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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996.
Commission File Number 1-9079
U.S. RESTAURANT PROPERTIES MASTER L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 41-1541631
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
5310 Harvest Hill Rd., Suite 270, LB 168, Dallas, Texas 75230
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
972-387-1487
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Units Representing Limited Company New York Stock Exchange
Interests and Evidenced by
Depository Receipts
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes _X_ No __
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. _X_
The aggregate market value of the Units (based upon the closing
price of the Units on March 19, 1997, on the New York Stock Exchange)
held by non-affiliates of the Registrant was $197,228,869.
As of March 19, 1997, there were 7,012,582 Units outstanding.
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U.S. RESTAURANT PROPERTIES MASTER L.P.
TABLE OF CONTENTS
Page
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PART I
Item 1. Business................................................... 1
Item 2. Properties................................................. 13
Item 3. Legal Proceedings.......................................... 18
Item 4. Submission of Matters to a Vote of Security-Holders........ 18
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters........................................ 19
Item 6. Selected Financial Data.................................... 20
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 21
Item 8. Financial Statements and Supplementary Data................ 24
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure........................ 24
PART III
Item 10. Directors and Executive Officers of the Registrant......... 24
Item 11. Executive Compensation..................................... 25
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................. 26
Item 13. Certain Relationships and Related Transactions............. 27
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K................................................ 29
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PART I
ITEM 1. BUSINESS
GENERAL
U.S. Restaurant Properties Master L.P., a Delaware limited 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 Dairy Queen-R-, Hardee's-R-, Chili's-R-, Grandy's-R- and
Pizza Hut-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 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 March 19, 1997, the Partnership's portfolio consisted of 346
restaurant properties in 44 states (the "Current Properties"), approximately
99.5% 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 restaurants. In May 1994, an investor
group led by Robert J. Stetson and Fred H. Margolin acquired the Managing
General Partner. In March 1995, certain amendments to 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 Burger King Corporation. Since
adoption of the amendments, the Partnership has acquired 224 properties for
an aggregate purchase price of approximately $132 million, including 208
properties acquired since January 1, 1996 and has entered into binding
agreements to acquire 130 additional restaurant properties (the "Acquisition
Properties") for an aggregate purchase price of approximately $72 million.
The Acquisition Properties consist of 76 Arby's restaurant properties, six
Pizza Hut restaurant properties, four Hardee's restaurant properties, two
Schlotzsky's restaurant properties, two Wendy's restaurant properties, one
Bruegger's Bagels restaurant property and 39 other national and regional
brand named restaurant properties. Upon acquisition of the Acquisition
Properties, the Partnership's portfolio will consist of an aggregate of 476
properties in 44 states.
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 Burger King Corporation ("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.
HISTORY AND STRUCTURE OF THE COMPANY
The Partnership, formerly Burger King Investors Master L.P., was formed
in 1985 by Burger King Corporation and QSV Properties Inc., both of which
were at that time wholly-owned subsidiaries of The Pillsbury Company. QSV
Properties Inc. acted as the Managing General Partner of the Partnership.
Burger
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King Corporation was a special general partner of the Partnership until its
withdrawal on November 30, 1994.
The Partnership effected an initial public offering in 1986 and the
proceeds therefrom were used to buy the Partnership's initial portfolio of
128 properties from Burger King Corporation. From 1986 through March 1995,
the Partnership's limited partnership agreement limited the activities of the
Partnership to managing the original portfolio of properties.
In May 1994, an investor group led by Robert J. Stetson and Fred H.
Margolin, acquired QSV Properties Inc. and later changed its name to U.S.
Restaurant Properties, Inc. and then changed its name back to QSV Properties,
Inc. in February 1997. In March 1995, the Unitholders approved certain
amendments to the Partnership's limited partnership agreement that permit the
Partnership to incur debt, to acquire additional properties, including
restaurant properties not affiliated with Burger King Corporation.
The Partnership operates through U.S. Restaurant Properties Operating
L.P. (the "Operating Company"), formerly Burger King Operating Limited
Company, which holds the interests in the properties. The Partnership and
the Operating Partnership are generally referred to collectively as the
"Partnerships'" or the Partnership. Through its ownership of all of the
limited partner interests in the Operating Partnership, the Partnership owns
a 99.01% Partnership interest in the Operating Partnership. The Partnerships
are Delaware Limited Partnerships and continue in existence until December
31, 2035, unless sooner dissolved or terminated.
In 1996, the Partnership established certain other wholly owned
operating entities consisting of U.S. Restaurant Properties Business Trust I,
U.S. Restaurant Properties Business Trust II, Restaurant Acquisition
Corporation, Restaurant Renovation Partners L.P., U.S. Restaurant Properties
West Virginia Partners L.P., U.S. Restaurant Properties Carolina LTD., U.S.
Restaurant Properties Lincoln LTD., and U.S. Restaurant Properties Norman
LTD. Collectively, these entities in addition to the Partnerships are
referred to as the "Company". All of these entities are included in the
consolidated financial statements.
QSV Properties Inc. (formerly named U.S. Restaurant Properties, Inc.),
is the Managing General Partner of the Partnership. The principal executive
offices of the Company 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.
STRATEGY
Since the adoption of the amendments to the Partnership Agreement in
March 1995, the Company's principal business objective has been to expand and
diversify the Company's portfolio through frequent acquisitions of small to
medium-sized portfolios of fast food and casual dining restaurant properties.
The Company intends to achieve growth and diversification while maintaining
low portfolio investment risk through adherence to proven acquisition
criteria with a conservative capital structure. The Company intends to
continue to expand its portfolio by acquiring triple net leased properties
and structuring sale/leaseback transactions consistent with the following
strategies:
- FOCUS ON RESTAURANT PROPERTIES. The Company takes advantage of senior
management's extensive experience in fast food and casual dining
restaurant operations to identify new investment opportunities and
acquire restaurant properties satisfying the Company's investment
criteria. Management believes, based on its industry knowledge and
experience,
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that relative to other real estate sectors, restaurant properties
provide numerous acquisition opportunities at attractive valuations.
- INVEST IN MAJOR RESTAURANT BRANDS. The Company intends to continue to
acquire properties operated as major national and regional restaurant
brands, such as Burger King-R-, Dairy Queen-R-, Hardee's-R- and
Chili's-R- by competent, financially-stable operators. Certain of the
Company Current Properties are also operated as Schlotzsky's-R-,
Grandy's-R-, Pizza Hut-R-, KFC-R- and Taco Bell-R- restaurants and
other brand named restaurants. Management believes, based on its
industry knowledge and experience, that successful restaurants
operated under these types of brands offer stable, consistent income
to the Company with minimal risk of default or non-renewal of the
lease and franchise agreement. As a result of its concentration on
major national and regional brands, in the last three fiscal years, of
all rental revenues due, more than 99.5% has been collected.
- ACQUIRE EXISTING RESTAURANTS. The Company's strategy is to focus
primarily on the acquisition of existing fast food and casual dining
chain restaurant properties that have a history of profitable
operations with a remaining term on the current lease of at least five
years. The average remaining lease term for the Current Properties is
13 years. Management believes, based on its industry knowledge and
experience, that acquiring existing restaurant properties provides a
higher risk-adjusted rate of return to the Company than acquiring
newly-constructed restaurants. However, a limited number of newly
constructed restaurants have been acquired at a higher rate of return.
- CONSOLIDATE SMALLER PORTFOLIOS. Management believes, based on its
industry knowledge and experience, that pursuing multiple transactions
involving smaller portfolios of restaurant properties (generally
having an acquisition price of less than $3 million) results in a more
attractive valuation because the size of such transactions generally
does not attract large institutional property owners. Smaller buyers
typically are not well capitalized and may be unable to compete for
such transactions. Larger transactions involving multiple properties
generally attract several institutional bidders, often resulting in a
higher purchase price and lower investment returns to the purchaser.
In certain circumstances, however, the Company has identified,
evaluated and pursued portfolios valued at up to $50 million that
present attractive risk/return ratios.
- MAINTAIN CONSERVATIVE CAPITAL STRUCTURE. The Company has a policy of
maintaining a ratio of total indebtedness of 50% or less to the
greater of (i) the market value of all issued and outstanding Units
plus total outstanding indebtedness ("Total Market Capitalization") or
(ii) the original cost of all of the Company's properties as of the
date of such calculation. The Company's ratio of total indebtedness to
Total Market Capitalization was approximately 27% at December 31,
1996. The Company, however, may from time to time reevaluate its
borrowing policies in light of then-current economic conditions,
relative costs of debt and equity capital, market values of
properties, growth and acquisition opportunities and other factors.
- INVESTMENT CRITERIA. Since the previously approved amendments to the
Partnership Agreements, the Company has acquired 224 restaurant
properties. The Company intends to continue acquiring properties,
including closing the acquisition of the Acquisition Properties
currently under binding contracts. The Company will target the
acquisition of properties of national and regional fast food or casual
dining restaurant chains, which may include Burger King, that satisfy
some or all of the following criteria:
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- The rent on such properties has produced cash flow that after
deducting management fees, interest and debt amortization, or
equity issuance, would improve the Company's existing cash flow
per Partnership Unit.
- The restaurant's annual sales would be in the highest 70% of the
restaurants in that chain.
- The restaurants would have historically generated at least the
normal profit for restaurants in that chain and be projected to
continue to generate a profit even if sales decreased by 10%.
- The properties would be located where the average per capita
income was stable or increasing.
- The restaurant's franchisees would possess significant net worth
and preferably operate multiple restaurants.
- The properties would be in good repair and operating condition.
Management receives acquisition proposals from a number of sources. The
Company utilizes seven independent real estate professionals who assist the
Company in examining and analyzing proposed acquisitions. These
professionals are compensated principally upon the Company's closing of an
acquisition of property. There can be no assurance that management will be
able to identify properties that satisfy all or a significant number of the
above criteria or that, if identified, the Company will be able to purchase
such restaurant properties. When purchasing additional restaurant
properties, the Company also intends to emphasize higher base rents and
de-emphasize percentage rents.
The Company believes that it can generate improved operating results as
a result of the acquisition of additional properties and by making loans to
tenants for the renovation and improvement of its properties. The Company
also believes that expansion and diversification of its property portfolio to
include more balance among restaurant brands will decrease its dependence on
one chain.
Since March 1995, the Company has acquired 224 restaurant properties in
35 states as of March 19, 1997. These properties include 54 Burger King
restaurants properties, 40 Dairy Queen restaurants properties, 30 Grandy's
restaurant properties, 26 Hardee's restaurants properties, 16 Bruegger's
Bagels restaurant properties, 14 Pizza Hut restaurant properties, eight
Chili's restaurant properties, eight Schlotzsky's restaurant properties, two
KFC restaurant properties, one Taco Bell restaurant property and 25 other
regional brand name restaurant properties. The Company has an additional 130
restaurant properties under contract for acquisition. Such properties
represent 19 separate transactions in various stages of negotiation and due
diligence and there can be no assurance that such transactions will be
closed. Such acquisitions represent an aggregate consideration of $72
million. These properties include 76 Arby's restaurant properties, six Pizza
Hut restaurant properties, four Hardee's restaurant properties, two
Schlotzsky's restaurant properties, two Wendy's restaurant properties, one
Bruegger's Bagels restaurant property and an additional 39 other restaurant
properties operated under other tradenames.
The Company believes that improving, expanding, rebuilding or replacing
its restaurant properties is important. The Company has made and intends to
make loans to tenants to renovate and improve their restaurants. In
addition, the Company intends to purchase additional restaurant properties
and related equipment and construct new properties.
The Company believes that the Company can foster improved operating
results at selected properties, encourage renewal of expiring leases and
reduce the likelihood of having to rebuild the existing properties at the
Company's expense if it assists tenants in repairing and updating their
restaurants. The Company also
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believes that diversification of the Company's restaurant property portfolio
would lessen the dependence of the Company's performance on one chain.
The Company intends to finance the acquisition of additional properties
principally by using borrowing capacity, on a secured recourse or
non-recourse basis, of the Company's existing properties, through the
issuance of additional Partnership Units, or the Company's $95 million
revolving credit agreement with a syndicate of banks. The proceeds of any
borrowing are expected to be used to acquire additional restaurant
properties. The credit agreement expires December 28, 1998 and provides that
borrowings under the agreement will bear interest at 180 basis points over
the London Interbank Rate (LIBOR). The borrowings are secured by the
Company's interest in the real estate and leases owned by the Company. At
March 19, 1997, approximately $48 million remained available under the credit
agreement. In addition, a $30 million increase to the line of credit is
currently being negotiated as well as a $20 million private placement of
equity. The Company believes that seller financing will not be available for
the purchase of additional restaurant properties.
During 1996, 384,836 Partnership Units were used to purchase 18 of the
184 properties in four separate transactions. Of the 384,836 Partnership
Units issued, 324,575 Partnership Units are guaranteed to have a market value
of $24 per unit two years from the transaction date, 28,261 Partnership Units
are guaranteed to have a market value of $23 per unit three years from the
transaction date and 32,000 Partnership Units are guaranteed to have a value
of $25 per unit two years from the transaction date.
INDUSTRY
Currently, approximately two-thirds of fast food restaurant operators
lease their restaurant properties. Leasing enables a restaurant operator to
reallocate funds to the improvement of current restaurants, the acquisition
of additional restaurants or other uses.
Management believes, based on its industry knowledge and experience,
that the Company competes with numerous other publicly-owned entities, some
of which dedicate substantially all of their assets and efforts to acquiring,
owning and managing chain restaurant properties. The Company also competes
with numerous private firms and private individuals for the acquisition of
restaurant properties. In addition, there are a number of other
publicly-owned entities that are dedicated to acquiring, owning and managing
triple net lease properties. A majority of chain restaurant properties are
owned by restaurant operators and real estate investors. Management
believes, based on its industry knowledge and experiences that this
fragmented market provides the Company with substantial acquisition
opportunities. Management also believes that the inability of most small
restaurant owners to obtain funds with which to compete for acquisitions as
timely and inexpensively as the Company provides the Company with a
competitive advantage when seeking to acquire a restaurant property.
Approximately 53% of the Company's Current Properties consists of
properties leased to operators of Burger King restaurants. Based on
publicly-available information, Burger King is the second largest fast food
restaurant system in the United States in terms of system wide sales.
According to publicly-available information, there are approximately 6,900
Burger King restaurant units in the United States. With respect to the Burger
King restaurants in the Company's portfolio, for the year-ended December 31,
1996, same-store sales (consisting of the stores included in the portfolio at
January 1, 1995 and at December 31, 1996) increased 3.5% over the prior year.
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RECENT DEVELOPMENTS
RECENT ACQUISITIONS: Since January 1, 1996, the Company has acquired
208 restaurant properties for an aggregate purchase price of approximately
$121 million. The acquired properties are leased on a triple net basis to
operators of Burger King, Dairy Queen, Hardee's, Chili's, Schlotzsky's, Pizza
Hut, Grandy's, Taco Bell, KFC and other brand name restaurants.
PENDING ACQUISITIONS: At March 19, 1997, the Company had entered into
binding agreements to purchase interests in 130 Acquisition Properties for an
aggregate purchase price of approximately $72 million, including the purchase
of 76 Arby's restaurant properties, six Pizza Hut restaurant properties, four
Hardee's restaurant properties, two Schlotzsky's restaurant properties, two
Wendy's restaurant properties, one Bruegger's Bagels restaurant property and
an additional 39 other national and regional brand named restaurant
properties. The Company intends to acquire the Acquisition Properties with
both cash and Partnership Units. Approximately, 272,000 Partnership Units
will be issued for Acquisition Properties. The cash portion of the
acquisitions will be financed principally by utilizing the Company's line of
credit. In addition, the Company intends to acquire $20 million through a
private placement of equity.
EXCHANGE OFFER REGISTRATION FILED: On February 7, 1997, a proxy
statement for an exchange offer and registration statement was filed with the
Securities and Exchange Commission. This filing pertains to an exchange of
properties for Partnership Units. This exchange is currently valued at
approximately $7,850,000.
CREDIT FACILITIES: The Company's revolving credit agreement with a
syndicate of banks was recently increased to $95 million. At March 19, 1997,
approximately $48 million remained available for borrowings under the credit
agreement (excluding $.4 million subject to outstanding letters of credit).
The remaining balance is intended to be used for the financing of pending
acquisitions.
NOTES PAYABLE: On February 26, 1997, the Company issued $40,000,000 in
notes payable. This includes $12,500,000 of 8.06% Series A Senior Secured
Guaranteed Notes due January 31, 2000 and $27,500,000 of 8.30% Series B
Senior Secured Guaranteed Notes due January 31, 2002. The proceeds were
primarily utilized to reduce the amount outstanding under the line of credit
and to improve the Company's cash position. The debt is collateralized by
substantially all the assets of the Company. The collateral is pari passu
with the company's revolving credit agreement.
REIT CONVERSION: On February 7, 1997, the Company filed a proxy
statement and registration statement with the Securities and Exchange
Commission. The proxy statement and registration statement related to the
proposed conversion of U.S. Restaurant Properties Master L.P. into a
self-advised real estate investment trust (REIT). The conversion is subject
to the approval of the limited partners.
RECENT EVENTS: Since March 19, 1997, the Company purchased on
Schlotzsky's restaurant property for a purchase price of $825,000.
DISTRIBUTIONS AND ALLOCATIONS
CASH FLOW DISTRIBUTIONS. Net cash flow from operations of the Company
that is distributed is allocated 98.02 percent to the Unitholders and 1.98
percent to the Managing General Partner until the Unitholders have received a
simple (non-cumulative) annual return for such year equal to 12 percent of
the Unrecovered Capital Per Partnership Unit (i.e., $20.00 (the original
offering price in 1986) reduced by any prior distributions of net proceeds of
capital transactions); then any distributed cash flow for such year is
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allocated 75.25 percent to the Unitholders and 24.75 percent to the Managing
General Partner until the Unitholders have received a total simple
(non-cumulative) annual return for such year equal to 17.5 percent of the
Unrecovered Capital per Partnership Unit; and then any excess distributed
cash flow for such year is allocated 60.4 percent to the Unitholders and 39.6
percent to the Managing General Partner. Thus, for example, until a further
distribution of net proceeds of a capital transaction occurs (three such
capital distributions have occurred to date, one in 1989 of $0.08 per unit,
and two in 1993 totaling $0.24), the Unitholders receive 98.02 percent of any
net cash flow distributed for each year until they have received
distributions of $2.39 per Partnership Unit for such year; then the
Unitholders receive 75.25 percent of any cash flow distributed for such year
until they have received aggregate distributions of $3.49 per Partnership
Unit for such year; and then the Unitholders receive 60.4 percent of any
excess cash flow distributed for such year. The Company may retain otherwise
distributable cash flow to the extent the Managing General Partner deems
appropriate.
DISTRIBUTIONS OF PROCEEDS FROM CAPITAL TRANSACTIONS. Net proceeds from
financing and sales or other dispositions of the Properties (interim and
liquidating) are allocated 98.02 percent to the Unitholders and 1.98 percent
to the Managing General Partner until the Unitholders have received an amount
equal to the Unrecovered Capital Per Partnership Unit (initially $20.00 per
Unit) plus a cumulative, simple return equal to 12 percent of the balance of
their Unrecovered Capital Per Partnership Unit outstanding from time to time
(to the extent not previously received from distributions of prior capital
transactions); then such proceeds are allocated 75.25 percent to the
Unitholders and 25.75 percent to the Managing General Partner until the
Unitholders have received a total cumulative, simple return equal to 17.5
percent of the Unrecovered Capital Per Partnership Unit; and then such
proceeds are allocated 60.4 percent to the Unitholders and 39.6 percent to
the Managing General Partner. The Company may retain otherwise distributable
net proceeds from financing and sales or other dispositions of the Properties
to the extent the Managing General Partner deems appropriate.
TAX ALLOCATIONS. Operating income and loss of the Company for each year
generally is allocated between the Managing General Partner and the
Unitholders in the same aggregate ratio as cash flow is distributed for that
year. Gain and loss from a capital transaction generally is allocated among
the Partners in the same aggregate ratio as net proceeds of the capital
transaction are distributed except to the extent necessary to reflect capital
account adjustments. In the case of both operating income or loss and gain or
loss from capital transactions, however, the amount of such income, gain or
loss allocated to the Managing General Partner and the Unitholders for the
year will not necessarily equal the total cash distributed to the Managing
General Partner and the Unitholders for such year. Upon the transfer of a
Partnership Unit, tax items allocable thereto generally will be allocated
among the transferor and the transferee based on the period during the year
that each owned the Partnership Unit, with each Unitholder on the last day of
the month being treated as a Unitholder for the entire month. The Managing
General Partner intends to make a Section 754 election on behalf of the
Company for the tax year ended December 31, 1996.
PAYMENTS TO THE MANAGING GENERAL PARTNER
The Company pays the Managing General Partner a non-accountable annual
allowance. The annual allowance is adjusted annually to reflect any
cumulative increases in the Consumer Price Index occurring after January 1,
1986 and increases annually for one percent of the purchase price for
properties acquired. The 1996 annual allowance prior to the adjustment for
1996 Acquisition Properties equaled $679,998 for the year ended December 31,
1996. The annual allowance for 1997 prior to the adjustment for 1997
acquisitions will be $1,765,643. The allowance is paid quarterly, in arrears.
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To compensate the Managing General Partner for its efforts, with respect
to the addition of properties, the Company will pay the Managing General
Partner, with respect to each additional property purchased: (i) a one-time
acquisition fee equal to one percent of the purchase price for such property
and (ii) an annual fee equal to one percent of the purchase price for such
property, adjusted for increases in the Consumer Price Index. For 1996, the
one-time acquisition fee equaled $1,043,000 which was capitalized and the
increase in the annual fee equaled $495,000. In addition, if the Rate of
Return (as defined) on the Company's equity in all additional properties
exceeds 12 percent per annum for any fiscal year, the Managing General
Partner will be paid an additional fee equal to 25 percent of the cash flow
received with respect to such additional properties in excess of the cash
flow representing a 12 percent Rate of Return thereon. This excess fee
equaled $93,000 for 1996. See "Item 1. Business. - Distributions and
Allocations - Cash Flow Distributions." and "Item 13. Certain Relationships
and Related Transactions."
Except as provided above, such payments are in addition to distributions
made by the Company to the Managing General Partner in its capacity as
partner in the Company.
EMPLOYEES AND MANAGEMENT
On March 19, 1997, the Company and the Managing General Partner had 17
employees. The Company and Managing General Partner believe that relations
with its employees are good. In addition, the Managing General Partner hired
other parties in connection with the operations of the Company and the
Properties. The Company may pay or reimburse the Managing General Partner
for payments to affiliates for goods or other services if the price and the
terms for providing such goods or services are fair to the Company and not
less favorable to the Company than would be the case if such goods or
services were obtained from or provided by an unrelated third party. In
addition, the Managing General Partner obtains certain services, including
investor tax reporting services, audit services, depository and transfer
agent services, banking services, legal services, consultant services and
printing services from unrelated third parties.
REVOLVING LINE OF CREDIT AND LOANS TO COMPANY
The Managing General Partner has agreed to make available to the Company
an unsecured, interest-free, revolving line of credit in the principal amount
of $500,000 to provide the Company with necessary working capital to minimize
or avoid seasonal fluctuation in the amount of quarterly cash distributions.
The Managing General Partner is not required, however, to make financing
available under this line of credit before the Company obtains other
financing, whether for acquisitions, reinvestment, working capital or
otherwise.
No loans from the Managing General Partner were outstanding at any time
during the three years ended December 31, 1996.
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CONFLICTS OF INTEREST AND INDEPENDENT CONSULTANT
The Company is subject to various conflicts of interest arising out of
its relationship with the Managing General Partner including the ability to
acquire for its own account properties of the type sought to be purchased by
the Company as part of its expanded business plan and the fees to be paid to
the Managing General Partner in respect of additional restaurant properties
acquired by the Company. As a result of such conflicts, certain actions or
decisions of the Managing General Partner may have an adverse effect on the
interests of the Unitholders although the grant to the Managing General
Partner of options to purchase Partnership Units in connection with the
recent amendments to the Partnership Agreement was intended to mitigate such
conflicts of interest.
FIDUCIARY RESPONSIBILITIES OF THE MANAGING GENERAL PARTNER AND
INDEMNIFICATION
The Partnership Agreement provides that the Managing General Partner and
its affiliates, officers, directors, agents, and employees will not be liable
to the Company or to any of the 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 it believes to be in, or not opposed to, the
interest of the Company. 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 Company also indemnifies the
Managing General Partner and such persons and entities against all
liabilities, costs, and expenses (including legal fees and expenses) incurred
by the Managing General Partner or any such person or entity arising out of
or incidental to the business of the Company, 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 Company 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 or entity 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 Company unless the Company's indemnification obligation is
covered by insurance. The Company'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 Company and the indemnified party (in aggregate) for and to the
extent of such amount.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to persons controlling the Company pursuant to
the foregoing provisions, or otherwise, the Company has been advised that, in
the opinion of the Securities and Exchange Commission, such indemnification
is against public policy, as expressed in the Act 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 controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such controlling person, the
Company 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 Act and will be governed by the final
adjudication of such issue.
9
<PAGE>
COMPETITION
The restaurants operated on the properties are subject to significant
competition (including, for example, competition from other national and
regional "fast food" restaurant chains, other BK Restaurants (including
mobile restaurants), local restaurants, restaurants owned by BKC or
affiliated entities, national and regional restaurant chains that do not
specialize in "fast food" but appeal to many of the same customers as do
"fast food" restaurants, and other competitors such as convenience store and
supermarkets that sell ready-to-eat food. The success of the Company
depends, in part, on the ability of the restaurants operated on the
properties to compete successfully with such businesses. The Company does
not anticipate that it will seek to engage directly in or meet such
competition. Instead, the Company will be dependent upon the experience and
ability of the lessees operating the restaurants located on the properties
and, with respect to its BK Properties, the BKC system generally to compete
with these other restaurants and similar operations. The Company believes
that the ability of its lessees to compete is affected by their compliance
with the image requirements at their restaurants.
REGULATIONS
The Company, through its ownership of interests in and management of
real estate, is subject to various environmental, health, land-use and other
regulation be federal, state and local governments that affects the
development and regulation of restaurant properties. The Company's leases
impose the primary obligation for regulatory compliance on the operators of
the restaurant properties.
ENVIRONMENTAL REGULATION. Under various federal, state and local laws,
ordinances and regulations, an owner or operator of real property may become
liable for the costs of removal or remediation of certain hazardous
substances releases on or within its property. Such liability may be imposed
without regard to whether the owner or operator knew of, or caused the
release of the hazardous substances. In addition to liability for cleanup
costs, the presence of hazardous substances on a property could result in the
owner or operator incurring liability as a result of a claim by an employee
or another person for personal injury or a claim by an adjacent property
owner for property damage.
In connection with the Company's acquisition of a new 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 exits 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.
The Company is not currently a party to any litigation or administrative
proceeding with respect to any property's compliance with environmental
standards. Furthermore, the Company is not aware of nor does it anticipate
any such action, or the need to expend any of its funds, in the foreseeable
future in connection with its operations or ownership of existing properties
which would have a material adverse affect upon the Company's financial
position, operations or cash flow.
NEW ACCOUNTING PRONOUNCEMENTS. In 1996 the American Institute of
Certified Public Accountants issued Statement of Position 96-1,
"Environmental Remediation Liabilities", ("SOP 96-1"), which provides
guidance for the recognition, measurement, display and disclosure of
environmental remediation liabilities.
10
<PAGE>
The Company will adopt the provisions of SOP 96-1 in 1997, as required, and
does not expect such adoption to have a material impact on its results of
operations, financial position, or cash flows.
AMERICANS WITH DISABILITIES ACT ("ADA"). Under the ADA, all public
accommodations, including restaurants, are required to meet certain federal
requirements relating to physical access and use by disabled persons. A
determination that the Company or a property of the Company is not in
compliance with the ADA could result in the imposition of fines, injunctive
relief, damages or attorney's fees. The Company's leases contemplate that
compliance with the ADA is the responsibility of the operator. The Company
is not currently a party to any litigation or administrative proceeding with
respect to a claim of violation of the ADA and does not anticipate any such
action or proceeding that would have a material adverse effect upon the
Company.
LAND-USE: FIRE AND SAFETY REGULATIONS. In addition, the Company and
its restaurant operators are required to operate the properties in compliance
with various laws, land-use regulations, fire and safety regulations and
building codes as may be applicable or later adopted by the governmental body
or agency having jurisdiction over the location of the property or the matter
being regulated. The Company does not believe that the cost of compliance
with such regulations and laws will have a material adverse effect upon the
Company.
HEALTH REGULATIONS. The restaurant industry is regulated by a variety
of state and local departments and agencies, concerned with the health and
safety of restaurant customers. These regulations vary by restaurant
location and type (i.e., fast food or casual dining). The Company's leases
provide for compliance by the restaurant operator with all health regulations
and inspections and require that the restaurant operator obtain insurance to
cover liability for violation of such regulations or the interruption of
business due to closure caused by failure to comply with such regulations.
The Company is not currently a party to any litigation or administrative
proceeding with respect to the compliance with health regulations of any
property it finances, and does not anticipate any such action or proceeding
that would have a material adverse effect upon the Company.
INSURANCE. The Company requires its lessees to maintain adequate
comprehensive liability, fire, flood and extended loss insurance provided by
reputable companies with commercially reasonable and customary deductibles.
The Company also requires that it be named as an additional insured under
such policies. Certain types and amounts of insurance are required to be
carried by each restaurant operator under the leases with the Company, and
the Company actively monitors tenant compliance with this requirement. The
Company intends to require lessees of subsequently acquired properties to
obtain similar insurance coverage. There are, however, certain types of
losses generally of a catastrophic nature, such as earthquakes and floods,
that may be either uninsurable or not economically insurable, as to which the
Company's properties are at risk depending on whether such events occur with
any frequency in such areas. An uninsured loss could result in a loss to the
Company of both its capital investment and anticipated profits from the
affected property. 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
Company's investment. Inflation, changes in building codes and ordinances,
environmental considerations and other factors also might make using
insurance proceeds to replace a facility after it has been damaged or
destroyed infeasible. Under such circumstances, the insurance proceeds
received by the Company might be inadequate to restore its economic position
with respect to such property.
11
<PAGE>
COMPANY AGREEMENT
All Unitholders are bound by the terms and conditions of the Partnership
Agreement (including, without limitation, provisions thereof relating to
conflicts of interest, limitations on liability, and indemnification of the
Managing General Partner), a copy of which is available upon request (without
charge) at the offices of the Company or the Transfer Agent, American Stock
Transfer and Trust Company, 40 Wall Street, New York, NY 10005.
12
<PAGE>
ITEM 2. PROPERTIES
GENERAL
The Company acquired 128 properties from BKC on February 27, 1986 for a
total purchase price of $94,592,000. From such date through March 1995, five
of such properties were sold or leases on such properties were allowed to
expire and were not renewed.
Since the business strategy of the Company was changed in March 1995 as
a result of the amendments to the Partnership agreement, the Company has
acquired 224 restaurant properties in 35 states. Of such properties, 54 are
Burger King restaurant properties, 40 Dairy Queen restaurant properties, 30
Grandy's restaurant properties, 26 Hardee's restaurant properties, 16
Bruegger's Bagels restaurant properties, 14 Pizza Hut restaurant properties,
eight Chili's restaurant properties, eight Schlotzsky's restaurant
properties, two KFC restaurant properties, one Taco Bell restaurant property
and 25 other regional brand name restaurant properties. The Company has an
additional 130 restaurant properties under contract for acquisition. Such
properties represent 19 separate transactions in various stages of
negotiation and due diligence and there can be no assurance that such
transactions will be closed. Such acquisitions represent an aggregate
consideration of $72 million which includes the value of approximately
272,000 Partnership Units. These Acquisition Properties include 76 Arby's
restaurant properties, six Pizza Hut restaurant properties, four Hardee's
restaurant properties, two Schlotzsky's restaurant properties, two Wendy's
restaurant properties, one Bruegger's Bagels restaurant property and an
additional 39 other restaurant properties.
The equipment, furniture, fixtures, and other similar personal property
used on the Properties generally is owned or leased from third parties by the
lessee of the property; however, the equipment used in 62 restaurant
properties is owned by the Company.
13
<PAGE>
PROPERTIES
As of March 14, 1997, the Company property portfolio consisted of 329
Properties that are owned in fee simple or leased under leases with third
party lessors. The table below lists the number of Properties in each state
and related brand name.
<TABLE>
Burger Dairy Pizza Taco Total
State King Chili's Queen Grandy's Hardee's KFC Hut Schlotzsky's Bell Other Properties
- ----- ------ ------- ----- -------- -------- --- ----- ------------ ---- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alabama.......... 1 1 1 3
Arizona.......... 6 1 7
Arkansas......... 13 1 14
California....... 16 1 17
Colorado......... 3 3
Connecticut...... 3 3
Delaware......... 1 1
Florida.......... 6 7 13
Georgia.......... 7 23 1 31
Idaho............ 1 1
Illinois......... 1 1 2
Indiana.......... 2 1 3
Iowa............. 2 2
Kansas........... 2 2
Kentucky......... 3 3
Louisiana........ 2 2
Maine............ 4 4
Maryland......... 2 1 3
Massachusetts.... 3 3
Michigan......... 4 4
Minnesota........ 1 1
Mississippi...... 2 2
Missouri......... 3 1 4
Montana.......... 1 1
Nebraska......... 1 1 2
Nevada........... 1 1
New Jersey....... 5 5
New Mexico....... 1 1 1 3
New York......... 5 5
North Carolina... 9 4 13
Ohio............. 9 9
Oklahoma......... 3 7 1 1 12
Oregon........... 5 5
Pennsylvania..... 13 1 14
South Carolina... 7 2 1 10
Tennessee........ 3 2 5
Texas............ 10 2 40 22 2 2 3 1 15 97
Utah............. 1 1
Vermont.......... 1 1
Virginia......... 1 1
Washington....... 7 7
West Virginia.... 2 1 3
Wisconsin........ 5 5
Wyoming.......... 1 1
--- --- --- --- --- --- --- --- --- --- ---
Total............ 173 8 40 30 26 2 14 8 1 27 329
--- --- --- --- --- --- --- --- --- --- ---
--- --- --- --- --- --- --- --- --- --- ---
Percentage....... 53% 2% 12% 9% 8% 1% 4% 2% 1% 8% 100%
--- --- --- --- --- --- --- --- --- --- ---
--- --- --- --- --- --- --- --- --- --- ---
</TABLE>
14
<PAGE>
LEASES WITH RESTAURANT OPERATORS
The Company's strategy is to acquire operating properties rather
than developing new properties, although the Company has begun to
acquire newly constructed properties. Typically, the Company acquires
a property that has been operated as a fast food or casual dining
restaurant and that is subject to a lease with a remaining term of
five to 20 years and a co-terminus franchise agreement. Management
believes, based on its experience, that this strategy reduces the
Company's financial risk because the restaurant operated on such
property has a proven operating record that mitigated the risk of
default or non-renewal under the lease. The Company's current
properties have remaining lease terms ranging from one to 28 years.
Substantially all of the Company's existing leases are "triple
net," which means that the tenant is obligated to pay all costs and
expenses, including all real property taxes and assessments, repairs
and maintenance and insurance. The Company's leases provide for a
base rent plus a percentage of the restaurant's sales in excess of a
threshold amount. The triple net lease structure is designed to
provide the Company with a consistent stream of income without the
obligation to reinvest in the property. For the year ended December
31, 1996, base rental revenues and percentage rental revenues
represented 67% and 33%, respectively, of total gross rental revenues.
Management intends to renew and restructure leases to increase the
percentage of total rental revenues derived from base rental revenues
and decrease the percentage of total revenues from percentage rental
revenues. In addition, to encourage the early renewal of existing
leases the Company has offered certain lessees remodeling grants and
financing. To date, the Company has renewed 31 leases early under
this program. Management considers the grants and financing to be
prudent given the increased sales resulting at the remodeled
restaurants and the lower costs incurred because of the early lease
renewals.
The Company generally acquires properties from third party
lessors or from operators in a sale/leaseback transaction in which the
operator sells the property to the Company and enters into a long-term
lease (typically 20 years). A sale/leaseback transaction is
attractive to the operator because it allows the operator to realized
the value of the real estate while retaining occupancy for the long
term. A sale/leaseback transaction may also provide specific
accounting, earnings and market value benefits to the selling
operator. For example, the lease on the property may be structured by
the tenant as an off-balance sheet operating lease, consistent with
Financial Accounting Standards Board rules, which may increase the
operator's earnings, net worth and borrowing capacity. The following
table sets forth certain information regarding lease expirations for
the Company's properties as of March 14, 1997.
LEASE EXPIRATION SCHEDULE
NUMBER OF LEASES NET RENTAL
YEAR EXPIRING % OF TOTAL INCOME (1) % OF TOTAL
-------- ---------- ---------- ----------
1997.................. 2 1 $ 119 1
1998.................. 8 2 546 2
1999.................. 23 7 1,750 7
2000.................. 33 10 1,969 8
2001-05............... 94 29 7,344 30
2006-10............... 23 7 1,629 7
2011-15............... 11 3 1,208 5
2016-25............... 134 41 9,596 40
--- --- ------- ---
328 100% $24,161 100%
--- --- ------- ---
--- --- ------- ---
_____________
(1) Net rental income (in thousands) equals the current annualized
rentals (including any percentage rents based upon sales in 1996),
less annualized ground rents.
15
<PAGE>
OWNERSHIP OF REAL ESTATE INTERESTS
Of the 346 restaurant properties that the Company owns at
March 19, 1997, the Company owns both the land and the restaurant
building in fee simple on 301 of such properties (the "Fee
Properties"), the company owns the land and the tenant owns the
building on 14 of such properties and the Company leases the land, the
building or both from a third-party lessor on 79 of such properties
(the "Leasehold Properties"). The Company owns the land only on 31
properties.
Of the 79 Leasehold Properties, 14 are properties on which the
Company leases from a third party both the underlying land and the
restaurant building and the other improvements thereon (the "Primary
Leases") and then sublease the property to the restaurant operator.
Under the terms of the remaining 65 Leasehold Properties ("the Ground
Leases"), the Company leases the underlying land from a third party
and owns the restaurant building and the other improvements
constructed thereon. In any event, upon expiration or termination or
a Primary Lease or Ground Lease, the owner of the underlying land
generally will become the owner of the building and all improvements
thereon. The remaining terms of the Primary Leases and Ground Leases
range from one to 21 years. With renewal options exercised, the
remaining terms of the Primary Leases and Ground Leases range from
five to 35 years, with the average remaining term being 21 years.
The terms and conditions of each Primary Lease and each Ground
Lease vary substantially. Each Primary Lease and each Ground Lease,
however, have certain provisions in common, including that: (i) the
initial term is 20 years or less, (ii) the rentals payable are stated
amounts that may escalate over the terms of the Primary Leases and
Ground Leases, (and/or during renewal terms), but normally are not
based upon a percentage of sales of the restaurants thereon, and (iii)
the Company is required to pay all taxes and operating, maintenance
and insurance expenses for the Leasehold Properties. In addition,
under substantially all of the leases the Company may renew the term
one or more times at its option (although the provisions governing any
such renewal vary significantly and some renewal options are at a
fixed rental amount while others are at fair rental value at the time
of renewal). Several Primary Leases and Ground Leases also give the
owner the right to require the Company, upon the termination or
expiration thereof, to remove all improvements situated on the
property.
Although the Company, as lessee under each Primary Lease and
Ground Lease, generally has the right to assign or sublet all of its
rights and interests thereunder without obtaining the landlord's
consent, the Company is not permitted to assign or sublet any of its
rights or interest under 22 Primary Leases and Ground Leases without
obtaining the landlord's consent or satisfying certain other
conditions. In addition, approximately 20% of the Primary Leases and
Ground Leases require the Company to use such Leasehold Properties
only for the purpose of operating a Burger King restaurant or another
type of restaurant thereon. In any event, no transfer will release
the Company from any of its obligations under any Primary Lease or
Ground Lease, including the obligation to pay rent.
The Company leases or subleases 158 of its 346 existing
restaurant properties to BKC franchisees under a lease/sublease,
pursuant to which the franchisee is required to operate a Burger King
restaurant thereon in accordance with the lessee's franchise agreement
and to make no other use thereof. Upon its acquisition of such
properties, the Company assumed the rights and obligations of BKC
under the leases/subleases.
Although the provisions of BKC's standard form of lease to
franchisees have changed over time, the material provisions of the
leases/subleases generally are substantially similar to BKC's current
standard form of lease (except to the extent that BKC has granted rent
reductions or deferrals or made other lease modifications to alleviate
or lessen the impact of business or other economic problems that a
franchisee may have encountered). The leases/subleases generally
provide for a term of 20 years from the date of the
16
<PAGE>
opening of the restaurant and do not grant the lessee any renewal or
purchase options. The Company, however, is required under the
Partnership Agreements to renew a lease/sublease if BKC renews or
extends the lessee's franchisee agreement. The Company believes that
BKC's policy generally is to renew a franchise agreement if BKC
determines that economic and other factors justify renewal or extension
and the franchisee has complied with all obligations under the franchise
agreement. The remaining terms of all the BKC leases/subleases
currently range from one to 28 years, with the average remaining term
being nine years.
USE AND OTHER RESTRICTIONS ON THE OPERATION AND TRANSFER OF BURGER
KING RESTAURANT PROPERTIES
The Company was originally formed for the purpose of acquiring
all BKC's interests in the original portfolio and leasing or
subleasing them to BKC franchisees under the leases/subleases.
Accordingly, the Partnership Agreements contain provisions that state,
except as expressly permitted by BKC, that the Company may not use
such properties for any purpose other than to operate a Burger King
restaurant. In furtherance thereof, the Partnership Agreements: (i)
require the Company, in certain specified circumstances, to renew or
extend a lease/sublease and enter into a new lease with another
franchisee of BKC, to approve an assignment of a lease/sublease, to
permit BKC to assume a lease/sublease at any time and to renew a
Primary Lease, and (ii) impose certain restrictions and limitations
upon the Company's ability to sell, lease or otherwise transfer any
interest in such properties. The Partnership Agreements require the
Company to provide BKC notice of default under a lease/sublease and an
opportunity to cure such default prior to taking any remedial action.
The Partnership Agreements also require the Company under certain
circumstances to provide tenants with assistance with remodeling
costs. Such terms with respect to such properties imposed on the
Company by the Partnership Agreements may be less favorable than those
imposed upon other lessors of Burger King restaurants. BKC has
advised the Company that is intends to waive or not impose certain of
the restrictive provisions contained in the Partnership Agreements and
the Company is discussing BKC's position with BKC to clarify such
provisions.
RESTAURANT ALTERATIONS AND RECONSTRUCTION
The Company believes that improving, expanding, rebuilding or
replacing its restaurant properties from time to time is important.
In addition to normal maintenance and repair requirements, each
franchisee is required under BKC's franchise agreement and
lease/sublease, at its own cost and expense, to make such alterations
to a Burger King restaurant as may be reasonably required by BKC from
time to time to modify the appearance of the restaurant to reflect the
then current image requirements for Burger King restaurants. Most of
the properties that are operating as Burger King restaurants are 15 to
20 years old. The Company believes that many of these properties
require substantial improvements to maximize sales and that their
condition is below BKC's current image requirements.
To encourage the early renewal of existing leases/subleases, the
Company recently established an "early renewal program" whereby the
Company has offered to certain tenants the right to renew existing
leases/subleases for up to an additional 20 years. The purpose of
this program is to extend the term of existing leases/subleases prior
to the end of the lease term and enhance the value of the underlying
property to the Company. As a result of this program, the Company has
extended the leases term for 31 leases/subleases.
17
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is involved in litigation relating
to claims arising in the ordinary course of business. Currently, the
Company is not a party to any material litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to Unitholders in the quarter
ended December 31, 1996.
18
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Partnership's Units are traded on the New York Stock Exchange under
the symbol "USV". Quarterly distributions are declared for payment early in
the next calendar quarter. The high and low sales prices of the Units and
the distributions declared and paid during each calendar quarter of 1995 and
1996 and through March 14, 1997 are set forth below:
MARKET PRICE
------------------ DISTRIBUTIONS
1997 HIGH LOW CLOSE DECLARED
---- ------- ------- ------- -------------
First Quarter (through March 14) $30 7/8 $27 1/8 $28 1/4 $ .50
1996
----
First Quarter 23 3/8 19 1/2 23 3/8 $ .44
Second Quarter 25 21 5/8 23 .47
Third Quarter 25 5/8 21 1/2 24 3/4 .48
Fourth Quarter 28 1/4 22 5/8 27 3/4 .485
------
$1.875
1995
----
First Quarter 16 1/2 14 1/4 16 1/8 $ .42
Second Quarter 17 1/8 15 3/4 17 1/8 .42
Third Quarter 18 7/8 16 3/4 18 3/8 .42
Fourth Quarter 20 1/4 18 19 3/4 .43
------
$1.69
As of March 14, 1997, there were 1,806 holders of record in the
Partnership.
In July 1995, the Company announced its intention to repurchase up to
300,000 Partnership Units. Through December 31, 1996, the Company had
purchased 30,000 Partnership Units and no further repurchases have been made
or are presently contemplated.
19
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
YEARS ENDED DECEMBER 31,
------------------------------------------------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
1996 1995 1994 1993 1992
-------- ------- ------- ------- -------
Total revenues $ 18,324 $ 9,780 $ 8,793 $ 8,332 $ 8,489
Net income 7,473 5,223 4,933 4,528 2,486
Net income allocable
to unitholders 7,325 5,119 4,834 4,437 2,436
Net income per unit 1.20 1.10 1.04 0.96 0.53
Cash distributions
declared per unit 1.875 1.69 1.56 1.72* 1.56
----------------------
* Includes special capital transaction distributions of $.24.
DECEMBER 31,
------------------------------------------------
(IN THOUSANDS, EXCEPT PER UNIT DATA)
1996 1995 1994 1993 1992
-------- ------- ------- ------- -------
Total assets $177,418 $71,483 $62,889 $65,322 $69,087
Lines of credit 69,486 10,931 --- --- ---
Capitalized lease
obligations 362 563 775 966 1,138
Partners' capital 104,283 59,312 61,669 64,114 67,717
--general partners 1,163 1,241 1,308 1,357 1,430
--limited partners 103,120 58,071 60,361 62,757 66,287
--per unit 14.96 12.46 13.02 13.54 14.30
20
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS.
Revenues in 1996 totaled $18,324,000 up 87 percent from the $9,780,000
recorded in 1995 and up 108 percent from the $8,793,000 recorded in 1994.
Revenues in 1995 were up 11 percent from the revenues recorded in 1994. The
increase in revenues is primarily due to the acquisition of 16 restaurant
properties throughout 1995 and 184 restaurant properties throughout 1996. No
additions were made to the portfolio in 1994. In addition, sales increased
each year as indicated below and the straight-lining of escalating rent in
1996 contributed to a 3 percent increase in total revenues. In 1995 and 1994
straight-lining of rents did not apply.
Total comparable sales in the restaurants located on the Company's real
estate were $133,556,000 in 1996, $129,100,000 in 1995, and $120,543,000 in
1994. The comparable store sales relate to the original Burger King
portfolio in which revenues are not only in the form of minimum base rents
but also percentage rents that are paid in relation to actual sales of each
restaurant property.
Taxes, general and administrative expenses totaled $2,461,000 up 73
percent from the $1,419,000 recorded in 1995 and up 115 percent from the
$1,144,000 recorded in 1994. An increase in the management fee of $585,000
and expenses that directly correspond to the active growth of the Company
were the primary reasons for increased general and administrative expenses
for the year ended December 31, 1996 as compared to December 31, 1995. An
increase in expenses that directly corresponds to the active growth of the
Company was the primary reason for the increase in general and administrative
expenses for the year ended December 31, 1995 as compared to December 31,
1994.
Depreciation and amortization expenses totaled $3,978,000 up 158 percent
from the $1,541,000 recorded in 1995 and up 192 percent from the $1,361,000
recorded in 1994. These increases directly correlate to the property
acquisitions.
Rent expense totaled $2,080,000 up 48 percent from the $1,405,000
recorded in 1995 and up 54 percent from the $1,348,000 recorded in 1994. The
increase in rent expense directly correlates to the property acquisitions.
Twenty-seven (27) of the 200 properties purchased in 1995 and 1996 were
leasehold properties.
Interest expense, net of interest income, totaled $2,364,000 up from the
$192,000 in 1995 and up from the $(4) in 1994. The increase in interest
expense directly correlates to the additional property debt associated with the
acquisitions. No amounts were borrowed in 1994.
There was no write down of assets and intangible values relating to
closed properties during 1996 and 1995. A write down of $11,000 was made in
1994.
A restaurant property was sold for $825,000 at a gain of $590,000. The
sales price consisted of $82,500 in cash plus a $742,500 note receivable.
The note receivable is due on November 1, 1998. The gain on sale has been
deferred and is being accounted for under the cost recovery method. In
addition, equipment located at a restaurant property was sold for $50,000 and
a $32,000 gain was recognized.
Net income allocable to Unitholders in 1996 was $7,325,000 or $1.20 per
Partnership Unit, up 9 percent or 10 cents per Unit from $5,119,000 or $1.10
per Partnership Unit achieved in 1995. The 1995 results were up 6 percent or
6 cents per Partnership Unit from the 1994 results. Excluding provisions
for write
21
<PAGE>
down or dispositions of properties, net income allocable to Unitholders was
$1.20 in 1996, $1.10 in 1995 and $1.04 in 1994.
Regular cash distributions to the Limited Partners for 1996 totaled
$1.935 per Partnership Unit with .47 cents per Partnership Unit paid in the
first quarter, $.48 cents per Partnership Unit paid in the second quarter,
$.485 cents per Partnership Unit paid in the third quarter, and .50 cents in
the fourth quarter. Total cash distributions to Unitholders in 1995 and 1994
were $1.71 and $1.61 per Partnership Unit, respectively.
CASH FLOW FROM OPERATIONS BASED UPON TAXABLE INCOME
The Company generally considers "cash flow from operations based upon
taxable income" to be an appropriate measure of performance. "Cash flow from
operations based upon taxable income" is calculated as the sum of taxable
income plus charges for depreciation and amortization. All leases are
treated as operating leases for taxable income purposes which results in a
reconciling item from "cash flow from operating activities". In addition,
"cash flows from operations based upon taxable income" does not consider
changes in working capital items as a result; cash flow from operations based
upon taxable income should not be considered as an alternative to net income
determined in accordance with generally accepted accounting principles as an
indication of the Partnership's performance or as an alternative to cash flow
determined in accordance with generally accepted accounting principles as a
measure of liquidity. The Partnership believes that "cash flow from
operations based upon taxable income" is important because taxable income
flows through to the partners and it is the most consistent indication of
cash generated by operations and eliminates the fluctuations of
working capital. "Cash flow from operations based upon taxable income" on a
tax basis allocable to Unitholders in 1996 was $2.09 per Partnership Unit, up
$.31 cents per Partnership Unit from 1995. In 1995, "cash flow from operations
based upon taxable income" was $1.78 per Partnership Unit, up 13 cents per
Partnership Unit from the $1.65 achieved in 1994.
LIQUIDITY AND CAPITAL RESOURCES.
The Company's principal source of cash to meet its cash requirements is
rental revenues generated by the Company's properties. Cash generated by the
portfolio in excess of operating needs is used to reduce amounts outstanding
under the Company's credit agreements. Cash in excess of distributions is
used to cover payment of quarterly distributions to the Unitholders.
Currently, the Company's primary source of funding for acquisitions is its
existing revolving line of credit. The Company anticipates meeting its
future long-term capital needs through the incurrence of additional debt, the
issuance of additional Units, and a private placement of equity, along with
cash generated from internal operations.
The Company, as of March 19, 1997, has approximately $48 million
available under its $95 million line of credit with a syndicate of banks
(excluding $ .4 million subject to letters of credit). This line of credit
is secured by the Company's real estate including its leasehold interests.
The Company may request advances under this line of credit to finance the
acquisition of restaurant properties, to repair and update restaurant
properties and for working capital. The banks will also issue standby
letters of credit for the account of the Company under this loan facility.
This credit agreement expires on December 28, 1998 and provides that
borrowings thereunder bear interest at 180 basis points over the London
Interbank Offered Rate (LIBOR). Interest expense for 1996 and 1995 equaled
$2,364,000 and $192,000, respectively. During 1996, the Company also had a
$20 million mortgage warehouse facility from Morgan Keegan Mortgage Company,
Inc., which was secured by certain Company properties. As of March 19, 1997,
the balance due to Morgan Keegan Mortgage Company was zero and there were no
available draws. The borrowings thereunder beared interest at the rate of
300 basis points over LIBOR. The proceeds from this facility were used to
22
<PAGE>
finance the acquisition and purposed acquisition of various restaurant
properties owned by the U.S. Properties Business Trust I and II.
Pursuant to the Partnership Agreement, the Managing General Partner is
required to make available to the Company an unsecured, interest-free,
revolving line of credit in the principal amount of $500,000 to provide the
Company with necessary working capital to minimize or avoid seasonal
fluctuation in the amount of quarterly cash distributions. The Managing
General Partner is not required, however, to make financing available under
this line of credit before the Company obtains other financing, whether for
acquisitions, reinvestment, working capital or otherwise. The Managing
General Partner may make other loans to the Company. Each loan must bear
interest at a rate not to exceed the Morgan Guaranty Trust Company of New
York prime rate plus 1% or the highest lawful rate (whichever is less), and
in no event may any such loan be made on terms and conditions less favorable
to the Company than it could obtain from unaffiliated third parties or banks
for the same purpose. To management's knowledge, no loans have ever been
made pursuant to these arrangements and no loans were made or outstanding at
any time during each of the three years ended December 31, 1996.
The Partnership paid distributions in 1996 of $1.875 per Partnership
Unit, which represented 90% of cash flow from operations based upon taxable
income. The Partnership paid distributions for the first quarter of 1997 of
$ .50 cents per Partnership Unit. Management intends to distribute from 75%
to 95% of the estimated cash generated from operations within the general
objective of continued annual growth in the distributions. The Partnership
expects to maintain such distribution rate for the foreseeable future based
upon actual results of operations, the financial condition of the
Partnership, capital or other factors management deems relevant. During
1996, the Partnership distributed an aggregate of $11,167,000 to its
Unitholders.
INFLATION
Some of the Company's leases are subject to adjustments for increases in
the Consumer Price Index, which reduces the risk to the Company of the
adverse effects of inflation. Additionally, to the extent inflation
increases sales volume, percentage rents may tend to offset the effects of
inflation on the Company. Because triple net leases also require the
restaurant operator to pay for some or all operating expenses, property
taxes, property repair and maintenance costs and insurance, some or all of
the inflationary impact of these expenses will be borne by the restaurant
operator and not by the Company.
Operators of restaurants, in general, possess the ability to adjust menu
prices quickly. However, competitive pressures may limit a restaurant
operator's ability to raise prices in the face of inflation.
SEASONALITY
Fast food restaurant operations historically have been seasonal in
nature, reflecting higher unit sales during the second and third quarters due
to warmer weather and increase leisure travel. This seasonality can be
expected to cause fluctuations in the Partnership's quarterly unit revenue to
the extent if receives percentage rent.
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-K.
This Form 10-K contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Act of 1934, which are intended to be covered by the safe harbors
created thereby. These statements include the plans and objectives of
management for
23
<PAGE>
future operations, including plans and objectives relating to property
acquisitions and conversion to a real estate investment trust. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. Assumptions relating to the
foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions and future business decisions,
all of which are difficult or impossible to predict accurately and many of
which are beyond the control of the Partnership. Although the Partnership
believes that the assumptions underlying the forward-looking statements are
reasonable, any of the assumptions could be inaccurate and, therefore there
can be no assurance that the forward-looking statement included in this Form
10-K will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the
Partnership or any other person that the objectives and plans of the
Partnership will be achieved.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial information and supplementary data begin on page F-1 of
this Annual Report on Form 10-K. Such information is incorporated herein by
reference into this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Registrant is a limited Partnership (of which QSV Properties, Inc.
is the Managing General Partner) and has no directors or officers. The
executive officers of the Managing General Partner are Robert J. Stetson,
President and Chief Executive Officer, and Fred H. Margolin, Chairman of the
Board, Secretary and Treasurer. They have served in such positions and as
directors since the acquisition of the Managing General Partner on May 27,
1994. Messrs. Stetson and Margolin serve as executive officers of the
Managing General Partner at the pleasure of its board of directors.
Mr. Stetson is 46 years old. Since 1978, Mr. Stetson has been primarily
engaged in restaurant chain management, including the acquisition and
management of restaurant properties. From 1987 until 1992, Mr. Stetson
served as a senior executive in restaurant and retailing subsidiaries of
Grand Metropolitan PLC, the ultimate parent of Burger King. During this
period, Mr. Stetson served as the Chief Financial Officer and later President
- - Retail Division of Burger King and Chief Financial Officer and later Chief
Executive Officer of Pearle Vision. As Chief Financial Officer of Burger
King, Mr. Stetson was responsible for managing more than 750 restaurants that
Burger King leased to tenants. Prior to 1987, Mr. Stetson served in several
positions with PepsiCo Inc. and its subsidiaries, including Chief Financial
Officer of Pizza Hut. In 1972, Mr. Stetson received a Bachelor of Arts
degree from Harvard College. In 1975, Mr. Stetson received an M.B.A. from
Harvard Business School.
Mr. Margolin is 47 years old. In 1979, Mr. Margolin founded and became
the President of American Eagle Premium Finance Company, one of the largest
independent premium finance companies in Texas. From 1982 through 1988, Mr.
Margolin developed and then leased or sold shopping centers having an
aggregate cost of $50,000,000. In 1977, Mr. Margolin founded Intercon
General Agency, a national
24
<PAGE>
insurance agency specializing in the development and marketing of
insurance products for financial institutions. Mr. Margolin served as
the Chief Executive Officer of Intercon General Agency from its
inception until its sale to a public company in 1982. In 1971, Mr.
Margolin received a Bachelor of Science degree from the Wharton School
of the University of Pennsylvania. In 1973, Mr. Margolin received an
M.B.A. from Harvard Business School.
In addition to Messrs. Stetson and Margolin, the board of
directors of the Managing General Partner consists of Messrs. Gerald
H. Graham, David Rolph, Darrel Rolph, and Eugene G. Taper. Each
director serves a one-year term. Mr. Graham, age 59, is the Dean of
the Barton School of Business at Wichita State University. David
Rolph, age 48, and Darrel Rolph, age 59, own and operate the Tex-Mex
restaurant chain, "Carlos O'Kelleys," which has 25 units, and were
formerly one of the largest Pizza Hut franchisees. Mr. Taper, age 59,
a certified public accountant, is a consultant and a retired partner,
since 1993, of Deloitte & Touche LLP, an international public
accounting firm.
SECTION 16(a) REPORTS. Section 16(a) of the Securities and
Exchange Act of 1934, as amended, requires the Managing General
Partner, its directors and executive officers, and persons who
beneficially own more than 10 percent of the Partnership Units to file
with the SEC initial reports of Partnership Unit ownership and
reports of changes in ownership therein. The Managing General
Partner, directors and executive officers of the Managing General
Partner, and greater than 10 percent owners of the Partnership Units
are required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely upon a review of the
copies of such reports furnished to the Company and written
representations that no other reports were required during the year
ended December 31, 1995, the Company believes that all Section 16(a)
filing requirements applicable to the foregoing Managing General
Partner, director, executive officers, and greater than 10 percent
owners were complied with.
The year-end report is not required to be filed if there are no
previously unreported transactions or holding to report.
Nevertheless, the Company is required to disclose the names of
directors, executive officers and greater than 10 percent owners who
did not file the year-end report, unless the Company has received a
written statement that no filing was required. As of the date of this
report, the Company has not received any such statements.
ITEM 11. EXECUTIVE COMPENSATION.
The Managing General Partner, QSV Properties, Inc., is
responsible for managing the business and affairs of the Company. The
Company pays the Managing General Partner a non-accountable annual
allowance (adjusted annually to reflect increases in the Consumer
Price Index and additions to the property portfolio), plus
reimbursement of out-of-pocket costs incurred to other parties for
services rendered to the Companys. The allowance for the years ended
December 31, 1996, 1995 and 1994 was $1,175,000, $585,000 and
$542,000, respectively. For 1997, the allowance will be $1,766,000.
For 1996, 1995, and 1994 the one-time property acquisition fee equaled
$1,043,000, $109,000, and zero, respectively. The one-time property
acquisition fee is capitalized. The annual allowance includes
$495,000 and $29,000 of increased management fees due to acquisitions
for 1996 and 1995, respectively. The allowance is paid quarterly, in
arrears. The Company's accounts payable balance includes $416,000,
$187,000 and $136,000 for this allowance as of December 31, 1996, 1995
and 1994, respectively. The Managing General Partner paid no out-of-
pocket costs to other parties on behalf of the Company during 1996,
1995 and 1994. See "Item 1. Business - Distributions and Allocations"
and "- Payments to the Managing General Partner," above, and "Item 13.
Certain Relationships and Related Transactions," below.
25
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth certain information regarding the
beneficial ownership of the Partnership Units and the capital stock of
the Managing General Partner (the "QSV Properties Shares"),
respectively, as of March 19, 1997 by: (i) all persons who are
beneficial owners of 5 percent or more of the Partnership Units or the
QSV Properties Shares, respectively, (ii) all directors and executive
officers of the Managing General Partner, and (iii) all directors and
executive officers of the Managing General Partner as a group. The
Managing General Partner owns 50,000 Partnership Units, holds a
Partnership interest as a general partner and holds options to
purchase an additional 350,000 Partnership Units at $15.50 per unit.
The Company did receive a Schedule 13G before March 19, 1997. Unless
stated otherwise, the persons named below possess sole voting and
investment power with respect to the securities set forth opposite
their names.
<TABLE>
U.S. RESTAURANT
UNITS SHARES
--------------- ---------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------------------ ------ ------- ------ -------
<S> <C> <C> <C> <C>
Gerald H. Graham 1,400 * 0 0
Dean, Barton School of Business
100 Clinton Hall, Wichita State University
Wichita, Kansas 67260
Fred H. Margolin 23,843 (1) * 187.5 30
Darrel Rolph 38,000 (2) * 125.0 20
David Rolph 3,000 * 125.0 20
Robert J. Stetson 13,500 (3) * 187.5 30
Eugene G. Taper 1,050 * 0 0
6427 Redpine Rd.
Dallas, Texas 75248
All directors and executive officers of the ------ --- ----- ---
Managing General Partner as a group (6 persons) 80,793 * 625.0 100
</TABLE>
_____________
* Less than one percent.
(1) Does not include 4,622 Units held by Mr. Margolin's wife as
trustee for their minor children.
(2) Does not include 5,000 Units held by Mr. Rolph's wife as trustee for
their minor children. Does include 32,000 Units held by Mr. Rolph's
wife.
(3) Does not include 1,000 Units held by Mr. Stetson as trustee for
his minor child.
The address for Mr. Margolin and Stetson is 5310 Harvest Hill
Rd., Suite 270, LB 168, Dallas, Texas 75230. The address for Mr.
Darrel Rolph and David Rolph is Sasnack Management, 1877 N. Rock Rd.,
Wichita, Kansas 67206.
26
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Managing General Partner is responsible for managing the
business and affairs of the Partnership. The Partnership pays the
Managing General Partner a non-accountable annual allowance (adjusted
annually to reflect increases in the Consumer Price Index and
additions to the property portfolio), plus reimbursement of out-of-
pocket costs incurred to other parties for services rendered to the
Partnerships. The allowance for the years ended December 31, 1996,
1995, and 1994, was $1,175,000, $585,000 and $542,000, respectively.
The Partnerships' accounts payable balance includes $416,000, $187,000
and $136,000 for this allowance as of December 31, 1996, 1995, and
1994, respectively. The Managing General Partner paid no out-of-pocket
costs to other parties on behalf of the Company during 1996, 1995, and
1994.
To compensate the Managing General Partner for its efforts and
increased internal expenses with respect to additional properties, the
Partnership pays the Managing General Partner, with respect to each
additional property purchased: (i) a one-time acquisition fee equal to
one percent of the purchase price for such property and (ii) an annual
fee equal to one percent of the purchase price for such property,
adjusted for increases in the Consumer Price Index. For 1996 and
1995, the one-time acquisition fee equaled $1,043,000 and $109,000
respectively, which was capitalized, and the increase in the non-
accountable annual fee equaled $495,000 and $29,000 respectively. In
addition, if the Rate of Return (as defined) on the Partnership's
equity on all additional properties exceeds 12 percent per annum for
any fiscal year, the Managing General Partner will be paid an
additional fee equal to 25 percent of the cash flow received with
respect to such additional properties in excess of the cash flow
representing a 12 percent Rate of Return thereon. For 1996, this
additional fee equaled $93,000 and there was no fee paid in 1995 and
1994. However, to the extent such distributions are ultimately
received by the Managing General Partner in excess of those provided
by its 1.98 percent Partnership interest, they will reduce the fee
payable with respect to such excess cash flow from any additional
properties.
In 1994, the Partnerships with the consent and financial participation
of BKC, continued rent relief for three properties.
The Managing General Partner has agreed to make available to the
Partnership an unsecured, interest-free, revolving line of credit in
the principal amount of $500,000 to provide the Company with the
necessary working capital to minimize or avoid seasonal fluctuation in
the amount of quarterly cash distributions. No loans were made or were
outstanding at any time during the years ended December 31, 1996,
1995, and 1994.
A note receivable of $267,000 and $255,000 is due from Arkansas
Restaurants #10 L.P. (Arkansas) at December 31, 1996 and 1995,
respectively. The note receivable is due on September 1, 1997, and
has an interest rate of 9.0% per annum. At December 31, 1996, tenant
and other receivables from Arkansas were $63,000. In addition, during
1996 the Company paid remodel costs of $443,000 on behalf of Arkansas
for three restaurants operated by Arkansas under the Company's early-
renewal program. (See Note 8 of Notes to the Consolidated Financial
Statements) The Managing General Partner of Arkansas Restaurants #10
L.P. is owned by an officer of the Partnership's Managing General
Partner, but receives no compensation for its services.
As of December 31, 1996, notes receivable of $920,000 are due from
Southeast Fast Food Partners, L.P. (SFF). The notes receivable are
due on July 1, 1997 ($57,000) and July 1, 1999 ($863,000) and have an
27
<PAGE>
interest rate of 9.0% per annum. As of December 31, 1996, a note
receivable of $136,000 is due from the owners of SFF. This note
receivables is due on July 1, 1999 and has an interest rate of 9.0%
per annum. At December 31, 1996, tenant and other receivables from
SFF were $125,000. In addition, during 1996, the Company incurred
remodeling costs of $180,000 on behalf of SFF for restaurants operated
by SFF under the Company's early renewal program (See Note 8 of
Notes to the Consolidate Financial Statements). These remodeling
costs are included in accounts payable at December 31, 1996. The
Managing General Partner of Southeast Fast Food Partners, L.P. is
owned by an officer of the Partnership's Managing General Partner.
28
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a)(1) Financial Statements.
For a list of the consolidated financial statements of the
Registrant filed as part of this Annual Report on
Form 10-K, see page F-1, herein.
(a)(2) Financial Statement Schedules.
Schedule III Real Estate and Accumulated Depreciation will
be filed by amendment.
All other schedules have been omitted because the required
information of such other schedules is not present, is not
present in amounts sufficient to require submission of the
schedule or is included in the consolidated financial
statements.
(b) Reports on Form 8-K.
A report on Form 8-K dated December 30, 1996 was filed with
the Securities and Exchange Commission on December 30, 1996,
reporting information regarding the acquisition of 38
restaurant properties.
(c) Exhibits.
The Exhibits filed as part of this Annual Report on Form 10-K
are submitted as a separate section.
29
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: March 29, 1997 U.S. RESTAURANT PROPERTIES MASTER L.P.
By: QSV PROPERTIES, INC.,
its Managing General Partner
By: /s/ Robert J. Stetson
-----------------------------
Robert J. Stetson
President, Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Managing General Partner of the Company and in the
capacities and on the dates indicated:
Signature Title Date
/s/ Robert J. Stetson Director of QSV March 29, 1997
- ------------------------ Properties, Inc.
Robert J. Stetson
/s/ Fred H. Margolin Director of QSV March 29, 1997
- ------------------------ Properties, Inc.
Fred H. Margolin
/s/ Eugene G. Taper Director of QSV March 29, 1997
- ------------------------ Properties, Inc.
Eugene G. Taper
/s/ Gerald H. Graham Director of QSV March 29, 1997
- ------------------------ Properties, Inc.
Gerald H. Graham
/s/ Darrel Rolph Director of QSV March 29, 1997
- ------------------------- Properties, Inc.
Darrel Rolph
/s/ David Rolph Director of QSV March 29, 1997
- ------------------------ Properties, Inc.
David Rolph
30
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
WITH INDEPENDENT AUDITORS' REPORT
TABLE OF CONTENTS
Independent Auditors' Report . . . . . . . . . . . . . . . . .F-2
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . .F-3
Consolidated Statements of Income. . . . . . . . . . . . . . .F-4
Consolidated Statements of Partners' Capital . . . . . . . . .F-5
Consolidated Statements of Cash Flows. . . . . . . . . . . . .F-6
Notes to Consolidated Financial Statements . . . . . . . . . .F-8
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
U.S. Restaurant Properties Master L.P.
We have audited the accompanying consolidated balance sheets of U.S.
Restaurant Properties Master L.P. (the Partnership) as of
December 31, 1996 and 1995, and the related consolidated statements of
income, partners' capital, and cash flows for each of the three years
in the period ended December 31, 1996. These financial statements are
the responsibility of the Partnership's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the consolidated financial position of U.S.
Restaurant Properties Master L.P. as of December 31, 1996 and 1995,
and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 28, 1997
F-2
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31,
1996 1995
--------------------
ASSETS
Cash and equivalents $ 381 $ 7
Receivables, net 2,117 951
Deferred rent receivable 536 -
Purchase deposits 908 1,792
Prepaid expenses 403 315
Notes receivable 1,308 -
Notes receivable - related parties 2,738 269
Net investment in direct financing leases 17,105 19,371
Land 61,340 27,493
Buildings and leasehold improvements, net 75,339 7,900
Machinery and equipment, net 2,980 224
Intangibles, net 12,263 13,161
--------------------
$177,418 $71,483
--------------------
--------------------
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 2,642 $ 677
Deferred rent payable 55 -
Deferred gain on sale of property 590 -
Lines of credit 69,486 10,931
Capitalized lease obligations 362 563
Commitments (Notes 8 and 9)
General Partners' capital 1,163 1,241
Limited Partners' capital 103,120 58,071
-------- -------
$177,418 $71,483
--------------------
--------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER UNIT DATA)
YEAR ENDED DECEMBER 31,
1996 1995 1994
-----------------------------
GROSS RENTAL RECEIPTS (NOTE 10) $19,831 $11,647 $10,466
-----------------------------
-----------------------------
REVENUES FROM LEASED PROPERTIES
Rental income $16,346 $ 7,540 $ 6,340
Amortization of unearned income on
direct financing leases 1,978 2,240 2,453
-----------------------------
Total Revenues 18,324 9,780 8,793
EXPENSES
Rent 2,080 1,405 1,348
Depreciation and amortization 3,978 1,541 1,361
Taxes, general and administrative 2,461 1,419 1,144
Interest expense (income), net 2,364 192 (4)
Provision for write down or disposition
of properties - - 11
-----------------------------
Total Expenses 10,883 4,557 3,860
Gain on sale of equipment 32 - -
-----------------------------
Net income $ 7,473 $ 5,223 $ 4,933
-----------------------------
-----------------------------
Net income allocable to unitholders $ 7,325 $ 5,119 $ 4,834
-----------------------------
-----------------------------
Average number of outstanding units
(Primary) 6,107 4,638 4,635
-----------------------------
-----------------------------
Net income per unit $ 1.20 $ 1.10 $ 1.04
-----------------------------
-----------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(IN THOUSANDS)
<TABLE>
GENERAL LIMITED
UNITS PARTNERS PARTNERS TOTAL
-------------------------------------
<S> <C> <C> <C> <C>
Balance at January 1, 1994 4,635 $1,357 $ 62,757 $ 64,114
Net income 99 4,834 4,933
Cash distributions (148) (7,230) (7,378)
-------------------------------------
Balance at December 31, 1994 4,635 1,308 60,361 61,669
-------------------------------------
Special general partner interest transfer (13) (3) (16)
Net income 104 5,119 5,223
Purchase of partnership units (30) - (547) (547)
Units issued for property 54 - 985 985
Cash distributions (158) (7,844) (8,002)
-------------------------------------
Balance at December 31, 1995 4,659 1,241 58,071 59,312
-------------------------------------
Net income 148 7,325 7,473
Units issued for property 385 - 7,912 7,912
Proceeds from units issued in public offering 1,800 - 40,203 40,203
Proceeds from exercised unit options 50 - 775 775
Cash distributions (226) (11,166) (11,392)
-------------------------------------
Balance at December 31, 1996 6,894 $1,163 $103,120 $104,283
-------------------------------------
-------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
YEAR ENDED DECEMBER 31,
1996 1995 1994
--------- -------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 7,473 $ 5,223 $ 4,933
--------- -------- -------
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 3,978 1,541 1,361
Amortization of deferred financing costs 162 - -
Other, net (32) 854 (843)
Increase in receivables, net (1,166) (236) (301)
Increase in prepaid expenses (88) (192) (36)
Increase in deferred rent receivable (536) - -
Reduction in net investment in direct
financing leases 2,041 1,866 1,673
Increase in accounts payable 1,965 232 203
Increase in deferred rent payable 55 - -
--------- -------- -------
6,379 4,065 2,057
--------- -------- -------
Cash provided by operating activities 13,852 9,288 6,990
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 122 - -
Purchase of property (95,918) (9,746) -
Purchase of machinery and equipment (3,032) (232) -
Purchase deposits (paid) used 884 (1,792) -
Increase in notes receivable (3,034) (269) -
--------- -------- -------
Cash used in investing activities (100,978) (12,039) -
</TABLE>
continued on next page
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-6
<PAGE>
U.S. RESTAURANT PROPERTIES MASTER L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
<TABLE>
YEAR ENDED DECEMBER 31,
1996 1995 1994
--------- -------- -------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 104,805 12,453 -
Payments on line of credit (46,250) (1,522)
Cash distributions (11,392) (8,002) (7,378)
Proceeds from issuance of stock 40,978 - -
Loan origination costs and other intangibles (440) (77) -
Payments on capitalized lease obligations (201) (212) (191)
Purchase of partnership units - (547) -
Purchase of special general partner interest - (16) -
--------- -------- -------
Cash flows provided by (used in)
financing activities 87,500 2,077 (7,569)
--------- -------- -------
Increase (decrease) in cash and equivalents 374 (674) (579)
Cash and equivalents at beginning of year 7 681 1,260
--------- -------- -------
Cash and equivalents at end of year $ 381 $ 7 $ 681
--------- -------- -------
--------- -------- -------
SUPPLEMENTAL DISCLOSURE:
Interest paid during the year $ 2,431 $ 256 $ 90
--------- -------- -------
--------- -------- -------
NON-CASH INVESTING ACTIVITIES
Units issued for property $ 7,912 $ 985 $ -
--------- -------- -------
--------- -------- -------
Deferred Gain on sale of property $ 590 $ - $ -
--------- -------- -------
--------- -------- -------
Note received on sale of property $ 743 $ - $ -
--------- -------- -------
--------- -------- -------
Sale of property on direct financing lease $ 225 $ - $ -
--------- -------- -------
--------- -------- -------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-7
<PAGE>
Notes to Consolidated Financial Statements
1. ORGANIZATION
U.S. Restaurant Properties Master L.P. (Partnership), formerly Burger King
Investors Master L.P., a Delaware limited partnership, was formed on
December 10, 1985. The Partnership, through its 99.01% limited partnership
interest in U.S. Restaurant Properties Operating Limited Partnership (Operating
Partnership), also a Delaware Limited Partnership, acquired from Burger King
Corporation (BKC) for $94,592,000 in February 1986 an interest in 128 restaurant
properties owned or leased by BKC and leased or subleased on a net lease basis
to BKC franchisees. The Partnership is the sole limited partner of the
Operating Partnership, and they are referred to collectively as the
"Partnerships" or the "Partnership." QSV Properties, Inc., (QSV), formerly U.S.
Restaurant Properties, Inc., the Managing General Partner and BKC, the special
general partner, were both indirect wholly-owned subsidiaries of Grand
Metropolitan PLC prior to May 17, 1994, at which time QSV was sold to the
current owners. On January 20, 1995, the Partnership paid Burger King
Corporation $16,000 for its 0.02% interest in the Operating and Master Limited
Partnership.
In 1996, the Partnership established certain other wholly owned operating
entities consisting of U.S. Restaurant Properties Business Trust I, U.S.
Restaurant Properties Business Trust II, Restaurant Acquisition Corporation,
Restaurant Renovation Partners L.P., U.S. Restaurant Properties West Virginia
Partners L.P., U.S. Restaurant Properties Carolina LTD., U.S. Restaurant
Properties Lincoln LTD., and U.S. Restaurant Properties Norman LTD.
Collectively, these entities in addition to the Partnerships are referred to as
the "Company." All of these entities are included in the consolidated financial
statements.
The Partnership may issue an unlimited number of units. The units outstanding
as of December 31, 1996 and 1995 totaled 6,894,003 and 4,659,167, respectively.
QSV Properties, Inc. (formerly named U.S. Restaurant Properties, Inc.), is the
Managing General Partner of the Partnership.
2. ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles; however, this will not be the basis
for reporting taxable income to unitholders (see Note 10 for a reconciliation of
financial reporting income to taxable income). The consolidated financial
statements reflect the accounts of the Company after elimination of significant
inter-entity transactions.
Cash and cash equivalents include short-term, highly liquid investments with
maturities at the date of purchase of three months or less.
An intangible asset was recorded for the excess of cost over the net investment
in direct financing leases in 1986. This intangible asset represents the
acquired value of future contingent rent
F-8
<PAGE>
Notes to Consolidated Financial Statements (continued)
2. ACCOUNTING POLICIES (CONTINUED)
receipts (based on a percentage of each restaurant's sales) and is being
amortized on a straight-line basis over 40 years. The Company's
management routinely reviews the carrying amount of intangibles based
on projected cash flows. Based on the Company's policy for evaluating
impairment of intangibles, no valuation allowance was recorded as of
December 31, 1996 and 1995.
Rent revenues and expenses under operating leases are recognized on a
straight-line basis.
DEPRECIATION
Depreciation is computed using the straight-line method over estimated useful
lives of 6 to 20 years for financial reporting purposes. Accelerated and
straight-line methods are used for tax purposes.
USE OF ESTIMATES
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect reported amounts of certain assets, liabilities, revenues and
expenses as of and for the reporting periods. Actual results may differ from
such estimates.
LONG-LIVED ASSETS
Long-lived assets include real estate, direct financing leases, and
intangibles which are evaluated on an individual property basis. The
Partnership's management routinely reviews its investments for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Based on the
Company's policy for reviewing impairment of long-lived assets, no
valuation allowance was recorded as of December 31, 1996 and 1995.
INCOME TAXES
No federal or, in most cases, state income taxes are reflected in the
consolidated financial statements because the Partnerships are not taxable
entities. The partners must report their allocable shares of taxable income or
loss in their individual income tax returns.
EQUITY-BASED COMPENSATION
In 1995, Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," ("SFAS 123") was issued, effective for fiscal years
beginning after December 15, 1995. This Statement requires companies to use
recognized option pricing models to estimate the fair value of equity based
compensation, including options. This Statement also applies to transactions in
which an entity issues its equity instruments to acquire goods or services from
non-employees. Those transactions must be accounted for based on the fair value
of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.
F-9
<PAGE>
Notes to Consolidated Financial Statements (continued)
EQUITY-BASED COMPENSATION (CONTINUED)
The Company has elected not to recognize compensation expense for employee
equity based compensation as calculated under SFAS 123, but will recognize any
related expense in accordance with the provisions of APB Opinion No. 25.
Disclosure of amounts required by SFAS 123 are included in Note 6.
ENVIRONMENTAL REMEDIATION COSTS
The Company accrues for losses associated with environmental remediation
obligations when such losses are probable and reasonably estimable. Accruals
for estimated losses from environmental remediation obligations generally are
recognized no later than completion of the remediation feasibility study. Such
accruals are adjusted as further information develops or circumstances change.
Recoveries of environmental remediation costs from other parties are recorded as
assets when their receipt is deemed probable. Company management is not aware
of any environmental remediation obligations which would materially affect the
operations, financial position or cash flows of the Company.
In 1996 the American Institute of Certified Public Accountants issued Statement
of Position 96-1, "Environmental Remediation Liabilities", ("SOP 96-1"), which
provides guidance for the recognition, measurement, display and disclosure of
environmental remediation liabilities. The Company will adopt the provisions of
SOP 96-1 in 1997, as required, and does not expect such adoption to have a
material impact on its results of operations, financial position, or cash flows.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current year
presentation.
3. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
The following disclosure of estimated fair value was determined by the Company
using available market information and appropriate valuation methodologies.
However, considerable judgment is necessary to interpret market data and develop
the related estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that could be realized upon
disposition of the financial instruments. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.
Cash and cash equivalents, receivables (including deferred rent receivable),
accounts payable (including deferred rent payable), and the line of credit are
carried at amounts that approximate their fair value.
The fair value of notes receivable totaling $4,046,000 and $269,000 as of
December 31, 1996 and 1995, respectively, have a fair value of $3,672,000 and
$269,000, respectively, as based upon interest rates for notes with similar
terms and remaining maturities.
F-10
<PAGE>
Notes to Consolidated Financial Statements (continued)
The fair value estimates presented herein are based on information available to
management as of December 31, 1996 and 1995. Although management is not aware
of any factors that would significantly affect the estimated fair value amounts,
such amounts have not been comprehensively revalued for purposes of these
financial statements since that date, and current estimates of fair value may
differ significantly from the amounts presented herein.
F-11
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. OTHER BALANCE SHEET INFORMATION
DECEMBER 31,
---------------------
1996 1995
($000'S) ($000'S)
---------------------
RECEIVABLES, NET
Receivables $ 2,234 $ 1,068
Less allowance for doubtful accounts (117) (117)
---------------------
$ 2,117 $ 951
---------------------
---------------------
BUILDINGS AND LEASEHOLD IMPROVEMENTS, NET
Buildings and leasehold improvements $ 80,528 $ 10,545
Less accumulated depreciation (5,189) (2,645)
---------------------
$ 75,339 $ 7,900
---------------------
---------------------
MACHINERY AND EQUIPMENT, NET
Machinery and equipment $ 3,244 $ 232
Less accumulated depreciation (264) (8)
---------------------
$ 2,980 $ 224
---------------------
---------------------
INTANGIBLES, NET
Intangibles $ 27,003 $ 26,515
Less accumulated amortization (14,740) (13,354)
---------------------
$ 12,263 $ 13,161
---------------------
---------------------
Total purchase deposits of $908,000 and $1,792,000 at December 31, 1996 and
1995, respectively, included $167,000 and $1,075,000 of non-refundable deposits,
respectively.
5. PROPERTY ACQUISITIONS AND DISPOSITIONS
In March, 1995, the Partnership agreement was amended to expand the purpose of
the Partnership and allow for the diversification of the Partnership's
restaurant property portfolio through the acquisition of additional fast-food
and casual dining restaurant properties. Since the amendment in March, 1995,
the Partnership has acquired 200 restaurant properties.
During 1996, the Company completed the purchase of 184 restaurant properties for
an aggregate purchase price of $105,336,000 including the value of 384,836
Partnership Units issued as part of the aggregate purchase price. Three
restaurant properties were purchased with only Partnership Units; 15 restaurant
properties were purchased with a combination of cash and Partnership Units; and
166 restaurant properties were purchased with only cash. The 184 restaurant
properties include 45 Burger King restaurants, 40 Dairy Queen restaurants, 30
Grandy's restaurants, 25 Hardee's restaurants, 12 Pizza Hut restaurants, two KFC
restaurants, six Schlotzsky's restaurants,
F-12
<PAGE>
Notes to Consolidated Financial Statements (continued)
5. PROPERTY ACQUISITIONS AND DISPOSITIONS (CONTINUED)
six Chili's restaurants and 18 regional brand restaurants. The 384,836
Partnership Units issued in four of these transactions have guaranteed
Partnership Unit values (See Note 6).
During 1995, the Partnership completed the purchase of 16 restaurant
properties for an aggregate purchase price of $10,731,000, including the
value of 54,167 Partnership Units issued. The 16 restaurant properties
include 9 Burger King restaurant properties, 2 Chili's restaurant properties
and 5 regional brand restaurant properties. The 54,167 Partnership Units
issued include provisions for guaranteed Partnership Unit values in the
future (See Note 6).
During 1996, the Company sold one restaurant property for $815,000. The
Company received cash of $72,000 and a note from the buyer of $743,000. In
accordance with Statement of Financial Accounting Standards No. 66,
"Accounting for Real Estate Sales", the Company recorded a deferred gain on
the sale of $590,000.
On December 31, 1996 the Company owned land at 243 restaurant properties and
leased the land at 79 restaurant properties from third party lessors under
operating leases. The Company in turn leased or subleased the land primarily
to fast food and casual dining restaurant operators under operating leases.
On December 31, 1996, the Company owned the buildings on 277 restaurant
properties and leased the buildings on 14 restaurant properties from third
party lessors under leases accounted for as capital leases. The Company owns
31 restaurant properties in which only the land is owned and leased. The
Company leased 183 buildings to franchisees under operating leases. These
183 buildings are stated at cost, net of accumulated depreciation, on the
balance sheet. A total of 108 buildings are leased primarily to franchisees
under direct financing leases. The net investment in the direct financing
leases represents the present value of the future minimum lease receipts for
these 108 buildings. One restaurant property was sold during 1996.
On December 31, 1996 and 1995, there were 321 and 138 Company restaurant
sites respectively, in operation, and there was one closed site. The Company
continues to seek a suitable tenant for the remaining site. The write-down of
the closed site was $11,000 in 1994. No write-downs were recorded in 1996 or
1995.
In the normal course of business, the Company may sign purchase agreements to
acquire restaurant properties. Such agreements become binding obligations
upon the completion of a due diligence period ranging usually from 15 - 30
days.
On December 31, 1996, earnest money purchase deposits amounting to $908,000
were on deposit for the purchase of six Pizza Hut restaurants, four
Schlotzsky's restaurants, three Wendy's restaurants, two Arby's restaurants,
two Hardee's restaurants, one Taco Bell restaurant, one Kentucky Fried
Chicken restaurant, and 19 other regional chain restaurants.
F-13
<PAGE>
Notes to Consolidated Financial Statements (continued)
6. PARTNERSHIP UNIT OPTIONS AND GUARANTEED STOCK PRICE
Three restaurant properties were acquired on October 10, 1995, with a
combination of cash and 54,167 Partnership Units. The Partnership Units are
guaranteed to have a value of $24 per unit three years from the transaction
date. The unit price on the date issued was $18 3/8. Any difference between
the guaranteed value and the actual value of the units at the end of the
three year period is to be paid in cash. These properties were recorded at
the guaranteed value of the Partnership Units discounted to reflect the
present value on the date the Partnership Units were issued.
During 1996, 384,836 Partnership Units were used to purchase 18 of the 184
properties in four separate transactions. Of the 384,836 Partnership Units
issued, 324,575 Partnership Units are guaranteed to have a market value of
$24 per unit two years from the transaction date, 28,261 Partnership Units
are guaranteed to have a market value of $23 per unit three years from the
transaction date and 32,000 Partnership Units are guaranteed to have a value
of $25 per unit two years from the transaction date. The accounting
described in the paragraph above was used to record these transactions.
The Partnership has one fixed option plan. Under this plan the Limited
Partners on March 17, 1995 granted the Managing General Partner options to
acquire up to 400,000 Partnership Units, subject to certain adjustments under
anti-dilution provisions. The exercise price of each option is $15.50 which
is the average closing price of the depository receipts for the Partnership
Units on the New York Stock Exchange for the five trading days immediately
after the date of grant. The options are non-transferable except by
operation of law and vest and became exercisable in March 1996. The term of
the options expires in March 2005. As of December 31, 1996, the Managing
General Partner had exercised 50,000 Partnership Units at the option price of
$15.50 for a total purchase price of $775,000.
In accordance with SFAS 123, the fair value of each option is estimated on
the date of the grant using the binomial option-pricing model with the
following weighted-average assumptions: dividend yield of 7.3 percent for all
years; expected volatility of 17.8 percent, risk free interest rate of 5.7
percent for the options; and expected lives of 4 years for the plan options.
As of March 17, 1995, the 400,000 options which are described above had a
fair value as of the grant date of $724,000 representing a value per option
of $1.81.
Under the fixed option plan, if these options were considered as
compensation, net income would have been $7,292,000 and $4,680,000 as of
December 31, 1996 and 1995, respectively. Net income per unit would have
been $1.17 and $0.99 as of December 31, 1996 and 1995, respectively.
F-14
<PAGE>
Notes to Consolidated Financial Statements (continued)
7. LINES OF CREDIT
On December 31, 1996 and 1995, $65,396,000 and $10,931,000, respectively, had
been drawn on the Company's primary line of credit. The Company's line of
credit was increased to $95 million in December 1996 and matures on December
23, 1998. Substantially all properties are included as collateral on this
line of credit. The interest rate on this debt floats at 180 basis percentage
points above LIBOR. The effective interest rate at December 31, 1996, was
7.3625%. There is an unused line of credit fee of .25% per annum on the
average daily excess of the commitment amount over the aggregate unpaid
balance of the revolving loan which is charged and is payable on a quarterly
basis. The line of credit requires the Company to maintain a combined
tangible net worth, as defined in the loan document, in excess of
$85,000,000; maintain a combined GAAP Partners' Capital, as defined in the
loan document, of not less than $100,000,000; maintain a cash flow coverage
ratio of not less than .95 to 1 based upon a proforma five year bank debt
amortization; and maintain certain other financial covenants as defined in
the loan agreement. The Company's management believes it is in compliance
with all loan provision requirements as of December 31, 1996. On December
31, 1996, the balance available on the line of credit equaled $29,600,000
(considers $.4 million subject to outstanding letter of credit).
A revolving credit facility of $20,000,000 was established with a national
mortgage company on April 29, 1996. The interest rate on this credit
facility was LIBOR plus 300 basis points which resulted in an interest rate
of 8.5625% at December 31, 1996. This revolving credit facility is secured
by approximately 63 properties. On December 31, 1996, the total amount due
equaled $4,090,000. This revolving credit facility was paid in full in
January 1997 and no additional draws are available.
8. INVESTMENTS AND COMMITMENTS AS LESSOR
The Company leases land and buildings to a variety of national and regional
fast food chain and casual dining restaurants. The building portions on 108
of these properties, which are leased by BKC franchisees, are accounted for
as direct financing leases while the land portions are operating leases.
These leases generally provide for a term of 20 years from the opening of the
related restaurant, and do not contain renewal options. The Partnerships,
however, have agreed to renew a franchise lease if BKC or any of the other
franchise chains renews or extends the lessee's franchise agreement.
As of December 31, 1996, the remaining lease terms of all leases described in
the above paragraph and Note 5 ranged from 1 to 28 years and include various
renewal options. The leases provide for minimum rents and contingent rents
based on a percentage of each restaurant's sales, and require the franchisee
to pay executory costs.
F-15
<PAGE>
Notes to Consolidated Financial Statements (continued)
8. INVESTMENTS AND COMMITMENTS AS LESSOR (CONTINUED)
<TABLE>
DIRECT OPERATING
FINANCING LEASES LEASES
($000's) ($000's)
-----------------------------
<S> <C> <C>
MINIMUM FUTURE LEASE RECEIPTS FOR YEARS ENDING DECEMBER 31:
1997 $ 4,071 $ 17,060
1998 3,759 17,209
1999 2,978 16,944
2000 2,036 16,203
2001 1,331 15,216
Later 1,274 165,798
-----------------------------
$15,449 $248,430
-----------------------------
-----------------------------
</TABLE>
<TABLE>
1996 1995
($000's) ($000's)
-----------------------------
<S> <C> <C>
NET INVESTMENT IN DIRECT FINANCING LEASES AT DECEMBER 31:
Minimum future lease receipts $15,449 $ 19,778
Estimated unguaranteed residual values 7,437 7,562
Unearned amount representing interest (5,781) (7,969)
-----------------------------
$17,105 $ 19,371
-----------------------------
-----------------------------
</TABLE>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
($000's) ($000's) ($000's)
-------------------------------
RENTAL INCOME:
Minimum rental income $11,022 $3,584 $3,062
Contingent rental income 5,324 3,956 3,278
-------------------------------
$16,346 $7,540 $6,340
-------------------------------
-------------------------------
If Burger King properties are not adequately maintained during the term of
the tenant leases of which there are 173, such properties may have to be
rebuilt before the leases can be renewed, either by the Company as it
considers necessary or pursuant to Burger King's successor policy. The
successor policy, which is subject to change from time to time in Burger
King's discretion, is intended to encourage the reconstruction, expansion, or
other improvement of older Burger King restaurants and generally affects
properties that are more than ten years old or are the subject of a franchise
agreement that will expire within five years.
F-16
<PAGE>
Notes to Consolidated Financial Statements (continued)
8. INVESTMENTS AND COMMITMENTS AS LESSOR (CONTINUED)
Under the current operating partnership agreement, Burger King can require
that a restaurant property be rebuilt. If the tenant does not elect to
undertake the rebuilding, the Partnership would be required to make the
required improvement itself. However, as a condition to requiring the
Partnership to rebuild, Burger King would be required to pay the Partnership
its percentage share ("Burger King's Percentage Share") of the rebuilding
costs. Such percentage share would be equal to (i) the average franchise
royalty fee percentage rate payable to Burger King with respect to such
restaurant, divided by (ii) the aggregate of such average franchise royalty
fee percentage rate and the average percentage rate payable to the
Partnership with respect to such restaurant property. The Managing General
Partner believes that Burger King's Percentage Share would typically be 29%
for a restaurant property.
The Managing General Partner believes it is unlikely that any material amount
of rebuilding of Burger King restaurant properties will be required in the
next several years, if ever.
The Company believes that improving, expanding, rebuilding or replacing its
restaurant properties from time to time is important. In addition to normal
maintenance and repair requirements, each franchisee is required under BKC's
franchise agreement and lease/sublease, at its own cost and expense, to make
such alterations to a Burger King restaurant as may be reasonably required by
BKC from time to time to modify the appearance of the restaurant to reflect
the then current image requirements for Burger King restaurants. Most of the
properties that are operating as Burger King restaurants are 15 to 20 years
old. The Company believes that many of these properties require substantial
improvements to maximize sales and that their condition is below BKC's
current image requirements.
To encourage the early renewal of existing leases/subleases, the Company
recently established an "early renewal program" whereby the Company has
offered to certain tenants the right to renew existing leases/subleases for
up to an additional 20 years in consideration for remodeling financing. The
purpose of this program is to extend the term of existing leases/subleases
prior to the end of the lease term and enhance the value of the underlying
property to the Company. As a result of this program, the Company has
extended the lease term for 31 leases/subleases as a result of remodel grants
and lease riders. Two leases were renewed with loans. During 1996, the
Company paid remodeling costs of $1,118,000 in conjunction with this Program.
9. COMMITMENTS
The land at 79 restaurant properties and the land and buildings at 14
restaurant properties are leased by the Company from third party lessors. The
building portions of the leases are generally capital leases while the land
portions are operating leases. These leases provide for an original term of
20 years and most are renewable at the Company's option. As of December 31,
1996, the remaining lease terms (excluding renewal option terms) ranged from
1 to 15 years. If all renewal options are taken into account, the terms
ranged from 5 to 35 years. Rents payable may escalate during the original
lease and renewal terms. For nine properties, the leases provide for
contingent rent based on each restaurant's sales.
F-17
<PAGE>
Notes to Consolidated Financial Statements (continued)
9. COMMITMENTS (CONTINUED)
CAPITAL OPERATING
LEASES LEASES
($000'S) ($000'S)
-------------------
MINIMUM FUTURE LEASE OBLIGATIONS FOR YEARS
ENDING DECEMBER 31:
1997 $199 $ 2,103
1998 140 2,145
1999 60 1,930
2000 4 1,675
2001 1 1,248
Later - 3,530
------------------
Total minimum obligations (a) 404 $12,631
-------
-------
Amount representing interest (42)
----
Present value of minimum obligations $362
----
----
(A) MINIMUM LEASE OBLIGATIONS HAVE NOT BEEN REDUCED BY MINIMUM SUBLEASE RENTALS.
YEARS ENDED DECEMBER 31,
1996 1995 1994
($000's) ($000's) ($000's)
------------------------------
RENTAL EXPENSE
Minimum rental expense $1,992 $1,304 $1,246
Contingent rental expense 88 101 102
------------------------------
$2,080 $1,405 $1,348
------------------------------
------------------------------
On July 21, 1995, the Managing General Partner authorized the Partnership to
repurchase up to 300,000 of its Units in the open market. Through December 31,
1996, the Partnership repurchased 30,000 Units for $547,000. No further
repurchases have been made or are contemplated.
During 1996, the Company agreed to make available to USRP Development Company a
revolving line of credit in the principal amount of $5,000,000, to be used
solely for paying for the acquisition and development of restaurant properties
which will be purchased by the Company upon completion of the development. The
line of credit is secured by certain development properties and bears interest
at an annual rate of 9%. The line of credit is payable in monthly installments
beginning July 1997 and matures in October 2001. At December 31, 1996, the
outstanding balance was $1,414,000 and is included in Notes Receivable - related
parties.
F-18
<PAGE>
Notes to Consolidated Financial Statements (continued)
10. RECONCILIATION OF FINANCIAL REPORTING INCOME TO TAXABLE INCOME
Financial reporting income differs from taxable income primarily because
generally accepted accounting principles reflect the building portion of leases
from the Company to franchisees as a net investment in direct financing leases.
For tax purposes, these leases are treated as operating leases. In addition,
differences exist in depreciation methods and asset lives, and in the accounting
for escalating rents.
FINANCIAL
REPORTING RECONCILING TAXABLE
INCOME DIFFERENCES INCOME
($000'S) ($000'S) ($000'S)
-----------------------------
REVENUES FROM LEASED PROPERTIES:
Rental income $16,346 $ 3,485 $19,831
Amortization of unearned income on direct
financing leases 1,978 (1,978) -
-----------------------------
18,324 1,507 19,831
-----------------------------
EXPENSES:
Rent 2,080 192 2,272
Depreciation and amortization 3,978 1,242 5,220
General and administrative 2,461 - 2,461
Interest expense (income), net 2,364 (47) 2,317
-----------------------------
10,883 1,387 12,270
Gain on sale of properties and equipment 32 28 60
-----------------------------
Net income $ 7,473 $ 148 $ 7,621
-----------------------------
-----------------------------
11. RELATED PARTY TRANSACTIONS
The Managing General Partner is responsible for managing the business and
affairs of the Company. The Company pays the Managing General Partner a non-
accountable annual allowance (adjusted annually to reflect increases in the
Consumer Price Index and additions to the property portfolio), plus
reimbursement of out-of-pocket costs incurred to other parties for services
rendered to the Partnerships. The allowance for the years ended December 31,
1996, 1995, and 1994, was $1,175,000, $585,000 and $542,000, respectively. The
Partnerships' accounts payable balance includes $416,000, $187,000 and $136,000
for this allowance as of December 31, 1996, 1995, and 1994, respectively. The
Managing General Partner paid no out-of-pocket costs to other parties on behalf
of the Partnerships during 1996, 1995, and 1994.
F-19
<PAGE>
Notes to Consolidated Financial Statements (continued)
11. RELATED PARTY TRANSACTIONS (CONTINUED)
To compensate the Managing General Partner for its efforts and increased
internal expenses with respect to additional properties, the Partnership pays
the Managing General Partner, with respect to each additional property
purchased: (i) a one-time acquisition fee equal to one percent of the purchase
price for such property and (ii) an annual fee equal to one percent of the
purchase price for such property, adjusted for increases in the Consumer Price
Index. For 1996 and 1995, the one-time acquisition fee equaled $1,043,000 and
$109,000 respectively, which was capitalized, and the increase in the non-
accountable annual fee equaled $495,000 and $29,000 respectively. In addition,
if the Rate of Return (as defined) on the Partnership's equity on all additional
properties exceeds 12 percent per annum for any fiscal year, the Managing
General Partner will be paid an additional fee equal to 25 percent of the cash
flow received with respect to such additional properties in excess of the cash
flow representing a 12 percent Rate of Return thereon. For 1996, this
additional fee equaled $93,000 and there was no fee paid in 1995 and 1994.
However, to the extent such distributions are ultimately received by the
Managing General Partner in excess of those provided by its 1.98 percent
Partnership interest, they will reduce the fee payable with respect to such
excess cash flow from any additional properties.
In 1994, the Partnerships with the consent and financial participation of BKC,
continued rent relief for three properties.
The Managing General Partner has agreed to make available to the Partnership an
unsecured, interest-free, revolving line of credit in the principal amount of
$500,000 to provide the Company with the necessary working capital to minimize
or avoid seasonal fluctuation in the amount of quarterly cash distributions. No
loans were made or were outstanding at any time during the years ended
December 31, 1996, 1995, and 1994.
A note receivable of $267,000 and $255,000 is due from Arkansas Restaurants #10
L.P. (Arkansas) at December 31, 1996 and 1995, respectively. The note
receivable is due on September 1, 1997, and has an interest rate of 9.0% per
annum. At December 31, 1996, tenant and other receivables from Arkansas were
$63,000. In addition, during 1996 the Company paid remodel costs of $443,000 on
behalf of Arkansas for three restaurants operated by Arkansas under the
Company's early-renewal program. (See Note 8) The Managing General Partner of
Arkansas Restaurants #10 L.P. is owned by an officer of the Partnership's
Managing General Partner, but receives no compensation for its services.
As of December 31, 1996, notes receivable of $920,000 are due from Southeast
Fast Food Partners, L.P. (SFF). The notes receivable are due on July 1, 1997
($57,000) and July 1, 1999 ($863,000) and have an interest rate of 9.0% per
annum. As of December 31, 1996, a note receivable of $136,000 is due from the
owners of SFF. This note receivables is due on July 1, 1999 and has an interest
rate of 9.0% per annum. At December 31, 1996, tenant and other receivables from
SFF were $125,000. In addition, during 1996, the Company incurred remodeling
costs of $180,000 on behalf of SFF for restaurants operated by SFF under the
F-20
<PAGE>
Notes to Consolidated Financial Statements (continued)
11. RELATED PARTY TRANSACTIONS (CONTINUED)
Company's early -- renewal program (See Note 8). These remodeling costs are
included in accounts payable at December 31, 1996. The Managing General Partner
of Southeast Fast Food Partners, L.P. is owned by an officer of the
Partnership's Managing General Partner.
On July 30, 1996, the Company completed a sale/leaseback transaction with Carlos
O'Kelly's, Inc. Carlos O'Kelly's, Inc. is owned by a director of the Managing
General Partner.
12. DISTRIBUTIONS AND ALLOCATIONS
Under the amended partnership agreement, cash flow from operations of the
Partnerships each year will be distributed 98.02% to the unitholders and 1.98%
to the general partners until the unitholders have received a 12% simple
(noncumulative) annual return for such year on the unrecovered capital per unit
($20.00, reduced by any prior distributions of net proceeds of capital
transactions); then any cash flow for such year will be distributed 75.25% to
the unitholders and 24.75% to the general partners until the unitholders have
received a total simple (noncumulative) annual return for such year of 17.5% on
the unrecovered capital per unit; and then any excess cash flow for such year
will be distributed 60.40% to the unitholders and 39.60% to the general
partners. The unitholders received 98.02% of all cash flow distributions for
1996 and 1995 and 98% for 1994.
Under the amended partnership agreement, net proceeds from capital transactions
(for example, disposition of the Properties) will be distributed 98.02% to the
unitholders and 1.98% to the general partners until the unitholders have
received an amount equal to the unrecovered capital per unit plus 12.0%
cumulative, simple return on the unrecovered capital per unit outstanding from
time to time (to the extent not previously received from the distribution of
cash flow or proceeds of prior capital transactions); then such proceeds will be
distributed 75.25% to the unitholders and 24.75% to the general partners until
the unitholders have received the total cumulative, simple return of 17.5% on
the unrecovered capital per unit; and then such proceeds will be distributed
60.40% to the unitholders and 39.60% to the general partners. There were no
capital transactions in 1996 or 1995. The deferred gain on disposition of
property recorded in 1996 will be distributed upon the recognition of the gain
by the Company.
All operating income and loss of the Partnership for each year generally will be
allocated among the partners in the same aggregate ratio as cash flow is
distributed for that year. Gain and loss from a capital transaction generally
will be allocated among the partners in the same aggregate ratio as proceeds of
the capital transactions are distributed except to the extent necessary to
reflect capital account adjustments.
F-21
<PAGE>
Notes to Consolidated Financial Statements (continued)
13. SUMMARY BY QUARTER (UNAUDITED)
<TABLE>
PER UNIT
-------------------------
ALLOCABLE CASH RELATED*
REVENUES NET INCOME NET INCOME DISTRIBUTIONS
--------------------------------------------------
<S> <C> <C> <C> <C>
1996
First quarter $ 2,955 $1,323 $0.26 $0.47
Second quarter 4,309 1,862 0.33 0.48
Third quarter 5,748 2,590 0.36 0.485
Fourth quarter 5,312 1,698 0.25 0.50
----------------------------------------------
Annual $18,324 $7,473 $1.20 $1.94
----------------------------------------------
----------------------------------------------
1995
First quarter $ 2,123 $1,090 $0.23 $0.42
Second quarter 2,495 1,407 0.30 0.42
Third quarter 2,592 1,496 0.32 0.43
Fourth quarter 2,570 1,230 0.25 0.44
----------------------------------------------
Annual $ 9,780 $5,223 $1.10 $1.71
----------------------------------------------
----------------------------------------------
1994
First quarter $ 1,984 $1,100 $0.23 $0.39
Second quarter 2,297 1,341 0.28 0.39
Third quarter 2,330 1,392 0.29 0.41
Fourth quarter 2,182 1,100 0.24 0.42
----------------------------------------------
Annual $ 8,793 $4,933 $1.04 $1.61
----------------------------------------------
----------------------------------------------
</TABLE>
* Represents amounts declared and paid in the following quarter.
F-22
<PAGE>
Notes to Consolidated Financial Statements (continued)
14. PROFORMA (UNAUDITED)
The following proforma information was prepared by adjusting the actual
consolidated results of the Company for the years ended December 31, 1996 and
1995 for the effects of:
a. the purchase of 184 restaurant properties on various dates during
1996 for an aggregate purchase price of $105,336,000 including the
value of 384,836 Partnership Units issued to sellers and other
related financing transactions including the sale of 1,800,000
Partnership Units in June 1996; and
b. the purchase of 16 restaurant properties on various dates from March
1995 through December 1995 for an aggregate purchase price of
$10,963,000 including the value of 54,167 Partnership Units issued
to sellers and other related financing transactions as if all such
transactions had occurred as of January 1, 1995. Interest expense
for proforma purposes was calculated assuming interest rates of 7.2%
and 7.5% per annum for 1996 and 1995, respectively, which
approximates the rates the Company paid during such periods.
These proforma operating results are not necessarily indicative of what the
actual results of operations of the Company would have been assuming all of the
restaurant properties were acquired as of January 1, 1995 and they do not
purport to represent the results of operations for future periods.
YEARS ENDED DECEMBER 31,
1996 1995
($000'S) ($000'S)
--------------------
REVENUES FROM LEASED PROPERTIES:
Rental income $23,711 $23,198
Amortization of unearned income on direct financing
leases 1,978 2,241
--------------------
Total revenues 25,689 25,439
EXPENSES
Rent 2,312 2,213
Depreciation and amortization 5,834 5,822
Taxes, general and administrative 2,949 2,689
Interest expense (income), net 4,984 5,182
--------------------
Total expenses $16,079 $15,906
--------------------
--------------------
Net income $ 9,610 $ 9,533
--------------------
--------------------
Net income allocable to unitholders $ 9,419 $ 9,344
--------------------
--------------------
Average number of outstanding units 6,898 6,973
--------------------
--------------------
Net income per unit $ 1.37 $ 1.34
--------------------
--------------------
F-23
<PAGE>
Notes to Consolidated Financial Statements (continued)
15. SUBSEQUENT EVENTS (UNAUDITED)
In January and February of 1997 the Company acquired six properties in 4
separate transactions. The total purchase price approximated $2,556,000 in
cash. Among the restaurant properties acquired were two Arby's, two Pizza Huts
and two Schlotzky's.
On January 29, 1997, a distribution of $0.50 per Partnership Unit was declared.
The date of record was March 6, 1997, and the distribution date was March 13,
1997.
On February 7, 1997, a proxy statement for an exchange offer and registration
statement was filed with the Securities and Exchange Commission. This filing
pertains to an exchange of restaurant properties for Partnership Units. This
exchange is currently valued at $7,850,000.
On February 7, 1997, a proxy and registration statement, Form S-4, was filed
with the Securities and Exchange Commission regarding the conversion of U.S.
Restaurant Properties Master L.P. to a real estate investment trust (REIT)
entity.
On February 26, 1997, the Company issued $40,000,000 in debt which consist of
$12,500,000 Series A Senior Secured Guaranteed Notes with a 8.06% interest rate
and due date of January 31, 2000; and $27,500,000 Series B Senior Secured
Guaranteed Notes with a 8.30% interest rate and due date of January 31, 2002.
The proceeds were primarily utilized to reduce the amount outstanding under the
line of credit and to improve the Company's cash position. The debt is
collateralized by substantially all the assets of the Company.
From March 1, 1997 through March 19, 1997, the Company has acquired 18
properties. The total purchase price approximated $12,800,000 which included
118,579 Partnership Units. The 18 properties included 16 Bruegger's Bagels
restaurant properties and two regional named restaurant properties.
On March 19, 1997, the Company had 130 restaurant properties under contract for
acquisition. Such properties represent 19 separate transactions in various
stages of negotiation and due diligence. These acquisitions represent an
aggregate consideration of approximately $72,000,000. These properties include
76 Arby's restaurant properties, six Pizza Hut restaurant properties, four
Hardee's restaurant properties, two Schlotzsky's restaurant properties, two
Wendy's restaurant properties, one Bruegger's Bagels restaurant property, and 39
other restaurant properties operated under other trade names.
F-24
<PAGE>
EXHIBIT INDEX
2.1 Amended and Restated Purchase and Sale Agreement, dated as of
February 3, 1986, between Burger King Operating Limited Partnership
and Burger King Corporation (incorporated by reference to Exhibit
10(a) of U.S. Restaurant Properties Master L.P.'s (USRP) Registration
Statement No. 33-2382 on Form S-11).
2.2 Purchase and Sale Agreement, dated as of September 16, 1996, between
the QSR Income Properties, Ltd. and U.S. Restaurant Properties
Operating L.P.
2.3 Purchase and Sale Agreement dated as of November 27, 1995, between
Selected Properties and U.S. Restaurant Properties Operating L.P. and
a schedule of substantially identical documents.
2.4 Purchase and Sale Agreement, dated as of November 25, 1996, between
Grandy's Inc. and U.S. Resturant Properties Operating L.P.
2.5 Agreement Regarding Partial Assignment and Assumption of Rights and
Obligations Under Real Estate Purchase Agreement, dated as of
December 10, 1996, between Sydran Development Corporations and U.S.
Restaurant Properties Operating L.P.
2.6 Purchase and Sale Agreement, date as of March 20, 1996, between Bar S
Restaurants, Inc. and U.S. Restaurants Properties Operating L.P.
2.7 Asset Purchase Agreement, dated as of March 1996, between Wiggins
Enterprises, Inc. and U.S. Restaurant Properties Operating L.P.
2.8 Purchase and Sale Agreement, dated as of October 1995, between Burger
King Limited Partnership II and U.S. Restaurant Properties Operating
L.P.
2.9 Asset Purchase Agreement, dated as of December 23, 1996, among Sybra,
Inc., Valcor, Inc., and U.S. Restaurant Properties Operating L.P.
4.1 Second Amended and Restated Partnership Agreement of USRP
(incorporated by reference to Exhibit 4.1 of USRP's Registration
Statement No. 333-02675 on Form S-3).
4.2 Certificate of Limited Partnership of USRP (incorporated by reference
to Exhibit 4.2 of USRP's Registration Statement No. 333-02675 on
Form S-3).
4.3 Deposit Agreement, dated as of February 3, 1986, between Morgan
Guaranty Trust Company of New York and USRP (including the form of
the Depositary Receipt and the transfer application) (incorporated by
reference to Exhibit 4.5 of USRP's Registration Statement No. 33-2382
on Form S-11).
4.4 First Amendment to the Deposit Agreement dated as of May 5, 1987,
between Morgan Guarantee Trust Company of New York and USRP
(incorporated by reference to Exhibit 4(A) of USRP's Current Report
on Form 8-K, dated as of September 30, 1987).
4.5 Second Amended and Restated Partnership Agreement of U.S. Restaurant
Properties Operating L.P. (incorporated by reference to Exhibit 3.4
to USRP's Annual Report on Form 10-K for the year ended December 31,
1994).
E-1
<PAGE>
4.6 Certificate of Limited Partnership of U.S. Restaurant Properties
Operating L.P. (incorporated by reference to Exhibit 3.3 to USRP's
Annual Report on Form 10-K for the year ended December 31, 1994).
10.1 Option Agreement, dated as of March 24, 1995, between USRP and USRP's
Managing General Partner (incorporated by reference to Exhibit 10.3
to USRP's Annual Report on Form 10-K for the year ended December 31,
1994).
10.2 Stock Purchase Agreement, dated as of May 27, 1994, between The
Pillsbury Company and Robert J. Stetson, et al concerning the sale of
USRP's Managing General Partner (incorporated by reference to Exhibit
10.1 to USRP's Quarterly Report on Form 10-Q for the quarter ended June
30, 1994).
10.3 Second Amended and Restated Secured Loan Agreement, dated as of
December 23, 1996, between the USRP and various banks.
10.4 Demand Promissory Note, dated as of August 15, 1995, executed by
Arkansas Restaurants #10, L.P. for the benefit of U.S. Restaurant
Properties Operating L.P. (incorporated by reference to Exhibit 10.7
of the USRP's Registration Statement No. 333-02675 on Form S-3).
10.5 Mortgage Warehouse Facility, dated as of April 29, 1996, between U.S.
Restaurant Properties Business Trust I and Morgan Keegan Mortgage
Company, Inc. (incorporated by reference to Exhibit 10.8 for the
USRP's Registration Statement No. 333-02675 on Form S-3).
10.6 Amendment No. 1 to the Mortgage Warehouse Facility, dated as of June
1, 1996, between U.S. Restaurant Properties Business Trust I and
Morgan Keegan Mortgage Company, Inc. (incorporated by reference to
Exhibit 10.9 or the USRP's Registration Statement No. 333-02675 on
Form S-3).
10.7 Note Purchase Agreement of U.S. Restaurant Properties Operating L.P.
dated as of January 31, 1997.
11.1 Computation of Net Income per Unit.
21.1 Subsidiaries of the Registrant.
E-2
<PAGE>
EXHIBIT 2.2
PURCHASE AND SALE AGREEMENT
QSR INCOME PROPERTIES, LTD.
<PAGE>
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of
September 16, 1996, by and between QSR INCOME PROPERTIES, LTD., a California
limited partnership ("Seller"), U. S. RESTAURANT PROPERTIES MASTER L. P., a
Delaware limited partnership (the "Partnership") and U. S. RESTAURANT PROPERTIES
OPERATING L. P., a Delaware limited partnership ("Buyer"), and its assigns.
W I T N E S S E T H:
In consideration of the mutual covenants set forth herein, Seller and Buyer
agree as follows:
1. CONVEYANCE OF PROPERTIES. On the terms and subject to the conditions
set forth in this Agreement, at Closing, as hereinafter defined, Seller shall
sell, convey and assign to Buyer, and Buyer shall buy and accept from Seller,
subject to the Permitted Encumbrances, as hereinafter defined, the properties
(the "Properties") designated on SCHEDULE 1 hereto, including the following:
(a) Good and indefeasible title in fee simple to thirteen (13) owned
properties (the "Owned Properties") designated as such on SCHEDULE 1, together
with all rights and interests appurtenant thereto, including Seller's right,
title, and interest in and to all adjacent streets, alleys, rights-of-way and
any adjacent strips or gores of real estate; and buildings, structures and other
improvements located on the Land ("Improvements");
(b) All of Seller's interest as lessee in the three (3) leased
properties (the "Leased Properties") designated as such on SCHEDULE 1 (the Owned
Properties and Leased Properties are hereafter referred to as the "Properties").
(c) All of Seller's interest as payee in the following promissory
notes: (i) Promissory Note made by Chancy's, Inc., dated July 18, 1990, in the
original principal balance of $31,500.00; (ii) Promissory Note made by Hardee's
of Troy, Missouri, Inc., dated June 15, 1984, in the original principal balance
of $30,000.00; (iii) Promissory Note made by GNR, Inc., an Indiana corporation,
dated December 21, 1988, in the original principal balance of $31,500.00; (iv)
Promissory Note made by Noble Roman's, Inc., an Indiana corporation, dated May
8, 1989, in the original principal balance of $31,500.00; (v) Promissory Note
made by Noble Roman's, Inc., an Indiana corporation, dated May 8, 1989, in the
original principal balance of $60,000.00 (collectively the "Notes")
(d) all of Seller's interest as lessor in the leases demising space
in the Properties ("Leases") and the security deposits ("Deposits") made by
tenant ("Tenant") holding under the Leases;
(e) to the extent assignable, all of Seller's interest in all
agreements (other than the agreements described elsewhere in this Section 1)
that relate to the ownership, maintenance and operation of the Properties
("Property Agreements") which Buyer agrees in writing to assume; and
PURCHASE AND SALE AGREEMENT - PAGE 1
QSR INCOME PROPERTIES, LTD.
<PAGE>
(f) to the extent in Seller's possession and assignable, Seller's
interest in the following to the extent that they relate to the Properties: (i)
plans, drawings, specifications, surveys, and other technical descriptions
("Plans"), (ii) warranties ("Warranties"), (iii) licenses or permits
("Licenses"), and (iv) telephone exchanges, trade names and marks, and other
identifying material pertaining to the Properties ("Intangible Personal
Property").
2. EARNEST MONEY. Within three (3) business days of the date both Buyer
and Seller execute and deliver this Agreement, Buyer shall deliver to Lawyers
Title Insurance Corporation, Attn: Nancy Shirar, 600 North Pearl, Suite 700,
Lock Box 185, Dallas, Texas 75201 ("Title Company") $50.00 ("Non-Refundable
Earnest Money") in consideration for this Agreement and the Inspection Period,
as hereinafter defined. The Title Company shall immediately deliver the Non-
Refundable Earnest Money to Seller and the Non-Refundable Earnest Money shall be
retained by Seller in all events. In addition, the Buyer shall deposit
$350,000.00 with Title Company (the "Earnest Money"). The Earnest Money shall
be deposited in escrow or trust accounts that are interest-bearing, readily
available, liquid and federally insured to the full extent of the Earnest Money
deposited therein so that no portion of the Earnest Money shall ever be at risk.
The Earnest Money shall include any interest earned thereon. Title Company
shall deliver the Earnest Money only in accordance with this Agreement.
3. PURCHASE PRICE.
(a) The purchase price ("Purchase Price") for the Properties shall be
$7,571,234.00, increased by an amount equal to the adjusted principal balance of
the Notes. The adjusted principal balance shall be determined by discounting
the scheduled interest and principal payments (including amounts due at
maturity) at a rate necessary to provide a 13.5% yield to Buyer. The Purchase
Price shall be subject to adjustment as provided in Section 3(b) and Section (c)
hereof.
(b) Except with respect to Site 98212 (as identified on Schedule 1)
or any other vacant properties, no proration shall be made of real estate and
personal property taxes, utility charges and maintenance expenses, since these
expenses are obligations of the Tenant pursuant to each of the Leases. Base
Rent pursuant to the Leases shall be prorated as of 11:59 o'clock p.m. on the
Closing Date.
(c) With respect to Site 98212, and any other vacant properties, real
estate and personal property taxes, utility and maintenance expenses shall be
prorated as of 11:59 o'clock p.m. on the Closing Date. Additionally, if a lease
agreement is entered into for Site 98212 for rental payments of at least
$29,400.00 per year, the Purchase Price shall be increased by $150,000.00.
4. DELIVERY OF DOCUMENTS BY SELLER. On or before the date which is seven
(7) days following the date hereof, Seller shall order for delivery to Buyer
the following documents ("Documents"):
(a) All current and historical sales information and balance sheets
and financial information of Tenants actually provided to Seller under the
Leases for the prior two (2) years (the "Tenant Financial Statements");
PURCHASE AND SALE AGREEMENT - PAGE 2
QSR INCOME PROPERTIES, LTD.
<PAGE>
(b) Payment history of Tenants under the Leases for the prior two (2)
years;
(c) Audited balance sheets and income statements of Seller for its
fiscal years 1993, 1994, and 1995, together with unaudited balance sheet and
income statements for the most recent fiscal quarter of 1996 and fiscal year
1996 (year to date) ("Seller Financial Statements");
(d) Commitments for title insurance covering the Properties ("Title
Commitments") from the Title Company, setting forth the status of the title of
the Properties, showing all matters of record affecting the Properties, together
with a true, complete, and legible copy of all documents referred to in the
Title Commitments;
(e) Current ALTA/ACSM "as-built" surveys ("Surveys") listing all
easements and encroachments affecting the Properties with recording information,
indicating public access and parking spaces (including handicapped designation),
containing a flood plain certification, in form and content satisfactory to
Buyer and the Title Company;
(f) Current Phase I Environmental Reports for the Properties (the
"Reports"); and
(g) copies of any (i) Warranties, (ii) Licenses, (iii) certificates
of occupancy for the Properties, (iv) Plans, (v) Property Agreements, (vi)
engineering studies, but only to the extent in Seller's possession or obtainable
by Seller without undue expense.
5. RIGHT OF ENTRY AND INSPECTION.
(a) From the date hereof to the Closing Date, Seller shall afford
Buyer and its representatives a continuing right to inspect, at reasonable hours
subject to the rights of Tenants, the Properties, Documents, and all other
documents or data pertaining to the Properties. Buyer shall provide Seller with
reasonable advance notice of any on-site inspections. Buyer shall indemnify and
hold Seller harmless from and against any loss, claim or liability arising or
resulting from the inspections made by Buyer. Buyer will deliver to Seller
within twenty-five (25) days after execution of this Agreement, a written
confirmation of any Documents required to be delivered by Seller pursuant to
Section 4 hereof which Buyer has not received; any Document not included on such
written confirmation will be deemed to be received by Buyer. At any time prior
to 5:00 p.m. on the date that is thirty (30) days after the last to be delivered
of any of the Documents referenced in Section 4(a) through 4(f) hereof (the
"Inspection Period"), Buyer may (i) terminate this Agreement as to all of the
Properties pursuant to Section 16, in its sole and absolute discretion, and
obtain a return of the Earnest Money, or (ii) terminate this Agreement with
respect to no more than four (4) of the Owned and Leased Properties (the
"Excluded Properties"), for cause, in which event the Purchase Price will be
reduced by the Purchase Price allocable to the Excluded Properties pursuant to
SCHEDULE 2 hereof. For purposes hereof, Buyer may exclude a Property for cause
if, in its reasonable discretion, the Title Commitments, Surveys or Report with
respect to the Excluded Property discloses any defect that would materially
impair the value of the Excluded Property, or with respect to Site 98203, the
Lease is not renewed by the Tenant on or before the last day of the Inspection
Period at a rental rate of at least $66,240 per
PURCHASE AND SALE AGREEMENT - PAGE 3
QSR INCOME PROPERTIES, LTD.
<PAGE>
year. For purposes hereof, any lien, encumbrance or other defect reflected on
the Title Commitments for the Properties (other than the Excluded Properties)
as of the last day of the Inspection Period shall be deemed "Permitted
Exceptions."
(b) Buyer's failure to terminate this Agreement in whole or in part
by delivering the notice by the time called for in Section 5(a) shall terminate
Buyer's right to terminate this Agreement under that Section.
6. CONDITIONS PRECEDENT.
(a) The obligation of Seller to sell each Property on the Closing
Date shall be subject to the satisfaction of the following conditions (any of
which may be waived by Seller): (i) the representations and warranties of Buyer
set forth in Section 8 were true and correct in all material respects when made
and are true and correct in all material respects on the Closing Date; (ii)
Buyer delivers to Seller each of the items required to be delivered by Buyer and
takes all of the actions required to be taken by Buyer under Section 9 prior to
or on the Closing Date; (iii) Buyer shall have performed, observed and complied
with all covenants, agreements and conditions required by this Agreement to be
performed, observed and complied with on its part prior to or as of the Closing
Date; (iv) Seller shall have obtained a waiver of any rights of first refusal
held by Tenants under the Leases, or the period for the exercise of such right
shall have expired without exercise; (v) Seller shall have obtained any required
consents of landlords to approve the sale of the Properties to Buyer with
respect to the Leased Properties; (vi) as of the Closing, and upon issuance as
provided in Section 6(c) hereof, the Units are freely transferrable to the
public; and (vii) as of the Closing, the Units will be listed on the New York
Stock Exchange.
(b) The obligation of Buyer to purchase each Property on the Closing
Date shall be subject to the satisfaction of the following conditions (any of
which may be waived by Buyer): (i) the representations and warranties of Seller
set forth in Section 7 were true and correct in all material respects when made
and are true and correct in all material respects on the Closing Date; (ii)
Seller delivers to Buyer each of the items required to be delivered by Seller
and takes all of the actions required to be taken by Seller under Section 9
prior to or on the Closing Date; (iii) Seller shall have performed, observed and
complied with all covenants, agreements and conditions required by this
Agreement to be performed, observed and complied with on its part prior to or as
of the Closing Date; (iv) Seller shall have obtained a waiver of any rights of
first refusal held by Tenants under the Leases, or the period for the exercise
of such right shall have expired without exercise; (v) Seller shall have
obtained the Tenant Estoppel Certificates with respect to each Property; and
(vi) Seller shall have obtained any required consents of landlords to approve
the sale of the Properties to Buyer with respect to the Leased Properties.
(c) The parties' respective obligations hereunder are further subject
to the right of Seller's limited partners pursuant to Seller's agreement of
limited partnership to vote to approve the sale of the Properties to Buyer. In
connection therewith, Buyer and Seller will cooperate in the preparation of a
Prospectus/Proxy Statement ("Prospectus/Proxy Statement") to solicit the consent
of Seller's limited
PURCHASE AND SALE AGREEMENT - PAGE 4
QSR INCOME PROPERTIES, LTD.
<PAGE>
partners for the sale of the Properties and the registration of the units (the
"Units") of limited partnership interest of U. S. Restaurant Properties Master
L. P. (the "Partnership") to be delivered pursuant to Section 9 hereof. Buyer
and Seller will use their best efforts to file the Prospectus/Proxy Statement
with the Securities and Exchange Commission ("SEC") within thirty (30) days
after the last day of the Inspection Period, and to distribute the
Prospectus/Proxy Statement to Seller's limited partners within ten (10) days
after the SEC declares the Prospectus/Proxy Statement effective. If either (i)
Seller's limited partners fail to approve the sale of the Properties to Buyer,
or (ii) the SEC has not declared the Prospectus/Proxy Statement effective
within 180 days after the date of this Agreement, either Seller or Buyer may,
at their option, terminate this Agreement, in which event the Earnest Money
will be returned to Buyer and neither Seller nor Buyer will have any
continuing rights or obligation hereunder. Each of Buyer and Seller will bear
their own legal and accounting costs in the preparation of the
Prospectus/Proxy Statement; Buyer will pay SEC registration fees; Seller will
pay blue-sky fees and expenses and proxy solicitation expenses (if any).
Buyer and Seller will each pay 50% of printing expenses of the
Prospectus/Proxy Statement.
(d) The obligations of Buyer and Seller hereunder are each subject to
satisfaction of the following conditions:
(i) As of the commencement of the solicitation referred to in
(c) and the mailing of the Prospectus/Proxy Statement, the Registration
Statement referred to in (c) (the "Registration Statement") shall have been
declared effective under the Securities Act of 1933, as amended (the
"Act"); the issuance of the Units as provided for therein shall be
registered thereunder; no stop order suspending effectiveness of the
Registration Statement shall have been issued under the Act and no
proceedings for the issuance of such a stop order have been initiated or
threatened by the SEC.
(ii) As of the Closing, the issuance of the Units as provided for
herein shall be registered pursuant to the Registration Statement, and the
Registration Statement shall be effective; no stop order suspending
effectiveness of the Registration Statement shall have ben issued under the
Act and no proceeding for the issuance of such a stop order have been
initiated or threatened by the SEC. The Registration Statement (including
the documents incorporated by reference therein) as of its effective date,
and at all times thereafter through the Closing, shall be in compliance in
all material respects with the requirements of the Act and shall not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus/Proxy Statement (including the
documents incorporated by reference therein), as of their respective dates
and at all times thereafter through the Closing, shall be in compliance in
all material respects with the requirements of the Act and the rules and
regulations promulgated thereunder, and did not and do not contain any
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,
in light of the circumstances under which they were made, not misleading.
PURCHASE AND SALE AGREEMENT - PAGE 5
QSR INCOME PROPERTIES, LTD.
<PAGE>
(iii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus/Proxy Statement, at the time they were filed
with the SEC, complied in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, and when read together with the other
information in the Prospectus at the time the Registration Statement became
effective and at all times thereafter through the Closing, did not and do
no 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, in light of the circumstances under which they were made, not
misleading.
(e) Seller, Buyer and the Partnership hereby agree to use their best
efforts to cause satisfaction of all of the conditions and the obligations of
Buyer and Seller set forth in Section 6 hereof.
7. REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants
to, and covenants with, Buyer that:
(a) Subject to satisfaction of the conditions contained in Section
6(a) and (c), Seller has the full right, power, and authority to execute,
deliver, and perform this Agreement, and this Agreement, when executed and
delivered by Seller and Buyer, shall constitute the valid and binding agreement
of Seller, and shall be enforceable against Seller in accordance with its terms.
(b) Subject to satisfaction of the conditions contained in Section
6(a) and (c), all requisite action on the part of Seller has been taken by
Seller in connection with making and entering into this Agreement and the
consummation of the purchase and sale provided for herein.
(c) No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or, to the best of Seller's knowledge, threatened
against Seller, which would materially adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement.
(d) Seller has not received any written notices from any insurance
company, board of fire underwriters or similar organization regarding any
defects in any Property.
(e) Seller has no knowledge of any litigation, or possible
litigation, or of claims of violations or noncompliance with applicable laws and
regulations affecting any Property, including regulations of the Environmental
Protection Agency and any state regulatory body concerning the disposal of
grease, hazardous waste, petroleum, any underground storage tanks or any other
hazardous materials, or regulations of the Americans Disability Act providing
for access to the premises, dining areas and bathroom areas of any Property
("Applicable Laws").
(f) Seller has no contracts of any kind, such as for waste disposal,
termite protection, cleaning services, or paper supplies which will survive the
Closing Date and which will affect any Property.
PURCHASE AND SALE AGREEMENT - PAGE 6
QSR INCOME PROPERTIES, LTD.
<PAGE>
(g) To the best of Seller's knowledge, the Tenant Financial
Statements are and will be true, correct, accurate and complete and will not
omit to state any fact or condition, the omission of which makes such statements
misleading.
(h) The Seller Financial Statements are and will be true, correct,
accurate and complete and will not omit to state any fact or condition, the
omission of which makes such statements materially misleading.
(i) Seller has received no written notice of taking, condemnation,
betterment or assessment, actual or proposed, with respect to any Property.
(j) To the best of Seller's knowledge, all structures and
Improvements upon each Property have been constructed and installed in full
compliance with the Plans and with all applicable laws, statutes, ordinances,
codes, covenants, conditions and restrictions of any kind or nature affecting
such Property.
(k) To the best of Seller's knowledge, no portion of any Property
lies within any 100-year flood plain.
(l) Except for the Permitted Exceptions, Seller owns each Property
free and clear of all liens, restrictions, charges and encumbrances. From the
date hereof until the Closing Date or earlier termination of this Agreement,
Seller will not sell or assign any Property or create or permit to exist any
liens (other than Permitted Exceptions), encumbrances or charges thereon without
discharging the same prior to the Closing Date.
(m) Seller has no information or actual knowledge of any proposed
change in any of the Applicable Laws or any judicial or administrative action or
any action by adjacent land owners or any facts or conditions relating to any
Property which would materially and adversely affect, prevent or limit the use
of such Property as a restaurant.
(n) To Seller's knowledge, all Licenses and occupancy certificates
necessary for the operation and occupancy of any Property, including, but not
limited to, all building and use permits, have been obtained for all operations
to date and shall be maintained through Closing.
(o) Each Lease is in full force and effect, and Seller has no
knowledge of any event which would constitute a default or an event of default
either by Seller or any Tenant under a Lease.
(p) Each Note is current as to the payment of principal and interest,
the outstanding principal balance of each Note will be the amount provided to
Seller for purposes of calculating the Purchase Price pursuant to Section 3
hereof, and Seller is not aware of any defenses of the maker of any Note to the
payment thereof.
PURCHASE AND SALE AGREEMENT - PAGE 7
QSR INCOME PROPERTIES, LTD.
<PAGE>
(q) From and after the date hereof, and until the Closing or earlier
termination of this Agreement, Seller shall not take any action, or omit to take
any action, which action or omission would have the effect of violating any of
the representations and warranties of Seller contained in this Agreement.
(r) The Prospectus/Proxy Statement (including the documents
incorporated by reference therein), as of their respective dates and at all
times thereafter through the Closing, to the extent purporting to describe (i)
the business or activities of Seller, (ii) the approval required from Seller's
limited partners to this transaction, or (iii) the dissolution and liquidation
of Seller, shall be in compliance in all material respects with the requirements
of the Act and the rules and regulations promulgated thereunder, and did not and
do not contain any 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, in light of the circumstances under which they were made, not
misleading.
8. REPRESENTATIONS AND WARRANTIES OF BUYER AND THE PARTNERSHIP. The
Partnership and Buyer hereby represent and warrant to, and covenant with, Seller
that:
(a) The Partnership has been duly organized and is validly existing
as a limited partnership in good standing under the laws of Delaware. Each
other entity through which the Partnership beneficially owns an interest in real
property (collectively, the "Operating Partnerships") has been duly organized
and is validly existing and in good standing under the laws of its state of
organization. Each of the Partnership and each Operating Partnership has full
power and authority to own or lease and occupy its properties and conduct its
business, and is duly qualified to do business, and is in good standing, in each
jurisdiction which requires such qualification, except where the failure to so
qualify would not, individually or in the aggregate, have a material adverse
effect on the business, operations, earnings, assets or financial condition of
the Partnership (a "Material Adverse Effect").
(b) Each of the Partnership and each Operating Partnership has all
requisite power and authority, and all necessary material authorizations,
approvals, orders, licenses, certificates and permits of and from all regulatory
or governmental officials, bodies and tribunals, to own or lease its properties
and to conduct its businesses as now being conducted; all such authorizations,
approvals, licenses, certificates and permits are in full force and effect,
except where the failure to be in full force and effect would not have a
Material Adverse Effect on such entity; each of the Partnership and each
Operating Partnership is complying with all applicable laws, the violation of
which could have a Material Adverse Effect on the Partnership or on an Operating
Partnership.
(c) Each of the Partnership and each Operating Partnership has good
and marketable title to its properties, except where any restriction,
encumbrance or failure of title would not, individually or in the aggregate have
a Material Adverse Effect.
(d) Each of the Partnership and each Operating Partnership maintains,
or causes to be maintained, adequate insurance for the conduct of its business.
PURCHASE AND SALE AGREEMENT - PAGE 8
QSR INCOME PROPERTIES, LTD.
<PAGE>
(e) Each of the Partnership and each Operating Partnership owns or
licenses or otherwise has the right to use all patents, trademarks, trade names
and trade secrets material to such entity's business; other than routine
proceedings which if adversely determined would not materially affect such
entity's business, as a whole, no claims believed material have been asserted by
any person with respect to the use of any such patents, trademarks, trade names
and trade secrets or challenging or questioning the validity or effectiveness of
any such patents, trademarks, trade names or trade secrets; and to the best
knowledge of the Partnership and Buyer, the use, in connection with the business
and operations of the Partnership and the Operating Partnerships of such
patents, trademarks, and tradenames does not infringe on the rights of any
persons.
(f) The issuance of the Units has received all authorization and/or
consent required under the Agreement of Limited Partnership (the "Partnership
Agreement") of the Partnership and, when issued and delivered pursuant to this
Agreement, will be fully paid and nonassessable; and the holders of outstanding
units or other interest in the Partnership are not entitled to preemptive or
other rights to subscribe for the Units.
(g) Each of the Partnership and Buyer has full power and authority to
enter into and perform its obligations under this Agreement; the Partnership has
full power and authority to issue, sell and deliver the Units; and this
Agreement has been duly authorized, executed and delivered by the Partnership
and by Buyer and is enforceable in accordance with its terms (subject, however,
to exceptions under bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors).
(h) No consent, approval, authorization or order of any court of
governmental agency, authority or body is required (or if required, has not been
received) for the execution by the Partnership and Buyer of this Agreement, the
performance by the Partnership and Buyer of its obligations hereunder or the
consummation by the Partnership and Buyer of the transactions contemplated
herein.
(i) Neither the issue and sale of the Units nor the consummation of
any of the other transactions herein contemplated or the fulfillment of the
terms hereof will conflict with, result in a breach or violation of, or
constitute a default under any law or the Partnership Agreement or the terms of
any indenture or other agreement or instrument to which the Partnership or any
Operating Partnership is a party or is bound or any judgment, order or decree
applicable to the Partnership of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Partnership.
(j) Except as reflected in the consolidated Financial Statements for
the Partnership for its year end 1995 ("Financial Statements"), there is no
pending, or to the best knowledge of Buyer or the Partnership after due inquiry,
threatened, action, suit, proceeding or investigation before any court,
governmental agency, authority or body or arbitrator involving any of the
Partnership or any Operating Partnership of a character required to be disclosed
on such financial statements of the Partnership.
PURCHASE AND SALE AGREEMENT - PAGE 9
QSR INCOME PROPERTIES, LTD.
<PAGE>
(k) The Partnership and each Operating Partnership has fulfilled its
obligations, if any, under the minimum funding standard of Section 302 of the
United States Employee Retirement Income Security Act of 1974 ("ERISA") and the
regulations and published interpretations thereunder with respect to each
"pension plan" (as defined in ERISA and such regulations and published
interpretations) in which employees of the Partnership are eligible to
participate and each plan is in compliance in all material respects with the
presently applicable provision of ERISA and such regulations and published
interpretations (except for such failure to so comply that would not have,
singularly or in the aggregate with all other such failures to comply, a
Material Adverse Effect), and has not incurred any unpaid liability to the
Pension Benefit Guaranty Corporation (other than for the payment of premiums in
the ordinary course) or to any such plan under Title IV of ERISA.
(l) The Partnership is not bound by, and has not entered into, any
agreement restricting the amount of Units that Seller or any of its partners or
assignees may own.
(m) The Prospectus/Proxy Statement (including the documents
incorporated by reference therein), as of their respective dates and at all
times thereafter throughout the Closing, to the extent purporting to describe
the business or activities of Buyer, or relating to the registration of the
Units, as well as the financial statements relating to the Partnership contained
therein, shall be in compliance in all material respects with the requirements
of the Act and the rules and regulations promulgated thereunder, and did not and
do not contain any 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, in light of the circumstances under which they were made, not
misleading.
(n) From and after the date hereof, and until the Closing or earlier
termination of the Agreement, the Partnership and Buyer shall not take any
action, or omit to take any action, which action or omission would have the
effect of causing any of the representations and warranties of the Partnership
and Buyer contained herein to be untrue as of any time through the Closing.
9. CLOSING. The closing ("Closing") of the sale of the Properties by
Seller to Buyer shall occur on the date selected by Buyer upon ten (10) days
written notice to Seller but not later than fifteen (15) following the date that
the contingencies set forth in Sections 6(c) and 6(d) are removed, but in no
event any earlier than December 12, 1996 (the date of Closing is referred to as
the "Closing Date"). Closing shall occur in the offices of the Title Company,
located at 600 North Pearl, Suite 700, Dallas, Texas 75201, or at another place
and or time as mutually agreed upon by Seller and Buyer, commencing at 10:00
o'clock a. m. on the Closing Date. At Closing:
(a) Buyer shall deliver to Seller the number of Units constituting
the Purchase Price based on the following formula: the Purchase Price
determined pursuant to Section 3 shall be divided by the average closing price
of the Units on the New York Stock Exchange during the five (5) trading days
immediately preceding the Closing Date. In addition, Buyer shall deliver to
Seller (i) Assignment and Assumption of Lease Agreement in the form of EXHIBIT
C; (ii) Assignment and Assumption of Tenant Lease, in the form of EXHIBIT G;
fully executed, sworn to and acknowledged, as appropriate by Buyer.
PURCHASE AND SALE AGREEMENT - PAGE 10
QSR INCOME PROPERTIES, LTD.
<PAGE>
(b) Seller shall deliver or cause to be delivered to Buyer the
following ("Closing Documents"):
(i) Special Warranty Deeds in the form of EXHIBIT B,
conveying to Buyer the Owned Properties subject to the Permitted
Exceptions; Assignment and Assumption of Lease Agreement, in the form of
EXHIBIT C; General Assignment in the form of EXHIBIT D; Bill of Sale in the
form of EXHIBIT E; IRC Section 1445 Certification in the form of EXHIBIT F;
Assignment and Assumption of Tenant Lease, in the form of EXHIBIT G;
Estoppel Certificate in the form of EXHIBIT H with respect to each Property
for which Seller has received such Estoppel Certificate; Landlord consent
to the assignment of the Leased Properties or estoppel certificate of such
landlord; all fully executed, sworn to, and acknowledged, as appropriate,
by Seller, Tenant or landlord;
(ii) Evidence satisfactory to Buyer and Title Company that
the person or persons executing the Closing Documents on behalf of Seller
have full right, power and authority to do so;
(iii) The originals (to the extent in Seller's possession) of
the Leases, all Property Agreements, Warranties, Licenses and Plans; and
(iv) The original Notes, duly endorsed, without recourse, by
Seller to Buyer (or, to the extent the original Notes are not available, a
copy certified by Seller to be a true and correct copy of such original).
(c) Buyer and Seller shall each pay fifty percent (50.00%) of the
costs of obtaining the Title Commitments, the Owner Policies of Title Insurance
for the Properties, charges for the Reports, escrow and recording fees, transfer
taxes and documentary stamp taxes, and survey costs (the "Closing Costs").
(d) Seller shall deliver to Buyer possession of the Properties.
10. FURTHER COVENANTS OF SELLER. From the date hereof until Closing,
Seller warrants that it shall maintain and operate the Properties in a manner
consistent with its past maintenance and operation. Seller additional agrees
that it will not sell, convey or distribute (including distribution to its
limited partners) any Units received by Seller pursuant to this Agreement prior
to December 12, 1996. Nothing contained herein or in any other agreement to
which Buyer is a party will prevent the distribution of the Units to Seller's
limited partners on or after December 12, 1996.
11. NOTICES. Any notice provided or permitted to be given under this
Agreement must be in writing and may be served by depositing same in the United
States mail, addressed to the party to be notified, postage prepaid and
certified, with return receipt requested, by delivering the same in person to
such party, or by delivering the same by confirmed facsimile. Notice given in
accordance herewith shall be effective upon the earlier of receipt at the
address of the addressee or on the second
PURCHASE AND SALE AGREEMENT - PAGE 11
QSR INCOME PROPERTIES, LTD.
<PAGE>
(2nd) day following deposit of same in the United States mail as provided for
herein, regardless of whether same is actually received. For purposes of
notice, the addresses of the parties shall be as follows:
If to Buyer, to: U. S. Restaurant Properties, Inc.
5310 Harvest Hill Road, Suite 270, LB 168
Dallas, Texas 75230
Attention: Fred Margolin
With copy to: Richard S. Wilensky, Esq.
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
If to Seller, to: QSR Income Properties, Ltd.
701 Western Avenue
Suite 200
Glendale, California
Attn: David Singelyn
With copy to: Carl B. Phelps
Andrews & Kurth, L. L. P.
601 South Figueroa
Suite 4200
Los Angeles, California 90017
Either party may change its address for notice by giving ten (10) days prior
written notice thereof to the other party.
12. BROKERAGE COMMISSIONS. Buyer shall defend, indemnify, and hold
harmless Seller from any claim by any party claiming under Buyer for any
brokerage, commission, finder's, or other fees relative to this Agreement or the
sale of the Properties, and any court costs, attorneys' fees, or other costs or
expenses arising therefrom and alleged to be due by authorization of Buyer.
Seller shall defend, indemnify and hold harmless Buyer from any claim by any
party claiming under Seller for any brokerage, commission, finder's, or other
fees relative to this Agreement or the sale of the Properties, and any court
costs, attorneys' fees, or other costs or expenses arising therefrom and alleged
to be due by authorization of Seller.
13. INDEMNIFICATION.
(a) Subject to the other provisions of this Article 13, Seller shall
defend, indemnify and hold Buyer harmless from and against, and promptly
reimburse Buyer for, any loss, expense, damage, deficiency, liability, claim or
obligation, including investigative costs, costs of defense,
PURCHASE AND SALE AGREEMENT - PAGE 12
QSR INCOME PROPERTIES, LTD.
<PAGE>
settlement costs and attorneys' fees (collectively, "LOSSES") that Buyer
incurs or to which Buyer becomes subject, which Losses arise out of or in
connection with (i) any Breach by Seller of this Agreement, or (ii) any
meritorious claim asserted by any third party that would constitute a Breach
by Seller of this Agreement. As used herein, a party's "Breach" of this
Agreement shall mean any misrepresentation made by such party in this
Agreement, any breach of any of such party's covenants in this Agreement, or
any claim that may be asserted against such party arising from this Agreement.
"Losses" include, without limitation the amount of any taxes or liens upon
the Properties and the amount of any liabilities that Buyer has elected to pay
on Seller's behalf.
(b) Subject to the other provisions of this Article 13, Buyer shall
defend, indemnify and hold Seller harmless from and against, and promptly
reimburse Seller for, any Losses that Seller incurs or to which Seller becomes
subject, which Losses arise out of or in connection with (i) any Breach by Buyer
of this Agreement, or any agreement or instrument contemplated by this
Agreement, or (ii) any meritorious claim asserted by any third party that would
constitute a Breach by Buyer of this Agreement.
(c) If, on the Closing Date, either party has actual knowledge of the
Breach by the other party of any representation, warranty or covenant contained
herein, and the party with knowledge of such Breach nonetheless proceeds to
Closing, such party shall have waived any claim or cause of action for
indemnification against the Breaching party. The representations, warranties
and covenants of Buyer and Seller shall survive Closing and shall not be deemed
merged into the Closing documents. Provided, however, any claim by Buyer or
Seller for indemnification hereunder shall be conditioned on the party claiming
such indemnification providing written notice to the other party of such Breach
within twelve (12) month of the Closing Date, and actually filing suit within
eighteen (18) months of the Closing Date. Provided, further, that Buyer shall
not be entitled to any monetary damages from Seller or its partners for any
Breach hereunder; Buyer's sole remedy shall be as an offset to any damages for
Losses to which Seller is entitled hereunder. In no event will B. Wayne Hughes,
as individual general partner of Seller, have any personal liability to Buyer or
the Partnership for the performance of the obligations of Seller under this
Agreement. All remedies either under this Agreement or by law or otherwise
afforded to the parties shall be cumulative and not alternative.
14. RISK OF LOSS CONDEMNATION. If, prior to the time of Closing, all or
substantially all of the real property at any Property is (A) condemned or a
taking threatened or (B) destroyed or damaged, at the option of Buyer, such
Property shall (i) be excluded from this Agreement in which event the Purchase
Price shall be reduced by the consideration allocated to such Property pursuant
to Schedule 2, or (ii) Buyer may acquire such Property, pursuant to this
Agreement, together with an assignment by Seller of all available insurance
proceeds, or condemnation award. For the purposes of this Agreement, a Property
shall be substantially damaged if it cannot, by reasonable efforts, be reopened
for business within forty-five (45) days of such casualty. If Buyer elects not
to exercise its right to exclude such Property, then there shall be no
diminution of the consideration payable to Seller, but Buyer shall be entitled
to receive all condemnation proceeds and all insurance proceeds covering such
loss or damage, including both insurance carried by Seller and insurance, if
any, carried by Buyer. This right may be exercised within thirty (30) days
after the occurrence of the loss or damage, and, if
PURCHASE AND SALE AGREEMENT - PAGE 13
QSR INCOME PROPERTIES, LTD.
<PAGE>
such loss or damage occurs less than thirty (30) days prior to the scheduled
Closing Date, such Closing Date shall be extended for such additional period
of time as may be necessary to afford Buyer a full thirty (30) days to make
its election.
15. ASSIGNS. This Agreement shall inure to the benefit of and be binding
on the parties hereto and their respective heirs, legal representatives,
successors and assigns. This Agreement may be assigned by Buyer without the
consent of Seller by delivery of written notice of assignment to Seller.
16. TERMINATION AND REMEDIES.
(a) If Buyer fails to consummate the purchase of the Properties
pursuant to this Agreement for any reason other than; (i) termination hereof
pursuant to a right granted to Buyer in Sections 5 or 6; (ii) termination by
Seller pursuant to Section 6; or (iii) Seller's failure to perform its
obligations hereunder, then Seller, as its sole and exclusive remedy, shall have
the right to terminate this Agreement by notifying Buyer thereof, in which event
the Title Company shall deliver to Seller, as liquidated damages, the Earnest
Money, whereupon neither Buyer nor Seller shall have any further rights or
obligations hereunder. Seller and Buyer hereby acknowledge and agree they have
included the provision for payment of liquidated damages because, in the event
of a breach by Buyer, the actual damages incurred by Seller can reasonably be
expected to approximate the amount of liquidated damages called for, and because
the actual amount of such damages would be difficult if not impossible
accurately to measure.
(b) If Seller fails to consummate the sale of the Properties pursuant
to this Agreement for any reason other than (i) termination hereof by Buyer
pursuant to Sections 5 or 6; (ii) termination by Seller pursuant to Section 6;
or (iii) Buyer's failure to perform its obligations hereunder, Buyer shall have
the right, as its sole and exclusive remedies, to either (i) terminate this
Agreement by notifying Seller thereof, in which case the Title Company shall
deliver the Earnest Money to Buyer, whereupon neither party hereto shall have
any further rights or obligations hereunder, or (ii) enforce specific
performance of the obligations of Seller hereunder and/or seek damages for
breach of this Agreement by Seller.
(c) If Buyer terminates this Agreement pursuant to a right granted
Buyer in Section 5 or 6 or Seller terminates this Agreement pursuant to Section
6, then the Title Company shall deliver the Earnest Money to Buyer whereupon
neither Buyer or Seller shall have any further rights or obligations hereunder.
17. MISCELLANEOUS. Each of Buyer and Seller agrees with the other that it
has no present intention to make any public announcement of the purchase and
sale transaction contemplated hereby or of any of the terms thereof, and shall
obtain the written consent of the other party prior to making any announcement
or divulging any information. Both Seller and Buyer shall cooperate with one
another and in a timely manner execute all documents reasonably required to give
effect to the purchase and sale provided for herein. If any provision of this
Agreement is adjudicated by a court having jurisdiction over a dispute arising
herefrom to be invalid or otherwise unenforceable for any reason, such
invalidity or unenforceability shall not affect the other provisions hereof.
This Agreement shall be
PURCHASE AND SALE AGREEMENT - PAGE 14
QSR INCOME PROPERTIES, LTD.
<PAGE>
governed and construed in accordance with the laws of the State of Texas.
This Agreement is the entire agreement between Seller and Buyer concerning the
sale of the Properties and no modification hereof or subsequent agreement
relative to the subject matter hereof shall be binding on either party unless
reduced to writing and signed by the party to be bound. The provisions of
Sections 5, 7, 8, 12, and 13 shall survive Closing. EXHIBITS A-H attached
hereto are incorporated herein by this reference for all purposes. Time is of
the essence in the performance of each and every provision of this Agreement.
In the event that the last day for taking any action or serving notice under
this Agreement falls on a Saturday, Sunday or legal holiday, the time period
shall be extended until the following business day.
18. DATE OF AGREEMENT. All references in this Agreement to "the date
hereof" or similar references shall be deemed to refer to the last date, in
point of time, on which all parties hereto have executed and received a fully
executed copy of this Agreement. This Agreement constitutes an offer by Buyer
to purchase the Properties on the terms and conditions and for the Purchase
Price specified herein. Unless sooner terminated or withdrawn by notice in
writing to Seller, this offer shall lapse and terminate at the close of Buyer's
business day on ten (10) days following execution of this Agreement by Buyer,
unless, prior to such time, Seller has returned to Buyer two (2) fully executed
copies of this Agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
date first set forth above.
BUYER:
U. S. RESTAURANT PROPERTIES OPERATING L. P.
By: U. S. RESTAURANT PROPERTIES, INC.
By: /s/ ILLEGIBLE
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
PURCHASE AND SALE AGREEMENT - PAGE 15
QSR INCOME PROPERTIES, LTD.
<PAGE>
U. S. RESTAURANT PROPERTIES MASTER L. P.
By: U. S. RESTAURANT PROPERTIES, INC.
By: /s/ ILLEGIBLE
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SELLER:
QSR INCOME PROPERTIES, LTD.
By: B. WAYNE HUGHES, its General Partner
By: /s/ ILLEGIBLE
----------------------------------------
Name:
Title:
The undersigned hereby executes this Agreement for the sole purpose of (i)
acknowledging receipt of the Earnest Money and the Non-Refundable Earnest Money
and (ii) to evidence its agreement to hold the Non-Refundable Earnest Money and
the Earnest Money in trust for the parties hereto in accordance with the terms
of this Agreement.
TITLE COMPANY:
LAWYERS TITLE INSURANCE CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Date of Execution:
-------------------------
PURCHASE AND SALE AGREEMENT - PAGE 16
QSR INCOME PROPERTIES, LTD.
<PAGE>
Schedules and Exhibits Omitted
<PAGE>
EXHIBIT 2.3
PURCHASE AND SALE AGREEMENT
<PAGE>
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of the
day of , 1995, by and between Select Properties, a
Pennsylvania limited partnership ("Seller"), and U. S. RESTAURANT PROPERTIES
OPERATING L. P., a Delaware limited partnership ("Buyer").
W I T N E S S E T H:
In consideration of the mutual covenants set forth herein, Seller and Buyer
agree as follows:
1. TRANSFER OF PROPERTY. On the terms and subject to the conditions set
forth in this Agreement, at Closing, as hereinafter defined, Seller shall
transfer, convey and assign to Buyer, and Buyer shall buy and accept from
Seller, subject to the Permitted Encumbrances, as hereinafter defined, the
property (the "Property"), which consists of the following:
(a) good and indefeasible title in fee simple to the land more
particularly described on SCHEDULE 1 attached hereto (the "Land");
(b) all of Seller's interest in and to the improvements on the Land,
together with all rights and interests appurtenant thereto, including Seller's
right, title and interest in and to all (i) adjacent streets, alleys, rights-
of-way and any adjacent strips or gores of real estate; and (ii) buildings,
structures and other improvements located on the Land (the "Improvements");
(c) all of Seller's interest in and to the equipment and other
tangible personal property located in and used in connection with the ownership,
maintenance and operation of the Land and Improvements listed on EXHIBIT A
hereto (the "Personal Property");
(d) all of Seller's interest in the lease demising the Land and the
Improvements (the "Lease") and the security deposits (the "Deposits") made by
the tenant holding under the Lease (the "Tenant");
(e) to the extent assignable, all of Seller's interest in all
agreements (other than the agreements described elsewhere in this Section 1)
that relate to the ownership, maintenance and operation of the Property (the
"Property Agreements") which Buyer agrees in writing to assume; and
(f) to the extent in Seller's possession and assignable, any and all
(i) plans, drawings, specifications, surveys, and other technical descriptions
(the "Plans"), (ii) warranties (the "Warranties"), (iii) licenses or permits
(the "Licenses"), and (iv) telephone exchanges, trade names and marks, and other
identifying material pertaining to the Land and Improvements (the "Intangible
Personal Property").
<PAGE>
2. EARNEST MONEY. Within three (3) business days of the date both Buyer
and Seller execute and deliver this Agreement, Buyer shall deposit the sum of
$20,000 (the "Earnest Money") with Lawyers Title Insurance Company ("Title
Company") and provide Seller with written confirmation thereof. The Earnest
Money shall be deposited in escrow or trust accounts that are interest-bearing,
readily available, liquid and federally insured to the full extent of the
Earnest Money deposited therein so that no portion of the Earnest Money shall
ever be at risk. The Earnest Money shall include any interest earned thereon.
Title Company shall deliver the Earnest Money only in accordance with this
Agreement.
3. PURCHASE PRICE.
(a) The total purchase price for the Property (the "Purchase Price")
shall be the sum of $597,144, payable as follows:
(i) The sum of $ -0- (the "Cash Payment") shall be paid by Buyer
to Title Company at the Closing, in cash, and shall be distributed by Title
Company pursuant to Seller's instructions. The Cash Payment shall be adjusted
in accordance with the following subparagraph 3(b) and shall be credited by the
Earnest Money (and any interest earned thereon) to the extent delivered to
Seller at the Closing.
(ii) In addition to the Cash Payment, Seller shall also receive,
and Buyer will cause to be delivered by U.S. Restaurant Properties Master L.P.
(the "MLP"), which owns a 99% interest in Buyer, to Seller at the Closing,
24,881 partnership units of the MLP ("Partnership Units"), adjusted in
accordance with the following subparagraph 3(b). Seller shall have the right to
transfer the Partnership Units to a trust established for the benefit of
Seller's partners (the "Trust").
(b) In the event that the percentage rent payable by the Tenant
pursuant to the Lease Agreement for the lease year ending December 31, 1995
exceeds the percentage rent payable by the Tenant pursuant to the Lease
Agreement for the lease year ending December 31, 1994, then the number of
Partnership Units to be delivered to Seller at the Closing pursuant to Paragraph
3(a) hereof will be increased by 1/24th of an amount determined by multiplying
the amount of such additional percentage rent by 7.5; provided, however, that at
Seller's option, (i) Buyer shall pay to Seller, at the Closing, the value of any
additional fractional Partnership Unit, in cash, at the rate of $24.00 per
Partnership Unit or an amount equal to the closing purchase price for a
Partnership Unit on the trading day immediately preceding the Closing Date,
whichever amount shall be the greater, or (ii) Seller may purchase the balance
of the additional fractional Partnership Unit at the rate of $24.00 per
Partnership Unit.
Accordingly, for purposes of illustration only, in the event that the
percentage rent payable by the Tenant pursuant to the Lease Agreement for the
lease year ending December 31, 1995 exceeds
<PAGE>
the percentage rent payable by the Tenant pursuant to the Lease Agreement for
the lease year ending December 31, 1994 by the sum of $1,000.00, then Seller
shall receive an additional 312 Partnership Units and, at Seller's option,
Purchaser shall pay Seller an additional amount, in cash, equal to $12.00 or
50% of the closing purchase price for a Partnership Unit on the trading day
immediately preceding the Closing Date, whichever amount shall be the
greater, or Seller shall have the right to purchase the balance of the
fractional Partnership Unit for $12.00 or 50% of the closing purchase price
for a Partnership Unit on the trading day immediately preceding the Closing
Date, whichever amount shall be the lesser, determined as follows:
7.5 x $1,000/24 = 312.5
(c) The base rent payable pursuant to the Ground Lease and the Lease
Agreement shall be prorated as of the Closing Date. Percentage rent shall not
be prorated. No proration shall be made of real estate and personal property
taxes, utility charges and maintenance expenses, since these expenses are
obligations of the Tenant pursuant to the Lease Agreement.
(d) Notwithstanding anything contained herein to the contrary, if,
during the last 20 trading days immediately preceding the second anniversary of
the Closing Date (the "Second Anniversary"), the average closing sale price of a
Partnership Unit on the New York Stock Exchange (the "Average Closing Price") is
less than $24.00, then Buyer will cause to be delivered to Seller or the Trust,
within 10 days following the Second Anniversary, a number of additional
Partnership Units determined as follows: the amount by which the Average
Closing Price is less than $24.00 shall be multiplied by the number of
Partnership Units delivered to Seller at the Closing and the result shall then
be divided by the Average Closing Price; provided, however, that Buyer shall
pay Seller or the Trust the value of any additional fractional Partnership Unit,
in cash, at the rate of $24.00 per Partnership Unit, within 10 days following
the Second Anniversary.
Accordingly, for purposes of illustration only, in the event that Seller
receives 10,000 Partnership Units at the Closing and the Average Closing Price
is $20.00, then Seller shall receive an additional 2,000 Partnership Units,
determined as follows:
4 x 10,000/20 = 2,000
(e) Notwithstanding anything contained herein to the contrary, (i)
the guarantee provided by section 3(d) shall lapse with respect to any
Partnership Units that are sold by Seller or the Trust or any partner or
affiliate thereof (other than to a partner or affiliate of Seller or the Trust)
prior to the Second Anniversary at a price in excess of $24.00 per Partnership
Unit, and (ii) the guarantee provided by section 3(d) will lapse, in its
entirety, if either Seller or the Trust make any sales of Partnership Units
(other than to a partner or affiliate of Seller
<PAGE>
or to the Trust or a beneficiary of the Trust), whether or not delivered to
Seller at the Closing, at any time during the 60 trading days immediately
preceding the Second Anniversary, and Buyer shall cause the Partnership Units
delivered to Seller at the Closing to have an appropriate stop-transfer
notation on the MLP's transfer-agent records.
(f) The number of Partnership Units to be delivered to Seller at the
Closing or pursuant to the foregoing formula shall be appropriately adjusted to
eliminate the impact of any dividend (whether in securities or other property),
split, reclassification, recapitalization, reverse split or similar event,
announced or occurring, with respect to the Partnership Units and with a record
date after execution of this Agreement and before the Closing Date. Further, in
the event that the MLP converts to a Real Estate Investment Trust prior to the
Second Anniversary, then the shares of the Real Estate Investment Trust received
by Seller in exchange for the Partnership Units delivered to Seller at the
Closing, adjusted for any splits or proportionate distributions, will be deemed
to be the equivalent to Partnership Units for purposes of applying the foregoing
formula.
(g) The Partnership Units delivered to Seller at the Closing shall
not, at the time of delivery, be registered under the Securities Act of 1933, as
amended (the "Act"), and such Partnership Units shall, therefore, have a two (2)
year restriction on transferability until such time as such Partnership Units
have been registered under the Act; provided, however, that Buyer shall cause
the MLP to file a registration statement for the registration of such
Partnership Units, pay all of the expenses of registration, proceed diligently
with the respect to the registration of such Partnership Units under the Act and
cause such Partnership Units to be registered under the Act within one (1) year
following the Closing Date; and provided, further, that Buyer warrants that,
upon such registration, such Partnership Units shall be freely transferable.
Provided that Buyer pays all of the costs of registration, Seller shall use
reasonable efforts to assist Buyer with respect to the registration of such
Partnership Units. Until such time as the Partnership Units delivered to Seller
at the Closing have been registered under the Act, such Partnership Units shall
have a stop-transfer notation on the MLP's transfer-agent records. Any
additional Partnership Units delivered to Seller after the Second Anniversary
pursuant to Section 3(d) of this Agreement shall, at the time of delivery, have
been registered under the Act and shall be freely transferable.
(h) So long as Buyer remains a master operating limited partnership,
Buyer shall, during the two (2) year period following the Closing Date, have a
right of first refusal with respect to the purchase of all the Partnership Units
delivered to Seller at the Closing pursuant to the terms of this Agreement (the
"Right of First Refusal"). The Right of First Refusal may be exercised by Buyer
at any time during the twenty (24) hour period (the "Exercise Period")
immediately following Buyer's receipt of written notice
<PAGE>
from any holder of such Partnership Units (the "Right of First Refusal Notice"),
for a per unit price (net of commissions and other transaction costs) equal to
$.50 over the opening or closing sale price of each Partnership Unit on the date
that the Right of First Refusal Notice is given or the date that the Right of
First Refusal is exercised, whichever amount shall be the greater. In order to
exercise the Right of First Refusal, Buyer must give written notice (the
"Exercise Notice") to the party who has given the Right of First Refusal Notice
to Buyer (the "Selling Party") within the Exercise Period. All notices given
by a Selling Party pursuant to this subparagraph 3(h) shall be given by
facsimile transmission to Buyer at (214) 490-9119, and shall be deemed to have
been given and received, for purposes of this provision, at the time that the
facsimile transmission is completed, whether or not actually received. All
notices given by Buyer to a Selling Party pursuant to this subparagraph 3(h)
shall be given by facsimile transmission to the Selling Party at the facsimile
number specified in the Right of First Refusal Notice, and shall be deemed to
have been given and received, for purposes of this provision, only when
actually received. Notwithstanding anything contained herein to the contrary,
the Right of First Refusal shall expire on the Second Anniversary.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, A SELLING PARTY
SHALL NOT, UNDER ANY CIRCUMSTANCES, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
HEREINAFTER, BE LIABLE TO BUYER FOR ANY DAMAGES OF ANY NATURE, INCLUDING BUT NOT
LIMITED TO DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, OR
FOR LOSS OF PROFIT. BUYER'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH BY A
SELLING PARTY WITH RESPECT TO AND/OR ARISING OUT OF THE RIGHT OF FIRST REFUSAL,
AND A SELLING PARTY'S SOLE LIABILITY OF ANY KIND PURSUANT TO THE RIGHT OF FIRST
REFUSAL, REGARDLESS OF THE LEGAL THEORY PURSUANT TO WHICH DAMAGES ARE SOUGHT,
SHALL BE LIMITED TO THE TOTAL SUM OF ONE ($1.00) DOLLAR.
4. DELIVERY OF DOCUMENTS BY SELLER. Within ten (10) days following the
date hereof, or as soon thereafter as possible, Seller shall deliver to Buyer
the following documents (the "Documents"):
(a) Copies of all current and historical sales and any other
financial information provided to Seller by the Tenant, which shall include the
fiscal quarter ended September 30, and the previous three years (the "Financial
Information");
(b) A copy of the Lease, including any amendments thereto;
(c) Copies of (i) the Warranties, (ii) the Licenses, (iii)
certificates of occupancy for the Improvements, (iv) the Plans, (v) the Property
Agreements, (vi) any Phase I Environmental Reports, and (vii) engineering
studies, but only to the extent that such Documents are in Seller's possession
or obtainable by Seller without expense;
<PAGE>
(d) Payment history of the Tenant for the two (2) year period ending
December 31, 1995 (the "Payment History"); and
(e) Copies of Seller's financial statements for the three year period
ending December 31, 1994.
5. TITLE INSURANCE; SURVEY. Within five (5) days following the date
hereof, Buyer shall order the following:
(a) A Commitment for title insurance covering the fee estate in the
Land and the Improvements ("Title Commitment") from Title Company, setting forth
the status of the title of the Land and the Improvements, showing all matters of
record affecting the Land and the Improvements, together with a true, complete,
and legible copy of all documents referred to in the Title Commitments; and
(b) A current "as-built" survey ("Survey") listing all easements and
encroachments affecting the Property, parking spaces (including handicapped
designation), containing a flood plain certification, in form and context
satisfactory to the Title Company.
6. RIGHT OF ENTRY, INSPECTION, TERMINATION.
(a) From the date hereof to the Closing Date, Seller shall afford
Buyer and its representatives a continuing right to inspect, at reasonable
hours, the Property and any data or documents pertaining to the Property
reasonably requested by Buyer. Buyer shall indemnify and hold Seller harmless
from and against any loss, claim or liability arising or resulting from the
inspections made by Buyer. If for any reason Buyer is not satisfied with the
physical condition of the Improvements, any matter in the Documents, or any
matter in the information available to Buyer concerning the Property, Buyer may
terminate this Agreement in accordance with Section 15, by delivering written
notice to Seller prior to 5:00 o'clock p.m. on the date that is thirty (30) days
after the last to be delivered of any of the Documents (such period, the
"Inspection Period").
(b) Seller shall use reasonable efforts to obtain from the Tenant,
prior to the end of the Inspection Period, an estoppel certificate substantially
in form of EXHIBIT B attached hereto. If Seller cannot obtain such an estoppel
certificate prior to 5:00 p.m. of the last day of the Inspection Period, Buyer
shall the right to terminate this Agreement in accordance with Section 15, by
delivering written notice to Seller prior to the expiration of the Inspection
Period.
(c) Buyer's failure to terminate this Agreement by delivering the
notice by the time called for in Section 6(a) or 6(b) shall be deemed to
constitute the waiver of Buyer's right to terminate this Agreement pursuant to
such Section.
<PAGE>
7. TITLE. Buyer shall have the right, at any time during the Inspection
Period, to object in writing to any matters reflected by the Survey or the Title
Commitment. All matters to which Buyer objects are "Non-Permitted
Encumbrances". All matters to which such objection is not made are "Permitted
Encumbrances". Seller, at its sole cost and expense, shall have the right, but
not the obligation, to cure or remove any or all Non-Permitted Encumbrances
within thirty (30) days following the expiration of the Inspection Period. If
Seller does not cause all of the Non-Permitted Encumbrances to be removed or
cured within the above described thirty (30) day period, then Buyer shall have
the right, as its sole and exclusive remedies, either (i) to terminate this
Agreement in accordance with Section 15 by delivering notice to Seller within
two (2) days after the expiration of the above described thirty (30) day period,
or (ii) to elect to purchase the Property subject to all encumbrances, without
any reduction in the Purchase Price. Buyer's failure to deliver the foregoing
notice of termination shall be deemed Buyer's acceptance of such Non-Permitted
Encumbrances and a waiver of such Buyer's right to terminate pursuant to this
Section 7.
8. REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants
to, and covenants with, Buyer that:
(a) Seller has the full right, power, and authority to execute,
deliver, and perform this Agreement, and this Agreement, when executed and
delivered by Seller and Buyer, shall constitute the valid and binding agreement
of Seller, and shall be enforceable against Seller in accordance with its terms.
(b) All requisite action on the part of Seller has been taken by
Seller in connection with making and entering into this Agreement and the
consummation of the purchase and sale provided for herein.
(c) No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or, to the best of Seller's knowledge, threatened
against Seller, which would materially adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement.
(d) Seller has not received any written notice from appropriate
governmental authorities that the Property is in violation of any applicable
laws.
(e) Seller has not received any written notices from any insurance
company, board of fire underwriters or similar organization regarding any
defects in the Property.
(f) Seller has no actual knowledge of any litigation, or threatened
litigation, or of claims of any kind, or of any facts or circumstances which can
reasonably be expected to have a material adverse effect upon the Seller or the
Property, including
<PAGE>
regulations of the Environmental Protection Agency and any state regulatory
body concerning the disposal of grease, hazardous waste, petroleum, any
underground storage tanks or any other hazardous materials, or regulations of
the Americans Disability Act providing for access to the premises, dining
areas and bathroom areas of the Property.
(g) Seller has no contracts of any kind, such as for waste disposal,
termite protection, cleaning services, or paper supplies, which will survive the
Closing Date.
(h) Seller has received no written notice of taking, condemnation,
betterment or assessment, actual or proposed, with respect to the Property.
(i) To the best of Seller's actual knowledge, all structures and
Improvements upon the Property have been constructed and installed, in all
material respects, in compliance with the Plans and with all applicable laws,
statutes, ordinances, codes, covenants, conditions and restrictions of any kind
or nature affecting the Land or Improvements.
(j) To the best of Seller's actual knowledge, all Licenses and
occupancy certificates necessary for the operation and occupancy of the
Property, including, but not limited to, all building and use permits, have been
obtained for all operations to date and shall be maintained through Closing.
(k) From and after the date hereof, and until the Closing or
termination of this Agreement, Seller shall not sell, assign or create any
right, title or interest whatsoever in or to the Property or create any lien,
encumbrance or charge thereon without promptly discharging the same.
(l) From and after the date hereof, and until the Closing or
termination of this Agreement, Seller shall not take any action, or omit to take
any action, which action or omission would have the effect of violating any of
the representations and warranties of Seller contained in this Agreement.
(m) The Lease, with any amendments or extensions thereto, is in full
force and effect, and Seller has no actual knowledge of any event which would
constitute an event of default either by Seller or Tenant under the Lease.
(n) The Financial Information was provided to Seller by the Tenant
and, without having undertaken any independent investigation, Seller does not
have any actual knowledge that the Financial Information is not correct.
(o) The Payment History is true and correct in all material respects.
<PAGE>
All representations and warranties made in this Agreement shall be
deemed to be made on the date hereof and again on the Closing Date. It shall be
a condition of Buyer's obligation to close that all warranties and
representations made hereunder are true, in all material respects, on the
Closing Date. All such representations and warranties shall survive the Closing
for a period of one year and shall not be deemed to have merged into and be
governed by the Closing Documents. If Buyer discovers, prior to Closing, that
any representation or warranty made in this Agreement is not true, then Buyer
shall have the right, as its sole and exclusive remedies, either (i) to
terminate this Agreement in accordance with Section 15, by delivering notice to
Seller prior to the Closing Date, or (ii) to elect to purchase the Property
subject to such untrue warranty or representation without any reduction in the
Purchase Price. If Buyer discovers, after Closing, that any representation or
warranty made in this Agreement is not true, Buyer shall be entitled to exercise
any and all rights and remedies available at law or in equity as a result of
such breach provided, however, that as a condition to Buyer's right to do so,
Buyer must deliver written notice of such breach to Seller within one (1) year
after the Closing Date and Buyer must exercise such remedies including the
filing of any suit or other action within two (2) years after the Closing Date,
based on a breach of which Buyer gave Seller such notice within such one (1)
year period after the Closing Date.
9. CLOSING. The closing (the "Closing") of the sale of the Property by
Seller to Buyer shall occur on or before the 23rd day of January, 1996 (the
"Closing Date"). Closing shall occur in the offices of Seller in Conynham,
Pennsylvania, commencing at 10:00 a.m., or at another place and or time as
mutually agreed upon by Seller and Buyer, in writing. At the Closing:
(a) Buyer shall deliver to Seller (i) payment in accordance with
Section 3; (ii) evidence satisfactory to Seller and Title Company that the
person executing documents on behalf of Buyer has full right, power and
authority to do so; and (iii) an Assignment and Assumption of Lease in the form
of EXHIBIT C, fully executed, sworn to, and acknowledged by Buyer;
(b) Seller shall deliver or cause to be delivered to Buyer the
following (the "Closing Documents"):
(i) Special Warranty Deed, in the form of EXHIBIT D, conveying
to Buyer the Land and Improvements; General Assignment, in the form of
EXHIBIT E; Bill of Sale, in the form of EXHIBIT F; IRC Section 1445
Certification, in the form of EXHIBIT G; and Assignment and Assumption of
Lease, in the form of EXHIBIT C; all fully executed, sworn to, and
acknowledged, as appropriate, by Seller;
(ii) Evidence satisfactory to Buyer and the Title Company that
the person or persons executing the Closing Documents on behalf of Seller have
full right, power and authority to do so;
<PAGE>
(iii) The originals (to the extent in Seller's possession) of
the Lease, the Financial Information and all Property Agreements, Warranties,
Licenses and Plans; and
(iv) An "investment letter" from Seller and the Trust
substantially in the form of EXHIBIT H attached hereto.
(c) Buyer shall be responsible for the costs of obtaining the Title
Commitment, the Owner Policy of Title Insurance for the Property, the Survey and
all required updates thereof, any escrow fees of the Title Company and recording
fees. Buyer and Seller shall share equally all applicable transfer taxes.
(d) The brokerage fee agreed to be paid by Buyer to Broker, as
hereinafter defined, as set forth in Section 12 hereof shall be paid by Buyer at
Closing. Each of Seller and Buyer shall pay its own legal fees incurred in
connection with this Agreement.
10. OPERATION OF PROPERTY. From the date hereof until Closing, Seller
warrants that it shall maintain and operate the Property in a manner consistent
with its past maintenance and operation.
11. NOTICES. Any notice provided or permitted to be given under this
Agreement must be in writing and may be served by depositing same in the United
States mail, addressed to the party to be notified, postage prepaid and
certified, with return receipt requested, by delivering the same in person to
such party, or by delivering the same by confirmed facsimile. Notice given in
accordance herewith shall be effective upon the earlier of receipt at the
address of the addressee or on the third (3rd) day following deposit of same in
the United States mall as provided for herein. For purposes of notice, the
addresses of the parties shall be as follows:
If to Seller, to: Select Properties
c/o Louis Hirsh Investments
Conyngham, PA 18219
Attn: Louis Hirsh
Telephone No. 717-788-4116
Fax No. 717-788-4282
with a copy to: Astor Weiss Kaplan & Rosenblum
200 S. Broad Street - Sixth Floor
Philadelphia, PA 19102
Attn: G. David Rosenblum, Esquire
Telephone No. 215-790-0100
Fax No. 215-790-0509
<PAGE>
If to Buyer, to: U. S. Restaurant Properties Operating L. P.
Attn: David Pettijohn
5310 Harvest Hill Road
Suite 270, Lock Box 168
Dallas, Texas 73230
Telephone No. 214-387-1487
Fax No. 214-490-9119
Either party may change its address for notice by giving ten (10) days prior
written notice thereof to the other party.
12. COMMISSIONS. Buyer shall pay to Louis Hirsh Investments or its
designee ("Broker") a commission in connection with the sale of the Property and
the Other Properties (as defined hereinafter), in the total amount of
$300,000.00, which payment shall be made in accordance with Section 9(d) hereof;
provided that Buyer shall have no obligation to make any payment to Broker
unless and until the purchase and sale provided for herein is consummated. If
the purchase and sale contemplated herein is not consummated for any reason,
including default by Buyer or Seller, no commission, fee, or charge shall be
due, earned or payable to Broker. Seller shall defend, indemnify, and hold
harmless Buyer from any claim by any party other than Broker claiming under
Seller for any brokerage, commission, finder's, or other fees relative to this
Agreement or the sale of the Property, and any court costs, attorneys' fees, or
other costs or expenses arising therefrom and alleged to be due by authorization
of Seller. Buyer shall defend, indemnify and hold harmless Seller from any
claim by any party claiming under Buyer for any brokerage, commission, finder's,
or other fees relative to this Agreement or the sale of the Property, and any
court costs, attorneys' fees, or other costs or expenses arising therefrom and
alleged to be due by authorization of Buyer.
13. ASSIGNS. This Agreement shall inure to the benefit of and be binding
on the parties hereto and their respective heirs, legal representatives,
successors and assigns. This Agreement may be assigned by Buyer without the
consent of Seller by delivery of written notice of assignment to Seller;
provided, however, that in the event of an assignment of this Agreement by
Buyer, Buyer shall nevertheless remain fully obligated by all of its obligations
hereunder.
14. DESTRUCTION, DAMAGE OR TAKING BEFORE CLOSING. In the event of damage
to or destruction of all or any portion of the Property by fire or other
casualty, Seller shall promptly notify Buyer. If Seller reasonably estimates
that $50,000.00 or less is required to be expended to repair or restore the
damaged or destroyed Property or portion thereof ("Repair Cost"), this Agreement
shall remain in full force and effect, and Seller shall, at its option, either
(i) repair such damage or destruction, or, if such damage or destruction has not
been repaired prior to Closing, (ii) require Buyer to take title to the
Property, assign to Buyer all available casualty insurance proceeds and
indemnify Buyer (in
<PAGE>
form and content satisfactory to Buyer) for all costs and expenses of repair
in excess of available insurance proceeds. If Seller reasonably estimates
that the Repair Cost exceeds $50,000.00, Buyer shall have, as its sole and
exclusive remedies, (i) the option to terminate this Agreement in accordance
with Section 14 within ten (10) business days after its receipt of notice
from Seller as set forth above, by notice in writing to Seller, or (ii) if
Buyer does not elect to terminate, this Agreement shall remain in full force
and effect, Buyer shall take title to the Property subject to such damage to
or destruction, with an assignment by Seller to Buyer of all available
casualty insurance proceeds. In the event of an eminent domain taking or the
issuance of a notice of an eminent domain taking with respect to all or any
portion of the Property, Seller shall promptly notify Buyer. Buyer shall
have, as its sole and exclusive remedies, (i) the option to terminate this
Agreement in accordance with Section 14 within ten (10) business days after
its receipt of such notice from Seller, by notice in writing to Seller, or
(ii) if Buyer does not elect to terminate this Agreement, this Agreement
shall remain in full force and effect, Buyer shall be obligated to consummate
this transaction for the full Purchase Price, and Buyer shall be entitled to
receive all eminent domain awards and, to the extent the same may be
necessary and appropriate, Seller shall assign to Buyer at Closing Seller's
rights to such awards. In no event shall the Purchase Price be reduced,
except to the extent of any deductible amounts payable in connection with
insurance proceeds assigned by Seller to Buyer.
15. TERMINATION AND REMEDIES.
15.1 If Buyer fails to consummate the purchase of the Property
pursuant to this Agreement for any reason other than termination hereof pursuant
to a right granted to Buyer in Sections 5, 6, 7, 8 or 14, then Seller, as its
sole and exclusive remedy, shall have the right to terminate this Agreement by
notifying Buyer thereof, in which event the Title Company shall deliver the
Earnest Money to Seller, as liquidated damages, whereupon neither Buyer nor
Seller shall have any further rights or obligations hereunder. Seller and Buyer
hereby acknowledge and agree they have included the provision for payment of
liquidated damages because, in the event of a breach by Buyer, the actual
damages incurred by Seller can reasonably be expected to approximate the amount
of liquidated damages called for, and because the actual amount of such damages
would be difficult if not impossible accurately to measure.
15.2 If Seller fails to consummate the sale of the Property pursuant
to this Agreement for any reason other than (i) termination hereof by Buyer
pursuant to Sections 5, 6, 7, 8 or 14, or (ii) Buyer's failure to perform its
obligations hereunder, Buyer shall have the right, as its sole and exclusive
remedies, to either (x) terminate this Agreement by notifying Seller thereof, in
which case the Title Company shall deliver the Earnest Money to Buyer, whereupon
neither party hereto shall have any further rights or obligations hereunder, or
(y) enforce specific performance of the obligations of Seller hereunder.
<PAGE>
15.3 If Buyer terminates this Agreement pursuant to a right granted
Buyer in Sections 5, 6, 7, 8 or 14, then the Title Company shall deliver the
Earnest Money to Buyer, whereupon neither Buyer or Seller shall have any further
rights or obligations hereunder, unless Seller objects to Buyer's right to
properly terminate this Agreement pursuant to such sections, in which event the
Title Company shall retain the Earnest Money until the Title Company receives
instructions with respect to the disposition of the Earnest Money from both
Buyer or Seller or until such time as a court of competent jurisdiction
determines the disposition of the Earnest Money.
15.4 Buyer and Seller acknowledge that Buyer has, concurrently
herewith, entered into Purchase and Sale Agreements with Seller, Fast Food
Properties, Fast Food Properties II and Ohio Properties with respect to fourteen
(14) other restaurant properties, in addition to the Property (such 14 other
Properties are referred to hereinafter as the "Other Properties"). In the event
that (a) the closing of title with respect to each and every one of the Other
Properties does not take place on the Closing Date for any reason other than by
reason of the seller's default, or (b) the seller shall have the right to
terminate or terminates the Purchase and Sale Agreement for any one or more of
the Other Properties, or (c) Buyer terminates the Purchase and Sale Agreement
for any one or more of the Other Properties other than by reason of Seller's
default, then Seller shall have the right to terminate this Agreement pursuant
to this section 15.4 by notifying Buyer thereof, in which event the Earnest
Money shall be returned to Buyer, unless the closing of title with respect to
each and every one of the Other Properties does not take place on the Closing
Date by reason of Buyer's default, in which event the Title Company shall
deliver the Earnest Money to Seller, as liquidated damages, whereupon neither
Buyer nor Seller shall have any further rights or obligations hereunder.
15.5 In the event that (a) the closing of title with respect to each
and every one of the Other Properties does not take place on the Closing Date
for any reason other than by reason of Buyer's default, or (b) Buyer shall have
the right to terminate or terminates the Purchase and Sale Agreement for any
one or more of the Other Properties, or (c) the seller terminates the Purchase
and Sale Agreement for any one or more of the Other Properties other than by
reason of Buyer's default, then Buyer shall have the right to terminate this
Agreement pursuant to this section 15.5 by notifying Seller thereof, in which
event the Earnest Money shall be returned to Buyer, unless the closing of title
with respect to each and every one of the Other Properties does not take place
on the Closing Date by reason of Buyer's default, in which event the Title
Company shall deliver the Earnest Money to Seller, as liquidated damages,
whereupon neither Buyer nor Seller shall have any further rights or obligations
hereunder.
<PAGE>
16. MISCELLANEOUS.
16.1 Each of Buyer and Seller agrees with the other that it has no
present intention to make any public announcement of the purchase and sale
transaction contemplated hereby or of any of the terms thereof, and shall obtain
the written consent of the other party prior to making any announcement or
divulging any information.
16.2 Both Seller and Buyer shall cooperate with one another and in a
timely manner execute all documents reasonably required to give effect to the
purchase and sale provided for herein.
16.3 If any provision of this Agreement is adjudicated by a court
having jurisdiction over a dispute arising hereunder to be invalid or otherwise
unenforceable for any reason, such invalidity or unenforceability shall not
affect the other provisions hereof.
16.4 This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Pennsylvania and the parties hereby consent
to the jurisdiction of the Court of Common Pleas of the City of Philadelphia
and/or the United States District Court for the Eastern District of Pennsylvania
for purposes of resolving any dispute between the parties arising under this
Agreement.
16.5 This Agreement is the entire agreement between Seller and Buyer
concerning the sale of the Property and no modification hereof or subsequent
agreement relative to the subject matter hereof shall be binding on either party
unless reduced to writing and signed by the party to be bound.
16.6 The provisions of Sections 3, 7, 8 and 10 shall survive Closing.
16.7 EXHIBITS A-H attached hereto are incorporated herein by this
reference for all purposes. Time is of the essence in the performance of each
and every provision of this Agreement.
16.8 In the event that the last day for taking any action or serving
notice under this Agreement falls on a Saturday, Sunday or legal holiday, the
time period shall be extended until the following business day.
16.9 Seller shall provide Buyer with a copy of Seller's financial
statements for the period ending December 31, 1995 within 60 days following the
Closing Date.
17. DATE OF AGREEMENT. All references in this Agreement to "the date
hereof" or similar references shall be deemed to refer to the last date, in
point of time, on which both parties hereto have executed and received a fully
executed copy of this Agreement.
<PAGE>
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
date first set forth above.
BUYER:
U. S. RESTAURANT PROPERTIES OPERATING L. P.
By: U. S. RESTAURANT PROPERTIES, INC.,
its General Partner
By:
----------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
SELLER:
SELECT PROPERTIES, a Pennsylvania limited
partnership
By:
-----------------------------------------
LOUIS HIRSH,
its General Partner
<PAGE>
The undersigned hereby executes this Agreement for the sole purpose of (i)
acknowledging receipt of the Earnest Money and (ii) to evidence its agreement to
hold the Earnest Money in trust for the parties hereto in accordance with the
terms of this Agreement.
TITLE COMPANY:
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date of Execution:
--------------------------
<PAGE>
ATTACHMENTS:
- ------------
Schedule 1 - Legal Description of the Land
Exhibit A - Personal Property
Exhibit B - Tenant Estoppel Certificate
Exhibit C - Assignment and Assumption of Lease Agreement
Exhibit D - Special Warranty Deed
Exhibit E - General Assignment
Exhibit F - Bill of Sale
Exhibit G - IRC Section 1445 Certification
Exhibit H - Investment Letter
<PAGE>
Schedules and Exhibits Omitted
<PAGE>
EXHIBIT 2.3
Schedule of Substantially Identical Documents
Purchase and Sale Agreements, between the following entities and
U.S. Restaurant Properties Operating L.P.
<TABLE>
Purchase Price (each
of which comprises a
combination of cash
Seller Property and Purchaser Units)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Fast Food Properties II Rt. 49 East, Central Square, NY 1,070,352
Select Properties Clay, Onodage Co., NY 653,832
Ohio Properties Taylor's Military Svy., No. 637,
Union, Clemont Co., OH 812,028
Fast Food Properties II N. Church St., Hazleton, PA 568,354
Ohio Properties 211 S. Main St., Old Forge, PA 783,874
Fast Food Properties II 560 Spring Mill Rd., Mansfield, OH 660,447
Select Properties Canton, OH 938,640
Fast Food Properties 18860 S. Dixie Hwy., Miami, FL 978,608
Fast Food Properties II 50 Buckeye Cove Rd., Canton, NC 1,130,069
Fast Food Properties II Durham Triangle, NC 1,035,936
Fast Food Properties II 3414 Roxboro Rd., Durham Co., NC 987,500
Ohio Properties 515 No. Broad St., West Hazleton, PA 514,194
Fast Food Properties II Binghamton, NY 599,904
Ohio Properties 1 West Main Street, Nanticoke, PA 686,432
----------
11,420,170
</TABLE>
<PAGE>
EXHIBIT 2.4
PURCHASE AND SALE AGREEMENT
BURGER KING RESTAURANT
FORT WORTH, TEXAS
<PAGE>
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of May
______, 1996, by and between CAROL HAVENER ("Seller"), and U. S. RESTAURANT
PROPERTIES OPERATING L. P., a Delaware limited partnership ("Buyer"), and its
assigns.
W I T N E S S E T H:
In consideration of the mutual covenants set forth herein, Seller and
Buyer agree as follows:
1. CONVEYANCE OF PROPERTY. On the terms and subject to the conditions
set forth in this Agreement, at Closing, as hereinafter defined, Seller shall
sell, convey and assign to Buyer, and Buyer shall buy and accept from Seller,
subject to the Permitted Encumbrances, as hereinafter defined, the property (the
"Property") designated on SCHEDULE 1 hereto, including the following:
(a) Good and indefeasible title in fee simple to the land (the
"Land"), located at 4217 Bridge Street, Fort Worth, Texas on which a Burger
King restaurant is located, together with all rights and interests appurtenant
thereto, including Seller's right, title, and interest in and to all adjacent
streets, alleys, rights-of-way and any adjacent strips or gores of real estate;
and buildings, structures and other improvements located on the Land
("Improvements");
(b) all of Seller's interest in the leases demising space in the
Improvements ("Lease") and the security deposits ("Deposits") made by tenant
("Tenant") holding under the Lease;
(c) to the extent assignable, all of Seller's interest in all
agreements (other than the agreements described elsewhere in this Section 1)
that relate to the ownership, maintenance and operation of the Property
("Property Agreements") which Buyer agrees in writing to assume; and
(d) to the extent in Seller's possession and assignable, any and all
(i) plans, drawings, specifications, surveys, and other technical descriptions
("Plans"), (ii) warranties ("Warranties"), (iii) licenses or permits
("Licenses"), and (iv) telephone exchanges, trade names and marks, and other
identifying material pertaining to the Land and Improvements ("Intangible
Personal Property").
2. EARNEST MONEY. Within three (3) business days of the date both Buyer
and Seller execute and deliver this Agreement, Buyer shall deliver to
Commonwealth Land Title, Attn: Karen Moreau, 14643 Dallas Parkway, Suite 770,
Lock Box 61, Dallas, Texas 75240 ("Title Company") $50.00 ("Non-Refundable
Earnest Money") in consideration for this Agreement and the Inspection Period,
as hereinafter defined. The Title Company shall immediately deliver the Non-
Refundable Earnest Money to Seller and the Non-Refundable Earnest Money shall be
retained by Seller in all events. In addition, the Buyer shall deposit
$5,000.00 with Title Company (the "Earnest Money"). The Earnest Money shall be
deposited in escrow or trust accounts that are interest-bearing, readily
available, liquid and federally insured to the full extent of the Earnest Money
deposited therein so that no portion of the
PURCHASE AND SALE AGREEMENT - PAGE 1
BURGER KING - FORT WORTH, TEXAS
<PAGE>
Earnest Money shall ever be at risk. The Earnest Money shall include any
interest earned thereon. Title Company shall deliver the Earnest Money only
in accordance with this Agreement.
3. PURCHASE PRICE.
(a) The purchase price for the Property shall be $600,000.00 (the
"Purchase Price"), payable by delivery by Buyer of 25,000 units of limited
partnership (the "Units") of U. S. Restaurant Properties Master L. P., a
Delaware limited partnership (the "Partnership"). The Units will not be
registered under U. S. securities laws and Seller will be restricted from
selling or transferring the Units during the two (2) year period following the
Closing Date. For purposes of determining the credit against the Purchase Price
for Units delivered hereunder, each Unit shall be valued at $24.00, which
valuation shall not be affected by any change in the market price of the Units
between the contract date and Closing. The Purchase Price shall be paid to the
Title Company and distributed by the Title Company as designated by Seller. The
Purchase Price shall be credited by the Earnest Money (and any interest earned
thereon) to the extent delivered to Seller and shall be adjusted as described in
this Agreement.
(b) No proration shall be made of real estate and personal property
taxes, utility charges and maintenance expenses, since these expenses are
obligations of the Tenant pursuant to the Lease. Base Rent pursuant to the
Lease shall be prorated as of 11:59 o'clock p.m. on the Closing Date.
4. DELIVERY OF DOCUMENTS BY SELLER. On or before the date which is seven
(7) days following the date hereof, Seller shall deliver to Buyer the following
documents ("Documents"):
(a) All current and historical sales information provided to Seller
by the Tenant under the Lease and all balance sheets and financial information
of Tenant (the "Financial Statements");
(b) Payment history of Tenant under the Lease for the prior two (2)
years;
(c) Commitment for title insurance covering the fee estates in the
Land and the Improvements ("Title Commitment") from the Title Company, setting
forth the status of the title of the Land and the Improvements, showing all
matters of record affecting the Land and the Improvements, together with a true,
complete, and legible copy of all documents referred to in the Title Commitment;
(d) Current "as-built" survey ("Survey") listing all easements and
encroachments affecting the Property, parking spaces (including handicapped
designation), containing a flood plain certification, in form and content
satisfactory to Buyer and the Title Company;
(e) Current Phase I Environmental Report for the Property (the
"Report"); and
(f) copies of any (i) Warranties, (ii) Licenses, (iii) certificates
of occupancy for the Improvements, (iv) Plans, (v) Property Agreements, (vi)
engineering studies, but only to the extent in
PURCHASE AND SALE AGREEMENT - PAGE 2
BURGER KING - FORT WORTH, TEXAS
<PAGE>
Seller's possession or obtainable by Seller without undue expense. In addition,
Seller shall prepare and deliver to Buyer an inventory of any personal property
("Personal Property") to be conveyed to Buyer.
5. RIGHT OF ENTRY AND INSPECTION.
(a) From the date hereof to the Closing Date, Seller shall afford
Buyer and its representatives a continuing right to inspect, at reasonable
hours, the Property, Documents, and all other documents or data pertaining to
the Property. Buyer shall indemnify and hold Seller harmless from and against
any loss, claim or liability arising or resulting from the inspections made by
Buyer. If Buyer, in its sole and absolute discretion is not satisfied with the
physical condition of the Improvements, any matter in the Documents, or any
matter in the information available to Buyer concerning the Property, Buyer may
terminate this Agreement in accordance with Section 14, by delivering written
notice to Seller prior to 5:00 o'clock p. m. on the date that is thirty (30)
days after the last to be delivered of any of the Documents referenced in
Sections 4(a) through 4(e) hereof (such period, the "Inspection Period").
(b) Buyer's failure to terminate this Agreement by delivering the
notice by the time called for in Section 5(a) shall terminate Buyer's right to
terminate this Agreement under that Section.
6. TITLE. Buyer shall have the right, at any time during the Inspection
Period, to object in writing to any matters reflected by the Survey or the Title
Commitment. All matters to which Buyer objects are "Non-Permitted
Encumbrances". All matters to which such objection is not made are "Permitted
Encumbrances". Seller, at its sole cost and expense, shall have the right, but
not the obligation, to cure or remove all Non-Permitted Encumbrances within ten
(10) days following the expiration of the Inspection Period. If Seller does not
cause all of the Non-Permitted Encumbrances to be removed or cured within the
above described ten (10) day period, then Buyer shall have the right, as its
sole and exclusive remedies, either (i) to terminate this Agreement in
accordance with Section 14 by delivering notice to Seller within two (2) days
after the expiration of the above described ten (10) day period, or (ii) to
elect to purchase the Property subject to the Non-Permitted Encumbrances without
any reduction in the Purchase Price. Buyer's failure to deliver the foregoing
notice of termination shall be deemed Buyer's waiver of such Non-Permitted
Encumbrances and a waiver of such right to terminate.
7. REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants
to, and covenants with, Buyer that:
(a) Seller has the full right, power, and authority to execute,
deliver, and perform this Agreement, and this Agreement, when executed and
delivered by Seller and Buyer, shall constitute the valid and binding agreement
of Seller, and shall be enforceable against Seller in accordance with its terms.
(b) All requisite action on the part of Seller has been taken by
Seller in connection with making and entering into this Agreement and the
consummation of the purchase and sale provided for herein.
PURCHASE AND SALE AGREEMENT - PAGE 3
BURGER KING - FORT WORTH, TEXAS
<PAGE>
(c) No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or, to the best of Seller's knowledge, threatened
against Seller, which would materially adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement.
(d) Seller has not received any written notice from appropriate
governmental authorities that the Property is in violation of any applicable
laws.
(e) Seller has not received any written notices from any insurance
company, board of fire underwriters or similar organization regarding any
defects in the Property.
(f) Seller has no knowledge of any litigation, or possible
litigation, or of claims of violations or noncompliance with applicable laws and
regulations affecting the Property, including regulations of the Environmental
Protection Agency and any state regulatory body concerning the disposal of
grease, hazardous waste, petroleum, any underground storage tanks or any other
hazardous materials, or regulations of the Americans Disability Act providing
for access to the premises, dining areas and bathroom areas of the Property
("Applicable Laws").
(g) Seller has no contracts of any kind, such as for waste disposal,
termite protection, cleaning services, or paper supplies which will survive the
Closing Date.
(h) To the best of Seller's knowledge, the Financial Statements are
and will be true, correct, accurate and complete and will not omit to state any
fact or condition, the omission of which makes such statements misleading.
(i) Seller has received no written notice of taking, condemnation,
betterment or assessment, actual or proposed, with respect to the Property.
(j) All structures and Improvements upon the Property have been
constructed and installed in full compliance with the Plans and with all
applicable laws, statutes, ordinances, codes, covenants, conditions and
restrictions of any kind or nature affecting the Land or Improvements.
(k) No portion of the Property lies within any 100-year flood plain.
(l) Except for the Permitted Encumbrances, Seller owns the Property
free and clear of all liens, restrictions, charges and encumbrances. From the
date hereof until the Closing Date or earlier termination of this Agreement,
Seller will not sell or assign any of the Property or create or permit to exist
any liens (other than Permitted Encumbrances), encumbrances or charges thereon
without discharging the same prior to the Closing Date.
(m) Seller has no information or actual knowledge of any proposed
change in any of the Applicable Laws or any judicial or administrative action or
any action by adjacent land owners or
PURCHASE AND SALE AGREEMENT - PAGE 4
BURGER KING - FORT WORTH, TEXAS
<PAGE>
any facts or conditions relating to the Property which would materially and
adversely affect, prevent or limit the use of such Property as a restaurant.
(n) All Licenses and occupancy certificates necessary for the
operation and occupancy of the Property, including, but not limited to, all
building and use permits, have been obtained for all operations to date and
shall be maintained through Closing.
(o) The Lease is in full force and effect, and Seller has no
knowledge of any event which would constitute a default or an event of default
either by Seller or Tenant under the Lease.
(p) From and after the date hereof, and until the Closing or earlier
termination of this Agreement, Seller shall not take any action, or omit to take
any action, which action or omission would have the effect of violating any of
the representations and warranties of Seller contained in this Agreement.
All representations and warranties made in this Agreement shall be
deemed to be made on the date hereof and again on the Closing Date. It shall be
a condition of Buyer's obligation to close that all warranties and
representations made hereunder are true on the Closing Date. All such
representations and warranties shall survive the Closing for a period of one
year and shall not be deemed to have merged into and be governed by the Closing
Documents. If Buyer discovers prior to Closing, that any representation or
warranty made in this Agreement is not true, then Buyer shall have the right, as
its sole and exclusive remedies, to either (i) terminate this Agreement in
accordance with Section 14 by delivering notice to Seller prior to the Closing
Date, or (ii) elect to purchase the Property subject to such untrue warranty or
representation without any reduction in the Purchase Price. If Buyer discovers
after Closing that any representation or warranty made in this Agreement is not
true, Buyer shall be entitled to exercise any and all rights and remedies
available at law or in equity as a result of any breach of any of such
representations or warranties, provided as a condition to Buyer's right to do
so, Buyer must deliver written notice of such breach to Seller within one (1)
year after the Closing Date and Buyer must exercise such remedies including the
filing of any suit or other action within two (2) years after the Closing Date,
based on a breach thereof of which Buyer gave Seller such notice within such one
(1) year period after the Closing Date.
8. CLOSING. The closing ("Closing") of the sale of the Property by
Seller to Buyer shall occur on the date seven (7) days following the last day
of the Inspection Period, or at such earlier date agreed to by Seller and
Buyer in writing (the date such Closing occurs is hereinafter referred to as
the "Closing Date"). Closing shall occur in the offices of the Title
Company, located at 14643 Dallas Parkway, Suite 770, Dallas, Texas 75240, or
at another place and or time as mutually agreed upon by Seller and Buyer,
commencing at 10:00 o'clock a.m. on the Closing Date. At Closing:
(a) Buyer shall deliver to Seller (i) the Purchase Price in
accordance with Section 3; and (ii) evidence satisfactory to Seller and the
Title Company that the person executing documents on behalf of Buyer has full
right, power and authority to do so.
PURCHASE AND SALE AGREEMENT - PAGE 5
BURGER KING - FORT WORTH, TEXAS
<PAGE>
(b) Seller shall deliver or cause to be delivered to Buyer the
following ("Closing Documents"):
(i) Special Warranty Deed in the form of EXHIBIT B, conveying to
Buyer the Land and Improvements subject to the Permitted Encumbrances;
General Assignment in the form of EXHIBIT C; Bill of Sale in the form of
EXHIBIT D; and IRC Section 1445 Certification in the form of EXHIBIT E;
Assignment and Assumption of Lease Agreement, in the form of EXHIBIT F;
original Estoppel Certificate in the form of EXHIBIT I; all fully executed,
sworn to, and acknowledged, as appropriate, by Seller;
(ii) Evidence satisfactory to Buyer and Title Company that the
person or persons executing the Closing Documents on behalf of Seller have
full right, power and authority to do so;
(iii) The originals (to the extent in Seller's possession) of
the Lease, all Property Agreements, Warranties, Licenses and Plans; and
(iv) An Investment Letter substantially in the form of EXHIBIT H,
hereto.
(c) Seller shall be responsible for the costs of obtaining the Title
Commitment, the Owner Policy of Title Insurance for the Property, and survey
costs (the "Closing Costs"). Buyer shall pay for the Reports and all recording
fees. Buyer and Seller shall share any escrow fees of the Title Company.
(d) Each of Seller and Buyer shall pay its own legal fees incurred in
connection with this Agreement; provided, however, that if a suit is filed by
Buyer or Seller alleging a breach hereof or default hereunder, the non-
prevailing party shall pay all reasonable legal fees of the prevailing party
resulting from such suit.
(e) Seller shall deliver to Buyer possession of the Property.
9. OPERATION OF PROPERTY. From the date hereof until Closing, Seller
warrants that it shall maintain and operate the Property in a manner consistent
with its past maintenance and operation.
10. NOTICES. Any notice provided or permitted to be given under this
Agreement must be in writing and may be served by depositing same in the United
States mail, addressed to the party to be notified, postage prepaid and
certified, with return receipt requested, by delivering the same in person to
such party, or by delivering the same by confirmed facsimile. Notice given in
accordance herewith shall be effective upon the earlier of receipt at the
address of the addressee or on the second (2nd) day following deposit of same in
the United States mail as provided for herein, regardless of whether same is
actually received. For purposes of notice, the addresses of the parties shall
be as follows:
PURCHASE AND SALE AGREEMENT - PAGE 6
BURGER KING - FORT WORTH, TEXAS
<PAGE>
If to Buyer, to: U. S. Restaurant Properties, Inc.
5310 Harvest Hill Road, Suite 270, LB 168
Dallas, Texas 75230
Attention: David Pettijohn
With copy to: Richard S. Wilensky, Esq.
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
If to Seller, to: Ms. Carol Havener
P. O. Box 121697
Fort Worth, Texas 76121
Either party may change its address for notice by giving ten (10) days prior
written notice thereof to the other party.
11. BROKERAGE COMMISSIONS. Buyer shall defend, indemnify, and hold
harmless Seller from any claim by any party claiming under Buyer for any
brokerage, commission, finder's, or other fees relative to this Agreement or the
sale of the Property, and any court costs, attorneys' fees, or other costs or
expenses arising therefrom and alleged to be due by authorization of Buyer.
Seller shall defend, indemnify and hold harmless Buyer from any claim by any
party claiming under Seller for any brokerage, commission, finder's, or other
fees relative to this Agreement or the sale of the Property, and any court
costs, attorneys' fees, or other costs or expenses arising therefrom and alleged
to be due by authorization of Seller.
12. ASSIGNS. This Agreement shall inure to the benefit of and be binding
on the parties hereto and their respective heirs, legal representatives,
successors and assigns. This Agreement may be assigned by Buyer without the
consent of Seller by delivery of written notice of assignment to Seller.
13. DESTRUCTION, DAMAGE OR TAKING BEFORE CLOSING. In the event of damage
to or destruction of all or any portion of the Property by fire or other
casualty, Seller shall promptly notify Buyer. If Seller reasonably estimates
that $50,000.00 or less is required to be expended to repair or restore the
damaged or destroyed Property or portion thereof ("Repair Cost"), this Agreement
shall remain in full force and effect, and Seller shall, at its option, either
(i) repair such damage or destruction, or, if such damage or destruction has not
been repaired prior to Closing, (ii) require Buyer to take title to the
Property, assign to Buyer all available casualty insurance proceeds and
indemnify Buyer (in form and content satisfactory to Buyer) for all costs and
expenses of repair in excess of available insurance proceeds. If Seller
reasonably estimates that the Repair Cost exceeds $50,000.00, Buyer shall have,
as its sole and exclusive remedies, (i) the option to terminate this Agreement
in accordance with Section 14 within ten (10) business days after its receipt of
notice from Seller as set forth above, by notice in writing to Seller, or (ii)
if Buyer does not elect to terminate, this Agreement shall remain in full force
and effect, Buyer shall take title to the Property subject to such damage to or
destruction, with an
PURCHASE AND SALE AGREEMENT - PAGE 7
BURGER KING - FORT WORTH, TEXAS
<PAGE>
assignment by Seller to Buyer of all available casualty insurance proceeds.
In the event of an eminent domain taking or the issuance of a notice of an
eminent domain taking with respect to all or any portion of the Property,
Seller shall promptly notify Buyer. Buyer shall have, as its sole and
exclusive remedies, (i) the option to terminate this Agreement in accordance
with Section 14 within ten (10) business days after its receipt of such
notice from Seller, by notice in writing to Seller, or (ii) if Buyer does not
elect to terminate this Agreement, this Agreement shall remain in full force
and effect, Buyer shall be obligated to consummate this transaction for the
full Purchase Price, and Buyer shall be entitled to receive all eminent
domain awards and, to the extent the same may be necessary and appropriate,
Seller shall assign to Buyer at Closing Seller's rights to such awards. In
no event shall the Purchase Price be reduced, except to the extent of any
deductible amounts payable in connection with insurance proceeds assigned by
Seller to Buyer.
14. TERMINATION AND REMEDIES.
(a) If Buyer fails to consummate the purchase of the Property
pursuant to this Agreement for any reason other than termination hereof pursuant
to a right granted to Buyer in Sections 5, 6, 7, or 13, then Seller, as its sole
and exclusive remedy, shall have the right to terminate this Agreement by
notifying Buyer thereof, in which event the Title Company shall deliver to
Seller, as liquidated damages, the Earnest Money, whereupon neither Buyer nor
Seller shall have any further rights or obligations hereunder. Seller and Buyer
hereby acknowledge and agree they have included the provision for payment of
liquidated damages because, in the event of a breach by Buyer, the actual
damages incurred by Seller can reasonably be expected to approximate the amount
of liquidated damages called for, and because the actual amount of such damages
would be difficult if not impossible accurately to measure.
(b) If Seller fails to consummate the sale of the Property pursuant
to this Agreement for any reason other than (i) termination hereof by Buyer
pursuant to Sections 5, 6, 7, or 13 or (ii) Buyer's failure to perform its
obligations hereunder, Buyer shall have the right, as its sole and exclusive
remedies, to either (i) terminate this Agreement by notifying Seller thereof, in
which case the Title Company shall deliver the Earnest Money to Buyer, whereupon
neither party hereto shall have any further rights or obligations hereunder, or
(ii) enforce specific performance of the obligations of Seller hereunder and/or
seek damages for breach of this Agreement by Seller.
(c) If Buyer terminates this Agreement pursuant to a right granted
Buyer in Section 5, 6, 7, or 13, then the Title Company shall deliver the
Earnest Money to Buyer whereupon neither Buyer or Seller shall have any further
rights or obligations hereunder.
15. MISCELLANEOUS. Each of Buyer and Seller agrees with the other that it
has no present intention to make any public announcement of the purchase and
sale transaction contemplated hereby or of any of the terms thereof, and shall
obtain the written consent of the other party prior to making any announcement
or divulging any information. Both Seller and Buyer shall cooperate with one
another and in a timely manner execute all documents reasonably required to give
effect to the purchase and sale provided for herein. If any provision of this
Agreement is adjudicated by a court having
PURCHASE AND SALE AGREEMENT - PAGE 8
BURGER KING - FORT WORTH, TEXAS
<PAGE>
jurisdiction over a dispute arising herefrom to be invalid or otherwise
unenforceable for any reason, such invalidity or unenforceability shall not
affect the other provisions hereof. This Agreement shall be governed and
construed in accordance with the laws of the State of Texas. This Agreement
is the entire agreement between Seller and Buyer concerning the sale of the
Property and no modification hereof or subsequent agreement relative to the
subject matter hereof shall be binding on either party unless reduced to
writing and signed by the party to be bound. The provisions of Sections 3, 7,
8, and 11 shall survive Closing. EXHIBITS A-I attached hereto are
incorporated herein by this reference for all purposes. Time is of the
essence in the performance of each and every provision of this Agreement. In
the event that the last day for taking any action or serving notice under
this Agreement falls on a Saturday, Sunday or legal holiday, the time period
shall be extended until the following business day.
16. DATE OF AGREEMENT. All references in this Agreement to "the date
hereof" or similar references shall be deemed to refer to the last date, in
point of time, on which all parties hereto have executed and received a fully
executed copy of this Agreement. This Agreement constitutes an offer by Buyer
to purchase the Property on the terms and conditions and for the Purchase Price
specified herein. Unless sooner terminated or withdrawn by notice in writing to
Seller, this offer shall lapse and terminate at the close of Buyer's business
day on ten (10) days following execution of this Agreement by Buyer, unless,
prior to such time, Seller has returned to Buyer two (2) fully executed copies
of this Agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
date first set forth above.
BUYER:
U. S. RESTAURANT PROPERTIES OPERATING L. P.
By: U. S. RESTAURANT PROPERTIES, INC.
By: /s/
----------------------------------------
Name: Fred Margolin
--------------------------------------
Title: Chairman
-------------------------------------
SELLER:
/s/ CAROL HAVENER
-------------------------------------------
CAROL HAVENER
PURCHASE AND SALE AGREEMENT - PAGE 9
BURGER KING - FORT WORTH, TEXAS
<PAGE>
The undersigned hereby executes this Agreement for the sole purpose of (i)
acknowledging receipt of the Earnest Money and the Non-Refundable Earnest Money
and (ii) to evidence its agreement to hold the Non-Refundable Earnest Money and
the Earnest Money in trust for the parties hereto in accordance with the terms
of this Agreement.
TITLE COMPANY:
COMMONWEALTH LAND TITLE COMPANY
By: /s/ DOUGLAS R. NELSON
----------------------------------------
Name: Douglas R. Nelson
--------------------------------------
Title: Vice President
-------------------------------------
Date of Execution: 6/21/96
-------------------------
PURCHASE AND SALE AGREEMENT - PAGE 10
BURGER KING - FORT WORTH, TEXAS
<PAGE>
ATTACHMENTS:
------------
Exhibit A - Personal Property
Exhibit B - Special Warranty Deed
Exhibit C - General Assignment
Exhibit D - Bill of Sale
Exhibit E - IRC Section 1445 Certification
Exhibit F - Assignment and Assumption of Lease Agreement
Exhibit G - Intentionally Deleted
Exhibit H - Investment Letter
Exhibit I - Estoppel Certificate
<PAGE>
Schedules and Exhibits Omitted
<PAGE>
EXHIBIT 2.5
PURCHASE AND SALE AGREEMENT
TWO PIZZA HUT RESTAURANTS
MARTINSBURG and FRONT ROYAL, VIRGINIA
<PAGE>
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of June,
______, 1996, by and between DIANE C. ROLPH, an individual ("Seller"), and U. S.
RESTAURANT PROPERTIES OPERATING L. P., a Delaware limited partnership ("Buyer"),
and its assigns.
W I T N E S S E T H:
In consideration of the mutual covenants set forth herein, Seller and Buyer
agree as follows:
1. CONVEYANCE OF PROPERTY. On the terms and subject to the conditions
set forth in this Agreement, at Closing, as hereinafter defined, Seller shall
sell, convey and assign to Buyer, and Buyer shall buy and accept from Seller,
subject to the Permitted Encumbrances, as hereinafter defined, the properties
(the "Properties") designated on SCHEDULE 1 hereto, including the following:
(a) Good and indefeasible title in fee simple to the land (the
"Land"), located in Martinsburg and Front Royal, Virginia on which Pizza Hut
restaurants are located, together with all rights and interests appurtenant
thereto, including Seller's right, title, and interest in and to all adjacent
streets, alleys, rights-of-way and any adjacent strips or gores of real estate;
and buildings, structures and other improvements located on the Land
("Improvements");
(b) all of Seller's interest in the leases demising space in the
Improvements ("Leases") and the security deposits ("Deposits") made by tenant
("Tenants") holding under the Leases;
(c) to the extent assignable, all of Seller's interest in all
agreements (other than the agreements described elsewhere in this Section 1)
that relate to the ownership, maintenance and operation of the Properties
("Property Agreements") which Buyer agrees in writing to assume; and
(d) to the extent in Seller's possession and assignable, any and all
(i) plans, drawings, specifications, surveys, and other technical descriptions
("Plans"), (ii) warranties ("Warranties"), (iii) licenses or permits
("Licenses"), and (iv) telephone exchanges, trade names and marks, and other
identifying material pertaining to the Land and Improvements ("Intangible
Personal Property").
2. EARNEST MONEY. Within three (3) business days of the date both Buyer
and Seller execute and deliver this Agreement, Buyer shall deliver to
Commonwealth Land Title Company, 14643 Dallas Parkway, Suite 770, Lock Box 61,
Dallas, Texas 75240, Attn: Karen Moreau ("Title Company") $50.00 ("Non-
Refundable Earnest Money") in consideration for this Agreement and the
Inspection Period, as hereinafter defined. The Title Company shall immediately
deliver the Non-Refundable Earnest Money to Seller and the Non-Refundable
Earnest Money shall be retained by Seller in all
PURCHASE AND SALE AGREEMENT - PAGE 1
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
events. In addition, the Buyer shall deposit $8,000.00 with Title Company
(the "Earnest Money"). The Earnest Money shall be deposited in escrow or
trust accounts that are interest-bearing, readily available, liquid and
federally insured to the full extent of the Earnest Money deposited therein
so that no portion of the Earnest Money shall ever be at risk. The Earnest
Money shall include any interest earned thereon. Title Company shall deliver
the Earnest Money only in accordance with this Agreement.
3. PURCHASE PRICE.
(a) The purchase price for the Property shall be $800,000.00 (the
"Purchase Price"), payable by delivery by Buyer of 32,000 units of limited
partnership (the "Units") of U. S. Restaurant Properties Master L. P., a
Delaware limited partnership (the "Partnership"). The Units will not be
registered under U. S. securities laws, but Buyer will obtain the registration
of the Units at its cost and expense within twelve (12) months after the Closing
Date. For purposes of determining the credit against the Purchase Price for
Units delivered hereunder, each Unit shall be valued at $25.00, and shall be
subject to the unit price guaranty of the Purchaser, attached as EXHIBIT G
hereto. The Purchase Price shall be paid to the Title Company and distributed
by the Title Company as designated by Seller. The Purchase Price shall be
adjusted as described in this Agreement.
(b) No proration shall be made of real estate and personal property
taxes, utility charges and maintenance expenses, since these expenses are
obligations of the Tenant pursuant to the Leases. Base Rent and Percentage Rent
pursuant to the Leases shall be prorated as of 11:59 o'clock p.m. on the Closing
Date.
4. DELIVERY OF DOCUMENTS BY SELLER. On or before the date which is
thirty (30) days following the date hereof, Seller shall deliver to Buyer the
following documents ("Documents"):
(a) All current and historical sales information provided to Seller
by the Tenants (the "Financial Statements");
(b) Commitment for title insurance covering the fee estates in the
Land and the Improvements ("Title Commitment") from the Title Company, setting
forth the status of the title of the Land and the Improvements, showing all
matters of record affecting the Land and the Improvements, together with a true,
complete, and legible copy of all documents referred to in the Title Commitment;
(c) Current "as-built" survey ("Survey") listing all easements and
encroachments affecting the Properties, parking spaces (including handicapped
designation), containing a flood plain certification, with sufficient detail to
obtain deletion of the standard survey exception in the Title Commitment; and
PURCHASE AND SALE AGREEMENT - PAGE 2
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
(d) copies of any (i) Warranties, (ii) Licenses, (iii) certificates
of occupancy for the Improvements, (iv) Plans, (v) Property Agreements, (vi)
engineering studies, but only to the extent in Seller's possession or obtainable
by Seller without undue expense.
5. RIGHT OF ENTRY AND INSPECTION.
(a) From the date hereof to the Closing Date, Seller shall afford
Buyer and its representatives a continuing right to inspect, at reasonable
hours, the Property, Documents, and all other documents or data pertaining to
the Properties, subject to the rights of Tenants under the Leases. Buyer shall
indemnify and hold Seller harmless from and against any loss, claim or liability
arising or resulting from the inspections made by Buyer. If Buyer, in its sole
and absolute discretion is not satisfied with the physical condition of the
Improvements, any matter in the Documents, or any matter in the information
available to Buyer concerning the Properties, Buyer may terminate this Agreement
in accordance with Section 14, by delivering written notice to Seller prior to
5:00 o'clock p. m. on the date that is thirty (30) days after the last to be
delivered of any of the Documents referenced in Sections 4(a) through 4(e)
hereof (such period, the "Inspection Period").
(b) Buyer's failure to terminate this Agreement by delivering the
notice by the time called for in Section 5(a) shall terminate Buyer's right to
terminate this Agreement under that Section.
6. TITLE. Buyer shall have the right, at any time during the Inspection
Period, to object in writing to any matters reflected by the Survey or the Title
Commitment. All matters to which Buyer objects are "Non-Permitted
Encumbrances". All matters to which such objection is not made are "Permitted
Encumbrances". Seller, at its sole cost and expense, shall have the right, but
not the obligation, to cure or remove all Non-Permitted Encumbrances within ten
(10) days following the expiration of the Inspection Period. If Seller does not
cause all of the Non-Permitted Encumbrances to be removed or cured within the
above described ten (10) day period, this Agreement shall automatically
terminate and Buyer shall receive a refund of the Earnest Money, unless Buyer,
in its sole discretion elects to purchase the Properties subject to the Non-
Permitted Encumbrances.
7. REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants
to, and covenants with, Buyer that:
(a) Seller has the full right, power, and authority to execute,
deliver, and perform this Agreement, and this Agreement, when executed and
delivered by Seller and Buyer, shall constitute the valid and binding agreement
of Seller, and shall be enforceable against Seller in accordance with its terms.
(b) All requisite action on the part of Seller has been taken by
Seller in connection with making and entering into this Agreement and the
consummation of the purchase and sale provided for herein.
PURCHASE AND SALE AGREEMENT - PAGE 3
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
(c) No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or, to the best of Seller's knowledge, threatened
against Seller, which would materially adversely affect the ability of Seller to
consummate the transactions contemplated by this Agreement.
(d) Seller has not received any written notice from appropriate
governmental authorities that either Property is in violation of any applicable
laws.
(e) Seller has not received any written notices from any insurance
company, board of fire underwriters or similar organization regarding any
defects in either Property.
(f) Seller has no knowledge of any litigation, or possible
litigation, or of claims of violations or noncompliance with applicable laws and
regulations affecting either Property, including regulations of the
Environmental Protection Agency and any state regulatory body concerning the
disposal of grease, hazardous waste, petroleum, any underground storage tanks or
any other hazardous materials, or regulations of the Americans Disability Act
providing for access to the premises, dining areas and bathroom areas of the
Properties ("Applicable Laws").
(g) Seller has no contracts of any kind, such as for waste disposal,
termite protection, cleaning services, or paper supplies which will survive the
Closing Date.
(h) Seller has received no written notice of taking, condemnation,
betterment or assessment, actual or proposed, with respect to either Property.
(i) No portion of either Property lies within any 100-year flood
plain.
(j) Except for the Permitted Encumbrances, Seller owns the Properties
free and clear of all liens, restrictions, charges and encumbrances. From the
date hereof until the Closing Date or earlier termination of this Agreement,
Seller will not sell, assign or create any right, title or interest whatsoever
in or to either Property or create or permit to exist any liens (other than
Permitted Encumbrances), encumbrances or charges thereon without discharging the
same prior to the Closing Date.
(k) Seller has no information or actual knowledge of any proposed
change in any of the Applicable Laws or any judicial or administrative action or
any action by adjacent land owners or any facts or conditions relating to either
Property which would materially and adversely affect, prevent or limit the use
of such Property as a restaurant.
(l) All Licenses and occupancy certificates necessary for the
operation and occupancy of each Property, including, but not limited to, all
building and use permits, have been obtained for all operations to date and
shall be maintained through Closing.
PURCHASE AND SALE AGREEMENT - PAGE 4
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
(m) Each Lease is in full force and effect, and Seller has no
knowledge of any event which would constitute a default or an event of default
either by Seller or Tenant under either Lease.
(n) From and after the date hereof, and until the Closing or earlier
termination of this Agreement, Seller shall not take any action, or omit to take
any action, which action or omission would have the effect of violating any of
the representations and warranties of Seller contained in this Agreement.
All representations and warranties made in this Agreement shall be
deemed to be made on the date hereof and again on the Closing Date. It shall be
a condition of Buyer's obligation to close that all warranties and
representations made hereunder are true on the Closing Date. If Buyer discovers
prior to Closing, that any representation or warranty made in this Agreement is
not true, then Buyer shall have the right, as its sole and exclusive remedies,
to either (i) terminate this Agreement in accordance with Section 14 by
delivering notice to Seller prior to the Closing Date, or (ii) elect to purchase
the Properties subject to such untrue warranty or representation without any
reduction in the Purchase Price.
8. CLOSING. The closing ("Closing") of the sale of the Property by
Seller to Buyer shall occur on the date fifteen (15) days following the last day
of the Inspection Period, or at such earlier date agreed to by Seller and Buyer
in writing (the date such Closing occurs is hereinafter referred to as the
"Closing Date"). Closing shall occur in the offices of the Title Company,
located at 14643 Dallas Parkway, Suite 770, Dallas, Texas 75240, or at another
place and or time as mutually agreed upon by Seller and Buyer, commencing at
10:00 o'clock a. m. on the Closing Date. At Closing:
(a) Buyer shall deliver to Seller (i) the Purchase Price in
accordance with Section 3; (ii) evidence satisfactory to Seller and the Title
Company that the person executing documents on behalf of Buyer has full right,
power and authority to do so; and (iii) the Guaranty Agreement.
(b) Seller shall deliver or cause to be delivered to Buyer the
following ("Closing Documents"):
(i) Special Warranty Deed in the form of EXHIBIT B, conveying to
Buyer the Land and Improvements subject to the Permitted Encumbrances;
General Assignment in the form of EXHIBIT C; Bill of Sale in the form of
EXHIBIT D; and IRC Section 1445 Certification in the form of EXHIBIT E;
original Estoppel Certificate in the form of EXHIBIT I; all fully executed,
sworn to, and acknowledged, as appropriate, by Seller;
(ii) Evidence satisfactory to Buyer and Title Company that the
person or persons executing the Closing Documents on behalf of Seller have
full right, power and authority to do so;
PURCHASE AND SALE AGREEMENT - PAGE 5
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
(iii) The originals (to the extent in Seller's possession) of
the Leases, all Property Agreements, Warranties, Licenses and Plans; and
(iv) An Investment Letter substantially in the form of EXHIBIT H,
hereto.
(c) Seller shall be responsible for the costs of obtaining the
Survey. Buyer shall pay for the Phase I Report on the Properties. Buyer and
Seller shall share the costs of the Title Commitment, the Owner's Policy of
title insurance, any transfer taxes or deed stamp taxes, and any escrow and
recording costs.
(d) Each of Seller and Buyer shall pay its own legal fees incurred in
connection with this Agreement; provided, however, that if a suit is filed by
Buyer or Seller alleging a breach hereof or default hereunder, the non-
prevailing party shall pay all reasonable legal fees of the prevailing party
resulting from such suit.
(e) Seller shall deliver to Buyer possession of the Property.
(f) The Title Company shall deliver to Buyer the Earnest Money.
9. OPERATION OF PROPERTY. From the date hereof until Closing, Seller
warrants that it shall maintain and operate the Property in a manner consistent
with its past maintenance and operation.
10. NOTICES. Any notice provided or permitted to be given under this
Agreement must be in writing and may be served by depositing same in the United
States mail, addressed to the party to be notified, postage prepaid and
certified, with return receipt requested, by delivering the same in person to
such party, or by delivering the same by confirmed facsimile. Notice given in
accordance herewith shall be effective upon the earlier of receipt at the
address of the addressee or on the second (2nd) day following deposit of same in
the United States mail as provided for herein, regardless of whether same is
actually received. For purposes of notice, the addresses of the parties shall
be as follows:
If to Buyer, to: U. S. Restaurant Properties, Inc.
5310 Harvest Hill Road, Suite 270, LB 168
Dallas, Texas 75230
Attention: David Pettijohn
With copy to: Richard S. Wilensky, Esq.
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
PURCHASE AND SALE AGREEMENT - PAGE 6
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
If to Seller, to: Ms. Diane C. Rolph
c/o Sasnack Management Corporation
1877 North Rock Road
Wichita, Kansas 67206
Either party may change its address for notice by giving ten (10) days prior
written notice thereof to the other party.
11. BROKERAGE COMMISSIONS. Buyer shall defend, indemnify, and hold
harmless Seller from any claim by any party claiming under Buyer for any
brokerage, commission, finder's, or other fees relative to this Agreement or the
sale of the Property, and any court costs, attorneys' fees, or other costs or
expenses arising therefrom and alleged to be due by authorization of Buyer.
Seller shall defend, indemnify and hold harmless Buyer from any claim by any
party claiming under Seller for any brokerage, commission, finder's, or other
fees relative to this Agreement or the sale of the Property, and any court
costs, attorneys' fees, or other costs or expenses arising therefrom and alleged
to be due by authorization of Seller.
12. ASSIGNS. This Agreement shall inure to the benefit of and be binding
on the parties hereto and their respective heirs, legal representatives,
successors and assigns. This Agreement may be assigned by Buyer without the
consent of Seller by delivery of written notice of assignment to Seller.
13. DESTRUCTION, DAMAGE OR TAKING BEFORE CLOSING. In the event of damage
to or destruction of all or any portion of any Property by fire or other
casualty, Seller shall promptly notify Buyer. If Seller reasonably estimates
that $50,000.00 or less is required to be expended to repair or restore the
damaged or destroyed Property or portion thereof ("Repair Cost"), this Agreement
shall remain in full force and effect, and Seller shall, at its option, either
(i) repair such damage or destruction, or, if such damage or destruction has not
been repaired prior to Closing, (ii) require Buyer to take title to the
Property, assign to Buyer all available casualty insurance proceeds and
indemnify Buyer (in form and content satisfactory to Buyer) for all costs and
expenses of repair in excess of available insurance proceeds. If Seller
reasonably estimates that the Repair Cost exceeds $50,000.00, Buyer shall have,
as its sole and exclusive remedies, (i) the option to terminate this Agreement
in accordance with Section 14 within ten (10) business days after its receipt of
notice from Seller as set forth above, by notice in writing to Seller, or (ii)
if Buyer does not elect to terminate, this Agreement shall remain in full force
and effect, Buyer shall take title to the Property subject to such damage to or
destruction, with an assignment by Seller to Buyer of all available casualty
insurance proceeds. In the event of an eminent domain taking or the issuance of
a notice of an eminent domain taking with respect to all or any portion of the
Property, Seller shall promptly notify Buyer. Buyer shall have, as its sole and
exclusive remedies, (i) the option to terminate this Agreement in accordance
with Section 14 within ten (10) business days after its receipt of such notice
from Seller, by notice in writing to Seller, or (ii) if Buyer does not elect to
terminate this Agreement, this Agreement shall remain in full force and effect,
Buyer shall be obligated to consummate this transaction for the full Purchase
Price, and Buyer shall be entitled to
PURCHASE AND SALE AGREEMENT - PAGE 7
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
receive all eminent domain awards and, to the extent the same may be necessary
and appropriate, Seller shall assign to Buyer at Closing Seller's rights to such
awards. In no event shall the Purchase Price be reduced, except to the extent
of any deductible amounts payable in connection with insurance proceeds assigned
by Seller to Buyer.
14. TERMINATION AND REMEDIES.
(a) If Buyer fails to consummate the purchase of the Properties
pursuant to this Agreement for any reason other than termination hereof pursuant
to a right granted to Buyer in Sections 5, 6, 7, or 13, then Seller, as its sole
and exclusive remedy, shall have the right to terminate this Agreement by
notifying Buyer thereof, in which event the Title Company shall deliver to
Seller, as liquidated damages, the Earnest Money, whereupon neither Buyer nor
Seller shall have any further rights or obligations hereunder. Seller and Buyer
hereby acknowledge and agree they have included the provision for payment of
liquidated damages because, in the event of a breach by Buyer, the actual
damages incurred by Seller can reasonably be expected to approximate the amount
of liquidated damages called for, and because the actual amount of such damages
would be difficult if not impossible accurately to measure.
(b) If Seller fails to consummate the sale of the Property pursuant
to this Agreement for any reason other than (i) termination hereof by Buyer
pursuant to Sections 5, 6, 7, or 13 or (ii) Buyer's failure to perform its
obligations hereunder, Buyer shall have the right, as its sole and exclusive
remedies, to terminate this Agreement by notifying Seller thereof, in which case
the Title Company shall deliver the Earnest Money to Buyer, whereupon neither
party hereto shall have any further rights or obligations hereunder.
(c) If Buyer terminates this Agreement pursuant to a right granted
Buyer in Section 5, 6, 7, or 13, then the Title Company shall deliver the
Earnest Money to Buyer whereupon neither Buyer or Seller shall have any further
rights or obligations hereunder.
15. MISCELLANEOUS. Each of Buyer and Seller agrees with the other that it
has no present intention to make any public announcement of the purchase and
sale transaction contemplated hereby or of any of the terms thereof, and shall
obtain the written consent of the other party prior to making any announcment
or divulging any information. Both Seller and Buyer shall cooperate with one
another and in a timely manner execute all documents reasonably required to give
effect to the purchase and sale provided for herein. If any provision of this
Agreement is adjudicated by a court having jurisdiction over a dispute arising
herefrom to be invalid or otherwise unenforceable for any reason, such
invalidity or unenforceability shall not affect the other provisions hereof.
This Agreement shall be governed and construed in accordance with the laws of
the State of Texas. This Agreement is the entire agreement between Seller and
Buyer concerning the sale of the Property and no modification hereof or
subsequent agreement relative to the subject matter hereof shall be binding on
either party unless reduced to writing and signed by the party to be bound. The
provisions of Sections 3, 7, 8, and 11 shall
PURCHASE AND SALE AGREEMENT - PAGE 8
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
survive Closing. EXHIBITS A-I attached hereto are incorporated herein by this
reference for all purposes. Time is of the essence in the performance of each
and every provision of this Agreement. In the event that the last day for
taking any action or serving notice under this Agreement falls on a Saturday,
Sunday or legal holiday, the time period shall be extended until the
following business day.
16. DATE OF AGREEMENT. All references in this Agreement to "the date
hereof" or similar references shall be deemed to refer to the last date, in
point of time, on which all parties hereto have executed and received a fully
executed copy of this Agreement. This Agreement constitutes an offer by Buyer
to purchase the Properties on the terms and conditions and for the Purchase
Price specified herein. Unless sooner terminated or withdrawn by notice in
writing to Seller, this offer shall lapse and terminate at the close of Buyer's
business day on ten (10) days following execution of this Agreement by Buyer,
unless, prior to such time, Seller has returned to Buyer two (2) fully executed
copies of this Agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
date first set forth above.
BUYER:
U. S. RESTAURANT PROPERTIES OPERATING L. P.
By: U. S. RESTAURANT PROPERTIES, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SELLER:
-------------------------------------------
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
PURCHASE AND SALE AGREEMENT - PAGE 9
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
The undersigned hereby executes this Agreement for the sole purpose of (i)
acknowledging receipt of the Earnest Money and the Non-Refundable Earnest Money
and (ii) to evidence its agreement to hold the Non-Refundable Earnest Money and
the Earnest Money in trust for the parties hereto in accordance with the terms
of this Agreement.
TITLE COMPANY:
COMMONWEALTH LAND TITLE COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Date of Execution:
-------------------------
PURCHASE AND SALE AGREEMENT - PAGE 10
TWO PIZZA HUT RESTAURANTS IN VIRGINIA
<PAGE>
ATTACHMENTS:
------------
Exhibit A - Intentionally Deleted
Exhibit B - Special Warranty Deed
Exhibit C - General Assignment
Exhibit D - Bill of Sale
Exhibit E - IRC Section 1445 Certification
Exhibit F - Intentionally Deleted
Exhibit G - Guaranty Agreement
Exhibit H - Investment Letter
Exhibit I - Estoppel Certificate
<PAGE>
Schedules and Exhibits Omitted
<PAGE>
EXHIBIT 2.6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made March 29, 1995, by
and between FOOD FACTS, INC. ("Food Facts"), a Louisiana corporation, SAMUEL G.
HODGES, CLAUDIA HODGES, and WILLIAM WESLEY HODGES, the sole stockholders of
Food Facts (collectively referred to as "Seller"), and U. S. RESTAURANT
PROPERTIES OPERATING L. P. ("Buyer"), a Delaware limited partnership.
EXPLANATORY STATEMENT
Seller is engaged in the operation of three (3) Burger King restaurants
(the "Business") doing business in El Dorado (the "El Dorado location"), Camden
(the "Camden location"), and Magnolia (the "Magnolia location"), Arkansas,
hereinafter sometimes referred to as the "Business".
Samuel G. Hodges and William Wesley Hodges hold a franchise agreement from
Burger King authorizing them to operate a Burger King Restaurant at the El
Dorado location. Some of the personal property used as operating assets of the
El Dorado location are owned by Samuel G. Hodges, who has leased them to Food
Facts. The remainder of the personal property used as operating assets of the
El Dorado location are owned by Food Facts. The building at the El Dorado
location was originally leased by Samuel G. Hodges and William W. Hodges from
Burger King Operating Limited Partnership. U. S. Restaurant Properties
Operating L. P. has acquired from Burger King Operating Limited Partnership all
of its rights under the lease agreement of the El Dorado location. Samuel G.
Hodges and William W. Hodges have subleased the building at the El Dorado
location to Food Facts. The parties desire to effect the sale to Buyer of
certain of the assets of Seller used in connection with operating the El Dorado
location, and for the Buyer and Seller to terminate the lease of the building at
the El Dorado location so that Buyer can operate the business at the El Dorado
location it owns.
Samuel G. Hodges and William Wesley Hodges hold a franchise agreement from
Burger King authorizing them to operate a Burger King Restaurant at the Camden
location. The land, building and some of the personal property used as
operating assets of the Camden location are owned by Samuel G. Hodges, who has
leased them to Food Facts. The remainder of the personal property used as
operating assets of the Camden location are owned by Food Facts. The parties
desire to effect the sale to Buyer of certain of the assets of Seller used in
connection with operating the Camden location, and for the Buyer to purchase the
land and the building at the Camden location from Samuel G. Hodges, in
accordance with this Agreement.
Samuel G. Hodges and William Wesley Hodges hold a franchise agreement from
Burger King authorizing them to operate a Burger King Restaurant at the Magnolia
location. The land upon which the Magnolia location sits is leased by S. Gray
Hodges and William Wesley Hodges from J. D. Ashley
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and Larry C. Wallace d/b/a University Plaza Shopping Center. S. Gray Hodges
and William Wesley Hodges constructed the building for the Magnolia location
on this leased land, and in turn leased the land and building to Food Facts.
Some of the personal property used as operating assets of the Magnolia
location are owned by Samuel G. Hodges, who has leased them to Food Facts.
The remainder of the personal property used as operating assets of the
Magnolia location are owned by Food Facts. The parties desire to effect the
sale to Buyer of certain of the assets of Seller used in connection with
operating the Magnolia location, and for the Buyer to purchase the building
at the Magnolia location from S. Gray Hodges and William Wesley Hodges, and
for the Buyer to enter into a lease of the Magnolia location directly with J.
D. Ashley and Larry C. Wallace d/b/a University Plaza Shopping Center.
ARTICLE I
PURCHASE AND SALE OF ASSETS
On the Closing, and upon the terms and subject to the conditions contained
herein, Seller shall sell, assign, transfer and deliver to the Buyer, and Buyer
shall purchase, accept and acquire from Seller by appropriate bills of sale,
assignments and other instruments acceptable to Buyer, the assets owned by
Seller related to the Business of the El Dorado, Camden and Magnolia locations
more specifically described below:
1.1 INVENTORY. All of Seller's inventory ("Inventory") on hand at the
date of the Closing.
1.2 FURNITURE, FIXTURES AND EQUIPMENT. All of the items of furniture,
fixtures and equipment and used in connection with the Business, which are
listed and described on Schedule 1.2 attached to this Agreement together with
such non-material additions and deletions as shall occur in the ordinary course
of business.
1.3 DECOR. All of the Items of Seating and Decor used in connection with
the Business, which are listed and described on Schedule 1.3 attached to this
Agreement together with such non-material additions and deletions as shall occur
in the ordinary course of business.
1.4 SIGN. Each of the Seller's signs used in connection with the Business
which are listed and described on Schedule 1.4.
1.5 CASH REGISTER. All of the Seller's cash registers used in connection
with the Business which are listed and described on Schedule 1.5.
1.6 PLAYGROUNDS. All of the Seller's playground equipment at the Camden
and Magnolia locations which are listed and described on Schedule 1.6.
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1.7 FRANCHISE AGREEMENT. All of Seller's interest in any Franchise
Agreement with Burger King for the El Dorado, Camden, and Magnolia locations.
1.8. LEASES AND SUBLEASES. All interests of Samuel G. Hodges, William
Wesley Hodges and Food Facts in leases and subleases of personal property with
respect to the El Dorado, Camden, and Magnolia locations, and all interests of
Samuel G. Hodges, William Wesley Hodges and Food Facts in real property leases
and subleases in the El Dorado, Camden and Magnolia locations.
1.9. CAMDEN REAL ESTATE. Good and indefeasible title in fee simple to the
land in __________ County, Arkansas, described in Exhibit 7 (the "Camden Land"),
together with all rights and interests thereto, including Seller's right, title
and interest in and to all (i) adjacent streets, alleys, rights-of-way and any
adjacent strips or gores of real estate; and (ii) buildings, structures and
other improvements located on the Land (the "Camden Improvements"). The Camden
Land and Camden Improvements shall also include, without limitation all
additions and improvements to the real property not otherwise specifically
included in the Business Assets described in Article 1.1 hereof, including,
without limitation, fixtures, fittings, apparatus and other items of tangible
personal property and replacements thereof, if any, affixed or attached to or
used in connection with the operation, maintenance, or management of the Camden
location.
1.10. MAGNOLIA REAL ESTATE. All of Seller's interest in the Lease between
S. Gray Hodges and William Wesley Hodges from J. D. Ashley and Larry C. Wallace
d/b/a University Plaza Shopping Center (the "Magnolia Lease") and fee simple
title to the buildings, structures and any other improvements located on the
Magnolia Lease described in Exhibit 6 (the "Magnolia Improvements"). The
Magnolia Lease and Improvements shall also include without limitation all
additions and improvements to the real property not otherwise specifically
included in the Business Assets described in Article 1.1 hereof, including,
without limitation, fixtures, fittings, apparatus and other items of tangible
personal property and replacements thereof, if any, affixed or attached to or
used in connection with the operation, maintenance, or management of the
Magnolia location.
1.11 GOODWILL. All of the Seller's Goodwill associated with the El Dorado,
Camden, and Magnolia locations, including tradenames, trademarks and any other
items of intangible property used in the Business.
All of the assets described in Paragraph 1.1 through 1.11 are collectively
referred to as the "Purchased Assets".
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ARTICLE II
EXCLUDED ASSETS
This sale excludes all assets owned by Seller except those specifically
described in Article I.
ARTICLE III
EXCLUSION OF LIABILITIES
Except as specifically set forth on Schedule 3, the Purchased Assets are
not subject to any liability for money owed or any other claim, demand or
offset.
ARTICLE IV
PURCHASE PRICE
4.1 DETERMINATION OF PURCHASE PRICE. The purchase price ("Purchase
Price") for the Purchased Assets shall be $2,000,000.00, plus the value of the
saleable inventory on the date of closing, and subject to adjustment pursuant to
Article X.
4.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets and among the various Sellers as set forth in
Schedule 4.2. Buyer shall have no responsibility for the allocation of the
Purchase Price among the Sellers or the payment of the Purchase Price to any of
the Sellers, and each Seller hereby waives any right or claim against the Buyer
with respect thereto.
4.3 PAYMENT OF THE PURCHASE PRICE. At Closing, the entire Purchase Price
shall be paid by Buyer to Seller in cash or by certified or bank cashier's check
immediately convertible into cash upon presentation to a bank reasonably
acceptable to Seller, or by wire transfer of such funds in accordance with
Seller's written instructions to Buyer.
ARTICLE V
RIGHT OF ENTRY, INSPECTION, TERMINATION
5.1 INSPECTION PERIOD. From the date hereof to the Closing Date (as
hereafter defined), Seller shall afford Buyer and its representatives a
continuing right to inspect, at reasonable hours, the Purchased Assets, and all
other documents or data pertaining to the Purchased Assets. During such period,
Seller shall provide Buyer with financial statements from the operation of the
Business. Buyer shall indemnify and hold Seller harmless from and against any
loss, claim or liability arising or resulting
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from the inspections made by Buyer. If for any reason Buyer is not satisfied
with the physical condition of the Purchased Assets or any matter in the
information provided to Buyer concerning the Purchased Assets, Buyer may
terminate this Agreement in accordance with Article 5.5 by delivering written
notice to Seller prior to 5:00 p.m. on the date that is forty-five (45) days
after the date of execution of this Agreement (such period, the "Inspection
Period").
5.2 EARNEST MONEY. Within three business days of the date both Buyer and
Seller execute and deliver this Agreement, Buyer shall deliver to Lawyer's Title
Insurance Company, Attn: David McCallum (the "Title Insurer") $50.00 (the "Non-
Refundable Earnest Money") in consideration for this Agreement and the
Inspection Period. The Title Insurer shall immediately deliver the Non-
Refundable Earnest Money to Seller and the Non-Refundable Earnest Money shall be
retained by Seller in all events. In addition, Buyer shall deposit an
additional $60,000.00 with the Title Insurer and $40,000.00 with the Seller for
a total amount of $100,000.00, which shall constitute the earnest money
("Earnest Money"). Provided, however, that the $40,000.00 Earnest Money due to
Seller shall not be payable until such time that all rental payments due under
the lease agreement between Samuel G. Hodges, William Wesley Hodges and U. S.
Restaurant Properties Operating L. P. with respect to the El Dorado location
(the "El Dorado Lease") are current and Seller has executed any amendments to
the El Dorado Lease required by Buyer. The Title Insurer shall deposit its
$60,000.00 share of the Earnest Money in an interest bearing federally insured
account, and the term Earnest Money shall include any interest accrued on the
amount retained by the Title Insurer. The Title Insurer and the Seller shall
deliver the Earnest Money only in accordance with the terms of this Agreement,
however the Title Insurer shall have no liability for the disposition by the
Seller of its $40,000.00 share of the Earnest Money.
5.3. CLOSING. Except as extended pursuant to the provisions of this
Agreement or as otherwise agreed to by the parties, the closing ("Closing") of
the sale and purchase of the Purchased Assets shall take place at the offices of
Compton, Prewett, Thomas and Hickey, P. A., 423 North Washington, El Dorado,
Arkansas 71730 at the later of (i) 15 days after the expiration of the
Inspection Period, or (ii) five (5) days following the satisfaction of the
conditions set forth in Section 7.4 hereof, provided that this Agreement shall
terminate in all events not later than ninety (90) days after execution of this
Agreement if the purchase and sale of the Purchased Assets is not consummated on
or before such date.
5.4 At the Closing, the Buyer shall be credited with the Earnest Money and
any interest thereon. If Buyer fails to consummate the purchase of the
Purchased Assets pursuant to this Agreement other than termination hereof
pursuant to the right granted to Buyer in articles 5.1, VI, VII and XIV, then
Seller as its sole and exclusive remedy shall have the right to terminate this
Agreement by delivering written notice to Buyer in which event Seller shall
retain Seller's share of the Earnest Money, and the Title Insurer shall deliver
to Seller, as liquidated damages, the Title Insurer's share of the Earnest Money
whereupon neither Seller or Buyer shall have any further rights or obligations
hereunder. Seller and Buyer hereby acknowledge and agree that they have
provided the provision for payment of liquidated damages because in the event of
a breach by Buyer, the actual damages incurred
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by Seller can reasonably expect to approximate the amount of liquidated damages
called for, and because the actual amount of such damages would be difficult, if
not impossible to accurately measure. If Seller fails to consummate the sale of
the Purchased Assets pursuant to this Agreement for any reason other than (i)
termination hereof by Buyer pursuant to Articles 5.1, VI, VII and XIV or (ii)
Buyer's failure to perform its obligations hereunder, Buyer shall have the right
as its sole and exclusive remedy to either (a) terminate this Agreement by
notifying Seller thereof in which event Seller and Title Insurer shall deliver
the Earnest Money to Buyer whereupon neither party shall have any further rights
or obligations hereunder or (b) enforce specific performance of the obligations
of Seller hereunder and/or seek damages for breach of this Agreement by Seller.
5.5 If Buyer terminates this Agreement pursuant to Articles 5.1, VI, VII
or XIV, Seller and Title Insurer shall deliver the Earnest Money to Buyer
whereupon neither party shall have any further rights or obligations hereunder.
5.6 If Seller fails or refuses to return all or any portion of the Earnest
Money Buyer has deposited with Seller within five (5) days after Seller has
received notification provided in Articles 5.4 or 5.5, Seller shall be in
default under this Agreement and under the El Dorado Lease, and Buyer shall be
entitled to exercise all remedies available at law to recover the Earnest Money
or as provided in the El Dorado Lease upon default. Samuel G. Hodges and
William Wesley Hodges agree that this Agreement amends the El Dorado Lease and
shall execute such further documents to evidence such amendment as Buyer may
request.
ARTICLE VI
ACTIONS PRIOR TO CLOSING
6.1 APPROVAL OF TITLE. Seller shall deliver to Buyer a standard
coverage Preliminary Title Report within ten (10) days hereof issued by the
Title Insurer, which shows the state of the title of the Real Property at the
Camden and Magnolia location (the "Preliminary Title Report").
6.2 ELIMINATION OF UNAPPROVED EXCEPTIONS TO TITLE REPORT. If Buyer
specifically disapproves of one or more exceptions indicated in the Preliminary
Title Report, Seller may cure Buyer's disapproval by agreeing, in a written
notice delivered to Title Insurer within twenty (20) days after receipt of
Buyer's notice of disapproval, either to eliminate or cause the Title Insurer to
agree to insure over such exception(s) prior to the Closing. If Seller fails to
so remove or insure over each exception to which Buyer has objected prior to the
Closing, Buyer may elect to terminate this Agreement in accordance with the
provisions of Section 5.5 hereof.
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of Buyer under this Agreement are, at the option of Buyer,
subject to the satisfaction of the following conditions:
7.1 COMPLIANCE. Seller fully complies with all of its obligations set
forth in this Agreement.
7.2 REPRESENTATIONS. The representations and warranties of Seller and
Stockholder contained in this Agreement shall be true, complete, and correct in
all material respects as of the date of this Agreement and at and as of the
Closing as though such representations and warranties were made at and as of the
Closing.
7.3 COVENANT NOT TO COMPETE. That simultaneously with payment of the
Purchase Price by Buyer, Seller shall have delivered to Buyer the Covenant Not
To Compete between Buyer and Stockholders of Seller in the form attached to this
Agreement as Exhibit 5, executed by stockholders of the Seller, and all other
documents and instruments requisite to vest in Buyer title to all of the
Purchased Assets.
7.4. FRANCHISE AGREEMENT AND MAGNOLIA LEASE. Buyer shall use its best
efforts to obtain the following agreements on or before the Closing Date:
a. An assignment of the Magnolia Lease to Buyer in form and content
satisfactory to Buyer; and
b. A Franchise Agreement from Burger King Corporation with respect
to the El Dorado, Camden and Magnolia locations in form and content satisfactory
to Buyer. If Buyer cannot obtain either of such Agreements prior to the Closing
Date, Buyer shall have the right to terminate this Agreement in accordance with
Article 5.5, by delivering written notice to Seller prior to the Closing Date.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are, at the option of Seller,
subject to the satisfaction of the following conditions:
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8.1 COMPLIANCE. Buyer fully complies with all of its obligations set forth
in this Agreement, including but not limited to payment of the Purchase Price
due at Closing.
8.2 REPRESENTATIONS. The representations and warranties of Buyer contained
in this Agreement shall be true, complete, and correct in all material respects
as of the date of this Agreement and at and as of the Closing as though such
representations and warranties were made at and as of the Closing.
ARTICLE IX
TRANSACTIONS AT CLOSING
9.1 DELIVERY BY SELLER. At the Closing, Food Facts and its Stockholders
will deliver to Buyer the following:
a. A Bill of Sale executed by Food Facts and Samuel G. Hodges,
substantially in the form attached to this Agreement as Exhibit 1;
b. A Warranty Deed for the Camden location in the form of Exhibit 2.
c. A Warranty Deed for the Magnolia location in the form of Exhibit 2.
d. The Affidavit regarding bulk transfers referred to in Article XII
below.
e. Such other documents or instruments as Buyer or its counsel may
reasonably require to effect the Closing and the transactions contemplated by
this Agreement.
9.2 DELIVERY BY BUYER. At Closing, Buyer shall deliver to Seller:
a. The Purchase Price in the manner required under this Agreement;
b. A resale certificate executed by Buyer, in form satisfactory to
Seller, exempting the Inventory purchased by Buyer from Seller from local sales
tax;
c. A release of Seller's obligation under the lease for the Magnolia
location in the form of Exhibit 3.
d. A release of Seller's obligation under the lease for the El
Dorado location in the form of Exhibit 4.
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e. Such other documents or instruments as Seller or its counsel may
reasonably require to effect Closing and the transactions contemplated by this
Agreement.
ARTICLE X
CLOSING ADJUSTMENTS
10.1 PRORATIONS OF OPERATING EXPENSES. All operating expenses for or
pertaining to the Purchased Assets, including but not limited to public utility
charges, charges pursuant to any service contracts, insurance, and all other
operating charges with respect to the Purchased Assets shall be prorated between
Buyer and Seller at the closing on the basis of a thirty (30) day month and as
if all charges covered thereby were uniformly incurred over the period for which
they are payable.
Seller shall pay for all deliveries and services rendered through the
Closing Date. Any supply or inventory items on order in the ordinary course of
business, but undelivered as of the Closing Date, shall be accepted by Buyer,
and the charges for the same shall be paid by Buyer directly to the supplier.
All cash in the cash registers of the Business on the Closing Date shall belong
to Buyer.
10.2 REAL ESTATE CLOSING COSTS. Seller and Buyer shall each pay one-half
(1/2) of all fees, charges or expenses of any closing agent and any revenue
stamp transfer fees. Seller shall pay all pest control inspection and report
fees and any fees, charges or expenses with respect to the policy of title
insurance described in Article VI of this Agreement. Buyer shall pay all survey
fees relating to the Real Property acquired by Buyer hereunder and all
recordation taxes, fees or charges payable as the result of the transactions
contemplated by this Agreement with respect to the sale of the Real Property,
but specifically excluding any sales and use taxes payable by Seller on account
of sales made by Seller prior to the Closing. The charges, costs and expenses
described in this Article 10.2 are collectively referred to as the "Real
Property Closing Costs."
10.3 PRORATIONS OF REAL ESTATE EXPENSES. The following items shall be
prorated as of the Closing on the basis or a thirty (30) day month and as if all
charges covered thereby were uniformly incurred over the period for which they
are payable:
(a) County, city and special district, if any, taxes and assessments
affecting the Real Property based on the most recent information available in
the office of the taxing entity.
(b) All other unpaid but accrued operating expenses for or pertaining
to the Real Property, including but not limited to public utility charges, and
all other operating charges with respect to the Real Property shall be prorated
between Buyer and Seller at the Closing.
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10.4 ERRORS. If an error is made in any Closing adjustment or if certain
adjustments are estimated to facilitate Closing, the parties agree to promptly
readjust such items when the correct information becomes available.
ARTICLE XI
REPRESENTATION AND WARRANTIES
Food Facts and its Stockholders, jointly and severally, represent and
warrant to Buyer as follows:
11.1 ORGANIZATION. Food Facts: (1) is a corporation duly organized,
validly existing and in good standing under the laws of Louisiana; (2) is
qualified to do business and is in good standing in every other state in which
it transacts business; and (3) has full corporate power and authority to own and
lease its properties used in connection with its business, as such properties
are now owned or leased, and to conduct its business as and where such business
is now conducted and in the manner such business is now conducted.
11.2 AUTHORIZATIONS. Food Facts and its Stockholders have full corporate
power and authority to enter into and carry out the transactions contemplated by
this Agreement. This Agreement is a valid and binding agreement of Food Facts
and its Stockholders, enforceable in accordance with its terms, and has been
duly authorized and approved by all necessary corporate and shareholder
approval.
11.3 STOCKHOLDER. Samuel G. Hodges, William Wesley Hodges and Claudia
Hodges are the sole stockholders of Food Facts and no other person or firm has
any option, right, or interest in any issued or unissued stock of Seller.
11.4 CONDITION OF PURCHASED ASSETS. Seller will keep and maintain the
Purchased Assets in their "as is" physical condition on the date of this
Agreement (subject to reasonable wear and tear) and will deliver the Purchased
Assets to Buyer in such condition, subject, however, to Article XIV.
11.5 TITLE; INDEBTEDNESS. Except for secured indebtedness to First
National Bank of Magnolia, Magnolia, Arkansas in the original principal amount
of $335,807.79, with an approximate unpaid principal balance of $____________
and the secured indebtedness to First Financial Bank, El Dorado, Arkansas in the
original principal amount of $500,007.60, with an approximate unpaid principal
balance of $___________ , Seller owns all or the Purchased Assets free and clear
of all liens, restrictions, charges, and encumbrances. These debts will be paid
on the Closing Date.
11.6 TITLE. Seller has good and marketable title to all of the real estate
in Camden and to the ground lease in Magnolia that those two restaurants are
being operated from; and that they have a good
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and marketable lease to the land and building in El Dorado from which that
restaurant is being operated, subject to the indebtedness referred to in the
preceding Article 11.5.
11.7 LITIGATION. Seller has no knowledge of any litigation, or possible
litigation, or of claims of any kind, or of any facts or circumstances which
might in any way adversely affect the Seller or their operations, including
regulations of Environmental Protection Agency and the disposal of grease,
hazardous waste, petroleum, any underground storage tanks or any other hazardous
material, or regulations of the Americans Disability Act providing for access to
the premises, dining areas and bathroom areas.
11.8 GOVERNMENTAL AND OTHER COMPLIANCE. Seller shall at all times comply
with any and all applicable laws, rules, or regulations that may in any way
govern or affect the performance or its obligations under this Agreement, or
with which compliance may be required to properly effect the transactions
contemplated in this Agreement.
11.9 COMPLIANCE WITH CONTRACTS. Seller has no contracts of any kind, such
as for waste disposal, termite protection, cleaning services, paper supplies,
food supplies which will survive the Closing Date.
11.10 EMPLOYMENT OBLIGATIONS. Seller is not a party to any employment
contract or agreement, labor union agreement or agreement for the future
purchases of materials, supplies or equipment.
11.11 REAL PROPERTY IMPROVEMENTS. The location, construction, occupancy,
operation and use of the real property improvements at the Camden and Magnolia
locations (the "Real Property") do not violate any applicable law, statue,
ordinance, rule, regulation, order or determination of any governmental
authority or any board of fire underwriters (or other body exercising similar
functions) or any restrictive covenant or deed restriction or zoning ordinance
or classification affecting such Real Property improvements including, without
limitation, all building codes, flood disaster laws and health and environmental
laws (hereinafter the "Applicable Laws").
11.12 CHANGES IN APPLICABLE LAWS. Seller has no information or knowledge of
any change contemplated in any of the Applicable Laws or any judicial or
administrative action or any action by adjacent land owners or any fact or
conditions relating to the Real Property which would adversely affect, prevent
or limit the use of such Real Property in the Business.
11.13 FLOOD PLAIN. No portion of the Real Property lies within any 100-year
flood plain.
11.14 FINANCIAL INFORMATION. Attached hereto as Exhibit 7 is the profit and
loss statement of the Business for the 12-month period ending December 31, 1994,
separately identifying the sales volumes and operating expenses of the El
Dorado, Camden and Magnolia locations (the "Year-End
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Financials"). Additionally Seller shall provide Buyer with similar financial
information for the three month period ending March 31, 1995 on or before
April 10, 1995 (the "Quarterly Financials"). The Year End Financials and the
Quarterly Financials are and will be true, correct, accurate and complete and
will not omit to state any fact or condition, the omission of which makes any
of such statements misleading.
11.15 REPRESENTATIONS TRUE AS OF CLOSING. The foregoing representations
and warranties shall be deemed to be restated by Seller at the time of the
Closing of this sale. The representations and warranties are material, and
are made to induce Buyer to make the purchase provided for herein, and Buyer
has relied on the truth and accuracy of said representations in signing this
contract.
ARTICLE XII
BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants to Seller as follows:
12.1 ORGANIZATION. Buyer is a limited partnership, validly existing, and
in good standing under the laws of Delaware.
12.2 AUTHORIZATIONS. Buyer has full power and authority to enter into and
carry out the transactions contemplated by this Agreement. This Agreement
constitutes a valid and binding legal obligation of Buyer enforceable in
accordance with its terms.
12.3 NO VIOLATION. The execution, delivery, and performance of this
Agreement by Buyer does not and will not conflict with or result in any breach
or default of any of the terms or provisions of any material agreement to which
Buyer is a party or by which any of Buyer's assets or property is bound, or
violate any statutes or law or any judgements, decree, order, regulation, or
rule of any court or governmental authority.
12.4 SUFFICIENT FUNDS. Buyer has available funds sufficient to consummate
the purchase contemplated by this Agreement. Buyer agrees to provide Seller, at
Seller's request, with evidence reasonably satisfactory to Seller of such
financial capability.
12.5 COMPLETENESS OF STATEMENTS. No representation by Buyer in this
Agreement or in any statement (including the Year-End and Quarterly Financials),
exhibit, schedule, certificate document, or instrument provided to Seller
pursuant to or in connection with this Agreement and the transactions
contemplated by this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make any such statements
misleading.
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12.6 REPRESENTATIONS TRUE AS OF CLOSING. All of the representations and
warranties contained in this article shall be true and accurate on and as of the
Closing Date with the same force and effect as though the same had been made on
and as of such date.
ARTICLE XIII
BULK TRANSFER COMPLIANCE
At the closing, Seller will deliver to Buyer an affidavit stating that all
debts of Seller have been paid in full, and that Seller has no creditors on the
closing date, except for the debt owed by Sellers to First National Bank of
Magnolia, Magnolia, Arkansas and to First Financial Bank, El Dorado, Arkansas,
both of whom shall be paid in full from the sale proceeds. By reason of the
said affidavit, Seller and Buyer agree that notice to creditors under the bulk
sales law of Arkansas will not be required and need not be given. The debts
owed by Seller are to be paid by Seller solely, and Seller does hereby indemnify
and will hold Buyer harmless from any and all loss damage, or liability which
buyer may incur or become subject to, by reason of noncompliance with the bulk
sales law.
ARTICLE XIV
RISK OF LOSS; CONDEMNATION PROCEEDS
14.2 PERSONAL PROPERTY. In the event that any item(s) of Personal Property
are damaged or destroyed by fire or some other casualty or event prior to
Closing, Seller shall not be obligated to repair or replace such item(s) of
Personal Property. However, in such case, the Purchase Price shall be adjusted
downward by an amount equal to the lesser of:
a. The costs to repair such item(s) and return them to their "as is"
condition on the date of this Agreement; or
b. The fair market value (and not the replacement value) of such
item(s) as of the date of this Agreement.
14.3 REAL ESTATE. If, prior to the time of Closing, all or a substantial
portion of the Peal Property at any of the three locations is (1) condemned or a
taking threatened or (2) destroyed or damaged, this Agreement, at the option of
Buyer, shall be null and void and of no further effect, and each party shall be
relieved of further liability to the other. For the purposes of this Agreement,
"damage" shall mean damage that could not, by reasonable efforts, be repaired
within forty-five (45) days or the occurrence thereof. If Buyer elects not to
exercise its right to rescind, then there shall be no diminution of the Purchase
Price, but Buyer shall be entitled to receive all condemnation proceeds and all
insurance proceeds covering such loss or damage, including both insurance
carried by Seller and
ASSET PURCHASE AGREEMENT - PAGE 13
FOOD FACTS, INC. - U. S. RESTAURANT PROPERTIES OPERATING L.P.
<PAGE>
insurance, if any, carried by Buyer. This right may be exercised within thirty
(30) days after the occurrence of the loss or damage, and, if such loss or
damage occurs less than thirty (30) days prior to the scheduled date of closing,
such date of closing shall be extended for such additional period or time as may
be necessary to afford Buyer a full thirty (30) days to make its election.
ARTICLE XV
CONDUCT OF THE BUSINESS PENDING CLOSING
Seller agrees that from and after the date of this Agreement and until
Closing, except as otherwise expressly consented to by Buyer in writing, (1)
Seller will carry on its business substantially in the sane manner as now
conducted and maintain inventory levels of the Inventory consistent with past
practice and (2) Seller will not enter into any agreement or make any commitment
other than in the ordinary course of business and consistent with its past
practice.
ARTICLE XVI
INDEMNIFICATION
Buyer shall indemnify Seller from and against any loss, damage, claim of
damage, liability, or expense (including reasonable attorney fees) of any kind,
and from any cause whatsoever (hereafter collectively referred to as "Claims"),
arising out of or by reason of Buyer's ownership, use, occupation, or enjoyment
of the Purchased Assets from and after the date of closing (except where such
Claim is a result of a breach by Seller of any representation or warranty
contained herein), and Seller shall indemnify Buyer from and against all Claims
arising out of or by reason of Seller's ownership, use, occupation, or enjoyment
of the Purchased Assets Prior to the date of Closing (except where such Claim
has been assumed by Buyer under this Agreement).
ARTICLE XVII
PRESS RELEASES
Buyer and Seller agree that all press releases or other public
communications relating to this Agreement or matters contemplated by this
Agreement will require the prior approval of both parties prior to Closing.
ASSET PURCHASE AGREEMENT - PAGE 14
FOOD FACTS, INC. - U. S. RESTAURANT PROPERTIES OPERATING L.P.
<PAGE>
ARTICLE XVIII
BROKERAGE
Each party warrants and represents that it has not retained anyone to
solicit or secure this Agreement upon an agreement or understanding for a
commission, percentage, brokerage, or contingent fee. Each party agrees to
indemnify and hold harmless the other party from any damage or injury resulting
from the breach of a party's warranty or representations under this Article.
ARTICLE XIX
ENTIRE AGREEMENT
This Agreement and the attached Exhibits and Schedules (which are fully
incorporated in this Agreement) contain the entire understanding and agreement
of the parties and may only be altered or amended by a document in writing
signed by the parties.
ARTICLE XX
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, executors, personal representatives,
successors, and permitted assigns, and to the benefit of no other party. Buyer
may assign this Agreement without the approval of Seller by delivery of written
notice to Seller.
ARTICLE XXI
CONFIDENTIALITY OF INFORMATION
Pending Closing, and at all times after the cancellation of this Agreement
by its terms, Buyer shall keep confidential and shall not use or disclose any
information documents or other writings of Seller that it obtained in connection
with its negotiations with Seller or under the terms of this Agreement, except
where such matters are otherwise in public domain or except where required by
law. Buyer shall also immediately return to Seller all documents and other
writings (originals and photocopies), and any notes, memos, and other writings
of Buyer that mention or summarize any confidential information of Seller. This
Agreement shall survive the cancellation of the Agreement, and Seller shall have
the right to pursue all remedies available to it, both at law and in equity
(including reasonable attorney fees) in enforcing this provision. Buyer shall
not be relieved of liability under this provision by the terms of any other
provision.
ASSET PURCHASE AGREEMENT - PAGE 15
FOOD FACTS, INC. - U. S. RESTAURANT PROPERTIES OPERATING L.P.
<PAGE>
ARTICLE XXII
NOTICES
All notices required or permitted to be given to Seller under this
Agreement shall be addressed to:
Food Facts, Inc.
c/o Samuel G. Hodges
11230 Stanley Aubin Lane
Baton Rouge, Louisiana 70816
with a copy to:
Joseph Hickey
Compton, Prewett, Thomas & Hickey, P. A.
P. O. Drawer 1917
El Dorado, Arkansas 71731
All notices required or permitted to be given to Buyer under this Agreement
shall be addressed to:
U. S. Restaurant Properties Operating L. P.
c/o QSV Properties, Inc.
5310 Harvest Hill Road, Suite 270
Dallas, Texas 75230
Attn: Fred Margolin
with a copy to:
Richard S. Wilensky
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
All notices to Buyer, to Seller, or to Stockholder shall be effectively given
and made upon hand delivery or when mailed by U. S. registered mail, return
receipt requested, postage prepaid, if addressed to the party as provided in
this Article or to any other address for such party that is provided to all
other parties in accordance with this Article.
ASSET PURCHASE AGREEMENT - PAGE 16
FOOD FACTS, INC. - U. S. RESTAURANT PROPERTIES OPERATING L.P.
<PAGE>
ARTICLE XXIII
WAIVER
No party shall be deemed to have waived the exercise of any right that it
holds under this Agreement unless such waiver is made in writing. No waiver
made with respect to any instance involving the exercise of any such right shall
be deemed to be a waiver with respect to any other instance involving the
exercise thereof or with respect to any other such right.
ARTICLE XXIV
SEVERABILITY
If any one or more of the provisions of this Agreement shall be held in
valid, illegal, or unenforceable in any respect, such provision shall not affect
any other provision of this Agreement, and each provision of this Agreement
shall be enforced to the full extent permitted by law.
ARTICLE XXV
SURVIVAL OF OBLIGATIONS
The terms and provisions of this Agreement and the obligations, warranties,
representations, and covenants of the parties contained in this Agreement shall
survive Closing and continue in full force and effect and shall not be merged or
extinguished by the act of Closing or the execution and/or delivery of the Deed,
Bill of Sale, or any other documents or instruments of transfer or assignment.
ARTICLE XXVI
FURTHER ASSURANCES
The parties agree to execute such further assurances, documents, or
instruments and take such further actions as may be necessary to confirm their
understanding with respect to the terms and provisions set forth in this
Agreement so as to be in a position to implement the same.
ARTICLE XXVII
COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, and all of which together shall constitute one and the
same instrument.
ASSET PURCHASE AGREEMENT - PAGE 17
FOOD FACTS, INC. - U. S. RESTAURANT PROPERTIES OPERATING L.P.
<PAGE>
ARTICLE XXVIII
LIABILITY OF SELLERS
All representations, warranties, liabilities and obligations of the Seller
hereunder shall be deemed the joint and several obligation of each of the
parties identified as the Seller under the first paragraph provisions of this
Agreement.
ARTICLE XXIX
CHOICE OF LAW
This Agreement shall be construed and governed in accordance with the laws
of the State of Arkansas.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first above written. Title Insurer has also executed
this Agreement to evidence Title Insurer's agreement to serve as such in
accordance with this Agreement and for no other purpose.
SELLER: BUYER:
FOOD FACTS, INC. U. S. RESTAURANT PROPERTIES OPERATING L. P.
By: QSV PROPERTIES, INC.
By: /s/ [NAME ILLEGIBLE]
----------------------------
, President
By: /s/ [NAME ILLEGIBLE]
---------------------------------------
Its Chairman
ATTEST: ATTEST:
/s/ [NAME ILLEGIBLE] /s/ [NAME ILLEGIBLE]
- ------------------------------- ------------------------------------------
, Secretary , Secretary
ASSET PURCHASE AGREEMENT - PAGE 18
FOOD FACTS, INC. - U. S. RESTAURANT PROPERTIES OPERATING L.P.
<PAGE>
STOCKHOLDERS OF FOOD FACTS, INC.
/s/ Samuel G. Hodges
- --------------------------------
SAMUEL G. HODGES
/s/ Claudia Hodges
- --------------------------------
CLAUDIA HODGES
/s/ William Wesley Hodges
- --------------------------------
WILLIAM WESLEY HODGES
ASSET PURCHASE AGREEMENT - PAGE 19
FOOD FACTS, INC. - U. S. RESTAURANT PROPERTIES OPERATING L.P.
<PAGE>
SCHEDULE OF EXHIBITS
Exhibit 1 Bill of Sale
Exhibit 2 Release of Seller's obligation under the lease for
the Magnolia location
Exhibit 3 Purchased Assets
Exhibit 4 Release of Seller's obligation under the lease for the
El Dorado Location
Exhibit 5 Covenant Not To Compete
Exhibit 6 Magnolia Improvements
Exhibit 7 The Year-End Financials
Exhibit 8 Camden Land
<PAGE>
SCHEDULES
Schedule 1.2 Furniture, Fixtures and Equipment
Schedule 1.3 Decor
Schedule 1.4 Sign
Schedule 1.5 Cash Registers
Schedule 1.6 Playground Equipment
Schedule 3 Purchased Assets
Schedule 4.2 Purchase Price Allocation
<PAGE>
Schedules and Exhibits Omitted
<PAGE>
EXHIBIT 2.7
95 AT 570038-A
TEXAS ASSOCIATION OF REALTORS-R-
COMMERCIAL EARNEST MONEY CONTRACT
THIS CONTRACT OF SALE, is made by and between U.S. Restaurant Properties
Master L.P., hereafter referred to as "Buyer") and Southridge Village
Partnership, hereafter referred to as "Seller" upon the terms, provisions and
conditions set forth herein.
1. PURCHASE AND SALE. Seller agrees to sell and convey to Buyer and Buyer
agrees to buy from Seller the following property situated in Denton County,
Texas, known as Lot 1B and 1C of Southridge Village Shopping Center Addition.
2. PROPERTY. Lot 1B and 1C, Block ______________, ___________________
Addition, City of __________________________, or as described on attached
Exhibit "A", together with all and singular the rights and appurtenances,
pertaining to the property, including any right, title, and interest of Seller
in and to adjacent streets, alleys or rights of way. All of such real property,
rights, and appurtenances being hereinafter referred to as the "Property",
together with any improvements, fixtures, and personal property situated on and
attached to the Property, including but not limited to the following:
SEE RIDER 1
3. CONTRACT SALES PRICE.
<TABLE>
<S> <C> <C>
A. Cash down payment payable at closing (including earnest money) . . . $ 700,000
B. Sum of all notes described in Paragraph 4 below. . . . . . . . . . . $
C. Other 54,166.67 limited partnership units in Buyer . . . . . . . . . $1,300,000
D. Sales Price (Sum of A, B, and C) (See Rider 2) . . . . . . . . . $2,000,000
</TABLE>
4. FINANCING CONDITIONS.
A. ASSUMPTION. Buyer shall assume the unpaid balance of that promissory
note payable to _______________________________ dated ________________, 19____.
Buyer shall pay the installment payment due after the date of closing. The
assumed principal balance at closing will be $____________ allowing for an
agreed $_________ variance. The cash payable at closing shall be adjusted for
the amount of such variance. Buyer shall apply for assumption approval, if
necessary or required, within ____ days from the effective date of this contract
and shall make every reasonable effort to obtain the same. If the variance
exceed $_________ or the existing interest rate is increased above _____% of
Buyer is required to pay an assumption fee in excess of $________, or assumption
approval cannot be obtained within ________ days from the effective date hereof,
this contract may be terminated at Buyer's option and the Earnest Money shall be
refunded to Buyer without delay.
B. THIRD PARTY FINANCING. This contract is subject to approval of a loan
for Buyer by a third party in the amount of $______________ payable at
_____________ intervals for not less than ________ years with the initial
interest rate not to exceed ______% per annum, and with each principal and
interest installment not exceed $________ [ ] including interest [ ] plus
interest, for the first _____ years of the loan. Buyer shall apply for the loan
within ____ days from the effective date of this contract and shall make every
reasonable effort to obtain approval. If the loan has not been approved within
_____ days from the effective date hereof, this contract shall terminate and the
Earnest Money shall be refunded to Buyer without delay.
C. OTHER FINANCING:
SEE SPECIAL PROVISIONS 29, 30, 31,32, 33, 34 AND 35
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Any Seller financed note may be prepaid in whole or in part at any time without
penalty. The lien securing payment of such note will be inferior to any lien
securing any loan assumed pursuant to paragraph 4A above.
5. EARNEST MONEY.
A. $56,000.00 is herewith tendered and is to be deposited as Earnest
Money with Lawyers Title Insurance co. (Alexandra Smith, Escrow Officer) as
Escrow Agent. Additional Earnest Money, if any, shall be deposited with the
Escrow Agent on or before ___________________, 19___, in the amount of
____________. Earnest Money is deposited with the Escrow Agent with the
understanding that Escrow Agent (i) does not assume or have any liability for
performance or nonperformance of any party, (ii) has the right to require the
receipt, release and authorization in writing of all parties before paying the
deposit in any party, and (iii) is not liable for interest or other charge on
the funds held. If any party unreasonably fails to agree in writing to an
appropriate release of Earnest Money, then such party shall be liable in the
other parties to the extent provided in paragraph 14. At closing, Earnest Money
shall be applied to any cash down payment required, next to Buyer's closing
costs and any excess refunded to Buyer. Before Buyer shall be entitled to
refund of Earnest Money, any actual expenses incurred or paid on Buyer's behalf
shall be deducted therefrom and paid to the creditors entitled thereto.
B. [ ] Yes [ ] No. The parties herein agree that the Earnest Money
shall be deposited in an account at Escrow Agent bearing interest and the
interest shall be credited to Seller.
<PAGE>
6. PROPERTY CONDITION/INVESTIGATION.
[ ] A. Buyer accepts the Property in "as is" condition.
[ X ] B. Buyer accepts the Property subject to the [X] Property
Condition and/or [X] Investigation Addendums attached
hereto.
7. SURVEY AND TITLE BINDER.
A. Survey
[ ] 1. No survey is required
[ ] 2. Seller shall furnish within ten (10) days from the effective date
of this contract, Seller's existing survey of the Property dated
___________________, 19___.
[ ] 3. Within 30 days after the date of this contract, Seller shall, [
] at Seller's expense [ X ] at Buyer's expense, deliver or cause
to be delivered to Buyer and Title Company a copy of a
current-on-the ground survey ("Survey") of the Property made by a
duly licensed surveyer reasonably acceptable to Buyer and in a
form acceptable to Buyer and the Title Company issuing the title
commitment and Owner's Policy of Title insurance required herein.
If the survey exception (except as to shortages in area) is to be
deleted herein, the additional expense for such deletion shall be
paid by Buyer. The Survey shall show acreage or square feet,
access to the Property, the location of all improvements, rights
of way, easements, encroachments, streets, roads, water courses,
or fences on or adjacent to the Property, if any. If this
contract does not close through no fault of Seller, in addition
to the other rights of Seller hereunder, Buyer shall pay for the
Survey.
B. Within 15 days after the date of this contract, Seller shall, at
Seller's expense, deliver or cause to be delivered to Buyer.
(1) A title commitment ("Title Binder") covering the Property binding the
Title Company to issue a Texas Owner's Policy of Title Insurance on
the standard form of policy prescribed by the Texas State Board of
Insurance at the closing in the full amount of the purchase price; and
(2) True, correct, and legible copies of any and all instruments referred
to in the Title Binder as constituting exceptions or restrictions upon
the title of Seller, if requested by Buyer in writing within 5 days of
receipt of the title commitment.
(3) A U.C.C. lien search, if applicable. SEE RIDER 3.
8. APPROVAL PERIOD AND TITLE.
A. Buyer shall have 15 days after the receipt of both the Survey and
Title Binder to review same and to deliver in writing to Seller such objections
as Buyer may have to anything contained therein. Any such item to which Buyer
shall not object shall be deemed to be accepted by Buyer. If there are
objections by Buyer, Seller shall in good faith attempt to satisfy same prior to
closing, but Seller shall not be required to incur any cost to do so. If title
objections are disclosed, Seller shall have 30 days to cure same. If Seller
delivers written notice to Buyer on or before closing date that Seller is unable
to satisfy such objections, or if, for any reason, Seller is unable to convey
title in accordance with Section 8(B) below, Buyer may either waive such
objections and accept such title as Seller is able to convey or terminate this
contract by written notice to Seller and Earnest Money shall be refunded with no
Broker's fee due. Zoning ordinances and a lien for current taxes shall not be
valid objections to title.
B. Seller represents and warrants to Buyer that at the closing Seller
will have and will convey to Buyer good and indefeasible title by Special
Warranty Deed subject only to liens securing debt created, assumed or taken
subject to, as part of the consideration, taxes for the current year, and any
other reservations, easements, discrepancies in boundaries, encroachments,
restrictions or exceptions previously approved by Buyer in accordance with
Paragraph 8.A. Delivery of the Title Policy pursuant to Section 10 below shall
be deemed to fulfill all duties of Seller as to the sufficiency of title
required hereunder; provided, however, Seller shall not thereby be released from
the warranties of Seller's Deed.
9. NOTICE TO BUYER. At the time of the execution of this contract, Broker has
advised and hereby advises Buyer, by this writing, that Buyer should be
furnished with or obtain a policy of title insurance or if an abstract covering
the Property is provided in lieu thereof, Buyer should have said abstract
examined by an attorney of Buyer's own selection.
10. CLOSING.
A. The closing of the sale (the "Closing Date") shall be on or before 45
days after the expiration hereof (unless extended by Seller pursuant to Section
8A).
B. At the closing, Seller shall deliver to Buyer: (i) a Special Warranty
Deed (with Vendor's Lien retained if not a cash purchase) covering the Property,
subject only to liens securing debt created, assumed or existing as part of the
consideration, taxes for the current year, and any other reservations or
exceptions previously approved by Buyer in accordance with Paragraph 8.A; (ii)
An Owner's Policy of Title Insurance (the "Title Policy") issued by Lawyers
Title Insurance Company in full amount of the Sales Price, dated as of closing,
insuring Buyer's fee simple title to the Property to be good and indefeasible
subject only to those title exceptions permitted herein, or as may be approved
by Buyer in writing, and the standard printed exceptions contained in the usual
form of the title Policy; provided, however: (a) the exception as to area and
boundaries shall be in accordance with Paragraph 7.A.3; (b) the exception as to
restrictive covenants shall be endorsed "None of Record", or, if of record,
restrictive covenants shall be referenced by appropriate recording information;
(c) the exception as to taxes shall be limited to taxes for the current year and
subsequent years, and subsequent assessments for prior years due to changes in
land usage or ownership; and (iii) possession of the property. SEE RIDER 4.
C. At the closing, Buyer shall deliver to Seller (i) the cash portion of
the sales price (the Earnest Money being applied thereto) and (ii) Deed of
Trust.
D. Unless otherwise provided herein, costs for the Survey, the Title
Policy, preparing Deed, all inspections, tax certificates, reports and repairs
required of Seller herein by 1/2 of escrow fee shall be Seller's expense. All
other costs and expenses incurred in connection with this contract which are not
recited herein to be the obligation of Seller, shall be the obligation of Buyer.
Unless otherwise paid, before Buyer shall be entitled to refund of Earnest
Money, any such costs and expenses required to be paid by Buyer shall be
deducted therefrom and paid to the creditors entitled thereto.
E. Rents and lease commissions, interest, insurance, utility charges,
personal property taxes and ad valorem taxes for the then current year shall be
prorated at the closing effective as of the Closing Date. If for any reason
utility charges cannot be accurately determined at date of closing for proration
purposes, Buyer may postpone proration of utility charges until after closing
and at such time as a statement for utility charge is received, charges
appearing on such statement shall then be prorated as of the date of closing,
and Seller shall tender in cash the cost of all utility charges to the date of
closing to Buyer upon demand. Any security deposits held by Seller shall be
delivered to Buyer. If the closing shall occur before the tax rate is fixed for
the then current year, the apportionment of the taxes shall be upon the basis of
the tax rate for the preceding year applied to the latest assessed valuation but
<PAGE>
any difference in ad valorem taxes for the year of sale actually paid by Buyer
shall be adjusted between the parties upon receipt of written evidence of the
payment thereof. If Seller has claimed the benefit of laws permitting a special
use valuation for the purposes of payment of ad valorem taxes on the Property,
the Seller represents that he was legally entitled to claim such benefits. If
this sale or Buyer's use of the property after closing results in the assessment
of additional taxes for prior years, such additional taxes shall be the
obligation of the Buyer and such obligation shall survive closing.
F. If Buyer is to assume an existing loan, Buyer shall pay any transfer
fee as provided in Paragraph 4. Buyer shall execute, at the option nd expense
of Seller, a Deed of Trust to Secure Assumption with a Trustee named by Seller.
G. If the Property is situated within a utility district subject to the
provisions of Section 50.301, Texas Water Code, then at or prior to the closing,
Seller agrees to give Buyer the written notice required by said Section and
Buyer agrees to sign and acknowledge the notice to evidence receipt thereof.
11. ESTOPPEL CERTIFICATE BY TENANTS. Seller shall deliver to Buyer an
"estoppel certificate" signed by each tenant leasing space in the Property as of
the date of closing stating (1) that no default exists under the terms of the
lease agreement by either Lessor or Lessee; (2) the amount of any rental
payments made in advance, if any; (3) the amount of any security deposits made,
if any; (4) the amount of any offsets against rent, if any; and (5) that the
tenant has no defenses against the payment of rent accruing under the terms of
his lease agreement. Seller shall, at closing, tender to Buyer the amount of
any security deposits and advance rental payments received. Seller shall
deliver to Buyer all existing leases and service and/or warranty contracts
applicable to the premises within 10 days of this contract. Buyer shall have 3
days from receipt of those contracts to disapprove of same in writing to Seller,
and Buyer may terminate this agreement and Earnest Money shall be refunded with
no Broker's fee due. At closing the cost of any service and/or warranty
contracts shall be prorated.
12. BROKER'S FEES.
[ X ] A. To be set forth in a separate agreement.
13. CASUALTY LOSS. If, prior to Closing, any part of Property is damaged or
destroyed by fire or other casualty loss, Seller shall restore the same to its
previous condition as soon as reasonably possible, but in any event by Closing
Date; and if Seller is unable to do so without fault, this contract shall
terminate and Earnest Money shall be refunded with no Broker's fee due.
14. DEFAULT. If Buyer fails to comply herewith, Seller shall receive the
Earnest Money as liquidated damages. If Seller is unable without fault to
deliver Title Policy or to make any non-casualty repairs required herein within
the time herein specified, Buyer may either terminate this contract and receive
the Ernest Money as the sole remedy, and no Broker's fee shall be earned, or
extend the time up to 30 days. If Seller fails to comply herewith for any other
reason, Buyer may (i) terminate this contract and receive the Earnest Money,
thereby releasing Seller from this contract or (ii) enforce specific performance
hereof. If completion of sale is prevented by Buyer's default, and Seller
elects to enforce specific performance, the Broker's fee is payable only if and
when Seller collects damages for such default by suit, compromise, settlement or
otherwise, and after first deducting the expenses of collection, and then only
in amount equal to one-half of that portion collected, but not exceeding the
amount of Broker's fee.
15. CONDEMNATION. If any part of the Property is condemned prior to Closing
Date, Seller shall promptly give Buyer written notice of such condemnation and
Buyer shall have the option of either applying the proceeds on a pro rata basis
of any condemnation award to reduce the Sales Price provided herein or declare
this contract terminated by delivering written notice of termination to Seller
and Earnest Money shall be refunded to Buyer with no Broker's fee due.
16. ATTORNEY'S FEES. Any signatory to this contract who is the prevailing
party in any legal proceeding against any other signatory brought under or with
relation to this contract or transaction shall be additionally entitled to
recover court costs and reasonable attorney fees, and all other litigation
expenses, including deposition costs, travel, and expert witness fees, from the
non-prevailing party.
17. REPRESENTATIONS. In addition to other representations made herein, Seller
represents that unless securing payment of the Note, there will be no Title 1
liens, unrecorded liens or Uniform Commercial Code liens except those specified
in paragraph 26 against any of the Property on Closing Date, that loan(s) will
be without default, and reserve deposits will not be deficient. If any
representation above is untrue this contract may be terminated by Buyer and the
Earnest Money shall be refunded without delay. Representations shall survive
closing.
18. NOTICES. Any notice or communication required or permitted hereunder shall
be deemed to be delivered, whether actually received or not, when deposited in
the United States mail, postage fully prepaid, registered or certified mail, and
addressed to the intended recipient at the address on the signature page of this
contract. Any address for notice may be changed by written notice delivered as
provided herein.
19. INTEGRATION. This contract contains the complete agreement between the
parties and cannot be varied except by the written agreement of the parties. The
parties agree that there are no oral agreements, understandings, representations
or warranties which are not expressly set forth herein.
20. BINDING EFFECT. This contract shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
representatives, successors and assigns where permitted by this contract. The
effective date of this contract shall be the date upon which the last party
signs.
21. TERMINATION OF OFFER. Unless accepted by Seller, as evidenced by Seller's
signature hereto and delivered to Buyer by 5:00 pm., the ____ day of
_______________, 19___, this offer to purchase shall be null and void and all
parties hereto shall stand relieved and released of any and all liability or
obligations hereunder and all Earnest Money shall be returned to Buyer.
22. ASSIGNMENT.
[ X ] A. Buyer may not assign this contract.
[ ] B. Buyer may assign this contract and all rights hereunder and
shall be relieved of any future liability under this
contract provided the assignee shall assume in writing all
the obligations of Buyer hereunder.
<PAGE>
23. TEXAS LAW TO APPLY. This agreement shall be construed under and in
accordance with the laws of the State of Texas and all obligations of the
parties created hereunder are performable in Denton County, Texas.
24. LEGAL CONSTRUCTION. In case any one or more of the provisions contained in
this contract shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof and this contract shall be construed
as if such invalid, illegal, or unenforceable provision had never been contained
herein.
25. TIME. Time is of the essence.
26. SPECIAL PROVISIONS. (This section to include additional factual data
relevant to the sale which may include addendums.)
Buyer represents and warrants to Seller that Buyer is authorized to
enter into this transction, and the person signing on behalf of Buyer
is authorized to do so.
27. CONSULT YOUR ATTORNEY. This is intended to be a legally binding contract.
This contract constitutes the entire agreement between the parties and their
real estate agents, there being no oral agreements, representations, conditions,
or warranties, express or implied, in addition to this contract.
28. PRINCIPAL DISCLOSURE.
[ ] The Buyer of this Property is a licensed real estate agent and is
acting as a principal in this transaction.
[ ] The Seller of this Property is a licensed real estate agent and
is acting as a principal in this transaction.
29. (a) As an integral part of the consideration to bc tendered by Buyer
to Seller hereunder, Buyer shall pay to Seller, in currently collectible
funds, an amount equal to the Guaranteed Differences (defined below),
calculated as of the third anniversary of the date of closing hereunder, on
or before that date which is five business days after the third anniversary
of the date of closing hereunder.
(b) The "Guaranteed Difference" is the amount equal to: the
difference between (x) the sum of $1,300,000 and (y) the average closing
price of the Units (the "Closing Price") (as calculated by multiplying (i)
the average closing selling price of units in Buyer on the New York Stock
Exchange over the 20 trading days immediately preceding the date of
calculation by (ii) 54,166.67); and for the purposes of calculating the
Guaranteed Difference applicable on the third anniversary of closing
hereunder only, further reduced by the amount of any Prior Proceeds
(defined below).
The following is an example of the operation of the foregoing:
If two months after the second anniversary of closing hereunder Seller
sells the Units at $22 per unit, and if upon the third anniversary of
closing hereunder the average Closing Price of the Units is $20 per unit,
the Guaranteed Difference applicable to the third anniversary hereof shall
be $108,333.34. [$1,300,000 - (54,166.67 x 20) - ((54,166.67 x 22) -
(54,166.67 x 20))].
c) "Prior Proceeds" is the amount equal to the difference between
(i) the amount realized with respect to any of the Units sold by Seller
after the second anniversary hereof and (ii) the Closing Price allocable to
such sold portion of the Units applicable on the third anniversary of
Closing hereunder.
d) Buyer's obligations hereunder shall survive closing and delivery
of the deed, shall constitute personal obligations of Buyer and shall bc
secured, in part, by delivery of the Letters of Credit (defined below) as
set forth in Section 30 below.
30) At closing, Buyer shall deliver to Seller a letter of credit in the face
amount of the Guaranteed Difference, calculated as of the date of closing
hereunder and redetermined as of each Replacement Date (as hereinafter
defined). Such letter of credit, and any replacement thereof, (each a
"Letter of Credit") shall bc in form reasonably acceptable to Seller and
shall be issued by an issuer reasonably acceptable to Seller. Each Letter
of Credit shall have a duration of one year. Each Letter of Credit shall
contain a provision whereby Seller shall be entitled to draw the entire
amount of such Letter of Credit if Seller certifies to the issuer that
Seller has not received a replacement Letter of Credit, conforming to the
terms hereof, on or before that date (a "Replacement Date") which is five
business days prior to the exaspiration date of the then current Letter of
Credit, in an amount equal to the Guaranteed Difference, calculated as of
the Replacement Date. In addition, the Letter of Credit which shall be
outstanding as of the third anniversary of closing hereunder, shall contain
a provision whereby Seller shall be entitled to draw upon such portion of
the Letter of Credit, on or after the third anniversary of closing
hereunder, as Seller shall certify to issuer is equal to the amount of the
Guaranteed Difference, calculated as of the third anniversary of closing
hereunder. Each time that Seller issues a certification to the issuer of
the Letter of Credit described above, Seller shall also issue a separate
substantively identical certification to Buyer.
31) In the event that the Guaranteed Difference is negative or zero as of any
Replacement Date, the obligations of Buyer hereunder shall nevertheless
continue. In the event that the Guaranteed Difference is negative or zero
as of the third anniversary of closing hereunder, Buyer shall have no
further obligations hereunder. In no event shall Seller ever be required to
pay money to Buyer in the event that the Guaranteed Difference is negative.
32) Seller hereby represents and warrants to, and covenants with Buyer, that,
to the actual knowledge of Seller:
(a) Seller has the full right, power, and authority to execute,
deliver, and perform this Agreement, and this Agreement when executed and
delivered by Seller and Buyer, shall constitute the valid and binding
agreement of Seller, and shall be enforceable against Seller in accordance
with its terms.
(b) All requisite corporate action on the part of Seller has been
taken by Seller in connection with making and entering into this Agreement
and the consummation of the purchase and sale provided for herein.
(c) No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or, to the best of Seller's knowledge, threatened
against Seller, which would materially adversely affect the ability of
Seller to consummate the transactions contemplated by this Agreement.
(d) Seller has not received any written notice from appropriate
governmental authorities that the Property is currently in violation of any
applicable laws.
(c) Seller has not received any written notices from any insurance
company, board of fire underwriters or similar organization regarding any
defects in the Property.
(f) Seller has no knowledge of any litigation affecting the Property
or claims of any kind, including regulations of the Environmental
Protection Agency and any state regulatory body concerning the disposal of
grease, hazardous waste, petroleum, any underground storage tanks or any
other hazardous materials, or regulations of the Americans Disability Act
providing for access to the premises, dining areas and bathroom areas of
the Property.
(g) Seller has no contracts of any kind, such as for waste disposal,
termite protection, cleaning services, or paper supplies which will survive
the Closing Date.
(h) All financial information delivered to Buyer concerning the
Leases are and will be true, correct, accurate and complete ant will not
omit to state any fact or condition, the omission of which makes such
statements misleading.
(i) Seller has received no written notice from applicable
governmental authorities of taking, condemnation, betterment or assessment,
actual or proposed, with respect to the Property.
(j) From and after the date hereof, and until the Closing or earlier
termination of this Agreement, Seller shall not sell, assign or create any
right, title or interest whatsoever in or to the Property or create or
permit to arise any liens, encumbrance or charge thereon without promptly
discharging the same, and shall operate the Property in conformity with its
past practices.
(k) The Lease Agreements are in full force and effect, and Seller has
no actual knowledge of any event which would constitute a default or an
event of default either by Seller or any tenant under a Lease Agreement.
33) All representations and warranties made in this Agreement shall be deemed
to be made on the date hereof and again on the Closing Date. It shall be a
condition of Buyer's obligation to close that all warranties and
representations made hereunder are true on the Closing Date.
Notwithstanding any language contained in the Deed to the contrary, all
such representations and warranties shall survive the Closing for a period
of six months and shall not be deemed to have merged into and be governed
by the Closing Documents. If Buyer discovers prior to Closing, that any
representation or warranty made in this Agreement is not true, then Buyer
shall have the right, as its sole and exclusive remedies, to either (i)
terminate this Agreement by delivering notice to Seller prior to the
Closing Date and recover the Earnest Money, or (ii) elect to purchase the
Property subject to such untrue warranty or representation without any
reduction in the Purchase Price. If Buyer discovers after Closing that any
representation or warranty made in this Agreement is not true, Buyer shall
be entitled to exercise any and all rights and remedies available at law or
in equity as a result of any breach of any of such representations or
warranties, provided as a condition to Buyer's right to do so, Buyer must
deliver written notice of such breach to Seller within six (6) months after
the Closing Date and Buyer must exercise such remedies including the filing
of any suit or other action within six (6) months after the Closing Date.
34) The Buyer hereby represents and warrants to Seller, and covenants with
Seller, that:
(a) Buyer is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, the state of
its incorporation. Buyer has the full power and authority to own its
assets, conduct its business as and where such business is presently
conducted. After giving effect to the sale and issuance of the Units
pursuant to this Agreement, 4,635,000 limited partnership Units are issued
and outstanding in Buyer;
(b) the execution, delivery and performance of this Agreement by
Buyer, and the consummation of the transactions contemplated hereby, have
been authorized by all of the necessary partnership actions by Buyer and
the necessary corporate actions by the board of directors of the general
partner of Buyer. This Agreement constitutes the valid and legally binding
agreement of Buyer, enforceable against it in accordance with its terms;
and
(c) by purchase of the Units hereunder, Seller shall receive good and
absolute title thereto, fully paid and nonassessable, free and clear of all
liens, charges, encumbrances or any other restriction whatsoever other than
the restrictions contained in this Agreement, the Stock Restriction
Agreement and the Registration Rights Agreement of even date herewith.
35) Piggyback Registration Rights
(a) If, from time to time during the period two (2) years from the
Closing Date (the "Registration Period"), Buyer determines to effect a
registration under the 1933 Act in connection with the public offering of
Limited Partnership Interests for cash proceeds payable to Buyer or to any
Unit holder of Buyer ("Offering Shares"), then Buyer shall give prompt
written notice ("Registration Notice") to the Seller of Buyer's intent to
proceed with such registration and offering of the Offering Shares. No
provision of this Section 35(a) shall create, or shall be construed as
creating, any obligation of Buyer 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.
(b) If within five (5) days (the "Final Request Date") after the
receipt of Buyer's Registration Notice, Seller shall deliver to Buyer a
written request to have some or all of its limited partnership Units in
Buyer ("Registerable Shares") included in such registration, than Buyer
shall cause to be registered under the 1933 Act all of the Registerable
Shares that Seller has requested to be registered, and Seller shall have
the right to participate in any offering pursuant to such registration
statement in accordance with this Agreement. Seller shall be entitled to
exercise such option under this Agreement for not less than 54,166 limited
partnership Units (or all, if less than 54,166 limited partnership Units)
are then held by Seller (the Registrable Shares as to which the Seller
properly exercises such option pursuant to, and in accordance with, this
Agreement are referred to, collectively, as the "Piggyback Shares"). The
Seller shall not be entitled to proceed with a registration and offering of
the Piggyback Shares unless Buyer proceeds with the registration and
offering of the Offering Shares.
(c) The underwriter(s), investment banker(s) and/or manager(s) for
any offering pursuant to this Section 35 shall be selected by Buyer in its
sole discretion. If the registration involves an underwritten offering,
all participating interest holders must sell their Piggyback Shares to the
underwriters as selected by Buyer on the same terms and conditions as apply
to Seller and any other selling interest holder with such differences,
including any with respect to indemnification and liability insurance, as
may be usual and customary in combined primary and secondary offerings. If
the managing underwriter of the public offering of Offering Shares proposed
to be registered by Buyer or by another interest holder in Buyer having
been granted registration rights by Buyer advises Buyer in writing that
marketing factors require a limitation of the number of Offering Shares to
be underwritten, then the number of Registerable Shares of Seller to be
included in such registration statement and the number of limited
partnership Units in Buyer to be included in such registration statement by
any other interest holder in Buyer having been granted registration rights
by Buyer before or after the date of this Agreement other than Seller
(collectively, "Registration Rights Interest Holders") shall be limited,
pro rata, based on a fraction, the numerator of which shall be the number
of shares of limited partnership Units in Buyer that Seller shall have
requested to be registered under this Section 35 or, in the case of
Registration Rights Interest Holders, the number of limited partnership
Units in Buyer that such Registration Rights Interest Holders shall have
requested to be registered, and the denominator of which shall be the total
number of limited partnership units in Buyer requested to be registered by
Seller and Registration Rights Interest Holders. It is the intention of the
parties that thc Piggyback or incidental registration rights of Seller
shall be PARI PASSU with any "piggyback" or incidental registration rights
of any Registration Rights Interest Holder.
EXECUTED by Seller on this the 24th day of August, 1995.
BROKERS SELLER:
- ------------------------------- ---------------------------------------
SOUTHRIDGE VILLAGE PARTNERSHIP
ARC-SOUTHRIDGE INVESTORS PARTNERSHIP
By: Dls. Southridge Affiliates
-----------------------------------
LISTING BROKER LICENSE NO.
By: By:/s/ David G. Marshall
- ------------------------------- ------------------------------------
Title: General Partner
-----------------------------------
Suite 1900, 210 W. Rittenhouse Sq.
Philadelphia, PA 19103
Phone: (215) 893-6000
EXECUTED by Buyer on this the _____________ day of ________________, 19____.
BUYER:
By: U.S. RESTAURANT PROPERTIES MASTER L.P.
By: U.S. Restaurant Properties, Inc.
- ------------------------------- ------------------------------------
CO-BROKER LICENSE NO.
By:
-----------------------------------
Title: Chairman
5210 Harvest Hill, Suite 270, L.B. 168
Dallas, Texas 75230
(214) 696-4591
Receipt of $56,000.00 Earnest
-----------------
Money is acknowledged in the form
of BUYER'S CHECK
- -------------------------------------
Escrow Agent
By:/s/ Alexandra Smith, Escrow Officer
-----------------------------------
American Title Company
2323 Bryan #1600
Dallas, Tx 75201
Phone: (214) 220-6366
Fax: (214) 220-0179
[Note: This form has been prepared by Babb & Hanna, P.C., attorneys for the
Texas Association of REALTORS (TAR). Babb & Hanna, P.C. has approved this form
for use by TAR member brokers and salespersons for the purpose of selling
improved or unimproved commercial real property. This form has not been drafted
for a specific transaction, therefore, the parties are advised to consult an
attorney of their choice before signing.]
<PAGE>
INVESTIGATION/FEASIBILITY STUDY ADDENDUM
INVESTIGATION/FEASIBILITY STUDY. Buyer is granted the right to conduct an
investigation and/or feasibility study of the Property as follows:
[X] market or economic feasibility study
[X] engineering study
[X] inspection of zoning, subdividing, or other use restrictions affecting the
Property
[X] availability of utilities, including electricity, gas, water and wastewater
treatment
[X] inspection of soil and subsoil condition
[X] other ENVIRONMENTAL PHASE I
---------------------------------------------------------------------
- -------------------------------------------------------------------------------
Buyer shall have 30 days from the effective date hereof to perform such
investigation and/or study. Buyer or Buyer's agents shall have the right of
access to the Property prior to closing for the purpose of conducting such
investigation and/or study, and shall have the right to conduct tests and obtain
core samples. Seller agrees to cooperate with Buyer in connection with the
investigation and/or study, agrees to furnish Buyer with copies of any and all
documents relating to the Property that might be necessary to complete such
investigation and/or study, and agrees to execute any and all documents that
might be required in order to obtain any necessary governmental authority or
consent with respect to the above-described matters. If Buyer determines, in
Buyer's sole judgment and discretion, that the Property is not suitable for
Buyer's intended use, within the ____ days, Buyer shall give Seller written
notice of such fact on or before the end of the period stated above with a copy
to Escrow Agent. Upon receipt of such written notice, the Escrow Agent shall
refund the Earnest Money to Buyer, and both parties shall be released from all
further obligations under this contract. If Buyer does not send such written
notice to Seller, then it shall be presumed that the Property is suitable for
Buyer's intended use, and the contact may not be terminated by Buyer for the
reasons set forth in this Section. In the event this contract does not close,
through no fault of Seller, Buyer shall restore the Property to its original
condition, if changed due to the investigation and/or study performed by Buyer.
U.S. RESTAURANT PROPERTIES MASTER L.P. SOUTHRIDGE VILLAGE PARTNERSHIP
BY: U.S. RESTAURANT PROPERTIES, INC. BY: ARC-SOUTHRIDGE INVESTORS
PARTNERSHIP
By: BY: DLS. SOUTHRIDGE AFFILIATES
---------------------------------- ---------------------------------
By: /s/ David G. Marshall
---------------------------------
David G. Marshall
Its: Chairman Its: General Partner
---------------------------------- ---------------------------------
Date 8/21/95 Date 8/24/95
After expiration of the Feasibility Period, Buyer shall accept the property AS
IS and the Deed shall contain the following language: (see attached "as is"
language).
<PAGE>
THIS CONVEYANCE IS MADE BY GRANTOR AS-IS AND WITH ALL FAULTS, AND GRANTOR
EXPRESSLY DISCLAIMS, AND GRANTEE ACKNOWLEDGES AND ACCEPTS THAT GRANTOR HAS
DISCLAIMED, ANY AND ALL REPRESENTATIONS WARRANTIES, OR GUARANTEES, OF ANY KIND,
ORAL OR WRITTEN, EXPRESSED OR IMPLIED, OR ARISING BY OPERATION OF LAW OR
OTHERWISE OR CONCERNING SUCH PROPERTY AND IMPROVEMENTS, INCLUDING WITHOUT
LIMITATION, (I) THE USE, INCOME POTENTIAL, EXPENSES, OPERATION CHARACTERISTICS
OR CONDITION OF THE PROPERTY OR ANY PORTION THEREOF, INCLUDING WITHOUT
LIMITATION WARRANTIES OF SUITABILITY, HABITABILITY, MERCHANTABILITY, DESIGN OR
FITNESS FOR ANY SPECIFIC PURPOSE OR A PARTICULAR PURPOSE OR GOOD AND WORKMANLIKE
CONSTRUCTION, (II) THE NATURE OR QUALITY OF CONSTRUCTION, STRUCTURAL DESIGN AND
ENGINEERING OF THE PROPERTY, (III) THE ENVIRONMENTAL CONDITION OF THE PROPERTY
AND THE PRESENCE OR ABSENCE OF OR CONTAMINATION BY HAZARDOUS MATERIALS OR THE
COMPLIANCE OF THE PROPERTY WITH ALL REGULATIONS OR LAWS RELATING TO HEALTH OR
THE ENVIRONMENT, (IV) THE QUALITY OF THE LABOR AND MATERIALS INCLUDED IN THE
PROPERTY, (V) THE SOIL CONDITIONS, DRAINAGE, FLOODING CHARACTERISTICS, UTILITIES
OR OTHER CONDITIONS EXISTING IN OR TO THE PROPERTY, AND (VI) THE COMPLIANCE OF
THE PROPERTY WITH ANY REQUIREMENTS ESTABLISHED BY THE AMERICANS WITH
DISABILITIES ACT.
<PAGE>
PROPERTY CONDITION ADDENDUM
PROPERTY CONDITION (CHECK "A" OR "B")
[ ] A. Buyer accepts the Property in its present condition, subject only to:
[ ] B. Buyer requires inspections and repairs as follows:
Check Applicable Boxes:
[ ] i. Termites: Seller, at Buyer's expense shall furnish to Buyer at or
prior to closing a written report by a Structural Pest Control
Business Licensee, dated within 30 days before Closing Date and
stating that there is no visible evidence of active termites or
visible damage to the improvements from the same in need of
repair. Such report shall not cover fences, trees and shrubs.
[X] ii. Condition of Property.
Buyer shall have the right at Buyer's expense (i) within 30 days
from the date of this contract to have any of the STRUCTURAL
items indicated below, and (ii) within 30 days from the date of
this contract to have any of the EQUIPMENT AND SYSTEMS items
indicated below, inspected by inspectors of Buyer's choice and to
give Seller within such time periods written report of required
repairs to any of the items checked below which are not
performing the function for which intended or which are in need
of immediate repair. Failure to do so shall be deemed a waiver
of Buyer's inspection and repair rights and Buyer agrees to
accept Property in its present condition.
ITEMS THAT BUYER MAY REQUIRE TO BE INSPECTED (check applicable
boxes):
STRUCTURAL:
[X] foundation, [X] roof, [X] load bearing walls, [X] floors, [X]
ceilings, [X] basement, [X] water penetration, and
------------------------------------------------------------------
------------------------------------------------------------------
EQUIPMENT AND SYSTEM:
[X] plumbing system (including any water heaters), [X] central
heating and air conditioning, [X] electrical system, [X] heating
and cooling units in the walls, floors, ceilings, roof or
windows, [X] any built in applicances, [ ] swimming pools and
related mechanical equipment [X] sprinkler systems, and
------------------------------------------------------------------
------------------------------------------------------------------
Repairs required by inspections and reports shall be at Buyer's
expense.
[ ] iii. Seller shall make the following repairs in ddition to those
required above: None
------------------------------------------------------------------
------------------------------------------------------------------
All inspections shall be by trained and qualified persons who
regularly provide such service and all repairs shall be by
trained and qualified persons who are, whenever possible,
manufacturer-approved service persons or are licensed or bonded
whenever such license or bond is required by law. For these
purposes and for re-inspections after repairs have been
completed, Seller shall permit access to the Property at any
reasonable time.
U.S. RESTAURANT PROPERTIES MASTER L.P. SOUTHRIDGE VILLAGE PARTNERSHIP
BY: U.S. RESTAURANT PROPERTIES, INC. BY: ARC-SOUTHRIDGE INVESTORS
PARTNERSHIP
BY: DLS. SOUTHRIDGE AFFILIATES
- -------------------------------------- ------------------------------------
By: By: /s/ David G. Marshall
- -------------------------------------- ------------------------------------
David G. Marshall
Its: Chairman Its: General Partner
- -------------------------------------- ------------------------------------
Date 8/21/95 Date 8/24/95
<PAGE>
Attachment to Texas Association of Realtors
Commercial Earnest Money Contract
RIDER 1
A. Lease Agreement between Seller and Pilot Point National Bank ("Pilot
Point Lease");
B. Lease Agreement between Seller, and Chili's, Inc. ("Chili's Lease");
C. Lease Agreement between Seller and Robert Teong Lim ("Red Peppers
Lease") (collectively, the "Lease Agreements").
RIDER 2
The Units of limited partnership interest will be unregistered and subject
to a two (2) year restriction on transfer under U.S. securities laws.
RIDER 3
(4) Sales and other historical financial information in Seller's
possession with respect to the Pilot Point Lease, Chili's Lease and Red Pepper's
Lease, and to the extent in Seller's possession by Seller, current financial
statements which respect to each such tenant.
(5) A Phase I Environmental Report to the extent in Seller's possession.
RIDER 4
(iv) original copies of the Lease Agreements, to the extent in Seller's
possession; (v) a quit claim Assignment and Assumption of the Lease Agreements,
in form satisfactory to the parties; (iv) a quit-claim general assignment of all
intangible property associated with the Property, including warranties, plans
and specifications, trade names and trade marks, in form satisfactory to the
parties.
<PAGE>
EXHIBIT 2.8
PURCHASE AND SALE AGREEMENT
THIRTY GRANDY'S RESTAURANT PROPERTIES
GRANDY'S, INC.
("Seller")
and
U. S. RESTAURANT PROPERTIES OPERATING L. P.
("Buyer")
<PAGE>
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is entered into as of
November __, 1996, by and between GRANDY'S, INC., a California corporation
("Seller"), and U. S. RESTAURANT PROPERTIES OPERATING L. P., a Delaware
limited partnership ("Buyer").
W I T N E S S E T H:
In consideration of the mutual covenants set forth herein, Seller and
Buyer agree as follows:
1. CONVEYANCE OF PROPERTIES. On the terms and subject to the
conditions set forth in this Agreement, at Closing (as hereinafter defined),
Seller shall sell, convey and assign to Buyer, and Buyer shall buy and accept
from Seller, subject to the Permitted Encumbrances (as hereinafter defined),
good and indefeasible title in fee simple to thirty (30) parcels of land
described on SCHEDULE 1 attached hereto, on which Grandy's restaurants are
located (collectively the "Land"), together with all rights and interests
appurtenant thereto, including Seller's right, tide, and interest in and to
all adjacent streets, alleys, rights-of-way and any adjacent strips or gores
of real estate (together with the Land, collectively, the "Properties"; each
a "Property"), but excluding any interest of Seller in the buildings,
structures, fixtures, improvements and personal property located on the Land
(the "Improvements").
2. EARNEST MONEY. Within three (3) business days after the date both
Buyer and Seller execute and deliver this Agreement, Buyer shall deliver to
First American Title Insurance, 228 East 45th Street, New York, New York
10017, Attn: Bruce Clay ("Title Company") $50.00 ("Non-Refundable Earnest
Money") in consideration for this Agreement and the Inspection Period (as
hereinafter defined). The Tide Company shall immediately deliver the
Non-Refundable Earnest Money to Seller and the Non-Refundable Earnest Money
shall be retained by Seller in all events. In addition, Buyer on the same
date shall deposit $250,000.00 with Tide Company (the "Earnest Money"). The
Earnest Money shall be deposited in escrow or trust accounts that are
interest-bearing, readily available, liquid and federally insured to the full
extent of the Earnest Money deposited therein. The Earnest Money shall
include any interest earned thereon. Title Company shall deliver the Earnest
Money only in accordance with this Agreement.
3. PURCHASE PRICE.
(a) The purchase price for the Properties shall be $12,500,000.00
(the "Purchase Price"). The Purchase Price shall be paid to the Title
Company and distributed by the Tide Company to Seller pursuant to
instructions executed by Seller and Buyer. The Purchase Price shall be
credited by the Earnest Money (and any interest earned thereon) to the extent
delivered to Seller and shall be adjusted as described in this Agreement.
PURCHASE AND SALE AGREEMENT - PAGE 1
GRANDY'S INC.
<PAGE>
(b) No proration shall be made of real estate and personal property
taxes, utility charges and maintenance expenses, since these expenses are
obligations of the Tenant pursuant to the Lease Agreement to be executed between
Buyer and Seller (as tenant) on the Closing Date.
4. DELIVERY OF DOCUMENTS BY SELLER. On or before the date which is seven
(7) days following the date hereof, or as soon thereafter as practicable, Seller
shall deliver to Buyer the following documents ("Documents"):
(a) Commitments for title insurance covering the fee estate in the
Land ("Title Commitments") from the Title Company, setting forth the status
of the title of the Land, showing all matters of record affecting the Land,
together with a true, complete, and legible copy of all documents referred to
in the Title Commitments;
(b) Current "as built" Surveys of the Properties drawn under the
minimum standard detail requirements for ALTA/ACSM land title surveys,
recertified to Buyer and the Title Company, listing all easements and
encroachments affecting the Properties, identifying parking spaces (including
handicapped designation) and ingress and egress, and containing a flood plain
certification;
(c) Current phase I environmental surveys (the "Environmental
Reports");
(d) Balance sheet and income statements of Seller for the fiscal
quarter ending September 30,1996, and at least the previous three (3) years,
which identify separately the gross sales from each restaurant location (the
"Financial Statements");
(e) Certificates of insurance covering the Properties and
Improvements;
(f) Copies of any current real property leases, if any, on the
Properties; and
(g) Copies of real estate tax bills for the prior three (3) years.
5. RIGHT OF ENTRY, INSPECTION, TERMINATION.
(a) From the date hereof to the Closing Date, Seller shall afford
Buyer and its representatives a continuing right to inspect, at reasonable
hours, the Properties, Documents, and all other documents or data pertaining
to the Properties. Buyer shall indemnify and hold Seller harmless from and
against any loss, claim or liability arising or resulting from the
inspections made by Buyer. At any time prior to 5:00 p.m. on the date that
is fifteen (15) days after the date of this Agreement, Buyer may terminate
this Agreement by written notice to Seller as to all of the Properties, in
its sole and absolute discretion, and obtain a return of the Earnest Money.
PURCHASE AND SALE AGREEMENT - PAGE 2
GRANDY'S INC.
<PAGE>
(b) If Buyer does not terminate this Agreement pursuant to Section
5(a) above, from the date of receipt of the last of the Title Commitment, Survey
and Environmental Report with respect to each Property, Buyer shall have a
fourteen (14) day period (the "Review Period") in which to deliver written
objection to Seller (which objection must be reasonable) of any matter contained
in such Title Commitment, Survey and Environmental Report with respect to such
Property. Seller, at its sole cost and expense shall have the right, but not
the obligation, to agree in writing to cure or remove at or before Closing any
such matter objected to by Buyer within the five (5) day period following the
last day of the Review Period with respect to such Property. If Seller does not
cure or agree to cure such matter to the reasonable satisfaction of Buyer, and
if (i) such defect in the reasonable discretion of Buyer would materially impair
the fair market value of the affected Property, or (ii) such matter is reflected
on the "requirements" Schedule of the Title Commitment, Buyer may by notice to
Seller delivered in writing within ten (10) days following the last day of the
Review Period terminate this Agreement only as to the Property with the uncured
defect (the "Excluded Property"), with a reduction in the Purchase Price equal
to the Allocated Value of the Excluded Property as set forth on Schedule 1. If
Buyer terminates this Agreement with respect to an Excluded Property, Seller
may, in its sole discretion, terminate this Agreement in its entirety by written
notice to Buyer within ten days after Buyer's notice to Seller that it has
terminated the Agreement with respect to the Excluded Property, in which event
the Earnest Money shall be returned to Buyer and Buyer and Seller shall have no
further rights or obligations hereunder. Notwithstanding the foregoing, Buyer
shall have no right to terminate this Agreement with respect to a Property for
the following defects: (i) statutory liens for taxes or other governmental
charges not yet due and payable or the amount or validity of which is being
contested in good faith by appropriate proceedings by Seller, and with respect
to which Seller has agreed to establish all reserves required under the Lease
Agreement on the Closing Date; and (ii) survey exceptions, reciprocal easements
agreements, utility easements, and other customary encumbrances on, and
exceptions to, title to real property that (w) were not incurred in connection
with any indebtedness, (x) do not render title to the property encumbered
thereby unmarketable (y) do not, individually or in the aggregate, materially
impair the use, for its current purposes, or value, of such real property, and
(z) are not listed on the "requirements" Schedule of the Title Commitments.
6. TITLE. All matters reflected on the Title Commitment or Survey with
respect to a Property on the last day of the Review Period shall be "Permitted
Encumbrances" hereunder, unless such Property is an Excluded Property or Buyer
delivers an objection notice to Seller as provided in Section 5(b) and Seller
agrees to cure any such matter in the manner provided in Section 5(b) at or
prior to Closing.
7. REPRESENTATIONS AND WARRANTIES. Seller hereby represents and warrants
to, and covenants with Buyer that:
(a) Seller has the full right, power, and authority to execute,
deliver, and perform this Agreement, and this Agreement, when executed and
delivered by Seller and Buyer, shall constitute the valid and binding agreement
of Seller, and shall be enforceable against Seller in accordance with its
PURCHASE AND SALE AGREEMENT - PAGE 3
GRANDY'S INC.
<PAGE>
terms subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or similar laws affecting the rights of creditors
generally and the availability of equitable remedies.
(b) All requisite action on the part of Seller has been taken by
Seller in connection with making and entering into this Agreement and the
consummation of the purchase and sale provided for herein, and no consents or
approvals are required from any party in order to consummate such purchase
and sale.
(c) No attachments, execution proceedings, assignments for the
benefit of creditors, insolvency, bankruptcy, reorganization or other
proceedings are pending or, to the best of Seller's knowledge, threatened
against Seller, which would materially adversely affect the ability of Seller
to consummate the transactions contemplated by this Agreement.
(d) Seller has not received any written notice from appropriate
governmental authorities that any Property is in violation of any applicable
laws which would materially adversely affect the ability of the Seller to
operate any Property or materially affect its value.
(e) Seller has not received any written notices from any insurance
company, board of fire underwriters or similar organization regarding any
material defects in any Property which would materially adversely affect the
ability of the Seller to operate any Property or materially affect its value.
(f) The Improvements and their use shall be in material compliance
with all applicable zoning, building, environmental, subdivision and other
laws, rules, and regulations applicable thereto, as well as any private
restrictive covenants affecting the Properties, except where any
noncompliance would not materially adversely affect the ability of the Seller
to operate any Property or materially affect its value; and shall be ready
for use and occupancy, and all necessary certificates of approval and
occupancy shall have been issued and furnished by all authorities having or
claiming to have jurisdiction over the construction, use or occupancy of the
Improvements.
(g) From the date hereof, and until the Closing or earlier
termination of this Agreement, Seller shall not sell, assign or create any
right, title or interest whatsoever in or to any Property or create any
liens, encumbrances or charge thereon without discharging the same at or
prior to the Closing Date.
(h) The Financial Statements are and will be true, correct,
accurate and complete and will not omit to state any fact or condition, the
omission of which makes such statements misleading.
(i) Seller has no knowledge of any litigation, or threatened
litigation, or of claims of any kind, or of any facts or circumstances which
may in any way materially adversely affect Seller or any Property, including
any material violations of any regulations of the Environmental Protection
Agency and any state regulatory body concerning the disposal of grease,
hazardous waste, petroleum,
PURCHASE AND SALE AGREEMENT - PAGE 4
GRANDY'S INC.
<PAGE>
any underground storage tanks or any other hazardous materials or regulations
of the Americans with Disabilities Act providing for access to the premises,
dining areas and bathroom areas of any Property ("Applicable Laws").
(j) To the best of Seller's knowledge, all structures and
Improvements upon each Property have been constructed and installed in material
compliance with all applicable laws, statutes, ordinances, codes, covenants,
conditions and restrictions of any kind or nature affecting such Property.
(k) Seller has no information or actual knowledge of any proposed
change in any of the Applicable Laws or any judicial or administrative action or
any action by adjacent landowner or any facts or conditions relating to any
Property in each case which would materially and adversely affect, prevent or
limit the use of such Property as a restaurant.
(l) Seller has received no written notice of taking, condemnation,
betterment or assessment, actual or proposed, with respect to any Property.
(m) To the best of Seller's knowledge, no portion of any Property
lies within any 100-year flood plain.
All representations and warranties made in this Agreement shall be
deemed to be made on the date hereof and again on the Closing Date. It shall
be a condition of Buyer's obligation to close that all warranties and
representations made hereunder are true in all material respects on the
Closing Date. If Buyer discovers prior to Closing, that any representation
or warranty made in this Agreement is not true in all material respects and
is not susceptible of being cured prior to the Closing, then Buyer shall have
the right, as its sole and exclusive remedies, to either (i) terminate this
Agreement in accordance with Section 13 by delivering notice to Seller prior
to the Closing Date, or (ii) elect to purchase the Properties subject to such
untrue warranty or representation without any reduction in the Purchase
Price. If Buyer discovers after Closing that any representation or warranty
made in this Agreement is not true in all material respects, Buyer shall be
entitled to exercise any and all rights and remedies available at law or in
equity as a result of any breach of any of such representations or
warranties, provided as a condition to Buyer's right to do so, Buyer must
deliver written notice of such breach to Seller within one (1) year after the
Closing Date and Buyer must exercise such remedies including the filing of
any suit or other action within two (2) years after the Closing Date, based
on a breach thereof of which Buyer gave Seller such notice within such one
(1) year period after the Closing Date.
8. CLOSING. The closing ("Closing") of the sale of the Properties by
Seller to Buyer shall occur on the first business day seven (7) days after the
last day of the last Review Period to occur, or at such earlier date agreed to
by Seller and Buyer in writing (the date such Closing occurs is hereinafter
referred to as the "Closing Date"). Provided, however, if Closing does not
occur on or before December 13, 1996, either Buyer or Seller may terminate this
Agreement (provided that such
PURCHASE AND SALE AGREEMENT - PAGE 5
GRANDY'S INC.
<PAGE>
terminating party is not otherwise in default hereunder) and Buyer shall
receive a refund of its Earnest Money. Closing shall occur in the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017,
or at another place and or time as mutually agreed upon by Seller and Buyer,
commencing at 10:00 o'clock a. m. on the Closing Date. At Closing:
(a) Buyer shall deliver to Seller (i) the Purchase Price in
accordance with Section 3; (ii) an executed Lease Agreement referred to
below; and (iii) evidence satisfactory to Seller and the Title Company that
the person executing documents on behalf of Buyer has full right, power and
authority to do so.
(b) Seller shall deliver or cause to be delivered to Buyer the
following ("Closing Documents"):
(i) Special Warranty Deed in the form of EXHIBIT A, conveying to
Buyer the Land subject to the Permitted Encumbrances; IRC Section 1445
Certification in the form of EXHIBIT B; all fully executed, sworn to, and
acknowledged, as appropriate, by Seller;
(ii) An executed Lease Agreement in the form attached hereto as
EXHIBIT C (with such revisions to Section 15.4 thereof as Seller's lender
may reasonably request and which are reasonably acceptable to Buyer); and
(iii) Evidence satisfactory to Buyer and Title Company that
the person or persons executing the Closing Documents on behalf of Seller
have full right, power and authority to do so.
(c) Seller shall be responsible for the costs of obtaining the Title
Commitments, the Environmental Reports, the Owner Policies of Title Insurance
for the Properties (with survey exception deleted), the Surveys and all required
updates thereof, and applicable transfer taxes. Buyer and Seller shall share
all escrow fees of the Title Company and recording costs.
(d) Each of Seller and Buyer shall pay its own legal fees incurred
in connection with this Agreement; provided, however, that if a suit is filed
by Buyer or Seller alleging a breach hereof or default hereunder, the
non-prevailing party shall pay all reasonable legal fees of the prevailing
party resulting from such suit.
(e) Seller shall deliver to Buyer possession of the Properties
subject to the Lease Agreement and Permitted Encumbrances.
9. NOTICES. Any notice provided or permitted to be given under this
Agreement must be in writing and may be served by depositing same in the United
States mail, addressed to the party to be notified, postage prepaid and
certified, with return receipt requested, by delivering the same in
PURCHASE AND SALE AGREEMENT - PAGE 6
GRANDY'S INC.
<PAGE>
person to such party, or by delivering the same by confirmed facsimile.
Notice given in accordance herewith shall be effective upon the earlier of
receipt at the address of the addressee or on the second (2nd) day following
deposit of same in the United States mail as provided for herein, regardless
of whether same is actually received. For purposes of notice, the addresses
of the parties shall be as follows:
If to Seller, to: American Restaurant Group
450 Newport Center Drive, Sixth Floor
Newport Beach, California 92660
Attn: William McCaffrey
Phone No. 714-721-8000
Fax No. 714-721-8941
With a copy to: Philip T. Ruegger
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Phone No. 212-455-2000
Fax No. 212-455-2502
With a copy to: American Restaurant Group, Inc.
Law Department
4410 El Camino Real, Suite 201
Los Altos, California 94022
Phone No. 415-949-6400
Fax No. 415-949-6420
If to Buyer: U. S. Restaurant Properties Operating L. P.
Attn: David Pettijohn
5310 Harvest Hill Road
Suite 270, Lock Box 168
Dallas, Texas 73230
Phone No. 972-387-1487
Fax No. 972-490-9119
With a copy to: Richard S. Wilensky
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
Phone No. 214-220-6334
Fax No. 214-220-0179
PURCHASE AND SALE AGREEMENT - PAGE 7
GRANDY'S INC.
<PAGE>
Either party may change its address for notice by giving ten (10) days prior
written notice thereof to the other party.
10. COMMISSIONS. Buyer shall defend, indemnify, and hold harmless
Seller from any claim by any party claiming under Buyer for any brokerage,
commission, finder's, or other fees relative to this Agreement or the sale of
the Properties, and any court costs, attorneys' fees, or other costs or
expenses arising therefrom and alleged to be due by authorization of Buyer.
Seller shall defend, indemnify and hold harmless Buyer from any claim by any
party claiming under Seller for any brokerage, commission, finder's, or other
fees relative to this Agreement or the sale of the Properties, and any court
costs, attorneys' fees, or other costs or expenses arising therefrom and
alleged to be due by authorization of Seller.
11. ASSIGNS. This Agreement shall inure to the benefit of and be
binding on the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Agreement may not be assigned
by Buyer or Seller without the consent of the other.
12. DESTRUCTION, DAMAGE OR TAKING BEFORE CLOSING. In the event of damage
to or destruction of all or any portion of any Property by fire or other
casualty, Seller shall promptly notify Buyer. This Agreement shall remain in
full force and effect, and Seller shall, at its option, either (i) repair
such damage or destruction, or, if such damage or destruction has not been
repaired prior to Closing, (ii) require Buyer to take title to the Property,
assign to Buyer all available casualty insurance proceeds and indemnify Buyer
(in form and content satisfactory to Buyer) for all costs and expenses of
repair in excess of available insurance proceeds. In the event of an eminent
domain taking or the issuance of a notice of an eminent domain taking with
respect to all or any portion of the Property, Seller shall promptly notify
Buyer. If such taking shall have a materially adverse effect upon the
present use and operation of the affected Leased Property or the economic
feasibility of operation thereof or shall result in the elimination of
necessary legal ingress and/or egress from such Leased Property to public
roads (each a "Total Taking"), then Buyer shall have, as its sole and
exclusive remedies, (i) the option to terminate this Agreement with respect
to such Property, with a reduction in the Purchase Price attributable to such
Excluded Property equal to the Allocated Value of such Excluded Property as
set forth on Schedule 1, or (ii) if Buyer does not elect to terminate this
Agreement with respect to such Excluded Property, this Agreement shall remain
in full force and effect, Buyer shall be obligated to consummate this
transaction for the full Purchase Price, and Buyer shall be entitled to
receive, to the extent allocable to the Excluded Property, all eminent domain
awards and, to the extent the same may be necessary and appropriate, Seller
shall assign to Buyer at Closing Seller's rights to such awards. If an
eminent domain taking occurs with respect to any Property which is not a
Total Taking, then Buyer shall still be obligated to purchase the affected
Property and, at Seller's option (i) any award for such taking shall first be
paid to Seller to the extent reasonably necessary to enable Seller to repair
and/or reconstruct the affected Property (which repair and/or reconstruction
shall be the obligation of Seller), with any remainder of such award being
paid to Buyer or (ii) the entire award for any such
PURCHASE AND SALE AGREEMENT - PAGE 8
GRANDY'S INC.
<PAGE>
taking shall be paid to Buyer and Seller shall have no obligation to repair
and/or reconstruct the affected Property.
13. TERMINATION AND REMEDIES.
(a) If Buyer fails to consummate the purchase of the Properties
pursuant to this Agreement for any reason other than termination hereof
pursuant to a right granted to Buyer in Sections 5, 7, 8, or 12, then Seller,
as its sole and exclusive remedy, shall have the right to terminate this
Agreement by notifying Buyer thereof, in which case the Title Company shall
deliver the Earnest Money to Seller, whereupon neither party shall have any
further rights or obligations hereunder. Seller and Buyer hereby acknowledge
and agree they have included the provision for payment of liquidated damages
because, in the event of a breach by Buyer, the actual damages incurred by
Seller can reasonably be expected to approximate the amount of liquidated
damages called for, and because the actual amount of such damages would be
difficult if not impossible accurately to measure.
(b) If Seller fails to consummate the sale of the Properties
pursuant to this Agreement for any reason other than (i) termination hereof
by Buyer pursuant to Sections 5, 7, 8, or 12 or (ii) Buyer's failure to
perform its obligations hereunder, Buyer shall have the right, as its sole
and exclusive remedies, to either (x) terminate this Agreement by notifying
Seller thereof, in which case the Title Company shall deliver the Earnest
Money to Buyer, whereupon neither party hereto shall have any further rights
or obligations hereunder, or (y) enforce specific performance of Seller's
obligation hereunder.
(c) If Buyer terminates this Agreement pursuant to a right granted
Buyer in Sections 5, 7, 8, or 12 then the Title Company shall deliver the
Earnest Money to Buyer whereupon neither Buyer or Seller shall have any
further rights or obligations hereunder.
14. MISCELLANEOUS. Each of Buyer and Seller agrees with the other that
it has no present intention to make any public announcement of the purchase
and sale transaction contemplated hereby or of any of the terms thereof, and
shall obtain the written consent of the other party prior to making any
public announcement. Either party may provide information on the purchase
and sale transaction contemplated hereby to the Securities and Exchange
Commission, or otherwise, as required by law. Both Seller and Buyer shall
cooperate with one another and in a timely manner execute all documents
reasonably required to give effect to the purchase and sale provided for
herein. If any provision of this Agreement is adjudicated by a court having
jurisdiction over a dispute arising herefrom to be invalid or otherwise
unenforceable for any reason, such invalidity or unenforceability shall not
affect the other provisions hereof. This Agreement shall be governed and
construed in accordance with the laws of the State of Texas. This Agreement
is the entire agreement between Seller and Buyer concerning the sale of the
Properties and no modification hereof or subsequent agreement relative to the
subject matter hereof shall be binding on either party unless reduced to
writing and signed by the party to be bound. The provisions of Sections 3,
7, 8, and 10 shall survive Closing. EXHIBITS A-C attached hereto are
PURCHASE AND SALE AGREEMENT - PAGE 9
GRANDY'S INC.
<PAGE>
incorporated herein by this reference for all purposes. Time is of the
essence in the performance of each and every provision of this Agreement. In
the event that the last day for taking any action or serving notice under
this Agreement falls on a Saturday, Sunday or legal holiday, the time period
shall be extended until the following business day.
15. DATE OF AGREEMENT. All references in this Agreement to "the date
hereof" or similar references shall be deemed to refer to the last date on which
all parties hereto have executed and received a fully executed copy of this
Agreement. This Agreement constitutes an offer by Buyer to purchase the
Properties on the terms and conditions and for the Purchase Price specified
herein. Unless sooner terminated or withdrawn by notice in writing to Seller,
this offer shall lapse and terminate at the close of Buyer's business day ten
(10) days following execution of this Agreement by Buyer, unless, prior to such
time, Seller has returned to Buyer one (1) fully executed copy of this
Agreement.
IN WITNESS WHEREOF, Buyer and Seller have executed this Agreement as of the
date first set forth above.
BUYER:
U. S. RESTAURANT PROPERTIES OPERATING L. P.
By: U. S. RESTAURANT PROPERTIES, INC.
By: /s/ Fred Margolin
----------------------------------------
Name: Fred Margolin
--------------------------------------
Title: Chairman
--------------------------------------
SELLER:
GRANDY'S, INC.
By: /s/ Patrick J. Kelvie
----------------------------------------
Name: Patrick J. Kelvie
-------------------------------------
Title: Secretary
-------------------------------------
PURCHASE AND SALE AGREEMENT - PAGE 10
GRANDY'S INC.
<PAGE>
The undersigned hereby executes this Agreement for the sole purpose of (i)
acknowledging receipt of the Earnest Money and the Non-Refundable Earnest Money
and (ii) to evidence its agreement to hold the Non-Refundable Earnest Money and
the Earnest Money in trust for the parties hereto in accordance with the terms
of this Agreement.
TITLE COMPANY:
FIRST AMERICAN TITLE INSURANCE
By: /s/ Bruce J. Clay
-----------------------------------------------
Name: Bruce J. Clay
-----------------------------------------------
Title: Vice President
---------------------------------------------
Date of Execution: 11/25/96
--------------------------------
ATTACHMENTS:
Exhibit A - Special Warranty Deed
Exhibit B - IRC Section 1445 Certification
Exhibit C - Lease Agreement
PURCHASE AND SALE AGREEMENT - PAGE 11
GRANDY'S INC.
<PAGE>
Schedules and Exhibits Omitted
<PAGE>
EXHIBIT 2.9
AGREEMENT REGARDING PARTIAL ASSIGNMENT AND ASSUMPTION
OF RIGHTS AND OBLIGATIONS
UNDER REAL ESTATE PURCHASE AGREEMENT
This Agreement Regarding Partial Assignment and Assumption of Rights
and Obligations Under Real Estate Purchase Agreement ("Agreement") is entered
into as of December 10th, 1996, by and between SYDRAN DEVELOPMENT
CORPORATION, a California corporation ("Assignor"), and U.S. RESTAURANT
PROPERTIES OPERATING L.P., a Delaware limited partnership ("Assignee"), who
agree as follows:
RECITALS
A. Reference is made to that certain Real Estate Purchase and Sale
Agreement (Existing Restaurants) entered into as of June 15, 1996, by and
among Snowstate Restaurant Corporation and Franklin Restaurant Corporation
(together, "Seller"), as seller, and Assignor, as buyer, as amended and
reinstated pursuant to that Reinstatement and Amendment Agreement (Real
Estate Purchase Agreement -- Existing Restaurants) entered into as of August
22, 1996, by and among Seller and Assignor (as so amended, the "ERPA").
Pursuant to the ERPA, Assignor has the right to purchase from Seller seven
(7) parcels of improved real property on which are located existing Chili's
Restaurants in the states of Arkansas, Idaho, Nebraska, New Mexico, Utah and
Wyoming, as identified on the attached EXHIBIT A and as more particularly
described in the ERPA (the "Real Property"). Seller and Assignor have also
entered into an Asset Purchase and Sale Agreement and a Real Estate Purchase
and Sale Agreement (Development Parcels), both of which have also been
amended and reinstated as of August 22, 1996 (as so amended, the "Related
Agreements"), for the purchase and sale of certain existing and proposed
Chili's Restaurants and assets and real estate interests related thereto (the
"Restaurant Assets"). Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings set forth in the ERPA.
B. Assignee has received and reviewed copies of the ERPA and the
Related Agreements, together with all exhibits thereto.
C. Assignor has the right to conduct due diligence investigations with
respect to the Real Property and the Restaurant Assets under the terms of the
ERPA and the Related Agreements in order to determine whether Assignor
desires to acquire the Restaurant Assets and to operate the Restaurants on
the Real Property.
D. The obligations of Assignor under the ERPA and the Related
Agreements to purchase some or all of the Real Property and Restaurant Assets
may be terminated in certain circumstances as more particularly set forth in
the ERPA and the Related Agreements.
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<PAGE>
E. If, based on such due diligence, Assignor determines that (i) Assignor
desires to acquire some or all of the Restaurant Assets in order to operate the
Restaurants on the related Real Property and (ii) the Real Property is
acceptable for the operation of the Restaurants, Assignor desires to assign to
Assignee Assignor's rights and obligations to purchase six (6) of the seven (7)
parcels of the Real Property and to have Assignee purchase such Real Property
and lease such Real Property to Assignor, and Assignee desires to assume
Assignor's rights and obligations to purchase such Real Property and to purchase
such Real Property and lease such Real Property to Assignor, all on the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee agree as
follows:
1. DESIGNATION OF REAL PROPERTY.
1.1 DESIGNATED PARCELS. If Assignor and Seller determine, in the
exercise of their respective rights under the ERPA in such a manner as Assignor
and Seller may, in their sole and absolute discretion, determine, that all seven
(7) of the parcels of Real Property are to be acquired, those six (6) parcels of
the Real Property identified as "Designated Parcels" on EXHIBIT A shall be
subject to, and acquired by Assignee under, this Agreement, and shall be
referred to herein as the "Designated Parcels." The seventh parcel of Real
Property, which is located in St. George, Utah (the "Retained Parcel"), shall
not be subject to this Agreement but shall either (i) be acquired by Assignor or
another assignee of Assignor pursuant to the ERPA or (ii) be made subject, by
amendment of the ERPA and the Related Agreements, to one of the Related
Agreements and acquired by Assignor or another assignee of Assignor pursuant
thereto. Assignee hereby approves of such proposed amendments of the ERPA and
the Related Agreements to remove the Retained Parcel from the ERPA and to make
other modifications to the ERPA and Related Agreements, provided that such other
modifications do not materially affect Assignee's rights or obligations
hereunder. If the ERPA and the Related Agreements are so amended, the terms
"ERPA" and "Related Agreements," as used in this Agreement, shall refer to the
ERPA and the Related Agreements as so amended. Assignor shall promptly provide
Assignee with copies of any such amendments.
1.2 DELETION OF DESIGNATED PARCELS BY ASSIGNOR. If Assignor and/or
Seller determine, in the exercise of their rights under the ERPA in such a
manner as Assignor and Seller may, in their sole and absolute discretion,
determine, that one (1) or more of the Designated Parcels shall be deleted from
the Real Property to be acquired under the ERPA, Assignor shall promptly notify
Assignee of such deletion. Any such parcel(s) so deleted (individually, a
"Deleted Parcel" and collectively, the "Deleted Parcels") shall no longer be
part of the Designated Parcels and the term "Designated Parcels" shall
thereafter include only the remaining Designated Parcels not so deleted. In the
event any Designated Parcel is so deleted, Assignee shall have no right under
Section 4.09 of the ERPA or
2
<PAGE>
otherwise, to lease such Deleted Parcel from Seller or to otherwise acquire
any interest in such Deleted Parcel. Provided, however, that if Assignor
deletes more than three (3) Designated Parcels from the Real Property to be
acquired under the ERPA, Assignee may, in its discretion, terminate this
Agreement by delivering written notice of termination to Assignor within two
(2) business days following Assignee's receipt of notice of the deletions by
Assignor.
2. ASSIGNEE'S DUE DILIGENCE.
2.1 ASSIGNOR'S DELIVERY OF MATERIALS. Assignor has provided to
Assignee, or has caused to be provided to Assignee, copies of: (i) those
Title Reports (together with copies of documents identified therein), Surveys
and Environmental Reports reviewed by Assignor in the course of Assignor's
due diligence regarding the Designated Parcels; (ii) such other documents
reviewed by Assignor in the course of Assignor's due diligence regarding the
Designated Parcels as may have been requested by Assignee; (iii) any
summaries of such reviewed documents prepared by Assignor; and (iv) any
notices of Defects delivered by Assignor to Seller under the ERPA. Assignee
acknowledges and agrees that: (vv) Assignor's delivery of such materials is
for the convenience of Assignee only; (xx) except as expressly set forth in
this Agreement, neither Assignor nor its agents or representatives has made,
and Assignee is not relying on and has not been induced by, any
representations, warranties or statements, express or implied, regarding the
Real Property, the Designated Parcels, or the accuracy or effect of any due
diligence materials provided by Assignor to Assignee hereunder; (yy) Assignee
will rely solely on its own due diligence investigations, inspections and
reviews with respect to the physical condition, state of title, environmental
and other matters relating to the Designated Parcels; and (zz) Assignee is
experienced, knowledgeable and sophisticated in the acquisition and ownership
of restaurant properties. Without limiting the generality of the foregoing,
Assignee acknowledges and agrees that any and all summaries of due diligence
investigations prepared by Assignor and provided to Assignor hereunder are
provided solely at the request and for the convenience of Assignee, and
Assignor makes no representations or warranties as to the completeness or
accuracy thereof or of any conclusions or recommendations set forth therein.
2.2 DEFECTS IDENTIFIED BY ASSIGNEE. Assignee's review of such
information has revealed certain conditions about the Designated Parcels that
are unacceptable to Assignee (the "Defects"), and Assignee has, by copy of
its letters to Chicago Title Company, Assignor and Asssignor's surveyors
dated December 3, 1996, notified Assignor of such Defects. If Assignor
notifies Assignee, within two (2) business days following the date of this
Agreement, that such Defects will be cured prior to the Closing under the
ERPA, Assignor shall cause such Defects to be so cured. If Assignor fails to
notify Assignee within such two business day period that all such Defects
will be cured prior to the Closing under the ERPA, the Designated Parcel(s)
subject to the uncured Defect(s) shall, unless the Defect is waived in
writing by Assignee within one (1) business day following the expiration of
such two business day period, be deleted as a Designated Parcel, in which
event the term "Designated Parcels" shall thereafter include only the
remaining
3
<PAGE>
Designated Parcels not so deleted. Any such Designated Parcels deleted by
Assignee may, in Assignor's discretion, still be purchased by Assignor under
the ERPA, and, in such event, shall be referred to in this Agreement as
"Retained Parcels."
3. ASSIGNMENT AND ASSUMPTION OF ERPA. Conditioned upon, subject to and
concurrent with the Closing under the ERPA, Assignor shall grant, convey,
transfer and assign to Assignee Assignor's right, title and interest under
the ERPA with respect to the Designated Parcels, including, without
limitation, the right to purchase the Designated Parcels from Seller.
Assignor shall retain all right, title and interest under the ERPA with
respect to the purchase of the Retained Parcels, if any. With regard to the
Designated Parcels to be purchased by Assignee, Assignee hereby agrees that
the purchase shall be in accordance with the terms and provisions of the ERPA
and that Assignee shall, at the Closing and with respect to the Designated
Parcels: (i) accept the foregoing assignment; (ii) substitute itself as the
"Buyer" under the ERPA; (iii) assume, perform, fulfill and be bound by all of
the terms, covenants, conditions, obligations and agreements contained in the
ERPA as a direct obligation to Seller, except as otherwise provided elsewhere
in this Agreement; and (iv) indemnify, defend, protect and hold Assignor
harmless from and against any and all liabilities, costs, expenses
(including, without limitation, attorneys' fees and costs), claims, actions,
causes or action, demands, losses, damages, penalties and judgments relating
to Assignee's obligations under this Agreement or under the ERPA, or from any
breach thereof. The obligations of Assignee under this SECTION 3 shall be
conditioned on Assignee's receipt of reasonably satisfactory evidence that
Sydran Food Services III, L.P. has, or will have, equity capital of at least
$8,500,000 as of the Closing. Any and all representations, warranties,
covenants or obligations made or undertaken by Seller under the ERPA shall be
made and undertaken solely by Seller and, except as expressly set forth in
this Agreement, Assignor does not make or undertake any such representations,
warranties, covenants or obligations to Assignee, nor shall Assignor be
liable to Assignee for any breach or nonperformance thereof by Seller.
Assignor shall indemnify, defend, protect and hold Assignee harmless from and
against any and all liabilities, costs, expenses (including, without
limitation, attorneys' fees and costs), claims, actions, causes or action,
demands, losses, damages, penalties and judgments relating to Assignor's
obligations under this Agreement or under the ERPA, or from any breach
thereof.
4. PURCHASE PRICE.
4.1 PURCHASE PRICE. Any provisions of the ERPA to the contrary
notwithstanding, if all six (6) of the Designated Parcels identified on
EXHIBIT A are purchased by Assignee, the portion of the Purchase Price to be
paid by Assignee for the Designated Parcels under the ERPA shall be Nine
Million Dollars ($9,000,000), as such amount may be adjusted pursuant to
Section 1.13 of the ERPA and subject to any appropriate prorations, debits or
credits in accordance with Sections 1.10, 1.11 and/or 4.04 of the ERPA.
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4.2 REDUCTION OF PURCHASE PRICE. If any of the Designated Parcels
are deleted pursuant to the provisions of this Agreement, the Purchase Price
to be paid by Assignee for the remaining Designated Parcels shall be reduced
by the amount by which the Purchase Price would be reduced under Sections
4.08 and 4.09 of the ERPA if such parcel(s) were deleted therefrom.
4.3 ALLOCATION OF PURCHASE PRICE. The total Purchase Price paid by
Assignee for the Designated Parcels shall be allocated among the Designated
Parcels in proportion to the relative gross sales of the Restaurants on the
Designated Parcels during the twelve (12)-month period ending on October 31,
1996 (annualized for any period less than 12 months). If Assignee purchases
all six (6) Designated Parcels, the Purchase Price shall be allocated as set
forth on EXHIBIT A.
5. DEPOSIT. Upon execution of this Agreement, the parties shall
establish with Escrow Agent a separate escrow than the Escrow under the ERPA
(the "Assignment Escrow"). Upon the opening of the Assignment Escrow,
Assignee shall deposit in the Assignment Escrow the sum of Two Hundred Fifty
Thousand Dollars ($250,000) (the "Deposit"), which amount, together with any
and all interest earned thereon, shall be held in the Assignment Escrow
pending the Closing, at which time it shall either be (i) transferred to the
Escrow Agent or the Closing Agent under the ERPA, as appropriate, to be paid
to Seller and applied against the Purchase Price payable by Assignee for the
Designated Parcels to be purchased by Assignee or (ii) retained by Assignor
pursuant to SECTION 9 in the event of Assignee's default hereunder. In
addition, the Deposit shall be refunded to Assignee in the event that this
Agreement is terminated pursuant to SECTION 1.2, if the ERPA is terminated
for reasons other than Assignee's default, or if Assignor defaults in its
obligations hereunder. Assignor and Assignee shall execute and deliver such
escrow instructions as may be necessary or appropriate to implement the
provisions of this SECTION 5.
6. EVIDENCE OF FINANCING. Within two (2) business days following the
date of this Agreement, Assignee shall deliver to Assignor written
confirmation that Assignee has notified its lender, Comerica Bank-Texas, to
effectively "lock off" the funds necessary to pay the Purchase Price for all
of the Designated Parcels plus any and all related costs payable by Assignee
under the ERPA and/or this Agreement. In the event that Assignee fails to
deliver such written confirmation to Assignor within such two (2)-day period,
Assignor shall have the right, at its election, to terminate this Agreement.
7. LIMITATIONS AND MODIFICATIONS OF ASSIGNMENT AND ASSUMPTION. The
assignment and assumption of rights and obligations under the ERPA as set
forth in SECTION 3 of this Agreement shall be subject to the following
modifications and limitations:
(a) Assignee shall have no right to determine or extend the Closing
Date under Section 1.03 of the ERPA, any such rights being exclusively
reserved to Assignor. Assignor shall provide Assignee with ten (10) days'
written notice of Closing under the
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ERPA. No modification of the ERPA, or extension of Closing after March 31,
1997, shall be binding on Assignee without its written consent.
(b) With regard to Section 1.04 of the ERPA, any and all Earnest
Money Deposit paid by Assignor shall be credited solely to Assignor's
account, and Assignee shall have no interest therein nor shall any portion
thereof be applied against the Purchase Price for the Designated Parcels
payable by Assignee.
(c) With regard to Section 1.06 of the ERPA, Assignee shall pay to
Assignor, upon request, fifty percent (50%) of the cost of any Surveys on the
Designated Parcels obtained by Assignor.
(d) With regard to Section 1.07 of the ERPA, Assignee shall pay to
Assignor, upon request, fifty percent (50%) of the cost of any Environmental
Reports on the Designated Parcels obtained by Assignor.
(e) With regard to any amounts payable by or to the buyer under
Sections 1.10, 1.11 and/or 4.04 of the ERPA that relate to the Real Property
in its entirety, if there are any Retained Parcels to be acquired by
Assignor, the amounts so payable by or to Assignee shall bear the same
proportion to the full amounts payable as the Purchase Price payable for the
Designated Parcels purchased by Assignee bears to the total Purchase Price
for the entire Real Property. Regardless of whether or not there are any
Retained Parcels to be acquired by Assignor, any amounts payable by or to the
buyer under Sections 1.10, 1.11 and/or 4.04 of the ERPA that relate to an
individual parcel of the Real Property (rather than to the Real Property in
its entirety) shall be paid by, or shall accrue to the benefit of, the party
acquiring such parcel.
(f) With regard to Section 1.13 of the ERPA, Assignee shall have no
right to terminate the ERPA (any such right being exclusively reserved to
Assignor), but Assignee shall have the right to terminate this Agreement
under option (i) of that Section and Assignee's rights to purchase the
Designated Parcels shall be reduced or terminated, as applicable, if Seller
exercises any of its rights under the last two (2) sentences of that Section.
(g) Assignee hereby represents and warrants to Assignor as set
forth in Article III of the ERPA, except that (i) references to "SDC" and
"Buyer" shall be deemed to refer to Assignee, (ii) references to "Seller"
shall be deemed to refer to Assignor, (iii) references to the "Agreement"
shall be deemed to refer to this Agreement and (iv) with regard to Section
3.01, Assignee is a Delaware limited partnership.
(h) With regard to Section 4.06, from the date hereof through the
Closing, neither Assignor nor Assignee shall disclose, disseminate, divulge,
discuss, copy or otherwise transmit the existence or terms of this Agreement
or of the ERPA, directly or indirectly, to any person or entity, except to
its respective attorneys, consultants and
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prospective lenders as reasonably required to perform its due diligence
investigations and to consummate the transaction contemplated hereunder.
(i) Assignee shall have no rights or obligations with respect to the
provisions of Section 4.09 of the ERPA, all such rights and obligations being
reserved to Assignor.
(j) Assignee shall have no right to delay the Closing Date under
Section 4.11 of the ERPA, any such right being exclusively reserved to
Assignor.
(k) The condition set forth in Section 5.08 of the ERPA shall be a
condition for the benefit of Assignee only if and to the extent that Assignee
has objected to any Defect under SECTION 2.2 of this Agreement and has not
subsequently waived such Defect.
(l) With regard to the last paragraph of Article V and Section 7.01
of the ERPA, Assignee's sole remedy in the event of a breach by Seller or in
the event of the non-occurrence of any of the conditions set forth in Article
V shall be to terminate this Agreement and receive a refund of the Deposit,
provided Assignee is not in default hereunder, any rights to terminate the
ERPA being reserved to Assignor.
(m) With regard to Article VIII of the ERPA, Assignor and Assignee
agree as follows:
(i) If Assignee or Assignor (or any other assignee of Assignor)
has a claim for indemnity against Seller under the ERPA or any Related Agreement
for a claim based on an alleged breach of representations or warranties by
Seller, the party with such claim (the "Indemnitee") shall notify the other
party to this Agreement of the existence and amount of such claim in accordance
with the provisions of Section 8.04 of the ERPA, whether or not the Indemnitee
intends or is then permitted, pursuant to the first sentence of Section 8.03 of
either the ERPA or a Related Agreement, to pursue such claim against Seller.
The amount of any and all such claims, regardless of the individual amounts
thereof, shall be referred to herein as the "Claim Pool." An Indemnitee shall
have the right at any time, subject to the restrictions of Section 9.06 and any
other applicable provisions of the ERPA or a Related Agreement, to assert and
pursue against Seller any individual claim(s) in excess of $50,000 that the
Indemnitee may have. If and when the amount of the Claim Pool exceeds $250,000,
an Indemnitee shall have the right, subject to the restrictions of Section 9.06
and any other applicable provisions of the ERPA and/or Related Agreements, to
assert and pursue against Seller any such claim(s) that the Indemnitee may have,
including, without limitation, any individual claim(s) of $50,000 or less
constituting part of the Claim Pool that the Indemnitee may previously have been
precluded from asserting by virtue of the restrictions of Section 8.03 of either
the ERPA or a Related Agreement. Assignor and Assignee shall each reasonably
cooperate (but shall have no obligation to incur any significant expense) with
the other's efforts to assert any bona fide claims against Seller.
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(ii) For purposes of determining if and when any claims by
Seller under the first sentence of Section 8.03 of the ERPA and/or Related
Agreements exceed $250,000, Assignor and Assignee shall promptly notify each
other of any and all claims asserted by Seller against either of them, and
shall provide to the other copies of any notices of claims received from
Seller under Section 8.04 of the ERPA or any Related Agreement. Assignor and
Assignee shall each keep the other reasonably informed as to the progress and
status of any such claims.
(iii) The amount of the maximum liability of the parties to the
ERPA pursuant to the second sentence of Section 8.03 thereof shall be
referred to herein as the "Indemnity Cap." If Seller's total indemnity
liability to Assignee and Assignor (and any other assignees of Assignor)
under the ERPA and the Related Agreements would, but for the Indemnity Cap,
exceed the amount of the Indemnity Cap (the amount of which total indemnity
liability shall be referred to herein as the "Uncapped Seller's Liability"),
then an adjustment and appropriate payments shall be made between Assignee
and Assignor (and any other assignees of Assignor) such that the amount
received by, or paid to a third party on behalf of, Assignee, Assignor or any
other assignee of Assignor in satisfaction of Seller's indemnity obligations
shall not exceed the percentage of the Indemnity Cap that such party's share
of the Uncapped Seller's Liability bears to the total Uncapped Seller's
Liability.
(iv) If the total indemnity liability of Assignee and Assignor
(and any other assignees of Assignor) to Seller under the ERPA and the
Related Agreements would, but for the Indemnity Cap, exceed the amount of the
Indemnity Cap (the amount of which total indemnity liability shall be
referred to herein as the "Uncapped Buyer's Liability"), then an adjustment
and appropriate payments shall be made between Assignee and Assignor (and any
other assignees of Assignor) such that the amount paid by Assignee, Assignor
or any other assignee of Assignor in satisfaction of its indemnity
obligations shall not exceed the percentage of the Indemnity Cap that such
party's share of the Uncapped Buyer's Liability bears to the total Uncapped
Buyer's Liability.
8. LEASES OF REAL PROPERTY. With respect to each of the Designated
Parcels purchased by Assignee, Assignee shall, commencing on the Closing Date,
lease such Designated Parcel to Sydran Food Services III, L.P., a California
limited partnership, which lease shall be on the terms and in substantially the
form attached hereto as EXHIBIT B. The execution of such leases by Sydran Food
Services III, L.P. shall be a condition precedent to Assignee's obligation
hereunder. The monthly "Base Rent" under each such lease shall be an amount
equal to one-twelfth (1/12) of eleven percent (11%) of the portion of the
Purchase Price allocated to the Designated Parcel covered by such lease, as
provided in SECTION 4.3 of this Agreement. For purposes of the purchase option
set forth in Section 19 of each such Lease, the purchase price shall be equal to
the portion of the Purchase Price allocated to the Designated Parcel covered by
such lease, as provided in SECTION 4.3 of this Agreement. If Assignee purchases
all six (6) Designated Parcels, the monthly "Base Rent" under each lease shall
be the "Base Rent" for such Designated Parcel as set forth on EXHIBIT A, and the
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"Break Point" under each lease shall be the "Break Point" for such Designated
Parcel as set forth on EXHIBIT A.
9. REMEDIES.
9.1 ASSIGNOR'S REMEDIES. If Assignee breaches its obligations under
this Agreement, Assignor shall be entitled to retain the Deposit as full
compensation for any and all damages suffered by Assignor as a result of
Assignee's breach.
9.2 ASSIGNEE'S REMEDIES. If Assignor breaches its obligations under
this Agreement, the Deposit shall be returned to Assignee and, in addition,
Assignee shall be entitled to either (i) collect from Assignor the sum of Two
Hundred Fifty Thousand Dollars ($250,000) as full compensation for any and all
damages suffered by Assignee as a result of Assignor's breach or (ii) bring an
action for specific performance of Assignor's obligations; provided that no
default or breach by Assignor under the ERPA or any Related Agreement shall,
solely by reason thereof, constitute a default or breach by Assignor under this
Agreement.
9.3 LIQUIDATED DAMAGES. Assignor and Assignee each agree that the
damages that they would sustain as a result of a breach of this Agreement by
the other would be extremely difficult and impracticable to ascertain.
Therefore, Assignor and Assignee each agree that if they breach their
respective obligations under this Agreement, the other party shall be
entitled to recover the sum set forth in SECTION 9.1 or 9.2, as the case may
be. Any such sum shall be paid and received as liquidated damages and not as
a penalty. Assignor and Assignee acknowledge and agree that such amounts are
reasonable estimates of the damages that they would suffer in the event of a
breach by the other considering all of the circumstances existing on the date
of this Agreement, including the relationship of the sums to the range of
harm that could reasonably be anticipated and the anticipation that proof of
actual damages would be impractical or extremely difficult. In placing their
initials at the places provided below, each party specifically confirms the
accuracy of the statements in this SECTION 9.3. Both parties agree that the
sums stated as liquidated damages shall be in lieu of any other monetary
and/or equitable relief to which a party might otherwise be entitled by
virtue of this Agreement by operation of law and/or equity.
Assignor's initials: ______ Assignee's initials: ______
10. MISCELLANEOUS.
10.1 BROKERAGE AND FINDER'S FEES; INDEMNITY. Assignor and Assignee
represent and warrant to each other that they have dealt with no broker, agent,
finder or other intermediary in connection with the transactions contemplated by
this Agreement. In the event that any claim is asserted by any
person claiming a commission or finder's fee with respect to this Agreement or
the transactions contemplated hereby arising from any act, representation, or
promise of any party hereto or its representatives, all such claims shall be
handled and paid by the party whose actions or alleged commitments form the
basis of such
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claim. The party against whom the claim for such commissions or fees is made
shall indemnify and hold the other party harmless from and against any cost
or expense with respect thereto, including, without limitation, reasonable
attorneys' fees and disbursements.
10.2 AMENDMENT AND MODIFICATION. This Agreement may be amended or
supplemented only by written agreement of Assignor and Assignee.
10.3 NON-WAIVER. No waiver or waivers by any party of any provision
of this Agreement, whether by conduct or otherwise, shall be deemed to be a
further or continuing waiver of that or any other provision of this Agreement.
10.4 EXPENSES; ATTORNEYS' FEES. Except as otherwise provided
herein, whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto will pay its own expenses incurred by
it or on its behalf in connection with this Agreement or any transaction
contemplated by this Agreement; provided, however, if any legal action is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach default, or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other relief to
which it or they may be entitled. In the event that either party obtains a
judgment in connection with the enforcement or interpretation of this
Agreement, such party shall be entitled to recover from the other all costs
and expenses incurred in connection with the enforcement of such judgment,
including, without limitation, reasonable attorneys' fees, whether incurred
prior to or after the entry of the judgment.
10.5 SURVIVAL AT CLOSING. All agreements, covenants, warranties,
representations and indemnities in this Agreement shall survive the Closing
for a period of three (3) years, and it shall not be a condition precedent to
any indemnity set forth herein that the indemnified party shall have made any
payment on account of any claim, loss, damage, obligation, liability
deficiency, penalty, cost or expense indemnified against herein.
Notwithstanding the foregoing, the survival of the obligations of the parties
under SECTION 7(M) of this Agreement shall not be subject to such three
(3)-year limitation.
10.6 NOTICES. Notices hereunder shall be addressed as set forth
below or as otherwise may be designate in writing to the addresses set forth
below, and shall be sent by (i) registered or certified mail, return receipt
requested, effective three (3) days after deposit in the United States Mail,
postage prepaid; or (ii) a telecopied facsimile, effective upon receipt by
the addressee (with a copy deposited in the United States Mail, postage
prepaid); or (iii) commercial overnight courier or express service, effective
one (1) business day after deposit; of (iv) personal delivery, effective upon
receipt by the addressee:
To Assignor: Sydran Development Corporation
3000 Executive Parkway, Suite 515
San Ramon, California 94583
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Attention: Kenneth A. Freed
Fax No.: (510) 328-3318
To Assignee: U.S. Restaurant Properties Operating L.P.
5310 Harvest Hill Road, Suite 270
Dallas, Texas 75230
Attention: Fred Margolin
Fax No.: (214) 490-9119
With a copy to: Richard S. Wilensky
Middleberg, Riddle & Gianna
2323 Bryan Street
Dallas, TX 75201
Fax No.: (214) 220-3189
Either party hereto may change the address to which such communications should
be directed by giving written notice to the other party of such change.
10.7 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
and understanding of the parties with respect to the transactions contemplated
and supersedes any and all prior agreements and understandings with respect
thereto.
10.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
10.9 HEADINGS. The headings and captions of the various sections of
this Agreement have been inserted only for the purpose of convenience, and are
not a part of this Agreement and shall not be deemed in any manner to modify,
explain, expand or restrict any of the provisions of this Agreement.
10.10 SUCCESSORS; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns; provided that
Assignee shall have no right to assign any of its rights or obligations
hereunder without Assignor's prior written consent, which may be granted or
withheld in Assignor's sole discretion.
10.11 SEVERABILITY. Except as provided to the contrary herein, in
case any one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
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10.12 GOVERNING LAW. Assignor and Assignee acknowledge and agree
that this Agreement shall be governed by the laws of the State of California
applicable to agreements made and entered into in the State of California.
10.13 TIME OF ESSENCE. Time is of the essence of each provision
of this Agreement in which time for performance is an element.
10.14 RECITALS. The Recitals set forth in this Agreement are true
and correct and are a part of this Agreement.
10.15 EXHIBITS. Attached hereto are the following Exhibits, each
of which is incorporated into this Agreement in full by this reference:
Exhibit A: List of Real Property
Exhibit B: Form of Real Property Lease
10.16 ADDITIONAL ACTS. Except as otherwise provided herein, in
addition to the acts, deeds and instruments recited herein and contemplated to
be performed, executed and/or delivered by the parties hereto, each party hereby
agree to perform, execute and/or deliver, promptly following the reasonable
request of the other party, any and all such further acts, deeds, instruments
and assurances as the requesting party may reasonably require to consummate the
transactions contemplated hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ASSIGNOR ASSIGNEE
SYDRAN DEVELOPMENT U.S. RESTAURANT PROPERTIES
CORPORATION, a California OPERATING L.P., a Delaware limited
Corporation partnership
By: /s/ KENNETH FREED
------------------------------- By: U.S. RESTAURANT PROPERTIES,
Name: Kenneth Freed INC., a Delaware corporation
-----------------------------
Its: Vice President and Secretary
-----------------------------
Its: Managing General Partner
By: /s/ ILLEGIBLE
--------------------------------
Its: Fred Margolin, Chairman
--------------------------------
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Exhibits Omitted
<PAGE>
EXHIBIT 10.3
EXECUTION COPY
SECOND AMENDED AND RESTATED SECURED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED SECURED LOAN AGREEMENT is dated as of
December 23, 1996, by and between U.S. RESTAURANT PROPERTIES OPERATING L.P.,
a Delaware limited partnership ("BORROWER") and COMERICA BANK-TEXAS, a state
banking association organized under the laws of the State of Texas (in its
individual capacity, "COMERICA"), COMPASS BANK, a state banking association
formerly known as Compass Bank-Dallas organized under the laws of the State
of Texas ("COMPASS"), LASALLE NATIONAL BANK, a national bank ("LASALLE"),
FIRST AMERICAN BANK TEXAS, SSB, a savings bank organized under the laws of
the State of Texas ("FIRST AMERICAN"), GUARANTY FEDERAL BANK, F.S.B., a
federal savings bank ("GUARANTY FEDERAL") and the additional commercial,
banking or financial institutions which hereafter become parties hereto
(Comerica, Compass, LaSalle, First American, Guaranty Federal and such other
additional commercial, banking or financial institutions which hereafter
become parties hereto pursuant to SECTION 11.11 of this Agreement are
sometimes referred to hereinafter collectively as the "BANKS" and
individually as a "BANK") and COMERICA BANK-TEXAS, as agent for the Banks
hereunder (the "AGENT"), to be effective on the initial Disbursement Date.
WITNESSETH
WHEREAS, Comerica and Borrower entered into that certain Secured Loan
Agreement dated as of June 27, 1995, as amended by that certain First
Amendment to Secured Loan Agreement, dated as of October 6, 1995, and as
further amended by that certain Second Amendment to Loan Agreement, dated as
of December 6, 1995 as further amended by that certain Amended and Restated
Secured Loan Agreement dated as of February 15, 1996, among Borrower,
Comerica, Compass and Agent, as further amended by that certain First
Amendment to the Amended and Restated Secured Loan Agreement and as further
amended by that certain Second Amendment to Amended and Restated Secured Loan
Agreement, dated as November 8, 1996 (as amended, the "ORIGINAL AGREEMENT");
WHEREAS, U.S. Restaurant Properties Master L.P., a Delaware limited
partnership, ("MLP") executed that certain Guaranty dated as of June 27,
1995, in favor of Comerica, as reaffirmed from time to time thereafter, as
amended by the Amended and Restated Guaranty dated February 15, 1996 and by
the Second Amended and Restated Guaranty dated as of the date hereof;
WHEREAS, Borrower from time to time has executed certain Lease
Assignments (as defined below) as collateral security for all of the
indebtedness, liabilities and other obligations of Borrower and Guarantor
arising under the Original Agreement, as amended, modified, renewed and/or
restated from time to time, as well as those arising under the other "Loan
Documents" as such term is defined in such Lease Assignments; and
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WHEREAS, Borrower desires to increase the maximum commitment amount under
the Original Agreement to finance the update and repair of Borrower's existing
properties, to repay certain outstanding indebtedness to Morgan Keegan Mortgage
Company Inc., a Tennessee corporation ("MORGAN KEEGAN"), and to finance the
purchase additional restaurant properties, and the Banks are willing to provide
such financing subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, Borrower, the Banks and the Agent agree as follows, this
Agreement being an amendment, modification, renewal and restatement of the
Original Agreement:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following respective meanings:
"ACQUISITION ADVANCE" shall mean a loan the proceeds of which are used by
Borrower for the purposes described in CLAUSE (A) of SECTION 2.14 of this
Agreement.
"ADVANCE" shall mean a loan advance made by a Bank to Borrower under
SECTION 2 of this Agreement.
"ADVANCE COMPLIANCE CERTIFICATE" shall mean (a) in regards to each
Acquisition Advance, a certificate in substantially the form of EXHIBIT A-1
attached hereto, (b) in regards to each Working Capital Advance, a certificate
in substantially the form of EXHIBIT A-2 attached hereto, (c) in regards to each
Letter of Credit Advance, a certificate in substantially the form of EXHIBIT A-3
attached hereto and (d) in regards to each Development Advance, a certificate in
substantially the form of EXHIBIT A-4 attached hereto.
"ADVANCE TYPE" refers to the distinction between Advances which are
Acquisition Advances, Advances which are Letter of Credit Advances, Advances
which are Working Capital Advances, and Advances which are Development
Advances.
"AFFILIATE" shall mean, when used with respect to any person, any other
person which, directly or indirectly, controls or is controlled by or is
under common control with such person. For purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by"
and "under common control with"), with respect to any person, shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"AGENT" shall have the meaning given to it in the preamble of this
Agreement, and shall include all successors and assigns thereof.
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"AGENT'S ACCOUNT" shall mean the commercial loan accounting account of
Agent with Comerica Bank-Texas, ABA #111000753, at its office at 1601 Elm
Street, Dallas, Texas 75201, GL Account Number 90010, Favor: Comerica
Bank-Texas Commercial Loan Accounting, Reference: U. S. Restaurant
Properties, or such other account of Agent as Agent notifies the Banks from
time to time as the "Agent's Account" for purposes of this Agreement.
"AGREEMENT" shall mean this Second Amended and Restated Secured Loan
Agreement, including all exhibits, schedules and supplements hereto, as the
same may be renewed, extended, amended and restated from time to time.
"ANNUALIZED COMBINED ADJUSTED CASH FLOW" shall mean, as of any applicable
date of determination, the product of (a) the sum of (A) Combined Cash Flow
of Borrower and Guarantor for the calendar month immediately preceding the
calendar month in which such determination date is PLUS (B) to the extent
deducted in computation of Combined Net Income for such period, the amount of
interest expense of Borrower during such period as determined in accordance
with GAAP, MULTIPLIED by (b) the Weighting Factor for the calendar month
immediately preceding the calendar month in which such determination date is,
MULTIPLIED by (c) twelve (12).
"ANNUALIZED COMBINED CASH FLOW" shall mean, as of any applicable date of
determination, the product of (a) the Combined Cash Flow of Borrower and
Guarantor for the calendar month immediately preceding the calendar month in
which such determination date is, MULTIPLIED by (b) twelve (12).
"APPLICABLE RATE" is defined in SECTION 2.2(C) of this Agreement.
"BANK" shall have the meaning given to it in the preamble of this
Agreement.
"BANK SUPPLEMENT" is defined in SECTION 11.11 of this Agreement
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
amended, or any successor act or code.
"BASE RATE" shall mean, as of any applicable date of determination, the
higher of (a) Prime Rate as of such date MINUS one quarter of one percent
(0.25%) or (b) the Federal Funds Rate as of such date PLUS one percent
(1.00%). "PRIME RATE" shall mean, as of any applicable date of determination,
that annual rate of interest designated by Agent as its prime rate, which
rate may not be the lowest rate of interest charged by Agent to any of its
customers, and which rate is changed by Agent from time to time, it being
understood that Agent may make commercial loans and other loans at rates of
interest at, above or below its prime rate. "FEDERAL FUNDS RATE" shall mean,
as of any applicable date of determination, or interest rate per annum equal
to the rate per annum at which Agent, in its sole determination, is able to
acquire federal funds in the interbank term federal funds market through
brokers of recognized standing in the amount of the advance to which such
rate pertains.
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"BASE RATE ADVANCE" is defined in SECTION 2.2(c) of this Agreement.
"BKC" shall have the meaning as is given to such term in the Borrower's
Partnership Agreement.
"BORROWER" is defined in the preamble of this Agreement.
"BORROWER'S PARTNERSHIP AGREEMENT" shall mean that certain "Second
Amended and Restated Agreement of Limited Partnership of U.S. Restaurant
Properties Operating L.P. (formerly Burger King Operating Limited
Partnership)" dated as of March 17, 1995, without giving effect to any
amendment thereto.
"BORROWING" shall mean a borrowing consisting of simultaneous Advances by
the Banks.
"BORROWING NOTICE" is defined in SECTION 2.1.3(A) of this Agreement.
"BURGER KING RESTAURANT LOCATION" shall have the meaning as is given to the
term "Restricted Restaurant Property" in the Borrower's Partnership Agreement.
"BUSINESS DAY" shall mean any day OTHER THAN a Saturday, a Sunday, or a
day on which the Agent is authorized to be closed under the laws of the State
of Texas, and, with respect to each Advance which bears, or is to bear,
interest at the LIBOR Rate, each LIBOR Business Day.
"CAPITAL LEASE" shall mean any lease of Property which in accordance with
GAAP should be capitalized on the lessee's balance sheet or for which the
amount of the asset and liability thereunder as if so capitalized should be
disclosed in a note to such balance sheet.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. Sections 9601 ET SEQ.), as
amended from time to time, including, without limitation, the Superfund
Amendments and Reauthorization Act ("SARA").
"CO-BRANDED PROPERTIES" shall mean commercial restaurant properties on
which convenience store and/or gasoline dispensary operations are operated on
the same premises as the commercial restaurant properties.
"COLLATERAL" shall mean (i) all property of any Loan Party now or
hereafter in the possession of the Agent or any Bank or any Affiliate of the
Agent or any Bank (or as to which the Agent or any Bank or any Affiliate of
the Agent or any Bank now or hereafter controls possession by documents or
otherwise), (ii) all amounts in all deposit or other accounts (including
without limitation an account evidenced by a certificate of deposit) of any
Loan Party now or hereafter with the Agent or any Bank or any Affiliate of
the Agent or any Bank, wherever located and whether now owned or hereafter
acquired, together with all replacements thereof, substitutions therefor,
accessions thereto, and all proceeds and products of any of the foregoing,
and (iii) all Real Property and other additional property (real or personal)
of any Loan Party
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which is now or hereafter subject to a security interest, mortgage, lien,
claim or other encumbrance granted by any Loan Party to, or in favor of, the
Agent or any Bank to secure all or any part of the Indebtedness, including
without limitation all of the leases, real property and other rights, titles
and interests covered by the Lease Assignments.
"COMERICA" is defined in the preamble of this Agreement, and shall include
all successors and assigns thereof.
"COMBINED" or "COMBINED" shall mean when used with reference to any
financial term in this Agreement, the aggregate for two or more persons of the
amounts signified by such term for all such persons determined on a combined or
consolidated basis in accordance with GAAP. Unless otherwise specified herein,
references to "combined" financial statements or data of Borrower includes
combination and consolidation with its Subsidiaries and with MLP in accordance
with GAAP.
"COMBINED CASH FLOW" shall mean, for any applicable period of
determination, Combined Net Income of Borrower and MLP on combined basis plus:
(i) depreciation, amortization and all other non-cash charges; and (ii)
provisions for federal, state and local income taxes.
"COMBINED DEBT" shall mean, as of any applicable date of determination,
total Debt of Borrower and MLP on a combined basis as determined in accordance
with GAAP.
"COMBINED FIXED CHARGES" shall mean, as of any applicable date of
determination, the product of (i) sum of (a) all amounts of Borrower and MLP
on a combined basis which would, in accordance with GAAP, be deducted in
computing net income on account of interest on Debt, including but not
limited to imputed interest in respect of Capital Lease obligations,
amortization of Debt discounts and expenses, fees and commissions for letters
of credit and bankers' acceptance financing and net interest costs of
interest rate swaps and hedges for the calendar month immediately preceding
the calendar month in which such determination date is, PLUS (b) all payments
of Borrower and MLP on a combined basis pursuant to any lease of Property
other than Capital Lease obligations (net of the amount, if any, of fixed
rents paid to Borrower or MLP or any Affiliate of either or both of them
under noncancellable subleases of one year or longer on the Property subject
to such leases) for the calendar month immediately preceding the calendar
month in which such determination date is, MULTIPLIED by (ii) the Weighting
Factor for the calendar month immediately preceding the calendar month in
which the determination date is, MULTIPLIED by (iii) twelve (12).
"COMBINED GAAP PARTNERS' CAPITAL" shall mean, as of any applicable date of
determination, total partners' capital of Borrower and MLP on a combined basis
as determined in accordance with GAAP.
"COMBINED INTEREST EXPENSE" shall mean, for any applicable period of
determination, all amounts which would, in accordance with GAAP, be deducted
in computing net income of Borrower and MLP on a combined basis on account of
interest on Debt, including imputed
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interest in respect of Capital Lease obligations, amortization of Debt
discounts and expenses, fees and commissions for letters of credit and
bankers' acceptance financing and the net interest costs of interest rate
swaps and hedges.
"COMBINED NET INCOME" shall mean, for any applicable period of
determination, the net income (or loss) of Borrower and MLP on a combined basis
determined in accordance with GAAP but excluding in any event:
(a) any gains or losses on the sale or other disposition, not in the
ordinary course of business, of investments, leases or fixed or capital
assets, and any taxes on the excluded gains and any tax deductions or
credits on account on any excluded losses; and
(b) net earnings of any Person in which Borrower and/or MLP has an
ownership interest, unless such net earnings shall have actually been
received by Borrower and/or MLP in the form of cash distributions.
"COMBINED TANGIBLE NET WORTH" shall mean, as of any applicable date of
determination, the excess of (a) the net book value of all assets of Borrower
and MLP on a combined basis (other than patents, patent rights, trademarks,
trade names, franchises, copyrights, licenses, goodwill, and similar intangible
assets) after all appropriate deductions in accordance with GAAP (including,
without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization), over (b) all Debt of Borrower and MLP on a
combined basis.
"COMBINED TOTAL ASSETS" shall mean the total assets of Borrower and MLP
determined on a combined basis according to GAAP.
"COMBINED TOTAL CAPITALIZATION" shall mean the sum of Combined GAAP
Partners' Capital and Combined Funded Debt.
"COMBINED TOTAL FUNDED DEBT" shall mean, as of any applicable date of
determination, all Funded Debt of Borrower and MLP on a combined basis.
"COMMITMENT AMOUNT" with respect to any Bank shall mean the dollar amount
set forth opposite such Bank's name on the signature page hereof (or on the then
most recent Bank Supplement to which such Bank is a party, if any), as amended
from time to time, as such amounts may be reduced from time to time pursuant to
SECTION 2.1.5 of this Agreement.
"CURRENT ASSETS" shall mean, as of any applicable date of determination,
all cash, non-affiliated customer receivables, United States government
securities, claims against the United States government, and inventories.
"CURRENT LIABILITIES" shall mean, as of any applicable date of
determination, (a) all liabilities of Borrower and MLP on a combined basis that
should be classified as current in accordance with GAAP, including without
limitation any portion of the principal of the
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Advances classified as current, PLUS (b) to the extent not otherwise
included, all liabilities of Borrower and MLP on a combined basis to any
Affiliates of either or both of them whether or not classified as current in
accordance with GAAP.
"DEBT" shall mean, with respect to any Person as of any date of
determination, the sum (without duplication) of: (a) its obligations for
borrowed money; (b) its obligations with respect to the undrawn portion of all
unexpired letters of credit plus all amounts drawn, but unreimbursed to the
issuer or guarantor of all letters of credit (including, but not limited to, all
Letter of Credit Exposure); (c) its obligations for the deferred purchase price
of Property acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all obligations created or arising
under any conditional sale or other title retention agreement with respect to
any such Property); (d) all obligations appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases; (e) all obligations for
borrowed money secured by any Lien with respect to any Property owned by such
Person (whether or not it has assumed or otherwise become liable for such
liabilities); and (f) all guarantees or contingent obligations of such Person
with respect to obligations of a type described in any of clauses (a) through
(e) hereof. Debt of any Person shall include all obligations of such Person of
the character described in clauses (a) through (f) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP but shall not include such
obligations and guarantees if owed or guaranteed by Borrower to MLP or by MLP to
Borrower and shall also not include any unfunded obligations which may exist now
and in the future in Borrower's or MLP's pension plans.
"DEFAULT" shall mean a condition or event which, with the giving of notice
or the passage of time, or both, would become an Event of Default.
"DEVELOPMENT ADVANCE" shall mean a loan the proceeds of which are used by
Borrower for the purposes described in CLAUSE (d) of SECTION 2.14 of this
Agreement.
"DEFAULT RATE" shall mean the lesser of (i) the Maximum Rate or (ii) the
rate per annum which shall from day to day be equal to three percent (3%) in
excess of the Applicable Rate.
"DISBURSEMENT DATE" shall mean each date upon which the Agent makes a
disbursement or a Bank makes a loan or otherwise extends credit to or on behalf
of Borrower under SECTION 2.1 and/or SECTION 2.17 of this Agreement or Comerica
issues a Letter of Credit for the benefit of Borrower under SECTION 2.14 of this
Agreement.
"ENVIRONMENTAL LAW" shall mean any federal, state or local law, statute,
ordinance, judgment, rule or regulation (a) pertaining to health, industrial
hygiene, or the environmental conditions on, under or about the Real Property,
including, but not limited to, CERCLA, SARA and RCRA; or (b) governing the use,
storage, treatment, handling, manufacture, transportation or disposal of
Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code.
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"EVENT OF DEFAULT" shall mean any of those conditions or events listed in
SECTION 9.1 of this Agreement.
"FINANCIAL STATEMENTS" shall mean all those balance sheets, earnings
statements and other financial data (whether of Borrower or any of its
Subsidiaries or Guarantor or otherwise) which have been furnished to the
Agent and/or any Bank for the purposes of, or in connection with, this
Agreement and the transactions contemplated hereby.
"FINANCING STATEMENTS" shall mean financing statements describing the
Bank as secured party and Borrower as debtor covering the Collateral and
otherwise in such form, for filing in such jurisdictions and with such filing
offices, as the Agent and/or any Bank shall reasonably deem necessary or
advisable.
"FIVE YEAR TREASURY RATE" shall mean, at any date of determination, the
yield which shall be imputed, by linear interpolation, from the current
weekly yield of those United States Treasury Notes having maturities of five
years from such date, as published in then-most recent Federal Reserve
Statement Release H.15(519) or any successor publication thereto.
"FUNDED DEBT" shall mean, with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, one (1)
year or more from, or is directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to date one (1) year or more
(including, without limitation, an option of such obligor under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of one (1) year or more) from, the date of the creation
thereof, and shall also include all of the Indebtedness; PROVIDED that Funded
Debt also shall include, as at any date of determination, Current Maturities
of Funded Debt. As used in this definition, "CURRENT MATURITIES OF FUNDED
DEBT" means, at any time and with respect to any item of Funded Debt, the
portion of such Funded Debt outstanding at such time which by the terms of
such Funded Debt or the terms of any instrument or agreement relating thereto
is due on demand or within one (1) year from such time (whether by sinking
fund, or other required prepayment or final payment at maturity) and is not
directly or indirectly renewable, extendible or refundable at the option of
the obligor under an agreement or firm commitment in effect at such time to a
date one (1) year or more from such time.
"GAAP" shall mean, as of any applicable date of determination, generally
accepted accounting principles consistently applied.
"GENERAL COMPLIANCE CERTIFICATE" shall mean a certificate in
substantially the form of EXHIBIT G attached hereto.
"GENERAL PARTNER" shall mean U.S. Restaurant Properties, Inc., a Delaware
corporation.
"GUARANTOR" shall mean MLP, USRP Business Trust_I, USRP Business Trust_II,
USRP Development Company, USRP (Carolina), USRP (Lincoln), USRP (Norman),
Restaurant
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Renovation Partners, USRP (WV) Partners and each other Person which
now or hereafter executes a Guaranty.
"GUARANTY" shall mean a guaranty (or separate guaranties) in the form and
content of EXHIBIT F to this Agreement pursuant to which each Guarantor
(jointly and severally if more than one) unconditionally guarantees repayment
to the Bank of all the Indebtedness.
"HAZARDOUS SUBSTANCE" shall mean one or more of the following substances:
(a) those substances included within the definitions of (i)
"hazardous substances", "hazardous materials" or "toxic substances", in
CERCLA, SARA, RCRA, Toxic Substances Control Act, Federal Insecticide,
Fungicide and Rodenticide Act and the Hazardous Materials Transportation Act
(49 U.S.C. Sections 1801 ET SEQ.), or (ii) "solid waste", as defined under
the Texas Solid Waste Disposal Act;
(b) such other substances, materials and wastes which are or become
regulated as hazardous or toxic under applicable local, state or federal law,
or the United States government, or which are or become classified as
hazardous or toxic under federal, state, or local laws or regulations; and
(c) any material, waste or substance which is: (i) asbestos; (ii)
polychlorinated biphenyls; (iii) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Sections 1251 ET
SEQ. (33 U.S.C. Section 1321) or listed pursuant to Section 307 of the Clean
Water Act (33 U.S.C. Section 1317); (iv) explosives; (v) radioactive
materials; or (vi) petroleum, petroleum products or any fraction thereof.
"INDEBTEDNESS" shall mean all loans, advances, indebtedness, obligations
and liabilities of Borrower under the Original Agreement, this Agreement
and/or the other Loan Documents to the Agent and/or any of the Banks
(including without limitation the Advances and the Letter of Credit
Exposure), together with all other indebtedness, obligations and liabilities
whatsoever of Borrower to the Agent and/or any of the Banks, whether matured
or unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, which in any way relate to or arise from the Original Agreement,
this Agreement and/or the other Loan Documents.
"INTERCREDITOR AGREEMENT" shall mean an intercreditor/collateral agency
agreement by and among the Agent and the Term Notes Purchasers in form and
substance acceptable to the Agent and each of the Banks in its sole
discretion.
"INTEREST PERIOD" is defined in SECTION 2.2 of this Agreement.
"LEASE ASSIGNMENT" shall mean an Assignment of Lease, Rents and Real
Estate in the form and content of EXHIBIT D to this Agreement, or such other
form and content as is prescribed by the Banks from time to time and is
consistent with the provisions of SECTION 3 of this Agreement, pursuant to
which Borrower and each Loan Party assigns to the Bank the leases
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described on SCHEDULE 1.1 attached to this Agreement and all other Real
Property of such Loan Party now or hereafter owned by such Loan Party.
"LEGAL RATE" shall mean the maximum rate of nonusurious interest permitted
to be paid by Borrower or received by the Agent or any Bank with respect to the
Indebtedness owed to such Lender from time to time under applicable state or
federal law as now or as may be hereafter in effect, including, as to article
5069-1.04 Vernon's Texas Civil Statutes (and as the same may be incorporated by
reference in other Texas statutes), but otherwise without limitation, that rate
based upon the "INDICATED RATE CEILING".
"LENDER" shall mean the Agent and/or any or all of the Banks, as the case
may be, in its respective capacity as a lender of funds or a provider of credit
accommodations to, or for the account of Borrower under this Agreement and/or
any of the other Loan Documents.
"LETTER OF CREDIT" shall mean each letter of credit, as defined in the
Uniform Commercial Code, issued to, for the account of, or for the benefit of
Borrower by the Agent.
"LETTER OF CREDIT ADVANCE" shall mean a loan, the proceeds of which are
used by Borrower for the purposes described in CLAUSE (b) of SECTION 2.14 of
this Agreement.
"LETTER OF CREDIT COMMISSION" shall have the meaning given to such term in
SECTION 2.14(b) of this Agreement.
"LETTER OF CREDIT EXPOSURE" shall mean, at any time, the undrawn portion of
all unexpired Letters of Credit plus all amounts drawn, but unreimbursed, under
Letters of Credit.
"LIBOR BUSINESS DAY" shall mean a day on which commercial banks are open
for domestic or foreign exchange business in London, England.
"LIBOR RATE" shall mean, with respect to any LIBOR Rate Interest Period for
any LIBOR Rate Advance, the interest rate conclusively determined by the Agent
two (2) Business Days prior to the first day of such Interest Period (as
adjusted for any applicable reserve requirement applicable to "eurocurrency
liabilities" pursuant to Regulation D or any other applicable regulation of the
Board of Governors of the Federal Reserve System (or any successor) which
prescribes reserve requirements applicable to "eurocurrency liabilities" as
presently defined in Regulation D, or any eurocurrency funding) at which
deposits in immediately available funds in U.S. dollars are offered to the Agent
by prime banks in the interbank eurodollar market selected by the Agent for
delivery on the first day of such LIBOR Rate Interest Period (at such time as
the Agent elects) in an amount equal to the principal amount of the
corresponding Advance outstanding on the first day of such LIBOR Rate Interest
Period, for a period equal to such LIBOR Rate Interest Period.
"LIBOR RATE ADVANCE" is defined in SECTION 2.2 of this Agreement.
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"LIBOR RATE INTEREST PERIOD" shall mean an Interest Period pertaining to an
Advance as to which the Applicable Rate during such Interest Period is based
upon the LIBOR Rate.
"LIEN" shall mean: (a) as to any person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, in or on; or (b) any interest or
title of any vendor lessor, lender or other secured party, or to the lender or
other person under conditional sale, or other title retention agreement or
Capital Lease with respect any property or asset of the person.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Revolving
Credit Note, the Guaranty, the Letters of Credit, the Lease Assignments and all
other agreements, documents and instruments executed by any Loan Party and, or
in favor of, the Agent and/or any Bank in connection with or relating to this
Agreement or the Original Agreement or any of the transactions contemplated
hereunder or thereunder.
"LOAN PARTY" shall mean, individually and collectively, each of Borrower,
Guarantor and each Person which is a guarantor of any of the Indebtedness or
which has granted or shall grant a lien on any Real Property as collateral
security for any of the Indebtedness.
"LONG TERM DEBT" shall mean, as of any applicable date of determination,
all Debt of Borrower and/or Guarantor which should be classified as "funded
indebtedness" or "long-term indebtedness" on a combined balance sheet of
Borrower and Guarantor prepared as of such date in accordance with GAAP,
together (without duplication) with the unpaid principal balance of the
Advances outstanding on such date.
"MAJORITY BANKS" shall mean, as of any applicable date of determination,
a Bank or Banks holding not less than sixty-six and two-thirds percent (66%)
of the Overall Commitment Amount.
"MAXIMUM RATE" shall mean the maximum nonusurious interest rate, if any,
that at any time, or from time to time, may be contracted for, taken,
received, charged or received under applicable state or federal law.
"MLP" is defined in the preamble of this Agreement, and shall include
successors and assigns thereof.
"MLP'S PARTNERSHIP AGREEMENT" shall mean that certain "Second Amended and
Restated Agreement of Limited Partnership of U.S. Restaurant Properties
Master L.P. (formerly Burger King Investors Master L.P.)" dated as of March
17, 1995, without giving effect to any amendment thereto.
"NET BOOK VALUE" shall mean, for any item of property or asset of
Borrower, the gross book value of such item of property or asset, MINUS the
accumulated depreciation attributable to such item of property or asset, as
determined in accordance with GAAP.
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"ORIGINAL NOTE" shall mean that certain Revolving Credit Note dated June
27, 1995, in the stated principal amount of $10,000,000, executed by Borrower
and payable to the order of Comerica, as amended, modified and restated by
that certain Amended and Restated Revolving Credit Note dated December 6,
1995, in the stated principal amount of $20,000,000, as further amended,
modified and restated by that certain Amended and Restated Revolving Credit
Note, dated February 15, 1996 in the principal amount of $40,000,000, and as
further amended, modified and restated by that certain Second Amended and
Restated Revolving Credit Note dated November 8, 1996, in the principal
amount of $60,000,000 executed by Borrower and payable to the order of the
Agent.
"OVERALL COMMITMENT AMOUNT" shall mean $95,000,000; PROVIDED, HOWEVER,
that if Borrower reduces the Overall Commitment Amount from time to time
under SECTION 2.1.5 of this Agreement, the Overall Commitment Amount shall be
deemed to be such lesser amount.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any person
succeeding to the present powers and functions of the Pension Benefit
Guaranty Corporation.
"PERMITTED LIENS" shall mean:
(a) liens and encumbrances in favor of the Agent and/or the Banks
which secure the Indebtedness;
(b) liens for taxes, assessments or other governmental
charges incurred in the ordinary course of business and for which no
interest, late charge or penalty is attaching or which are being
contested in good faith by appropriate proceedings and, if requested
by the Agent or any of the Banks, bonded in an amount and manner
satisfactory to the Bank;
(c) liens, not delinquent, created by statute in connection
with worker's compensation, unemployment insurance, social security
and similar statutory obligations;
(d) liens of mechanics, materialmen, carriers, warehousemen
or other like statutory or common law liens securing obligations (i)
incurred in good faith in the ordinary course of business that are not
yet due and payable or (ii) which Borrower has provided notice thereof
to the Agent and each of the Banks in accordance with SECTION 6.14 of
this Agreement and are being contested in good faith and by
appropriate and lawful proceedings diligently conducted and, if
requested by the Agent or any of the Banks, bonded in a manner
satisfactory to the Bank;
(e) encumbrances consisting of existing or future zoning
restrictions, existing recorded rights-of-way, existing recorded
easements, existing recorded private restrictions or existing or
future public restrictions on the use of real property, none of which
materially impairs the use of such property in the operation of the
business for which it is used and none of which is violated in any
material respect by any existing or proposed structure or land use;
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(f) liens affecting the fixtures and equipment located on any Real
Property of any Loan Party;
(g) liens securing purchase money Debt of Borrower incurred
by Borrower on or after the date hereof in an aggregate amount not to
exceed $250,000; provided, however, such liens shall be permitted only
against the specific assets of Borrower purchased with the proceeds of
such purchase money Debt;
(h) liens upon Real Property which secure Term Notes Debt in
an aggregate amount not to exceed $40,000,000.00, provided that all of
the Term Note Purchasers shall have entered into the Intercreditor
Agreement with the Agent and/or the Banks with respect to such Debt
and any and all liens securing such Debt prior to the incurrence
thereof;
(i) liens securing additional financing obtained by
Borrower, provided that (A) Borrower is in full compliance with the
covenants set forth in SECTIONS 6.5, 6.6, 6.7, 6.8, 6.9, and 6.10 (the
"FINANCIAL COVENANTS") of this Agreement at the time that such
additional financing is obtained and after giving effect thereto, as
if all amounts of financing contemplated thereunder are then
outstanding (and for purposes of such determination and without
limiting the other provisions of this Agreement, Borrower's compliance
with such covenants shall be tested as of the date that such financing
is obtained), (B) there are no types of financial covenants pertaining
to such additional financing which are not presently described in the
Financial Covenants of this Agreement and the compliance thresholds of
the financial covenants, if any, pertaining to such additional
financing are at least 15% less restrictive than the compliance
thresholds of the Financial Covenants of this Agreement, (C) the terms
and conditions of such additional financing (including but not limited
to the amount of such additional financing and types and items of
property and assets to be secured thereby) shall have been approved in
writing by all of the Banks, in such Banks sole discretion, prior to
the incurrence thereof, and (D) within one (1) Business Day prior to
Borrower obtaining such financing, Borrower shall have delivered to
the Agent a General Compliance Certificate dated as of the date that
such financing is obtained which certifies such compliance to the
satisfaction of the Agent;
(j) existing leases covering all or part of the ground upon
which the Real Property is situated and commercial leases entered into
after the date hereof in the ordinary course of Borrower's business
for the operation of commercial restaurants which leases are assigned
to the Agent as part of the Collateral; and
(k) existing liens described on SCHEDULE 5.5 attached to this
Agreement.
"PERSON" OR "PERSON" shall mean any individual, corporation, partnership,
joint venture, association, trust, unincorporated association, joint stock
company, government, municipality, political subdivision or agency, or other
entity.
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"PRO FORMA FIVE YEAR COMBINED TOTAL FUNDED DEBT AMORTIZATION" shall mean,
as of any applicable date of determination, for purposes of SECTION 6.10 of
this Agreement, a pro forma calculation of the monthly combined principal and
interest payment amounts that would be required to fully amortize the amount
of the aggregate unpaid principal amount of the Combined Total Funded Debt
outstanding on the date of such determination, together with a pro forma
amount of interest thereon at the fixed rate per annum equal to the Five Year
Treasury Rate in effect on such date plus two hundred (200) basis points, in
equal combined monthly payments over the five-year period commencing on such
date.
"PRO FORMA TWENTY YEAR COMBINED TOTAL FUNDED DEBT AMORTIZATION" shall
mean, as of any applicable date of determination, for purposes of SECTION
6.10 of this Agreement, a pro forma calculation of the monthly combined
principal and interest payment amounts that would be required to fully
amortize the amount of the aggregate unpaid principal amount of the Combined
Total Funded Debt outstanding on the date of such determination, together
with a pro forma amount of interest thereon at the fixed rate per annum equal
to the Twenty Year Treasury Rate in effect on such date plus two hundred
(200) basis points, in equal combined monthly payments over the twenty-year
period commencing on such date.
"PRO RATA SHARE" means, as to any Bank, the percentage obtained by
dividing such Bank's Commitment Amount by the Overall Commitment Amount.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Sections 6901, ET SEQ.), as amended from time to time.
"REAL PROPERTY" of a Person shall mean all of the real property and
improvements of such Person, wherever located, now or hereafter owned or
occupied by any such Person or in which any such Person now or hereafter has
any rights, title or interest (including, but not limited to, an interest as
fee owner, ground lessee or other lessee).
"RESTAURANT RENOVATION PARTNERS" shall mean Restaurant Renovation Partners,
L.P., a Texas limited partnership.
"REVOLVING CREDIT NOTE" shall mean the promissory note conforming to
SECTION 2.1.2 of this Agreement and in the form and content of EXHIBIT C to
this Agreement.
"SUBORDINATED DEBT" shall mean indebtedness of Borrower which has been
subordinated to the Indebtedness pursuant to a subordination agreement in
form and content satisfactory to the Agent.
"SUBSIDIARY" shall mean and include any Person (a) which, directly or
indirectly, is under the control of Borrower, any Guarantor and/or General
Partner, or (b) of which or in which Borrower, any Guarantor and/or General
Partner (or any Subsidiary or Subsidiaries of any of
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them) owns directly or indirectly 50% or more of (i) the combined voting
power of all classes having general voting power under ordinary circumstances
to elect a majority of the board of directors or equivalent body of such
Persons, if it is a corporation, (ii) the capital interest or profits
interest of such Person, if it is a partnership, joint venture or similar
entity, or (iii) the beneficial interest of such Person if it is a trust,
business trust, association or other unincorporated organization. For
purposes of this definition, "control" with respect to any Person shall mean
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"TERMINATION DATE" shall mean the earlier of (a) December 23, 1998; or
(b) the date on which the Banks' commitments to make Advances are terminated
by Borrower pursuant to SECTION 2.1.5; or (c) the date on which any Bank's
commitment to make Advances is terminated pursuant to SECTION 9.2(a).
"TERM NOTES DEBT" shall mean any Debt of a Loan Party incurred pursuant
to one or more note purchase agreements in form and substance acceptable to
the Agent and each of the Banks in its sole discretion, by and between
Borrower and the Term Note Purchasers; provided that (i) the aggregate
principal amount of such Debt does not exceed $40,000,000.00 at any time
outstanding and (ii) all of the Term Note Purchasers shall have entered into
the Intercreditor Agreement with the Agent and/or the Banks with respect to
such Debt and any and all liens securing such Debt prior to the incurrence
thereof.
"TERM NOTES PURCHASERS" shall mean Pacific Mutual Life Insurance Company,
the Ohio National Life Insurance Company, Jefferson-Pilot Life Insurance
Company, Reliastar Life Insurance Company, Northern Life Insurance Company,
Reliastar Bankers Security Life Insurance Company, United Services Life
Insurance Company and/or any other Persons acceptable to Agent in its sole
discretion.
"TWENTY YEAR TREASURY RATE" shall mean, at any date of determination, the
yield which shall be imputed, by linear interpolation, from the current
weekly yield of those United States Treasury Notes having maturities of
twenty years from such date, as published in then-most recent Federal Reserve
Statement Release H.15(519) or any successor publication thereto.
"UCC" shall mean the Uniform Commercial Code as adopted and in force in
the State of Texas as from time to time amended or, if the creation,
perfection or enforcement of security interest against a fixture or other
personal property subject to the liens and security interests of the Agent
and/or any Bank is governed by the laws of a state other than Texas, the
Uniform Commercial Code in effect in such state, as the same may be amended
from time to time.
"USRP BUSINESS TRUST I" shall mean U.S. Restaurant Properties Business
Trust I, a Delaware business trust.
"USRP BUSINESS TRUST II" shall mean U.S. Restaurant Properties Business
Trust II, a Delaware business trust.
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"USRP DEVELOPMENT COMPANY" shall mean U.S. Restaurant Properties
Development, L.P., a Texas limited partnership.
"USRP (CAROLINA)" shall mean USRP (Carolina), Ltd., a Texas limited
partnership.
"USRP (LINCOLN)" shall mean USRP (Lincoln), Ltd., a Texas limited
partnership.
"USRP (NORMAN)" shall mean USRP (Norman), Ltd., a Texas limited
partnership.
"USRP (WV) PARTNERS" shall mean USRP (West Virginia) Partners, L.P., a
Texas limited partnership.
"WEIGHTING FACTOR" shall mean, for each calendar month set forth below, the
monthly weighing factor corresponding thereto:
Calendar Month Monthly Weighting Factor
-------------- -----------------------
January 1.14
February 1.20
March 1.00
April 1.00
May 1.00
June 0.95
July 0.90
August 0.90
September 1.03
October 1.01
November 1.06
December 1.00
"WORKING CAPITAL" shall mean, as of any applicable date of determination,
Current Assets less Current Liabilities.
"WORKING CAPITAL ADVANCE" shall mean a loan the proceeds of which are
used by Borrower for the purposes described in CLAUSE (e) of SECTION 2.14 of
this Agreement.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
in this Agreement shall be construed in accordance with GAAP.
1.3 SINGULAR AND PLURAL. Where the context herein requires, the
singular number shall be deemed to include the plural, the masculine gender
shall include the feminine and neuter genders, and vice versa.
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SECTION 2. CREDIT FACILITIES, INTEREST AND FEES
2.1 ADVANCES.
2.1.1 REVOLVING CREDIT COMMITMENT. Subject to the terms and
conditions of this Agreement, each Bank severally, and not jointly, agrees to
make loans (the "ADVANCES") to Borrower on a revolving basis in such amounts
as Borrower shall request pursuant to this SECTION 2.1 from time to time
during the period commencing on the date hereof, and continuing to and
including the Termination Date, on a pro rata basis in accordance with such
Bank's Pro Rata Share; PROVIDED that at no time shall (i) the sum of the
aggregate principal amount of Advances made by any Bank at such time
outstanding PLUS such Bank's Pro Rata Share at such time of the Letter of
Credit Exposure exceed such Bank's Pro Rata Share of the Overall Commitment
Amount, as the Overall Commitment Amount may be reduced pursuant to SECTION
2.1.5; and PROVIDED FURTHER, that (i) each Disbursement Date under this
Agreement must be a Business Day, (ii) the principal amount of each Advance
other than a LIBOR Rate Advance must be in the minimum amount of $1,000 or,
if greater, in integral multiples of $1,000, and (iii)_the principal amount
of each LIBOR Rate Advance must be in the minimum principal amount of
$1,000,000 or, if greater, in integral multiples of $10,000.
2.1.2 REVOLVING CREDIT NOTE. The Advances shall be evidenced by
the Revolving Credit Note, executed by Borrower, dated the date of this
Agreement, payable to Agent as agent for itself and each of the other Banks
on the Termination Date (unless sooner accelerated pursuant to the terms of
this Agreement or as therein provided), and in the stated principal amount of
the original Overall Commitment Amount.
2.1.3 MAKING THE ADVANCES.
(a) Each Advance shall be made, to the extent that a Bank is so
obligated under SECTION 2.1.1 of this Agreement, on written notice
from Borrower to the Agent and each Bank delivered before 10:00 A.M.
(Dallas, Texas time) on a Business Day which is at least three (3)
Business Days prior to the first day of the Interest Period for such
Advance specifying (i) the amount of such Advance (which amounts of
Advances shall be pro rata among the Banks in accordance with each
Bank's Pro Rata Share), (ii) the Advance Type thereof, (iii) the
Interest Period therefor (which Interest Period shall be the same for
each Bank), (iv) the selected interest rate applicable thereto (which
interest rate shall be the same for each Bank) pursuant to and in
accordance with SECTION 2.2, (v) the deposit account (together with
wire transfer instructions of the Borrower) into which Borrower
requests that the proceeds of such Advance be sent in the case of an
Advance in the form of a loan, and the name and address of the
beneficiary and other pertinent information in the case of an Advance
by Comerica issuing or guaranteeing a Letter of Credit (such written
notice to be substantially in the form of (A) EXHIBIT B-1 attached
hereto in the case of an Acquisition Advance, (B) EXHIBIT B-2 attached
hereto in the case of a Letter of Credit Advance, (C) EXHIBIT B-3
attached hereto in the case of a Working Capital Advance, and (D)
EXHIBIT B-4 attached hereto in the case of a Development Advance, and
in all cases in all respects in form and substance satisfactory to
Agent, and
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being hereinafter referred to as the "BORROWING NOTICE"),
and shall be accompanied by an Advance Compliance Certificate which
corresponds to the Advance Type of such Advance. In the case of a
proposed Borrowing comprised of LIBOR Rate Advances, the Agent shall
on the second Business Day before any LIBOR Rate Advance notify each
Bank of the interest rate applicable to such LIBOR Rate Advance under
SECTION 2.2 of this Agreement. Not later than 11:30 A.M. (Dallas,
Texas time) on the day of any Borrowing, each Bank will make available
for its account to the Agent at the Agent's Account, in same day
funds, such Bank's Pro Rata Share of such proposed Borrowing. After
the Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in SECTION 4 of this Agreement, the
Agent will make such funds available to Borrower by delivering such
funds to Borrower's deposit account specified in such Borrowing Notice.
(b) Each Borrowing Notice shall be irrevocable and binding on
Borrower and Borrower shall indemnify the Agent and each Bank against
any loss or expense incurred by it as a result of any failure to
fulfill on or before the date specified for such Advance the
applicable conditions set forth in SECTION 4 of this Agreement,
including, without limitation, any loss (including loss of anticipated
profits) or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Agent or such
Bank to fund such Advance when such Advance, as a result of such
failure, is not made on such date.
2.1.4 BANK OBLIGATIONS. The failure of any Bank to make any
Advance required to be made by it shall not relieve any other Bank of its
obligation, if any, under this Agreement to make any Advance required to be made
by it, but no Bank shall be responsible for the failure of any other Bank to
make any Advance required to be made by such other Bank. Furthermore, no Bank
shall be obligated to make any Advance to Borrower if:
(a) any of the conditions precedent set forth in SECTION 4
of this Agreement shall not have been either satisfied by Borrower or
waived by such Bank in accordance with SECTION 11.4 of this Agreement,
or
(b) such proposed Advance would cause the aggregate sum of
the unpaid principal amount of the Advance outstanding plus the Letter
of Credit Exposure under this Agreement (or such Bank's Pro Rata Share
thereof) to exceed the Overall Commitment Amount (or such Bank's Pro
Rata Share thereof) on such Disbursement Date.
2.1.5 TERMINATION OR REDUCTION IN OVERALL COMMITMENT AMOUNT BY
BORROWER. Borrower, at any time and from time to time (except as may
hereinafter be provided), upon at least five (5) Business Days' prior written
notice received by the Agent and the Banks, may permanently terminate all but
not less than all of the Banks' commitments to make Advances under this
Agreement or permanently reduce the Overall Commitment Amount by an integral
multiple of $1,000,000. On the effective date of such termination or reduction,
Borrower shall pay to each Bank such Bank's Pro Rata Share, in the case of a
termination, of the aggregate
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unpaid principal amount of all Advances, or, in the case of a reduction, the
amount, if any, by which the aggregate unpaid principal amount of all
Advances exceeds the reduced Overall Commitment Amount, together in each case
with all interest accrued and unpaid on the principal amounts so prepaid.
The notice shall specify the Termination Date of the reduced Overall
Commitment Amount and the effective date of the reduction, as the case may
be. Borrower may not revoke any such notice of termination or reduction
without the prior written consent of the Agent and the Majority Banks.
2.2 REPAYMENT AND INTEREST.
(a) Borrower shall repay the aggregate unpaid principal amount of
all Advances of each Bank in accordance with the terms of a promissory
note of Borrower, in substantially the form of EXHIBIT C hereto (the
"REVOLVING CREDIT NOTE"), evidencing the indebtedness resulting from
such Advances and delivered to the Agent for the benefit of the Banks
pursuant to SECTION 4.1.1 or SECTION 11.11.
(b) The period between the date of each Advance and the date of
payment in full of such Advance shall be divided into successive
periods, each such period being an "INTEREST PERIOD" for such Advance.
Notwithstanding the duration of the applicable Interest Period,
interest on the unpaid amount of each Advance shall be due and payable
in accordance with SECTION 2.2(c) below and the other applicable
provisions of this Agreement. The initial Interest Period for each
Advance shall begin on the date of such Advance and end on the last
day of such period as selected by Borrower, and thereafter, each
subsequent Interest Period for such Advance shall begin on the last
day of the immediately preceding Interest Period for such Advance and
end on the last day of such period as selected by Borrower in
accordance with the terms hereof. The duration of each such Interest
Period for each Base Rate Advance shall be one day, and the duration
of each such LIBOR Interest Period for a LIBOR Rate Advance shall be
one (1), two (2), three (3), six (6) or twelve (12) months, or such
other period as Borrower may select and the Agent may agree to;
PROVIDED, HOWEVER, that:
(i) the duration of any Interest Period for any Advance
that commences before the repayment date for such Advance and
otherwise ends after such repayment date shall end on such
repayment date;
(ii) if Borrower fails to select any Advance to be a
LIBOR Rate Advance or a Base Rate Advance, it shall be deemed to
be a Base Rate Advance;
(iii) if Borrower fails to select the duration of
any LIBOR Rate Interest Period for a LIBOR Rate Advance, the
duration of such LIBOR Rate Interest Period shall be one (1)
month;
(iv) any LIBOR Interest Period which would otherwise end
on a day which is not a LIBOR Business Day shall be extended to
the next succeeding LIBOR Business Day (unless such LIBOR
Business Day falls in another calendar
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month, in which case such LIBOR Interest Period shall end on the next
preceding LIBOR Business Day);
(v) any LIBOR Interest Period which begins on the last
LIBOR Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month
at the end of such LIBOR Interest Period) shall, subject to
CLAUSE (IV) above, end on the last LIBOR Business Day of a
calendar month;
(vi) Borrower shall not have more than ten (10) LIBOR
Interest Periods in effect concurrently at any time; and
(vii) no Borrowing Notice shall specify a LIBOR Rate
Interest Period which shall end after the Termination Date.
(c) Borrower shall pay interest on the unpaid principal amount of each
Advance from the date of such Advance until such principal amount is due,
payable on the first day of each month, commencing on January_1, 1997 and on the
Termination Date, at an interest rate per annum equal at all times during such
Interest Period for such Advance to the Applicable Rate (as defined below) or
the Default Rate (as hereinafter defined), as the case may be; PROVIDED,
HOWEVER, that for any Advance having an Interest Period less than one (1) month,
interest thereon shall be due and payable on the last day of such Interest
Period. The term "APPLICABLE RATE", as used herein, shall mean an interest rate
per annum equal at all times during the Interest Period then applicable to such
Advance to whichever of the following rates is selected by Borrower:
(i) the Base Rate in effect on the day of such Interest
Period (such an Advance being referred to as a "BASE RATE
ADVANCE"); or
(ii) one and eight-tenths percent (1.80%) PLUS the LIBOR
Rate in effect on the first day of such Interest Period (such an
Advance being referred to in this Agreement as a "LIBOR RATE
ADVANCE");
PROVIDED, HOWEVER, that if either a Bank is unable to acquire the funds upon
which the interest rate described in CLAUSE (II) immediately above is based for
such Interest Period or the Borrower fails to select an interest rate in
accordance with the terms hereof, then the Applicable Rate for such Interest
Period will the Base Rate in effect on the first day of such Interest Period;
and PROVIDED, FURTHER, HOWEVER, that in no event shall the Applicable Rate
exceed the Maximum Rate. All past due principal and, to the extent permitted by
applicable law, interest upon the Advances shall bear interest, from the date
such amount becomes due to the date such amount is paid in full, at the Default
Rate and shall be due and payable upon demand. Each change in the interest rate
applicable to an Advance shall become effective without prior notice to the
undersigned automatically as of the opening of business on the date of such
change in the Base Rate or the LIBOR Rate, as the case may be; PROVIDED, THAT,
the LIBOR Rate shall not change with respect to a
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LIBOR Rate Advance during the corresponding LIBOR Interest Period applicable
thereto.
(d) Borrower shall not be permitted to repay any LIBOR Rate Advance prior
to the expiration of the corresponding LIBOR Interest Period applicable thereto,
unless (i) such repayment is specifically required by the terms of this
Agreement, (ii) the Majority Banks demand that such repayment be made in
accordance with this Agreement, or (iii) the Majority Banks, in their sole
discretion, consent to such repayment. If for any reason any LIBOR Rate Advance
is repaid prior to the expiration of the corresponding LIBOR Interest Period
applicable thereto, Borrower shall pay to the Agent for the ratable benefit of
the Banks on demand any amounts required to compensate the Agent and/or the Bank
for any losses, costs, or expenses which it may incur as a result of such
repayment. A certificate of the Agent and/or the Banks claiming compensation
under this paragraph and setting forth the additional amount or amounts to be
paid to the Agent and/or the Bank hereunder shall be conclusive in the absence
of manifest error.
(e) In regards to any LIBOR Rate Advance, if the Agent determines that
deposits in U.S. dollars (in the applicable amounts) are not being offered to
the Agent in the interbank eurodollar market selected by the Agent for the LIBOR
Interest Period applicable to such LIBOR Rate Advance, or that the rate at which
such dollar deposits are being offered will not adequately and fairly reflect
the cost to the Agent and/or any Bank of making or maintaining a LIBOR Rate
Advance for the applicable LIBOR Interest Period, the Agent shall forthwith give
notice thereof to the undersigned, whereupon until the Agent notifies the
undersigned that such circumstances no longer exist, (i) the right of Borrower
to select an interest rate based upon the LIBOR Rate shall be suspended, and
(ii) each LIBOR Rate Advance in effect shall thereupon automatically be
converted into a Base Rate Advance in accordance with the provisions hereof. If
notice has been given by the Agent to Borrower requiring a LIBOR Rate Advance to
be repaid or converted, then unless and until the Agent notifies Borrower that
the circumstances giving rise to such repayment or conversion no longer apply,
the only interest rate available to Borrower shall be a rate based upon the Base
Rate. If the Agent notifies Borrower that the circumstances giving rise to such
repayment or conversion on longer apply, Borrower may thereafter select an
interest rate based upon the LIBOR Rate in accordance with the terms of this
Agreement.
(f) If at any time the rate of interest applicable to any Advance, as
computed on the basis of the "contract rate" defined and specified in the
Revolving Credit Note evidencing any Advance, would exceed the Legal Rate, the
interest payable under the Revolving Credit Note shall be computed upon the
basis of the Legal Rate, but any subsequent reduction in such contract rate
shall not reduce the applicable interest rate thereafter applicable under the
Revolving Credit Note below the Legal Rate until the aggregate amount of
interest accrued and payable under the Revolving Credit Note as to the Advances
equals the total amount of interest which would have accrued if interest on the
Advances had been at all times computed solely on the basis of such contract
rate.
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(g) No agreements, conditions, provisions or stipulations contained
in this Agreement or any other instrument, document or agreement between
Borrower and the Agent and/or any Bank or default of Borrower, or the
exercise by the Agent and/or any Bank of its respective right to
accelerate the payment of the maturity of principal and interest or to
exercise any option whatsoever contained in this Agreement or any other
agreement between Borrower and the Agent and/or any Bank, or the arising
of any contingency whatsoever, shall entitle the Agent and/or any Bank
to collect, in any event, interest exceeding the Legal Rate and in no
event shall Borrower be obligated to pay interest exceeding such Legal
Rate and all agreements, conditions or stipulations, if any, which may
in any event or contingency whatsoever operate to bind, obligate or
compel Borrower to pay a rate of interest exceeding the Legal Rate,
shall be without binding force or effect, at law or in equity, to the
extent only of the excess of interest over such Legal Rate. In the
event any interest is charged in excess of the Legal Rate ("EXCESS"),
Borrower acknowledges and stipulates that any such charge shall be the
result of an accident and bona fide error, and such Excess shall be,
first, applied to reduce the principal then unpaid hereunder; second,
applied to reduce the Indebtedness; and third, returned to Borrower, it
being the intention of the parties hereto not to enter at any time into
a usurious or otherwise illegal relationship. Borrower recognizes that,
with fluctuations in the rates of interest provided for in the Revolving
Credit Note and the Legal Rate, such an unintentional result could
inadvertently occur. By the execution of this Agreement, Borrower
covenants that (a) the credit or return of any Excess shall constitute
the acceptance by Borrower of such Excess, and (b) Borrower shall not
seek or pursue any other remedy, legal or equitable, against the Agent
and/or any Bank, based in whole or in part upon the charging or
receiving of any interest in excess of the maximum authorized by
applicable law. For the purpose of determining whether or not any
Excess has been contracted for, charged or received by the Agent and/or
any Bank, all interest at any time contracted for, charged or received
by the Agent and/or such Bank in connection with this Agreement shall be
amortized, prorated, allocated and spread in equal parts during the
entire term of this Agreement. The provisions of this SECTION 2.2(g)
shall be deemed to be incorporated into every document or communication
relating to the Indebtedness which sets forth or prescribes any account,
right or claim or alleged account, right or claim of the Agent and/or
any Bank with respect to Borrower (or any other obligor in respect of
Indebtedness). All such documents and communications and all figures
set forth therein shall, for the sole purpose of computing the extent of
the Indebtedness and obligations of Borrower (or other obligor) asserted
by the Agent and/or any Bank thereunder, be automatically recomputed by
any Borrower or obligor, and by any court considering the same, to give
effect to the adjustments or credits required by this SECTION 2.2(g).
2.3 MANDATORY PAYMENTS ON ADVANCES. Borrower shall pay to the Agent for
the ratable benefit of each Bank any amount by which the sum of the aggregate
unpaid principal amount of all Advances plus the Letter of Credit Exposure
from time to time exceeds the Overall Commitment Amount, together with all
interest accrued and unpaid on the amount of such excess. Such payment shall
be immediately due and owing WITHOUT NOTICE OR DEMAND upon the
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occurrence of any such excess. Any mandatory prepayment under this SECTION
2.3 shall not reduce the Overall Commitment Amount.
2.4 OPTIONAL PREPAYMENTS ON ADVANCES. Borrower, at any time and from
time to time, may prepay the unpaid principal amount of the Advances in whole
or in part pro rata among the Banks based on each Bank's Pro Rata Share
without premium except as otherwise set forth in SECTION 2.2(d) of this
Agreement; PROVIDED, HOWEVER, that any optional prepayment of the Advances
made under this SECTION 2.4 shall not reduce the Overall Commitment Amount.
2.5 PREPARATION FEES. Upon demand of the Agent from time to time,
Borrower shall pay to the Agent the amount of the reasonable expenses
(including, without limitation, reasonable attorneys' fees, whether of inside
or outside counsel, and disbursements) incurred by such Person from time to
time in connection with the preparation of this Agreement and related
instruments and/or the making (or preparation for the making) of advances
hereunder.
2.6 UNUSED LINE FEE. Borrower shall pay to the Agent, for the benefit
of the Banks (in accordance with each Bank's Pro Rata Share), an unused line
fee for the period commencing on the date of this Agreement to and including
the Termination Date equal to one-quarter of one percent (0.25%) per annum on
the average daily excess of the Overall Commitment Amount over the aggregate
unpaid principal balance of the Advances plus the Letter of Credit Exposure.
Such unused line fee shall be payable on the first Business Day of each
January, April, July and October, beginning January_1, 1997 and on the
Termination Date, for the periods ending on such date.
2.7 INCREASED COSTS.
(a) If either (i) the introduction of or any change (including,
without limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation of any law or
regulation or (ii) the compliance by any Bank with any guideline or
request from any central bank or other governmental authority (whether
or not having the force of law), shall result in any increase in the
cost to any Bank of making, funding or maintaining any LIBOR Rate
Advance, then Borrower shall from time to time, upon demand by such
Bank, pay to such Bank additional amounts sufficient to indemnify such
Bank against such increased cost. A certificate as to the amount of
such increased cost, submitted to Borrower by such Bank, shall, in the
absence of manifest error, be conclusive and binding for all purposes.
(b) If either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) compliance by any Bank
with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects
or would affect the amount of capital required or expected to be
maintained by any Bank and any Bank determines that the amount of such
capital, is increased by or based upon the existence of such Bank's
commitment to make LIBOR Advances hereunder and other commitments of
this type, then, upon demand by such Bank, Borrower shall immediately
pay to such Bank, from time to time as specified by such Bank,
additional
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amounts sufficient to compensate such Bank in the light of such
circumstances, to the extent that any Bank reasonably determines such
increase in capital to be allocable to the existence of such Bank's
commitment to lend hereunder. A certificate as to such amounts,
submitted to Borrower by such Bank, shall, in the absence of manifest
error, be conclusive and binding for all purposes.
2.8 LOCK BOX. Borrower shall cause all tenants of the Real Property of
any Loan Party to make payments to Borrower in care of a lock box account to
be established with the Agent prior to the initial Disbursement Date. The
Agent shall have sole access to such account. Borrower shall endorse to the
Agent and forthwith deliver to the Agent all payments which it receives from
its leased properties or arising from any other rights or interests of
Borrower therein, in the form received by Borrower, without commingling with
any funds belonging to Borrower. All payments so received by the Agent shall
be deposited in the account of Borrower, Account No. 7611017455, maintained
at the Agent on the first Business Day following the day of receipt by the
Agent of such payment; PROVIDED, HOWEVER, at all times from and after the
occurrence of an Event of Default, all payments so received by the Agent
shall be applied in payment of the Indebtedness, first to the Agent on
account of the Agent's costs and expenses, then to the Lenders in accordance
with their respective Pro Rata Share of interest on the Indebtedness, then to
the Lenders in accordance with their respective Pro Rata Share of principal
on the Advances and Letters of Credit Exposure in such order as they may
elect, and then to other Indebtedness.
2.9 PAYMENTS AND COMPUTATIONS. All sums payable by Borrower to the
Agent and/or any Bank under this Agreement, the Revolving Credit Note or the
other documents contemplated hereby shall be paid directly to the Agent for
the benefit of itself and/or any Bank and Comerica, as the case may be, at
the Agent's address set forth SECTION 11.13 hereof in immediately available
United States funds, without set off, deduction or counterclaim. In its sole
discretion, the Agent and/or any of the Banks may charge any and all deposit
or other accounts (including, without limitation, an account evidenced by a
certificate of deposit) of Borrower with the Agent and/or any of the Banks
for all or a part of any Indebtedness then due; PROVIDED, HOWEVER, that this
authorization shall not affect Borrower's obligation to pay, when due, any
Indebtedness whether or not account balances are sufficient to pay amounts
due. All computations of interest accrued at the Applicable Rate (but not the
Maximum Rate) hereunder and under the Revolving Credit Note and commitment
fee hereunder shall be made by each Bank on the basis of a year of 360 days
for the actual number of days (including the first day but excluding the last
day) elapsed, and all computations of interest accrued at the Maximum Rate
shall be based upon a year with 365 or 366 days, as appropriate. Whenever
any payment to be made hereunder or under the Revolving Credit Note shall be
stated to be due, or whenever the last day of any Interest Period would
otherwise occur, on a Business Day, such payment may be made, and the last
day of such Interest Period shall occur, on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation
of payment of interest, commitment fee or other fee, as the case may be.
2.10 RECEIPT OF PAYMENTS. Any payment of the Indebtedness made by mail
will be deemed tendered and received only upon actual receipt by the Agent or
a Bank as the case may
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be, at the address designated for such payment, whether or not the Agent or
such Bank has authorized payment by mail or any other manner, and shall not
be deemed to have been made in a timely manner unless received on the date
due for such payment, time being of the essence. Borrower expressly assumes
all risks of loss or liability resulting from non-delivery or delay of
delivery of any item of payment transmitted by mail or in any other manner.
Acceptance by the Agent or any Bank of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an
Event of Default, and at any time thereafter and until the entire amount then
due has been paid, such Person shall be entitled to exercise any and all
rights conferred upon it herein upon the occurrence of an Event of Default.
Borrower waives the right to direct the application of any and all payments
at any time or times hereafter received by the Agent or any Bank from or on
behalf of Borrower. Prior to the occurrence of a Default, payments made by
Borrower shall be applied by the Agent and each Bank, as the case may be, as
specified by Borrower. After the occurrence and during the continuance of a
Default, Borrower agrees that the Agent and each of the Banks shall have the
continuing exclusive right to apply and to reapply any and all payments
received at any time or times hereafter against the Indebtedness in such
manner as each of them may deem advisable, notwithstanding any entry by any
of them upon any of its books and records. Borrower expressly agrees that to
the extent that the Agent or any of the Banks receives any payment or benefit
and such payment or benefit, or any part thereof, is subsequently
invalidated, declared to be fraudulent or preferential, set aside or is
required to be repaid t a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, then to
the extent of such payment or benefit, the Indebtedness or part thereof
intended to be satisfied shall be revived and continued in full force and
effect as if such payment or benefit had not been made and, further, any such
repayment by the Agent or any of the Banks, to the extent that it did not
directly receive a corresponding cash payment, shall be added to and be
additional Indebtedness payable upon demand by it.
2.11 RECORDATION OF AMOUNTS DUE. The date and amount of each Advance is
made by the Agent or each of the Banks, as the case may be, and of each
repayment of principal and interest thereon received by each of them, may be
recorded by each of them in its respective records. The aggregate unpaid
amount so recorded by the Agent or any such Bank shall constitute prima facie
evidence of the amount owing and unpaid on the Indebtedness; PROVIDED,
HOWEVER, that the failure by the Agent or any Bank so to record any such
amount or any error in so recording any such amount shall neither increase
nor limit Borrower's obligations under this Agreement or the Revolving Credit
Note to repay the principal amount of all the Advances and Letter of Credit
Exposure together with all interest accrued or accruing thereon.
2.12 ALL INDEBTEDNESS AT OPTION OF THE BANK BECOMES DUE AND PAYABLE ON
TERMINATION DATE. Notwithstanding anything in this Agreement or in Revolving
Credit Note to the contrary, the Agent and each of the Banks shall have the
sole option, upon the Termination Date, to require payment in full of all
Indebtedness owing to it, including, without limitation, payment in full of
all Advances.
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2.13 LETTERS OF CREDIT.
(a) If requested to do so by Borrower, Comerica, in its individual
capacity as a Bank (and not in its capacity as the Agent), may, IN COMERICA'S
SOLE DISCRETION, issue or confirm Letters of Credit; PROVIDED HOWEVER that
(i) in no event shall the aggregate amount of Letter of Credit Exposure at
any time outstanding exceed $1,500,000.00 and (ii) Borrower shall be required
to satisfy the conditions specified in SECTION 4.2.2(b) of this Agreement in
connection therewith. Each Letter of Credit shall have an expiration date
that occurs on or before the earliest of (A) the Termination Date, or (B) the
date which is three hundred sixty four (364) days immediately following the
date of issuance or confirmation of such Letter of Credit. Each Letter of
Credit shall be payable in dollars. Borrower will immediately and
unconditionally pay to Agent for the benefit of the Banks the amount of each
payment made under each Letter of Credit. All amounts paid under a Letter of
Credit shall, immediately upon the making of such payment and without the
necessity of further act or evidence, constitute Advances and the Banks shall
be entitled to all of the benefits of this Agreement and the other Loan
Documents with respect thereto.
(b) In addition, Borrower also shall, in consideration of the issuance
or confirmation of each Letter of Credit and in addition to other charges
payable by Borrower under this Agreement, (i) pay to Comerica, for Comerica's
own account and not for the ratable benefit of the Banks, at the time of the
issuance or confirmation of such Letter of Credit, the amount of all fees and
expenses incurred by Comerica in connection with the issuance of, or paid by
Comerica in connection with the issuance of, such Letter of Credit, PLUS (ii)
pay to the Agent, for the ratable benefit of the Banks in connection with
each issuance or confirmation of each Letter of Credit or amendment thereto
issued or confirmed, a fee equal to one percent (1.0%) per annum of the face
amount of each Letter of Credit or Letter of Credit amendment issued or
confirmed (the "LETTER OF CREDIT COMMISSION"). The Letter of Credit
Commission shall be paid to the Agent at the end of each calendar quarter
during which such Letter of Credit is outstanding, and, to the extent that
such amounts remain owing and unpaid, on the Termination Date. In addition,
upon the happening and during the continuance of any Default or Event of
Default, the Letter of Credit Commission shall be one percent (1.0%) per
annum in excess of the Letter of Credit Commission which would otherwise be
payable.
(c) At any time an Event of Default has occurred and is continuing and
at anytime from and after the Termination Date, Borrower shall deliver to the
Agent for the benefit of the Banks with respect to the Letter of Credit
Exposure, within one Business Day following the Agent's or any of the Bank's
request therefor, cash collateral or United States treasury bills in an
amount equal to the aggregate Letter of Credit Exposure pertaining to all
Letters of Credit (plus the projected amount of all fees associated
therewith).
(d) Borrower assumes all risks of the acts or omissions of the
beneficiary with respect to its use of any Letter of Credit. Neither
Comerica, the Agent nor any Bank shall
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be responsible: for the validity, or genuineness of certificates or other
documents delivered under or in connection with such Letter of Credit, even
if such certificates or other documents should in fact prove to be invalid,
fraudulent or forged; for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
wireless, facsimile or otherwise, whether or not they be in code; for errors
in translation or for errors in interpretation of technical terms; for any
failure or inability by Comerica or anyone else to perform in accordance with
foreign laws, customs or regulations or by reason of any control or
restriction rightfully or wrongfully exercised by any government or group
asserting or exercising governmental or paramount powers; or for any other
consequences arising from causes beyond Comerica's control; and none of the
above shall affect, impair or prevent the vesting of any of the rights or
powers of Comerica hereunder. In furtherance and not in limitation of the
above provisions of this SUBSECTION (d), Borrower agrees that Comerica may
accept certificates or other documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary and furthermore, Borrower agrees that
any action, inaction or omission taken or suffered by Comerica in good faith
in connection with any Letter of Credit, or related drafts, certificates or
other documents, shall be binding on Borrower and shall not result in any
liability of Comerica to Borrower.
(e) Notwithstanding anything in this Agreement to the contrary, the
parties hereto agree that automatically upon the issuance or confirmation by
Comerica of a Letter of Credit, each other Bank shall be deemed to have
purchased a participation equal to such Bank's Pro Rata Share in such Letter
of Credit, and, upon written demand by Comerica following a draw on such
Letter of Credit, with a copy of such demand to Agent, each other Bank shall
purchase from Comerica, directly and not as a participation, and Comerica
shall sell and assign to each such other Bank, such Bank's Pro Rata Share of
the Advance resulting from such draw, as of the date of such purchase, by
such Bank depositing in Agent's account in Dallas, Texas, or such other place
as shall be designated by Agent, for the benefit of Comerica, in same day
funds in United States dollars, an amount equal to the portion of such
Advance purchased by such Bank. Such payment shall be made by such Bank on
the Business Day on which demand therefor is made by Comerica, provided
notice of such demand is given not later than 12:00 p.m. (Dallas, Texas time)
on such Business Day, or the first Business Day next succeeding such demand
if notice of such demand is given after such time. Borrower hereby agrees to
each participation, sale and assignment pursuant to this SUBSECTION (e). Upon
the purchase by a Bank from Comerica of a participation and/or Advance
described in this SUBSECTION (e), such Bank shall be entitled on a pro rata
basis to the extent of such purchase to the same rights and benefits under
this Agreement relating to such Letters of Credit and Advances resulting from
draws on such Letters of Credit as to which Comerica is entitled including,
without limitation, the rights to any collateral or security for such Letters
of Credit as provided in this Agreement. At the request of Comerica, each
other Bank agrees to execute such additional agreements, documents and
instruments as Comerica or its counsel may from time to time reasonably
require to further evidence the agreements of such other Banks to the
provisions of this SUBSECTION (e).
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2.14 USE OF PROCEEDS. The Advances and the Letters of Credit and the
proceeds of the foregoing shall be used by Borrower solely for the purposes
of (a) acquiring commercial restaurant properties (and (i) any properties
adjacent to the restaurant properties that are essential to the acquisition
or operation of such restaurant properties and, for properties acquired after
the date hereof, have a cost of less than $50,000 for any single restaurant
property and (ii) convenience store and/or gasoline dispensary operations
which were Qualified USRP Development Company Projects (as such term is
defined below) acquired from USRP Development Company and are operated as
Co-Branded Properties), (b) the issuance and funding of standby Letters of
Credit, (c) repayment of all of the indebtedness owing to Morgan Keegan which
is outstanding as of the date of this Agreement, in an aggregate amount not
to exceed $4,100,000, (d) to the extent of $10,000,000 in the aggregate
outstanding at any time, advances to USRP Development Company for the
purposes permitted under SUBCLAUSE (b) of SECTION 7.5 of this Agreement, and
(e) to the extent of $7,500,000 in the aggregate outstanding at any time (i)
advances to Borrower's tenants for the purposes permitted under SECTION 7.5
of this Agreement and (ii) other working capital purposes of Borrower. From
time to time and upon the Bank's request, Borrower shall furnish to the Agent
evidence satisfactory to the Agent that such proceeds are being used
according to the terms of this SECTION 2.14. As used herein, "QUALIFIED USRP
DEVELOPMENT COMPANY PROJECTS" shall mean commercial properties which USRP
Development Company acquired as unimproved property and constructed thereon
new convenience store and/or new gasoline dispensary operations facilities
together with commercial restaurant facilities which are operated as
Co-Branded Properties.
2.15 PRO RATA ADVANCES AND LETTER OF CREDIT EXPOSURE. The Borrower and
the Banks acknowledge and agree that all Advances made and Letter of Credit
Exposure incurred on or after the date hereof, and all increases and
decreases thereof, are to be made and incurred pro rata by the Banks in
accordance with such Bank's Pro Rata Share (or in such other manner as the
Banks among themselves may agree from time to time); and each Bank's actual
outstanding Advance and Letter of Credit Exposure shall be adjusted from time
to time by each Bank purchasing or selling at par from or to the other Banks,
as the case may be, simultaneously with each such increase or decrease, such
that each Bank's position in each shall at all times be pro rata in
accordance with such Bank's Pro Rata Share. Notwithstanding the foregoing
provisions of this SECTION 2.15, in the event that from time to time a Bank
does not make an Advance of all or a portion of an amount under SECTION 2 of
this Agreement, for any reason other than as a result of the existence of an
Event of Default or otherwise (an "UNFUNDED AMOUNT"), Comerica, in its
individual capacity as a Bank (and not in its capacity as the Agent) shall
have the right (but not the obligation) for its individual own account, at
its option, in the exercise of its sole discretion, to advance or incur all
or a portion of such Unfunded Amount; and if any Event of Default occurs or
exists during any period when an Unfunded Amount advanced or incurred by
Comerica is outstanding, then payments by the Borrower during such period
shall be applied first, to repayment of such outstanding Unfunded Amount
advanced or incurred by Comerica, and next to the other Advances of each Bank
outstanding based upon each Bank's Pro Rata Share.
2.16 ADMINISTRATIVE AND OTHER FEES. Borrower agrees to pay to the Agent,
for the Agent's own and sole account and not for the account of the Banks,
such fees in such amounts
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determined from time to time by the Agreement of Borrower and the Agent and
set forth in one or more separate letter agreements between Borrower and the
Agent. Each such fee shall be deemed fully earned and non-refundable on the
due date thereof.
SECTION 3. SECURITY
3.1 GENERAL. To secure full and timely performance of Borrower's
covenants set out in this Agreement and to secure the repayment of the
Revolving Credit Note, all of the Advances and all other Indebtedness,
Borrower hereby grants and assigns to the Agent and the Banks, and hereby
agrees to grant and assign and cause each Loan Party and each general partner
or Subsidiary of any of them to grant and assign to the Agent and the Banks a
lien upon, and security interest in, the Collateral and all other commercial
restaurant locations and other Real Property of Borrower or Guarantor, or any
general partner or Subsidiary of any of them, now or hereafter owned or
leased by such Person pursuant to the Lease Assignments, the Financing
Statements and such other agreements, documents and instruments as the Agent
shall from time to time require. Borrower hereby ratifies and affirms any and
all Lease Assignments, Financing Statements and other agreements, documents
and instruments executed by Borrower or any other Loan Party on or before the
date of this Agreement, agrees that the same shall continue in full force and
effect, and agrees that the same are the legal, valid and binding obligations
of Borrower or such other Loan Party, as the case may be, enforceable against
Borrower or such other Loan Party, as the case may be, in accordance with
their respective terms, and that all such existing Lease Assignments,
Financing Statements and other agreements, documents and instruments shall
secure the Indebtedness as defined herein, and not just as defined in the
Original Agreement, and that upon request each Loan Party, and any general
partner or Subsidiary of any of them, will execute all documentation
reasonably requested by the Agent and/or the Majority Banks to evidence the
same. The Collateral shall also include such personalty and fixtures of
Borrower and Guarantor, and each general partner or Subsidiary of any of
them, as are at any time now or hereafter located on any Real Property
described above. Borrower shall, and shall cause each Loan Party, and each
general partner or Subsidiay thereof, to execute and deliver such documents
as the Agent and/or the Banks shall require to confirm the existing liens,
mortgages and Lease Assignments and the addition of Compass and the other
Banks as beneficiaries under any recorded Lease Assignment.
SECTION 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
AGENT AND THE BANKS
4.1 CONDITIONS TO FIRST DISBURSEMENT. The obligations of the Agent and
each of the Banks under this Agreement are subject to the occurrence, prior
to or upon the date hereof, of each of the following conditions:
4.1.1 DOCUMENTS EXECUTED AND FILED. Borrower shall have executed
(or caused to be executed) and delivered to the Agent and, as appropriate,
there shall have been filed or recorded with such filing or recording offices
as the Agent or any of the Banks shall deem appropriate, the following:
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(a) the Revolving Credit Note executed by Borrower;
(b) the Financing Statements executed by each Loan Party;
(c) the Lease Assignments executed by each Loan Party;
(d) the Guaranty executed by each Guarantor;
(e) landlord and mortgagee waivers and/or estoppel certificates with
respect to all Real Property where any of the lease agreements, instruments
and other documents evidencing the Collateral (or copies of such lease
agreements, instruments and documents) or any of Borrower's books and
records are located, all in form and substance reasonably satisfactory to
the Majority Banks;
(f) true and correct copies of all leases evidencing any Loan Party's
Real Property consisting of a lessee's leasehold interest (e.g., ground
leases);
(g) true and correct copies of all leases evidencing any Loan Party's
Real Property consisting of a lessor's leasehold interests (e.g., commercial
restaurant franchisee tenant leases); and
(h) such other documents and instruments as the Agent or any of the
Banks shall reasonably require.
4.1.2 CERTIFIED RESOLUTIONS. Borrower shall have furnished to the
Agent a certified copy of resolutions of the partners of Borrower authorizing
the execution, delivery and performance of this Agreement, the borrowing
hereunder, the Revolving Credit Note and any other documents contemplated by
this Agreement, which shall have been certified by the General Partner as of
the Disbursement Date first occurring as being complete, accurate and in
effect. General Partner shall have furnished to the Agent a copy of
resolutions of the Board of Directors of General Partner authorizing the
execution, delivery and performance of this Agreement, the borrowing
hereunder, the Revolving Credit Note and any other documents contemplated by
this Agreement, which shall have been certified by the Secretary or Assistant
Secretary of General Partner as of the Disbursement Date first occurring as
being complete, accurate and in effect. Each Guarantor shall have furnished
to the Agent a copy of resolutions of the partners and/or board of directors
and/or board of trustees, as the case may be, of such Guarantor authorizing
the execution, delivery and performance of the Guaranty and any other
documents contemplated by this Agreement to be executed, delivered or
performed by such Guarantor, which shall have been certified by the general
partner and/or chief executive officer and/or managing trustee, at the case
may be, of such Guarantor as of the Disbursement Date first occurring as
being complete, accurate and in effect. The general partner and/or chief
executive officer and/or managing trustee, as the case may be, of each
Guarantor shall have furnished to the Agent a copy of resolutions of the
Board of Directors of General Partner and/or the resolutions of the board of
directors and/or board of trustees of each Guarantor, as the case may be,
authorizing the execution, delivery and performance of the Guaranty and any
other documents contemplated by
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this Agreement to be executed, delivered or performed by each Guarantor,
which shall have been certified by the Secrtary of Assistant Secretary of the
general partner and/or the chief executive officer and/or managing trustee,
as the case may be, of each Guarantor as of the Disbursement Date first
occurring as being complete, accurate and in effect.
4.1.3 CERTIFIED CERTIFICATE OF INCORPORATION/LIMITED PARTNERSHIP
CERTIFICATE. Borrower shall have furnished to the Agent a copy of the
Certificate of Limited Partnership and all other documents required to be
filed by Borrower to create a limited partnership, including all amendments
thereto and restatements thereof, all of which shall have been certified by
the Delaware Secretary of State or other appropriate filing office as of a
date within thirty (30) days of the Disbursement Date first occurring.
General Partner shall have furnished to the Agent a copy of the Certificate
of Incorporation including all amendments thereto and restatements thereof,
and all other charter documents of General Partner, all of which shall have
been certified by the Delaware Secretary of State as of a date within thirty
(30) days of the Disbursement Date first occurring. Each Guarantor shall
have furnished to the Agent a copy of all of the documents required to be
executed or filed by such Guarantor to create the form of entity of such
Guarantor, including all amendments thereto and restatements thereof, all of
which shall have been certified by the Secretary of State of its jurisdiction
of formation or other appropriate filing office as of a date within thirty
(30) days of the Disbursement Date first occurring. The general partner,
trustee or other analogous Person of each Guarantor shall have furnished to
the Agent a copy of all of the documents required to be executed or filed by
such Person to create the form of entity of such Person, including all
amendments thereto and restatements thereof, all of which shall have been
certified by the Secretary of State of its jurisdiction of formation as of a
date within thirty (30) days of the Disbursement Date first occurring.
4.1.4 CERTIFIED BYLAWS/LIMITED PARTNERSHIP AGREEMENT. Borrower
shall have furnished to the Agent a copy of the limited partnership agreement
of Borrower, including all amendments thereto and restatements thereof, which
shall have been certified to by the General Partner as of the Disbursement
Date first occurring as being complete, accurate and in effect. General
Partner shall have furnished to the Agent a copy of the Bylaws of General
Partner, including all amendments thereto and restatements thereof, which
shall have been certified by the Secretary or Assistant Secretary of General
Partner as of the Disbursement Date first occurring as being complete,
accurate and in effect. Each Guarantor shall have furnished to the Agent a
copy of all of the limited partnership agreement, bylaws and/or other
organizational agreements of such Guarantor, including all amendments thereto
and restatements thereof, which shall have been certified to by the general
partner and/or chief executive officer, as the case may be, of such Guarantor
as of the Disbursement Date first occurring as being complete, accurate and
in effect. The general partner, trustee or other analogous Person of
Guarantor shall have furnished to the Agent a copy of the limited partnership
agreement, bylaws and/or other organizational agreements of such Person ,
including all amendments thereto, which shall have been certified by the
general partner and/or chief executive officer, as the case may be, of such
Person as of the Disbursement Date first occurring as being complete,
accurate and in effect.
4.1.5 CERTIFICATE OF GOOD STANDING. Borrower, each Guarantor,
General Partner and the general partner, trustee or other analogous Person of
Guarantor each shall have furnished
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to the Agent a certificate of good standing with respect to it, which shall
have been certified by the Secretary of State of its jurisdiction of
formation, together with evidence of such Person's authority to do business
in the State of Texas, as of a date within thirty (30) days of the initial
Disbursement Date.
4.1.6 CERTIFICATE OF INCUMBENCY. General Partner and the general
partner, trustee or other analogous Person of each Guarantor each shall have
furnished to the Agent a certificate of the Secretary or Assistant Secretary
of it, certified as of the Disbursement Date first occurring, as to the
incumbency and signatures of the officers of it signing this Agreement, the
Revolving Credit Note, the Lease Assignments, the Guaranty and any documents
contemplated or delivered under this Agreement on behalf of itself, Borrower
and/or each Guarantor.
4.1.7 OPINION OF COUNSEL. Borrower shall have furnished to the
Agent and each of the Banks the favorable written opinion of legal counsel to
Borrower, General Partner, each Guarantor and the general partner, trustee or
other analogous Person of Guarantor, dated as of the initial Disbursement
Date, in form and content as set forth in EXHIBIT E to this Agreement and
containing such other or additional opinions as may be requested by the Agent
or any of the Banks.
4.1.8 UCC LIEN SEARCHES. The Agent shall have received UCC filing
and record searches of the names of each Loan Party from all applicable
recording and filing offices, and such searches shall disclose no notice of
any liens or encumbrances filed against any of the Collateral other than the
Financing Statements or Permitted Liens. If such searches disclose any liens
or encumbrances other than the Financing Statements or Permitted Liens,
Borrower shall have furnished the Agent with such releases, modifications, or
assignments thereof as shall be required by the Agent or any of the Banks, in
form and content satisfactory to the Bank.
4.1.9 INSURANCE. Borrower shall have furnished to the Agent, in
form, content and amounts and with companies satisfactory to the Agent and
each of the Banks in accordance with SECTION 6.2 hereof, copies of the
insurance policies described in SECTION 6.2 hereof.
4.1.10 FINANCIAL AND OTHER INFORMATION. Borrower shall have
furnished to the Agent and each Bank its current financial statements,
agings, reports and certificates set forth in SECTION 6.1.1 through SECTION
6.1.9.
4.1.11 LEASES. Borrower shall have furnished to the Agent copies of
all leases of Real Property and a legal description of the Real Property
covered thereby, together with all other information reasonably requested by
the Agent or any of the Banks relating to such leases which may be necessary
or desirable by the Agent or any of the Banks for the preparation or
recordation of the Lease Assignments.
4.2 CONDITIONS TO ALL DISBURSEMENTS. The obligations of any of the
Banks to make any Advance on any Disbursement Date, including, but not
limited to, the initial Disbursement Date, are subject to the occurrence,
prior to or on the Disbursement Date related to such Advance, of each of the
following conditions:
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4.2.1 GENERAL COMPLIANCE CERTIFICATE. The Agent shall have
received on or before the third day preceding such Disbursement Date a
General Compliance Certificate, executed by the chief executive or chief
financial officer of General Partner on behalf of Borrower, certified as of
such Disbursement Date and confirming that as of such Disbursement Date:
(a) no Default or Event of Default has occurred and is continuing,
or would result from the making of the proposed Advance; and
(b) the warranties and representations set forth in SECTION 5 of
this Agreement are true and correct on and as of such Disbursement Date.
4.2.2 BORROWING NOTICES AND ADVANCE COMPLIANCE CERTIFICATES. The
Agent shall have received each of the following, duly completed and executed
by the chief executive officer or chief financial officer of General Partner
on behalf of Borrower and certified as of such Disbursement Date:
(a) in the case of an Acquisition Advance, a Borrowing Notice in
the form of EXHIBIT B-1 attached hereto and an Advance Compliance
Certificate in the form of EXHIBIT A-1 attached hereto, together with
(i) Lease Assignments, (ii) a current property summary report of all
Real Property of all Loan Parties and each general partner or Subsidiary
thereof, (iii) mortgagee/lender title commitments which satisfy the
requirements of SECTION 6.16 and SECTION 6.17 of this Agreement, and
with respect to which all costs of policy issuance have been paid by
Borrower (or other Loan Party), (iv) copies of all leases pertaining to
such Real Property, (v) copies of owner title commitments, (vi) pro
forma closing statements, (vii) the "flood hazard area" certificates or
evidence of flood insurance, as the case may be, with respect to such
property or interest described in SECTION 6.16 of this Agreement, (viii)
evidence of casualty, liability and other insurance required under
SECTION 6.2 of this Agreement with respect to such Real Property or
required under any lease on such Real Property, (ix) the cover sheet of
the environmental site assessment pertaining to such Real Property which
identifies such Real Property and sets forth the conclusion and/or
executive summary of such report, and (x) all other agreements,
documents and instruments required by the Agent or the Majority Banks to
create, evidence or perfect the lien and security interest of the Agent
for the benefit of the Banks on the Real Property which is to be
acquired with the proceeds of such Acquisition Advance as Collateral for
the Indebtedness;
(b) in the case of a Letter of Credit Advance, a Borrowing Notice
in the form of EXHIBIT B-2 attached hereto and an Advance Compliance
Certificate in the form of EXHIBIT A-2 attached hereto;
(c) in the case of a Working Capital Advance, a Borrowing Notice in
the form of EXHIBIT B-3 attached hereto and an Advance Compliance
Certificate in the form of EXHIBIT A-3 attached hereto; and
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(d) in the case of a Development Advance, a Borrowing Notice in the
form of EXHIBIT B-4 hereto and an Advance Compliance Certificate in the
form of EXHIBIT A-4 attached hereto, together with (i) a development
budget, a pro-forma economic analysis and site analysis for the
development project for which the proceeds of such advance are intended
to be used together with such other information as may be required by
the Agent or any Bank, (ii) Lease Assignments, (iii) a current property
summary report of all Real Property of all Loan Parties and each general
partner or Subsidiary thereof, (iv) mortgagee/lender title commitments
which satisfy the requirements of SECTION 6.16 and SECTION 6.17 of this
Agreement, and with respect to which all costs of policy issuance have
been paid by Borrower (or other Loan Party), (v) copies of all leases
pertaining to such Real Property, (vi) copies of owner title
commitments, (vii) pro forma closing statements, (viii) the "flood
hazard area" certificates or evidence of flood insurance, as the case
may be, with respect to such property or interest described in SECTION
6.16 of this Agreement, (ix) evidence of casualty, liability and other
insurance required under SECTION 6.2 of this Agreement with respect to
such Real Property or required under any lease on such Real Property,
(x) the cover sheet of an environmental site assessment pertaining to
such Real Property which identifies such Real Property and sets forth
the conclusions and/or executive summary of such report, and (xi) all
other agreements, documents and instruments required by Agent or the
Majority Banks to create, evidence or perfect the lien and security
interest of the Agent for the benefit of the Banks on the Real Property
comprising the Development Project as Collateral for the Indebtedness.
4.2.3 BANK SATISFACTION. The Agent shall not know or have any
reason to believe that, as of such Disbursement Date:
(a) any Default or Event of Default has occurred and is continuing;
(b) any warranty or representation set forth in SECTION 5 of this
Agreement shall not be true and correct; or
(c) any provision of law, any order of any court or other agency of
government on any regulation, rule or interpretation thereof shall have had
any material adverse effect on the validity or enforceability of this
Agreement, the Revolving Credit Note, the Security Agreements, the Lease
Assignment, the Financing Statements, the Pledge Agreement or the other
documents contemplated hereby.
4.2.4 APPROVAL OF LEGAL MATTERS. All actions, proceedings,
instruments and documents required to carry out the transactions contemplated
by this Agreement or incidental thereto and all other related legal matters
shall have been satisfactory to the Agent and, if desired by the Agent at its
sole option, satisfactory to and approved by legal counsel for the Agent (and
said counsel shall have been furnished with such certified copies of actions
and proceedings and such other instruments and documents as they shall have
reasonably requested).
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SECTION 5. WARRANTIES AND REPRESENTATIONS
From the date of this Agreement until the later of (a) the Termination
Date or (b) when the Indebtedness is paid in full, Borrower has performed all
its obligations hereunder and all commitments and other obligations of the
Agent and of the Banks under the Loan Documents have terminated, Borrower
represents and warrants to the Agent and each of the Banks that:
5.1 CORPORATE EXISTENCE AND POWER. (a) Borrower is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to transact business as a
foreign limited partnership in and is in good standing under the laws of each
jurisdiction in which the failure to so qualify could reasonably be expected
to have a material adverse effect on the business or operations (financial or
otherwise) of Borrower; (b) General Partner is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to transact business as a foreign business as a foreign
corporation in and is in good standing under the laws of each jurisdiction in
which the failure to so qualify could reasonably be expected to have a
material adverse effect on the business or operations (financial or
otherwise) of General Partner; (c) Guarantor is a limited partnership duly
organized, validly existing and in good standing under the laws of the State
of Delaware and is qualified to transact business as a foreign limited
partnership in and is in good standing under the laws of each jurisdiction in
which the failure to so qualify could reasonably be expected to have a
material adverse effect on the business or operations (financial or
otherwise) of Guarantor; (d) Borrower, General Partner and Guarantor each has
the power and authority to own its properties and assets and to carry out its
business as now being conducted and is qualified to do business and in good
standing in every jurisdiction wherein such qualification is necessary; (e)
Borrower, and General Partner on behalf of Borrower, have the power and
authority to execute, deliver and perform this Agreement, to borrow money in
accordance with its terms, to execute, deliver and perform the Revolving
Credit Note and all other documents contemplated hereby, to grant to the
Agent and the Banks liens and security interests in the Collateral as herein
contemplated and to do any and all other things required of it herein; ad
(f) each Guarantor, and its general partner, trustee or other Person
executing a Guaranty on behalf of such Guarantor, have the power and
authority to execute, deliver and perform the Guaranty and each of the other
documents to which it is a party in accordance with their respective terms,
and to do any and all other things required of it thereunder.
5.2 AUTHORIZATION AND APPROVALS. The execution, delivery and
performance of this Agreement, the borrowings hereunder and the execution,
delivery and performance of the Revolving Credit Note, the Lease Assignments,
the Financing Statements and other documents contemplated hereby (a) have
been duly authorized by all requisite partnership action of Borrower and
corporate action of General Partner; (b) except for the filing and recording
of the Financing Statements and the Lease Assignments in the appropriate UCC
records and real property records specified on SCHEDULE 5.2 attached hereto,
do not require registration with or consent or approval of, or other action
by, any federal, state or other governmental authority or regulatory body,
or, if such registration, consent or approval is required, the same has been
obtained and disclosed in writing to the Agent; (c) will not violate any
provision of law, any order of any court or other agency of government, the
Certificate of Incorporation or Bylaws of
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General Partner, the partnership certificate or limited partnership agreement
of Borrower, or any provision of any indenture, note, agreement or other
instrument to which Borrower and/or General Partner is a party, or by which
it or any of its properties or assets are bound; (d) will not be in conflict
with, result in a breach of or constitute (with or without notice or passage
of time) a default under any such indenture, note, agreement or other
instrument; and (e) will not result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of Borrower other than in favor of the Agent for the
benefit of itself and the Banks and as contemplated hereby. The execution,
delivery and performance of each Guaranty and the other documents to which
any Guarantor is a party (a) have been duly authorized by all requisite
organizational action of Guarantor and organizational action of the general
partner, trustee or other Person executing such Guaranty on behalf of
Guarantor; (b) do not require registration with or consent or approval of, or
other action by, any federal, state or other governmental authority or
regulatory body, or, if such registration, consent or approval is required,
the same has been obtained and disclosed in writing to the Agent; (c) will
not violate any provision of law, any order of any court or other agency of
government, any of the organizational documents of the general partner,
trustee or other Person executing such Guaranty on behalf of any Guarantor,
the partnership certificate, limited partnership ageement, Trust Agreement or
other document of any Guarantor, or any provision of any indenture, note,
agreement or other instrument to which any Guarantor and/or the general
partner, trustee or other Person executing such Guaranty on behalf of
Guarantor is a party, or by which it or any of its properties or assets are
bound; (d) will not be in conflict with, result in a breach of or constitute
(with or without notice or passage of time) a default under any such
indenture, note, agreement or other instrument; and (e) will not result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of any Guarantor other than
in favor of the Agent for the benefit of itself and the Banks and as
contemplated thereby.
5.3 VALID AND BINDING AGREEMENT. This Agreement is, and the Revolving
Credit Note, the Lease Assignment, the Financing Statements and all other
documents contemplated hereby will be, when delivered, valid and binding
obligations of Borrower and enforceable in accordance with their respective
terms. Each Guaranty will be, when delivered, the valid and binding
obligations of each Guarantor and enforceable in accordance with its terms.
5.4 ACTIONS, SUITS OR PROCEEDINGS. There are no actions, suits or
proceedings, at law or in equity, and no proceedings before any arbitrator or
by or before any governmental commission, board, bureau, or other
administrative agency, pending, or, to the best knowledge of Borrower,
threatened against or affecting Borrower, General Partner or any Guarantor,
or any of their respective properties or rights which, if adversely
determined, could materially impair the right of Borrower, General Partner or
any Guarantor to carry on its respective business substantially as now
conducted or could have a material adverse effect upon the financial
condition of Borrower, General Partner or any Guarantor. Upon request of the
Agent, Borrower shall provide, and cause each Loan Party and each general
partner, trustee or Subsidiary thereof to provide, a current list of all
pending litigation involving it or its respective properties.
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5.5 NO LIENS, PLEDGES, MORTGAGES OR SECURITY INTERESTS. Except for (i)
Permitted Liens, (ii) liens in favor of the Agent for the benefit of itself
and the Banks securing the Indebtedness, and (iii) liens of Morgan Keegan to
be released on or before January 10, 1997, none of Borrower's, General
Partner's or any Guarantor's respective assets and properties, including,
without limitation, the Collateral, are subject to any mortgage, pledge,
lien, security interest or other encumbrance of any kind or character.
5.6 ACCOUNTING PRINCIPLES. All combined and combining balance sheets,
earnings statements and other financial data furnished to the Agent or any of
the Banks for the purposes of, or in connection with, this Agreement and the
transactions contemplated by this Agreement, have been prepared in accordance
with GAAP, and do or will fairly present the financial condition of Borrower
and Guarantor as of the dates, and the results of its operations for the
periods, for which the same are furnished. Without limiting the generality
of the foregoing, the Financial Statements have been prepared in accordance
with GAAP (except as disclosed therein) and fairly present the financial
condition of Borrower and Guarantor as of the dates, and the results of its
operations for the fiscal periods, for which the same are furnished. Neither
Borrower, General Partner nor Guarantor has any material contingent
obligations, liabilities for taxes, long-term leases or unusual forward or
long-term commitments not disclosed by, or reserved against in, the Financial
Statements.
5.7 FINANCIAL CONDITION. Borrower, General Partner and each Guarantor
are each solvent, able to pay its debts as they mature, has capital
sufficient to carry on its business and has assets the fair market value of
which exceed its liabilities, and neither Borrower, nor General Partner nor
any Guarantor will be rendered insolvent, undercapitalized or unable to pay
maturing debts by the execution or performance of this Agreement or the other
documents contemplated hereby. There has been no material adverse change in
the business, properties or condition (financial or otherwise) of Borrower,
General Partner or any Guarantor since the date of the latest of the
Financial Statements.
5.8 CONDITIONS PRECEDENT. As of each Disbursement Date, all appropriate
conditions precedent referred to in SECTION 4 hereof shall have been
satisfied or waived in writing by the Agent.
5.9 TAXES. Borrower, General Partner and each Guarantor have each filed
by the due date therefor all federal, state and local tax returns and other
reports it is required by law to file, has paid or caused to be paid all
taxes, assessments and other governmental charges that are shown to be due
and payable under such returns, and have made adequate provision for the
payment of such taxes, assessments or other governmental charges which have
accrued but are not yet payable. Neither Borrower, nor General Partner nor
any Guarantor has any knowledge of any deficiency or assessment in connection
with any taxes, assessments or other governmental charges not adequately
disclosed in the Financial Statements.
5.10 COMPLIANCE WITH LAWS. Borrower, General Partner and each Guarantor
have each complied with all applicable laws, to the extent that failure to
comply would materially interfere with the conduct of the business of
Borrower, General Partner or any Guarantor.
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5.11 INDEBTEDNESS. Neither Borrower nor General Partner nor any Guarantor
has any indebtedness for money borrowed or any direct or indirect obligations
under any leases (whether or not required to be capitalized under GAAP) or
any agreements of guarantee or surety, except for (i) the endorsement of
negotiable instruments by them in the ordinary course of business for deposit
or collection, (ii) the Term Notes Debt, (iii) unsecured obligations for down
payments and earnest money which are disclosed in advance in writing to the
Agent for the purchase of commercial restaurant properties which do not
exceed ten percent (10%) of the proposed purchase price of such properties,
and (iv) unsecured contingent payments for the purchase of restaurant
properties which do not exceed five percent (5%) of the aggregate purchase
price of such properties (as determined on a property-by-property basis for
each property purchased).
5.12 MATERIAL AGREEMENTS. Except as disclosed on SCHEDULE 5.12 attached
hereto, which may be updated by Borrower from time to time, neither Borrower,
nor General Partner nor any Guarantor has any material leases (under which it
is a lessee), contracts or commitments of any kind (including, without
limitation, employment agreements, collective bargaining agreements, powers
of attorney, distribution contracts, patent or trademark licenses, contracts
for future purchase or delivery of goods or rendering of services, bonus,
pension and retirement plans, or accrued vacation pay, insurance and welfare
agreements). To the best knowledge of Borrower, all parties to the agreements
disclosed on SCHEDULE 5.12 have complied with the provisions of such leases,
contracts or commitments; and to the best knowledge of Borrower, no party to
such agreements is in default thereunder, nor has there occurred any event
which with notice or the passage of time, or both, would constitute such a
default.
5.13 MARGIN STOCK. Borrower is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, and no part of the
proceeds of any Advance hereunder will be used, directly or indirectly, to
purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock or for any other purpose
which might violate the provisions of Regulation G, S, T, U or X of the said
Board of Governors. Borrower does not own any margin stock.
5.14 PENSION FUNDING. Neither Borrower, General Partner nor Guarantor
has incurred any accumulated funding deficiency within the meaning of ERISA
or incurred any liability to the PBGC in connection with any employee benefit
plan established or maintained by Borrower, General Partner or Guarantor and
no reportable event or prohibited transaction, as defined in ERISA, has
occurred with respect to such plans.
5.15 MISREPRESENTATION. No warranty or representation by Borrower
contained herein or in any certificate or other document furnished by
Borrower pursuant hereto contains any untrue statement of material fact or
omits to state a material fact necessary to make such warranty or
representation not misleading in light of the circumstances under which it
was made. There is no fact which Borrower has not disclosed to the Agent in
writing which materially
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and adversely affects nor, so far as Borrower can now foresee, is likely to
prove to affect materially and adversely the business, operations,
properties, prospects, profits or condition (financial or otherwise) of
Borrower or ability of Borrower to perform this Agreement.
5.16 PARTNERSHIP INTERESTS, PARTNERS AND SUBSIDIARIES. The entire issued
and outstanding equity interests and the beneficial and record owners thereof
for each of Borrower, General Partner and each Subsidiary of Borrower,
Guarantor or General Partner is set forth in SCHEDULE 5.16 attached hereto.
There are no outstanding options, warrants or rights to purchase, nor any
agreement for the subscription, purchase or acquisition of, any equity
interest of Borrower, General Partner or any Subsidiary of Borrower,
Guarantor or General Partner. Except as set forth in SCHEDULE 5.16, which may
be updated from time to time by Borrower, neither Borrower, General Partner
nor any Guarantor has any Subsidiaries.
5.17 NO CONFLICTING AGREEMENTS. Neither Borrower, nor General Partner
nor any Guarantor is in default under any agreement to which it is a party or
by which it or any of its property is bound, the effect of which might have a
material adverse effect on the business or operations (financial or
otherwise) on any of them. No provision of the certificate of limited
partnership, limited partnership agreement, certificate of incorporation,
bylaws, Trust Agreement or other organizational documents of Borrower,
General Partner or any Guarantor, and no provision of any existing mortgage,
indenture, note, contract, agreement, statute (including, without limitation,
any applicable usury or similar law), rule, regulation, judgment, decree or
order binding on Borrower, General Partner or any Guarantor or affecting the
property of Borrower, General Partner or any Guarantor conflicts with, or
requires any consent under, or would in any way prevent the execution,
delivery or carrying out of the terms of, this Agreement, the Lease
Assignment, any Guaranty or any other documents contemplated hereby, and the
taking of any such action will not constitute a default under, or result in
the creation or imposition of, or obligation to create any lien upon the
property of Borrower, General Partner or any Guarantor pursuant to the terms
of any such mortgage, indenture, note, contract or agreement; except that in
regards to sales of and foreclosures on Real Property of Borrower and MLP the
provisions of Article VIII of the Agreements of Limited Partnership of
Borrower and MLP provide for a right of first refusal on sales of and
foreclosures on Real Property of Borrower and MLP in favor of BKC.
5.18 REAL PROPERTY. SCHEDULE 1.1 sets forth a complete list of all of
the Real Property and interests thereof owned or leased, as the case may be
as indicated thereon, by Borrower and each Loan Party as of the date hereof,
on a Loan Party by Loan Party basis. SCHEDULE 1.1 shall be updated by
Borrower from time to time (but not less frequently than quarterly) to
reflect matters which occur after the date hereof.
5.19 OUTSTANDING PRINCIPAL BALANCE OF INDEBTEDNESS UNDER ORIGINAL
AGREEMENT. As of the date hereof immediately prior to the execution of this
Agreement and the Revolving Credit Note, the unpaid principal balance of the
Indebtedness (including without limitation all Advances and all Letter of
Credit Exposure) under the Original Agreement is as set forth on SCHEDULE
5.19 attached hereto and made a part hereof, plus accrued but unpaid interest
thereon. Borrower further covenants, warrants and represents that (i) there
exists no Event of Default nor any fact or condition which with the giving of
notice or passage of time or both would create an Event of
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Default, (ii) that there are no defenses, counterclaims or offsets to any of
the Loan Documents, that if any defense, counterclaim or offset exists, known
or unknown, the same is hereby waived and released in full, and (iii) that
all of the warranties and representations contained in the Original
Agreement are true and correct as of the date hereof.
SECTION 6. AFFIRMATIVE COVENANTS
On a continuing basis from the date of this Agreement until the later of
(a) the Termination Date or (b) when the Indebtedness is paid in full,
Borrower has performed all of its other obligations hereunder and all
commitments and other obligations of the Agent and the Banks under the Loan
Documents have terminated, Borrower covenants and agrees that it will, at its
sole expense:
6.1 FINANCIAL AND OTHER INFORMATION.
6.1.1 ANNUAL FINANCIAL REPORTS. Furnish to the Agent and each
Bank, in form and reporting basis satisfactory to the Agent and each Bank,
not later than ninety (90) days after the close of each fiscal year of
Borrower, beginning with the fiscal year ending December 31, 1996, the 10-K
Annual Report of Borrower and the financial statements of Borrower and MLP
(on a combined and combining basis) containing the balance sheet as of the
close of each such fiscal year, statements of income and retained earnings
and a statement of cash flows for each such fiscal year, and such other
comments and financial details as are usually included in similar reports.
Such reports shall be prepared in accordance with GAAP by a Big Six
accounting firm or such other independent certified public accountants of
recognized standing selected by Borrower and acceptable to the Agent and
shall contain unqualified opinions as to the fairness of the statements
therein contained. The Agent acknowledges that it has received such
financial statements for Borrower's fiscal year ended December 31, 1995.
6.1.2 10-Q QUARTERLY REPORTS. Furnish to the Agent and each Bank,
in form and substance satisfactory to the Agent and each Bank, not later than
forty-five (45) days after the close of each fiscal quarter of Borrower other
than the fiscal year end of Borrower, beginning with the fiscal quarter
ending September_30, 1996, containing the combined balance sheet of Borrower
and MLP as of the end of such period, combined statements of income and
retained earnings of Borrower and MLP and a combined statement of cash flows
of Borrower and MLP for the portion of the fiscal year up to the end of such
period, management's discussion and analysis of the financial condition and
results of operations of Borrower and MLP, and such other comments and
financial details as are usually included in such reports. These statements
shall be prepared on the same accounting basis as the statements required in
SECTION 6.1 of this Agreement and shall be reviewed by a Big Six accounting
firm or such other independent certified public accountants of recognized
standing selected by Borrower and acceptable to the Agent.
6.1.3 MONTHLY FINANCIAL STATEMENTS. Furnish to the Agent not later
than thirty (30) days after the close of each calendar month, beginning with
the month ending November 30, 1996, financial statements of Borrower and MLP
(on a combined and combining basis)
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containing a balance sheet of them as of the end of such period, statements
of income and retained earnings and a statement of cash flows of them for the
portion of the fiscal year up to the end of such period, and such other
comments and financial details as are usually included in similar reports.
These statements shall be prepared on the same accounting basis as the
statements required in SECTION 6.1.1 of this Agreement and shall be in such
detail as the Agent may reasonably require, and the accuracy of the
statements shall be certified by the chief executive or financial officer of
Borrower and MLP.
6.1.4 QUARTERLY OPERATING REPORTS. Furnish to the Agent and each
Bank quarterly by the thirtieth (30th) day after the close of each fiscal
quarter of Borrower, beginning with the fiscal quarter ending December 31,
1996: (a)_operating reports on the properties of each Loan Party as of the
end of the preceding fiscal quarter of Borrower in a form satisfactory to the
Agent; (b)_property acquisition pipeline reports as of the end of the
preceding fiscal quarter of Borrower in a form satisfactory to the Agent;
(c)_franchisee loan status reports as of the end of the preceding fiscal
quarter of Borrower in form and substance satisfactory to the Agent; and (d)
property summary reports on the properties of each Loan party as of the end
of the preceding fiscal quarter of Borrower in form and substance
satisfactory to the Agent.
6.1.5 COMPLIANCE CERTIFICATE. Together with each delivery of the
financial statements required by SECTIONS 6.1.1 of this Agreement and the
10-Q Quarterly Report required by SECTION 6.1.2 of this Agreement, furnish to
the Agent a General Compliance Certificate executed by the chief executive or
chief financial officer of the General Partner and the general partner of
MLP, certified as of such date, and confirming that, as of such date:
(a) no Default or Event of Default has occurred, or if any such
matter exists, stating the nature thereof, the period of existence thereof,
and what action Borrower proposes to take with respect thereto;
(b) the warranties and representations set forth in SECTION 5 of this
Agreement are true and correct on and as of such date, except as otherwise
specified in such certificate; and
(c) Borrower is in compliance with all the terms and conditions
contained in this Agreement;
and attached to which certificate shall be a report in form satisfactory to
the Agent prepared by such chief executive or chief financial officer of the
general partner of Borrower and MLP, as the case may be, setting forth
information and calculations that demonstrate compliance (or noncompliance)
with each of the covenants set forth in SECTIONS 6.5, 6.6, 6.7, 6.8, 6.9, and
6.10, of this Agreement.
6.1.6 ADVERSE EVENTS. Promptly inform the Agent of the occurrence
of any Default or Event of Default, or of any other occurrence which has or
could reasonably be expected to have a materially adverse effect upon
Borrower's, General Partner's or any Guarantor's business, properties, or
financial condition or upon Borrower's, General Partner's or
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any Guarantor's ability to comply with its obligations hereunder, including
without limitation, any failure to observe or perform any term, covenant or
condition in any agreement or instrument evidencing, securing or relating to
any of its indebtedness, which is being contested by Borrower.
6.1.7 REPORTS. Promptly furnish to the Agent upon becoming
available a copy of all financial statements, reports, notices, proxy
statements and other communications sent by Borrower or any Guarantor to its
respective partnership interest or unit holders or shareholders, and all
regular and periodic reports filed by Borrower, General Partner or any
Guarantor with any securities exchange, the Securities and Exchange
Commission, or other governmental authority.
6.1.8 MANAGEMENT LETTERS. Furnish to the Agent, promptly upon
receipt thereof, copies of all management letters and other reports of
substance submitted to Borrower, General Partner or any Guarantor by
independent certified public accountants in connection with any annual or
interim audit of the books of Borrower, General Partner or any Guarantor.
6.1.9 OTHER INFORMATION AS REQUESTED. Borrower shall promptly
furnish to the Agent such other information regarding the operations,
business affairs and financial condition of Borrower, General Partner or any
Guarantor as the Agent may reasonably request from time to time, and permit
the Agent, and its respective employees, attorneys and agents, to inspect all
of the books, records and properties of any Loan Party and general partner,
trustee or Subsidiary of any of them and its Subsidiaries at any reasonable
time. References in this SECTION 6 to the "chief executive or financial
officer" shall include the general partners when Borrower is a partnership
and the trustee when the Loan Party is a trust.
6.1.10 LEASES. Borrower shall promptly furnish to the Agent copies
of all leases of Real Property and any and all amendments and modifications
of any lease of Real Property entered into on or after the date hereof
between any Loan Party or general partner or trustee of or Subsidiary thereof
and any Person, under which any Loan Party or general partner or trustee or
Subsidiary thereof is a lessor or lessee.
6.2 INSURANCE. Either directly, or indirectly through assignments of
insurance policies provided by lessees of its properties, or by self
insurance if consented to in writing by the Agent in its sole discretion on a
case by case basis, keep its and each Loan Party's insurable properties
(including but not limited to the Collateral) adequately insured and maintain
(a) insurance against fire and other risks customarily insured against under
an "all-risk" policy and such additional risks customarily insured against by
companies engaged in the same or a similar business to that of Borrower or
its Subsidiaries, as the case may be, (b) necessary worker's compensation
insurance, (c) public liability insurance, and (d) such other insurance as
may be required by law or as may be reasonably required in writing by the
Agent, all of which insurance shall be in such amounts, containing such
terms, in such form, for such purposes, prepaid for such time period, and
written by such companies as may be satisfactory to the Agent; PROVIDED,
HOWEVER, that unless otherwise agreed by the Agent in writing, the Collateral
shall be insured for its replacement cost and all insurance policies shall be
written by a company (or companies) having an A.M. Best rating of "A-" or
better. Borrower will promptly deliver to the Agent evidence satisfactory to
the Agent that such insurance has been so procured and shall deliver evidence
of
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each renewal thereof upon the request of the Agent. If Borrower fails to
maintain satisfactory insurance as herein provided, the Agent shall have the
option to do so, and Borrower agrees to repay the Agent upon demand, with
interest at the Legal Rate, all amounts so expended by the Agent. Borrower
hereby appoints the Agent or any employee or agent of the Agent as Borrower's
attorney-in-fact, which appointment is coupled with an interest and
irrevocable, and authorizes the Agent or any employee or agent of the Agent,
on behalf of Borrower, (a) to adjust and compromise any loss under said
insurance, (b) at any time after the occurrence during the existence of an
Event of Default, to notify the companies that have issued said insurance to
change the address of delivery of Borrower's mail to an address designated by
the Agent, (c) at any time after the occurrence during the existence of an
Event of Default, to open, to receive, open and dispose of all mail addressed
to Borrower, to demand payment and (d) to endorse any check or draft payable
to Borrower in connection with returned or unearned premiums on said
insurance or the proceeds of said insurance, and any amount so collected may
be applied toward satisfaction of the Indebtedness; provided, however, that
the Agent shall not be required hereunder so to act.
6.3 TAXES. Pay promptly and within the time that they can be paid
without late charge, penalty or interest all taxes, assessments and similar
imposts and charges of every kind and nature lawfully levied, assessed or
imposed upon Borrower or any Loan Party or any Subsidiaries of any of them,
and their property, except to the extent being contested in good faith. If
any contested amount exceeds $10,000, upon the Agent's request Borrower shall
escrow funds, post bond, or provide other security, in an amount and manner
satisfactory to the Agent. If Borrower shall fail to pay such taxes and
assessments within the time they can be paid without penalty, late charge or
interest the Agent shall have the option to do so, and Borrower agrees to
repay the Agent upon demand, with interest at the Legal Rate, all amounts so
expended by the Agent. At the request of the Agent or any Bank, Borrower
shall, at Borrower's expense, subscribe to a tax monitoring service
acceptable to the Agent in order to monitor the payment of any such taxes and
assessments and the filing of any liens against the property of Borrower or
any of its Subsidiaries, Borrower agreeing to supply the Agent with copies of
each report delivered to Borrower by such tax monitoring service. As an
alternative to the preceding sentence, Borrower agrees that the Agent itself,
at Borrower's expense, may subscribe to such a tax monitoring service as to
taxes, assessments and liens applicable to Borrower's or any of its
Subsidiaries' property.
6.4 MAINTAIN LIMITED PARTNERSHIP AND BUSINESS. Except as otherwise
consented to in writing by the Agent in its sole discretion, do or cause to
be done all things necessary to preserve and keep in full force and effect
Borrower's and each Loan Party's existence, rights and franchises and comply
with all applicable laws; continue to conduct and operate its and each Loan
Party's and each of their respective Subsidiaries' business substantially as
conducted and operated during the present and preceding calendar year; at all
times maintain, preserve and protect all franchises and trade names and
preserve all the remainder of its and each Loan Party's and each of their
respective Subsidiaries' property and keep the same in good repair, working
order and condition; and from time to time make, or cause to be made, all
needed and proper repairs, renewals, replacements, betterments and
improvements thereto so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
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6.5 MAINTAIN COMBINED TANGIBLE NET WORTH. Maintain at all times (a) a
sum of (i) Combined Tangible Net Worth of Borrower and MLP on a combined
basis plus (ii) the amount of partners' capital returned to its partnership
interest or investment unit holders after September 30, 1996, which is not
less than (b) the sum of (i) $85,000,000 plus (ii) 100% of the net proceeds
of any and all equity offerings (other than equity comprising the purchase
price paid by a Loan Party for Real Property which is included in the
Collateral) that are made after the date of this Agreement of Borrower or MLP
or any Affiliate of either or both of them.
6.6 MAINTAIN COMBINED GAAP PARTNERS' CAPITAL. Maintain at all times (a)
a sum of (i) Combined GAAP Partners' Capital of Borrower and MLP on a
combined basis plus (ii) the amount of partners' capital returned to its
partnership interest or investment unit holders after September 30, 1996,
which is not less than (b) the sum of (i) $100,000,000 plus (ii) 100% of the
net proceeds from any equity offerings (other than equity comprising the
purchase price paid by a Loan Party for Real Property which is included in
the Collateral) that are made on or after the date of this Agreement by
Borrower or MLP or any Affiliate of either or both of them.
6.7 MAINTAIN COMBINED DEBT RATIO. Maintain at all times the ratio of
(a) Combined Debt to (b) the sum of (i) Combined Tangible Net Worth of
Borrower and MLP on a combined basis plus (ii) the amount of partners'
capital returned to its partnership interest or investment unit holders after
September 30, 1996, at not more than 1.50 to 1.0.
6.8 MAINTAIN COMBINED FIXED CHARGE COVERAGE RATIO. Maintain at all
times the ratio of Annualized Combined Adjusted Cash Flow to Combined Fixed
Charges of Borrower and MLP on a combined basis of not less than 2.25 to 1.0.
6.9 MAINTAIN COMBINED TOTAL FUNDED DEBT TO COMBINED TOTAL CAPITALIZATION
RATIO. Maintain at all times the ratio of (a) Combined Total Funded Debt to
(b) the sum of (i) Combined Total Capitalization of Borrower and MLP on a
combined basis plus (ii) the amount of partners' capital returned to its
partnership interest or investment unit holders after September 30, 1996, of
not greater than 0.55 to 1.0.
6.10 MAINTAIN MINIMUM COMBINED CASH FLOW COVERAGE. Maintain at all times
the ratio of (a) Annualized Combined Adjusted Cash Flow to Pro Forma Five
Year Combined Total Funded Debt Amortization of Borrower and MLP on a
combined basis at not less than 0.95 to 1.0 and (b) Annualized Combined
Adjusted Cash Flow to Pro Forma Twenty Year Combined Total Funded Debt
Amortization of Borrower and MLP on a combined basis at not less than 2.00 to
1.0. The historical and prospective Net Income of each Loan Party
attributable to any Real Property of any Loan Party and/or any leases or
rentals thereon that is encumbered by any mortgage, deed of trust, assignment
or other encumbrance by any Person other than or in addition to those in
favor of the Agent securing the Indebtedness, or those in favor of the Agent
securing Term Notes Debt and the Indebtedness, regardless of the record or
contractual priority of such mortgage, deed of trust or other encumbrance,
shall be excluded from the calculation of Combined Cash Flow and Annualized
Combined Adjusted Cash Flow for all purposes of this Agreement (including
without limitation the purposes of determining Borrower's compliance with
this SECTION 6.10).
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6.11 ERISA. (a) At all times meet the minimum funding requirements of
ERISA with respect to Borrower's and each Loan Party's employee benefit plans
subject to ERISA; (b) promptly after Borrower knows or has reason to know (i)
of the occurrence of any event, which would constitute a reportable event or
prohibited transaction under ERISA, or (ii) that the PBGC or Borrower has
instituted or will institute proceedings to terminate an employee pension
plan, deliver to the Agent a certificate of the chief financial officer of
Borrower setting forth details as to such event or proceedings and the action
which Borrower proposes to take with respect thereto, together with a copy of
any notice of such event which may be required to be filed with the PBGC; and
(c) furnish to the Agent (or cause the plan administrator to furnish the
Agent) a copy of the annual return (including all schedules and attachments)
for each plan covered by ERISA, and filed with the Internal Revenue Service
by Borrower not later than ten days after such report has been so filed.
6.12 USE OF LOAN PROCEEDS. Use the proceeds of the Advances and Letters
of Credit hereunder only for the purposes set forth in SECTION 2.14 of this
Agreement.
6.13 COLLATERAL AUDITS. Permit the Agent to conduct audits of the
Collateral and of Borrower's books and records as often as the Agent, in its
credit judgment, deems such audits to be necessary. Upon the Agent's
request, Borrower shall reimburse the Agent for the reasonable costs and
expenses expended by the Agent in connection with such audits.
6.14 LIENS. Promptly notify the Agent of any liens in excess of $10,000
individually or $250,000 in the aggregate of mechanics, materialmen,
carriers, warehousemen or other like statutory or common law liens.
6.15 COPIES OF LEASES. Deliver to the Agent: (a) within thirty (30)
days following the date hereof, copies of all leases of Real Property,
together with any and all amendments and modifications to such leases,
entered into on or before the date hereof between any Loan Party and any
Person, under which such Loan Party is a lessor; and (b) within thirty (30)
days following the entering into thereof, copies of all leases of Real
Property entered into after the date hereof, together with any and all
amendments and modifications to any leases of Real Property entered into
after the date hereof, between any Loan Party and any Person, under which
such Loan Party is a lessor.
6.16 EXECUTION, DELIVERY AND RECORDATION OF LEASE ASSIGNMENTS ON REAL
PROPERTY ACQUIRED IN THE FUTURE. Assign, and cause each Loan Party and
general partner, trustee or Subsidiary thereof to assign, to the Agent for
the benefit of the Agent and the Banks, as additional collateral for the
Indebtedness, all of such Person's right, title and interest in all Real
Property and interests therein acquired by any Person after the date hereof,
and execute and deliver to the Agent for the benefit of the Agent and the
Banks, in form and content acceptable to the Agent and sufficient for filing
and recording with such filing or recording offices as the Agent and the
Banks shall deem appropriate, Lease Assignments covering all of such Real
Property, and deliver to the Agent with respect to all such Real Property (i)
a mortgagee/lender title policy(ies) which satisfies the requirements thereof
in SECTION 6.17 of this Agreement showing that such Person's right, title and
interest therein is not subject to any mortgage, pledge,
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lien, security interest or other encumbrance of any kind or character except
for Permitted Liens, liens in favor of the Bank and other liens which may be
consented to in writing by the Agent and the Banks from time to time, and
(ii) a certificate that such Real Property is not located in an identified
"flood hazard area" in which flood insurance has been made available pursuant
to the National Flood Insurance Reform Act of 1994 and the regulations
thereunder (or, if such Real Property is located in such an identified area,
evidence of such Loan Party having obtained flood insurance with respect
thereto).
6.17 CLOSINGS OF REAL PROPERTY ACQUISITIONS. Conduct all closings of all
purchases or acquisitions of Real Property by any Loan Party through a title
company satisfactory to the Agent, obtain an owner's title policy or
leasehold policy duly issued to any Loan Party by a title insurer
satisfactory to the Agent, and promptly following such closing deliver to the
Agent a true and correct copy of each such owner's title policy or leasehold
policy issued to such Loan Party in connection therewith. For purposes
hereof, Commonwealth Land Title Company, Chicago Title Company, Ticor,
Fidelity National Title Insurance Company, Stewart Title Company and First
American Title Company shall all be deemed acceptable. Such Loan Party shall
also deliver to the Agent as a part of each such closing (i) Lease
Assignments covering each such Real Property purchased or acquired, (ii) a
mortgagee/lender title insurance commitment in form and substance
satisfactory to the Agent and the Banks covering each such Real Property
purchased or acquired and with respect to which all costs of policy issuance
have been paid by Borrower (or other Loan Party), promptly followed by a
policy naming the Agent for the benefit of itself and the Banks as an insured
thereunder, (iii) copies of all leases pertaining to such Real Property, (iv)
a closing statement pertaining to such Real Property purchase or acquisition,
(v) evidence of casualty, liability and other insurance acquired under
SECTION 6.2 of this Agreement with respect to such Real Property or required
under any lease on such Real Property, (vi) the cover sheet of the
environmental site assessment pertaining to such Real Property which
identifies such Real Property and sets forth the conclusion and/or executive
summary of such report, (vii) the flood insurance certificates or evidence of
flood insurance, as the case may be, with respect to such Real Property
described in SECTION 6.16 of this Agreement and (viii) all other agreements,
documents and instruments required by the Agent to create, evidence or
perfect the lien and security interest of itself and the Agent for the
benefit of the Banks on such Real Property.
6.18 EVIDENCE OF AUTHORITY TO CONDUCT BUSINESS. Promptly obtain and
deliver, and cause each Loan Party and general partner, trustee or Subsidiary
thereof to obtain and deliver, to Agent evidence of Borrower's and such other
Person's qualification and good standing to do business in each state where
it now or hereafter does business, except in states where the failure to be
qualified or in good standing could not reasonably be expected to have a
materially adverse effect upon the operations, business, property, assets,
financial condition or credit of such Person.
SECTION 7. NEGATIVE COVENANTS
On a continuing basis from the date of this Agreement until the later of
(a) the Termination Date or (b) when the Indebtedness is paid in full,
Borrower has performed all of its other obligations hereunder and all
commitments and other obligations of the Agent and the
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Banks under the Loan Documents have terminated, Borrower covenants and agrees
that it will not, that it will not permit any Subsidiary to, and that each
Guarantor and each other Loan Party will not:
7.1 DISTRIBUTIONS. Declare or pay during any calendar year any
distribution (whether by reduction of capital or otherwise) with respect to
any of its equity interests in excess of the sum of (A) Net Income, plus (B)
depreciation and amortization, plus (C) reduction in net investment in direct
financing leases, plus (D) provision for writedowns and disposal of Real
Property; PROVIDED, HOWEVER, that in the event that a Default or Event of
Default then exists or would result therefrom, neither Borrower nor MLP shall
declare or pay any distribution (whether by reduction of capital or
otherwise) with respect to any of its equity interests.
7.2 ACQUISITION OF EQUITY INTERESTS. Purchase, redeem, retire or
otherwise acquire any of its general partnership interests or limited
partnership interests (or any units representing the same) of any of its
general partners or limited partners, or make any commitment to do so;
PROVIDED, HOWEVER, that MLP shall be permitted to do so as long as no Default
or Event of Default then exists or would result therefrom.
7.3 LIENS AND ENCUMBRANCES. Create, incur, assume or suffer to exist
any mortgage, pledge, encumbrance, security interest, lien or charge of any
kind upon any of its property or assets (including, without limitation, any
charge upon property purchased or acquired under a conditional sales or other
title retaining agreement or lease required to be capitalized under GAAP)
whether now owned or hereafter acquired other than Permitted Liens.
7.4 INDEBTEDNESS. Incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any
indebtedness or liability for borrowed money, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations, or
any other indebtedness whatsoever, except for (a) the Indebtedness,
(b) Subordinated Debt, (c) existing indebtedness to the extent set forth on
SCHEDULE 5.11 of this Agreement, (d) trade indebtedness incurred and paid in
the ordinary course of business, (e) contingent indebtedness to the extent
permitted by SECTION 7.6 of this Agreement, (f) indebtedness secured by
Permitted Liens, (g) indebtedness of the type and amounts described on
SCHEDULE 7.4, (h) obligations of Borrower or MLP to issue limited partnership
interests of Guarantor as consideration for Borrower's purchase of real
property which do not involve any obligation to pay money, (i) reimbursement
obligations of Borrower under a Letter of Credit, (j) Term Notes Debt and (k)
obligations of any Loan Party to pay a deferred portion down payments and
earnest money deposits, which are disclosed in advance in writing to the
Agent, for the purchase of commercial restaurant properties and which,
together with the portion of such down payments and earnest money deposits
previously paid, do not exceed ten percent (10%) of the proposed purchase
price of such properties (as determined on a property by property basis)
7.5 EXTENSION OF CREDIT. Make loans, advances or extensions of credit
to any Person; PROVIDED, HOWEVER, that as long as no Default or Event of
Default then exists or would result therefrom, Borrower shall be permitted to
make (a) advances in a cumulative aggregate amount not to exceed $7,500,000
for the purpose of repair and refurbishment of the restaurant
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improvements situated on its Real Properties, (b) advances to USRP
Development Company in a cumulative aggregate amount not to exceed
$10,000,000 for the development of Co-Branded Properties projects approved in
writing by the Majority Banks in the Majority Banks' sole discretion
(provided that (I) in the event that Borrower shall have made a written
request to the Agent and each of the Banks for such approval and provided to
them all of the information described in SECTION 4.2.2 (d) of this Agreement
concerning such project, such request shall be deemed approved if the
Majority Banks have not notified the Borrower, orally or in writing, of their
approval or disapproval of such request within five (5) Business Days
following the later of (A) the date upon which all of the Banks have actually
received such request or (B) the date upon which all of the information
described in SECTION 4.2.2(d) shall have been delivered by Borrower to all of
the Banks and the Agent and (II) Borrower's project known as "Hunt-Woodbine"
located at the corner of Loop 820 and Beach Street in Fort Worth, Texas and
Borrower's project known as "Cuellar" located at I-30 and White Hills Drive,
Rockwall, Texas hereby are deemed approved by the Majority Banks), and (c)
down payments and earnest money deposits which are disclosed in advance in
writing to the Agent for the purchase of commercial restaurant properties and
which, together with the deferred portion of such down payments and earnest
money deposits, do not exceed ten percent (10%) of the proposed purchase
price of such properties (as determined on a property by property basis);
PROVIDED, HOWEVER, that any promissory note or other evidence of such
indebtedness and any collateral or security for the same shall be pledged and
assigned to the Agent for the benefit of itself and the Banks in such manner
as the Agent may require.
7.6 GUARANTEE OBLIGATIONS. Guarantee or otherwise, directly or
indirectly, in any way be or become responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of any other
Person, agreement for the furnishing of funds to any other Person through the
furnishing of goods, supplies or services, by way of stock purchase, capital
contribution, advance or loan, for the purpose of paying or discharging (or
causing the payment or discharge of) the indebtedness of any other Person, or
otherwise, except for (a) the endorsement of negotiable instruments by
Borrower in the ordinary course of business for deposit or collection and (b)
the guaranty of royalty and advertising cooperative obligations, in an
aggregate amount not to exceed $500,000 at any time, of an Affiliate under a
franchise agreement to which such Affiliate is a party, provided that the
franchise agreement covers the restaurant situated on Real Property leased by
Borrower to such Affiliate.
7.7 SUBORDINATE INDEBTEDNESS. Subordinate any indebtedness due to it
from a Person to indebtedness of other creditors of such Person.
7.8 PROPERTY TRANSFER, MERGER OR LEASE-BACK. (a) Sell, lease, transfer
or otherwise dispose of in any calendar year properties and assets having an
aggregate value of more than $5,000,000 (whether in one transaction or in a
series of transactions) without the prior written consent of the Majority
Banks; PROVIDED, HOWEVER, that all of the proceeds of all sales, leases,
transfers or other dispositions shall in any event be paid to the Agent for
the ratable benefit of the Banks in repayment of the Advances and Letter of
Credit Exposure then outstanding; (b) except as otherwise consented to in
writing by the Agent and the Majority Banks, change its name, consolidate
with or merge into any other corporation, permit another corporation to merge
into it, acquire all or substantially all the properties or assets of any
other Person, enter into any
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reorganization or recapitalization or reclassify its capital stock or form or
acquire any Subsidiary except a Subsidiary engaged in substantially the same
business as Borrower, provided that such Subsidiary has guaranteed the
Indebtedness and has agreed to abide by such covenants, which contain
substantially the same terms as the warranties and covenants set forth in
SECTIONS 5, 6 and 7 of this Agreement and which are otherwise in form and
substance satisfactory to the Bank; or (c), except as otherwise consented to
in writing by the Agent and the Majority Banks, enter into any sale-leaseback
transaction as a lessee.
7.9 ACQUIRE SECURITIES. Purchase or hold beneficially any stock or
other securities of, or make any investment or acquire any interest
whatsoever in, any other Person, except for (a) certificates of deposit with
maturities of one year or less of United States commercial banks with
capital, surplus and undivided profits in excess of $100,000,000, (b) the
purchase partnership interests and other securities of Persons substantially
all of the business of which is the rental of restaurant real property,
provided that (i) the aggregate amount of such securities owned by Borrower,
Guarantor and the Subsidiaries may not exceed, at any one time $2,000,000,
and (ii) Borrower shall sell or otherwise dispose of each such security
(including a disposition by the purchase or liquidation into Borrower of all
or substantially all of the assets of such Person), within twelve (12) months
after the date of acquisition, (c) instruments issued by the Agent or any of
the Banks, (d) money market instruments, (e) obligations from United States
commercial banks with capital, surplus and undivided profits in excess of
$100,000,000, as a counterparty to a written repurchase agreement obligating
such counterparty to repurchase such obligations not later than fourteen (14)
days after the purchase thereof, (f) mutual funds investing in obligations of
the type described in CLAUSES (e) and (f) and this SECTION 7.9, and (g)
direct obligations of the United States Government maturing within one (1)
year from the date of acquisition thereof.
7.10 PENSION PLAN. (a) Allow any fact, condition or event to occur or
exist with respect to any employee pension or profit sharing plans
established or maintained by it which might constitute grounds for
termination of any such plan or for the court appointment of a trustee to
administer any such plan, or (b) permit any such plan to be the subject of
termination proceedings (whether voluntary or involuntary) from which
termination proceedings there may result a liability of any Loan Party to the
PBGC which, in the opinion of the Agent, will have a materially adverse
effect upon the operations, business, property, assets, financial condition
or credit of any Loan Party.
7.11 MISREPRESENTATION. Furnish the Agent or any Bank with any
certificate or other document that contains any untrue statement of a
material fact or omits to state a material fact necessary to make such
certificate or document not misleading in light of the circumstances under
which it was furnished.
7.12 MARGIN STOCK. Apply any of the proceeds of any Advance or Letter of
Credit Exposure to the purchase or carrying of any "margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or any regulations, interpretations or rulings thereunder.
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7.13 PURCHASE OR ACQUIRE CERTAIN PROPERTIES. Purchase or acquire (a)_any
property(ies) or leasehold interest(s) in a single transaction or series of
related transactions having an aggregate cost to Borrower in excess of
$10,000,000 (exclusive of the portion of such cost that is paid in the form
of partnership equity investment units in MLP) without the prior written
consent of the Agent and the Majority Banks (with consent or notification of
non-consent from the Agent and the Majority Banks to be communicated to
Borrower within ten (10) Business Days following Borrower's written request
therefor to them), unless each of the same at the time of such purchase or
acquisition are occupied by a tenant operating a "Top Twenty Restaurant
Chain" (as determined by the then most recent annual ranking of Nation's
Restaurant News) commercial restaurant thereon; or (b) any leasehold
interest(s) in a single transaction or a series of related transactions in
which all rent and obligations of any Loan Party under the leasehold
interest(s) acquired in such transaction(s) are greater than twenty percent
(20%) of the lease rental income of such Loan Party from the tenant lease(s)
of the restaurants located on such leasehold interests.
7.14 LEASE TERMS AND RENEWALS. Enter into, renew, modify or otherwise
become obligated under any present or future lease (as lessor or lessee)
except on such terms as are made on an arm's length basis, in good faith, and
do not and would not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the business or operations
(financial or otherwise) of any Loan Party.
7.15 AMENDMENT OF PARTNERSHIP AGREEMENT; REMOVAL OF THE GENERAL PARTNER.
Except as otherwise consented to in writing by the Majority Banks, allow or
permit (a) any amendment or modification of Borrower's Partnership Agreement
or MLP's Partnership Agreement in any respect or (b) any removal, addition or
substitution of a general partner in Borrower or MLP.
7.16 LIMITATION OF TENANT FRANCHISEE CONCENTRATIONS. Permit more than
twenty percent (20%) of the number of Real Property locations of the Loan
Parties to be occupied by tenants operating businesses thereon which are not
either (i) restaurants listed as "Top Fifty Chain Restaurant Companies" in
the then most recent ranking published by Technomic or (ii) restaurants
listed as "Top Fifty-Restaurants Only" in the then most recent ranking
published by Nations Restaurant News.
SECTION 8. PROVISIONS REGARDING ENVIRONMENTAL LAWS
8.1 COVENANTS REGARDING ENVIRONMENTAL COMPLIANCE. Borrower hereby
covenants and agrees with the Agent and each of the Banks as follows:
8.1.1 HAZARDOUS SUBSTANCE USE, MANUFACTURE. Borrower shall not
use, generate, manufacture, produce, store, release, discharge, or dispose of
on, under, or about the Real Property or transport to or from the Real
Property any Hazardous Substance, or allow any other person or entity to do
so on the Real Property, except in strict compliance with all applicable laws
(including all applicable Environmental Laws).
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8.1.2 COMPLIANCE WITH ENVIRONMENTAL LAWS. Borrower shall keep and
maintain the Real Property in compliance with, and shall not cause the Real
Property to be in violation of, any applicable Environmental Law.
8.1.3 NOTICES. Borrower shall give prompt written notice to the
Agent of:
(a) any proceeding or written inquiry by any governmental authority
with respect to the presence of any Hazardous Substance on the Real
Property or the migration thereof from or to other property;
(b) all written claims made or threatened by any third party against
Borrower or the Real Property relating to any loss or injury resulting
from any Hazardous Substance;
(c) Borrower's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of the Real Property that would
reasonably be expected to cause the Real Property or any part thereof to
be subject to any material restrictions on the ownership, occupancy,
transferability or use of the Real Property under any applicable
Environmental Law, or to be otherwise subject to any material restrictions
on the ownership, occupancy, transferability or use of the Real Property
under any applicable Environmental Law;
(d) any written notice of violation or complaint from a governmental
authority and relating to an applicable Environmental Law;
(e) any written notices or reports Borrower provides to a
governmental authority relating to instances of non-compliance with an
applicable Environmental Law; and
(f) any written application Borrower provides to a governmental
authority to obtain or amend a permit or approval relating to the
generation, storage, treatment, or disposal of a Hazardous Substance
or air contaminant.
8.1.4 DELIVERY OF PREMISES TO THE BANK. In the event any Lease
Assignment or any mortgage securing the Indebtedness is foreclosed or
Borrower tenders a deed in lieu of foreclosure with respect to any Real
Property, Borrower shall deliver such Real Property to the Agent for the
benefit of itself and each of the Banks free of any and all Hazardous
Substances so that the condition of such Real Property shall not be a
violation of any Environmental Laws.
8.1.5 INDEMNITY. Borrower shall defend, indemnify and hold
harmless the Agent and each of the Banks, its employees, agents, officers,
directors, successors and assigns from and against any and all claims,
demands, penalties, fines, liabilities, settlements, damages, costs or
expenses of whatever kind or nature, including, without limitation,
attorney's and consultant's fees (said attorneys and consultants to be
selected by the Majority Banks), investigation and laboratory fees,
environmental studies required by the Majority Banks (whether prior to
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foreclosure or otherwise), court costs and litigation expenses, any of which
arise out of or are related to: (a) the use, generation, manufacture,
production, storage, presence, disposal, release or threatened release of any
Hazardous Substance on, from or affecting the Real Property or the soil,
water, vegetation, buildings, personal property, persons or animals thereon,
(b) any personal injury (including wrongful death) or property damage (real
or personal) arising out of or related to such Hazardous Substance, (c) any
lawsuit brought or threatened, settlement reached, or governmental order
relating to such Hazardous Substances, (d) the cost of removal of all such
Hazardous Substances from all or any portions of the Real Property, (e)
taking necessary precautions to protect against the release of Hazardous
Substances on or affecting the Real Property, (f) complying with all
Environmental Laws, (g) any violation of Environmental Laws or requirements
of the Agent which are based upon or in any way related to such Hazardous
Substances, and/or (h) the costs of any repair, cleanup or remediation of the
Real Property and the preparation and implementation of any closure, remedial
or other plans required to be undertaken by applicable Environmental Laws.
Upon the Majority Banks' request, Borrower shall execute a separate indemnity
covering the foregoing matters.
8.1.6 REMEDIAL WORK. In the event that any investigation, site
monitoring, containment, cleanup, removal, restoration or other remedial work
of any kind or nature (the "REMEDIAL WORK") is required to be undertaken
under any applicable local, state or federal law or regulation, any judicial
order, or by any governmental entity because of, or in connection with, the
current or reasonably threatened future presence or release of a Hazardous
Substance in or into the air, soil, ground water, surface water or soil vapor
at, on, about, under or within the Real Property (or any portion thereof),
Borrower shall promptly after written demand for performance thereof by
appropriate governmental authorities (or such shorter period of time as may
be required under any applicable law, regulation, order or agreement),
commence and thereafter diligently prosecute to completion, all such Remedial
Work. All Remedial Work shall be performed by contractors selected by
Borrower and approved in advance by the Majority Banks, and under the
supervision of a consulting engineer selected by Borrower and approved by the
Agent (which approval the Agent shall not unreasonably withhold). All costs
and expenses of such Remedial Work shall be paid by Borrower including, but
not limited to, the Agent's reasonable attorneys' fees and reasonable costs
incurred in connection with its monitoring or review of such Remedial Work.
Notwithstanding the foregoing, Borrower shall not be deemed to have breached
this SECTION 8.1.6 if (a) Borrower's noncompliance hereunder resulted from
good faith error or innocent omission, (b) Borrower after obtaining knowledge
of such noncompliance commences and diligently pursues a cure of such breach,
and (c) such noncompliance is cured within ninety (90) Business Days
following Borrower's receipt of notice of such noncompliance from the Agent,
any appropriate governmental authorities or otherwise and such noncompliance
has not resulted in a material adverse effect on the Collateral or Borrower's
business, financial condition or operation.
8.1.7 CERTAIN RIGHTS OF THE BANK. Upon the Agent's or any Bank's
receipt of notice from any source concerning the existence of any Hazardous
Substance or the noncompliance by Borrower or any Real Property with any
Environmental Law, which matter, if true, could result in an order, suit or
other action against Borrower and/or any Real Property and which could, in
the Majority Banks' commercially reasonable discretion, jeopardize Borrower's
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ability to repay the Indebtedness or impair the value of any material portion
of the Collateral, the Majority Banks shall have the right (but not the
obligation) to require a repayment of all or any portion of the Indebtedness
(and a corresponding pro tanto reduction of the Overall Commitment Amount) as
the Majority Banks shall determine, in their sole and absolute discretion,
irrespective of the existence or non-existence of any Default or Event of
Default at such time. The foregoing sentence shall not be deemed to limit
any other rights the Agent may have under this Agreement, any other document,
or at law or in equity. All reasonable costs and expenses incurred by the
Agent in the exercise of any such rights shall become part of the
Indebtedness, shall be secured by the collateral contemplated hereunder, and
shall be payable by Borrower upon demand.
8.2 REPRESENTATIONS AND WARRANTIES RELATING TO ENVIRONMENTAL MATTERS.
Borrower represents and warrants to the Agent and each of the Banks that,
except as disclosed on _ SCHEDULE 8.2 hereto:
8.2.1 NO EXISTING VIOLATION. Neither the Real Property nor
Borrower is in violation of or subject to any existing, pending or, to the
knowledge of Borrower, threatened investigation by any governmental authority
under any Environmental Law.
8.2.2 NO PERMITS REQUIRED. Borrower has not acquired and is not
required by any applicable Environmental Law to obtain any permits or license
to construct or use any improvements, fixtures or equipment forming a part of
the Real Property except such permits or licenses as have been obtained.
8.2.3 PREVIOUS USES. Borrower or its environmental advisors has
made diligent inquiry into previous uses and ownership of the Real Property,
and based upon such inquiry has no knowledge of any Hazardous Substance
disposed of or released on or to the Real Property in any quantity requiring
remediation.
8.2.4 USE BY BORROWER. Borrower's prior, present and intended use
of the Real Property will not result in the disposal or release of any
Hazardous Substance on or to the Real Property except in material compliance
with applicable law.
8.2.5 UNDERGROUND STORAGE. No underground storage tanks, whether
or not containing any Hazardous Substances, are located on or under the Real
Property.
8.3 ENVIRONMENTAL RISK ASSESSMENT. Within thirty (30) days after a
written request therefor by the Agent, Borrower shall deliver to the Agent
and each of the Banks a report prepared at Borrower's cost and expense by an
environmental consultant acceptable to the Majority Banks, detailing the
results of an environmental investigation concerning the Real Property or any
portion thereof designated in such notice, including results of any soil and
ground water samples that may have been taken in connection with such
investigation.
8.4 SURVIVAL OF OBLIGATIONS. The provisions of this SECTION 8 shall be
in addition to any and all other obligations and liabilities Borrower may
have to the Agent and each of the Banks at common law or pursuant to any
other agreement and, notwithstanding anything in
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SECTION 11.13 hereof to the contrary, shall survive (a) the repayment of the
Revolving Credit Note and all other Indebtedness, (b) the satisfaction of all
of Borrower's other obligations hereunder and under the other loan documents,
(c) the discharge of any mortgage which has been or is hereafter granted to
the Agent and any of the Banks, and (d) the foreclosure or acceptance of a
deed in lieu of foreclosure of any mortgage which has been or is hereafter
granted to the Agent or any of the Banks.
SECTION 9. EVENTS OF DEFAULT - ENFORCEMENT -
APPLICATION OF PROCEEDS
9.1 EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
9.1.1 FAILURE TO PAY MONIES DUE. If Borrower shall fail to pay,
within three (3) days of the date when such payment is due, any of the
Indebtedness, including, without limitation, any principal or interest under the
Revolving Credit Note or any taxes, insurance or other amount payable by
Borrower under this Agreement or under any document executed in connection
herewith, or if General Partner and/or any Guarantor shall fail to pay, when
due, any indebtedness, obligation or liability whatsoever of such Person to the
Agent and/or any of the Banks.
9.1.2 MISREPRESENTATION. If any warranty or representation of
Borrower in connection with or contained in this Agreement, or if any financial
data or other information now or hereafter furnished to the Agent and/or any of
the Banks by or on behalf of Borrower, shall prove to be false or misleading in
any material respect.
9.1.3 NONCOMPLIANCE WITH THE BANK AGREEMENTS. If Borrower, General
Partner and/or any Guarantor shall fail to perform in the time and manner
required any of its obligations or covenants under, or shall fail to comply with
any of the provisions of, this Agreement, the Lease Assignment, any Guaranty,
which does not involve the failure to make a payment when due (be it principal,
interest, taxes, insurance or otherwise) and which is not cured by Borrower
within twenty (20) days after the earlier of the date of notice to Borrower by
the Agent and/or any of the Banks of such Default or the date the Agent is
notified, or should have been notified pursuant to Borrower's obligation under
SECTION 6.1.6 hereof, of such Default, provided that with respect to any
noncompliance with SECTION 8 hereof which requires Remedial Work, such twenty
(20) day period shall be extended to such time as is required under SECTION
8.1.6 hereof.
9.1.4 OTHER DEFAULTS. If Borrower, General Partner and/or any
Guarantor shall default in the payment when due of any of its indebtedness
(other than indebtedness owing to the Agent and/or any of the Banks) or in the
observance or performance of any term, covenant or condition in any agreement or
instrument evidencing, securing or relating to such indebtedness, and such
default be continued for a period sufficient to permit acceleration of the
indebtedness, irrespective of whether any such default shall be forgiven or
waived or there has been acceleration by the holder thereof (provided however,
if the Borrower, General Partner or any Guarantor shall give prompt notice of
such default to the Agent under SECTION 6.1.6 hereof,
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together with evidence of the bona fide contest of the same by appropriate
and lawful proceedings and the Agent shall be provided with reasonable
assurances or collateral such that such default will not have a material
adverse effect on the business or operations (financial or otherwise) of the
Borrower, General Partner or any Guarantor or the value of any material
portion of the Collateral then, in that event there shall be no Event of
Default until such time as an adverse final judgment has been entered in the
matter, subject, however, to the provisions of SECTION 9.1.5 below); or
9.1.5 JUDGMENTS. If there shall be rendered against Borrower,
General Partner and/or any Guarantor one or more judgments or decrees
involving an aggregate liability of $250,000 or more, which has or have
become nonappealable and shall remain undischarged, unsatisfied by insurance
and unstayed for more than thirty (30) days, whether or not consecutive; or
if a writ of attachment or garnishment against the property of Borrower,
General Partner and/or any Guarantor shall be issued and levied in an action
claiming $250,000 or more and not released or appealed and bonded/secured in
an amount and manner reasonably satisfactory to the Agent within thirty (30)
days after such issuance and levy.
9.1.6 BUSINESS SUSPENSION, THE BANKRUPTCY, ETC. If Borrower,
General Partner and/or any Guarantor shall voluntarily suspend transaction of
its business; or if Borrower, General Partner and/or any Guarantor shall not
pay its debts as they mature or shall make a general assignment for the
benefit of creditors; or proceedings in the Bankruptcy, or for reorganization
or liquidation of Borrower, General Partner or any Guarantor under the
Bankruptcy Code or under any other state or federal law for the relief of
debtors shall be commenced or shall be commenced against Borrower, General
Partner or any Guarantor and shall not be discharged within thirty (30) days
of commencement; or a receiver, trustee or custodian shall be appointed for
Borrower, General Partner or any Guarantor or for any substantial portion of
its respective properties or assets.
9.1.7 CHANGE OF MANAGEMENT OR OWNERSHIP. If, without the prior
written consent of the Majority Banks, (a) General Partner or a controlling
portion of its voting stock or a substantial portion of its assets comes
under the practical, beneficial or effective control of one or more Persons
other than the existing shareholders of General Partner set forth on SCHEDULE
5.16, whether by reason of death, merger, consolidation, sale or purchase of
stock or assets or otherwise, (b) General Partner and/or any Guarantor
transfers, assigns or pledges any interest, legal or beneficial, in the
interest of such partner in Borrower to any Person other than the Agent for
the benefit of itself and the Banks, (c) a change in Borrower's senior
management occurs which in the Agent's sole judgment could be expected to
adversely affect Borrower's ability to carry on its business as conducted
before such change, (d) General Partner at any time ceases to be or no longer
is the sole general partner of Borrower for any reason whatsoever, (e)
General Partner at any time ceases to be or no longer is the sole General
Partner of MLP for any reason whatsoever, or (f) there exists any general
partner in Borrower or MLP other than General Partner.
9.1.8 INADEQUATE FUNDING OR TERMINATION OF EMPLOYEE BENEFIT PLAN(S)
OR OCCURRENCE OF CERTAIN REPORTABLE EVENTS. If (a) Borrower, General Partner or
any Guarantor
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shall fail to meet its minimum funding requirements under ERISA with respect
to any employee benefit plan established or maintained by it, or if any such
plan shall be subject of termination proceedings (whether voluntary or
involuntary) and there shall result from such termination proceedings a
liability of Borrower, General Partner or any Guarantor to the PBGC which in
the reasonable opinion of the Agent will have a materially adverse effect
upon the operations, business, property, assets, financial condition or
credit of Borrower, General Partner or any Guarantor or (b) there shall
occur, with respect to any pension plan maintained by Borrower, General
Partner or any Guarantor any reportable event (within the meaning of Section
4043(b) of ERISA) which the Agent shall determine constitutes a ground for
the termination of any such plan, and if such event continues for thirty (30)
days after the Agent gives written notice to Borrower, provided that
termination of such plan or appointment of such trustee would, in the opinion
of the Agent, have a materially adverse effect upon the operations, business,
property, assets, financial condition or credit of Borrower, General Partner
or any Guarantor.
9.2 ACCELERATION OF INDEBTEDNESS; REMEDIES. (a) Upon the occurrence of
an Event of Default, all Indebtedness shall be due and payable in full
immediately at the option of the Majority Banks without presentation, demand,
protest, notice of dishonor or other notice of any kind, all of which are
hereby expressly waived. Unless all of the Indebtedness is then immediately
fully paid, the Agent, at the direction of the Majority Banks, shall have and
may exercise any one or more of the rights and remedies for which provision
is made for a secured party under the UCC, any or all Lease Assignments or
other Loan Document or under any other document contemplated hereby or for
which provision is provided by law or in equity, including, without
limitation, the right to take possession and sell, lease or otherwise dispose
of any or all of the Collateral (subject, in regards to any Burger King
Restaurant Location, to any applicable limitations contained in SECTION
9.2(B) of this Agreement) and to set off against the Indebtedness any amount
owing by the Agent and/or any Bank to Borrower and/or any property of
Borrower in its possession. Borrower agrees, upon request of the Agent to
assemble the Collateral and make it available to the Agent at any place
designated by the Agent, as the case may be, which is reasonably convenient
to the Agent, as the case may be, and Borrower. In addition to and not in
limitation of the other provisions of this SECTION 9.2, upon the occurrence
of an Event of Default, the Agent and each of the Banks may, at its option,
terminate its commitment under this Agreement to make Advances.
(b) Except as may otherwise be agreed to or consented to by BKC from time
to time, and only to the extent that such a requirement may exist under the
Borrower's Partnership Agreement, before any foreclosure on any Burger King
Restaurant Location (or other transfer of any Burger King Restaurant Location
occurring in connection with enforcement proceedings by the Agent against
such Burger King Restaurant Location) may be had under any Lease Assignment
covering the same the Agent shall first notify BKC in writing of its intent
to foreclose or effect another transfer and shall first offer such property
to BKC at the price and on the other terms and conditions specified in a
written offer from a prospective purchaser (which may be the Agent and/or any
Bank) in connection with such foreclosure or other transfer. The terms of
this SECTION 9.2(B) shall be deemed to be effective as of the date of the
Original Agreement. In accordance with the Borrower's Partnership Agreement,
Borrower warrants and represents to the Agent and the Banks that the credit
facility contemplated under this Agreement
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and secured by the Collateral (which includes without limitation Burger King
Restaurant Locations) is a bona fide transaction and that the Agent and the
Banks are unrelated to and unaffiliated with BKC, the Managing General
Partner (as such term is defined in Borrower's Partnership Agreement) or any
Affiliate (as such term is defined in Borrower's Partnership Agreement)
thereof.
9.3 ONE OBLIGATION; APPLICATION OF PROCEEDS. All of the Indebtedness,
including the Advances, shall constitute one loan and obligation, secured by
the Agent's and each Bank's lien or security interest in the Collateral and
by all other security interests, mortgages, liens, claims, and encumbrances
now and from time to time hereafter granted from Borrower to the Agent for
the benefit of itself and the Banks. Upon the occurrence of an Event of
Default, the Agent may in its sole discretion apply the Collateral to any
portion of the Indebtedness. The proceeds of any sale or other disposition
of the Collateral authorized by this Agreement shall be applied by the Agent,
first upon all expenses authorized by the UCC or other applicable law or Loan
Document or otherwise in connection with the sale and all reasonable
attorneys' fees and legal expenses incurred by the Agent. The balance of the
proceeds of such sale or other disposition shall be applied in the payment of
the Indebtedness, first to the costs and expenses of the Agent, then to
interest, then to principal, and then to other Indebtedness. The surplus, if
any, shall be paid over to Borrower or to such other Person or Persons as may
be entitled thereto under applicable law. Borrower shall remain liable for
any deficiency, which Borrower shall pay to the Agent and each Bank
immediately upon demand.
9.4 CUMULATIVE REMEDIES. The remedies provided for herein are
cumulative to the remedies for collection of the Indebtedness as provided by
law, in equity or by any mortgage, security agreement or other document
contemplated hereby. Nothing herein contained is intended, nor shall it be
construed, to preclude the Agent or any Bank from pursuing any other remedy
for the recovery of any other sum to which it may be or become entitled for
the breach of this Agreement by Borrower.
9.5 PAYABLE UPON DEMAND. To the extent that any of the Indebtedness is
payable upon demand, nothing contained in this Agreement or any document
contemplated hereby shall be construed to prevent the Agent from making
demand, with or without reason, for immediate payment of all or any part of
such Indebtedness at any time or times, whether or not a Default or an Event
of Default has occurred.
SECTION 10. THE AGENT
10.1 AUTHORIZATION AND ACTION. Each Bank hereby appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement (including, without limitation,
enforcement or collection of the Revolving Credit Note), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks pursuant to
the terms of the Intercreditor Agreement;
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PROVIDED, HOWEVER, that the Agent shall not be required to take any action
which exposes the Agent to personal liability or which is contrary to this
Agreement or applicable law. In addition to and not in limitation of the
foregoing, each Bank hereby specifically appoints and authorizes Agent to act
as agent for and on behalf of such Bank as the Beneficiary under the Lease
Assignments.
10.2 DUTIES AND OBLIGATIONS. The Agent agrees to exercise the same degree
of care in handling its duties under this Agreement as it would normally do with
respect to credits of a comparable size, amount and nature held entirely for its
own account. Neither the Agent nor any of its directors, officers, agents, or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Agent (i) may treat the payee of any Bank as the holder of
such Bank's Pro Rata Share of the Indebtedness unless and until the Agent
receives written notice of the assignment thereof signed by such Bank and the
Agent receives the written agreement of the assignee that such assignee is bound
hereby as it would have been if it had been an original Bank party hereto, in
each case in form reasonably satisfactory to the Agent, (ii) may consult with
legal counsel (including counsel for Borrower), independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts, and (iii) shall incur no liability under or in
respect of this Agreement by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telegram, cable, telex or
facsimile) believed by it to be genuine and signed or sent by the proper party
or parties or by acting upon any representation or warranty of Borrower made or
deemed to be made hereunder. Further, the Agent (A) makes no warranty or
representation to any Bank and shall not be responsible or have any liability to
any Bank for the accuracy or completeness of any statements, warranties or
representations (whether written or oral) made by Borrower in or in connection
with this Agreement the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other instrument or
document furnished pursuant hereto, the existence, validity, enforceability,
effectiveness or priority of any lien or security interest in the Collateral
granted or proposed to be granted under this Agreement, the Lease Agreement, or
any other document, or the value, adequacy or existence of any Collateral, (B)
shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement on the
part of Borrower or to inspect the property (including the books and records) of
Borrower.
10.3 AGENT AND AFFILIATES. With respect to its commitment, the Advances
made by it, the Letters of Credit issued by it, and its Pro Rata Share of the
Indebtedness, the Agent shall have the same rights and powers under this
Agreement as the other Banks and may exercise the same as though it were not
the Agent; and the term "BANK" or "BANKS" shall, unless otherwise expressly
indicated, include the Agent in its capacity as Bank. Comerica and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, Borrower,
all as if Comerica were not the Agent hereunder and without any duty to
account therefor to the Banks, but in the event of such engagement,
additional funds advanced by Comerica under such business outside of the
contemplation of the
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Advances, Letters of Credit and other credit accommodations described in this
Agreement and the Loan Documents shall not be deemed to be part of the
Indebtedness.
10.4 BANK CREDIT DECISION. It is understood and agreed by each Bank
that it has itself been, and will continue to be, solely responsible for
making its own independent appraisal of and investigations into the financial
condition, creditworthiness, condition, affairs, status and nature of
Borrower. Accordingly, each Bank confirms to the Agent that such Bank has not
relied, and will not hereafter rely, on the Agent (i) to check or inquire on
its behalf into the adequacy, accuracy or completeness of any information
provided by Borrower under or in connection with this Agreement or the
transactions herein contemplated (whether or not such information has been or
is hereafter distributed to such Bank by the Agent), or (ii) to assess or
keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of Borrower. Each Bank acknowledges
that a copy of this Agreement and a copy of the Exhibits hereto have been
made available to it and to its individual legal counsel for review and such
Bank acknowledges that it is satisfied with the form and substance of this
Agreement and the Exhibits hereto.
10.5 INDEMNIFICATION. The Banks agree to indemnify the Agent (to the
extent not reimbursed by Borrower), ratably according to their respective Pro
Rata Share, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgment, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Agent under this
Agreement, provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, each Bank agrees to reimburse the Agent promptly upon demand for
its ratable share of any reasonable out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
preservation of any rights of the Agent or the Banks under, or the
enforcement of, or legal advice in respect of rights or responsibilities
under, this Agreement, to the extent that the Agent is not reimbursed for
such expenses by Borrower.
10.6 SUCCESSOR AGENT. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and Borrower. If no
successor Agent shall have been appointed by the Majority Banks, and shall have
accepted such appointment, within sixty (60) days after the retiring Agent's
giving of notice of resignation, then the retiring Agent may, on behalf of the
Banks, appoint Compass as successor Agent (or if Compass does not accept such
appointment, another successor Agent, which shall be either a Bank or a bank
organized under the laws of the United States or of any state thereof, or any
affiliate of such bank, and having a combined capital and surplus of at least
$50,000,000). Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement arising after the date of such acceptance. After any retiring
Agent's resignation hereunder as Agent, the
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provision of this SECTION 10 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
10.7 EXCHANGE OF INFORMATION. Each Bank and the Agent shall freely
exchange with the other(s) of them any information relating to the condition,
financial or otherwise, of any Loan Party, and Borrower hereby consents any
and all prior, present or future such exchanges.
10.8 BENEFIT OF THE AGENT AND THE BANKS ONLY. The terms and provisions of
this SECTION 10 are for the sole and exclusive benefit of the Agent and the
Banks, and not for the benefit of the any Loan Party or any other person. The
provisions of this SECTION 10 may be modified and amended by the unanimous
consent of the Agent and the Banks and the consent of Borrower shall not be
required for any such modification or amendment.
SECTION 11. MISCELLANEOUS
11.1 CERTAIN RELEASES OF SPECIFIC REAL PROPERTY COLLATERAL. Upon the
request of Borrower, the Agent and each of the Banks will, so long as there
exists no Default or Event of Default, execute in connection with Borrower's
sales of real property permitted under SECTION 7.8(A) of this Agreement releases
of such property from the lien and encumbrance of the Lease Agreement covering
such property, PROVIDED THAT (a) each such property to be released is being sold
in the ordinary course of business by Borrower to BONA FIDE unrelated third
parties, (b) either (i) such property is being replaced with substantially
equivalent Real Property with a substantially equivalent stream of rent payments
of similar credit quality or (ii) the sale of such property is for cash and the
proceeds of the sale, net only of reasonable seller's closing costs, are applied
by Borrower as a payment on the Advances, (c) the property to be released
consists of the entire parcel or parcels of property acquired and is not a mere
portion thereof, and (d) has submitted to the Agent properly prepared release
documents in a form satisfactory to the Agent, and with respect to any new
parcel described in CLAUSE (b)(i) hereof, properly prepared Lease Assignments
(or other agreements, documents and instruments satisfactory to the Agent in its
sole discretion) for such parcel, the warranty deed and closing statement for
such property or properties, and such other information as the Agent shall
reasonably request.
11.2 INDEPENDENT RIGHTS. No single or partial exercise of any right, power
or privilege hereunder, or any delay in the exercise thereof, shall preclude
other or further exercise of the rights of the parties to this Agreement.
11.3 COVENANT INDEPENDENCE. Each covenant in this Agreement shall be
deemed to be independent of any other covenant, and an exception or illegality
in one covenant shall not create an exception or illegality in another covenant.
11.4 WAIVERS AND AMENDMENTS. No forbearance on the part of the Agent or
any of the Banks in enforcing any of its rights under this Agreement, nor any
renewal, extension or rearrangement of any payment or covenant to be made or
performed by Borrower hereunder, shall constitute a waiver of any of the terms
of this Agreement or of any such right. No amendment or waiver of any provision
of this Agreement or any other Loan Document, nor
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consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Majority
Banks and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; PROVIDED, HOWEVER,
that any modification of, or waiver of compliance with any of the provisions
of, this SECTION 11.4 or the Indebtedness or any terms affecting the maturity
of or any other dates for payment of the amounts of any Indebtedness, the
Advances, interest on the Advances, or the release of any Collateral (except
to the extent contemplated hereunder), the Revolving Credit Note or the
Indebtedness shall require the written agreement of the Agent and each of the
Banks.
11.5 GOVERNING LAW. This Agreement, and each and every term and provision
hereof, shall be governed by and construed in accordance with the internal law
of the State of Texas. If any provisions of this Agreement shall for any reason
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision hereof, but this Agreement shall be construed as if
such invalid or unenforceable provisions had never been contained herein.
11.6 SURVIVAL OF WARRANTIES, ETC. All of Borrower's covenants,
agreements, representations and warranties made in connection with this
Agreement and any document contemplated hereby shall survive the borrowing
and the delivery of the Revolving Credit Note hereunder and shall be deemed
to have been relied upon by the Agent and each of the Banks, notwithstanding
any investigation heretofore or hereafter made by the Agent or any of the
Banks. All statements contained in any certificate or other document
delivered to the Agent or any of the Banks at any time by or on behalf of
Borrower pursuant hereto or in connection with the transactions contemplated
hereby shall constitute representations and warranties by Borrower in
connection with this Agreement.
11.7 FURTHER ASSURANCES. Borrower agrees, at its cost and expense, to
execute and deliver, and to cause each of its Subsidiaries and Affiliates to
execute and deliver, all further instruments and documents (including without
limitation any security agreement or fee or leasehold mortgage or deed of
trust or assignment of leases or rents or any modifications to any existing
mortgages and Lease Assignments as are necessary to reflect that the
Indebtedness under this Agreement is a modification and extension of the
indebtedness, liabilities and obligations arising under and contemplated by
the Original Agreement in form and substance satisfactory to the Agent), and
take all further action, that may be necessary or appropriate, or that the
Agent or any of the Banks may request, in order to perfect or protect any
lien or security interest granted or purported to be granted under the Lease
Assignment or any other Loan Documents or with respect to any other
Collateral and any other property (whether real, personal or mixed) owned or
leased by Borrower or any of its Subsidiaries or Affiliates, now or in the
future, that the Agent or the Majority Banks may specify.
11.8 COSTS AND EXPENSES. Borrower agrees that it will reimburse the Agent,
upon demand, for all costs and expenses incurred by it in connection with the
preparation or making of this Agreement, the other Loan Documents and the other
documents contemplated hereby, and of any amendments, modifications, waivers or
consents with respect to this Agreement, the other Loan Documents or the other
documents contemplated hereby. Borrower agrees that it will reimburse the Agent
and/or and each of the Banks, upon demand, for all costs and expenses
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incurred by any of them in connection with (a) collecting or attempting to
collect the Indebtedness or any part thereof; (b) maintaining or defending
the Bank's security interests or liens (or the priority thereof); (c) the
enforcement of any of their rights or remedies under this Agreement or the
other documents contemplated hereby; and/or (d) any other matters or
proceedings arising out of or in connection with any lending arrangement
between the Agent and/or any of the Banks and Borrower, which costs and
expenses include, without limitation, payments made by the Agent and/or any
of the Banks for taxes, insurance, assessments, or other costs or expenses
which Borrower is required to pay under this Agreement, any of the other Loan
Documents or any of the other documents contemplated hereby; reasonable
expenses related to the examination and appraisal of the Collateral;
reasonable audit expenses; court costs and reasonable attorneys' fees
(whether in-house or outside counsel is used, whether legal assistants are
used, and whether such costs are incurred in formal or informal collection
actions, federal bankruptcy proceedings, probate proceedings, on appeal or
otherwise); and all other costs and expenses of the Agent incurred in
connection with any of the foregoing. All of such costs and expenses of the
Agent and each of the Banks shall become part of the Indebtedness and shall
be secured by the Collateral. Without limiting any of the foregoing, the
Agent or any of the Banks may, at any time or times, in its sole discretion
(without any obligation to do so), without waiving or releasing any
obligations, liability or duty of Borrower under this Agreement or the other
Loan Documents, or any Event of Default, (i) make any payment for taxes,
insurance, assessments, or other costs or expenses which Borrower or any Loan
Party is required to pay under this Agreement, any of the other Loan
Documents or any of the other documents contemplated hereby, (ii) pay when
due, acquire or accept an assignment of any Lien or claim asserted by any
Person against any of the Collateral and/or (iii) receive, and require the
right to receive, notice and an opportunity to cure any default under any
document or instrument encumbering or affecting all or any part of the
Collateral (and Borrower, Guarantor, General Partner and each other Loan
Party shall execute and provide, and shall cause to be executed and provided,
documentation reasonably acceptable to the Agent creating such rights to
notice and opportunity to cure). All sums paid by the Agent or any such Bank
in respect thereof and all costs, fees and expenses, including, without
limitation, attorney's fees and court costs, which are incurred by the Agent
or any such Bank on account thereof, shall be payable upon demand, by
Borrower to the Agent for the ratable benefit of itself and such Banks, as
the case may be, together with interest accruing at the Default Rate from the
date of demand until paid and shall be secured by the Collateral. Neither the
Agent nor any Bank shall be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto or for
any diminution in the value thereof, or for any act or default of any
warehouseman, carrier, forwarding agency, or other person whomsoever, but the
same shall be at Borrower's sole risk.
11.9 PAYMENTS ON SATURDAYS, ETC. Whenever any payment to be made
hereunder shall be stated to be due on a Saturday, Sunday or any other day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension, if any, shall be included in computing
interest in connection with such payment.
11.10 RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Event of Default the Agent and each Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time
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or demand, provisional or final) at any time held and other indebtedness at
any time owing by the Agent and/or such Bank to or for the credit or the
account of Borrower against any and all of the obligations of Borrower now or
hereafter existing under any Loan Document, irrespective of whether or not
the Agent or such Bank shall have made any demand under such Loan Document
and although such deposits, indebtedness or obligations may be unmatured or
contingent. Agent and such Bank agree promptly to notify Borrower after any
such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
the Agent and Banks under this SECTION 11.10 are in addition to other rights
and remedies (including, without limitation, other rights of set-off) which
the Agent and the Banks may have. In the event of any such set-off the Bank
or the Agent setting-off such amount shall promptly remit the proportionate
share of such sum to the other Banks in accordance with their respective Pro
Rata Share.
11.11 BINDING EFFECT; SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a)
This Agreement shall be binding upon and inure to the benefit of
Borrower, the Agent and the Banks and their respective successors
and assigns, except that Borrower shall not have the right to
assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Majority Banks.
(b) Each Bank shall have the right at any time, without the
consent of Borrower or any other person, to assign, negotiate,
hypothecate, or grant participations in this Agreement or in any of
its commitments, Advances, rights and security under this Agreement
and any of the other Loan Documents to either one or more of its
affiliates which is a commercial banking or financial institution
or to one or more of the Banks, and in the event of the exercise of
such right shall promptly notify the Agent and the other Banks
thereof.
(c) Each Bank shall have the right at any time, to assign,
negotiate, or hypothecate this Agreement or any of its commitments,
Advances, rights and security under this Agreement and any of the
other Loan Documents to any other commercial banking or financial
institution; PROVIDED, HOWEVER, that (a) such Bank so assigning,
negotiating, or hypothecating this Agreement shall promptly notify
the Agent and the other Banks thereof and obtain the prior written
consent of the Agent thereto and (b) the Commitment Amount being
assigned by such Bank shall not be less than the lesser of (i)
$10,000,000 or (ii) the entire Commitment Amount of such Bank.
(d) Each Bank assigning or transferring any of its
commitments, Advances, rights and security under this Agreement or
any of the other Loan Documents shall, promptly upon request by the
Agent, execute and deliver such documents and instruments
reasonably requested by the Agent (collectively, a "BANK
SUPPLEMENT") to evidence such assignment or transfer and to
substitute the assignee or transferee as a Bank on all of the Loan
Documents. Borrower hereby acknowledges and agrees that any
assignment or transfer described in this SECTION 11.11 will give
rise to a direct obligation of Borrower to the buyer, assignee, or
transferee, as the case may be, and such person shall be considered
a Bank and rely on, and possess all rights under, all opinions,
certificates or other
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<PAGE>
instruments delivered under or in connection with this Agreement or any
other Loan Document. Borrower shall accord full recognition to any
such assignment or transfer, and all rights and remedies of such
Bank in connection with the interest so assigned shall be as fully
enforceable by such assignee as they were by the assignor Bank
thereof before such assignment.
(e) The Agent shall receive, in connection with each such
agreement or transfer, a $2,500 processing and recordation fee
payable by the assignee or transferee, as the case may be.
(f) Additionally, each Bank shall have the right to sell or
otherwise grant participations in the Agreement or in any of its
commitments, Advances, Revolving Credit Note, rights and security
under this Agreement and any of the other Loan Documents to any
other commercial banking or financial institution, PROVIDED THAT:
(i) such transferor Bank shall promptly notify Agent of the sale or
grant of such participation and of the identity of such
participant, (ii) such transferor Bank's obligations under this
Agreement (including, without limitation, its commitments
hereunder) shall remain unchanged, (iii) such transferor Bank shall
remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) such transferor Bank shall
remain the holder of its Pro Rata Share of the Revolving Credit
Note for all purposes of this Agreement, (v) Borrower, the Agent
and the other Banks shall continue to deal solely and directly with
such transferor Bank in connection with such transferor Bank's
rights and obligations under this Agreement, and (vi) such
participant under any such participation shall not be in privity of
contract with Borrower, the Agent and the Banks (other than the
Bank from whom the participant obtained such participation) and
shall not have any right to deal directly with Borrower, the Agent
or such other Banks in connection with any approval of any
amendment or waiver of any provision of this Agreement or any other
Loan Document or approval of any consent to any departure therefrom
by any party.
(g) In connection with any proposed assignment, negotiation,
hypothecation or granting of a participation, the Agent and any
such Bank or Banks, as the case may be, may disclose to the
proposed assignee or participant any information that Borrower is
required to deliver to the Agent and/or the Banks pursuant to this
Agreement or the other Loan Documents, and Borrower hereby agrees
to cooperate fully with the Agent and the Banks, as the case may
be, in providing any such information to any proposed assignee or
participant.
11.12 MAINTENANCE OF RECORDS. Borrower will keep all of its records
concerning its business operations and accounting at its principal place of
business. Borrower will give the Bank prompt written notice of any change in
its principal place of business, or in the location of its records.
11.13 NOTICES. All notices and communications provided for herein or in
any document contemplated hereby or required by law to be given shall be in
writing (unless expressly provided to the contrary) and, if personally
delivered, effective when delivered at the address
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<PAGE>
below or, in the case of mailing, effective two days after sending by
first class mail, postage prepaid, addressed as follows, or to such
other address as a party shall have designated to the other in
writing in accordance with this section, except that notices to the
Agent and/or the Banks pursuant to the provisions of SECTION 2
shall not be effective until received by the Agent and/or Banks, as
the case may be:
If to Borrower: U.S. Restaurant Properties Operating L.P.
5310 Harvest Hill Road
Suite 270, L.B. 168
Dallas, Texas 75230
Attn: Robert J. Stetson and Fred H. Margolin
with a copy to: Middleberg Riddle & Gianna, L.L.P.
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
Attn: Richard S. Wilensky, Esq.
If to the Agent or Comerica: Comerica Bank-Texas
P. O. Box 650282
Dallas, Texas 75262-0282
Attn: Gary L. Emery
with a copy to: Hughes & Luce, L.L.P.
1717 Main Street, Suite 2800
Dallas, Texas 75201
Attn: James C. Chadwick, Esq.
if to Compass: Compass Bank
8080 N. Central Expressway, Suite 370
Dallas, Texas 75206
Attn: John H. Reichenbach
if to LaSalle: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attn: Douglas J. Lovette
if to First American: First American Bank Texas, SSB
14651 Dallas Parkway, Suite 400
Dallas, Texas 75240
Attn: Jeffrey Schultz
65
<PAGE>
with a copy to: Mark A. Mesec & Associates
14651 Dallas Parkway, Suite 400
Dallas, Texas 75240
Attn: Mark A. Mesec, Esq.
if to Guaranty Federal: Guaranty Federal Bank, F.S.B.
8333 Douglas Avenue
Dallas, Texas 75225
Attn: Bruce G. Leib
and, if to a Bank other than Comerica, at the address of such Bank set forth on
the most recent Bank Supplement to which such Bank is a party, or, as to each
party, at such other address as shall be designated by such party in a written
notice to the other party. The giving of at least five (5) days notice before
the Agent or any Bank shall take any action described in any notice shall
conclusively be deemed reasonable for all purposes; provided, that this shall
not be deemed to require the Agent or any Bank to give five (5) days notice or
any notice if not specifically required in this Agreement.
11.14 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures were upon the same
instrument.
11.15 HEADINGS. Article and section headings in this Agreement are
included for the convenience of reference only and shall not constitute a part
of this Agreement for any purpose.
11.16 RELEASE AND DISCHARGE. Upon full payment of the Indebtedness
(including without limitation all Advances and all Letter of Credit Exposure),
performance by Borrower of all its other obligations hereunder and all
commitments and other obligations of the Agent and the Banks under the Loan
Documents having terminated, except as otherwise expressly provided herein, the
parties shall thereupon automatically each be fully, finally and forever
released and discharged from any claim, liability or obligation in connection
with this Agreement and the other documents contemplated hereby.
11.17 INCONSISTENCY WITH OTHER AGREEMENTS. To the extent any term or
provision contained in this Agreement shall be inconsistent with any provision
in any other document or instrument executed in connection herewith, this
Agreement shall control.
11.18 RELEASE. BORROWER AND GUARANTOR HEREBY VOLUNTARILY AND KNOWINGLY
RELEASE AND FOREVER DISCHARGE THE AGENT AND EACH OF THE BANKS, ITS PREDECESSORS,
AGENTS, EMPLOYEES, ATTORNEYS, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS,
DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES
WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR
UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING
IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AGREEMENT IS EXECUTED, WHICH
66
<PAGE>
BORROWER AND GUARANTOR, INDIVIDUALLY OR COLLECTIVELY, MAY NOW OR HEREAFTER HAVE
AGAINST THE AGENT AND EACH OF THE BANKS, ITS PREDECESSORS, AGENTS, EMPLOYEES,
ATTORNEYS, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY ADVANCES, ADVANCES, LETTERS OF CREDIT OR OTHER
INDEBTEDNESS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING,
TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST
LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE
AGREEMENT OR OTHER TRANSACTION DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF
THIS AGREEMENT.
11.19 DTPA WAIVER. BORROWER HEREBY WAIVES ALL OF ITS RIGHTS UNDER THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ.,
TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWER'S OWN
SELECTION, BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. BORROWER EXPRESSLY
WARRANTS AND REPRESENTS TO THE AGENT AND EACH OF THE BANKS THAT BORROWER
(A)_IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO THE
AGENT AND EACH OF THE BANKS AND (B) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
11.20 WAIVER OF JURY TRIAL. BORROWER, THE AGENT AND EACH OF THE BANKS
HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY AND ALL
ACTIONS OR PROCEEDINGS AT ANY TIME IN WHICH BORROWER AND THE AGENT OR ANY OF THE
BANKS ARE PARTIES ARISING OUT OF THIS AGREEMENT OR THE OTHER DOCUMENTS
CONTEMPLATED HEREBY. BORROWER HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL
COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.21 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER "LOAN
AGREEMENTS" (AS DEFINED IN SECTION 26.02(a)(2) OF THE TEXAS BUSINESS & COMMERCE
CODE, AS AMENDED) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THIS
AGREEMENT AND THE OTHER WRITTEN LOAN AGREEMENTS MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE>
11.22 AMENDMENT AND RESTATEMENT. This Agreement and the financing
commitments set forth herein constitute an amendment, modification and
restatement, but not an extinguishment or novation, of the Original Agreement
and the financing commitments set forth therein, the interest in the Original
Agreement of Comerica thereunder having assigned to Comerica and Compass
without recourse or warranty of any kind pursuant to the Assignment
Agreement. This Agreement and the other Documents are not intended as, and
shall not be construed as, a release, impairment or novation of the
indebtedness, liabilities and obligations of Borrower or any of the other
Loan Parties under the Original Agreement and the other agreements, documents
and instruments executed in connection therewith or relating thereto or the
liens and security interests granted therein, all of which liens and security
interests are hereby modified and affirmed. With respect to matters relating
to the period of this Agreement prior to the date hereof, all of the
provisions of the Original Agreement are hereby ratified and confirmed, and
shall remain in full force and effect; PROVIDED, HOWEVER, that with respect
to the period prior to the date hereof, all parties hereto waive all prior
defaults under the Original Agreement as to which Borrower has notified
Comerica in writing prior to the date hereof. The Original Agreement, as
modified by the provisions of this Agreement, shall be construed as one
agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, Borrower and the Banks have caused this Agreement
to be executed in Dallas, Texas by their duly authorized officers as of the
day and year first written above.
BORROWER:
U.S. RESTAURANT PROPERTIES
OPERATING L.P.
By: U.S. Restaurant Properties, Inc.,
its general partner
By: /s/ Fred H. Margolin
-------------------------------
Fred H. Margolin
Secretary
COMERICA:
Commitment Amount: $20,000,000.00 COMERICA BANK -TEXAS
By: /s/ Gary L. Emery
-------------------------------
Gary L. Emery
Vice President
COMPASS:
Commitment Amount: $20,000,000.00 COMPASS BANK, formerly known as
Compass Bank-Dallas
By: /s/ John H. Reichenbach
-------------------------------
John H. Reichenbach
Senior Vice President
[Signature Page to Second Amended and Restated Secured Loan Agreement dated as
of December 23, 1996, executed by and among Compass Bank, LaSalle National Bank,
First American Bank Texas, SSB, Guaranty Federal Bank, F.S.B., Comerica Bank
- -Texas, individually, and Comerica Bank -Texas, as Agent for itself and the
foregoing financial institutions]
<PAGE>
LASALLE:
Commitment Amount: $15,000,000.00 LASALLE NATIONAL BANK
By: /s/ Douglas J. Lovette
--------------------------------
Douglas J. Lovette
First Vice President
FIRST AMERICAN:
Commitment Amount: $20,000,000.00 FIRST AMERICAN BANK TEXAS, SSB
By: /s/ Jeffrey Schultz
--------------------------------
Jeffrey Schultz
Assistant Vice President
GUARANTY FEDERAL:
Commitment Amount: $20,000,000.00 GUARANTY FEDERAL BANK, F.S.B.
By:/s/ Bruce G. Leib
--------------------------------
Bruce G. Leib
Vice President
AGENT:
COMERICA BANK-TEXAS, as Agent
By: /s/ Gary L. Emery
--------------------------------
Gary L. Emery
Vice President
[Signature Page to Second Amended and Restated Secured Loan Agreement dated as
of December 23, 1996, executed by and among Compass Bank, LaSalle National Bank,
First American Bank Texas, SSB, Guaranty Federal Bank, F.S.B., Comerica Bank
- -Texas, individually, and Comerica Bank -Texas, as Agent for itself and the
foregoing financial institutions]
<PAGE>
LIST OF EXHIBITS
EXHIBIT A-1 - Form of Advance Compliance Certificate (Acquisition Advance)
EXHIBIT A-2 - Form of Advance Compliance Certificate (Letter of Credit
Advance)
EXHIBIT A-3 - Form of Advance Compliance Certificate (Working Capital
Advance)
EXHIBIT A-4 - Form of Advance Compliance Certificate (Development Advance)
EXHIBIT B-1 - Form of Borrowing Notice (Acquisition Advance)
EXHIBIT B-2 - Form of Borrowing Notice (Letter of Credit Advance)
EXHIBIT B-3 - Form of Borrowing Notice (Working Capital Advance)
EXHIBIT B-4 - Form of Borrowing Notice (Development Advance)
EXHIBIT C - Form of Revolving Credit Note
EXHIBIT D - Form of Lease Assignment
EXHIBIT E - Form of Opinion of Counsel
EXHIBIT F - Form of Guaranty
EXHIBIT G - Form of General Compliance Certificate
LIST OF SCHEDULES
SCHEDULE 1.1 - List of Real Property
SCHEDULE 5.2 - UCC Records and Property Records
SCHEDULE 5.5 - Permitted Liens
SCHEDULE 5.11 - Existing Indebtedness
SCHEDULE 5.12 - Material Agreements
SCHEDULE 5.16 - Subsidiaries
SCHEDULE 5.19 - Outstanding Principal Balance of Indebtedness Under Original
Agreement
SCHEDULE 7.4 - Permitted Indebtedness
SCHEDULE 8.2 - Environmental Disclosures
71
<PAGE>
Schedules and Exhibits Omitted
<PAGE>
U.S. RESTAURANT PROPERTIES OPERATING L.P.
---------------------------------------------
NOTE PURCHASE AGREEMENT
---------------------------------------------
DATED AS OF JANUARY 31, 1997
$12,500,000
8.06% SERIES A SENIOR SECURED GUARANTIED NOTES DUE JANUARY 31, 2000
$27,500,000
8.30% SERIES B SENIOR SECURED GUARANTIED NOTES DUE JANUARY 31, 2002
GUARANTIED BY:
U.S. RESTAURANT PROPERTIES MASTER L.P.
U.S. RESTAURANT PROPERTIES BUSINESS TRUST I
U.S. RESTAURANT PROPERTIES BUSINESS TRUST II
USRP (WEST VIRGINIA) PARTNERS, L.P.
RESTAURANT RENOVATION PARTNERS, L.P.
U.S. RESTAURANT PROPERTIES DEVELOPMENT, L.P.
USRP (LINCOLN), LTD.
USRP (NORMAN), LTD.
USRP (CAROLINA), LTD.
<PAGE>
TABLE OF CONTENTS
(NOT A PART OF THE AGREEMENT)
PAGE
1. PURCHASE AND SALE OF NOTES. . . . . . . . . . . . . . . . 2
1.1 The Notes. . . . . . . . . . . . . . . . . . . . . . 2
1.2 The Closing. . . . . . . . . . . . . . . . . . . . . 2
1.3 Purchase for Investment; ERISA.. . . . . . . . . . . 3
1.4 Failure to Tender, Failure of Conditions.. . . . . . 5
1.5 Expenses.. . . . . . . . . . . . . . . . . . . . . . 5
2. WARRANTIES AND REPRESENTATIONS. . . . . . . . . . . . . . 5
2.1 Nature of Business.. . . . . . . . . . . . . . . . . 6
2.2 Financial Statements; Indebtedness; Material
Adverse Change. . . . . . . . . . . . . . . . . . . 6
2.3 Subsidiaries and Affiliates. . . . . . . . . . . . . 7
2.4 Title to Properties; Patents, Trademarks, etc. . . . 7
2.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Pending Litigation.. . . . . . . . . . . . . . . . . 8
2.7 Full Disclosure. . . . . . . . . . . . . . . . . . . 9
2.8 Organization and Authority.. . . . . . . . . . . . . 9
2.9 Charter Instruments, Other Agreements. . . . . . . . 11
2.10 Restrictions on Company and Guarantors.. . . . . . . 11
2.11 Compliance with Law. . . . . . . . . . . . . . . . . 11
2.12 ERISA, etc.. . . . . . . . . . . . . . . . . . . . . 12
2.13 Environmental Compliance.. . . . . . . . . . . . . . 13
2.14 Sale of Notes is Legal and Authorized; Obligations are
Enforceable. . . . . . . . . . . . . . . . . . . . . 14
2.15 Governmental Consent; Certain Laws.. . . . . . . . . 15
2.16 Private Offering of Notes. . . . . . . . . . . . . . 15
2.17 No Defaults under Notes. . . . . . . . . . . . . . . 15
2.18 Use of Proceeds of Notes.. . . . . . . . . . . . . . 16
2.19 Company and Guarantors.. . . . . . . . . . . . . . . 16
2.20 Solvency.. . . . . . . . . . . . . . . . . . . . . . 16
2.21 Insurance. . . . . . . . . . . . . . . . . . . . . . 17
2.22 True and Correct Copies. . . . . . . . . . . . . . . 17
3. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . 17
3.1 Opinions of Counsel. . . . . . . . . . . . . . . . . 17
3.2 Warranties and Representations True; Compliance
with Financing Documents. . . . . . . . . . . . . . 18
3.3 Officers' Certificates.. . . . . . . . . . . . . . . 18
3.4 Legality.. . . . . . . . . . . . . . . . . . . . . . 19
3.5 Private Placement Numbers. . . . . . . . . . . . . . 19
3.6 Expenses.. . . . . . . . . . . . . . . . . . . . . . 19
3.7 Other Purchasers.. . . . . . . . . . . . . . . . . . 19
3.8 Bank Credit Agreement. . . . . . . . . . . . . . . . 19
3.9 Intercreditor/Collateral Agency Agreement. . . . . . 19
3.10 Leases.. . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Security Documents; Perfection.. . . . . . . . . . . 20
3.12 Compliance with this Agreement.. . . . . . . . . . . 20
3.13 Proceedings Satisfactory.. . . . . . . . . . . . . . 20
4. PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 Payment of Notes at Maturity.. . . . . . . . . . . . 21
4.2 Optional Prepayments.. . . . . . . . . . . . . . . . 21
4.3 Offer to Prepay upon Change in Control.. . . . . . . 22
4.4 Offer to Prepay upon Investment Grade Rating . . . . 23
4.5 Pro Rata Payments. . . . . . . . . . . . . . . . . . 25
4.6 Notation of Notes on Prepayment. . . . . . . . . . . 25
4.7 No Other Optional Prepayments. . . . . . . . . . . . 26
4.8 Interest Payments. . . . . . . . . . . . . . . . . . 26
4.9 Payments on Notes. . . . . . . . . . . . . . . . . . 26
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5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES;
LIMITATION ON TRANSFER. . . . . . . . . . . . . . . . . . 27
5.1 Registration of Notes. . . . . . . . . . . . . . . . 27
5.2 Exchange of Notes. . . . . . . . . . . . . . . . . . 27
5.3 Replacement of Notes.. . . . . . . . . . . . . . . . 28
5.4 Issuance Taxes.. . . . . . . . . . . . . . . . . . . 28
5.5 Execution and Delivery of Notes by Guarantors. . . . 28
6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Payment of Taxes and Claims. . . . . . . . . . . . . 28
6.2 Maintenance of Properties; Existence; etc. . . . . . 29
6.3 Payment of Notes and Maintenance of Office.. . . . . 30
6.4 Fixed Charges Coverage Ratio.. . . . . . . . . . . . 30
6.5 Consolidated Partners' Capital; Distributions. . . . 30
6.6 Maintenance of Consolidated Funded Debt. . . . . . . 32
6.7 Merger, Consolidation, etc.. . . . . . . . . . . . . 32
6.8 Sale of Assets, Etc. . . . . . . . . . . . . . . . . 33
6.9 Liens. . . . . . . . . . . . . . . . . . . . . . . . 34
6.10 Unencumbered Asset Ratio.. . . . . . . . . . . . . . 37
6.11 Additional Security. . . . . . . . . . . . . . . . . 37
6.12 Transactions with Affiliates.. . . . . . . . . . . . 39
6.13 Restrictions on Dividends, etc.. . . . . . . . . . . 39
6.14 Nature of Business.. . . . . . . . . . . . . . . . . 40
6.15 Pension Plans. . . . . . . . . . . . . . . . . . . . 40
6.16 Private Offering.. . . . . . . . . . . . . . . . . . 41
6.17 Amendment of Partnership Documents . . . . . . . . . 41
6.18 Post-Closing Matters . . . . . . . . . . . . . . . . 41
6.19 Excluded Securitization Subsidiary . . . . . . . . . 41
7. INFORMATION AS TO PARENT, COMPANY AND OTHER SUBSIDIARIES. 42
7.1 Financial and Business Information.. . . . . . . . . 42
7.2 Officers' Certificates.. . . . . . . . . . . . . . . 45
7.3 Accountants' Certificates. . . . . . . . . . . . . . 46
7.4 Inspection.. . . . . . . . . . . . . . . . . . . . . 46
7.5 Confidential Information . . . . . . . . . . . . . . 46
8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 47
8.1 Nature of Events.. . . . . . . . . . . . . . . . . . 47
8.2 Default Remedies.. . . . . . . . . . . . . . . . . . 50
8.3 Annulment of Acceleration of Notes.. . . . . . . . . 52
9. INTERPRETATION OF THIS AGREEMENT. . . . . . . . . . . . . 52
9.1 Terms Defined. . . . . . . . . . . . . . . . . . . . 52
9.2 GAAP.. . . . . . . . . . . . . . . . . . . . . . . . 74
9.3 Directly or Indirectly.. . . . . . . . . . . . . . . 74
9.4 Section Headings and Table of Contents and
Construction . . . . . . . . . . . . . . . . . . . . 75
9.5 Governing Law. . . . . . . . . . . . . . . . . . . . 75
9.6 General Interest Provisions. . . . . . . . . . . . . 75
10. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS. . . . . . . . 76
10.1 Guarantied Obligations . . . . . . . . . . . . . . . 76
10.2 Performance Under This Agreement . . . . . . . . . . 77
10.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . 77
10.4 Certain Waivers of Subrogation, Reimbursement and
Indemnity. . . . . . . . . . . . . . . . . . . . . . 78
10.5 Releases . . . . . . . . . . . . . . . . . . . . . . 78
10.6 Marshaling . . . . . . . . . . . . . . . . . . . . . 79
10.7 Liability. . . . . . . . . . . . . . . . . . . . . . 79
10.8 Primary Obligation . . . . . . . . . . . . . . . . . 80
10.9 Election to Perform Obligations. . . . . . . . . . . 80
10.10 No Election . . . . . . . . . . . . . . . . . . . . 80
10.11 Severability. . . . . . . . . . . . . . . . . . . . 81
10.12 Other Enforcement Rights. . . . . . . . . . . . . . 81
10.13 Delay or Omission; No Waiver. . . . . . . . . . . . 81
ii
<PAGE>
10.14 Restoration of Rights and Remedies. . . . . . . 81
10.15 Cumulative Remedies . . . . . . . . . . . . . . 81
10.16 Survival. . . . . . . . . . . . . . . . . . . . 82
10.17 No Setoff, Counterclaim or Other Deduction. . . 82
10.18 Separate Instruments. . . . . . . . . . . . . . 82
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 82
11.1 Communications. . . . . . . . . . . . . . . . . 82
11.2 Reproduction of Documents . . . . . . . . . . . 82
11.3 Survival . . . . . . . . . . . . . . . . . . . 83
11.4 Successors and Assigns. . . . . . . . . . . . . 83
11.5 Amendment and Waiver. . . . . . . . . . . . . . 83
11.6 Expenses. . . . . . . . . . . . . . . . . . . . 85
11.7 Environmental Indemnity . . . . . . . . . . . . 86
11.8 Waiver of Jury Trial; Consent to Jurisdiction;
Etc. . . . . . . . . . . . . . . . . . . . . . 86
11.9 Release. . . . . . . . . . . . . . . . . . . . 87
11.10 Indemnification of Each Holder. . . . . . . . . 88
11.11 Entire Agreement; Oral Agreements Ineffective . 88
11.12 Duplicate Originals, Execution in Counterpart.. 88
Annex 1 -- Information as to Purchasers
Annex 2 -- Payment Instructions at Closing; Addresses for Notices
Annex 3 -- Information as to Company and Guarantors
Annex 4 -- Mortgages and Assignment of Rents (Closing and Post-Closing
Procedures)
Exhibit A1 -- Form of Series A Note
Exhibit A2 -- Form of Series B Note
Exhibit B1 -- Form of Closing Opinion of Counsel to the Company and the
Guarantors
Exhibit B2 -- Form of Closing Opinion of Special Counsel to the Purchasers
Exhibit C1 -- Form of Officers' Certificate of the Company
Exhibit C2 -- Form of Officers' Certificate of the Guarantors (Limited
Partnership)
Exhibit C3 -- Form of Officers' Certificate of the Guarantors
(Business Trust)
Exhibit D1 -- Form of Secretary's Certificate of the Company
Exhibit D2 -- Form of Secretary's Certificate of the Guarantors (Limited
Partnership)
Exhibit D3 -- Form of Secretary's Certificate of the Guarantors (Business
Trust)
Exhibit E -- Form of Intercreditor/Collateral Agency Agreement
Exhibit F -- Forms of Mortgages and Assignments of Rent
iii
<PAGE>
U.S. RESTAURANT PROPERTIES OPERATING L.P.
U.S. RESTAURANT PROPERTIES MASTER L.P.
U.S. RESTAURANT PROPERTIES BUSINESS TRUST I
U.S. RESTAURANT PROPERTIES BUSINESS TRUST II
USRP (WEST VIRGINIA) PARTNERS, L.P.
RESTAURANT RENOVATION PARTNERS, L.P.
U.S. RESTAURANT PROPERTIES DEVELOPMENT, L.P.
USRP (LINCOLN), LTD.
USRP (NORMAN), LTD.
USRP (CAROLINA), LTD.
---------------------------------------------
NOTE PURCHASE AGREEMENT
---------------------------------------------
$12,500,000
8.06% SERIES A SENIOR SECURED GUARANTIED NOTES DUE JANUARY 31, 2000
$27,500,000
8.30% SERIES B SENIOR SECURED GUARANTIED NOTES DUE JANUARY 31, 2002
Dated as of January 31, 1997
[TO BE SEPARATELY ADDRESSED TO EACH OF THE
PURCHASERS LISTED ON ANNEX 1]
Ladies and Gentlemen:
U.S. RESTAURANT PROPERTIES OPERATING L.P. (together with its successors
and assigns, the "COMPANY"), a Delaware limited partnership, U.S. RESTAURANT
PROPERTIES MASTER L.P. (together with its successors and assigns, the
"PARENT"), a Delaware limited partnership, U.S. RESTAURANT PROPERTIES
BUSINESS TRUST I (together with its successors and assigns, "BUSINESS TRUST
I"), a Delaware business trust, U.S. RESTAURANT PROPERTIES BUSINESS TRUST II,
a Delaware business trust (together with its successors and assigns,
"BUSINESS TRUST II"), USRP (WEST VIRGINIA) PARTNERS, L.P., a Texas limited
partnership (together with its successors and assigns, "WEST VIRGINIA
PARTNERS"), RESTAURANT RENOVATION PARTNERS, L.P., a Texas limited partnership
(together with its successors and assigns, "RENOVATION PARTNERS"), U.S.
RESTAURANT PROPERTIES DEVELOPMENT, L.P., a Texas limited partnership
(together with its successors and assigns, "PROPERTIES DEVELOPMENT"), USRP
(LINCOLN), LTD., a Texas limited partnership (together with its successors
and assigns, "LINCOLN"), USRP (NORMAN), LTD., a Texas limited partnership
(together with its successors and assigns, "NORMAN") and USRP (CAROLINA),
LTD., a Texas limited partnership (together with its successors and assigns,
"CAROLINA") (each of the Parent, Business Trust I, Business Trust II, West
Virginia Partners, Renovation Partners, Properties Development, Lincoln,
Norman and Carolina, and each other Person who delivers a guaranty agreement
pursuant to Section 6.11, and each of their respective successors and
assigns, are collectively referred to herein as, the "GUARANTORS"), hereby
agree with you as follows:
U.S. RESTAURANT PROPERTIES OPERATING L.P. 1 NOTE PURCHASE AGREEMENT
<PAGE>
1. PURCHASE AND SALE OF NOTES
1.1 THE NOTES.
(a) SERIES A NOTES. The Company will authorize the issuance of
Twelve Million Five Hundred Thousand Dollars ($12,500,000) in aggregate
principal amount of its 8.06% Series A Senior Secured Guarantied Notes Due
January 31, 2000 (the "SERIES A NOTES"). The Series A Notes shall be in
the form of Exhibit A1, and shall have the terms as herein and therein
provided, and the terms therein provided are incorporated herein by
reference as if set forth herein in full.
The term "SERIES A NOTES" as used herein shall include each Series
A Note delivered pursuant to this Agreement or the Other Note Purchase
Agreements referred to in Section 1.2(c) and each Series A Note
delivered in substitution or exchange for any such Series A Note
pursuant to Section 5.2 or Section 5.3 of this Agreement or of any such
Other Note Purchase Agreement.
(b) SERIES B NOTES. The Company will authorize the issuance of
Twenty Seven Million Five Hundred Thousand Dollars ($27,500,000) in
aggregate principal amount of its 8.30% Series B Senior Secured
Guarantied Notes Due January 31, 2002 (the "SERIES B NOTES"). The
Series B Notes shall be in the form of Exhibit A2, and shall have the
terms as herein and therein provided, and the terms therein provided
are incorporated herein by reference as if set forth herein in full.
The term "SERIES B NOTES" as used herein shall include each Series
B Note delivered pursuant to this Agreement or the Other Note Purchase
Agreements referred to in Section 1.2(c) and each Series B Note
delivered in substitution or exchange for any such Series B Note
pursuant to Section 5.2 or Section 5.3 of this Agreement or of any such
Other Note Purchase Agreement.
The term "NOTES" as used herein shall include all Series A Notes and
Series B Notes.
(c) SECURITY FOR THE NOTES; GUARANTY. The Notes are to be secured
by, and to have the benefit of, a pledge of and grant of a first priority
security interest in the Collateral to the Collateral Agent pursuant to the
Security Documents. The obligations of the Company under the Notes will be
guarantied by the Guarantors pursuant to the Unconditional Guaranty.
1.2 THE CLOSING.
(a) PURCHASE AND SALE OF NOTES. The Company hereby agrees to
sell to you and you hereby agree to purchase from the Company, in
accordance with the provisions hereof, the aggregate principal amount
of each Series of Notes set forth below your name on Annex 1 (in the
amount or amounts and with respect to the Series set forth therein) at
one hundred percent (100%) of the principal amount thereof.
(b) THE CLOSING. The closing (the "CLOSING") of the Company's
sale of Notes will be held on February [__], 1997 (the "CLOSING DATE")
at 10:00 a.m., local time, at the offices of your special counsel, Hebb
& Gitlin, a Professional Corporation, One State Street, Hartford,
Connecticut 06103. At the Closing, the Company will deliver to you one
or more Notes (as set forth below your name on Annex 1), in the Series
and denominations indicated on Annex 1, in the aggregate principal
amount of your purchase, dated the Closing Date and payable to you or
payable as indicated on Annex 1, against payment by federal funds wire
transfer in immediately available funds of the purchase price thereof,
as directed by the Company on Annex 2.
U.S. RESTAURANT PROPERTIES OPERATING L.P. 2 NOTE PURCHASE AGREEMENT
<PAGE>
(c) OTHER PURCHASERS. Contemporaneously with the execution and
delivery of this Agreement, the Company and the Guarantors are entering
into one or more separate note purchase agreements identical (except
for the name and signature of the purchaser) hereto (individually, an
"OTHER NOTE PURCHASE AGREEMENT," and, collectively, the "OTHER NOTE
PURCHASE AGREEMENTS;" this Agreement and the Other Note Purchase
Agreements, collectively, the "NOTE PURCHASE AGREEMENTS") with each
other purchaser (collectively, the "OTHER PURCHASERS") listed on Annex
1, providing for the sale to each Other Purchaser of Notes in the
Series and in the aggregate principal amount set forth below its name
on Annex 1. The sales of the Notes to you and to each Other Purchaser
are to be separate sales.
1.3 PURCHASE FOR INVESTMENT; ERISA.
(a) PURCHASE FOR INVESTMENT. You represent to the Company and the
Guarantors that you are purchasing the Notes listed on Annex 1 below your
name for your own account for investment and with no present intention of
distributing the Notes or any part thereof, but without prejudice to your
right at all times to:
(i) sell or otherwise dispose of all or any part of the Notes
under a registration statement filed under the Securities Act, or in
a transaction exempt from the registration requirements of the
Securities Act; and
(ii) have control over the disposition of all of your assets
to the fullest extent required by any applicable insurance law.
It is understood that, in making the representations set out in Section
2.14(a) and Section 2.15(a) of this Agreement, the Company and the
Guarantors are relying, to the extent applicable, upon your
representation in the immediately preceding sentence.
(b) ERISA. You represent, with respect to the funds with which you
are acquiring the Notes and solely for purposes of determining whether such
purchase is a "prohibited transaction" (as provided for in section 406 of
ERISA or section 4975 of the IRC), that all of such funds are from or are
attributable to one or more of:
(i) GENERAL ACCOUNT -- funds from your general account assets
or from assets of one or more segments of such general account, and
that all requirements for an exemption under DOL Prohibited
Transaction Exemption 95-60 (60 FR 35925, July 12, 1995) in respect of
such "employee benefit plans" have been satisfied; PROVIDED that you
are relying on the representations of the Company, the Guarantors and
the Managing General Partners set forth in Section 2.12(a) in making
such representation;
(ii) SEPARATE ACCOUNT -- a "separate account" (as defined in
section 3 of ERISA),
(A) Plans That Hold Less Than 10% of a Pooled Separate
Account -- in respect of which all requirements for an exemption
under DOL Prohibited Transaction Class Exemption 90-1 are met
with respect to the use of such funds to purchase the Notes,
(B) Identified Plan Assets -- that is comprised of
employee benefit plans identified by you in writing and with
respect to which the Company and the Guarantors hereby warrant
and represent that, as of the Closing Date, neither the Company,
any Guarantor nor any ERISA Affiliate is a "party in interest"
(as defined in section 3 of ERISA) or a
U.S. RESTAURANT PROPERTIES OPERATING L.P. 3 NOTE PURCHASE AGREEMENT
<PAGE>
"disqualified person" (as defined in section 4975 of the IRC)
with respect to any plan so identified, or
(C) GUARANTEED SEPARATE ACCOUNT -- that is maintained
solely in connection with fixed contractual obligations of an
insurance company, under which any amounts payable, or credited,
to any employee benefit plan having an interest in such account
and to any participant or beneficiary of such plan (including
an annuitant) are not affected in any manner by the investment
performance of the separate account (as provided by 29 C.F.R.
Section 2510.3-101(h)(1)(iii));
(iii) QUALIFIED PROFESSIONAL ASSET MANAGER -- an "investment
fund" managed by a "qualified professional asset manager" (as such
terms are defined in Part V of DOL Prohibited Transaction Class
Exemption 84-14) with respect to which the requirements of such
exemption have been satisfied, PROVIDED that in making this
representation, it is assumed that the conditions set forth in Part
I(a), Part I(d) and Part I(e) of such Exemption have been satisfied;
(iv) EXCLUDED PLAN -- an employee benefit plan that is excluded
from the provisions of section 406(a) of ERISA by virtue of section
4(b) of ERISA; or
(v) EXEMPT FUNDS -- a separate investment account that is not
subject to ERISA and no funds of which come from assets of an
"employee benefit plan" or a "plan" or any other entity that is deemed
to hold assets of an "employee benefit plan" or a "plan" ("employee
benefit plan" is defined in section 3 of ERISA, and "plan" is defined
in section 4975(e)(1) of the IRC).
It is understood that, in making the representation set out in Section
2.12(b), the Company and the Guarantors are relying, to the extent
applicable, upon your representation in the immediately preceding sentence.
1.4 FAILURE TO TENDER, FAILURE OF CONDITIONS.
If at the Closing the Company fails to tender to you the Notes to be
purchased by you thereat, or if the conditions specified in Section 3 to be
fulfilled at the Closing have not been fulfilled, you may thereupon elect to
be relieved of all further obligations hereunder. Nothing in this Section
1.4 shall operate to relieve the Company from any of its obligations
hereunder or to waive any of your rights against the Company.
1.5 EXPENSES.
(a) GENERALLY. Whether or not the Notes are sold, the Company
will promptly (and in any event within thirty (30) days of receiving
any statement or invoice therefor) pay all fees, expenses and costs
relating hereto, including, but not limited to:
(i) the reasonable cost of reproducing this Agreement, the
Notes, each other Financing Document and each of the other documents
delivered in connection with the Closing;
(ii) the reasonable fees and disbursements of your special
counsel, Hebb & Gitlin, and your special local counsel (if any)
incurred in connection herewith;
(iii) the reasonable cost of delivering to your home office
or custodian bank, insured to your satisfaction, the Notes purchased
by you at the Closing; and
U.S. RESTAURANT PROPERTIES OPERATING L.P. 4 NOTE PURCHASE AGREEMENT
<PAGE>
(iv) the reasonable fees, expenses and costs incurred in
complying with each of the conditions to Closing set forth in Section
3.
(b) COUNSEL. Without limiting the generality of the foregoing,
it is agreed and understood that the Company will pay, at the Closing,
the statement for reasonable fees and disbursements of your special
counsel and your special local counsel (if any) presented at the
Closing and the Company will also pay, upon receipt of any statement
therefor, each additional statement for reasonable fees and
disbursements of your special counsel and your special local counsel
(if any) rendered after the Closing in connection with the issuance of
the Notes or the matters referred to in Section 1.5(a).
2. WARRANTIES AND REPRESENTATIONS
To induce you to enter into this Agreement and to purchase the Notes listed
on Annex 1 below your name, the Company, the Guarantors and the Managing General
Partners jointly and severally warrant and represent, as of the date hereof, as
follows:
2.1 NATURE OF BUSINESS.
The Placement Memorandum (a copy of which previously has been delivered to
you) correctly describes the general nature of the business and principal
Properties of the Parent, each of the other Guarantors, the Company and the
Managing General Partners as of the Closing Date.
2.2 FINANCIAL STATEMENTS; INDEBTEDNESS; MATERIAL ADVERSE CHANGE.
(a) FINANCIAL STATEMENTS. The Parent has provided you with its
consolidated financial statements described in PART 2.2(a) OF ANNEX 3.
Such financial statements have been prepared in accordance with GAAP
consistently applied, and present fairly, in all material respects, the
financial position of the Parent and its consolidated subsidiaries as
of such dates and the results of their operations and cash flows for
such periods. All such financial statements include the accounts of
all subsidiaries of the Parent for the respective periods during which
a subsidiary relationship has existed.
(b) DEBT. PART 2.2(b) OF ANNEX 3 lists all Debt of the Company, the
Guarantors and the Managing General Partners as of the Closing Date, and
provides the following information with respect to each item of such Debt:
(i) the holder thereof;
(ii) the outstanding amount, as of the Closing Date;
(iii) the portion which is classified as current under GAAP;
(iv) the collateral securing such Debt, if any; and
(v) the maturity thereof.
(c) MATERIAL ADVERSE CHANGE. Since December 31, 1995 there has
been no change in the business, prospects, profits, Properties or
condition (financial or otherwise) of the Company, any of the
Guarantors or any of the Managing General Partners, except changes in
the ordinary course of business that, individually or in the aggregate
for all such changes, could not reasonably be expected to have a
Material Adverse Effect.
U.S. RESTAURANT PROPERTIES OPERATING L.P. 5 NOTE PURCHASE AGREEMENT
<PAGE>
(d) SUMMARY AND PRO FORMA FINANCIAL INFORMATION. All statements
or summaries of historical financial condition and performance of the
Parent, the Company and the other Subsidiaries included in the
Placement Memorandum have been derived from financial statements and
information prepared on a basis of accounting consistent with GAAP and
with the accounting principles currently used by the Parent, to the
extent applicable, except as noted therein. All PRO FORMA information
with respect to the Parent, the Company and the other Subsidiaries
included in the Placement Memorandum (collectively, the "PRO FORMA
FINANCIAL INFORMATION") has been derived from financial statements and
information prepared on a basis of accounting consistent with GAAP and
with the accounting principles currently used by the Parent, except as
noted therein, and all material assumptions on which the Pro Forma
Financial Information were based are disclosed therein. The Pro Forma
Financial Information has been prepared in good faith, have a
reasonable basis and represent the good faith opinion of the Company as
to the projected results of the operations of the Company. The
estimates of future performance and financial condition set forth in
the Pro Forma Financial Information, taken as a whole, are, in the good
faith opinion of the Company, reasonably attainable, subject to the
uncertainties and approximations inherent in any projections. No
material events or facts have occurred or been discovered by the
Company since the preparation of the Pro Forma Financial Information
that would cause the Pro Forma Financial Information, taken as a whole,
not to be reasonably attainable, and the Company does not have, on the
Closing Date, any material obligations (whether accrued, matured,
absolute, actual, contingent or otherwise) that are not reflected in
the Pro Forma Financial Information, other than agreements to purchase
real estate entered into in the ordinary course of the Company's
business.
2.3 SUBSIDIARIES AND AFFILIATES.
There are no Subsidiaries other than the Company, Business Trust I,
Business Trust II, West Virginia Partners, Renovation Partners, Lincoln,
Norman, Carolina, Restaurant Acquisition Corp., USRP Renovation Corp. and
Restaurant Contractor Corp. PART 2.3 OF ANNEX 3 sets forth:
(a) the percentage of the equity interests of each Subsidiary owned
by the Parent and the Company;
(b) the name of each officer and director of each Managing General
Partner;
(c) a description of the Affiliates (other than individuals) and the
nature of their affiliation; and
(d) the name of each Person that owns more than five percent (5%)
of any class of the capital stock of each Managing General Partner.
Each of the Parent and the Company has good title to all of the equity
interests it purports to own of each Subsidiary, free and clear in each case
of any Lien.
2.4 TITLE TO PROPERTIES; PATENTS, TRADEMARKS, ETC.
(a) PROPERTIES. Each of the Company and the Guarantors has title
to each of its Properties reflected in the most recent consolidated
balance sheet of the Parent referred to in PART 2.2(A) OF ANNEX 3
(except as sold or otherwise disposed of in the ordinary course of
business), except where the failure to have such title could not
reasonably be expected to have a Material Adverse Effect. All such
Property is free from Liens except for Liens (a) in favor of the
Collateral Agent, (b) that would be permitted, after the Collateral
Release Date, by Section 6.9(a), or (c) permitted by the Security
Documents.
U.S. RESTAURANT PROPERTIES OPERATING L.P. 6 NOTE PURCHASE AGREEMENT
<PAGE>
(b) INTERESTS IN REAL PROPERTY. PART 2.4(b) OF ANNEX 3 correctly
describes each interest of the Company and the Guarantors in real Property,
the holder or holders of each such interest, and the nature (fee simple,
leasehold, easement or otherwise) and the extent of such interest.
(c) LEASES. All leases necessary for the conduct of the
respective businesses of the Company and the Guarantors (including,
without limitation, all Leasehold Property Leases and all Restaurant
Operator Leases) are valid and subsisting and are in full force and
effect and no default or event of default that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect has occurred or exists thereunder. PART 2.4(c) OF ANNEX 3
correctly identifies each of such leases, setting forth in each case
the lessor and lessee, the location of the subject Property and the
expiration date of such lease and whether such lease is a Leasehold
Property Lease or a Restaurant Operator Lease.
(d) UCC MATTERS. Since its organization, neither the Company nor
any Guarantor has
(i) changed its name or operated all or a portion of its
business under any name other than its present legal name, or
(ii) changed the address of its principal executive office,
except, in each case, as set forth on PART 2.4(d) OF ANNEX 3.
(e) CERTAIN INTANGIBLES. Each of the Company and the Guarantors
owns, possesses or has the right to use all of the patents, trademarks,
service marks, trade names, copyrights and licenses, and rights with
respect thereto, necessary for the present and currently planned future
conduct of its business, without any known conflict with the rights of
others, except for such failures to own, possess, or have the right to
use, or for such conflicts, that, individually or in the aggregate for
all such failures and conflicts, could not reasonably be expected to
have a Material Adverse Effect.
2.5 TAXES.
All tax returns required to be filed by each of the Company, the
Guarantors, the Managing General Partners and any other Person with which the
Company, any Guarantor or any Managing General Partner files or has filed a
consolidated return in any jurisdiction have been filed on a timely basis,
and all taxes, assessments, fees and other governmental charges upon the
Company, any of the Guarantors or any of the Managing General Partners or
upon their respective Properties, income or franchises, that are due and
payable have been paid, except for such tax returns and such tax payments
that, in the aggregate for all such tax returns and payments, could not
reasonably be expected to have a Material Adverse Effect. Neither the
Company, any of the Guarantors nor any of the Managing General Partners knows
of any proposed property, use or other tax assessment against any of the
Company, the Guarantors, the Managing General Partners or any of their
respective Properties which tax assessment could reasonably be expected to
have a Material Adverse Effect, that, in each such case, is not reflected in
full in the most recent balance sheet referred to in PART 2.2(a) OF ANNEX 3.
2.6 PENDING LITIGATION.
(a) PENDING LITIGATION. There are no proceedings, actions or
investigations pending or, to the knowledge of the Company, the
Guarantors or the Managing General Partners, threatened against or
affecting the Company, any Guarantor or any Managing General Partner in
any court or before any Governmental Authority or arbitration board or
tribunal that, individually or in the aggregate for all such
proceedings, actions and
U.S. RESTAURANT PROPERTIES OPERATING L.P. 7 NOTE PURCHASE AGREEMENT
<PAGE>
investigations, could reasonably be expected to have a Material Adverse
Effect.
(b) VIOLATIONS. Neither the Company, any Guarantor nor any
Managing General Partner is in default with respect to any judgment,
order, writ, injunction or decree of any court, Governmental Authority,
arbitration board or tribunal that, individually or in the aggregate
for all such defaults, could reasonably be expected to have a Material
Adverse Effect.
2.7 FULL DISCLOSURE.
The financial statements referred to in PART 2.2(A) OF ANNEX 3 do not,
nor does this Agreement, any other Financing Document, the Placement
Memorandum or any written statement furnished by or on behalf of the Company,
any of the Guarantors or any of the Managing General Partner to you in
connection with the negotiation or the closing of the sale of the Notes,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein and herein not misleading.
There is no fact that the Company, the Guarantors and the Managing General
Partners have not disclosed to you in the Placement Memorandum that has had
or, so far as any such Person can now reasonably foresee, could reasonably be
expected to have a Material Adverse Effect.
2.8 ORGANIZATION AND AUTHORITY.
(a) THE COMPANY, THE PARENT, WEST VIRGINIA PARTNERS, RENOVATION
PARTNERS, PROPERTIES DEVELOPMENT, LINCOLN, NORMAN AND CAROLINA. Each
of the Company, the Parent, West Virginia Partners, Renovation
Partners, Properties Development, Lincoln, Norman and Carolina:
(i) is a limited partnership duly organized, validly existing
and in good standing under the laws of its jurisdiction of formation;
(ii) has all legal and partnership power and authority to own
and operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted;
(iii) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate its
Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have
such licenses, certificates, permits, franchises and other
governmental authorizations, individually or in the aggregate for all
such failures, could not reasonably be expected to have a Material
Adverse Effect; and
(iv) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
limited partnership, in each state (each of which states is listed in
PART 2.8 OF ANNEX 3) where the failure to be so qualified or licensed
and authorized and in good standing, individually or in the aggregate
for all such failures, could reasonably be expected to have a Material
Adverse Effect.
(b) BUSINESS TRUST I AND BUSINESS TRUST II. Each of Business Trust
I and Business Trust II:
(i) has been duly organized and is validly existing and in
good standing under the laws of the State of Delaware;
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(ii) has all power and authority to own and operate its
Properties and to carry on its business as now conducted and as
presently proposed to be conducted;
(iii) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate its
Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have
such licenses, certificates, permits, franchises and other
governmental authorizations, individually or in the aggregate for all
such failures, could not reasonably be expected to have a Material
Adverse Effect; and
(iv) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
entity, in each state (each of which states is listed in PART 2.8 OF
ANNEX 3) where the failure to be so qualified or licensed and
authorized and in good standing, individually or in the aggregate for
all such failures, could reasonably be expected to have a Material
Adverse Effect.
(c) MANAGING GENERAL PARTNERS. Each of the Managing General
Partners:
(i) is a corporation duly incorporated, validly existing and
in good standing under the laws of the state of its incorporation;
(ii) has all legal and corporate power and authority to own and
operate its Properties and to carry on its business as now conducted
and as presently proposed to be conducted;
(iii) has all licenses, certificates, permits, franchises and
other governmental authorizations necessary to own and operate its
Properties and to carry on its business as now conducted and as
presently proposed to be conducted, except where the failure to have
such licenses, certificates, permits, franchises and other
governmental authorizations, individually or in the aggregate for all
such failures, could not reasonably be expected to have a Material
Adverse Effect; and
(iv) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation, in each state (each of which states is listed in PART 2.8
OF ANNEX 3) where the failure to be so qualified or licensed and
authorized and in good standing, individually or in the aggregate for
all such failures, could reasonably be expected to have a Material
Adverse Effect.
2.9 CHARTER INSTRUMENTS, OTHER AGREEMENTS.
Neither the Company, any Guarantor nor any Managing General Partner is
in violation in any respect of any term of their respective Partnership
Agreement or any other constitutive document, instrument or bylaw, as the
case may be, or of any agreement relating to, or providing the terms of, any
Debt specified in PART 2.2 OF ANNEX 3. Neither the Company, any Guarantor
nor any Managing General Partner is in violation of any term in any other
agreement or other instrument to which it is a party or by which it or any of
its Properties may be bound if the effect of such violation could reasonably
be expect to have a Material Adverse Effect.
Each Managing General Partner is the only general partner of its
respective Guarantor. The general partnership interest of the Managing
General Partners in each of their respective Guarantors is owned by such
Managing General Partner free and clear of any Liens. Each of the
Partnership Agreements constitutes the
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legal, valid and binding obligation of the Managing General Partner a party
thereto, enforceable against such Managing General Partner in accordance with
its terms, except as limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium, or other similar laws affecting the
enforceability of creditors' rights generally, and subject to the
availability of equitable remedies.
2.10 RESTRICTIONS ON COMPANY AND GUARANTORS.
Neither the Company, any Guarantor nor any Managing General Partner:
(a) is a party to any contract or agreement, or subject to any
partnership agreement, trust agreement, charter, bylaw or other restriction
that, individually or in the aggregate for all such contracts, agreements,
partnership agreements, trust agreements, charters and restrictions, could
reasonably be expected to have a Material Adverse Effect;
(b) is a party to any contract or agreement that restricts the
right or ability of such partnership, corporation or business trust to
incur Debt, other than this Agreement and the agreements listed in PART
2.10(b) OF ANNEX 3, none of which restricts the issuance and sale of
the Notes by the Company or the performance by the Company, any
Guarantor or any Managing General Partner of its respective obligations
under this Agreement, the Notes or any of the other Financing
Documents; or
(c) has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its Property,
whether now owned or hereafter acquired, to be subject to a Lien not
permitted by Section 6.9.
True, correct and complete copies of each of the agreements listed in PART
2.10(b) OF ANNEX 3 have been provided to you and your special counsel.
2.11 COMPLIANCE WITH LAW.
Each of the Company, the Guarantors and the Managing General Partners is
in compliance with all applicable laws, ordinances, governmental rules or
regulations (including, without limitation, all zoning, and subdivision
ordinances and building codes) to which it is subject, except where the
failure to so comply, individually or in the aggregate for all such
violations, could not reasonably be expected to have a Material Adverse
Effect.
2.12 ERISA, ETC.
(a) DISCLOSURE. PART 2.12(a) OF ANNEX 3 sets forth all ERISA
Affiliates and all "employee benefit plans" with respect to which the
Company, the Guarantors or the Managing General Partners or any
"affiliate" thereof is a "party-in-interest" or in respect of which the
Notes could constitute an "employer security" ("employee benefit plan"
and "party-in-interest" have the meanings specified in section 3 of
ERISA and "affiliate" and "employer security" have the meanings
specified in section 407(d) of ERISA).
(b) PROHIBITED TRANSACTIONS. The execution and delivery of this
Agreement and the issuance and sale of the Notes hereunder will not
result in a non-exempt prohibited transaction under section 406 of
ERISA or in connection with which a tax could be imposed pursuant to
sec-tion 4975(c)(1)(A) through section 4975(D), inclusive, of the IRC.
The representation set forth in the immediately preceding sentence is
made in reliance upon the representations in Section 1.3(b) as to the
source of funds used by you.
(c) PENSION PLANS.
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(i) COMPLIANCE WITH ERISA. The Parent, the Company, the other
Guarantors, the Managing General Partners and the other ERISA
Affiliates and each Pension Plan are in compliance with ERISA, except
for such failures to comply that, in the aggregate for all such
failures, could not reasonably be expected to have a Material Adverse
Effect.
(ii) FUNDING STATUS. No "accumulated funding deficiency" (as
defined in section 302 of ERISA and section 412 of the IRC), whether
or not waived, exists with respect to any Pension Plan.
(iii) PBGC. No liability to the PBGC has been or is expected
to be incurred by the Parent, the Company, the other Guarantors, the
Managing General Partners or any other ERISA Affiliate with respect
to any Pension Plan that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. No
circumstance exists that constitutes grounds under section 4042 of
ERISA entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, any Pension Plan or trust created
thereunder, nor has the PBGC instituted any such proceeding.
(iv) MULTIEMPLOYER PLANS. Except as set forth on PART 2.12(c)
OF ANNEX 3, neither the Parent, the Company, the other Guarantors, the
Managing General Partners nor any other ERISA Affiliate has incurred
or presently expects to incur any withdrawal liability under Title IV
of ERISA with respect to any Multiemployer Plan. Except as set forth
on PART 2.12(c) OF ANNEX 3, there have been no "reportable events" (as
defined in section 4043 of ERISA) with respect to any Multiemployer
Plan that could result in the termination of such Multiemployer Plan
and give rise to a liability of the Parent, the Company, the other
Guarantors, the Managing General Partner or any other ERISA Affiliate
in respect thereof.
(d) NO FOREIGN PENSION PLANS. Neither the Company, any Guarantor
nor any Managing General Partner now has, or at any time has had, any
Foreign Pension Plan.
2.13 ENVIRONMENTAL COMPLIANCE.
(a) COMPLIANCE. Each of the Company, the Guarantors and the
Managing General Partners is in compliance with all Environmental
Protection Laws in effect in each jurisdiction where it is presently
doing business and with respect to which the failure so to comply,
individually or in the aggregate for all such failures, could reasonably
be expected to have a Material Adverse Effect.
(b) LIABILITY. Neither the Company, any Guarantor nor any Managing
General Partner is subject to any liability under any Environmental
Protection Laws that, individually or in the aggregate for all such
liabilities, could reasonably be expected to have a Material Adverse
Effect.
(c) NOTICES. Neither the Company, any Guarantor nor any Managing
General Partner has received any:
(i) notice from any Governmental Authority by which any of its
present or previously-owned or leased Properties has been identified
in any manner by any Governmental Authority as a hazardous substance
disposal or removal site, "Super Fund" clean-up site or candidate for
removal or closure pursuant to any Environmental Protection Law;
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(ii) notice of any Lien arising under or in connection with any
Environmental Protection Law that has attached to any revenues of, or
to, any of its owned or leased Properties; or
(iii) any communication, written or oral, from any Governmental
Authority concerning action or omission by the Company or such
Guarantor in connection with its ownership or leasing of any Property
resulting in the release of any Hazardous Substance in violation of
any Environmental Protection Law;
where the effect of such notice or communication individually, or in the
aggregate for all such notices and communications, could reasonably be
expected to have a Material Adverse Effect.
(d) ENVIRONMENTAL ASSESSMENTS. Except for those real Properties
set forth on PART 2.13(d) OF ANNEX 3, a Phase I environmental assessment
of all of the real Properties owned or leased by any one or more of the
Company and each of the Guarantors at any time on or prior to the Closing
Date has been obtained and reviewed by a Senior Officer of the Company or
the Parent, as the case may be. Except as set forth in PART 2.13(d) OF
ANNEX 3, no such Phase I environmental assessment has revealed any
potential environmental issue that would warrant the conducting of a
Phase II environmental assessment or any further action on the part of
the Company or any Guarantor in respect thereof which would require
remediation under existing laws. With respect to each of those real
Properties identified on PART 2.13(d) OF ANNEX 3, the Company or one of
the Guarantors has received contractual representations from Burger King
Corporation as to the lack of environmental problems with respect to such
Properties which in the good faith judgment of the Company, were
reasonable in connection with the purchase of each such Property.
2.14 SALE OF NOTES IS LEGAL AND AUTHORIZED; OBLIGATIONS ARE ENFORCEABLE.
(a) SALE OF NOTES IS LEGAL AND AUTHORIZED. Each of the issuance,
sale and delivery of the Notes by the Company, the execution and delivery
of this Agreement and each other Financing Document by the Company and the
Guarantors and compliance by the Company and each of the Guarantors with
all of the provisions of this Agreement, the Notes and each of the other
Financing Documents:
(i) is within the partnership or trust powers, as the case may
be, of the Company and each Guarantor; and
(ii) is legal and does not conflict with, result in any breach
of any of the provisions of, constitute a default under, or result in
the creation of any Lien upon any Property of the Company, any
Guarantor or any Managing General Partner under the provisions of, any
agreement, any Partnership Agreement, any other constitutive
documents, or any other instrument to which it is a party or by which
it or any of its respective Properties may be bound.
(b) OBLIGATIONS ARE ENFORCEABLE.
(i) This Agreement and each of the other Financing Documents
has been duly authorized by all necessary action on the part of the
Company, the Guarantors and the Managing General Partners, has been
duly executed and delivered by authorized officers of each of the
Company, the Guarantors and the Managing General Partners, and
constitutes a legal, valid and binding obligation of the Company,
the Guarantors and the Managing General Partners, enforceable in
accordance with its respective terms; and
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(ii) the Notes have been duly authorized by all necessary
action on the part of the Company, have been duly executed and
delivered by authorized officers of its Managing General Partner
on behalf of the Company, and constitute legal, valid and binding
obligations of the Company, enforceable in accordance with their
respective terms,
except that, in each case, the enforceability of this Agreement, the Notes
and the other Financing Documents may be:
(x) limited by applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or other similar laws affecting
the enforceability of creditors' rights generally; and
(y) subject to the availability of equitable remedies.
2.15 GOVERNMENTAL CONSENT; CERTAIN LAWS.
(a) GOVERNMENTAL CONSENT. Neither the nature of the Company, any
Guarantor or any Managing General Partner, or of any of their respective
businesses or Properties, nor any relationship between the Company, any
Guarantor or any Managing General Partner and any other Person, nor any
circumstance in connection with the offer, issuance, sale or delivery of
the Notes and the execution and delivery of this Agreement and each of
the other Financing Documents, is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
Governmental Authority on the part of the Company, any of the Guarantors
or any of the Managing General Partner as a condition to the execution and
delivery of this Agreement and the other Financing Documents or the offer,
issuance, sale or delivery of the Notes (other than routine filings by the
Parent with the Securities and Exchange Commission, applicable state
securities commissions or any securities exchange on which the Securities
of the Parent are listed (which are not required to be made prior to the
Closing Date)).
(b) CERTAIN LAWS. Neither the Company, any Guarantor nor any
Managing General Partner is subject to regulation under, or otherwise
required to comply with any filing, registration or notice provisions of,
(i) the Investment Company Act of 1940, as amended, (ii) the Public Utility
Holding Company Act of 1935, as amended, (iii) the Transportation Acts of
the United States of America, 49 USC, as amended, or (iv) the Federal
Power Act, as amended.
2.16 PRIVATE OFFERING OF NOTES.
(a) OFFERING OF NOTES. Neither the Company, any Guarantor, any
Managing General Partner or the Placement Agents (the only Persons
authorized or employed by the Company, the Guarantors or the Managing
General Partners as agent, broker, dealer or otherwise in connection with
the offering or sale of the Notes or any similar Security of the Company
or any of the Guarantors) has offered any of the Notes or any similar
Security of the Company or any Guarantor for sale to, or solicited offers
to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any prospective purchaser, other than the number
of Institutional Investors (including you) set forth in PART 2.16(a) OF
ANNEX 3, each of whom was offered all or a portion of the Notes at
private sale for investment.
(b) REGISTRATION PROVISIONS. Neither the Company, any of the
Guarantors or any of the Managing General Partners, nor any agent acting
on their behalf, has taken any action that would subject the issue or
sale of the Notes to the registration provisions of section 5 of the
Securities Act or to the registration, qualification or other similar
provisions of any securities or "blue sky" law of any applicable
jurisdiction.
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2.17 NO DEFAULTS UNDER NOTES.
No event has occurred and no condition exists that, upon the execution
and delivery of this Agreement and the other Financing Documents and the
issuance of the Notes, would constitute a Default or an Event of Default.
2.18 USE OF PROCEEDS OF NOTES.
(a) USE OF PROCEEDS. The Company will apply the proceeds from the
sale of the Notes in the manner specified in PART 2.18(a) OF ANNEX 3.
(b) MARGIN SECURITIES. None of the transactions contemplated
herein and in the Notes (including, without limitation, the use of the
proceeds from the sale of the Notes) violates, will violate or will
result in a violation of section 7 of the Exchange Act or any regulations
issued pursuant thereto, including, without limitation, Regulations G, T,
U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R., Chapter II. The obligations of the Company and the Guarantors
under this Agreement, the Notes and the other Financing Documents are not
and will not be "directly" or "indirectly" secured (within the meaning of
such Regulation G) by any Margin Security, and no Notes are being sold on
the basis of any such collateral.
(c) ABSENCE OF FOREIGN OR ENEMY STATUS. Neither the sale of the
Notes nor the use of proceeds from the sale thereof will result in a
violation of any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended), or
any ruling issued thereunder or any enabling legislation or Presidential
Executive Order in connection therewith.
2.19 COMPANY AND GUARANTORS.
The Company and the Guarantors are operated as part of one consolidated
business entity and are directly dependent upon each other for and in
connection with their respective business activities and their respective
financial resources. The Guarantors will receive a direct economic and
financial benefit from the Debt incurred under this Agreement by the Company,
and the incurrence of such Debt is in the best interests of the Guarantors.
2.20 SOLVENCY.
(a) ASSETS GREATER THAN LIABILITIES. The fair value of the
business and assets of the Company and each Guarantor is in excess of the
amount that will be required to pay its liabilities (including, without
limitation, contingent, subordinated, unmatured and unliquidated
liabilities on existing debts, as such liabilities may become absolute
and matured), in each case both prior to and after giving effect to the
transactions contemplated by the Financing Documents.
(b) MEETING LIABILITIES. After giving effect to the transactions
contemplated by the Financing Documents, neither the Company nor any
Guarantor will
(i) be engaged in any business or transaction, or about to
engage in any business or transaction, for which it has unreasonably
small assets or capital (within the meaning of the Uniform Fraudulent
Transfer Act, the Uniform Fraudulent Conveyance Act and section 548 of
the Federal Bankruptcy Code), and
(ii) will be unable to pay its debts as they mature.
(c) INTENT. Neither of the Company nor any Guarantor is entering
into this Agreement with any intent to hinder, delay or defraud any current
or future creditors of the Company or any Guarantor.
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2.21 INSURANCE.
Each of the Restaurant Operator Leases requires the "Tenant" or "Lessee"
thereunder to maintain, for the benefit of one or more of the Company and the
Guarantors, insurance substantially on the terms described in PART 2.21 OF
ANNEX 3. In addition to such insurance maintained pursuant to the Restaurant
Operator Leases, the Company and the Guarantors maintain such policies of
insurance which are consistent with industry practice for owners of triple
net leased real Properties, including, without limitation, commercial
liability coverage.
2.22 TRUE AND CORRECT COPIES.
The Company and the Guarantors have delivered to you and your special
counsel true, correct and complete copies of:
(a) the Partnership Agreements;
(b) all Leasehold Property Leases and Restaurant Operator Leases set
forth on PART 2.22 OF ANNEX 3; and
(c) the Bank Credit Agreement, together with all documents and
instruments executed in connection therewith (collectively, the "BANK DEBT
DOCUMENTS").
There are no agreements or understandings between or among any one or more of
the Company, the Guarantors, the Managing General Partners and the Banks,
except as set forth in the Bank Debt Documents.
3. CLOSING CONDITIONS
Your obligations under this Agreement, including, without limitation,
the obligation to purchase and pay for the Notes to be delivered to you at
the Closing, are subject to the conditions precedent set forth below, and the
failure by the Company and the Guarantors to satisfy all such conditions
shall, at your election, relieve you of all such obligations. The failure of
the Company and the Guarantors to satisfy such conditions shall not operate
to relieve the Company and the Guarantors of their obligations hereunder or
to waive any of your rights against the Company or the Guarantors.
3.1 OPINIONS OF COUNSEL.
You shall have received from
(a) Middleberg Riddle & Gianna, counsel for the Company and the
Guarantors (together with such local counsel opinions, if any, agreed upon
prior to the Closing Date), and
(b) Hebb & Gitlin, a Professional Corporation, your special counsel,
closing opinions, each dated as of the Closing Date, substantially in the
respective forms set forth in Exhibit B1 and Exhibit B2 hereto and as to such
other matters as you may reasonably request. This Section 3.1 shall
constitute direction by the Company and the Guarantors to such counsel named
in the foregoing clause (a) to deliver such closing opinions to you.
3.2 WARRANTIES AND REPRESENTATIONS TRUE; COMPLIANCE WITH FINANCING
DOCUMENTS.
(a) WARRANTIES AND REPRESENTATIONS TRUE. The warranties and
representations of the Company, the Guarantors and the Managing General
Partners contained in Section 2 and contained in the other Financing
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Documents, shall be true on the Closing Date with the same effect as though
made on and as of that date.
(b) COMPLIANCE WITH FINANCING DOCUMENTS. The Company, the
Guarantors and the Managing General Partners shall have performed and
complied with all agreements and conditions contained in the Financing
Documents that are required to be performed or complied with by the
Company, the Guarantors and the Managing General Partners on or prior
to the Closing Date, and such performance and compliance shall remain
in effect on the Closing Date.
3.3 OFFICERS' CERTIFICATES.
You shall have received:
(a) a certificate dated the Closing Date and signed by two Senior
Officers of the Managing General Partner of the Company, substantially in
the form of Exhibit C1 hereto;
(b) with respect to each of the Guarantors that is a limited
partnership, a certificate dated the Closing Date and signed by two Senior
Officers of the Managing General Partner of such limited partnership,
substantially in the form of Exhibit C2 hereto;
(c) with respect to each of Business Trust I and Business Trust II,
a certificate dated the Closing Date and signed by a trustee of such
business trust, substantially in the form of Exhibit C3 hereto;
(d) a certificate dated the Closing Date and signed by the Secretary
or an Assistant Secretary of the Managing General Partner of the Company,
on behalf of the Company, substantially in the form of Exhibit D1 hereto;
(e) with respect to each of the Guarantors that is a limited
partnership, a certificate dated the Closing Date and signed by the
Secretary or an Assistant Secretary of the Managing General Partner
of such Guarantor, on behalf of such Guarantor, substantially in the
form of Exhibit D2 hereto; and
(f) with respect to each of the Guarantors which is a business
trust, a certificate dated the Closing Date and signed by a trustee of
such Guarantor, substantially in the form of Exhibit D3 hereto.
3.4 LEGALITY.
The Notes shall on the Closing Date qualify as a legal investment for
you under applicable insurance law (without regard to any "basket" or
"leeway" provisions), and such acquisition shall not subject you to any
penalty or other onerous condition contained in or pursuant to any such law
or regulation, and you shall have received such evidence as you may
reasonably request to establish compliance with this condition.
3.5 PRIVATE PLACEMENT NUMBERS.
The Company shall have obtained or caused to be obtained private
placement numbers for the Series A Notes and the Series B Notes from the
CUSIP Service Bureau of Standard & Poor's and you shall have been informed of
such private placement numbers.
3.6 EXPENSES.
All fees and disbursements required to be paid at the Closing pursuant
to Section 1.5(b) hereof shall have been paid in full.
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3.7 OTHER PURCHASERS.
None of the Other Purchasers shall have failed to execute and deliver a
Note Purchase Agreement or to accept delivery of or make payment for the
Notes to be purchased by it on the Closing Date.
3.8 BANK CREDIT AGREEMENT.
The Company, the Parent, each of the Banks and the Bank Agent shall have
entered into an amendment or an amendment and restatement of the Bank Credit
Agreement on or before the Closing Date, in form and substance satisfactory
to you, and the Bank Credit Agreement shall be in full force and effect on
the Closing Date and no default or event of default shall exist thereunder.
All conditions to closing specified in such amendment of the Bank Credit
Agreement shall have been satisfied or waived on or prior to the Closing
Date. The Company shall have delivered to you copies of all Bank Debt
Documents, in each case certified as true and correct by a Senior Officer of
the Company, and the Bank Debt Documents shall be in full force and effect.
3.9 INTERCREDITOR/COLLATERAL AGENCY AGREEMENT.
The Collateral Agent, the Banks, the Bank Agent, the Company, the Other
Purchasers and you shall have entered into a intercreditor/collateral agency
agreement on the Closing Date, substantially in the form of Exhibit E (as
amended from time to time, the "INTERCREDITOR/COLLATERAL AGENCY AGREEMENT"),
and the Intercreditor/Collateral Agency Agreement shall be in full force and
effect on the Closing Date and each party thereto shall be in full compliance
with its obligations thereunder.
3.10 LEASES.
The Company shall have delivered to you copies of each of the Leasehold
Property Leases and Restaurant Operator Leases set forth on PART 2.22 OF
ANNEX 3, in each case certified as true and correct by a Senior Officer of
the Company, and each of such leases shall be in full force and effect.
3.11 SECURITY DOCUMENTS; PERFECTION.
(a) SECURITY DOCUMENTS. The Guarantors and the Collateral Agent,
as the case may be, shall have entered into all of the Mortgages and
Assignments of Rents and the other Security Documents, in each case, in
form and substance satisfactory to the Purchasers, as set forth in PART
A OF ANNEX 4 and all such Security Documents shall be in full force and
effect on the Closing Date and each party thereto shall be in full
compliance with its obligations thereunder. The Company shall have
delivered to you in accordance with such Annex 4 copies of all of the
Security Documents.
(b) PERFECTION OF LIENS, ETC. Except with regard to acceptable
post-closing procedures described on Annex 4, you shall have received
such title reports, evidences and other assurances, in each case
satisfactory to you, that all actions necessary to perfect the Liens of
the Collateral Agent in the Collateral shall have been taken in
accordance with the terms and provisions of the Security Documents, and
confirmation thereof received by you. The Liens of the Collateral Agent
in the Collateral shall be valid, enforceable and perfected, and the
Collateral shall be subject to no other Liens except those Liens
permitted pursuant to Section 6.9 and as permitted by the Security
Documents.
3.12 COMPLIANCE WITH THIS AGREEMENT.
Each of the Company and the Guarantors shall have performed and complied
with all agreements and conditions contained herein that are required to be
performed or complied with by the Company and the Guarantors on or prior to
the
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Closing Date, and such performance and compliance shall remain in effect on
the Closing Date.
3.13 PROCEEDINGS SATISFACTORY.
All proceedings taken in connection with the issuance and sale of the
Notes and all documents and papers relating thereto shall be satisfactory to
you and your special counsel. You and your special counsel shall have
received copies of such documents and papers as you or they may reasonably
request in connection therewith or in connection with your special counsel's
closing opinion, all in form and substance reasonably satisfactory to you and
your special counsel.
4. PAYMENTS
4.1 PAYMENT OF NOTES AT MATURITY.
(a) SERIES A NOTES. The entire principal amount of the Series A
Notes, together with accrued and unpaid interest thereon and all other
amounts then due hereunder, shall be due and payable on January 31, 2000.
(b) SERIES B NOTES. The entire principal amount of the Series B
Notes, together with accrued and unpaid interest thereon and all other
amounts then due hereunder, shall be due and payable on January 31, 2002.
4.2 OPTIONAL PREPAYMENTS.
(a) OPTIONAL PREPAYMENTS. The Company may, at any time and from
time to time, prepay the principal amount of the Notes in part, in integral
multiples of One Million Dollars ($1,000,000), or in whole, in each case
together with:
(i) an amount equal to the Make-Whole Amount on such date in
respect of the principal amount of the Notes being so prepaid; and
(ii) interest on such principal amount then being prepaid
accrued to the prepayment date.
(b) NOTICE OF OPTIONAL PREPAYMENT. The Company will give notice of
any optional prepayment of the Notes to each holder of Notes not less than
thirty (30) days or more than sixty (60) days before the date fixed for
prepayment, specifying:
(i) such date;
(ii) that such prepayment is to be made pursuant to Section 4.2
of this Agreement;
(iii) the principal amount of each Note to be prepaid on such
date;
(iv) the interest to be paid on each such Note, accrued to the
date fixed for payment; and
(v) the calculation of an estimated Make-Whole Amount, if any
(calculated as if the date of such notice was the date of prepayment),
due in connection with such prepayment, accompanied by a copy of any
applicable documentation used in connection with determining the
Make-Whole Discount Rate in respect of such prepayment.
Notice of prepayment having been so given, the aggregate principal
amount of the Notes to be prepaid specified in such notice, together
with the Make-Whole Amount as of the specified prepayment date with
respect thereto, if any, and accrued interest thereon shall become due
and payable
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on the specified prepayment date. Contemporaneously with such prepayment
the Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date, accompanied by a copy of any applicable
documentation used in connection with determining the Make-Whole Discount
Rate in respect of such prepayment.
4.3 OFFER TO PREPAY UPON CHANGE IN CONTROL.
(a) NOTICE AND OFFER. In the event of either
(i) a Change in Control, or
(ii) the obtaining of knowledge of a Control Event by any
officer of any of the Managing General Partners, any trustee or
manager of Business Trust I or Business Trust II or by any officer,
general partner or trustee of any other Subsidiary (including, without
limitation, via the receipt of notice of a Control Event from any
holder of Notes),
then the Company will, within three (3) Business Days of (x) such Change
in Control or (y) the obtaining of knowledge of such Control Event, as
the case may be, give written notice of such Change in Control or Control
Event to each holder of Notes. In the event of a Change in Control, such
written notice shall contain, and such written notice shall constitute, an
irrevocable offer to prepay all, but not less than all, of the Notes of
each Series held by such holder on a date specified in such notice (the
"PROPOSED CONTROL PREPAYMENT DATE") that is contemporaneous with the date
of such Change in Control.
(b) CONDITION TO COMPANY ACTION. The Company will not take any
action that consummates or finalizes a Change in Control unless
(i) at least thirty (30) days prior to such action it shall
have given to each holder of Notes written notice containing and
constituting an offer to prepay Notes as described in subparagraph (a)
of this Section 4.3, accompanied by the certificate described in
subparagraph (d) of this Section 4.3, and
(ii) contemporaneously with such action, it prepays all Notes
required to be prepaid in accordance with this Section 4.3.
(c) ACCEPTANCE AND PAYMENT; REJECTION. To accept such offered
prepayment, a holder of Notes shall cause a notice of such acceptance
(which notice of acceptance may be in respect of one or more Series of
Notes held by such holder, but which notice need not treat Notes of all
Series held by such holder in the same manner) to be delivered to the
Company not later than fourteen (14) days after the date of receipt by
such holder of the written offer of such prepayment. If so accepted,
such offered prepayment shall be due and payable on the Proposed Control
Prepayment Date. Such offered prepayment shall be made at one hundred
percent (100%) of the principal amount of such Notes, together with
interest on the Notes then being prepaid accrued to the Proposed Control
Prepayment Date. A failure to respond to any such written offer of
payment as provided in this Section 4.3(c) shall be deemed to constitute
a rejection of such offer.
(d) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this Section 4.3 will be accompanied by an officer's
certificate, executed by a Senior Officer of the Company and dated the
date of such offer, specifying:
(i) the Proposed Control Prepayment Date;
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(ii) the principal amount of each Note offered to be prepaid;
(iii) the interest to be paid on each such Note, accrued to the
Proposed Control Prepayment Date;
(iv) that the conditions of this Section 4.3 have been
fulfilled; and
(v) in reasonable detail, the nature and date or proposed date
of the Change in Control and a description of the Person or Persons
that would, after giving effect to the Change in Control, hold the
Voting Units of each of the Parent, the Company and the Managing
General Partners of the Company and the Parent (and the percentage
held by such Person or Persons of the total amount of such Voting
Units).
(e) NOTICE CONCERNING STATUS OF HOLDERS OF NOTES. Promptly after
each Proposed Control Prepayment Date and the making of all prepayments
contemplated on such Proposed Control Prepayment Date under this Section
4.3 (and, in any event, within thirty (30) days thereafter), the Company
shall deliver to each remaining holder of Notes a certificate signed by
a Senior Officer of the Company containing a list of the then current
holders of Notes (together with their addresses) and setting forth as
to each such holder the outstanding principal amount of Notes of each
Series held by each such holder at such time.
4.4 OFFER TO PREPAY UPON INVESTMENT GRADE RATING.
(a) NOTICE AND OFFER. At any time after the Closing Date, so long
as at such time
(i) the Company shall have obtained an unsecured debt rating of
"Baa3" or higher from Moodys Investor Services, Inc., "BBB-" or higher
from Standard & Poors or "BBB-" or higher from Duff & Phelps Credit
Rating Co. and
(ii) the Banks shall have instructed the Collateral Agent in
writing to release, on behalf of the Banks, all Collateral,
then the Company shall be permitted, at its option, to send each holder of
Notes (so long as such notice is given to all holders of Notes then
outstanding) a written notice (the "INVESTMENT GRADE NOTICE") which shall
constitute, an irrevocable offer to prepay all, but not less than all, of
the Notes of each Series then outstanding held by such holder on a date
specified in such notice (the "INVESTMENT GRADE PREPAYMENT DATE") that is
at least thirty (30) days but not later than sixty (60) days after receipt
of the Investment Grade Notice.
(b) ACCEPTANCE AND PAYMENT; REJECTION. To accept such offered
prepayment pursuant to the Investment Grade Notice, a holder of Notes shall
cause a notice of such acceptance (which notice of acceptance must be in
respect of all Notes held by such holder) to be delivered to the Company
not later than fourteen (14) days after the date of receipt by such holder
of the Investment Grade Notice. If so accepted, such offered prepayment
shall be due and payable on the Investment Grade Prepayment Date. Such
offered prepayment shall be made at one hundred percent (100%) of the
principal amount of such Notes, together with interest on the Notes then
being prepaid accrued to the Investment Grade Prepayment Date. A failure
to respond to any such written offer of payment as provided in this
Section 4.4(b) shall be deemed to constitute a rejection of such offer.
A rejection (including any deemed rejection) of such offer shall require
the holders rejecting such offer to comply with the provisions of
Section 4.4(d) below.
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(c) NOTICE CONCERNING STATUS OF HOLDERS OF NOTES. Promptly after
the Investment Grade Prepayment Date and the making of all prepayments
contemplated on such Investment Grade Prepayment Date under this Section
4.4 (and, in any event, within thirty (30) days thereafter), the Company
shall deliver to each remaining holder of Notes a written notice (the
"COLLATERAL RELEASE NOTICE") signed by a Senior Officer of the Company
containing a list of the then current holders of Notes (together with
their addresses) and setting forth as to each such holder the outstanding
principal amount of Notes of each Series held by each such holder at such
time. The Collateral Release Notice must also state that pursuant to the
provisions of Section 4.4(d) all or a portion of the Collateral securing
such holder's Notes is subject to being released in accordance with such
Section based on the action (or lack of action) of the Required Holders.
(d) RELEASE OF COLLATERAL.
(i) In the event that any holder of Notes rejects (or is
deemed to have rejected) the offer of prepayment under the Investment
Grade Notice, such holder shall, at the direction of the Required
Holders (determined after taking into consideration the prepayment of
the Notes on the Investment Grade Prepayment Date) given within sixty
(60) days of the receipt by all such holders of the Collateral Release
Notice, instruct the Collateral Agent to release all of the Collateral
in which case the Notes and the Unconditional Guaranty shall become
unsecured on the date (the "COLLATERAL RELEASE DATE") which is the
sixty-first day after the date of receipt by all of such holders of
the Collateral Release Notice.
(ii) If the Required Holders fail to elect to give the
instruction contemplated by Section 4.4(d)(i) above, all holders of
Notes shall be deemed to have directed the Collateral Agent to take
any and all necessary actions to limit the Collateral securing the
Notes to a specified pool of Properties to be identified by the
Company. Such pool of Properties shall at all times have an aggregate
net book value equal to or greater than twice the amount of the
outstanding principal amount of the Notes. Upon such direction the
Company shall identify the Properties to make up such pool (and if at
such time, or from time to time thereafter, any of such Properties are
not part of the Collateral, grant one or more Mortgages and
Assignments of Rents to the Collateral Agent in such Properties in
accordance with Section 6.11(b)) and the holders of Notes shall send
written instructions to the Collateral Agent to release the
Properties, if any, which are at such time part of the Collateral but
not required to be included in such pool.
(e) INVESTMENT GRADE NOTICE. Each Investment Grade Notice to each
holder of Notes shall be executed by a Senior Officer of the Company and
shall specify, in addition to the offer to prepay the Notes pursuant to
this Section:
(i) the Investment Grade Prepayment Date;
(ii) the principal amount of each Note of such holder;
(iii) the interest to be paid on each such Note, accrued to the
Investment Grade Prepayment Date;
(iv) that the conditions of this Section 4.4 have been
fulfilled; and
(v) that if such holder does not elect to accept the offer of
prepayment contained in such Investment Grade Notice, all or a portion
of the Collateral securing such holder's Notes is subject to
U.S. RESTAURANT PROPERTIES OPERATING L.P. 21 NOTE PURCHASE AGREEMENT
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being released in accordance with the provisions of Section 4.4(d)
based on the action (or lack of action) of the Required Holders.
The Investment Grade Notice shall be accompanied by written evidence,
satisfactory to the Required Holders, that the conditions in clause (i)
and clause (ii) of Section 4.4(a) have been satisfied.
4.5 PRO RATA PAYMENTS.
If at the time any prepayment under Section 4.2 hereof is due there is
more than one Note outstanding, the aggregate principal amount of each such
prepayment of the Notes shall be allocated among the Notes at the time
outstanding (without distinguishing among the different Series) in
proportion, as nearly as practicable, to the respective unpaid principal
amounts of the Notes then outstanding, with adjustments, to the extent
practicable, to equalize for any prior prepayments not in such proportion.
4.6 NOTATION OF NOTES ON PREPAYMENT.
Upon any partial prepayment of a Note, such Note may, at the option of the
holder thereof, be (but shall not be required to be):
(a) surrendered to the Company pursuant to Section 5.2 hereof in
exchange for a new Note in a principal amount equal to the principal amount
remaining unpaid on the surrendered Note;
(b) made available to the Company for notation thereon of the
portion of the principal so prepaid; or
(c) marked by such holder with a notation thereon of the portion of
the principal so prepaid.
In case the entire principal amount of any Note is paid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the paid principal amount of any Note.
4.7 NO OTHER OPTIONAL PREPAYMENTS.
Except as provided in this Section 4, neither the Parent, the Company
nor any other Subsidiary or Affiliate may make any optional prepayment
(whether directly or indirectly by purchase or other acquisition) in respect
of the Notes.
4.8 INTEREST PAYMENTS.
Interest shall accrue on the unpaid principal balance of the Notes on
the basis of a 360-day year of twelve 30-day months:
(a) SERIES A NOTES. With respect to the Series A Notes, at the
rate of 8.06% PER ANNUM and shall be payable to the holders of the Series
A Notes, in arrears, quarterly on the last day of April, July, October
and January in each year, commencing on April 30, 1997, until the
principal amount of the Series A Notes in respect of which such interest
shall have accrued shall become due and payable, and interest shall
accrue on any overdue principal (including any overdue prepayment of
principal), Make-Whole Amount, if any, and (to the extent permitted by
applicable law) on any overdue installment of interest at a rate equal to
the LESSER of (i) the highest rate allowed by applicable law, and (ii)
10.06% PER ANNUM, and
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(b) SERIES B NOTES. With respect to the Series B Notes, at the
rate of 8.30% PER ANNUM and shall be payable to the holders of the Series
B Notes, in arrears, quarterly on the last day of April, July, October
and January in each year, commencing on April 30, 1997, until the
principal amount of the Series B Notes in respect of which such interest
shall have accrued shall become due and payable, and interest shall
accrue on any overdue principal (including any overdue prepayment of
principal), Make-Whole Amount, if any, and (to the extent permitted by
applicable law) on any overdue installment of interest at a rate equal to
the LESSER of (i) the highest rate allowed by applicable law, and (ii)
10.30% PER ANNUM.
4.9 PAYMENTS ON NOTES.
(a) MANNER OF PAYMENT. The Company shall pay all amounts payable
with respect to each Note (without any presentment of such Notes and
without any notation of such payment being made thereon) by crediting, by
federal funds bank wire transfer, the account of the holder thereof in
any bank in the United States of America as may be designated in writing
by such holder, or in such other manner as may be reasonably directed or
to such other address in the United States of America as may be
reasonably designated in writing by such holder. Annex 1 hereto shall be
deemed to constitute notice, direction or designation (as appropriate) to
the Company with respect to payments as aforesaid. In the absence of
such written direction, all amounts payable with respect to each Note
shall be paid by check mailed and addressed to the registered holder of
such Note at the address shown in the register maintained by the Company
pursuant to Section 5.1 hereof.
(b) PAYMENTS DUE ON HOLIDAYS. If any payment due on, or with
respect to, any Note shall fall due on a day other than a Business Day,
then such payment shall be made on the first Business Day following the
day on which such payment shall have so fallen due, PROVIDED that if all
or any portion of such payment shall consist of a payment of interest,
for purposes of calculating such interest, such payment shall be deemed
to have been originally due on such first following Business Day, such
interest shall accrue and be payable to (but not including) the actual
date of payment and the amount of the next succeeding interest payment
shall be adjusted accordingly.
(c) PAYMENTS, WHEN RECEIVED. Any payment to be made to the holders
of Notes hereunder or under the Notes shall be deemed to have been made
on the Business Day such payment actually becomes available to such
holder at such holder's bank prior to 12:00 noon (local time of such
bank).
5. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES; LIMITATION ON TRANSFER
5.1 REGISTRATION OF NOTES.
The Company will cause to be kept at its office maintained pursuant to
Section 6.3 a register for the registration and transfer of Notes. The name
and address of each holder of one or more Notes, the outstanding principal
amount and Series of each such Note, each transfer thereof and the name and
address of each transferee of one or more Notes shall be registered in such
register. The Person in whose name any Note shall be registered shall be
deemed and treated as the owner and holder thereof for all purposes hereof
and the Company shall not be affected by any notice or knowledge to the
contrary.
5.2 EXCHANGE OF NOTES.
(a) Upon surrender of any Note at the office of the Company
maintained pursuant to Section 6.3 duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder
of such Note or such holder's attorney duly authorized in writing, the
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Company will execute and deliver, at the Company's expense (except as
provided below), new Notes in exchange therefor, of the same Series as
such surrendered Note, in denominations of at least One Hundred Thousand
Dollars ($100,000) (except as may be necessary to reflect any principal
amount not evenly divisible by One Hundred Thousand Dollars ($100,000)),
in an aggregate principal amount equal to the unpaid principal amount of
the surrendered Note. Each such new Note shall be payable to such Person
as such holder may request and shall be substantially in the form of
Exhibit A1 or Exhibit A2, as the case may be. Each such new Note shall be
dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if
no interest shall have been paid thereon. The Company may require
payment of a sum sufficient to cover any stamp tax or governmental charge
imposed in respect of any such transfer of Notes.
(b) The Company will pay the cost of delivering to or from such
holder's home office or custodian bank from or to the Company, insured to
the reasonable satisfaction of such holder, the surrendered Note and any
Note issued in substitution or replacement for the surrendered Note.
5.3 REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership (or of ownership by such
Institutional Investor's nominee) of such loss, theft, destruction or
mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to the Company (PROVIDED that if the holder of
such Note is an Institutional Investor or a nominee of such Institutional
Investor, such Institutional Investor's own unsecured agreement of
indemnity shall be deemed to be satisfactory for such purpose), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense will execute and deliver, in lieu thereof, a
new Note of the same Series, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
5.4 ISSUANCE TAXES.
The Company will pay all taxes (other than taxes on the net income of
any holder of Notes), if any, due in connection with and as the result of the
initial issuance and sale of the Notes and in connection with any
modification of this Agreement, the Notes or any other Financing Document and
shall save each holder of Notes harmless without limitation as to time
against any and all liabilities with respect to all such taxes. The
obligations of the Company under this Section 5.4 shall survive the payment
or prepayment of the Notes and the termination of this Agreement and the
other Financing Documents.
5.5 EXECUTION AND DELIVERY OF NOTES BY GUARANTORS.
Each Guarantor shall, upon the issuance of any new Notes by the Company
pursuant to Section 5.2 or Section 5.3, cause the confirmation of the
Unconditional Guaranty provided therein to be duly executed and delivered in
the form provided on Exhibit A1 or Exhibit A2, as applicable.
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6. COVENANTS
The Company and the Guarantors covenant that on and after the Closing
Date and so long as any of the Notes shall be outstanding:
6.1 PAYMENT OF TAXES AND CLAIMS.
Each of the Company and the Guarantors will, and will cause each other
Subsidiary to, pay before they become delinquent:
(a) all taxes, assessments and governmental charges or levies
imposed upon it or its respective Property; and
(b) all claims or demands of materialmen, mechanics, carriers,
warehousemen, vendors, landlords and other like Persons that, if unpaid,
might result in the creation of a statutory, regulatory or common law Lien
upon its Property,
PROVIDED, that items of the foregoing description need not be paid so long as
such items are being actively contested in good faith and by appropriate
proceedings, adequate book reserves in accordance with GAAP have been
established and maintained with respect thereto, and such items, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
6.2 MAINTENANCE OF PROPERTIES; EXISTENCE; ETC.
Each of the Company and the Guarantors will, and will cause each other
Subsidiary to:
(a) PROPERTY -- maintain its Property in good condition, ordinary
wear and tear and obsolescence excepted, and make all necessary renewals,
replacements, additions, betterments and improvements thereto, PROVIDED
that this Section 6.2(a) shall not prevent the Company, any Guarantor or
any other Subsidiary from discontinuing the operation and the maintenance
of any of its Properties if such discontinuance is desirable in the
conduct of its business and such discontinuance could not reasonably be
expected to have a Material Adverse Effect;
(b) INSURANCE -- maintain or cause to be maintained, with
financially sound and reputable insurers,
(i) insurance with respect to its Property and business
against such casualties and contingencies, of such types and in such
amounts as is customary in the case of business entities of
established reputations engaged in the same or a similar business and
similarly situated, and
(ii) such other insurance as is required to be maintained on
its Property and business pursuant to section 6.2 of the Bank Credit
Agreement;
(c) FINANCIAL RECORDS -- keep accurate and complete books of records
and accounts in which accurate and complete entries shall be made of all
its business transactions and that will permit the provision of accurate
and complete financial statements in accordance with GAAP;
(d) EXISTENCE AND RIGHTS --
(i) (A) do or cause to be done all things necessary to
preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises, except
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(I) where the failure to do so, individually or
in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and
(II) in connection with a Permitted REIT
Conversion;
and
(B) maintain each Subsidiary as a Subsidiary;
in each case except as permitted by Section 6.7 and Section
6.8(b);
and
(ii) maintain in full force and effect, comply with all of the
terms and provisions of, and renew or extend the term of all Leasehold
Property Leases and all Restaurant Operator Leases except where the
failure to so maintain, comply, renew or extend, individually or in
the aggregate for such failures, could not reasonably be expected to
have a Material Adverse Effect; and
(e) COMPLIANCE WITH LAW -- not be in violation of any law, ordinance
or governmental rule or regulation to which it is subject (including,
without limitation, any Environmental Protection Law) and not fail to
obtain any license, certificate, permit, franchise or other governmental
authorization necessary to the ownership of its Properties or to the
conduct of its business if such violations or failures to obtain,
individually or in the aggregate for such violations or failures, could
reasonably be expected to have a Material Adverse Effect.
6.3 PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.
The Company will punctually pay, or cause to be paid, the principal of
and interest (and Make-Whole Amount, if any) on the Notes, as and when the
same shall become due according to the terms of this Agreement and of the
Notes, and will maintain an office at the address of the Company as provided
in Section 11.1 where notices, presentations and demands in respect of this
Agreement, the Notes or the other Financing Documents may be made upon it.
Such office will be maintained at such address until such time as the Company
shall notify the holders of the Notes of any change of location of such
office, which will in any event be located within the United States of
America.
6.4 FIXED CHARGES COVERAGE RATIO.
The Parent will not, at any time, permit the Fixed Charges Coverage
Ratio to be less than 2.00 to 1.
6.5 CONSOLIDATED PARTNERS' CAPITAL; DISTRIBUTIONS.
(a) CONSOLIDATED PARTNERS' CAPITAL. The Parent will not, at any
time, permit
(i) Consolidated Partners' Capital to be less than the SUM of
(A) $60,000,000, PLUS
(B) an aggregate amount equal to 100% of the Net
Proceeds of Partnership Interests of the Parent and the Net
Proceeds of Partnership Interests of the REIT Party (other than
equity comprising the purchase price for real Property which is
included in the Collateral) for the period commencing
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on the Closing Date and ending on the date of determination
thereof, and
(ii) Combined GAAP Partners' Capital to be less than the amount
equal to
(A) the SUM of
(I) $100,000,000, PLUS
(II) an amount equal to 100% of the aggregate Net
Proceeds of Partnership Interests of the Parent, the
Company or any Affiliate (as defined in the Bank Credit
Agreement in effect on the Closing Date) of either of
them (other than equity comprising the purchase price for
real Property paid by such Persons which is included in
the Collateral) for the period commencing on the Closing
Date and ending on the date of determination thereof,
MINUS
(B) the amount of partners' capital returned to the
holders of partnership interests (or other equity interests) in
the Parent or the REIT Party after September 30, 1996.
(b) DISTRIBUTIONS. Neither the Parent nor any Subsidiary will make
any Distribution in any calendar year if:
(i) the amount of such Distribution, together with all other
Distributions made in such calendar year, would exceed an amount
equal to the SUM of
(A) Consolidated Net Earnings for the portion of such
calendar year ended as of the date of such proposed
Distribution, PLUS
(B) the aggregate amount (to the extent, and only to
the extent such aggregate amount was deducted in the computation
of such Consolidated Net Earnings) of
(I) the amount of depreciation and amortization
of the Parent, the Company and the other Subsidiaries,
PLUS
(II) amounts in reduction of investment in direct
financing leases of the Parent, the Company and the other
Subsidiaries, PLUS
(III) provision for write-downs and dispositions of
real estate of the Parent, the Company and the other
Subsidiaries; or
(ii) as of the time of such Distribution, or after giving
effect thereto, a Default or an Event of Default exists or would
exist.
Notwithstanding anything to the contrary contained in this Section 6.5(b),
the obligations set forth in this Section 6.5(b) shall remain full force
and effect only so long as the Bank Credit Agreement contains a provision
substantially similar to section 7.1 of the Bank Credit Agreement (as in
effect on the Closing Date) relating to Distributions.
6.6 MAINTENANCE OF CONSOLIDATED FUNDED DEBT.
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The Parent will not at any time permit Consolidated Funded Debt to
exceed 55% of Consolidated Total Capitalization determined at such time.
6.7 MERGER, CONSOLIDATION, ETC.
The Parent will not, and will not permit the Company or any other
Subsidiary to, consolidate with or merge with any other Person or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to any Person (except that (x) the Company may
consolidate with or merge with the Parent in connection with a Permitted REIT
Conversion and (y) a Subsidiary (other than the Company) may (I) consolidate
with or merge with, or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to, the Parent or a
Wholly-Owned Subsidiary and (II) convey, transfer or lease all of its assets
in compliance with the provisions of Section 6.8), PROVIDED that, subject in
all cases to the provisions set forth in Section 4.3, the foregoing
restriction does not apply to the consolidation or merger of the Parent with,
or the conveyance, transfer or lease of substantially all of the assets of
the Parent in a single transaction or series of transactions to, any Person
so long as:
(a) the successor entity formed by such consolidation or the
survivor of such merger or the Person that acquires by conveyance,
transfer or lease substantially all of the assets of the Parent as an
entirety, as the case may be (the "SUCCESSOR ENTITY"), shall be a solvent
entity organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;
(b) if the Parent is not the Successor Entity, such entity
shall have executed and delivered to each holder of Notes its assumption
of the due and punctual performance and observance of each covenant and
condition of this Agreement, the Notes and the other Financing Documents
(pursuant to such agreements and instruments as shall be reasonably
satisfactory to the Required Holders), and the Parent shall have caused
to be delivered to each holder of Notes an opinion of nationally
recognized independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all agreements
or instruments effecting such assumption are enforceable in accordance
with their terms and comply with the terms hereof; and
(c) immediately after giving effect to such transaction no
Default or Event of Default would exist.
No such conveyance, transfer or lease of substantially all of the assets of
the Parent shall have the effect of releasing the Parent or any Successor
Entity from its liability under this Agreement, the Notes or the other
Financing Documents.
6.8 SALE OF ASSETS, ETC.
(a) SALE OF ASSETS. Except as permitted under Section 6.7, the
Parent and the Company will not, nor will the Parent or the Company permit
any other Subsidiary to, make any Asset Disposition unless:
(i) in the good faith opinion of the Parent or the Company,
as the case may be, the Asset Disposition is in exchange for
consideration having a Fair Market Value at least equal to that of
the Property exchanged and is in the best interest of the Parent,
the Company or such other Subsidiary;
(ii) immediately after giving effect to the Asset Disposition,
no Default or Event of Default would exist; and
(iii) immediately after giving effect to the Asset Disposition,
the Disposition Value of all Property that was the subject of any
Asset Disposition occurring on or after the Closing
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Date would not exceed 25% of Consolidated Total Assets as of the end
of the then most recently ended fiscal quarter of the Parent.
If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application or a Property Reinvestment Application within 365
days after such Transfer, then such Transfer, only for the purpose of
determining compliance with subsection (iii) of this Section 6.8(a) as of
any date, shall be deemed not to be an Asset Disposition.
(b) DISPOSAL OF OWNERSHIP OF A SUBSIDIARY. The Parent and the
Company will not, and will not permit any other Subsidiary to, sell or
otherwise dispose of any shares of Subsidiary Stock, nor will the Parent
or the Company permit any such Subsidiary to issue, sell or otherwise
dispose of any shares of its own Subsidiary Stock, PROVIDED that the
foregoing restrictions do not apply to:
(i) the issue of directors' qualifying shares by any such
Subsidiary;
(ii) any such Transfer of Subsidiary Stock constituting a
Transfer described in clause (a) of the definition of "Asset
Disposition"; and
(iii) the Transfer of all of the Subsidiary Stock of a
Subsidiary owned by the Parent and the other Subsidiaries if:
(A) such Transfer satisfies the requirements of Section
6.8(a)(iii),
(B) in connection with such Transfer the entire
Investment (whether represented by stock, Debt, claims or
otherwise) of the Parent and the other Subsidiaries in such
Subsidiary is sold, transferred or otherwise disposed of to a
Person other than (x) the Company, (y) another Subsidiary not
being simultaneously disposed of, or (z) an Affiliate, and
(C) the Subsidiary being disposed of has no continuing
Investment in any other Subsidiary not being simultaneously
disposed of or in the Parent.
(c) OWNERSHIP OF THE COMPANY. Notwithstanding the provisions of
Section 6.8(a) or Section 6.8(b), or any of the other terms or provisions
hereof, at all times prior to a Permitted REIT Conversion,
(i) the Parent shall own and control at least 99.01% of the
outstanding limited partnership interests of the Company, and
(ii) U.S. Restaurant Properties, Inc. shall own and control all
of the limited partnership interests of the Company not owned by the
Parent.
6.9 LIENS.
(a) NEGATIVE PLEDGE. The Parent and the Company will not, and
will not permit any other Subsidiary to, at any time after the
Collateral Release Date, directly or indirectly create, incur, assume or
permit to exist (upon the happening of a contingency or otherwise) any
Lien on or with respect to any Property (including, without limitation,
any document or instrument in respect of goods or accounts receivable)
of the Parent, the Company or any such other Subsidiary, whether now
owned or held or hereafter acquired, or any income or profits therefrom
or assign or otherwise convey any right to receive income or profits
(unless it makes, or causes to be made, effective provision whereby the
Notes will be equally and ratably secured with any and all other
obligations thereby
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secured, such security to be pursuant to an agreement reasonably
satisfactory to the Required Holders and, in any such case, the Notes
shall have the benefit, to the fullest extent that, and with such
priority as, the holders of the Notes may be entitled under applicable
law, of an equitable Lien on such property), except:
(i) Liens for taxes, assessments or other governmental charges
which are not yet due and payable or the payment of which is not at
the time required by Section 6.1;
(ii) Liens
(A) arising from judicial attachments and judgments,
(B) securing appeal bonds or supersedeas bonds, and
(C) arising in connection with court proceedings
(including, without limitation, surety bonds and letters of
credit or any other instrument serving a similar purpose),
PROVIDED that (1) the execution or other enforcement of such Liens is
effectively stayed, (2) the claims secured thereby are being actively
contested in good faith and by appropriate proceedings, (3) adequate
book reserves shall have been established and maintained and shall
exist with respect thereto, and (4) the aggregate amount so secured is
a Permitted Other Secured Obligation;
(iii) Liens incidental to the conduct of the business of the
Parent, the Company and the other Subsidiaries or to the ownership of
the Property and assets of such Person, including pledges or deposits
in connection with workers' compensation and social security taxes,
assessments and charges, PROVIDED that such Liens
(A) were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, and
(B) do not, in the aggregate for all such Liens,
otherwise materially detract from the value of such Property or
assets or materially impair the use thereof in the operation of
the business of such Person;
(iv) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or
encumbrances, in each case incidental to, and not interfering with,
the use of the affected Property in the ordinary conduct of the
business of the Parent, the Company or any of the other Subsidiaries,
PROVIDED that such Liens do not, in the aggregate for all such Liens,
materially detract from the value of such Property;
(v) Liens existing on the Closing Date and fully described in
PART 6.9(a) OF ANNEX 3;
(vi) Liens on property or assets of the Parent, the Company or
any other Subsidiary securing Debt owing to the Parent, the Company or
to another Wholly-Owned Subsidiary;
(vii) Liens securing renewals, extensions (as to time) and
refinancings of Debt secured by the Liens described in clause (v) of
this Section 6.9(a), PROVIDED that
(A) the amount of Debt secured by each such Lien is not
increased in excess of the amount of such Debt outstanding on
the date of such renewal, extension or refinancing,
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(B) none of such Liens is extended to encumber or
otherwise relate to or cover any additional Property of the
Parent, the Company or any other Subsidiary, and
(C) immediately prior to, and immediately after the
consummation of such renewal, extension or refinancing, and
after giving effect thereto, no Default or Event of Default
exists or would exist;
(viii) any Lien created to secure all or any part of the
purchase price, or to secure Debt incurred or assumed to pay all or
any part of the purchase price or cost of construction, of Property
(or any improvement thereon) acquired or constructed by the Parent,
the Company or any other Subsidiary after the Closing Date, PROVIDED
that
(A) any such Lien shall extend solely to the item or
items of such Property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other Property (or improvement
thereon) which is an improvement to or is acquired for specific
use in connection with such acquired or constructed Property (or
improvement thereon) or which is real Property being improved
by such acquired or constructed Property (or improvement
thereon),
(B) the principal amount of the Debt secured by any
such Lien shall at no time exceed an amount equal to 100% of the
Fair Market Value (as determined in good faith by the board of
directors of the Managing General Partner of the Company or
other managing board of the Company) of such Property (or
improvement thereon) at the time of such acquisition or
construction, and
(C) any such Lien shall be created contemporaneously
with, or within 180 days after, the acquisition or construction
of such Property; and
(ix) any Lien renewing, extending or refunding any Lien
permitted by the foregoing clause (viii), PROVIDED that (A) the
principal amount of Debt secured by such Lien immediately prior to
such extension, renewal or refunding is not increased, (B) such Lien
is not extended to any other Property, and (C) immediately prior to
and after such extension, renewal or refunding no Default or Event of
Default would exist;
(x) any Lien existing on Property of a Person immediately
prior to its being consolidated with or merged into the Parent, the
Company or another Subsidiary or its becoming a Subsidiary, or any
Lien existing on any Property acquired by the Parent, the Company or
any other Subsidiary at the time such Property is so acquired (whether
or not the Debt secured thereby shall have been assumed), PROVIDED
that
(A) no such Lien shall have been created or assumed in
contemplation of such consolidation or merger or such Person's
becoming a Subsidiary or such acquisition of Property,
(B) each such Lien shall extend solely to the item or
items of Property so acquired and, if required by the terms of
the instrument originally creating such Lien, other Property
which is an improvement to or is acquired for specific use in
connection with such acquired Property, and
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(C) the principal amount of the Debt secured by any
such Lien shall at no time exceed an amount equal to 100% of the
Fair Market Value (as determined in good faith by the board of
directors of the Managing General Partner of the Company or
other managing board of the Company) of such Property at the
time of such acquisition;
(xi) other Liens on Property of the Parent, the Company or the
other Subsidiaries not otherwise permitted pursuant to clause (i)
through clause (x), inclusive, of this Section 6.9(a), PROVIDED that
(A) the Debt or other obligation secured by such Lien
is a Permitted Other Secured Obligation; and
(B) prior to, and after giving effect to the
incurrence, assumption or creation of any such Lien, and to any
concurrent application of the proceeds of any Debt or other
obligation secured thereby, no Default or Event of Default would
exist.
(b) FINANCING STATEMENTS. The Parent and the Company will not, and
will not permit any other Subsidiary to, sign or file a financing
statement under the Uniform Commercial Code of any jurisdiction that
names the Parent, the Company or any other Subsidiary as debtor, or sign
any security agreement authorizing any secured party thereunder to file
any such financing statement, except, in any such case, a financing
statement filed or to be filed to perfect or protect a security interest
that the Parent, the Company or any such other Subsidiary is entitled to
create, assume or incur, or permit to exist, under the foregoing
provisions of this Section 6.9 or to evidence solely for informational
purposes a lessor's interest in Property leased to the Parent, the
Company or any such other Subsidiary.
(c) DEEMED INCURRENCE OF LIENS. For the purposes of this Section
6.9, any Person becoming a Subsidiary after the Collateral Release Date
shall be deemed to have incurred all of its then outstanding Liens at the
time it becomes a Subsidiary, and any Person extending, renewing or
refunding any Debt secured by any Lien shall be deemed to have incurred
such Lien at the time of such extension, renewal or refunding.
6.10 UNENCUMBERED ASSET RATIO.
The Parent will not, at any time after the Collateral Release Date,
permit the Unencumbered Asset Ratio to be less than 1.50 to 1.
6.11 ADDITIONAL SECURITY.
(a) ADDITIONAL SUBSIDIARIES. The Parent and the Company will, not
later than ten (10) Business Days after any Person becomes a Subsidiary,
cause such Person to
(i) if such Person is required by the Bank Credit Agreement
to deliver the Banks (or the Bank Agent, for the benefit of the Banks)
a Guaranty of the Debt evidenced by the Bank Credit Agreement, but in
any event if such Person is an Affiliate which the Company elects to
be the REIT Party after complying with the provisions of this Section
6.11, execute and deliver to each holder of Notes manually signed
originals of a guaranty agreement containing terms substantially
identical to the terms of the Unconditional Guaranty, and
(ii) if the Collateral Release Date shall not have occurred,
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(A) manually signed originals of a joinder agreement
providing that such Person shall become a party to the
Intercreditor/Collateral Agency Agreement,
(B) copies of manually signed originals of Mortgages
and Assignment of Rents creating first priority Liens on all
real Properties and related leases and rents of such Person in
favor of the Collateral Agent, and
(C) copies of manually signed originals of any one or
more ALTA (1970-B) Mortgage Loan Policies of Title Insurance
issued by a financially sound and reputable title insurance
company with respect to each of the interests in real Property
covered by such Mortgages and Assignments of Rents.
The foregoing items shall be accompanied by (i) a written notice, signed
by a Senior Officer of the Company, making reference to this Section of
this Agreement, stating that such Person shall have become a Subsidiary
and specifying the manner in which such Person shall have become a
Subsidiary, the jurisdiction of organization of such Person and the
percentage of its equity interests (and the nature of such equity
interests) owned by the Parent, the Company and the other Subsidiaries,
(ii) copies of the corporate charter and bylaws, limited partnership
agreement or other constitutive documents of such Person and resolutions
of the board of directors of such Person or its managing general partner
or other Person having managerial power with respect to such Person
authorizing its execution and delivery of the foregoing agreements and
the transactions contemplated thereby (in each case, certified as correct
and complete copies by the secretary or an assistant secretary or similar
officer of such Person) and (iii) a legal opinion, satisfactory in form,
scope and substance to the Required Holders, of independent counsel to
the effect (A) that the Financing Documents to which such Person is then
becoming a party are enforceable in accordance with their terms and (B)
if the Collateral Release Date shall not yet have occurred, that the
Liens against the Property of such Person shall have been created and
perfected in accordance with the requirements of the Security Documents.
(b) ADDITIONAL PROPERTIES. If the Collateral Release Date shall
have not occurred, the Parent and the Company will, not later than ten
(10) Business Days after the Parent, the Company or any other Subsidiary
acquires any interest in real Property (other than real Property located
in the State of Florida) not owned by such Person on the Closing Date
(such Property being referred to as "AFTER-ACQUIRED PROPERTY") execute
and deliver, or cause such Subsidiary to execute and deliver to each
holder of Notes and the Collateral Agent,
(i) manually signed originals of Mortgages and Assignments of
Rents creating first priority Liens on all such After-Acquired
Property and related leases and rents of such Person in favor of the
Collateral Agent, and
(ii) one or more ALTA (1970-B) Mortgage Loan Policies of Title
Insurance issued by a financially sound and reputable title insurance
company with respect to each of the interests in each parcel or item
of After-Acquired Property covered by such Mortgages and Assignments
of Rents.
The Parent and the Company will, before the Parent, the Company, any
other Subsidiary shall acquire any interest in real Property not owned by
such Person on the Closing Date, obtain (and a Senior Officer of the
Company will review) a Phase I environmental assessment of such real
Property and, in each such case, if any potential environmental issue is
revealed by such Phase I environmental assessment that could reasonably
be expected to result in the real Property being in violation of
applicable law, a
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<PAGE>
satisfactory Phase II environmental assessment of such real Property
shall be obtained and reviewed by a Senior Officer of the Company or
the Parent, as the case may be, prior to consummating such acquisition.
(c) COLLATERAL RATIO. Notwithstanding the foregoing provisions of
this Section 6.11, if the Notes are to be secured as provided in Section
4.4(d)(ii), the Company shall comply with the provisions of this Section
6.11 to insure that the aggregate net book value of the Collateral at
all times is not less than 200% of the outstanding principal amount of
the Notes.
6.12 TRANSACTIONS WITH AFFILIATES.
The Parent and the Company will not, and will not permit any other
Subsidiary to, enter into any transaction, including, without limitation, the
purchase, sale, lease or exchange of Property or the rendering of any
service, with any Affiliate, except in the ordinary course of, and pursuant
to the reasonable requirements of, the business of the Parent, the Company or
such other Subsidiary and upon fair and reasonable terms no less favorable to
the Parent, the Company or such other Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
6.13 RESTRICTIONS ON DIVIDENDS, ETC.
The Parent and the Company will not permit any Subsidiary to create or
otherwise cause or suffer to exist or become effective any restriction (other
than statutory, regulatory or common law restrictions) on the right or power
of any Subsidiary to
(a) pay dividends or make any other distributions on such
Subsidiary's capital stock, limited partnership interests or other equity
interests,
(b) pay any Debt owed by such Subsidiary to the Parent, the Company
or any other Subsidiary, or
(c) transfer any of its Property to the Parent, the Company or any
other Subsidiary.
6.14 NATURE OF BUSINESS.
The Parent and the Company will not, nor will they permit any other
Subsidiary to, engage in any business if, as a result thereof, the principal
businesses of the Parent, the Company and the other Subsidiaries, taken as a
whole, would be other than that of developing, acquiring, owning, and
managing income-producing properties which are leased on a triple net basis
to operators of fast food and casual dining restaurants, primarily Burger
King and other national and regional brands.
6.15 PENSION PLANS.
(a) COMPLIANCE. The Parent and the Company will, and will cause
each ERISA Affiliate to, at all times with respect to each Pension Plan
comply with all applicable provisions of ERISA and the IRC.
(b) PROHIBITED ACTIONS. The Parent and the Company will not, and
will not permit any ERISA Affiliate to:
(i) engage in any "prohibited transaction" (as such term is
defined in section 406 of ERISA or section 4975 of the IRC) or
"reportable event" (as such term is defined in section 4043 of ERISA)
that could result in the imposition of a tax or penalty;
U.S. RESTAURANT PROPERTIES OPERATING L.P. 34 NOTE PURCHASE AGREEMENT
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(ii) incur with respect to any Pension Plan any "accumulated
funding deficiency" (as such term is defined in section 302 of ERISA),
whether or not waived;
(iii) terminate any Pension Plan in a manner that could result
in the imposition of a Lien on the Property of the Parent, the Company
or any other Subsidiary pursuant to section 4068 of ERISA or the
creation of any liability under section 4062 of ERISA;
(iv) fail to make any payment required by section 515 of ERISA;
(v) incur any withdrawal liability under Title IV of ERISA
with respect to any Multiemployer Plan or any liability as a result of
the termination of any Multiemployer Plan; or
(vi) incur any liability or suffer the existence of any Lien
on the Property of the Parent, the Company or any ERISA Affiliate, in
either case pursuant to Title I or Title IV of ERISA or pursuant to
the penalty or excise tax or security provisions of the IRC,
if the aggregate amount of the taxes, penalties, funding deficiencies,
interest, amounts secured by Liens, and other liabilities in respect of any
of the foregoing could reasonably be expected to have a Material Adverse
Effect.
(c) FOREIGN PENSION PLANS. The Parent and the Company will, and
will cause each other Subsidiary to, at all times, comply in all material
respects with all laws, regulations and orders applicable to the
establishment, operation, administration and maintenance of all Foreign
Pension Plans, and pay when due all premiums, contributions and any other
amounts required by applicable Foreign Pension Plan documents or applicable
laws, except where the failure to comply with such laws, regulations and
orders, and to make such payments, in the aggregate for all such failures,
could not reasonably be expected to have a Material Adverse Effect.
6.16 PRIVATE OFFERING.
The Parent and the Company will not, and will not permit any Person
acting on their behalf to, offer the Notes or any part thereof or any similar
Securities for issue or sale to, or solicit any offer to acquire any of the
same from, any Person so as to bring the issuance and sale of the Notes
within the provisions of section 5 of the Securities Act.
6.17 AMENDMENT OF PARTNERSHIP DOCUMENTS.
The Parent and the Company shall not modify, amend, supplement or
terminate, or agree to amend, modify, supplement or terminate, either
(a) the Parent Partnership Certificate or the Parent Partnership
Agreement, or
(b) the Company Partnership Certificate or the Company Partnership
Agreement,
except in connection with a Permitted REIT Conversion and as described in the
proxy statement delivered to the partners of the Parent in connection with
the Permitted REIT Conversion. Neither the Parent nor the Company shall
allow or permit any removal, addition or substitution of a general partner in
the Parent or the Company. Notwithstanding anything to the contrary
contained in this Section 6.17, the obligations set forth in this Section
6.17 shall remain in full force and effect only so long as the Bank Credit
Agreement contains a provision substantially similar to section 7.15 of the
Bank Credit Agreement (as in effect
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on the Closing Date) relating to modifications to the partnership
organization of the Company or the Parent.
6.18 POST-CLOSING MATTERS.
The Parent and the Company agree, and will cause each Subsidiary, to
deliver the Mortgages and Assignment of Rents designated to be delivered
post-closing in PART B OF ANNEX 4 in accordance with the terms and provisions
of such Annex.
6.19 EXCLUDED SECURITIZATION SUBSIDIARY.
The Parent and the Company agree, at all times when the Excluded
Securitization Subsidiary shall exist, not to, directly or indirectly, take,
nor to permit any Subsidiary to take, any action which would result in the
assets and liabilities of any one or more of the Parent, the Company or any
Subsidiary being substantively consolidated with and into the assets and
liabilities of the Excluded Securitization Subsidiary in the bankruptcy
proceedings of the Excluded Securitization Subsidiary. The Parent and the
Company agree, within fifteen (15) days of the written request of the
Required Holders, to cause a legal opinion (of counsel reasonably
satisfactory to the Required Holders) to be delivered to the holders of Notes
which opinion states that, at such time, the assets and liabilities of any
one or more of the Parent, the Company or any Subsidiary would not be
substantively consolidated with and into the assets and liabilities of the
Excluded Securitization Subsidiary in the bankruptcy proceedings of the
Excluded Securitization Subsidiary. Such legal opinion shall not be subject
to any qualifications other than those which are typically found in legal
opinions covering such matters.
7. INFORMATION AS TO PARENT, COMPANY AND OTHER SUBSIDIARIES
7.1 FINANCIAL AND BUSINESS INFORMATION.
The Company and the Guarantor will deliver to each holder of Notes (and,
with respect to the matters identified in clause (i) and clause (j) hereof,
the Collateral Agent):
(a) QUARTERLY STATEMENTS -- as soon as practicable after the end of
each quarterly fiscal period in each fiscal year of the Parent (other than
the last quarterly fiscal period of each such fiscal year), and in any
event within forty-five (45) days thereafter, duplicate copies of
(i) (A) consolidated balance sheets of the Parent and the
Subsidiaries and (B) a balance sheet of the REIT Party, in each case,
as at the end of such quarter, and
(ii) (A) consolidated statements of income and partners'
capital and cash flows of the Parent and the Subsidiaries and (B) a
statement of income and partners' capital and cash flows of the REIT
Party, in each case, for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending with
such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally and certified as complete and correct,
subject to changes resulting from year-end adjustments, by a Senior
Financial Officer, and accompanied by the certificate required by Section
7.2 hereof;
(b) ANNUAL STATEMENTS -- as soon as practicable after the end of
each fiscal year of the Parent, and in any event within ninety (90) days
thereafter, duplicate copies of
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(i) (A) consolidated balance sheets of the Parent and the
Subsidiaries and (B) a balance sheet of the REIT Party, in each case,
as at the end of such year, and
(ii) consolidated statements of income and partners' capital
and cash flows of the Parent and the Subsidiaries and (B) a statement
of income and partners' capital and cash flows of the REIT Party, in
each case, for such year,
setting forth in each case in comparative form consolidated figures for the
previous fiscal year, all in reasonable detail, prepared in accordance with
GAAP and accompanied by
(A) in the case of such financial statements, an
opinion of independent certified public accountants of
recognized national standing, which opinion shall, without
qualification (including, without limitation, qualifications
related to the scope of the audit or the ability of the Parent
or any Subsidiary to continue as a going concern), state that
such financial statements present fairly, in all material
respects, the financial position of the companies being reported
upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the examination
of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for
such opinion in the circumstances,
(B) a certification by a Senior Financial Officer that
such statements are complete and correct, and
(C) the certificates required by Section 7.2 and
Section 7.3 hereof;
(c) AUDIT REPORTS -- promptly upon receipt thereof, a copy of each
other report submitted to the Parent, the Company or any other Subsidiary
at any time after the Closing Date by independent accountants in
connection with any annual, interim or special audit made by them of the
books of the Parent, the Company or any other Subsidiary;
(d) SEC AND OTHER REPORTS -- promptly upon their becoming available:
(i) each financial statement, report, notice or proxy
statement sent by the Parent, the Company or any other Subsidiary to
limited partners, stockholders or other holders of equity interests
generally,
(ii) each regular or periodic report (including, without
limitation, each Form 10-K, Form 10-Q and Form 8-K), any registration
statement which shall have become effective, and each final prospectus
and all amendments thereto filed by the Parent, the Company or any
other Subsidiary with the Securities and Exchange Commission (and any
successor agency), and
(iii) all press releases and other statements made available by
the Parent, the Company or any other Subsidiary to the public
concerning material developments in the business of the Parent, the
Company or the other Subsidiaries;
(e) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- within two (2) Business
Days of a Senior Officer of the Company or any Guarantor becoming aware of
the existence of any condition or event which constitutes a
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Default or an Event of Default, a written notice specifying the nature
and period of existence thereof and what action the Company and the
Guarantors are taking or propose to take with respect thereto;
(f) NOTICE OF CLAIMED DEFAULT -- within two (2) Business Days of a
Senior Officer of the Company or any Guarantor becoming aware that the
holder of any Note, or of any other Debt of the Parent, the Company or
any other Subsidiary, shall have given notice or taken any other action
with respect to a claimed Default, Event of Default, default or event of
default, a written notice specifying the notice given or action taken by
such holder and the nature of the claimed Default, Event of Default,
default or event of default and what action the Company and the
Guarantors are taking or propose to take with respect thereto;
(g) ERISA --
(i) within two (2) Business Days of becoming aware of the
occurrence of any "reportable event" (as such term is defined in
section 4043 of ERISA) for which notice thereof has not been waived
pursuant to regulations of the DOL, or "prohibited transaction" (as
such term is defined in section 406 of ERISA or section 4975 of the
IRC) in connection with any Pension Plan or any trust created
thereunder, a written notice specifying the nature thereof, what
action the Company and the Guarantors are taking or propose to take
with respect thereto, and, when known, any action taken by the IRS,
the DOL or the PBGC with respect thereto; and
(ii) prompt written notice of and, where applicable, a
description of
(A) any notice from the PBGC in respect of the
commencement of any proceedings pursuant to section 4042 of
ERISA to terminate any Pension Plan or for the appointment of
a trustee to administer any Pension Plan, and any distress
termination notice delivered to the PBGC under section 4041 of
ERISA in respect of any Pension Plan, and any determination of
the PBGC in respect thereof,
(B) the placement of any Multiemployer Plan in
reorganization status under Title IV of ERISA, any Multiemployer
Plan becoming "insolvent" (as such term is defined in section
4245 of ERISA) under Title IV of ERISA, or the whole or partial
withdrawal of the Parent, the Company or any other ERISA
Affiliate from any Multiemployer Plan and the withdrawal
liability incurred in connection therewith, or
(C) the occurrence of any event, transaction or
condition that could result in the incurrence of any liability
of the Parent, the Company or any other ERISA Affiliate or the
imposition of a Lien on the Property of the Parent, the Company
or any other ERISA Affiliate, in either case pursuant to Title
I or Title IV of ERISA or pursuant to the penalty or excise tax
or security provisions of the IRC,
PROVIDED that the Company and the Guarantors shall not be required to
deliver any such notice at any time when the aggregate amount of the
actual or potential liability of the Parent, the Company and the other
Subsidiaries in respect of all such events could not reasonably be
expected to have a Material Adverse Effect;
(h) ACTIONS, PROCEEDINGS -- promptly after the commencement of any
action or proceeding relating to the Parent, the Company or any other
Subsidiary in any court or before any Governmental Authority or
arbitration board or tribunal as to which there is a reasonable
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possibility of an adverse determination and that, if adversely
determined, is reasonably likely to have a Material Adverse Effect, a
written notice specifying the nature and period of existence thereof and
what action the Company and the Guarantors are taking or propose to take
with respect thereto;
(i) OTHER CREDITORS -- promptly upon the request of any holder of
Notes, copies of any statement, report or certificate furnished to any
holder of Debt of the Parent, the Company or any other Subsidiary
(including, without limitation, statements, reports and certificates
delivered to the Banks pursuant to, or in connection with, the Bank
Credit Agreement) to the extent that the information contained in such
statement, report or certificate has not already been delivered to each
holder of Notes;
(j) RULE 144A -- promptly upon the request of any holder of Notes,
information required to comply with 17 C.F.R. 230.144A, as amended from
time to time; and
(k) REQUESTED INFORMATION -- with reasonable promptness, such other
data and information as from time to time may be requested by any holder of
Notes.
7.2 OFFICERS' CERTIFICATES.
Each set of financial statements delivered to each holder of Notes
pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Parent, the
Company and the other Subsidiaries were in compliance with the
requirements of Section 6.4 through Section 6.10, inclusive, during the
period covered by the income statement then being furnished (including,
without limitation, with respect to each such Section, where applicable,
the calculations of the maximum or minimum amount, ratio or percentage,
as the case may be, permissible under the terms of such Sections, and the
calculation of the amounts, ratio or percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that the signer has reviewed
the relevant terms hereof and of the other Financing Documents and has
made, or caused to be made, under such signer's supervision, a review of
the transactions and conditions of the Parent, the Company and the other
Subsidiaries from the beginning of the accounting period covered by the
income statements being delivered therewith to the date of the
certificate and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes a Default
or an Event of Default or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action the Company and the Guarantors shall have taken or propose to take
with respect thereto.
7.3 ACCOUNTANTS' CERTIFICATES.
Each set of annual financial statements delivered pursuant to Section
7.1(b) shall be accompanied by a certificate of the accountants who certify
such financial statements, stating that they have reviewed this Agreement and
stating further, that, in making their audit, such accountants have not
become aware of any condition or event that then constitutes a Default or an
Event of Default unless such accountants are aware that any such condition or
event then exists, and in such case specifying the nature and period of
existence thereof.
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7.4 INSPECTION.
The Company and the Guarantors will permit the representatives of each
holder of Notes and the Collateral Agent, at the expense of the Company and
the Guarantors at any time when a Default or an Event of Default exists, and
otherwise at the expense of such holder or the Collateral Agent, to visit and
inspect any of the Properties of the Parent, the Company or any other
Subsidiary, to examine all their respective books of account, records,
reports and other papers, to make copies and extracts therefrom and to
discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants (and by this provision
the Company and the Guarantors authorize such accountants to discuss the
finances and affairs of the Parent, the Company and the other Subsidiaries),
all at such reasonable times and as often as may be reasonably requested.
7.5 CONFIDENTIAL INFORMATION.
For the purposes of this Section 7.5, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Parent, the Company or
any other Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement or the other Financing Documents that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by you as being confidential information
of the Parent, the Company or such other Subsidiary, PROVIDED that such term
does not include information that:
(a) was publicly known or otherwise known to you prior to the time
of such disclosure;
(b) subsequently becomes publicly known through no act or omission
by you or any person acting on your behalf;
(c) otherwise becomes known to you other than through disclosure by
the Parent, the Company or any other Subsidiary; or
(d) constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available.
You will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by you in good faith to protect confidential
information of third parties delivered to you, PROVIDED that you may deliver or
disclose Confidential Information to:
(i) your directors, officers, trustees, employees, agents, attorneys
and affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by your Notes);
(ii) your financial advisors and other professional advisors who
agree to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 7.5;
(iii) any other holder of any Note;
(iv) any Institutional Investor to which you sell or offer to sell
such Note or any part thereof or any participation therein (if such Person
has been notified in writing prior to its receipt of such Confidential
Information of the provisions of this Section 7.5);
(v) any Person from which you offer to purchase any Security of the
Parent, the Company or any other Subsidiaries (if such Person has been
notified in writing prior to its receipt of such Confidential Information
of the provisions of this Section 7.5);
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(vi) any federal or state regulatory authority having jurisdiction
over you;
(vii) the National Association of Insurance Commissioners or any
similar organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio; or
(viii) any other Person to which such delivery or disclosure may
be necessary or appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to you, (x) in response to any subpoena or
other legal process, (y) in connection with any litigation to which you are
is a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the
rights and remedies under your Notes, this Agreement and the other
Financing Documents.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 7.5
as though it were a party to this Agreement. On reasonable request by the
Company or a Guarantor in connection with the delivery to any holder of a
Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will confirm in writing that it
is bound by the provisions of this Section 7.5.
8. EVENTS OF DEFAULT
8.1 NATURE OF EVENTS.
An "Event of Default" shall exist if any of the following occurs and is
continuing:
(a) PRINCIPAL OR MAKE-WHOLE AMOUNT PAYMENTS -- the Company shall
fail to make any payment of principal or Make-Whole Amount on any Note on
or before the date such payment is due;
(b) INTEREST PAYMENTS -- the Company shall fail to make any payment
of interest on any Note on or before five (5) Business Days after the date
such payment is due;
(c) PARTICULAR COVENANT DEFAULTS -- the Parent, the Company or any
other Subsidiary shall fail to perform, observe or comply with any covenant
contained in Section 6.4 through Section 6.14, inclusive, in Section 6.16
or Section 6.17, in Section 7.1(e) or Section 7.1(f), or in Section 10;
(d) OTHER DEFAULTS -- the Parent, the Company or any other
Subsidiary shall fail to comply with any other provision hereof or of any
other Financing Document, and such failure continues for more than thirty
(30) days after such failure shall first become known to any Senior Officer
of the Company or any Guarantor;
(e) WARRANTIES OR REPRESENTATIONS -- any warranty, representation
or other statement by or on behalf of the Parent, the Company or any
Subsidiary contained herein or in any Financing Document, or in any
certificate, instrument or other statement furnished in compliance with or
in reference hereto or thereto shall have been false or misleading in any
material respect when made;
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(f) DEFAULT ON DEBT OR SECURITY --
(i) the Parent, the Company or any Subsidiary shall fail to
make any payment on any Debt or any Security when due;
(ii) any event shall occur or any condition shall exist in
respect of any Debt or any Security of the Parent or any Subsidiary,
or under any agreement securing or relating to any such Debt or
Security, that immediately or with any one or more of the passage of
time or the giving of notice, and that has not been cured, waived or
remedied within forty-five (45) days from the occurrence or existence
thereof:
(A) causes, or permits any holder thereof or a trustee
therefor to cause, such Debt or Security, or a portion thereof,
to become due prior to its stated maturity or prior to its
regularly scheduled date or dates of payment;
(B) permits any one or more of the holders thereof or
a trustee therefor to require the Parent, the Company or any
other Subsidiary to repurchase such Debt or Security from such
holder and any such holder or trustee exercises (or attempts to
exercise) such right; or
(C) permits any one or more of the holders of any
Security of the Parent, the Company, any other Subsidiary or any
Managing General Partner to appoint a substitute general partner
of the Company or the Parent, or to elect a majority of the
directors on the board of directors of the Managing General
Partner of the Company or the Parent;
PROVIDED that the aggregate amount of all obligations in respect of
all such Debt and Securities exceeds at such time Two Million Dollars
($2,000,000); or
(iii) an "Event of Default," shall have occurred or shall exist
(after any applicable period of notice and cure) under, and as defined
in, the Bank Credit Agreement, as amended and as in effect at such
time or any default or event of default shall have occurred or shall
exist (after any applicable period of notice and cure) under any of
the other Bank Debt Documents, as amended and as in effect at such
time;
(g) INVOLUNTARY BANKRUPTCY PROCEEDINGS --
(i) a receiver, liquidator, custodian or trustee of the
Parent, the Company, any other Subsidiary or any Managing General
Partner, or of all or any part of the Property of any such Person,
shall be appointed by court order and such order shall remain in
effect for more than forty-five (45) days, or an order for relief
shall be entered with respect to the Parent, the Company, any other
Subsidiary or any Managing General Partner, or the Parent, the
Company, any other Subsidiary or any Managing General Partner shall be
adjudicated a bankrupt or insolvent;
(ii) any of the Property of the Parent, the Company, any other
Subsidiary or any Managing General Partner shall be sequestered by
court order and such order shall remain in effect for more than
forty-five (45) days; or
(iii) a petition shall be filed against the Parent, the Company,
any other Subsidiary or any Managing General Partner under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any
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jurisdiction, whether now or hereafter in effect, and shall not be
dismissed within forty-five (45) days after such filing;
(h) VOLUNTARY PETITIONS -- the Parent, the Company, any other
Subsidiary or any Managing General Partner shall file a petition in
voluntary bankruptcy or seeking relief under any provision of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation law of any jurisdiction, whether now or
hereafter in effect, or shall consent to the filing of any petition
against it under any such law;
(i) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. -- the Parent, the
Company, any other Subsidiary or any Managing General Partner shall
make an assignment for the benefit of its creditors, or admits in
writing its inability, or fails, to pay its debts generally as they
become due, or shall consent to the appointment of a receiver,
liquidator or trustee of the Parent, the Company, any other Subsidiary
or any Managing General Partner or of all or any part of the Property of
any such Person;
(j) UNDISCHARGED FINAL JUDGMENTS -- a final, non-appealable
judgment or final, non-appealable judgments for the payment of money
aggregating in excess of Two Million Dollars ($2,000,000) is or are
outstanding against one or more of the Parent, the Company or any other
Subsidiary and any one of such judgments shall have been outstanding for
more than forty-five (45) days from the date of its entry and shall not
have been bonded, discharged in full or stayed;
(k) UNCONDITIONAL GUARANTY --
(i) the Unconditional Guaranty shall cease to be in full force
and effect or shall be declared by a court or Governmental Authority
of competent jurisdiction to be void, voidable or unenforceable
against any Guarantor;
(ii) the validity or enforceability of the Unconditional
Guaranty against any Guarantor shall be contested by any such
Guarantor, or any subsidiary or affiliate thereof; or
(iii) any Guarantor, or any subsidiary or affiliate thereof,
shall deny that such Guarantor has any further liability or obligation
under the Unconditional Guaranty; or
(l) SECURITY INTEREST -- any security interest or Lien granted to
the Collateral Agent pursuant to any Security Document shall fail at any
time to constitute a first priority security interest in or Lien on, or
assignment of, the Collateral described in such Security Document,
subject only to Liens permitted thereunder, or any of the Security
Documents shall cease to be in full force and effect in whole or in part
for any reason whatsoever except as specified therein.
If any action, condition, event or other matter would, at any time,
constitute an Event of Default under any provision of this Section 8.1, then
an Event of Default shall exist, regardless of whether the same or a similar
action, condition, event or other matter is addressed in a different
provision of this Section 8.1 and would not constitute an Event of Default at
such time under such different provision.
8.2 DEFAULT REMEDIES.
(a) ACCELERATION ON EVENT OF DEFAULT.
(i) If an Event of Default specified in clause (g), clause (h)
or clause (i) of Section 8.1 shall exist, all of the Notes at the time
outstanding shall automatically become immediately due and
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payable together with interest accrued thereon and, to the extent
permitted by applicable law, the Make-Whole Amount (if any) in
respect thereof, in each case without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived,
and the Company shall forthwith pay to the holder or holders of all
the Notes then outstanding the entire principal of and interest
accrued on the Notes and, to the extent permitted by applicable
law, the Make-Whole Amount at such time with respect to the
principal amount of the Notes at the time outstanding and all other
amounts owing under the Note Purchase Agreements or the other
Financing Documents to such holder or holders.
(ii) If an Event of Default other than those specified in
clause (g), clause (h) or clause (i) of Section 8.1 shall exist, the
Required Holders may exercise any right, power or remedy permitted to
such holder or holders by law and shall have, in particular, without
limiting the generality of the foregoing, the right to declare the
entire principal of, and all interest accrued on and, to the extent
permitted by applicable law, Make-Whole Amount (if any) in respect of,
all the Notes then outstanding to be, and such Notes shall thereupon
become, forthwith due and payable, without any presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith pay to the holder or holders
of all the Notes then outstanding the entire principal of and interest
accrued on such Notes and, to the extent permitted by applicable law,
the Make-Whole Amount at such time with respect to such principal
amount of the Notes and all other amounts owing under the Note
Purchase Agreements or the other Financing Documents to such holder or
holders.
(b) ACCELERATION ON PAYMENT DEFAULT. During the existence of an
Event of Default described in Section 8.1(a) or Section 8.1(b), and
irrespective of whether the Notes then outstanding shall have been
declared to be due and payable pursuant to Section 8.2(a)(ii), any
holder of Notes that shall have not consented to any waiver with respect
to such Event of Default may, at such holder's option, by notice in
writing to the Company, declare the Notes then held by such holder to
be, and such Notes shall thereupon become, forthwith due and payable
together with all interest accrued thereon, and, to the extent permitted
by applicable law, Make-Whole Amount (if any) in respect thereof,
without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived, and the Company shall
forthwith pay to such holder the entire principal of and interest
accrued on such Notes and, to the extent permitted by applicable law,
the Make-Whole Amount at such time with respect to such principal amount
of such Notes and all other amounts owing under the Note Purchase
Agreements and the other Financing Documents to such holder.
(c) VALUABLE RIGHTS. The Company acknowledges, and the parties
hereto agree, that the right of each holder to maintain its investment
in the Notes free from repayment by the Company (except as herein
specifically provided for) is a valuable right and that the provision
for payment of a Make-Whole Amount by the Company in the event that the
Notes are prepaid or are accelerated as a result of an Event of Default
under certain circumstances is intended to provide compensation for the
deprivation of such right under such circumstances.
(d) OTHER REMEDIES. During the existence of an Event of Default
and irrespective of whether the Notes then outstanding shall have been
declared to be due and payable pursuant to Section 8.2(a)(ii) and
irrespective of whether any holder of Notes then outstanding shall
otherwise have pursued or be pursuing any other rights or remedies, any
holder of Notes may proceed to protect and enforce its rights under this
Agreement and the other Financing Documents and under such Notes by
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exercising such remedies as are available to such holder in respect
thereof under applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any agreement
contained herein or in aid of the exercise of any power granted herein,
PROVIDED that the maturity of such holder's Notes may be accelerated
only in accordance with Section 8.2(a) and Section 8.2(b).
(e) NONWAIVER. No course of dealing on the part of any holder of
Notes nor any delay or failure on the part of any holder of Notes to
exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies.
(f) SECURITY DOCUMENTS. The holders of the Notes shall be
entitled to all of the rights, benefits, and remedies provided in the
Security Documents. No delay or omission of the Collateral Agent or of
any holder or holders of Notes to exercise any right or power arising
from any default on the part of the Company hereunder, under any
Security Document or under any other Financing Document shall exhaust or
impair any such right or power or prevent its exercise during the
continuance of such default. No waiver by the Collateral Agent or any
holder or holders of Notes of any such default, whether such waiver be
full or partial, shall extend to or be taken to affect any subsequent
default, or to impair the rights resulting therefrom except as may
otherwise be provided herein. No remedy hereunder, in any Security
Document or in any other Financing Document is intended to be exclusive
of any other remedy but each and every remedy shall be cumulative and in
addition to any and every other remedy given hereunder or otherwise
existing. By its acceptance of any Note, the holder of each Note shall
be deemed to have agreed to be bound by the applicable provisions of
each of the Security Documents.
8.3 ANNULMENT OF ACCELERATION OF NOTES.
If a declaration is made pursuant to Section 8.2(a)(ii), then and in
every such case, the Required Holders may, by written instrument filed with
the Company, rescind and annul such declaration and the consequences thereof,
PROVIDED that at the time such declaration is annulled and rescinded:
(a) no judgment or decree shall have been entered for the payment
of any moneys due on or pursuant hereto or the Notes;
(b) all arrears of interest upon all the Notes and all other sums
payable hereunder and under the Notes (except any principal of, or
interest or Make-Whole Amount on, the Notes that shall have become due
and payable by reason of such declaration under Section 8.2(a)(ii))
shall have been duly paid; and
(c) each and every other Default and Event of Default shall have
been waived pursuant to Section 11.5 or otherwise made good or cured;
and PROVIDED FURTHER that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
9. INTERPRETATION OF THIS AGREEMENT
9.1 TERMS DEFINED.
As used herein, the following terms have the respective meanings set forth
below or set forth in the Section of this Agreement following such term:
AFFILIATE -- means, at any time, a Person (including, without
limitation, the Excluded Securitization Subsidiary, but excluding each other
Person which is a Subsidiary)
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(a) that directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, the Parent
or the Company,
(b) that beneficially owns or holds five percent (5%) or more of any
class of partnership interests or other voting or equity interests of the
Parent or the Company,
(c) five percent (5%) or more of the voting or equity interests of
which is beneficially owned or held by the Parent, the Company or another
Subsidiary, or
(d) that is a general partner (including, without limitation, any
Managing General Partner), a limited partner, an officer, a director or
a trustee, as the case may be (or a member of the immediate family of a
general partner, a limited partner, an officer, director or trustee) of
the Parent, the Company, any other Subsidiary or any Managing General
Partner,
at such time.
As used in this definition:
CONTROL -- means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by
contract or otherwise.
AFTER-ACQUIRED PROPERTY -- Section 6.11(b).
AGREEMENT, THIS -- means this Note Purchase Agreement, as it may be
amended, supplemented and restated from time to time.
ASSET DISPOSITION -- means any Transfer EXCEPT:
(a) any Transfer from a Subsidiary (other than the Company) to the
Parent, the Company or a Wholly-Owned Subsidiary, so long as immediately
before and immediately after the consummation of any such Transfer and
after giving effect thereto, no Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Parent, the Company or any other
Subsidiary or that is obsolete.
BANK AGENT -- means and includes Comerica Bank Texas, as agent for the
Banks under the Bank Credit Agreement, and any successor agent for the Banks
thereunder.
BANK CREDIT AGREEMENT -- means the Amended and Restated Secured Loan
Agreement, dated as of February 15, 1996, among the Company, the Banks and
the Bank Agent, as amended by (i) that certain First Amendment to Amended and
Restated Secured Loan Agreement, dated as of May 8, 1996, among the Company,
the Parent, the Banks and the Bank Agent, (ii) that certain Second Amended
and Restated Secured Loan Agreement, dated as of December 23, 1996, among the
Company, the Parent, the Banks and the Bank Agent, and as the same may be
amended, modified or supplemented from time to time and in accordance with
its terms and the terms of the Intercreditor/Collateral Agency Agreement.
BANK DEBT DOCUMENTS -- Section 2.22.
BANKS -- means and includes Comerica Bank Texas, Compass Bank, LaSalle
National Bank, First American Bank, SSB, Guaranty Federal Bank, F.S.B., their
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respective successors and assigns, and any additional commercial, banking or
financial institutions which become parties to the Bank Credit Agreement from
time to time.
BUSINESS DAY -- means a day other than a Saturday, a Sunday or a day on
which the bank designated by the holder of a Note to receive for such
holder's account payments on such Note is required by law (other than a
general banking moratorium or holiday for a period exceeding four (4)
consecutive days) to be closed.
BUSINESS TRUST I -- the introductory sentence.
BUSINESS TRUST II -- the introductory sentence.
CAPITAL LEASE -- means, at any time, a lease with respect to which the
lessee is required to recognize, for accounting purposes, the acquisition of
an asset and the incurrence of a liability at such time, or in respect of
which the lessee is required to disclose the amount of such asset and
liability in a note to such lessee's financial statements, in each case in
accordance with GAAP.
CAPITAL LEASE OBLIGATIONS -- means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee
under such Capital Lease which would, in accordance with GAAP, appear as a
liability on, or be disclosed as a liability in a note to, a balance sheet of
such Person.
CAROLINA -- the introductory sentence.
CHANGE IN CONTROL -- means, at any time:
(i) the acquisition, holding or control, directly or indirectly, by
(A) any "person" (as such term is used in section 13(d) and
section 14(d)(2) of the Exchange Act as in effect on the Closing Date)
or
(B) related Persons constituting a "group" (as such term is
used in Rule 13d-5 under the Exchange Act as in effect on the Closing
Date)
(other than by a Permitted Management Transferee or in a Permitted REIT
Conversion), of more than fifty percent (50%) of the Voting Units of the
Parent;
(ii) the acquisition, holding or control, directly or indirectly, by
(A) any "person" (as such term is used in section 13(d) and
section 14(d)(2) of the Exchange Act as in effect on the Closing Date)
or
(B) related Persons constituting a "group" (as such term is
used in Rule 13d-5 under the Exchange Act as in effect on the Closing
Date),
other than the Parent, a Wholly-Owned Subsidiary or a Permitted Management
Transferee, of more than fifty percent (50%) of the Voting Units of the
Company;
(iii) the acquisition, holding or control, directly or indirectly, by
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(A) any "person" (as such term is used in section 13(d) and
section 14(d)(2) of the Exchange Act as in effect on the Closing Date)
or
(B) related Persons constituting a "group" (as such term is
used in Rule 13d-5 under the Exchange Act as in effect on the Closing
Date),
(other than a Permitted Management Transferee) of more than fifty percent
(50%) of the Voting Units of any Managing General Partner; or
(iv) if such time is prior to the consummation of a Permitted REIT
Conversion, the failure of the Parent to legally and beneficially own,
directly or indirectly, ninety-nine and one one-hundredth percent (99.01%)
or more of the Voting Units of the Company.
CLOSING -- Section 1.2(b).
CLOSING DATE -- Section 1.2(b).
COLLATERAL -- means the "Collateral" as defined in the
Intercreditor/Collateral Agency Agreement.
COLLATERAL AGENT -- Comerica Bank - Texas, in its capacity as collateral
agent under the Intercreditor/Collateral Agency Agreement.
COLLATERAL RELEASE DATE -- Section 4.4(d)(i).
COLLATERAL RELEASE NOTICE -- Section 4.4(c).
COMBINED GAAP PARTNERS' CAPITAL -- means, at any time, total partners'
capital of the Company and the Parent on a combined basis determined at such
time in accordance with GAAP.
COMPANY -- the introductory sentence.
COMPANY PARTNERSHIP AGREEMENT -- means that certain Second Amended and
Restated Agreement of Limited Partnership of U.S. Restaurant Properties
Operating L.P. (formerly Burger King Operating Limited Partnership), dated as
of March 17, 1995, without giving effect to any amendment thereto.
COMPANY PARTNERSHIP CERTIFICATE -- means the Certificate of Limited
Partnership of Burger King Operating Limited Partnership filed with the
Secretary of State of the State of Delaware on December 10, 1985, as amended
by (a) the Amendment to the Certificate of Limited Partnership filed with
such Secretary of State on July 26, 1994, (b) the Amendment to the
Certificate of Limited Partnership filed with such Secretary of State on
November 30, 1994, (c) the Amendment to the Certificate of Limited
Partnership filed with such Secretary of State on June 13, 1996, and (d) the
Amendment to the Certificate of Limited Partnership filed with such Secretary
of State on June 17, 1996.
CONFIDENTIAL INFORMATION -- Section 7.5.
CONSOLIDATED CASH FLOW -- means, in respect of any period, the SUM of
(a) Consolidated Net Earnings, PLUS
(b) the aggregate amount of:
(i) the amount of all depreciation and amortization allowances
and other non-cash expenses of the Parent, the Company and the other
Subsidiaries, PLUS
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(ii) taxes imposed on or measured by income or excess profits,
PLUS
(iii) Consolidated Fixed Charges
(to the extent, and only to the extent, that such aggregate amount was
deducted in the computation of Consolidated Net Earnings for such period)
in each case accrued for such period by the Parent, the Company and the other
Subsidiaries, determined on a consolidated basis for such Persons.
CONSOLIDATED FIXED CHARGES -- means, with respect to any period, the SUM of
(a) Consolidated Interest Expense for such period, PLUS
(b) Consolidated Minimum Operating Lease Rentals for such period.
CONSOLIDATED FUNDED DEBT -- means, as of any date of determination, the
total of all Funded Debt of the Parent, the Company and the other
Subsidiaries outstanding on such date, after eliminating all offsetting
debits and credits among the Parent, the Company and the other Subsidiaries
and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Parent, the Company
and the other Subsidiaries in accordance with GAAP.
CONSOLIDATED INTEREST EXPENSE -- means, with respect to any period, the
SUM (without duplication) of the following (in each case, eliminating all
offsetting debits and credits between the Parent, the Company and the other
Subsidiaries and all other items required to be eliminated in the course of
the preparation of consolidated financial statements of the Parent, the
Company and the other Subsidiaries in accordance with GAAP):
(a) all interest in respect of Debt of the Parent, the Company and
the other Subsidiaries (including (x) imputed interest on Capital Lease
Obligations deducted in determining Consolidated Net Earnings for such
period, together with all interest capitalized or deferred during such
period and not deducted in determining Consolidated Net Earnings for
such period, and (y) the net interest expense for such period in respect
of Interest Rate Swaps entered into by the Parent, the Company, and the
other Subsidiaries), PLUS
(b) all debt discount and expense amortized or required to be
amortized in the determination of Consolidated Net Earnings for such
period, PLUS
(c) all fees and commissions in respect of letters of credit and
bankers' acceptances (and instruments serving similar functions),
whether or not representing obligations for borrowed money, accrued for
such period by the Parent, the Company and the other Subsidiaries.
CONSOLIDATED MINIMUM OPERATING LEASE RENTALS -- means, with respect to any
period,
(a) the SUM of the rental and other obligations required to be
paid during such period by the Parent, the Company or any other
Subsidiary as lessee under all Operating Leases of real or personal
Property (such real and personal property being referred to as the
"LEASED PROPERTY"), excluding any amount required to be paid by the
lessee (whether or not therein designated as rental or additional
rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, MINUS
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(b) the SUM of the fixed rental payments received by the Parent, the
Company and the other Subsidiaries under Acceptable Subleases in respect of
such Leased Property during such period,
PROVIDED that, if at the date of determination, any such rental or other
obligations (or portion thereof) referred to in clause (a) are contingent or
not otherwise definitely determinable by the terms of the related Operating
Lease, the amount of such obligations (or such portion thereof) (i) shall be
assumed to be equal to the amount of such obligations for the period of
twelve (12) consecutive calendar months immediately preceding the date of
determination or (ii) if the related lease was not in effect during such
preceding twelve (12) month period, shall be the amount estimated by a Senior
Financial Officer on a reasonable basis and in good faith.
As used in this definition,
ACCEPTABLE SUBLEASE -- means a sublease that is non-cancelable by the
sublessee having a term (including terms of renewal or extension at the
option of the sublessor, whether or not such option has been exercised)
expiring more than one (1) year after the commencement of the initial term
thereof.
CONSOLIDATED NET EARNINGS -- means, with reference to any period, the
net income (or loss) of the Parent, the Company and the other Subsidiaries
for such period (taken as a cumulative whole), as determined in accordance
with GAAP, after eliminating all offsetting debits and credits among the
Parent, the Company and the other Subsidiaries and all other items required
to be eliminated in the course of the preparation of consolidated financial
statements of the Parent, the Company and the other Subsidiaries in
accordance with GAAP, PROVIDED that there shall be excluded:
(a) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary or is merged into or consolidated with the Parent, the
Company or another Subsidiary, and the income (or loss) of any Person,
substantially all of the assets of which have been acquired in any manner,
realized by such other Person prior to the date of acquisition;
(b) the income (or loss) of any Person (other than a Subsidiary) in
which the Parent, the Company or any other Subsidiary has an ownership
interest, except to the extent that any such income has been actually
received by the Parent, the Company or such other Subsidiary in the form of
cash dividends or similar cash distributions;
(c) the undistributed earnings of any Subsidiary (other than the
Company and any Guarantor) to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation
applicable to such Subsidiary;
(d) any aggregate net gain and net loss during such period arising
from extraordinary items or transactions;
(e) any gain arising from the acquisition of any Security, or the
extinguishment, under GAAP, of any Debt, of the Parent, the Company or any
other Subsidiary; and
(f) in the case of a successor to the Parent by consolidation or
merger or as a transferee of its assets, any earnings of the successor
entity in respect thereof prior to such consolidation, merger or transfer
of assets.
CONSOLIDATED PARTNERS' CAPITAL -- means, at any time, the SUM of the total
general partners' capital and the total limited partners' capital of the Parent,
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the Company and the other Subsidiaries that would be shown at such time on a
consolidated balance sheet for such Persons prepared in accordance with GAAP.
CONSOLIDATED TOTAL ASSETS -- means, at any time, the total assets of the
Parent, the Company and the other Subsidiaries which would be shown as assets on
a consolidated balance sheet for such Persons as of such time prepared in
accordance with GAAP.
CONSOLIDATED TOTAL CAPITALIZATION -- means, at any time, the SUM of
(a) Adjusted Consolidated Partners' Capital, PLUS
(b) Consolidated Funded Debt,
in each case, determined at such time.
For the purposes hereof, "ADJUSTED CONSOLIDATED PARTNERS' CAPITAL"
means, at any time, the SUM of
(i) Consolidated Partners' Capital at such time, PLUS
(ii) if at such time, the SUM of
(A) the aggregate Net Proceeds of Partnership Interests
of the Parent and the Net Proceeds of Partnership Interests of
the REIT Party PLUS
(B) the aggregate value of equity interests issued by
the Parent, the Company or the Subsidiaries as payment of the
purchase price for real Property acquired by any of such Persons
(value of such equity determined by the purchase price of such
real Property),
in each case during the period commencing on the Closing Date and
ending at such time, exceeds $90,000,000, an amount equal to the SUM
of (I) the aggregate accumulated depreciation expense and (II) the
aggregate amount of amortization with respect to investments in direct
financing leases, in each case, for the Parent, the Company and the
Subsidiaries for such period.
CONTROL EVENT -- means:
(a) the execution by the Parent, any Subsidiary or any Affiliate of
any letter of intent or similar agreement with respect to any proposed
transaction or event or series of transactions or events that, individually
or in the aggregate, could reasonably be expected to result in a Change in
Control; or
(b) the execution of any written agreement that, when fully
performed by the parties thereto, would result in a Change in Control.
DEBT -- with respect to any Person means, at any time, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of Property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such Property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capital Leases;
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(d) all liabilities for borrowed money secured by any Lien with
respect to any Property owned by such Person (whether or not it has assumed
or otherwise become liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (f) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (e) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP but shall not include any
unfunded obligations of such Person in respect of any Pension Plans (whether
such obligations exist on the Closing Date or arise thereafter).
DEBT PREPAYMENT APPLICATION -- means, with respect to any Transfer of
Property, the application by the Parent, the Company or the other
Subsidiaries of cash in an amount equal to the Net Proceeds Amount with
respect to such Transfer to pay, on a PRO RATA basis the outstanding Senior
Funded Debt of the Parent, the Company or the other Subsidiaries (other than
Senior Funded Debt owing to the Parent, the Company, any of the other
Subsidiaries or any Affiliate and Senior Funded Debt in respect of any
revolving credit or similar credit facility providing the Parent, the Company
or any of the other Subsidiaries with the right to obtain loans or other
extensions of credit from time to time, except to the extent that in
connection with such payment of Senior Funded Debt the availability of credit
under such credit facility is permanently reduced by an amount not less than
the amount of such proceeds applied to the payment of such Senior Funded
Debt), PROVIDED THAT in the course of making such application the Company
shall offer to prepay each outstanding Note in a principal amount which, when
added to the Make-Whole Amount applicable thereto, equals the Ratable Portion
for such Note. If any holder of a Note fails to accept such offer of
prepayment, then, for purposes of the preceding sentence only, the Company
nevertheless will be deemed to have paid Senior Funded Debt in an amount
equal to the Ratable Portion for such Note.
As used in this definition,
RATABLE PORTION -- means, for any Note, an amount equal to the product
of (x) the Net Proceeds Amount being so applied to the payment of Senior
Funded Debt MULTIPLIED BY (y) a fraction the numerator of which is the
outstanding principal amount of such Note and the denominator of which is
the aggregate principal amount of Senior Funded Debt of the Parent, the
Company and the other Subsidiaries.
DEFAULT -- means an event or condition the occurrence of which would, with
the lapse of time or the giving of notice or both, become an Event of Default.
DISPOSITION VALUE -- means, at any time, with respect to any Property
(a) in the case of Property that does not constitute Subsidiary
Stock, the book value thereof, valued at the time of such disposition in
good faith by the Parent, and
(b) in the case of Property that constitutes Subsidiary Stock, an
amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock or equity interests as is equal to the
percentage that the book value of such Subsidiary Stock represents of
the book value of all of the outstanding capital stock or other equity
interests of such Subsidiary (assuming, in making such calculations,
that all Securities convertible into such capital stock or other equity
interests are so converted and giving full effect to all transactions
that would occur or be required in connection with such conversion)
determined at the time of the disposition thereof, in good faith by the
Parent.
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DISTRIBUTION -- means
(a) any distribution (whether in the form of cash or any other
Property), direct or indirect, made on account of any Voting Units in the
Parent, the Company or any other Subsidiary, other than a distribution made
by a Subsidiary to the Company or the Parent,
(b) any dividend or other distribution (whether in the form of
cash or any other Property), direct or indirect, made on account of any
Voting Units of any Subsidiary (other than Voting Units owned legally
and beneficially by the Parent, the Company or a Wholly-Owned
Subsidiary), except a dividend payable solely in Voting Units of such
Subsidiary, and except Voting Unit splits in connection with which no
Property is distributed and only the number of such outstanding Voting
Units is increased,
(c) any optional or mandatory redemption, retirement, purchase or
other acquisition, direct or indirect, of any Voting Units in the Parent,
the Company or any Subsidiary, or
(d) any optional or mandatory redemption, retirement, purchase or
other acquisition, direct or indirect, of any Voting Units of any
Subsidiary (other than Voting Units owned legally and beneficially by
the Parent, the Company or a Subsidiary), or of any warrants, rights, or
options to acquire any such Voting Units.
DOL -- means the Department of Labor and any successor agency.
DOLLARS or $ -- means United States of America dollars.
ENVIRONMENTAL PROTECTION LAW -- means any law, statute or regulation
(including, without limitation, CERCLA, RCRA and SARA) enacted by any
Governmental Authority in connection with or relating to the protection or
regulation of the environment, including, without limitation, those laws,
statutes and regulations regulating the disposal, removal, production,
storing, refining, handling, transferring, processing or transporting of
hazardous or toxic substances, and any orders, decrees or judgments issued by
any court of competent jurisdiction in connection with any of the foregoing.
As used in this definition,
CERCLA -- means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time (by
SARA or otherwise), and all rules and regulations promulgated in connection
therewith.
RCRA -- means the Resource Conservation and Recovery Act of 1976, as
amended from time to time, and all rules and regulations promulgated in
connection therewith.
SARA -- means the Superfund Amendments and Reauthorization Act of
1986, as amended from time to time, and all rules and regulations
promulgated in connection therewith.
ERISA -- means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
ERISA AFFILIATE -- means any corporation or trade or business that:
(a) is a member of the same "controlled group of corporations"
(within the meaning of section 414(b) of the IRC) as the Parent; or
(b) is under "common control" (within the meaning of section 414(c)
of the IRC) with the Parent.
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EVENT OF DEFAULT -- Section 8.1.
EXCHANGE ACT -- means the Securities Exchange Act of 1934, as amended from
time to time.
EXCLUDED SECURITIZATION SUBSIDIARY -- means a corporation, business
trust or other limited liability entity which the Company shall have
designated in writing after the Closing to each of the holders of the Notes
as the "Excluded Securitization Subsidiary" so long as
(a) the Parent, the Company or a Wholly- Owned Subsidiary at all
times owns all equity interests and all other ownership rights of such
Person,
(b) neither the Parent, the Company nor any Subsidiary is in any
manner liable, directly or indirectly, in any respect for any liabilities
or obligations of such Person,
(c) at no time prior to such designation shall such Person
previously have been designated as an "Excluded Securitization Subsidiary,"
(d) such Person shall have been formed for the sole purpose of
acquiring, and shall such Person shall have acquired, assets of the Parent,
the Company, a Wholly-Owned Subsidiary or any other Person in a transaction
which
(i) complies in all respects with the provisions of Section
6.8(a) and Section 6.12 and
(ii) shall have been entered into on an arm's length basis as
if such Person were in no manner affiliated with or owned by the
transferor of such assets and
(e) the Company shall have caused to be delivered to each of the
holders of Notes a legal opinion of counsel to the Company (which
counsel is reasonable satisfactory to the Required Holders) which states
that the assets and liabilities of the Company, the Parent or any
Subsidiary would not be substantively consolidated into such Person in
bankruptcy proceeding to which such Person was the subject. Such legal
opinion shall not be subject to any qualifications other than those
which are typically found in legal opinions covering such matters.
FAIR MARKET VALUE -- means, at any time, with respect to any Property,
the sale value of such Property that would be realized in an arm's-length
sale at such time between an informed and willing buyer and an informed and
willing seller under no compulsion to buy or sell, respectively.
FINANCING DOCUMENTS -- means the Note Purchase Agreements, the Notes,
the Intercreditor/Collateral Agency Agreement, the Security Documents, any
guaranty agreement provided to the holders of the Notes pursuant to Section
6.11(a)(i)(A), and in each such case the other agreements and instruments
executed in connection therewith, as each may be amended, restated or
otherwise modified from time to time.
FIXED CHARGES COVERAGE RATIO -- means, at any time, the RATIO of
(a) Consolidated Cash Flow for the period of four (4) consecutive
fiscal quarters ending on, or most recently ended prior to, such time TO
(b) Consolidated Fixed Charges for such period.
For the purposes of determining the "Fixed Charges Coverage Ratio,"
Consolidated Interest Expense shall include the portion of Consolidated Interest
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Expense attributable to any Debt incurred by the Parent, the Company or any
other Subsidiary in connection with any acquisition of any Subsidiary and
Consolidated Cash Flow shall include the portion of Consolidated Cash Flow
attributable to such Subsidiary, in each case on a PRO FORMA basis as if such
acquisition was completed on the first day of the fiscal quarter during which
such acquisition was completed.
FOREIGN PENSION PLAN -- means any plan, fund or other similar program
(a) established or maintained outside of the United States of
America by any one or more of the Parent, the Company or the other
Subsidiaries primarily for the benefit of the employees (substantially all
of whom are aliens not residing in the United States of America) of the
Parent, the Company or such other Subsidiaries, which plan, fund or other
similar program provides for retirement income for such employees or
results in a deferral of income for such employees in contemplation of
retirement, and
(b) not otherwise subject to ERISA.
FUNDED DEBT -- means, with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures, or which is otherwise payable or unpaid, one (1)
year or more from, or is directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to a date one (1) year or more
(including, without limitation, an option of such obligor under a revolving
credit or similar agreement obligating the lender or lenders to extend credit
over a period of one (1) year or more) from, the date of the creation
thereof, PROVIDED that Funded Debt shall include, as at any date of
determination, Current Maturities of Funded Debt.
As used in this definition,
CURRENT MATURITIES OF FUNDED DEBT -- means, at any time and with
respect to any item of Funded Debt, the portion of such Funded Debt
outstanding at such time which by the terms of such Funded Debt or the
terms of any instrument or agreement relating thereto is due on demand
or within one (1) year from such time (whether by sinking fund, other
required prepayment or final payment at maturity) and is not directly or
indirectly renewable, extendible or refundable at the option of the
obligor under an agreement or firm commitment in effect at such time to
a date one (1) year or more from such time.
GAAP -- means accounting principles as promulgated from time to time in
statements, opinions and pronouncements by the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board and
in such statements, opinions and pronouncements of such other entities with
respect to financial accounting of for-profit entities as shall be accepted
by a substantial segment of the accounting profession in the United States of
America.
GOVERNMENTAL AUTHORITY -- means:
(a) the government of
(i) the United States of America and any state or other
political subdivision thereof, or
(ii) any other jurisdiction (A) in which any Managing
General Partner, the Parent, the Company or any other Subsidiary
conducts all or any part of its business or (B) that asserts
jurisdiction over the conduct of the affairs or Properties of
any Managing General Partner, the Parent, the Company or any
other Subsidiary; and
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(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
GUARANTIED OBLIGATIONS -- Section 10.1.
GUARANTORS -- the introductory sentence.
GUARANTY -- means, with respect to any Person (for the purposes of this
definition, the "SUBJECT GUARANTOR"), any obligation (except the endorsement
in the ordinary course of business of negotiable instruments for deposit or
collection) of the Subject Guarantor guaranteeing or in effect guaranteeing
any indebtedness, dividend or other obligation of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, including,
without limitation, obligations incurred through an agreement, contingent or
otherwise, by the Subject Guarantor:
(a) to purchase such indebtedness or obligation or any Property
constituting security therefor;
(b) to advance or supply funds
(i) for the purpose of payment of such indebtedness or
obligation, or
(ii) to maintain working capital or other balance sheet
condition or any income statement condition of the Primary Obligor or
otherwise to advance or make available funds for the purchase or
payment of such indebtedness or obligation;
(c) to lease Property or to purchase Securities or other Property
or services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of the Primary Obligor to make
payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of the indebtedness or obligation
of the Primary Obligor against loss in respect thereof.
For purposes of computing the amount of any Guaranty in connection with any
computation of indebtedness or other liability, it shall be assumed that the
indebtedness or other liabilities that are the subject of such Guaranty are
direct obligations of the issuer of such Guaranty.
HAZARDOUS SUBSTANCES -- means any and all pollutants, contaminants,
toxic or hazardous wastes and any other substances that might pose a hazard
to health or safety, the removal of which may be required or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage,
seepage or filtration of which is or shall be, in each of the foregoing
cases, restricted, prohibited or penalized by any applicable law.
INSTITUTIONAL INVESTOR -- means the Purchasers, any affiliate of any of
the Purchasers and any holder or beneficial owner of Notes that is an
"accredited investor" as defined in section 2(15) of the Securities Act.
INTERCREDITOR/COLLATERAL AGENCY AGREEMENT -- Section 3.9.
INTEREST RATE SWAPS -- means, with respect to any Person, any agreements or
other arrangements constituting interest rate swaps or hedges entered into from
time to time by such Person.
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INVESTMENT -- means any investment, made in cash or by delivery of
Property, by the Parent, the Company or any other Subsidiary:
(a) in any Person, whether by acquisition of stock, indebtedness or
other obligation or security, or by loan, Guaranty, advance, capital
contribution or otherwise; or
(b) in any Property.
Investments shall be valued at cost less any net return of capital through
the sale or liquidation thereof or other return of capital thereon.
INVESTMENT GRADE NOTICE -- Section 4.4(a).
INVESTMENT GRADE PREPAYMENT DATE -- Section 4.4(a).
IRC -- means the Internal Revenue Code of 1986, together with all rules and
regulations promulgated pursuant thereto, as amended from time to time.
IRS -- means the Internal Revenue Service of the United States of
America and any successor agency.
LEASEHOLD PROPERTY LEASES -- means and includes the leasehold property
leases identified on PART 2.4(C) OF ANNEX 3 all other leases evidencing any
interest of the Company or any other Subsidiary in real Property consisting
of a lessee's leasehold interest therein.
LIEN -- means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including, but
not limited to, the security interest lien arising from a mortgage,
encumbrance, pledge, conditional sale, sale with recourse or a trust receipt,
or a lease, consignment or bailment for security purposes. The term "Lien"
includes, without limitation, reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting real Property and includes,
without limitation, with respect to stock, stockholder agreements, voting
trust agreements, buy-back agreements and all similar arrangements. For the
purposes hereof, the Parent, the Company and each other Subsidiary shall be
deemed to be the owner of any Property that it shall have acquired or holds
subject to a conditional sale agreement, Capital Lease or other arrangement
pursuant to which title to the Property has been retained by or vested in
some other Person for security purposes, and such retention or vesting is
deemed a Lien. The term "Lien" does not include negative pledge clauses in
agreements relating to the borrowing of money.
LINCOLN -- the introductory sentence.
MAKE-WHOLE AMOUNT -- means, with respect to Prepaid Principal and the date
the prepayment thereof is due (the "PREPAYMENT DATE"), the greater of
(a) Zero Dollars ($0), or
(b) an amount equal to the Present Value of the Prepaid Cash Flows
determined in respect of such Prepaid Principal as of such Prepayment Date
MINUS the amount of such Prepaid Principal.
As used in this definition,
PREPAID PRINCIPAL -- means any portion of the principal amount of any
Debt being paid for any reason (including, without limitation,
acceleration, optional prepayment or mandatory prepayment required because
of the occurrence of a contingency) prior to its regularly scheduled
maturity date.
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PRESENT VALUE OF THE PREPAID CASH FLOWS -- means, with respect to any
Prepaid Principal, the sum of the present values of the then remaining
scheduled payments of principal and interest that would have been payable
in respect of such Prepaid Principal but that are no longer payable as a
result of the early prepayment of such Prepaid Principal. In determining
such present values,
(i) the amount of interest accrued through and including the
day immediately preceding such Prepayment Date on such Prepaid
Principal since the scheduled interest payment date immediately
preceding such Prepayment Date shall be deducted from the first of
such payments of interest, and
(ii) a discount rate equal to the Make-Whole Discount Rate
determined with respect to such Prepaid Principal and such Prepayment
Date DIVIDED by four (4), and a discount period of three (3) months of
thirty (30) days each, shall be used.
MAKE-WHOLE DISCOUNT RATE -- means fifty one-hundredths percent (0.50%)
PER ANNUM PLUS the PER ANNUM percentage rate (rounded to the nearest three
(3) decimal places) equal to the bond equivalent yield to maturity derived
from the Bloomberg Rate, or if the Bloomberg Rate is not then available,
the Applicable H.15 Rate determined as of the date that is two (2) Business
Days prior to such Prepayment Date.
APPLICABLE H.15 -- means, at any time, the United States Federal
Reserve Statistical Release H.15(519) then most recently published and
available to the public, or if such publication is not available, then any
other source of current information in respect of interest rates on
securities of the United States of America that is generally available and,
in the judgment of the Required Holders, provides information reasonably
comparable to the H.15(519) report.
APPLICABLE H.15 RATE -- means, at any time with respect to any Prepaid
Principal, the then most current annual yield to maturity of the
hypothetical United States Treasury obligation listed in the Applicable
H.15 with a Treasury Constant Maturity (as such term is defined in such
Applicable H.15) equal to the Weighted Average Life to Maturity of such
Prepaid Principal. If no such United States Treasury obligation with a
Treasury Constant Maturity corresponding exactly to such Weighted Average
Life to Maturity is listed, then the yields for the two (2) then most
current hypothetical United States Treasury obligations with Treasury
Constant Maturities most closely corresponding to such Weighted Average
Life to Maturity (one (1) with a longer maturity and one (1) with a
shorter maturity, if available) shall be calculated pursuant to the
immediately preceding sentence and the Make-Whole Discount Rate shall be
interpolated or extrapolated from such yields on a straight-line basis.
BLOOMBERG RATE -- means, with respect to any Prepayment Date and
Prepaid Principal, the PER ANNUM yield reported on Page "UST" on the
Bloomberg Financial Market Service (or such other display as may replace
Page UST on the Bloomberg Financial Market Service) at 10:00 a.m. (New
York time) on the second (2nd) Business Day preceding such Prepayment
Date for United States government Securities having a maturity (rounded
to the nearest month) corresponding to the Weighted Average Life to
Maturity of such Prepaid Principal.
WEIGHTED AVERAGE LIFE TO MATURITY -- means, with respect to any
Prepayment Date and Prepaid Principal, the number of years obtained by
DIVIDING the Remaining Dollar-Years of such Prepaid Principal by such
Prepaid Principal, determined as of such Prepayment Date.
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REMAINING DOLLAR-YEARS -- means the result obtained by
(a) MULTIPLYING, in the case of each then remaining scheduled
payment of principal that would have been payable in respect of
Prepaid Principal but is no longer payable as a result of the
prepayment of such Prepaid Principal,
(i) an amount equal to such scheduled payment of
principal, by
(ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such Prepayment Date and
the date such scheduled principal payment would be due if such
Prepaid Principal had not been so prepaid, and
(b) calculating the sum of each of the products obtained in
the preceding subsection (a).
MANAGING GENERAL PARTNER -- means with respect to the Company and the
Parent, U.S Restaurant Properties, Inc., a Delaware corporation, and its
successors and assigns, and with respect to each other Guarantor that is a
limited partnership, the Person listed as such opposite such Guarantor on
PART 9.1(B) OF ANNEX 3, and their respective successors and assigns.
MARGIN SECURITY -- means "margin stock" within the meaning of
Regulations G, T and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R., Chapter II, as amended from time to time.
MATERIAL ADVERSE EFFECT -- means a material adverse effect on
(a) the business, prospects, profits, Properties or condition
(financial or otherwise) of the Parent, the Company and the other
Subsidiaries, taken as a whole, or any Managing General Partner;
(b) the ability of the Company to perform any of its obligations set
forth in this Agreement, the Notes or any of the other Financing Documents,
(c) the ability of any Guarantor to perform its respective
obligations set forth in this Agreement, the Notes or any of the other
Financing Documents, or
(d) the validity or enforceability of this Agreement, the Notes or
any of the other Financing Documents.
MORTGAGES AND ASSIGNMENTS OF RENTS -- means such mortgages, deeds of
trust and assignments of leases and rents, substantially in the applicable
form attached hereto as Exhibit F, pursuant to which the Company, any of the
Guarantors or any other Subsidiary collaterally assigns to the Collateral
Agent, for the benefit of the Banks and the holders of the Notes, the leases
described in PART 2.4(C) OF ANNEX 3 and all other interests in real Property
now or hereafter possessed or owned by the Company, the Guarantors or any
other Subsidiary.
MULTIEMPLOYER PLAN -- means any "multiemployer plan" (as defined in
section 3(37) of ERISA) in respect of which the Parent or any ERISA Affiliate
is an "employer" (as such term is defined in section 3 of ERISA).
NET PROCEEDS AMOUNT -- means, with respect to any Transfer of any Property
by any Person, an amount equal to the DIFFERENCE of
(a) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of such
Transfer) received by such Person in respect of such Transfer, MINUS
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(b) all ordinary and reasonable out-of-pocket costs and expenses
actually incurred by such Person in connection with such Transfer.
NET PROCEEDS OF PARTNERSHIP INTERESTS -- means, with respect to any period
and any Person, cash proceeds (net of all costs and out-of-pocket expenses in
connection therewith, including, without limitation, placement, underwriting and
brokerage fees and expenses), received by such Person during such period, from
the sale of all limited partnership interests and other equity interests of such
Person.
NORMAN -- the introductory sentence.
NOTE PURCHASE AGREEMENTS -- Section 1.2(c).
NOTES -- Section 1.1(b).
OPERATING LEASE -- means any lease which is not a Capital Lease.
OTHER NOTE PURCHASE AGREEMENTS -- Section 1.2(c).
OTHER PURCHASERS -- Section 1.2(c).
PARENT -- the introductory sentence.
PARENT PARTNERSHIP AGREEMENT -- means that certain Second Amended and
Restated Agreement of Limited Partnership of U.S. Restaurant Properties
Master L.P. (formerly Burger King Investors Master L.P.), dated as of March 17,
1995, without giving effect to any amendment thereto.
PARENT PARTNERSHIP CERTIFICATE -- means the Certificate of Limited
Partnership of Burger King Investors Master L. P. filed with the Secretary of
State of the State of Delaware on December 10, 1985, (a) the Amendment to the
Certificate of Limited Partnership filed with such Secretary of State on July
7, 1994, (b) the Amendment to the Certificate of Limited Partnership filed
with such Secretary of State on November 7, 1994, (c) the Amendment to the
Certificate of Limited Partnership filed with such Secretary of State on
November 30, 1994, and (d) the Amendment to the Certificate of Limited
Partnership filed with such Secretary of State on June 17, 1996.
PARTNERSHIP AGREEMENTS -- means the Company Partnership Agreement, the
Parent Partnership Agreement and, each of the partnership agreements of each
Guarantor described on PART 9.1(B) OF ANNEX 3.
PBGC -- means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor thereto.
PENSION PLAN -- means, at any time, any "employee pension benefit plan"
(as such term is defined in section 3 of ERISA) maintained at such time by
the Parent or any ERISA Affiliate for employees of the Parent or such ERISA
Affiliate, excluding any Multiemployer Plan.
PERMITTED MANAGEMENT TRANSFEREE -- means: (i) each of Robert J. Stetson
and Fred H. Margolin or (ii) related Persons constituting a "group" (as such
term is used in Rule 13d-5 under the Exchange Act as in effect on the Closing
Date) which includes, and is controlled by, each of Robert J. Stetson and
Fred H. Margolin.
PERMITTED REIT CONVERSION -- means any transaction by which the Parent
or an Affiliate (such Affiliate herein referred to as the "REIT PARTY")
qualifies as a REIT (as contemplated by Sections 856 through 860 of the IRC)
so long as (a) after giving effect to such qualification each of Robert J.
Stetson and Fred H. Margolin shall have been elected by the directors of such
REIT to manage the affairs and Properties of such REIT and to perform
functions substantially similar to those performed by a chief executive
officer and a chief financial officer, (b) after giving effect to such
qualification, the Parent, the Company
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and each Guarantor remain fully liable in all respects under each of the
Financing Documents to which it was a party immediately prior to such
qualification, (c) if such REIT is not the Parent, the Company shall have
elected that such REIT be the REIT Party upon compliance with the provisions
of Section 6.11 and (c) immediately prior to, and after giving effect to,
such qualification no Default or Event of Default exists or would exist.
PERMITTED OTHER SECURED OBLIGATION -- means, at any time, any Debt or
obligations of the Parent or any Subsidiary which, in each case, is secured by
a Lien so long as the SUM (without duplication) of
(a) the aggregate amount of all Debt and other obligations
(including, without limitation, obligations of the type described in clause
(ii) of Section 6.9(a)) secured by Liens (other than Debt or obligations
secured by Liens permitted pursuant to each clause of Section 6.9(a) other
than clause (ii) and clause (x) thereof) at such time, PLUS,
(b) the aggregate amount of Total Subsidiary Funded Debt outstanding
at such time
does not exceed 15% of Consolidated Partners' Capital at such time.
PERSON -- means an individual, sole proprietorship, partnership,
corporation, limited liability company, association, trust, business trust,
joint venture, unincorporated organization, or a government or agency or
political subdivision thereof.
PLACEMENT AGENTS -- means SPP Hambro & Co., LLC and Comerica Bank.
PLACEMENT MEMORANDUM -- means the Confidential Direct Placement
Memorandum, dated October 1996, prepared by the Placement Agents (together
with all exhibits, annexes, amendments and supplements thereto).
PREFERRED STOCK -- means, in respect of any corporation or other entity,
shares of the capital stock or other equity interests of such corporation or
other entity that are entitled to preference or priority over any other
shares of the capital stock or other equity interests of such corporation in
respect of payment of dividends (or other payments which are the equivalent
thereof) or distribution of assets upon liquidation.
PRO FORMA FINANCIAL INFORMATION -- Section 2.2(d).
PROPERTIES DEVELOPMENT -- the introductory sentence.
PROPERTY -- means any interest in any kind of property or asset, whether
real, personal or mixed, and whether tangible or intangible.
PROPERTY REINVESTMENT APPLICATION -- means, with respect to any Transfer
of Property, the application of an amount equal to the Net Proceeds Amount
with respect to such Transfer to the acquisition by the Parent, the Company
or any other Subsidiary of operating assets of the Parent, the Company or any
other Subsidiary to be used in the ordinary course of business of such Person
and which shall are of a similar nature and have a value equivalent to the
Property subject to such Transfer.
PROPOSED CONTROL PREPAYMENT DATE -- Section 4.3(a).
PURCHASERS -- means you and the Other Purchasers.
REIT -- means a Real Estate Investment Trust.
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REIT PARTY -- has the meaning assigned to such term in the definition of
"Permitted REIT Conversion" in this Section 9.1.
RENOVATION PARTNERS -- the introductory sentence.
REQUIRED HOLDERS -- means, at any time, the holders of at least
sixty-two and one-half percent (62-1/2%) in principal amount of the Notes at
the time outstanding (exclusive of Notes then owned by any one or more of the
Parent, the Company, any other Subsidiary and any Affiliate).
RESTAURANT OPERATOR LEASES -- means and includes each restaurant operator
lease identified on PART 2.4(C) OF ANNEX 3 and all other leases evidencing
any interest of the Company or any other Subsidiary in real Property
consisting of a lessor's leasehold interest therein.
SECURITIES ACT -- means the Securities Act of 1933, as amended from time
to time.
SECURITY -- means "security" as defined in section 2(1) of the Securities
Act.
SECURITY DOCUMENTS -- means each of the Mortgages and Assignments of Rents
and each other document delivered to the Purchasers pursuant to Section 3.11 and
Section 6.11.
SENIOR FINANCIAL OFFICER -- means, so long as U.S. Restaurant Properties,
Inc. is responsible for the management of the Parent and the Company, the
chief financial officer, the principal accounting officer, the treasurer or
the controller of such Person and, otherwise, the individual or individuals
performing the functions normally considered to be performed by the chief
financial officer, the principal accounting officer, the treasurer or the
controller of the Parent and the Company, respectively, assuming the Parent
and the Company were corporations.
SENIOR FUNDED DEBT -- means (a) any Funded Debt of the Parent (other than
Subordinated Debt) and (b) any Funded Debt of the Company or any Subsidiary.
SENIOR OFFICER -- means, with respect to any Person, the individual or
individuals performing the functions normally considered to be performed by
the chief executive officer, the chief financial officer, the president, the
treasurer, the controller or the secretary of such Person, assuming, in respect
of any Person which is not a corporation, that such Person is a corporation.
SERIES -- means any or all of either series of Notes issued hereunder.
SERIES A NOTES -- Section 1.1(a).
SERIES B NOTES -- Section 1.1(b).
STANDARD & POOR'S -- means Standard & Poor's Corporation.
SUBORDINATED DEBT -- means any Debt that is in any manner subordinated in
right of payment or security in any respect to Debt evidenced by the Notes.
SUBSIDIARY -- means
(a) the Company,
(b) (i) any other corporation, association, business trust or
other business entity (other than for all purposes herein, including
the calculation of the financial covenants in Section 6.4 through
Section 6.6, inclusive, the Excluded Securitization Subsidiary) in
which the Parent, the Company or one or more of the other Subsidiaries
(either individually or collectively) owns sufficient
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equity, voting interests or other contractual rights to enable it or
them ordinarily, in the absence of contingencies, to elect a majority
of the directors (or Persons performing similar functions) of such
entity or effectively control the business, Properties or affairs of
such entity, and
(ii) any partnership or joint venture if more than a 50%
interest in the profits or capital thereof is owned by the Parent, the
Company or one or more of the other Subsidiaries (either individually
or collectively, unless such partnership can and does ordinarily take
major business actions without the prior approval of the Parent, the
Company or one or more of the other Subsidiaries), and
(c) at all times from and after the Permitted REIT Conversion and
for all purposes herein (including, without limitation, in connection with
financial statements and information required to be delivered by Section
7.1), if such Person is not the Parent or the Company, the REIT Party.
SUBSIDIARY STOCK -- means, with respect to any Subsidiary, the stock or
other equity interests of such Subsidiary (or any options or warrants to
purchase stock, other equity interests or other Securities exchangeable for
or convertible into stock or other equity interests) of such Subsidiary.
SUCCESSOR ENTITY -- Section 6.7(a).
TRANSFER -- means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its
Property, including, without limitation, Subsidiary Stock. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Parent may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. In any such case,
the Disposition Value of any Property subject to each such separate Transfer
shall be determined by ratably allocating the aggregate Disposition Value of
all Property subject to all such separate Transfers to each such separate
Transfer on a proportionate basis.
TOTAL SUBSIDIARY FUNDED DEBT -- means, at any time, (without duplication)
(a) the aggregate Funded Debt of all Subsidiaries outstanding at
such time, and
(b) the aggregate amount of claims in respect of the redemption of,
and accumulated, unpaid dividends on, all Preferred Stock (and other equity
Securities and all other Securities convertible into, exchangeable for, or
representing the right to purchase, Preferred Stock) of all Subsidiaries
outstanding at such time (whether or not any right of redemption or
conversion is exercisable by the holder thereof at such time),
determined, in each case, on a combined basis for such Persons, but excluding
from such calculation (i) any such Funded Debt of the Company evidenced by
the Notes and the Bank Credit Agreement, (ii) any such Funded Debt of any
Subsidiary (other than the Company) in respect of the Unconditional Guaranty
or any Guaranty of any of the Funded Debt specified in clause (i) hereof, and
(iii) all such Preferred Stock and other equity Securities which are legally
and beneficially owned by the Parent, the Company or any Wholly-Owned
Subsidiary.
UNCONDITIONAL GUARANTY -- Section 10.1.
UNENCUMBERED ASSET RATIO -- means, as of any date of determination, the
RATIO of
(a) the total of all assets of the Parent, the Company and the other
Subsidiaries not subject to any Lien securing Debt and which would
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be shown as assets on a consolidated balance sheet for such Persons at
such time prepared in accordance with GAAP, TO
(b) the total of all Debt of the Parent, the Company and the other
Subsidiaries not secured by a Lien and outstanding on such date, after
eliminating all offsetting debits and credits among the Parent, the Company
and the other Subsidiaries and all other items required to be eliminated in
the course of the preparation of consolidated financial statements of the
Parent, the Company and the other Subsidiaries in accordance with GAAP.
VOTING UNITS -- means, with respect to any Person,
(a) at any time that such Person is a corporation, the capital stock
of any class or classes of such Person the holders of which are ordinarily,
in the absence of contingencies, entitled to vote in the election of
corporate directors, and
(b) at any time that such Person is a partnership, joint venture or
similar entity, the capital interest or profits interest of such Person,
and
(c) at any time that such Person is a limited liability company, the
membership interests of such Person, and
(d) at any time that such Person is a trust, business trust,
association or other unincorporated organization, the beneficial interest
of such Person.
WEST VIRGINIA PARTNERS -- the introductory sentence.
WHOLLY-OWNED SUBSIDIARY -- means any Subsidiary all of the equity interests
(except director's qualifying shares) and voting interests of which are owned by
any one or more of the Parent, the Company and the other Wholly-Owned
Subsidiaries.
9.2 GAAP.
Where the character or amount of any asset or liability or item of
income or expense, or any consolidation or other accounting computation is
required to be made for any purpose hereunder, it shall be done in accordance
with GAAP as in effect on the date of, or at the end of the period covered
by, the financial statements from which such asset, liability, item of income,
or item of expense is derived, or, in the case of any such computation, as in
effect on the date as of which such computation is required to be determined,
PROVIDED, that if any term defined herein includes or excludes amounts, items
or concepts that would not be included in or excluded from such term if such
term was defined with reference solely to GAAP, such term will be deemed to
include or exclude such amounts, items or concepts as set forth herein.
9.3 DIRECTLY OR INDIRECTLY.
Where any provision herein refers to action to be taken by any Person, or
that such Person is prohibited from taking, such provision shall be applicable
whether such action is taken directly or indirectly by such Person, including
actions taken by or on behalf of any partnership in which such Person is a
general partner.
9.4 SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.
(a) SECTION HEADINGS AND TABLE OF CONTENTS, ETC. The titles of the
Sections of this Agreement, the Annexes and the Table of Contents of this
Agreement appear as a matter of convenience only, do not constitute
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a part of this Agreement and shall not affect the construction hereof.
The words "herein," "hereof," "hereunder" and "hereto" refer to this
Agreement as a whole and not to any particular Section or other
subdivision. References to Sections are, unless otherwise specified,
references to Sections of this Agreement. References to Annexes and
Exhibits are, unless otherwise specified, references to Annexes and
Exhibits attached to this Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall be construed
(absent an express contrary provision herein) as being independent of each
other covenant contained herein, and compliance with any one covenant shall
not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
9.5 GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
9.6 GENERAL INTEREST PROVISIONS.
It is the intention of the Company and the Purchaser to conform strictly
to the Applicable Interest Law (as defined below). Accordingly, it is agreed
that, notwithstanding any provisions to the contrary in this Agreement or in
the Notes, the aggregate of all interest, and any other charges or
consideration constituting interest under the Applicable Interest Law that is
taken, reserved, contracted for, charged or received pursuant to this
Agreement or the Notes shall under no circumstances exceed the maximum amount
of interest allowed by the Applicable Interest Law. If any such excess
interest is ever charged, received or collected on account of or relating to
this Agreement and the Notes (including any charge or amount which is not
denominated as "interest" but is legally deemed to be interest under
Applicable Interest Law), then in such event
(a) the provisions of this Section 9.6 shall govern and control,
(b) the Company shall not be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount of
interest allowed by the Applicable Interest Law,
(c) any excess shall be deemed a mistake and cancelled automatically
and, if theretofore paid, shall be credited to the principal amount of the
Notes by the holders thereof, and if the principal balance of the Notes is
paid in full, any remaining excess shall be forthwith paid to the Company,
and
(d) the effective rate of interest shall be automatically subject
to reduction to the Maximum Legal Rate of Interest (as defined below).
If at any time thereafter, the Maximum Legal Rate of Interest is increased
then, to the extent that it shall be permissible under the Applicable
Interest Law, the Company shall forthwith pay to the holders of the Notes, on
a PRO RATA basis, all amounts of such excess interest that the holders of the
Notes would have been entitled to receive pursuant to the terms of this
Agreement and the Notes had such increased Maximum Legal Rate of Interest
been in effect at all times when such excess interest accrued. To the extent
permitted by the Applicable Interest Law, all sums paid or agreed to be paid
to the holders of the Notes for the use, forbearance or detention of the
indebtedness evidenced thereby shall be amortized, prorated, allocated and
spread throughout the full term of the Notes. For purposes of this Section
9.6, "APPLICABLE INTEREST LAW" shall mean any present or future law
(including, without limitation, the law of the United States of America)
which has application to the interest and other charges pursuant to this
Agreement and the Notes, PROVIDED THAT, THE FOREGOING NOTWITHSTANDING, THE
PARTIES HERETO SELECT, TO THE EXTENT THEY MAY LAWFULLY DO SO, THE INTERNAL
LAWS OF THE STATE OF NEW YORK AS THE LAW WHICH HAS APPLICATION
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TO SUCH INTEREST AND OTHER CHARGES, and the "MAXIMUM LEGAL RATE OF INTEREST"
shall mean the maximum rate of interest that a holder of Notes may from time
to time legally charge the Company by agreement and in regard to which the
Company would be prevented successfully from raising the claim or defense of
usury under the Applicable Interest Law as now or hereafter construed by
courts having appropriate jurisdiction.
10. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
10.1 GUARANTIED OBLIGATIONS.
The Parent, Business Trust I, Business Trust II, West Virginia Partners,
Renovation Partners, Properties Development, Lincoln, Norman and Carolina, in
consideration of the execution and delivery of this Agreement and the other
Financing Documents and the purchase of the Notes by you, hereby irrevocably,
unconditionally, absolutely, jointly and severally guarantee to each holder of
Notes, as and for each such Guarantor's own debt, until final and indefeasible
payment has been made:
(a) the due and punctual payment by the Company of the principal of,
and interest, and the Make-Whole Amount (if any) on, the Notes at any time
outstanding and the due and punctual payment of all other amounts payable,
and all other indebtedness owing, by the Company to the holders of the
Notes under this Agreement, the Notes and the other Financing Documents
(all such obligations so guarantied are herein collectively referred to
as the "GUARANTIED OBLIGATIONS"), in each case when and as the same shall
become due and payable, whether at maturity, pursuant to mandatory or
optional prepayment, by acceleration or otherwise, all in accordance with
the terms and provisions hereof and thereof; it being the intent of the
Guarantors that the guaranty set forth in this Section 10.1 (the
"UNCONDITIONAL GUARANTY") shall be a guaranty of payment and not a guaranty
of collection; and
(b) the punctual and faithful performance, keeping, observance, and
fulfillment by the Company of all duties, agreements, covenants and
obligations of the Company contained in this Agreement, the Notes and the
other Financing Documents.
10.2 PERFORMANCE UNDER THIS AGREEMENT.
In the event the Company fails to make, on or before the due date
thereof, any payment of the principal of, or interest or the Make-Whole
Amount (if any) on, the Notes or of any other amounts payable, or any other
indebtedness owing, to the holders of the Notes under this Agreement, any of
the Notes or any of the other Financing Documents or if the Company shall
fail to perform, keep, observe, or fulfill any other obligation referred to
in clause (a) or clause (b) of Section 10.1 in the manner provided in the
Notes or in this Agreement after in each case giving effect to any applicable
grace periods or cure provisions or waivers or amendments, each of the
Guarantors shall cause forthwith to be paid the moneys, or to be performed,
kept, observed, or fulfilled each of such obligations, in respect of which
such failure has occurred in accordance with the terms and provisions of this
Agreement and the Notes. In furtherance of the foregoing, if an Event of
Default shall exist, all of the Guarantied Obligations shall, in the manner
and subject to the limitations provided herein for the acceleration of the
Notes (including, without limitation, the provisions related to the annulment
thereof), forthwith become due and payable without notice, regardless of
whether the acceleration of the Notes shall be stayed, enjoined, delayed or
otherwise prevented.
10.3 WAIVERS.
To the fullest extent permitted by law, each Guarantor does hereby waive:
(a) notice of acceptance of the Unconditional Guaranty;
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(b) notice of any purchase of the Notes under this Agreement, or the
creation, existence or acquisition of any of the Guarantied Obligations,
subject to such Guarantor's right to make inquiry of each holder of Notes
to ascertain the amount of the Guarantied Obligations at any reasonable
time;
(c) notice of the amount of the Guarantied Obligations, subject to
such Guarantor's right to make inquiry of each holder of Notes to ascertain
the amount of the Guarantied Obligations at any reasonable time;
(d) notice of adverse change in the financial condition of the
Company or any other fact that might increase or expand such Guarantor's
risk hereunder;
(e) notice of presentment for payment, demand, protest, and notice
thereof as to the Notes or any other instrument;
(f) notice of any Default or Event of Default;
(g) all other notices and demands to which such Guarantor might
otherwise be entitled (except if such notice or demand is specifically
otherwise required to be given to such Guarantor pursuant to the terms of
this Agreement);
(h) the right by statute or otherwise to require you or any other
holder of Notes to institute suit against the Company or any other
Guarantor or to exhaust the rights and remedies of you or any other holder
of Notes against the Company or any other Guarantor, such Guarantor being
bound to the payment of each and all Guarantied Obligations, whether now
existing or hereafter accruing, as fully as if such Guarantied Obligations
were directly owing to you or the other holders of Notes by such Guarantor;
(i) any defense arising by reason of any disability or other defense
(other than the defense that the Guarantied Obligations shall have been
fully and finally performed and indefeasibly paid) of the Company or by
reason of the cessation from any cause whatsoever of the liability of the
Company in respect thereof, and any other defense that such Guarantor may
otherwise have against the Company or any holder of Notes;
(j) any stay (except in connection with a pending appeal),
valuation, appraisal, redemption or extension law now or at any time
hereafter in force which, but for this waiver, might be applicable to any
sale of Property of such Guarantor made under any judgment, order or decree
based on this Agreement, and such Guarantor covenants that it will not at
any time insist upon or plead, or in any manner claim or take the benefit
or advantage of such law; and
(k) any claim of any nature arising out of any right of indemnity,
contribution, reimbursement or any similar right, or any claim of
subrogation arising, in respect of any payment made under the Unconditional
Guaranty or in connection with the Unconditional Guaranty, against the
Company or the estate of the Company (including, without limitation, Liens
on the Property of the Company or the estate of the Company), in each case
if, but only if, and for so long as, the Company is the subject of any
proceeding brought under the Federal Bankruptcy Code or under the
applicable bankruptcy laws of any appropriate jurisdiction, whether now
or hereafter in effect, and further agrees that such Guarantor will not
file any claims against the Company or the estate of the Company in the
course of any such proceeding in respect of the rights referred to in this
clause (k), and further agrees that each holder of Notes may specifically
enforce the provisions of this clause (k).
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10.4 CERTAIN WAIVERS OF SUBROGATION, REIMBURSEMENT AND INDEMNITY.
Each Guarantor hereby acknowledges and agrees that such Guarantor shall
not have any right of subrogation, reimbursement, or indemnity whatsoever in
respect of the Guarantied Obligations, and no right of recourse to or with
respect to any assets or Property of the Company. Nothing shall discharge or
satisfy the obligations of any Guarantor hereunder except the full and final
performance and indefeasible payment of the Guarantied Obligations.
10.5 RELEASES.
Each Guarantor consents and agrees that, without notice to or by such
Guarantor and without impairing, releasing, abating, deferring, suspending,
reducing, terminating or otherwise affecting the obligations of such Guarantor
hereunder, each holder of Notes, in the manner provided herein, by action or
inaction, may:
(a) compromise or settle, renew or extend the period of duration or
the time for the payment, or discharge the performance of, or may refuse
to, or otherwise not, enforce, or may, by action or inaction, release all
or any one or more parties to, any one or more of the Notes, this
Agreement or any of the other Financing Documents;
(b) assign, sell or transfer, or otherwise dispose of, any one or
more of the Notes;
(c) grant waivers, extensions, consents and other indulgences to the
Company or any other Guarantor in respect of any one or more of the Notes,
this Agreement or any of the other Financing Documents;
(d) amend, modify or supplement in any manner and at any time (or
from time to time) any one or more of the Notes, this Agreement or the
other Financing Documents in accordance with Section 11.5 or otherwise;
(e) release or substitute any one or more of the endorsers or
guarantors of the Guarantied Obligations whether parties hereto or not;
(f) sell, exchange, release or surrender any Property at any time
pledged or granted as security in respect of the Guarantied Obligations,
whether so pledged or granted by such Guarantor or another guarantor of
the Company's obligations under this Agreement, the Notes and the other
Financing Documents; and
(g) exchange, enforce, waive, or release, by action or inaction, any
security for the Guarantied Obligations or any other guaranty of any of the
Notes.
10.6 MARSHALING.
Each Guarantor consents and agrees that:
(a) you and each other holder of Notes shall be under no obligation
to marshal any assets in favor of such Guarantor or against or in payment
of any or all of the Guarantied Obligations; and
(b) to the extent any other Guarantor makes a payment or payments
to any holder of Notes, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside, or required, for any of the foregoing reasons or for any other
reason, to be repaid or paid over to a custodian, trustee, receiver, or
any other party under any bankruptcy law, common law, or equitable cause,
then to the extent of such payment or repayment, the obligation or part
thereof intended to be satisfied thereby shall be revived and continued in
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full force and effect as if said payment or payments had not been made and
such Guarantor shall be primarily liable for such obligation.
10.7 LIABILITY.
Each Guarantor agrees that the liability of such Guarantor in respect of
this Section 10 shall be immediate and shall not be contingent upon the
exercise or enforcement by you or any other holder of Notes of whatever
remedies you or such other holder may have against the Company or any other
Guarantor or the enforcement of any Lien or realization upon any security you
or such other holder may at any time possess.
10.8 PRIMARY OBLIGATION.
The Unconditional Guaranty set forth in this Section 10 is a primary and
original obligation of each Guarantor and is an absolute, unconditional,
continuing and irrevocable guaranty of payment and performance and shall
remain in full force and effect (except as set forth in Section 10.16) until
the full, final and indefeasible payment of the Guarantied Obligations
without respect to future changes in conditions, including, without
limitation:
(a) change of law or any invalidity or irregularity with respect to
the issuance or assumption of any obligations (including, without
limitation, the Notes) of or by any of the Company or any Guarantor, or
with respect to the execution and delivery of any agreement (including,
without limitation, the Notes and this Agreement) of or by any of the
Company or any Guarantor;
(b) any event or condition described in Section 10.5;
(c) the occurrence of any event or the existence of any condition
specified in Section 8.1(g), Section 8.1(h) or Section 8.1(i) with respect
to the Company or any other Guarantor;
(d) any change in the ownership of the Voting Units of the Company
or any Guarantor; or
(e) any other change or circumstance whatsoever.
10.9 ELECTION TO PERFORM OBLIGATIONS.
Any election by any Guarantor to pay or otherwise perform any of the
obligations of the Company under the Notes, this Agreement or any of the
other Financing Documents, whether pursuant to this Section 10 or otherwise,
shall not release the Company or any other Guarantor from such obligations or
any of such Person's other obligations under the Notes, this Agreement and
the other Financing Documents.
10.10 NO ELECTION.
You and each other holder of Notes shall, individually or collectively,
have the right to seek recourse against any Guarantor to the fullest extent
provided for herein for such Guarantor's obligations under this Agreement
(including, without limitation, this Section 10) in respect of the Notes. No
election to proceed in one form of action or proceeding, or against any
party, or on any obligation, shall constitute a waiver of such holder's right
to proceed in any other form of action or proceeding or against other parties
unless such holder has expressly waived such right in writing. Specifically,
but without limiting the generality of the foregoing, no action or proceeding
by you or any other holder of Notes against the Company or any Guarantor
under any document or instrument evidencing obligations of the Company or
such Guarantor to you or such other holder of Notes shall serve to diminish
the liability of any Guarantor under this Agreement (including, without
limitation, this Section 10) except to the extent that you or such other
holder of Notes finally and unconditionally
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shall have realized payment by such action or proceeding, notwithstanding the
effect of any such action or proceeding upon such Guarantor's right of
subrogation against the Company.
10.11 SEVERABILITY.
Subject to the provisions of Section 8, each of the rights and remedies
granted under this Section 10 to you and each other holder of Notes in
respect of the Notes held by you or such other holder may be exercised by you
or such other holder without notice by you or such other holder to, or the
consent of or any other action by, any other holder of Notes.
10.12 OTHER ENFORCEMENT RIGHTS.
You and each other holder of Notes may proceed, as provided in Section
10.11, to protect and enforce the Unconditional Guaranty by suit or suits or
proceedings in equity, at law or in bankruptcy, and whether for the specific
performance of any covenant or agreement contained herein (including, without
limitation, in this Section 10) or in execution or aid of any power herein
granted; or for the recovery of judgment for the obligations hereby
guarantied or for the enforcement of any other proper, legal or equitable
remedy available under applicable law. You and each other holder of Notes
shall have, to the fullest extent permitted by law and this Agreement, a
right of set-off against any and all credits and any and all other Property
of each or all of the Guarantors, now or at any time whatsoever with, or in
the possession of, you or such other holder, or anyone acting for you or such
other holder, to ensure the full performance of any and all obligations of
such Guarantor hereunder.
10.13 DELAY OR OMISSION; NO WAIVER.
No course of dealing on the part of you or any other holder of Notes and
no delay or failure on the part of any such Person to exercise any right
hereunder (including, without limitation, this Section 10) shall impair such
right or operate as a waiver of such right or otherwise prejudice such
Person's rights, powers and remedies hereunder. Every right and remedy given
by the Unconditional Guaranty or by law to you or any other holder of Notes
may be exercised from time to time as often as may be deemed expedient by
such Person.
10.14 RESTORATION OF RIGHTS AND REMEDIES.
If you or any other holder of Notes shall have instituted any proceeding
to enforce any right or remedy under the Unconditional Guaranty, under any
Note held by you or such other holder of Notes, and such proceeding shall
have been dismissed, discontinued or abandoned for any reason, or shall have
been determined adversely to you or such other holder, then and in every such
case you and each such other holder, the Company and each Guarantor shall,
except as may be limited or affected by any determination (including, without
limitation, any determination in connection with any such dismissal) in such
proceeding, be restored severally and respectively to its respective former
positions hereunder and thereunder, and thereafter, subject as aforesaid, the
rights and remedies of you and such other holders of Notes shall continue as
though no such proceeding had been instituted.
10.15 CUMULATIVE REMEDIES.
No remedy under this Agreement (including, without limitation, this
Section 10) or the Notes is intended to be exclusive of any other remedy, but
each and every remedy shall be cumulative and in addition to any and every
other remedy given pursuant to this Agreement (including, without limitation,
this Section 10) or pursuant to the Notes.
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10.16 SURVIVAL.
So long as the Guarantied Obligations shall not have been fully and finally
performed and indefeasibly paid, the obligations of each Guarantor under this
Section 10 shall survive the transfer and payment of any Note and the payment
in full of all the Notes.
10.17 NO SETOFF, COUNTERCLAIM OR OTHER DEDUCTION.
Except as otherwise required by law, each payment by each Guarantor shall
be made without setoff, counterclaim or other deduction.
10.18 SEPARATE INSTRUMENTS.
Notwithstanding that each of the Guarantors is a party to this Agreement,
each of the Guarantied Obligations of each Guarantor under this Section 10
shall be deemed to be contained in a separate instrument and any invalidity
or unenforceability of this Agreement in respect of any Guarantor shall have
no effect on the validity or enforceability of this Agreement in respect of
the other Guarantors.
11. MISCELLANEOUS
11.1 COMMUNICATIONS.
(a) METHOD; ADDRESS. All communications hereunder or under the
Notes shall be in writing and shall be delivered either by nationwide
overnight courier or by facsimile transmission (confirmed by delivery by
nationwide overnight courier sent on the day of the sending of such
facsimile transmission). Communications to the Company or any Guarantor
shall be addressed as set forth on Annex 2, or at such other address of
which the Company or such Guarantor shall have notified each holder of
Notes. Communications to the holders of the Notes shall be addressed as
set forth on Annex 1 by such holder, or at such other address of which
such holder shall have notified the Company or such Guarantor (and the
Company shall record such address in the register for the registration
and transfer of Notes maintained pursuant to Section 5.1).
(b) WHEN GIVEN. Any communication addressed and delivered as herein
provided shall be deemed to be received when actually delivered to the
address of the addressee (whether or not delivery is accepted) or received
by the telecopy machine of the recipient. Any communication not so
addressed and delivered shall be ineffective.
11.2 REPRODUCTION OF DOCUMENTS.
This Agreement, each of the other Financing Documents (other than the
Notes) and all documents relating hereto or thereto, including, without
limitation,
(a) consents, waivers and modifications that may hereafter be
executed,
(b) documents received by you at the closing of your purchase of the
Notes (except the Notes themselves), and
(c) financial statements, certificates and other information
previously or hereafter furnished to you or any other holder of Notes,
may be reproduced by any holder of Notes by any photographic, photostatic,
microfilm, micro-card, miniature photographic, digital or other similar
process and each holder of Notes may destroy any original document so
reproduced. The Company and the Guarantors agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or
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administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by such holder of Notes in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Nothing in this Section 11.2 shall prohibit the Company, any Guarantor or any
holder of Notes from contesting the validity or the accuracy of any such
reproduction.
11.3 SURVIVAL.
All warranties, representations, certifications and covenants made by
the Company, the Parent or any Guarantor herein or in any certificate or
other instrument delivered by it or on its behalf hereunder shall be
considered to have been relied upon by you and shall survive the delivery to
you of the Notes regardless of any investigation made by you or on your
behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Company and any such
Guarantor hereunder. All payment obligations of the Company hereunder
(including, without limitation, reimbursement obligations in respect of
costs, expenses and fees of or incurred by the holders of the Notes), other
than the obligation to pay the principal of and interest and Make-Whole
Amount on the Notes, shall survive the payment or prepayment of the Notes and
the termination hereof.
11.4 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto. The provisions hereof
are intended to be for the benefit of all holders, from time to time, of
Notes, and shall be enforceable by any such holder, whether or not an express
assignment to such holder of rights hereunder shall have been made by you or
your successor or assign. Anything contained in this Section 11.4
notwithstanding, the Company may not assign any of its respective rights,
duties or obligations hereunder or under any of the other Financing Documents
without the prior written consent of all holders of Notes. For purposes of
the avoidance of doubt, any holder of a Note shall be permitted to pledge or
otherwise grant a Lien in and to such Note (including, without limitation,
pledging such Note to a trustee for the benefit of certain secured
noteholders pursuant to documents relating to the financing of such holder or
to one or more banks or other institutions providing financing in connection
with the purchase by such holder of such Note); PROVIDED, HOWEVER, that any
such pledgee or holder of a Lien shall not be considered a holder hereunder
until it shall have foreclosed upon such Note in accordance with applicable
law and informed the Company, in writing, of the same.
11.5 AMENDMENT AND WAIVER.
(a) REQUIREMENTS. This Agreement may be amended, and the observance
of any term hereof may be waived, with (and only with) the written consent
of the Company, the Guarantors and the Required Holders; PROVIDED that no
such amendment or waiver of any of the provisions of Section 1 through
Section 3 hereof, inclusive, or any defined term used therein, shall be
effective as to any holder of Notes unless consented to by such holder in
writing; and PROVIDED FURTHER that no such amendment or waiver shall,
without the written consent of the holders of all Notes (exclusive of
Notes held by the Parent, any Subsidiary or any Affiliate) at the time
outstanding:
(i) subject to Section 8, change the amount or time of any
prepayment or payment of principal or Make-Whole Amount or the rate or
time of payment of interest;
(ii) amend or waive the provisions of Section 4 or Section 8,
or amend or waive any defined term to the extent used therein;
(iii) amend the definition of "Required Holders;"
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(iv) amend this Section 11.5, or amend or waive any defined
term to the extent used herein;
(v) release any Guarantor from its respective obligations
hereunder; or
(vi) except as otherwise provided in Section 4.4, the
Intercreditor/Collateral Agency Agreement and the Security Documents,
release the Liens of the Collateral Agent in the Collateral.
The holder of any Note may specify that any such written consent executed
by it shall be effective only with respect to a portion of the Notes held
by it (in which case it shall specify, by dollar amount, the aggregate
principal amount of Notes with respect to which such consent shall be
effective) and in the event of any such specification such holder shall be
deemed to have executed such written consent only with respect to the
portion of the Notes so specified.
(b) SOLICITATION OF NOTEHOLDERS.
(i) SOLICITATION. Neither the Company, the Parent nor any
other Guarantor shall solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions
of this Agreement, the Notes or any of the other Financing Documents
unless each holder of the Notes (irrespective of the amount of Notes
then owned by it) shall be provided by the Company, the Parent or such
other Guarantor with sufficient information to enable it to make an
informed decision with respect thereto. Executed or true and correct
copies of any waiver or consent effected pursuant to the provisions of
this Section 11.5 shall be delivered by the Company to each holder of
outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by all holders of outstanding Notes
required to consent or agree to such waiver or consent.
(ii) PAYMENT. Neither the Company, the Parent nor any other
Guarantor shall, directly or indirectly, pay or cause to be paid any
remuneration, whether by way of supplemental or additional interest,
fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any of the terms and
provisions of this Agreement or any of the other Financing Documents
unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to the holders of all
Notes then outstanding.
(iii) SCOPE OF CONSENT. Any consent made pursuant to this
Section 11.5 by a holder of Notes that has transferred or has agreed
to transfer its Notes to the Parent, any Subsidiary or any Affiliate
and has provided or has agreed to provide such written consent as a
condition to such transfer shall be void and of no force and effect
except solely as to such holder, and any amendments effected or
waivers granted or to be effected or granted that would not have been
or would not be so effected or granted but for such consent (and the
consents of all other holders of Notes that were acquired under the
same or similar conditions) shall be void and of no force and effect,
retroactive to the date such amendment or waiver initially took or
takes effect, except solely as to such holder.
(c) BINDING EFFECT. Except as provided in Section 11.5(b)(iii)
hereof, any amendment or waiver consented to as provided in this Section
11.5 shall apply equally to all holders of Notes and shall be binding upon
them and upon each future holder of any Note and upon the Company, the
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Parent and the other Guarantors whether or not such Note shall have been
marked to indicate such amendment or waiver. No such amendment or waiver
shall extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right
consequent thereon.
11.6 EXPENSES.
(a) The Company shall pay when billed the reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the holders of
the Notes in connection with the consideration, negotiation, preparation or
execution of any amendments, waivers, consents, standstill agreements and
other similar agreements with respect hereto (whether or not any such
amendments, waivers, consents, standstill agreements or other similar
agreements are executed).
(b) At any time when the Company and/or any of the Guarantors and
the holders of Notes are conducting restructuring or workout negotiations
in respect hereof, or a Default or Event of Default exists, the Company
shall pay when billed the reasonable costs and expenses (including
reasonable attorneys' fees and the fees of professional advisors) incurred
by the holders of the Notes in connection with inspections made pursuant
to Section 7.4 and in connection with the assessment, analysis or
enforcement of any rights or remedies that are or may be available to the
holders of Notes.
(c) If the Company shall fail to pay when due any principal of, or
Make-Whole Amount or interest on, any Note, the Company shall pay to each
holder of Notes, to the extent permitted by law, such amounts as shall be
sufficient to cover the costs and expenses, including but not limited to
reasonable attorneys' fees, incurred by such holder in collecting any sums
due on such Notes.
11.7 ENVIRONMENTAL INDEMNITY.
Each of the Parent, the Company, the Guarantors and the Managing General
Partners covenants that, except for claims, losses, damages, response costs
or expenses caused by or contributed (to the extent of such contribution) to
by the grossly negligent or intentional misconduct of any holder of Notes or
the Collateral Agent, it will at all times, unconditionally, absolutely and
irrevocably, indemnify, hold harmless and defend each such holder and the
Collateral Agent and their respective successors and assigns from any and all
claims, losses, damages, response costs and expenses arising out of or in any
way relating to a breach and/or misrepresentation of any and/or all of the
environmental representations, warranties, certifications and/or covenants
set forth herein or in any of the Financing Documents, or in any way relating
to a breach or violation, or alleged breach or violation, of any one or more
of the Environmental Protection Laws, including, without limitation:
(a) claims of third parties (including, without limitation,
governmental agencies) for damages, penalties, response costs, injunctive
or other relief;
(b) costs of removal, treatment, disposal and restoration,
including, without limitation, reasonable fees of attorneys and experts,
costs of reporting the existence of hazardous materials to any governmental
agency and costs of preparing and/or causing to be prepared any and all
studies, tests, analyses and/or reports in connection with any
environmental matter; and
(c) any and all expenses or obligations incurred at, before and
after any trial or appeal therefrom, whether or not taxable as costs,
including, without limitation, reasonable attorneys' fees, witness fees,
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deposition costs, copying and telephone charges and other expenses, all of
which shall be paid by the Company when incurred.
Except for claims, losses, damages, response costs or expenses caused or
contributed (to the extent of such contribution) by the grossly negligent or
intentional misconduct of any holder of Notes or the Collateral Agent, the
representations, warranties, certifications and/or covenants contained herein
and the obligations of the Parent, the Company, the Guarantors and the
Managing General Partners to indemnify such holders and the Collateral Agent as
provided in this Section 11.7, including, without limitation, indemnification
for the expenses, damages, losses, costs, damages and liabilities referred to
above in this Section 11.7, shall survive the repayment of all amounts due
under the Financing Documents and the release and/or cancellation of any and
all of the Financing Documents, the foreclosure of any Liens on any Property
by such holders or the Collateral Agent and/or any third party, or the
conveyance thereof by deed in lieu of foreclosure.
11.8 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC.
(a) WAIVER OF JURY TRIAL. The parties hereto voluntarily and
intentionally waive any right any of them may have to a trial by jury in
respect of any litigation arising out of, under or in connection with this
Agreement or any of the documents, agreements or transactions contemplated
hereby. Each of the Company, the Guarantors and the Managing General
Partners has reviewed the foregoing waivers with its legal counsel and has
knowingly and voluntarily waived its jury trial rights following
consultation with legal counsel. In the event of litigation, this
Agreement may be filed as written consent to a trial by the court.
(b) CONSENT TO JURISDICTION. Any suit, action or proceeding arising
out of or relating to this Agreement, or any of the documents, agreements
or transactions contemplated hereby or any action or proceeding to execute
or otherwise enforce any judgment in respect of any breach under this
Agreement or any document or agreement contemplated hereby may be brought
by such party in any federal district court located in New York City,
New York, or any New York state court located in New York City, New York
as such party may in its sole discretion elect, and by the execution and
delivery of this Agreement, the parties hereto irrevocably and
unconditionally submit to the non-exclusive IN PERSONAM jurisdiction of
each such court, and each of the parties hereto irrevocably waives and
agrees not to assert in any proceeding before any tribunal, by way of
motion, as a defense or otherwise, any claim that it is not subject to
the IN PERSONAM jurisdiction of any such court. In addition, each of
the parties hereto irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of
venue in any suit, action or proceeding arising out of or relating to
this Agreement or any document, agreement or transaction contemplated
hereby brought in any such court, and hereby irrevocably waives any claim
that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum.
(c) SERVICE OF PROCESS. Each party hereto irrevocably agrees that
process personally served, served by U.S. Registered mail or served in the
manner provided for notices in this Agreement, at the addresses provided
herein for notices, shall constitute, to the extent permitted by law,
adequate service of process in any suit, action or proceeding arising out
of or relating to this Agreement or any document, agreement or transaction
contemplated hereby, or any action or proceeding to execute or otherwise
enforce any judgment in respect of any breach hereunder or under any
document or agreement contemplated hereby. Receipt of process so served
shall be conclusively presumed as evidenced by a delivery receipt
furnished by the United States Postal Service or any commercial delivery
service.
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(d) OTHER FORUMS. Nothing herein shall in any way be deemed to
limit the ability of any holder of Notes to serve any writs, process or
summonses in any manner permitted by applicable law or to obtain
jurisdiction over the Company or the Guarantors in such other jurisdiction,
and in such other manner, as may be permitted by applicable law.
11.9 Release.
The Company and the Guarantors hereby voluntarily and knowingly release
and forever discharge the Collateral Agent, the holders of the Notes and
their respective predecessors, directors, officers, employees, agents,
investment advisors, successors and assigns, from all possible claims,
demands, actions, causes of action, damages, costs, expenses, and liabilities
whatsoever, known or unknown, anticipated or unanticipated, suspected or
unsuspected, fixed, contingent, or conditional, at law or in equity,
originating in whole or in part on or before the Closing Date, which the
Company and the Guarantors, individually or collectively, may now or
hereafter have against the Collateral Agent, the holders of the Notes and
their respective predecessors, directors, officers, employees, agents,
investment advisors, successors and assigns, if any, and irrespective of
whether any such claims arise out of contract, tort, violation of law or
regulations, or otherwise, including, without limitation, any contracting
for, charging, taking, reserving, collecting or receiving interest in excess
of the highest lawful rate applicable, the exercise of any rights and
remedies under this Agreement, the Notes, any Security Document or other
Financing Document, and the negotiation for and execution of this Agreement.
11.10 INDEMNIFICATION OF EACH HOLDER.
From and at all times after the date of this Agreement, and in addition
to all of the holders' of Notes other rights and remedies against the
Company, the Company agrees to indemnify and hold harmless the Collateral
Agent, each holder of the Notes and each director, officer, employee, agent,
investment advisor and affiliate of the Collateral Agent and each such holder
against any and all claims (whether valid or not), losses, damages,
liabilities, costs and expenses of any kind or nature whatsoever (including,
without limitation, reasonable attorneys' fees, costs and expenses), incurred
by or asserted against the Collateral Agent, such holder or any such
director, officer, employee, agent, investment advisor or affiliate, from and
after the date hereof, whether direct, indirect or consequential, as a result
of or arising from or in any way relating to any suit, action or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, asserting a claim for any legal or equitable remedy against any
Person under any statute or regulation, including, but not limited to, any
federal or state securities laws, or under any common law or equitable cause
or otherwise, arising from or in connection with the negotiation,
preparation, execution, performance or enforcement of this Agreement or the
other Financing Documents or any transactions contemplated herein or therein,
or any of the transactions contemplated hereunder, whether or not the
Collateral Agent, such holder or any such director, officer, employee, agent,
investment advisor or affiliate is a party to any such action, proceeding,
suit or the target of any such inquiry or investigation; PROVIDED, HOWEVER,
that no indemnified party shall have the right to be indemnified hereunder
for any liability resulting from the willful misconduct or gross negligence
of such indemnified party. All of the foregoing losses, damages, costs and
expenses of any holder of Notes shall be payable as and when incurred upon
demand by such holder and shall be additional obligations hereunder. The
obligations of the Company and the rights of the holders of Notes under this
Section 11.10 shall survive payment of the Notes and the termination of this
agreement.
11.11 ENTIRE AGREEMENT; ORAL AGREEMENTS INEFFECTIVE.
This Agreement and the other "loan agreements" (as defined in section
26.02(a)(2) Of the Texas Business & Commerce Code, as amended) represent the
final agreement between the parties, and this Agreement and the other written
loan agreements may not be contradicted by evidence of prior, contemporaneous
or
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subsequent oral agreements between the parties. There are no unwritten oral
agreements between the parties.
11.12 DUPLICATE ORIGINALS, EXECUTION IN COUNTERPART.
Two (2) or more duplicate originals hereof may be signed by the parties,
each of which shall be an original but all of which together shall constitute
one and the same instrument. This Agreement may be executed in one or more
counterparts and shall be effective when at least one counterpart shall have
been executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall constitute one
duplicate original.
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If this Agreement is satisfactory to you, please so indicate by signing
the acceptance at the foot of a counterpart hereof and returning such
counterpart to the Company, the Parent, Business Trust I, Business Trust II,
West Virginia Partners, Renovation Partners, Properties Development, Norman,
Lincoln and Carolina, whereupon this Agreement shall become binding among us
in accordance with its terms.
Very truly yours,
U.S. RESTAURANT PROPERTIES OPERATING
L.P.
BY: U.S. RESTAURANT PROPERTIES,
INC.,
its general partner
By
--------------------------------
Name:
Title:
U.S. RESTAURANT PROPERTIES MASTER L.P.
BY: U.S. RESTAURANT PROPERTIES,
INC.,
its general partner
By
--------------------------------
Name:
Title:
U.S. RESTAURANT PROPERTIES BUSINESS
TRUST I
BY: ROBERT J. STETSON
its managing trustee
By
--------------------------------
BY: FRED MARGOLIN
its managing trustee
By
--------------------------------
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U.S. RESTAURANT PROPERTIES BUSINESS
TRUST II
BY: ROBERT J. STETSON
its managing trustee
By
--------------------------------
BY: FRED MARGOLIN
its managing trustee
By
--------------------------------
USRP (WEST VIRGINIA) PARTNERS, L.P.
BY: USRP RENOVATION CORP.,
its general partner
By
--------------------------------
Name:
Title:
RESTAURANT RENOVATION PARTNERS, L.P.
BY: RESTAURANT ACQUISITION CORP.,
its general partner
By
--------------------------------
Name:
Title:
U.S.RESTAURANT PROPERTIES
DEVELOPMENT, L.P.
BY: RESTAURANT CONTRACTOR CORP.,
its general partner
By
--------------------------------
Name:
Title:
USRP (NORMAN), LTD.
BY: RESTAURANT ACQUISITION CORP.
its general partner
By
--------------------------------
Name:
Title:
U.S. RESTAURANT PROPERTIES OPERATING L.P. NOTE PURCHASE AGREEMENT
<PAGE>
USRP (LINCOLN), LTD.
BY: RESTAURANT ACQUISITION CORP.
its general partner
By
--------------------------------
Name:
Title:
USRP (CAROLINA), LTD.
BY: RESTAURANT ACQUISITION CORP.
its general partner
By
--------------------------------
Name:
Title:
U.S. RESTAURANT PROPERTIES OPERATING L.P. NOTE PURCHASE AGREEMENT
<PAGE>
Accepted:
[PURCHASER]
By
-----------------------------------------
Name:
Title:
U.S. RESTAURANT PROPERTIES OPERATING L.P. NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASERS
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C>
Purchaser Name PACIFIC MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------------
Name in which to ATWELL & Co
register Note(s)
- --------------------------------------------------------------------------------------
Series; Note SERIES A NOTES:
registration number; AR-1 -- $5,000,000
Principal amount AR-2 -- $5,000,000
- --------------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account The Chase Manhattan Bank, N.A.
information ABA # 021-000-021
A/C = 900-9-002206
BBK = Chase Manhattan Bank/SSTO
A/C Name: Pacific Mutual Gen Acct
Sub A/C Number: 47363300
- --------------------------------------------------------------------------------------
Accompanying SERIES A NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.06%
Series A Senior Secured Guarantied Notes Due
January 31, 2000; PPN: 90346# AA 8; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- --------------------------------------------------------------------------------------
Address for notices Jerry E. Ziegler (2ND FL.)
related to payments Investment Analyst
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
- --------------------------------------------------------------------------------------
Address for all other Jerry E. Ziegler (2ND FL.)
notices Investment Analyst
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
Facsimile: 714-721-5406
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-1 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C>
Purchaser Name PACIFIC MUTUAL LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------------
Delivery of Securities The Chase Manhattan Bank
4 New York Plaza
Ground Floor Window
New York, NY 10004
Ref: A/C Name: Pacific Mutual Gen Acct
A/C Number: 89930705
Duplicate Remittance to:
The Chase Manhattan Bank, N.A.
P.O. Box 456
Wall Street Station
New York, NY 10005
With a copy to:
Kathleen D. Simmons
Assistant Vice President
Pacific Mutual Life Insurance Company
700 Newport Center Drive
Newport Beach, CA 92660
- --------------------------------------------------------------------------------------
Additional Instructions 2 signature lines required
- --------------------------------------------------------------------------------------
Tax identification 13-6065575
number
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-2 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER (CONT.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Purchaser Name THE OHIO NATIONAL LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------
Name in which to THE OHIO NATIONAL LIFE INSURANCE COMPANY
register Note(s)
- ------------------------------------------------------------------------------
Series; Note SERIES A NOTES:
registration number; AR-3 -- $2,500,000
Principal amount
SERIES B NOTES:
BR-1 -- $2,500,000
- ------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account Star Bank, N.A.
information ABA # 042-000013
5th & Walnut Streets
Cincinnati, OH 45202
For credit to The Ohio National Life Insurance
Company's Account No. 910-275-7
- ------------------------------------------------------------------------------
Accompanying SERIES A NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.06%
Series A Senior Secured Guarantied Notes Due
January 31, 2000; PPN: 90346# AA 8; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
SERIES B NOTES:
U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- ------------------------------------------------------------------------------
Address for notices THE OHIO NATIONAL LIFE INSURANCE COMPANY
related to payments Post Office Box 237
Cincinnati, OH 45201
Attn: Investment Department
- ------------------------------------------------------------------------------
Address for all other THE OHIO NATIONAL LIFE INSURANCE COMPANY
notices Post Office Box 237
Cincinnati, OH 45201
Attn: Investment Department
Facsimile: 513-794-4506
- ------------------------------------------------------------------------------
Tax identification 31-0397080
number
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-3 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER (Cont.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Purchaser Name JEFFERSON-PILOT LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------
Name in which to JEFFERSON-PILOT LIFE INSURANCE COMPANY
register Note(s)
- ------------------------------------------------------------------------------
Series; Note SERIES B NOTES:
registration number; BR-2 -- $5,000,000
Principal amount
- ------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account Jefferson-Pilot Life Insurance Company
information c/o The Bank of New York
ABA #021 000 018 BNF: IOC566
Attention: P&I Department
- ------------------------------------------------------------------------------
Accompanying SERIES B NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- ------------------------------------------------------------------------------
Address for notices Jefferson-Pilot Life Insurance Company
related to payments c/o The Bank of New York
Attention: P&I Department
P.O. Box 19266
Newark, New Jersey 07195
With duplicate copy to:
Jefferson-Pilot Life Insurance Company
P.O. Box 21008
Greensboro, NC 27420
Attn: Securities Administration - 3630
Fax: 910/691-3025
- ------------------------------------------------------------------------------
Address for all other Jefferson-Pilot Life Insurance Company
notices P.O. Box 21008
Greensboro, NC 27420
Attn: Securities Administration - 3630
Facsimile: 910/691-3025
- ------------------------------------------------------------------------------
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-4 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER (CONT.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Purchaser Name JEFFERSON-PILOT LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------
Delivery of Notes Bank of New York
One Wall Street
3rd Floor, Window A
For Jefferson-Pilot Life Acct. 186100
New York, New York 10286
With duplicate copy to:
Jefferson-Pilot Life Insurance Company
P.O. Box 21008
Greensboro, NC 27420
Attn: Securities Administration - 3630
- ------------------------------------------------------------------------------
Tax identification 56-0359860
number
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-5 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER (CONT.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Purchaser Name ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF
AMERICA
- ------------------------------------------------------------------------------
Name in which to ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF
register Note(s) AMERICA
- ------------------------------------------------------------------------------
Series; Note SERIES B NOTES:
registration number; BR-3 -- $5,000,000
Principal amount
- ------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account Alexander Hamilton Life Insurance Company of
information America
c/o The Bank of New York
ABA #021 000 018
BNF: IOC566
Attention: P&I Department
- ------------------------------------------------------------------------------
Accompanying SERIES B NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- ------------------------------------------------------------------------------
Address for notices Alexander Hamilton Life Insurance Company of
related to payments America
c/o The Bank of New York
Attention: P&I Department
P.O. Box 19266
Newark, NJ 07195
With duplicate copy to:
Alexander Hamilton Life Insurance Company of
America
P.O. Box 21008
Greensboro, NC 27420
Attn: Securities Administration - 3630
Fax: 910/691-3025
- ------------------------------------------------------------------------------
Address for all other Alexander Hamilton Life Insurance Company of
notices America
P.O. Box 21008
Greensboro, NC 27420
Attn: Securities Administration - 3630
Facsimile: 910/691-3025
- ------------------------------------------------------------------------------
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-6 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER (CONT.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Purchaser Name ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF
AMERICA
- ------------------------------------------------------------------------------
Delivery of Notes Bank of New York
One Wall Street
3rd Floor, Window A
For Alexander Hamilton Life Acct. 186101
New York, New York 10286
With duplicate copy to:
Alexander Hamilton Life Insurance Company of
America
P.O. Box 21008
Greensboro, NC 27420
Attn: Securities Administration - 3630
- ------------------------------------------------------------------------------
Tax identification 56-1311063
number
- ------------------------------------------------------------------------------
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-7 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER (CONT.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Purchaser Name FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------
Name in which to FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY
register Note(s)
- ------------------------------------------------------------------------------
Series; Note SERIES B NOTES:
registration number; BR-4 -- $5,000,000
Principal amount
- ------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account
information
Northern Trust Company New York
Attention: INC/DIV
ABA No. 071 000 152
First Alexander Hamilton Life Insurance Company
Account No.: 26-30446
- ------------------------------------------------------------------------------
Accompanying SERIES B NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- ------------------------------------------------------------------------------
Address for notices The Northern Trust Company of New York
related to payments 80 Broad Street, 19th Floor
New York, NY 10004
With duplicate copy to:
First Alexander Hamilton Life Insurance Company
100 North Greene Street
Greensboro, NC 27401
Attn: Securities Administration - 3630
Fax: 910/691-3025
- ------------------------------------------------------------------------------
Address for all other First Alexander Hamilton Life Insurance Company
notices 100 North Greene Street
Greensboro, NC 27401
Attn: Securities Administration - 3630
- ------------------------------------------------------------------------------
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-8 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASER (CONT.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Purchaser Name FIRST ALEXANDER HAMILTON LIFE INSURANCE COMPANY
- ------------------------------------------------------------------------------
Delivery of Notes The Northern Trust Company of New York
for First Alexander Hamilton Life Acct. 26-30446
80 Broad Street, 19th Floor
New York, NY 10004
With duplicate copy to:
First Alexander Hamilton Life Insurance Company
100 North Greene Street
Greensboro, NC 27401
Attn: Securities Administration - 3630
- ------------------------------------------------------------------------------
Tax identification 22-2768833
number
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-9 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C>
Purchaser Name RELIASTAR LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------------
Name in which to RELIASTAR LIFE INSURANCE COMPANY
register Note(s)
- --------------------------------------------------------------------------------------
Series; Note SERIES B NOTES:
registration number; BR-5 -- $4,000,000
Principal amount
- --------------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account First National Bank N.A./mpls
information 601 2nd Ave. S.
Acct. #1102-4001-4461
Bank ABA #091000022
Attn: Securities Accounting
- --------------------------------------------------------------------------------------
Accompanying SERIES B NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- --------------------------------------------------------------------------------------
Address for notices Reliastar Investment Research
related to payments 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Address for all other Reliastar Investment Research
notices 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Delivery of Securities Reliastar Investment Research
100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Peggy Herbst
- --------------------------------------------------------------------------------------
Tax identification 41-0451140
number
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-10 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C>
Purchaser Name NORTHERN LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------------
Name in which to NORTHERN LIFE INSURANCE COMPANY
register Note(s)
- --------------------------------------------------------------------------------------
Series; Note SERIES B NOTES:
registration number; BR-6 -- $4,000,000
Principal amount
- --------------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account First National Bank N.A./mpls
information 601 2nd Ave. S.
Acct. #1602-3237-6105
Bank ABA #091000022
Attn: Securities Accounting
- --------------------------------------------------------------------------------------
Accompanying SERIES B NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- --------------------------------------------------------------------------------------
Address for notices Reliastar Investment Research
related to payments 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Address for all other Reliastar Investment Research
notices 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Delivery of Securities Reliastar Investment Research
100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Peggy Herbst
- --------------------------------------------------------------------------------------
Tax identification 41-1295933
number
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-11 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C>
Purchaser Name RELIASTAR BANKERS SECURITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------------
Name in which to SIGLER & CO.
register Note(s)
- --------------------------------------------------------------------------------------
Series; Note SERIES B NOTES:
registration number; BR-7 -- $1,000,000
Principal amount
- --------------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account Chase Manhattan
information New York, NY
A/C #544755102
F/C #1960 Dept 571 NonStandard Securities
Bank ABA #021000021
- --------------------------------------------------------------------------------------
Accompanying SERIES B NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- --------------------------------------------------------------------------------------
Address for notices Reliastar Investment Research
related to payments 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Address for all other Reliastar Investment Research
notices 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Delivery of Securities Reliastar Investment Research
100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Peggy Herbst
- --------------------------------------------------------------------------------------
Additional Instructions 2 signature lines required
- --------------------------------------------------------------------------------------
Tax identification 53-0242530
number
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-12 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 1
INFORMATION AS TO PURCHASERS (CONT.)
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<S> <C>
Purchaser Name RELIASTAR LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------------
Name in which to SALKELD & CO.
register Note(s)
- --------------------------------------------------------------------------------------
Series; Note SERIES B NOTES:
registration number; BR-8 -- $1,000,000
Principal amount
- --------------------------------------------------------------------------------------
Payment on account of
Note(s)
Method Federal Funds Wire Transfer (for credit not later
than 12:00 noon, New York City time)
Account Bankers Trust
information New York, NY
ABA #021001033
A/C #99-911-145
- --------------------------------------------------------------------------------------
Accompanying SERIES B NOTES:
information U.S. Restaurant Properties Operating L.P.; 8.30%
Series B Senior Secured Guarantied Notes Due
January 31, 2002; PPN: 90346# AB 6; due date and
allocation (as among principal, Make-Whole Amount
and interest) of the payment being made and the
name and address of the bank from which such wire
transfer was made.
- --------------------------------------------------------------------------------------
Address for notices Reliastar Investment Research
related to payments 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Address for all other Reliastar Investment Research
notices 100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Ted Hoxmeier
Tel. No.: 612-372-5254
Fax No.: 612-372-5368
- --------------------------------------------------------------------------------------
Delivery of Securities Reliastar Investment Research
100 Washington Avenue South
Suite 800
Minneapolis, MN 55401-2147
Attn: Peggy Herbst
- --------------------------------------------------------------------------------------
Tax identification 53-0159267
number
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 1-13 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 2
PAYMENT INSTRUCTIONS AT CLOSING; ADDRESSES FOR NOTICES
1. PAYMENT INSTRUCTIONS AT CLOSING
The Company hereby directs that the purchase price for the Notes be sent
via wire transfer as follows:
Comerica Bank - Texas
ABA #: 111 000 753
Credit Account of Burger King Operating L.P.
Account #: 7611017455
Notify: Valerie Siverling (972) 387-1487, ext. 33
Bank Address:
8687 N. Central Expressway
Suite 1300, 4th Floor
Dallas, TX 75225
2. ADDRESSES FOR NOTICES
A. If to the Company:
U.S. Restaurant Properties Operating L.P.
5310 Harvest Hill Road, Suite 270
Dallas, TX 75230
Attention: Fred H. Margolin
Tel. No.: 972-387-1487 (ext. 19)
Fax No.: 972-490-9119
B. If to the Parent:
U.S. Restaurant Properties Master L.P.
5310 Harvest Hill Road, Suite 270
Dallas, TX 75230
Attention: Fred H. Margolin
Tel. No.: 972-387-1487 (ext. 19)
Fax No.: 972-490-9119
C. If to any of the other Guarantors, to such Guarantor at the following
address:
c/o U.S. Restaurant Properties Operating L.P.
5310 Harvest Hill Road, Suite 270
Dallas, TX 75230
Attention: Fred H. Margolin
Tel. No.: 972-387-1487 (ext. 19)
Fax No.: 972-490-9119
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 2-1 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 3
INFORMATION AS TO COMPANY AND GUARANTORS
PART 2.2(a) - FINANCIAL STATEMENTS:
PART 2.2(b) - DEBT:
PART 2.3 - SUBSIDIARIES AND AFFILIATES:
PART 2.4(b) - INTERESTS IN REAL PROPERTY:
PART 2.4(c) - LEASES:
PART 2.4(d) - UCC MATTERS:
PART 2.8 - FOREIGN QUALIFICATION AND GOOD STANDING:
PART 2.10(b) - RESTRICTIVE AGREEMENTS:
PART 2.12(a) - ERISA AFFILIATES AND EMPLOYEE BENEFIT PLANS:
PART 2.12(c) - WITHDRAWAL LIABILITIES AND REPORTABLE EVENTS UNDER
MULTIEMPLOYER PLANS:
PART 2.13(d) - ENVIRONMENTAL MATTERS:
PART 2.16(a) - NUMBER OF OFFEREES:
PART 2.18(a) - USE OF PROCEEDS:
PART 2.21 - INSURANCE:
PART 2.22 - LEASES:
PART 6.9(a) - EXISTING LIENS:
PART 9.1(a) - MANAGING GENERAL PARTNERS
PART 9.1(b) - PARTNERSHIP AGREEMENTS
U.S. RESTAURANT PROPERTIES OPERATING L.P. Annex 3-1 NOTE PURCHASE AGREEMENT
<PAGE>
ANNEX 4
MORTGAGES AND ASSIGNMENTS OF RENTS
PART A. SECURITY DOCUMENTS TO BE DELIVERED AT OR BEFORE THE CLOSING.
On or before the Closing Date, the Parent and the Company will cause
original executed Mortgages and Assignment of Rents for each of the
Properties of the Parent, the Company or any Subsidiary located in the
following states and identified on Schedule 1 hereto to be delivered to the
Purchasers:
California
Georgia
Texas.
The specific form of Mortgage and Assignment of Rent will be in form and
substance satisfactory to the Purchasers and may be prepared in consultation
with special local counsel from such jurisdictions.
PART B. SECURITY DOCUMENTS TO BE DELIVERED AFTER THE CLOSING.
Within 60 days of the Purchasers must receive original executed
Mortgages and Assignments of Rents from the Parent, the Company and the
Subsidiaries with respect to each of the remaining Properties owned by such
Persons on the Closing Date (other than Properties located in the State of
Florida), which Properties are identified on Schedule 1 attached hereto.
With respect to such Properties (other than Properties located in Arizona,
Connecticut, Missouri and Pennsylvania), such Mortgage and Assignments of
Rents will be in the form of Exhibit F-1 or F-2, as applicable. With respect
to Properties located in Arizona, Connecticut, Missouri and Pennsylvania, the
specific form of Mortgage and Assignment of Rent will be in form and
substance satisfactory to the Purchasers and may be prepared in consultation
with special local counsel from such jurisdictions.
PART C. RECORDING OF MORTGAGES AND ASSIGNMENTS OF RENTS.
1. Each of the Mortgages and Assignment of Rents will be recorded as
soon as practicable after it has been delivered to the Purchasers' special
counsel.
2. With respect to Properties owned by the Parent, the Company and the
Subsidiaries on the Closing Date, no title report or search will be required
to determine whether the Collateral Agent has a first priority lien.
Annex 4-1
<PAGE>
Exhibit 11.1
U.S. RESTAURANT PROPERTIES MASTER L.P.
COMPUTATION OF NET INCOME PER UNIT
(In thousands, except per unit amounts)
(Unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net Income $7,473 $5,223 $4,933
Net Income applicable to general partner (148) (104) (99)
------ ------ ------
Net Income applicable to unitholders (1) $7,325 $5,119 $4,834
------ ------ ------
------ ------ ------
Net Income per unit-Primary $ 1.20 $ 1.10 $ 1.04
------ ------ ------
------ ------ ------
Net Income per unit-Fully Diluted (2) $ 1.19 $ 1.08 $ 1.04
------ ------ ------
------ ------ ------
Weighted average number of units outstanding
Primary:
Weighted average units outstanding, excluding
equivalents 5,989 4,638 4,635
Dilutive effect of outstanding options 118 - -
------ ------ ------
Primary weighted average units outstanding 6,107 4,638 4,635
------ ------ ------
------ ------ ------
Fully Diluted (2):
Weighted average units outstanding, excluding
equivalents 5,989 4,638 4,635
Dilutive effect of outstanding options 158 86 -
------ ------ ------
Fully diluted weighted average units outstanding 6,147 4,724 4,635
------ ------ ------
------ ------ ------
</TABLE>
(1) Income allocable to unitholders represents 98.02% of net income
(2) This calculation is submitted in accordance with Securities Exchange Act of
1934 Release No. 9083, although not required by APB Opinion No. 15,
because it results in dilution of less than three percent.
<PAGE>
Exhibit 21.1
U. S. RESTAURANT PROPERTIES MLP
SUBSIDIARIES
U.S. Restaurant Properties Business Trust I
U.S. Restaurant Properties Business Trust II
USRP Renovation Corp., a Texas corporation
Restaurant Acquisition Corp., a Texas corporation
USRP West Virginia Partners L.P., a Texas Limited Partnership
USRP Carolina, LTD., a Texas Limited Partnership
Restaurant Renovation Partners, L.P., a Texas Limited Partnership
USRP Norman, LTD., a Texas Limited Partnership
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