Exhibit 10.5

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of November 4,
2003, among U.S. Restaurant Properties, Inc., a Maryland corporation (the
“Parent”), USRP (JV1), LLC, a Texas limited liability company and wholly-owned
subsidiary of the Parent (the “Company”), and Harbilan Corporation, a Florida
corporation (collectively, including its successors and assigns, the
“Purchaser”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, the
Parent desires to issue and sell to the Purchaser, and the Purchaser desires to
purchase from the Parent securities of the Parent, and the Company desires to
purchase the Subscription Securities, each as more fully described in this
Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Parent, the Company and the
Purchaser agree as follows:

 

ARTICLE I
DEFINITIONS

 

1.1           Definitions.  In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Articles Supplementary (as defined herein),
and (b) the following terms have the meanings indicated in this Section 1.1:

 

“Actual Minimum” means, as of any date, the maximum aggregate number of
Underlying Shares then issued or potentially issuable in the future upon
conversion of all shares of Preferred Stock.

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Securities Act.  With respect to a Purchaser, any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.

 

“Agent” shall have the meaning ascribed to such term in Section 2.2(f).

 

“Articles Supplementary” means the Articles Supplementary relating to the
Preferred Stock, in the form of Exhibit A attached hereto.

 

“Cash Consideration” means $51,842,853.

 

“Closing” means the Closing of the purchase and sale of the Securities pursuant
to Section 2.1.

 

“Closing Date” means the date of the Closing.

 

“Commission” means the Securities and Exchange Commission.

 

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“Commitment Letter” shall have the meaning ascribed to such term in
Section 2.2(f).

 

“Common Stock” means the common stock of the Parent, par value $0.001 per share,
and any securities into which such common stock shall hereinafter been
reclassified into.

 

“Company Counsel” means Locke Liddell & Saap LLP, outside counsel to the Parent
and the Company, with offices at 2200 Ross Avenue, Suite 2200, Dallas, Texas
75201-6776.

 

“Credit Agreement” shall have the meaning ascribed to such term in
Section 2.2(f).

 

“Disclosure Schedules” shall have the meaning ascribed to such term in
Section 3.1.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Lenders” shall have the meaning ascribed to such term in Section 2.2(f).

 

“Liens” shall have the meaning ascribed to such term in Section 3.1(a).

 

“Losses” means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including without limitation costs of preparation and
reasonable attorneys’ fees.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

 

“MVA” means Moore & Van Allen, PLLC with offices at Suite 4700, 100 North Tryon
Street, Charlotte, North Carolina 28202.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Preferred Stock” means the Parent’s $1.93 Series A Cumulative Convertible
Preferred Stock sold hereunder having the rights, preferences and privileges set
forth in the Articles Supplementary.

 

“Preferred Stock Consideration” means $8,592,438.

 

“Principal Market” initially means the New York Stock Exchange and shall also
include the NASDAQ Small-Cap Market, the American Stock Exchange or the NASDAQ
National Market, whichever is at the time the principal trading exchange or
market for the Common Stock and the Preferred Stock, based upon share volume.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

 

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“Prospectus Supplement” means a supplemental prospectus to be filed by the
Parent with the Commission pursuant to Rule 424 of the Securities Act,
specifically relating to the issuance of the Preferred Stock to the Purchaser.

 

“Registration Statement” means the shelf registration statement filed by the
Parent on Form S-3 (Registration No. 333-66371) and subsequent amendments
thereto.

 

“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i).

 

“Securities” means the Preferred Stock and the Underlying Shares.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stockholder Approval” means such approval as may be required by the applicable
rules and regulations of the Principal Market (or any successor entity) from the
shareholders of the Parent with respect to the transactions contemplated by the
Transaction Documents, including the issuance of all of the Underlying Shares in
excess of 20% of the Parent’s issued and outstanding Common Stock on the Closing
Date.

 

“Subscription Securities” shall mean all of the Purchaser’s entire right, title
and interest in its limited partnership interests in USRP/HCI Partnership 1,
L.P., which represents the amount to be exchanged by the Purchaser for the
consideration from the Company described in Section 2.1(a)(ii).

 

“Subscription Fee” shall have the meaning ascribed to such term in
Section 2.2(f).

 

“Subsidiary” means any subsidiary of the Parent that is required to be listed in
Schedule 3.1(a).

 

“Trading Day” means any day during which the Principal Market shall be open for
business.

 

“Transaction Documents” means this Agreement, the Articles Supplementary, the
Credit Agreement (as defined herein) and any other documents or agreements
executed in connection with the transactions contemplated hereunder.

 

“Underlying Shares” means the shares of Common Stock issuable upon conversion of
the Preferred Stock.

 

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ARTICLE II
EXCHANGE, PURCHASE AND SALE

 

2.1           Purchase; Sale; Exchange and Investment.  Upon the terms and
subject to the conditions set forth herein, concurrent with the execution and
delivery of this Agreement by the parties hereto or such other time as shall be
agreed to by the parties hereto,

 

(a)           (i) the Purchaser shall tender to the Parent the Preferred Stock
Consideration by wire transfer of immediately available funds to an account
designated by the Parent; and (ii) the Parent shall issue 404,350 shares of
Preferred Stock to the Purchaser; and

 

(b)           (i) the Purchaser shall tender to the Company the Subscription
Securities; and (ii) the Company shall pay the Cash Consideration to the
Purchaser by wire transfer of immediately available funds to an account
designated in writing by the Purchaser.

 

2.2           Proration of Priority Distribution.  In addition to tendering the
Subscription Securities provided in Section 2.1(a)(i), the Company shall also
pay to the Purchaser the Priority Distribution (as defined in the USRP/HCI
Partnership 1, L.P. partnership agreement) for the relevant period, prorated for
the number of days between October 20, 2003 and the Closing Date, which the
Company and the Purchaser hereby agree shall be equal to $213,642.  The Company
shall not be entitled to the Buyout Price (as defined in the USRP/HCI
Partnership 1, L.P. partnership agreement).

 

2.3           Conditions to Closing.  The Closing is subject to the satisfaction
or waiver by the party to be benefited thereby of the following conditions:

 

(a)           The Parent and the Company shall have delivered or caused to be
delivered to the Purchaser the following:

 

(i)            this Agreement duly executed by the Parent and the Company;

 

(ii)           evidence of the transfer of 404,350 shares of Preferred Stock to
the Purchaser’s account at the Depository Trust Company; and

 

(iii)          a legal opinion of Company Counsel, in the form of Exhibit B
attached hereto, addressed to the Purchaser;

 

(iv)          the Prospectus Supplement, a copy of which shall have been filed
by the Parent with the Commission on or prior to the Closing Date;

 

(v)           a certificate dated the Closing Date, executed by an officer of
the Parent satisfactory to the Purchaser, to the effect that the conditions set
forth in subsections (c) and (d) of this Section 3.3 have been satisfied; and

 

(vi)          a certificate dated the Closing Date, executed by the Secretary of
each entity, to the effect that (A) the Certificate of Incorporation and By-laws
of each entity shall have not been amended since the date upon which certified
copies of each had been delivered to Purchaser and remain in full force and
effect and (B) the officer executing this Agreement on behalf of each entity is
duly elected and hold the office set forth therein, with copies of resolutions
approved by the Board of Directors of each entity attached as an exhibit
thereto.

 

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(b)           At the Closing, the Purchaser shall have delivered or caused to be
delivered to the Parent and the Company the following:

 

(i)            this Agreement duly executed by the Purchaser;

 

(ii)           the Preferred Stock Consideration; and

 

(iii)          the Purchaser’s Subscription Securities, evidenced by delivery to
the Company of a certificate or certificates evidencing the Purchaser’s interest
in units of USRP/HCI Partnership 1, L.P.

 

(c)           All representations and warranties of the other party contained
herein shall remain true and correct as of the applicable Closing Date.

 

(d)           There shall have been no Material Adverse Effect (as defined in
Section 3.1(b)) with respect to the Parent and the Company from June 30, 2003
through the date hereof.

 

(e)           From the date hereof to the Closing Date, trading in the Common
Stock or the Preferred Stock shall not have been suspended by the Commission
(except for any suspension of trading of limited duration agreed to by the
Parent, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by such service, or on the Principal Market, nor shall a banking moratorium have
been declared either by the United States or New York State authorities, nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Purchaser, makes it impracticable or inadvisable to
purchase the shares of Preferred Stock at the Closing.

 

(f)            The Parent shall have entered into a credit agreement (“Credit
Agreement”) with Bank of America, N.A., as agent (the “Agent”), and other
lenders parties thereto (collectively, the “Lenders”) in accordance with the
terms of that certain commitment letter dated October 2, 2003 (the “Commitment
Letter”) between the Company and the Lenders and that certain summary of terms
and conditions attached to the Commitment Letter.  On the Closing Date, the
Credit Agreement shall be in full force and effect.  The Credit Agreement shall
provide for an aggregate of not less than $50,000,000 of revolving credit
commitments (of which not less than $20,000,000 shall remain undrawn both before
and after giving effect to the transactions contemplated to occur on the Closing
Date).  On the Closing Date, the Parent shall have issued a term loan note to
the Agent in an amount of not less than $35,000,000 under the Credit Agreement
and shall have paid via wire transfer of immediately available funds to the
Agent the sum of $500,000 (the “Subscription Fee”) in consideration for advisory
services associated with transactions contemplated under the Credit Agreement
and this Agreement.  All of the terms and conditions of the Credit Agreement and
other documents related thereto shall be satisfactory to the Purchaser.

 

(g)           On or before the Closing Date, the Parent shall have prepared and
filed with the Principal Market an additional shares listing application
covering (A) at least

 

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404,350 shares of Preferred Stock and (B) a number of shares of the Common Stock
at least equal to the Actual Minimum on the date of such application.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Parent and Company.  Except
as set forth under the corresponding section of the disclosure schedules
delivered to the Purchaser concurrently herewith (the “Disclosure Schedules”),
the Parent and the Company hereby make the following representations and
warranties to the Purchaser:

 

(a)           Subsidiaries.  The Parent and the Company have no direct or
indirect subsidiaries.  The Parent and the Company own, directly or indirectly,
all of the capital stock or other equity interests of each of their respective
Subsidiaries free and clear of any lien, charge, security interest, encumbrance,
right of first refusal or other restriction (collectively, “Liens”), and all the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights.  If the Parent and the Company have no subsidiaries, then references in
the Transaction Documents to the Subsidiaries will be disregarded.

 

(b)           Organization and Qualification.  Each of the Parent, the Company
and their respective Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing, as applicable, and in good standing under the laws
of the jurisdiction of its incorporation or organization (as applicable), with
the requisite power and authority to own and use its properties and assets and
to carry on its business as currently conducted.  Neither the Parent, the
Company nor any of their respective Subsidiaries is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents.  Each of the Parent, the Company and
their respective Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not reasonably be expected to, individually
or in the aggregate: (i) adversely affect the legality, validity or
enforceability of any Transaction Document, (ii) have or result in or be
reasonably likely to have or result in a material adverse effect on the results
of operations, assets, business, condition or prospects (financial or otherwise)
of the Parent, the Company and their respective Subsidiaries, taken as a whole,
or (iii) adversely impair the Parent’s or the Company’s ability to perform fully
on a timely basis its obligations under any of the Transaction Documents (any of
(i), (ii) or (iii), a “Material Adverse Effect”).

 

(c)           Authorization: Enforcement.  The Parent and the Company each has
the requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations hereunder or thereunder.  The execution and delivery
of each of the Transaction Documents by the Parent and the Company and the
consummation by them of the transactions contemplated hereby or thereby have
been duly authorized by all necessary action on the part of the Parent and the
Company and no further consent or action is required by the Parent or the
Company, other than the Required Approvals.  Each of the Transaction Documents
has been (or upon delivery will be) duly executed by the Parent and the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of each of the Parent and the Company enforceable
against each of them in accordance with its terms, subject to applicable
bankruptcy,

 

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insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and general principles of
equity.

 

(d)           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Parent and the Company and the consummation by the
Parent and the Company of the transactions contemplated thereby do not and will
not: (i) conflict with or violate any provision of the Parent’s, Company’s or
any of their respective Subsidiaries’ certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) subject to
obtaining the Required Approvals (as defined below), conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument
(evidencing a Parent, Company or Subsidiary debt or otherwise) or other
understanding to which the Parent, Company or any of their respective
Subsidiaries is a party or by which any property or asset of the Parent, Company
or any of their respective Subsidiaries is bound or affected, or (iii) result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority as currently in effect
to which the Parent, Company or their respective Subsidiaries is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Parent, Company or their respective Subsidiaries is
bound or affected; except in the case of each of clauses (ii) and (iii), such as
could not reasonably be expected to, individually or in the aggregate, have or
result in a Material Adverse Effect.

 

(e)           Filings.  Consents and Approvals.  Neither the Parent, Company nor
any of their respective Subsidiaries is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Parent and the Company of the Transaction
Documents, other than (i)  the Parent’s filing with the Commission of the
Prospectus Supplement, (ii) the application(s) to each applicable Principal
Market for the listing of the additional shares of Preferred Stock for trading
thereon in the time and manner required thereby, and (iii) applicable Blue Sky
filings (collectively, the “Required Approvals”).

 

(f)            Issuance of the Securities.  The Securities are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens, other than any Liens created or permitted to exist by
the Purchaser.  The Parent has reserved from its duly authorized capital stock a
number of shares of Common Stock for issuance of the Underlying Shares at least
equal to the Actual Minimum on the date hereof.

 

(g)           Capitalization.  The number of shares and type of all authorized,
issued and outstanding capital stock of the Parent is set forth in the
Disclosure Schedules.  No securities of the Parent are entitled to preemptive or
similar rights, and no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as a result of the purchase
and sale of the Securities, there are no outstanding options other than as set
forth in the SEC Reports, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Parent or any
Subsidiary is or may become bound

 

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to issue additional shares of Common Stock, or securities or rights convertible
or exchangeable into shares of Common Stock.  The issuance and sale of the
Securities will not obligate the Parent to issue shares of Common Stock or other
securities to any Person (other than the Purchaser) and will not result in a
right of any holder of the Parent securities to adjust the exercise, conversion,
exchange or reset price under such securities.

 

(h)           Registration Statement.

 

(i)                                     The Registration Statement has been
declared effective by the Commission under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for that purpose has been instituted or, to the knowledge of the
Parent, threatened by the Commission; and the Registration Statement and
Prospectus Supplement (as amended or supplemented if the Parent shall have
furnished any amendments or supplements thereto) comply, or will comply, as the
case may be, in all material respects with the Securities Act, and the rules and
regulations of the Commission thereunder, and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto and as of the date of the Prospectus Supplement and any amendment or
supplement thereto, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and the Prospectus Supplement, as amended or supplemented
at the Closing Date, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

 

(ii)                                  The documents incorporated by reference in
the Registration Statement, when they were filed with the Commission, conformed
in all material respects to the requirements of the Exchange Act, and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

 

(iii)                               The financial statements, and the related
notes thereto, included or incorporated by reference in the Registration
Statement present fairly the consolidated financial position of the Parent and
its consolidated subsidiaries as of the dates indicated and the results of their
operations and the changes in their consolidated cash flows for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis except as
set forth in the notes thereto, and the supporting schedules included or
incorporated by reference in the Registration Statement present fairly the
information required to be stated therein.

 

(iv)                              Since the respective dates as of which
information is given in the Registration Statement or the Prospectus Supplement,
there has not been

 

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any material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, business, prospects,
financial position, stockholders’ equity or results of operations of the Parent
and its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Registration Statement or the Prospectus Supplement; and
except as set forth or contemplated in the Registration Statement or Prospectus
Supplement neither the Parent nor any of its subsidiaries has entered into any
transaction or agreement (whether or not in the ordinary course of business)
material to the Parent and its subsidiaries taken as a whole.

 

(i)            SEC Reports: Financial Statements.  Except as set forth in the
Disclosure Schedules, the Parent has filed all reports required to be filed by
it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or
such shorter period as the Parent was required by law to file such material)
(the foregoing materials being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension.  The Parent has made available to the Purchaser a copy of all SEC
Reports filed within the 10 days preceding the date hereof.  As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.  The financial statements of the Parent included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing.  Such financial statements have been
prepared in accordance with GAAP, except as may be otherwise specified in such
financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Parent and its consolidated subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(j)            Material Changes.  Except as set forth in the Disclosure
Schedules, since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in the SEC Reports or
the Prospectus Supplement: (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Parent has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Parent’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Parent has not altered its method of accounting or the
identity of its auditors, (iv) other than in the ordinary course of business,
the Parent has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock, and (v) the Parent has
not issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Parent stock option or similar plans.

 

(k)           Litigation.  There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Parent, threatened against or affecting the

 

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Parent, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which:
(i) adversely affects or challenges the legality, validity or enforceability of
any of the Transaction Documents or the Securities or (ii) could, if there were
an unfavorable decision, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.  Neither the Parent nor any
Subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  The Parent does not
have pending before the Commission any request for confidential treatment of
information.  There has not been, and to the knowledge of the Parent, there is
not pending or contemplated, any investigation by the Commission involving the
Parent or any current or former director or officer of the Parent.  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Parent or any
Subsidiary under the Exchange Act or the Securities Act.

 

(l)            Compliance.  Except as set forth in the SEC Reports, neither the
Parent nor any Subsidiary: (i) is in default under or in violation of (and no
event has occurred that has not been waived that, with notice or lapse of time
or both, would result in a default by the Parent or any Subsidiary under), nor
has the Parent or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, except in each case
as could not, individually or in the aggregate, have or result in a Material
Adverse Effect.

 

(m)          Labor Relations.  No material labor dispute exists or, to the
knowledge of the Parent, is imminent with respect to any of the employees of the
Parent.

 

(n)           Regulatory Permits.  The Parent and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Parent nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

 

(o)           Title to Assets.  Except as set forth in the Disclosure Schedules,
the Parent and the Subsidiaries have good and marketable title in fee simple to
all real property owned by them that is material to the business of the Parent
and the Subsidiaries and good and marketable title in all personal property
owned by them that is material to the business of the Parent and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Parent and the
Subsidiaries.  Except in each case as could not, individually or in the
aggregate, have or result in a Material Adverse Effect, any real property and
facilities held under lease by the Parent and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Parent and the
Subsidiaries are in material compliance.

 

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(p)           Patents and Trademarks.  To the knowledge of the Parent, the
Parent and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”).  Neither the Parent nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Parent or any Subsidiary violates or infringes upon the rights of
any Person.  To the knowledge of the Parent, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.

 

(q)           Insurance.  The Parent and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Parent and the Subsidiaries are engaged.  A list of the Parent’s insurance
contracts and policies are set forth on the Disclosure Schedules.  To the best
of Parent’s knowledge, such insurance contracts and policies are accurate and
complete.  Neither the Parent nor any Subsidiary has any knowledge that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.

 

(r)            Transactions With Affiliates and Employees.  Except as set forth
in the SEC Reports, none of the executive officers or directors of the Parent
and, to the knowledge of the Parent, none of the employees of the Parent is
presently a party to any transaction with the Parent or any Subsidiary (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Parent, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

 

(s)           Internal Accounting Controls.  Except as set forth in the SEC
Reports, the Parent and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. 
There are no disagreements of any kind presently existing, or reasonably
anticipated by the Parent to arise, between the accountants and lawyers formerly
or presently employed by the Parent and the Parent is current with respect to
any fees owed to its accountants and lawyers.  Except as set forth in the SEC
Reports, the Parent has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Parent and designed
such disclosures controls and procedures to ensure that material information
relating to the Parent, including its subsidiaries, is made known to the
certifying officers by others within those entities, particularly during the
period in which the Parent’s Form 10-K or 10-Q, as the case may be, is being
prepared.  The Parent’s certifying officers have evaluated the effectiveness of
the Parent’s controls and procedures as of a date within 90 days prior to the
filing date of the Form 10-K for the fiscal year ended December 31, 2002 (such
date, the “Evaluation Date”).  The Parent presented in the Form 10-K for the
fiscal year ended December 31, 2002 the conclusions of the

 

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certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date.  Since the
Evaluation Date, there have been no significant changes in the Parent’s internal
controls (as such term is defined in Item 307(b) of Regulation S-K under the
Exchange Act) or, the Parent’s knowledge, in other factors that could
significantly affect the Parent’s internal controls.

 

(t)            Solvency/Indebtedness.  Based on the financial condition of the
Parent as of the Closing Date: (i) the fair market value of the Parent’s assets
exceeds the amount that will be required to be paid on or in respect of the
Parent’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Parent’s assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Parent, and projected capital requirements and capital
availability thereof, and (iii) the current cash flow of the Parent, together
with the proceeds the Parent would receive, were it to liquidate all of its
assets, after taking into account all anticipated uses of the cash, would be
sufficient to pay all amounts on or in respect of its debt when such amounts are
required to be paid.  The Parent does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).  The Parent has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date.  The SEC Reports
set forth as of the date thereof all outstanding secured and unsecured
Indebtedness of the Parent or any Subsidiary, or for which the Parent or any
Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness”
shall mean (a) any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts payable incurred in the ordinary course of
business), (b) all guaranties, endorsements and other contingent obligations in
respect of Indebtedness of others, whether or not the same are or should be
reflected in the Parent’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present
value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Parent nor any Subsidiary is
in default with respect to any Indebtedness.

 

(u)           Certain Fees.  No brokerage or finder’s fees or commissions are or
will be payable by the Parent to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement, and the Parent has not taken
any action that would cause any Purchaser to be liable for any such fees or
commissions.  The Parent agrees that the Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of any
Person for fees of the type contemplated by this Section with the transactions
contemplated by this Agreement.

 

(v)           Principal Market; Approvals.  The issuance and sale of the
Preferred Stock hereunder does not contravene the rules and regulations of the
Principal Market and no Stockholder Approval is required (i) in connection with
the issuance and sale of the Preferred Stock contemplated by this Agreement, and
(ii) for the Parent to fulfill its obligations under the Transaction Documents.

 

(w)          Listing and Maintenance Requirements.  Except as set forth in the
Disclosure Schedules, the Parent has not, in the 12 months preceding the date
hereof, received notice from any Principal Market on which the Common Stock or
Preferred Stock is or has been listed or

 

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quoted to the effect that the Parent is not in compliance with the listing or
maintenance requirements of such Principal Market.  The Parent is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

 

(x)            Registration Rights.  Except as set forth in the Disclosure
Schedules, the Parent has not granted or agreed to grant to any Person any
rights (including “piggy-back” registration rights) to have any securities of
the Parent registered with the Commission or any other governmental authority
that have not been satisfied.

 

(y)           Application of Takeover Protections.  The Parent and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Parent’s Restated Articles of Incorporation
(or similar charter documents) or the laws of its state of incorporation that is
or could become applicable to the Purchaser as a result of the Purchaser and the
Parent fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Parent’s
issuance of the Securities and the Purchaser’s ownership of the Securities.

 

(z)            Disclosure.  The Parent confirms that neither it nor any other
Person acting on its behalf has provided the Purchaser or its agents or counsel
with any information that constitutes or might constitute material, nonpublic
information.  The Parent understands and confirms that the Purchaser will rely
on the foregoing representations in effecting transactions in securities of the
Parent.  All disclosure provided to the Purchaser regarding the Parent, its
business and the transactions contemplated hereby, including the Schedules to
this Agreement, furnished by or on behalf of the Parent with respect to the
representations and warranties made herein are true and correct with respect to
such representations and warranties and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.  The Parent acknowledges and agrees that the Purchaser
does not make or has not made any representations or warranties with respect to
the transactions contemplated hereby other than those specifically set forth in
Section 3.2.

 

(aa)         Form S-3 Eligibility.  The eligibility requirements for use of Form
S-3, including both the registrant and the transaction requirements of General
Instructions I. A. and I. B. of Form S-3 promulgated under the Securities Act,
are satisfied for purposes of registering the Preferred Stock for sale to the
Purchaser.

 

(bb)         Seniority.  As of the date of this Agreement, no other equity of
the Parent is senior to the Preferred Stock in right of payment, whether with
respect to interest or upon liquidation or dissolution, or otherwise.

 

(cc)         Tax Status.  The Parent and each of its Subsidiaries has made or
filed all material federal, state and foreign income and all other material tax
returns, reports and declarations required by any jurisdiction to which it is
subject (unless and only to the extent that the Parent and each of its
Subsidiaries has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to

 

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the periods to which such returns, reports or declarations apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Parent know of no basis for any such
claim.  The Parent has not executed a waiver with respect to the statute of
limitations relating to the assessment or collection of any foreign, federal,
statue or local tax.  None of the Parent’s tax returns is presently being
audited by any taxing authority.

 

(dd)         Acknowledgment Regarding Purchaser’s Purchase of Securities.  The
Parent acknowledges and agrees that the Purchaser is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereby.  The Parent further acknowledges that the
Purchaser is not acting as a financial advisor or fiduciary of the Parent (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any statement made by the Purchaser or any of its
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Purchaser’s purchase of the Preferred Stock.  The Parent
further represents to the Purchaser that the Parent’s decision to enter into
this Agreement has been based solely on the independent evaluation of the Parent
and its representatives.

 

(ee)         Acknowledgment of Dilution.  The Parent acknowledges that the
issuance of the Securities will result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market
conditions.  The Parent further acknowledges that its obligations under the
Transaction Documents, including without limitation its obligation to issue the
Underlying Shares pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim, delay or
reduction, regardless of the effect of any such dilution and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Parent.

 

(ff)           Representations and Warranties in Other Agreements.  The
representations and warranties made by the Parent and its subsidiaries in the
Credit Agreement and in any other agreements, instruments or certificates
delivered pursuant hereto or thereto, are true and correct in all material
respects (except where any such representation and warranty is stated as being
true only as of a specific date, in which case such representation and warranty
was true and correct in all material respects on such date).

 

3.2           Representations and Warranties of the Purchaser.  The Purchaser
hereby represents and warrants to the Parent and the Company as follows:

 

(a)           Organization: Authority.  The Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations thereunder.  The purchase by the Purchaser of the Securities
hereunder has been duly authorized by all necessary action on the part of the
Purchaser.  Each of this Agreement and the Registration Agreement has been duly
executed by such Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of the Purchaser, enforceable against it in accordance with its terms.

 

(b)           Ownership of the Limited Partner Interest; Encumbrances.  As of
the date hereof, the Purchaser is the holder of record and beneficial owner of
one-hundred percent (100%) of the

 

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Subscription Securities.  At the Closing, the Company will receive good and
valid title to the Subscription Securities, free and clear of any liens,
charges, pledges, encumbrances, claims, security interests, restrictions, rights
of first refusal, defects in title or options of any kind.

 

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1           Transfer Restrictions.

 

(a)           The Purchaser agrees to the imprinting of the following legend on
any certificate evidencing the Securities:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
OWNERSHIP AND TRANSFER FOR THE PURPOSE OF THE COMPANY’S MAINTENANCE OF ITS
STATUS AS A REAL ESTATE INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE “CODE”). EXCEPT AS OTHERWISE PROVIDED PURSUANT TO THE
CHARTER OF THE CORPORATION, NO PERSON MAY (1) BENEFICIALLY OWN SHARES OF STOCK
IN EXCESS OF 9.8% (OR SUCH OTHER PERCENTAGE AS MAY BE PROVIDED IN THE CHARTER OF
THE CORPORATION) OF THE AGRREGATE VALUE OF ALL OUTSTANDING STOCK OR (2)
BENEFICIALLY OWN STOCK THAT WOULD RESULT IN THE COMPANY BEING “CLOSELY HELD”
UNDER SECTION 856(h) OF THE CODE. ANY PERSON WHO ATTEMPTS TO BENEFECIALLY OWN
SHARES OF STOCK IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY THE
COMPANY. IF THE RESTRICTIONS ON OWNERSHIP OR TRANSFER ARE VIOLATED, THE SHARES
OF STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY CONVERTED INTO SHARES OF
EXCESS STOCK WHICH WILL BE HELD IN TRUST BY THE COMPANY. THE COMPANY HAS THE
OPTION TO REDEEM SHARES OF EXCESS STOCK UNDER CERTAIN CIRCUMSTANCES. ALL TERMS
IN THIS LEGEND NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS ASCRIBED THERETO
IN THE COMPANY’S CHARTER, AS THE SAME MAY BE FURTHER AMENDED FROM TIME TO TIME,
A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON OWNERSHIP AND TRANSFER, WILL BE
SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS.

 

(b)           Certificates evidencing Underlying Shares shall not contain any
legend (other than the legend described in Section 4.1(a)): (i) while a
registration statement (including the Registration Statement and Underlying
Shares Registration Statement) covering the resale of the Preferred Stock or the
Underlying Shares, as the case may be, is effective under the Securities Act, or
(ii) following any sale of the Securities pursuant to Rule 144, or (iii) if such
Securities are eligible for sale under Rule 144(k), or (iv) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission).  If all or any shares of Preferred Stock are converted at a time
when there is an effective registration statement to cover the resale of the
Underlying Shares, or if such Underlying Shares may be sold under Rule 144(k) or
if such legend is not otherwise required under applicable requirements of the
Securities Act (including judicial interpretations thereof) then such Underlying
Shares shall be issued free of all legends.  The Parent agrees that following
the Effective Date or at such time as such legend is no longer required under
this Section 4.1(c), it will, no later than three Trading Days following the
delivery by a Purchaser to

 

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the Parent or the Parent’s transfer agent of a certificate representing
Securities issued with a restrictive legend, deliver or cause to be delivered to
the Purchaser a certificate representing such Securities that is free from all
restrictive and other legends.  The Parent may not make any notation on its
records or give instructions to any transfer agent of the Parent that enlarge
the restrictions on transfer set forth in this Section.

 

4.2           Furnishing of Information.  As long as the Purchaser owns
Securities, the Parent covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be
filed by the Parent after the date hereof pursuant to the Exchange Act.  Upon
the request of any Purchaser, the Parent shall deliver to such Purchaser a
written certification of a duly authorized officer as to whether it has complied
with the preceding sentence.  As long as any Purchaser owns Securities, if the
Parent is not required to file reports pursuant to such laws, it will prepare
and furnish to the Purchaser and make publicly available in accordance with
Rule 144(c) such information as is required for the Purchaser to sell the
Securities under Rule 144.  The Parent further covenants that it will take such
further action as any holder of Securities may reasonably request, all to the
extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144.

 

4.3           Integration.  The Parent shall not, and shall use its commercially
reasonable efforts to ensure that no Affiliate of the Parent shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchaser, or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Principal Market.

 

4.4           Reservation and Listing of Securities.

 

(a)           The Parent shall maintain a reserve from its duly authorized
shares of Common Stock for issuance pursuant to the Transaction Documents in
such amount as may be required to fulfill its obligations in full under the
Transaction Documents.

 

(b)           If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than the Actual Minimum on
such date, minus (ii) the number of shares of Common Stock previously issued
pursuant to the Transaction Documents, then the Board of Directors of the Parent
shall use commercially reasonable efforts to amend the Parent’s certificate or
articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Actual Minimum at such time (minus the
number of shares of Common Stock previously issued pursuant to the Transaction
Documents), as soon as possible and in any event not later than the 75th day
after such date; provided that the Parent will not be required at any time to
authorize a number of shares of Common Stock greater than the maximum remaining
number of shares of Common Stock that could possibly be issued after such time
pursuant to the Transaction Documents.

 

(c)           The Parent shall: (i) take all steps necessary to cause such
shares of Preferred Stock and Common Stock to be approved for listing on the
Principal Market as soon as possible after the Closing Date, (ii) provide to the
Purchaser evidence of such listing, and (iii) use reasonable efforts to maintain
the listing of such Preferred Stock and Common Stock on such Principal Market or
another Principal Market.

 

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4.5           Securities Laws Disclosure: Publicity.  The Parent shall, within
one Trading Day after the Closing Date, issue a press release or file a Current
Report on Form 8-K reasonably acceptable to the Purchaser disclosing all
material terms of the transactions contemplated hereby.  The Parent and the
Purchaser shall consult with each other in issuing any press releases with
respect to the transactions contemplated hereby.  Notwithstanding the foregoing,
other than in the Registration Statement and filings related thereto, the Parent
shall not publicly disclose the name of the Purchaser or the terms hereof, or
include the name of the Purchaser or the terms hereof in any filing with the
Commission or any regulatory agency or Principal Market, without the prior
written consent of such Purchaser, except to the extent such disclosure is
required by law or Principal Market regulations, in which case the Parent shall
provide the Purchaser with prior notice of such disclosure.

 

4.6           Non-Public Information.  The Parent covenants and agrees that
neither it nor any other Person acting on its behalf will provide the Purchaser
or its agents or counsel with any information that the Parent believes
constitutes material non-public information, unless prior thereto the Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information.  The Parent understands and confirms that the Purchaser shall
be relying on the foregoing representations in effecting transactions in
securities of the Parent.

 

4.7           Reimbursement.  If the Purchaser becomes involved in any capacity
in any Proceeding by or against any Person who is a stockholder of the Parent,
solely as a result of such Purchaser’s acquisition of the Preferred Stock under
this Agreement and without causation by any other activity, obligation,
condition or liability pertaining to the Purchaser and not to the transactions
contemplated by this Agreement, the Parent will reimburse the Purchaser, to the
extent such reimbursement is not provided for in Section 4.8, for its reasonable
legal and other expenses (including the cost of any investigation preparation
and travel in connection therewith) incurred in connection therewith, as such
expenses are incurred.  The reimbursement obligations of the Parent under this
paragraph shall be in addition to any liability which the Parent may otherwise
have, shall extend upon the same terms and conditions to any Affiliates of the
Purchaser who are actually named in such action, proceeding or investigation,
and partners, directors, agents, employees and controlling persons (if any), as
the case may be, of the Purchaser and any such Affiliate, and shall be binding
upon and inure to the benefit of any successors, assigns, heirs and personal
representatives of the Parent, the Purchaser and any such Affiliate and any such
Person.  The Parent also agrees that neither the Purchaser nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Parent or any Person asserting claims on behalf of or
in right of the Parent solely as a result of acquiring the Preferred Stock under
this Agreement.

 

4.8           Indemnification of Purchaser.  Subject to the provisions of this
Section 4.8, the Parent and the Company will indemnify and hold the Purchaser
and its directors, officers, shareholders, partners, employees and agents (each,
a “Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to any breach of any of the representations, warranties,
covenants or agreements made by the Parent and the Company in this Agreement or
in the other Transaction Documents.  If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Parent in writing, and
the Parent and/or the Company shall have the right to assume the defense thereof
with counsel of its own choosing.  Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Parent in writing, (ii) the Parent or the
Company has

 

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failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Parent or the Company and the position of such Purchaser Party.  The
Parent and the Company will not be liable to any Purchaser Party under this
Agreement (i) for any settlement by an Purchaser Party effected without the
Parent’s prior written consent; or (ii) to the extent that any loss, claim,
damage or liability is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by the Purchaser
in this Agreement or in the other Transaction Documents.

 

4.9           Indemnification of Parent and Company.  Subject to the provisions
of this Section 4.9, the Purchaser will indemnify and hold the Parent and the
Company and each of their respective directors, officers, shareholders,
partners, employees and agents (each, a “Parent-Company Party”) harmless from
any and all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court
costs and reasonable attorneys’ fees and costs of investigation that any such
Parent-Company Party may suffer or incur as a result of or relating to any
breach of any of the representations, warranties, covenants or agreements made
by the Purchaser in this Agreement or in the other Transaction Documents, other
than the Credit Agreement.  If any action shall be brought against any
Parent-Company Party in respect of which indemnity may be sought pursuant to
this Agreement, such Parent-Company Party shall promptly notify the Purchaser in
writing, and the Purchaser shall have the right to assume the defense thereof
with counsel of its own choosing.  Any Parent-Company Party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Parent-Company Party except to the extent that (i) the employment thereof
has been specifically authorized by the Purchaser in writing, (ii) the Purchaser
has failed after a reasonable period of time to assume such defense and to
employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate counsel, a material conflict on any material issue between the
position of the Purchaser and the position of such Parent-Company Party.  The
Purchaser will not be liable to any Parent-Company Party under this Agreement
(i) for any settlement by an Parent-Company Party effected without the
Purchaser’s prior written consent; or (ii) to the extent that any loss, claim,
damage or liability is attributable to any Parent-Company Party’s breach of any
of the representations, warranties, covenants or agreements made by the Parent
or the Company in this Agreement or in the other Transaction Documents.

 

4.10         Shareholders Rights Plan.  In the event that a shareholders rights
plan is adopted by the Parent, no claim will be made or enforced by the Parent
or any other Person that any Purchaser is an “Acquiring Person” under the plan
or in any way could be deemed to trigger the provisions of such plan by virtue
of receiving Securities under the Transaction Documents.

 

ARTICLE V
MISCELLANEOUS

 

5.1           Reserved.

 

5.2           Fees and Expenses.  The Parent agrees to reimburse the Purchaser
for all of its out of pocket costs and expenses (including reasonable fees and
expenses of its counsel) incurred in connection with the transactions
contemplated by this Agreement on or prior to the Closing.  The Parent shall pay
the fees and expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement.  The Parent shall pay all transfer agent fees, stamp taxes and other
taxes and duties levied in connection with the issuance of any Securities.

 

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5.3           Entire Agreement.  The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

5.4           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (a) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified on the signature pages hereto prior to 5:30 p.m. 
(New York City time) on a Trading Day, (b) the next Trading Day after the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section on a day that is not a Trading
Day or later than 5:30 p.m.  (New York City time) on any Trading Day, or (c) the
Trading Day following the date of mailing, if sent by U.S.  nationally
recognized overnight courier service.  The addresses for such notices and
communications are those set forth on the signature pages hereof, or such other
address as may be designated in writing hereafter, in the same manner, by such
Person.

 

5.5           Amendments: Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Parent, Company and the Purchaser or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought.  No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.

 

5.6           Construction.  The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.  The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

 

5.7           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns. 
The Parent and the Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Purchaser.  The
Purchaser may assign its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities.

 

5.8           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.8.

 

5.9           Governing Law: Venue: Waiver of Jury Trial.  All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  Each party hereby irrevocably

 

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waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  The parties hereby waive all
rights to a trial by jury.  If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

 

5.10         Survival.  The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery, exercise
and/or conversion of the Securities, as applicable.

 

5.11         Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

 

5.12         Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

5.13         Rescission and Withdrawal Right.  Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Parent and/or the Company
does not timely perform their related obligations within the periods therein
provided, then the Purchaser may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Parent, any relevant notice, demand
or election in whole or in part without prejudice to its future actions and
rights; provided, however, in the case of a rescission of a conversion of the
Preferred Stock, the Purchaser shall be required to return any shares of Common
Stock subject to such conversion or exercise notice.

 

5.14         Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Parent
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Parent of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

 

5.15         Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Purchaser,
the Parent and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in

 

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the foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.

 

5.16         Payment Set Aside.  To the extent that the Parent or the Company
makes a payment or payments to the Purchaser pursuant to any Transaction
Document or the Purchaser enforces or exercises its rights thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Parent or the Company, as the case may be, a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

 

5.17         Liquidated Damages.  The Parent’s and the Company’s obligations to
pay any liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Parent and the Company and shall not
terminate until all unpaid liquidated damages and other amounts have been paid
notwithstanding the fact that the instrument or security pursuant to which such
liquidated damages or other amounts are due and payable shall have been
canceled.

 

5.18         Tax Information.  Notwithstanding any provisions herein to the
contrary or in any other agreement to which a party hereto is bound, the parties
hereto and their respective Affiliates (and the respective partners, directors,
officers, employees, agents, advisors and other representatives of each of the
foregoing and their Affiliates) may disclose to any and all Persons, without
limitation of any kind the “tax treatment” or “tax structure” (as those terms
are defined in Treasury Regulation   1.6011-4(c)(8) and (9), respectively) of
the transactions contemplated hereby and (b) all materials of any kind
(including opinions or other tax analyses) relating to such tax treatment  or
tax structure or facts that are provided to any of the Persons referred to
above, except that “tax treatment” or “tax structure” shall not include the
identity of an existing or future party or its Affiliates.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

 

U.S. RESTAURANT PROPERTIES, INC.

 

 

 

By:

/s/ Stacy M. Riffe

 

 

Name:

Stacy M. Riffe

 

Title:

Chief Financial Officer

 

Address for Notice:

12240 Inwood Road, Suite 300

Dallas, Texas 75244

Attn:       Chief Financial Officer

Tel:         (972) 387-1487

Fax:         (972) 490-9119

 

With a copy to:

Kenneth L. Betts

Locke Liddell & Sapp LLP

2200 Ross Avenue, Suite 2200

Dallas, Texas 75201

Tel:         (214) 740-8743

Fax:         (214) 740-8800

 

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

 

USRP (JV1), LLC

 

 

 

By:

/s/ Stacy M. Riffe

 

 

Name:

Stacy M. Riffe

 

Title:

Chief Financial Officer

 

Address for Notice:

c/o U.S. Restaurant Properties, Inc.

12240 Inwood Road, Suite 300

Dallas, Texas 75244

Attn:       Chief Financial Officer

Tel:         (972) 387-1487

Fax:         (972) 490-9119

 

With a copy to:

Kenneth L. Betts

Locke Liddell & Sapp LLP

2200 Ross Avenue, Suite 2200

Dallas, Texas 75201

Tel:         (214) 740-8743

Fax:         (214) 740-8800

 

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IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

 

HARBILAN CORPORATION

 

 

 

By:

 

 

 

Name:

 

Title:

 

Address for Notice:

Harbilan Corporation

c/o Banc of America Securities, LLC

100 N. Tryon St.

NC1-007-11-07

Charlotte, NC  28255

Attention: Robert W. Long, Jr., Managing Director

Tel:         (704) 386-8467

Fax:         (704) 386-3215

 

 

With a copy to:

John S. Chinuntdet

Moore & Van Allen, PLLC

100 North Tryon Street

Suite 4700

Charlotte, NC  28202

Tel:         (704) 331-3502

Fax:         (704) 378-1950

 

 

 

[PURCHASER’S SIGNATURE PAGE]

 

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Exhibit A

 

Articles Supplementary

 

25

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Exhibit B

 

Form of Legal Opinion

 

26

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