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.


 

















 


“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


 


11

















 


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


 


12

















 


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


 


13

















 


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


 


14

















 


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


 


15

















 


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.


 


16

















 


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


 


17

















 


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.


 


18

















 


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


 


19

















 


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


 


20

















 


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]


 


21

















 


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


 


22

















 


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


 


23

















 


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]


 


24

















 


Exhibit A


 


Articles
Supplementary


 


25

















 


Exhibit B


 


Form of Legal
Opinion


 


26