Exhibit 10.7


 


PLEDGE
AGREEMENT


[U.S.
RESTAURANT PROPERTIES OPERATING, L.P. PLEDGE AGREEMENT]


 


THIS PLEDGE AGREEMENT,
dated as of November 4, 2003 (this “Pledge Agreement”) is made by
(a) U.S.
RESTAURANT PROPERTIES OPERATING, L.P., a Delaware limited partnership,
as pledgor (in such capacity, the “Pledgor”), and (b) BANK OF
AMERICA, N.A., in its capacity as Agent (in such capacity, the “Collateral
Agent”) for the Secured Parties (as defined in Section 1 hereof).


 


RECITALS


 


WHEREAS, pursuant
to the terms of that certain Credit Agreement dated as of November 4, 2003
by and among U.S.  RESTAURANT PROPERTIES
OPERATING L.P., a Delaware limited partnership (“USRP Operating”
or the “Principal Borrower”), USRP FUNDING 2002-A, L.P., a Texas limited
partnership (the “General SPE), USRP (S&C), LLC, a Texas limited
liability company (“S&C”), USRP (JV1), LLC, a Texas limited liability
company (“JV1”), USRP/HCI PARTNERSHIP 1, L.P., a Texas
limited partnership (“HCI”), USRP HOLDING CORP., a Texas corporation (“USRP
Holding”; collectively, with USRP Operating, the General SPE, S&C, JV1
and HCI, the “Borrower”), USRP MANAGING, INC., a Delaware corporation
and the general partner of USRP Operating, as a Guarantor (the “General
Partner”), U.S. RESTAURANT PROPERTIES, INC., a Maryland corporation, as a
Guarantor (“USRP REIT”), the Subsidiary Guarantors (as defined therein,
collectively, with the General Partner and the USRP REIT, the “Guarantors”),
the Lenders (as defined therein; provided, that such parties shall be referred
to herein as the “Revolving Lenders”), BANK OF AMERICA, N.A., as
Agent for the Revolving Lenders (in such capacity, the “Revolver Agent”)
and BANC
OF AMERICA SECURITIES LLC, as Sole Lead Arranger and Sole
Book Manager (as the same may have be further amended, restated,
supplemented or otherwise modified prior to the date hereof, the “Revolving
Credit Agreement”), the Revolving Lenders have agreed to make loans upon
the terms and subject to the conditions set forth therein;


 


WHEREAS, pursuant
to the terms of that certain Term Loan Agreement dated as of November 4,
2003 by and among the Borrower, the Guarantors, the Lenders (as defined
therein; provided, that such parties shall be referred to herein as the “Term
Loan Lenders”), BANK OF AMERICA, N.A., as Agent for the Term Loan Lenders
(in such capacity, the “Term Loan Agent”) and BANC OF AMERICA SECURITIES
LLC, as Sole Lead Arranger and Sole Book Manager (as the same may have be
further amended, restated, supplemented or otherwise modified prior to the date
hereof, the “Term Loan Agreement”), the Term Loan Lenders have agreed to
make loans upon the terms and subject to the conditions set forth therein;


 


WHEREAS, the
Collateral Agent, Revolver Agent, Revolving Lenders, Term Loan Agent, Term Loan
Lenders, the Borrower and the Guarantors (collectively, the Borrower and
Guarantors shall be referred to herein as the “Credit Parties”) have
entered into that certain Intercreditor Agreement dated as of November 4,
2003 (the “Intercreditor Agreement”) pursuant to which the Revolver
Agent, Revolving Lenders, Term Loan Agent and Term Loan Lenders have agreed to
share, pursuant to the terms and conditions set forth therein, the collateral
and payments made or delivered in connection with the credit facilities
referenced in the Revolving Credit Agreement and Term Loan Agreement and the
Collateral Agent has been appointed as the agent for such parties in
administering such sharing provisions and to hold all collateral delivered in
connection with such credit facilities for the benefit of the Secured Parties;


 


WHEREAS, it is a
condition precedent to the effectiveness of the Revolving Credit Agreement and
the Term Loan Agreement and the documents executed in connection with each of
them that the Pledgor shall have executed and delivered this Pledge Agreement
to the Collateral Agent for the ratable benefit of the Secured Parties in
accordance with the Intercreditor Agreement; and


 


NOW, THEREFORE, in
consideration of these premises and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:


 


1.                                       Definitions.
Capitalized terms used herein but not otherwise defined shall have the meanings
given to such terms in the Revolving Credit Agreement (or, to the extent the Revolving
Credit Agreement has been


 

















 


terminated or is of no
further force and effect, the Term Loan Agreement). The following terms which
are defined in the Uniform Commercial Code as in effect in the State of North
Carolina as of the date hereof are used herein as so defined:  Accession, Financial Asset, Proceeds and
Security.  In addition, the following
terms have the following meanings:


 


“Secured Obligations” means, without
duplication, (i) all of the obligations of the Credit Parties to any Secured Party,
whenever arising, under the Revolving Credit Agreement, the Term Loan Agreement
or any of the Subject Documents (including, but not limited to, any interest
accruing after the occurrence of a Bankruptcy Event with respect to any Credit
Party, regardless of whether such interest is an allowed claim under the
Bankruptcy Code), whether now existing or hereafter arising, due or to become
due, direct or indirect, absolute or contingent, howsoever evidenced, created,
held or acquired, whether primary, secondary, direct, contingent, or joint and
several, as such obligations may be amended, modified, increased, extended,
renewed or replaced from time to time, (ii) all of the obligations of the
Credit Parties to any Secured Party under any Hedging Agreement, and (iii) all
costs and expenses incurred in connection with enforcement and collection of
the foregoing obligations, including reasonable attorneys’ fees and the
allocated cost of internal counsel.


 


“Secured Parties” means a collective reference
to the Collateral Agent, Revolver Agent, Revolving Lenders, Term Loan Agent,
Term Loan Lenders and the Sole Lead Arranger and the Sole Book Manager under
the Revolving Credit Agreement and Term Loan Agreement.


 


“Subject Documents” shall mean a collective
reference to the Revolving Credit Agreement, the Term Loan Agreement, the
Intercreditor Agreement and all other documents, instruments or agreements from
time to time constituting “Credit Documents” as such term is used in both the
Revolving Credit Agreement and the Term Loan Agreement (to the extent such
documents have not been terminated and remain in full force and effect).


 


“UCC”
means the Uniform Commercial Code, as in effect in the State of North Carolina.


 


2.                                       Pledge
and Grant of Security Interest. To secure the prompt payment and
performance in full when due, whether by lapse of time, acceleration, mandatory
prepayment or otherwise, of the Secured Obligations, Pledgor hereby grants,
pledges and assigns to the Collateral Agent, for the benefit of the Secured Parties,
a continuing security interest in, and a right to set off against, any and all
right, title and interest of Pledgor in and to the following, whether now owned
or existing or owned, acquired, or arising hereafter (collectively, the “Pledged
Collateral”):


 


(a)                                  Pledged
Capital Stock.  (i) 100% of the
issued and outstanding Capital Stock owned by Pledgor in the entities set forth
on Schedule 2(a) attached hereto and (ii) 65% of the issued and
outstanding classes of Capital Stock entitled to vote (within the meaning of
Treas. Reg. Section 1.956 2(c)(2)) (“Voting Equity”) and 100% of
the issued and outstanding classes of Capital Stock not entitled to vote
(within the meaning of Treas. Reg. Section 1.956 2(c)(2)) (“Non Voting
Equity”) owned by the Pledgor of each foreign Subsidiary of the Pledgor set
forth on Schedule 2(b), in each case together with the certificates
(or other agreements or instruments), if any, representing such Capital Stock
and all options and other rights, contractual or otherwise, with respect
thereto (collectively, together with the Capital Stock described in Sections
2(b) and 2(c) below, the “Pledged Capital Stock”), including, but not
limited to, the following:


 


(A)                              all
shares, securities, partnership interests, membership interests or other equity
interests representing a dividend on any of the Pledged Capital Stock, or
representing a distribution or return of capital upon or in respect of the
Pledged Capital Stock, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any subscriptions, warrants,
rights or options issued to the holder of, or otherwise in respect of, the
Pledged Capital Stock; provided, however, that such Pledgor shall not be
required to deliver more than 65% of the Voting Equity of any Person that is a
foreign Subsidiary of the Pledgor; and


 


(B)                                without
affecting the obligations of the Pledgor under any provision prohibiting such
action hereunder or under any Subject Document, in the event of any
consolidation or merger


 


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involving the issuer of any Pledged Capital Stock and
in which such issuer is not the surviving entity, the Capital Stock (in the
applicable percentage specified in Section 2(a) above) of the successor
entity formed by or resulting from such consolidation or merger.


 


(b)                                 Additional
Shares.  (i) 100% of the issued and
outstanding Capital Stock of any Person which is hereafter listed on Schedule 2(a),
as amended from time to time and (ii) 65% of the Voting Equity and 100% of the
Non Voting Equity owned by the Pledgor of any Person which is hereafter listed
on Schedule 2(b), as amended from time to time, in each case
together with the certificates (or other agreements or instruments), if any,
representing such Capital Stock.


 


(c)                                  Proceeds.
All Accessions and all Proceeds of any and all of the foregoing, including,
without limitation, all cash and non-cash proceeds and products of the
foregoing, however and whenever acquired and in whatever form.


 


Without
limiting the generality of the foregoing, it is hereby specifically understood
and agreed that Pledgor may from time to time hereafter deliver additional
shares of Capital Stock to the Collateral Agent as collateral security for the
Secured Obligations.  Upon delivery to
the Collateral Agent, such additional Capital Stock shall be deemed to be part
of the Pledged Collateral and shall be subject to the terms of this Pledge
Agreement whether or not Schedule 2(a) is amended to refer to such
additional Capital Stock.


 


3.                                       Security
for Secured Obligations. The security interest created hereby in the
Pledged Collateral constitutes continuing collateral security for the Secured
Obligations.


 


4.                                       Delivery
of the Pledged Collateral; Perfection of Security Interest.


 


(a)                                  Delivery
of Certificates.  Pledgor shall
deliver to the Collateral Agent (i) simultaneously with or prior to the
execution and delivery of this Pledge Agreement, all certificates representing
the Pledged Capital Stock of Pledgor and (ii) promptly upon the receipt thereof
by or on behalf of Pledgor, all other certificates and instruments constituting
Pledged Collateral of Pledgor.  Prior to
delivery to the Collateral Agent, all such certificates and instruments
constituting Pledged Collateral of Pledgor shall be held in trust by Pledgor
for the benefit of the Collateral Agent pursuant hereto.  All such certificates shall be delivered in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, substantially in the form
provided in Exhibit 4(a) attached hereto with appropriate reference made
therein to capital stock, partnership interests or membership interests, as
appropriate.


 


(b)                                 Additional
Securities.  If Pledgor shall
receive by virtue of its being, becoming or having been the owner of any
Pledged Collateral, any (i) certificate, including without limitation, any
certificate representing a dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares or membership or equity interests, stock
splits, spin-off or split-off, promissory notes or other instrument; (ii)
option or right, whether as an addition to, substitution for, or an exchange
for, any Pledged Collateral or otherwise; (iii) dividends payable in
securities; or (iv) distributions of securities or other equity interests
in connection with a partial or total liquidation, dissolution or reduction of
capital, capital surplus or paid-in surplus, then, subject to the percentage
limitations set forth in Section 2(a) above, Pledgor shall receive such
certificate, instrument, option, right or distribution in trust for the benefit
of the Secured Parties, shall segregate it from Pledgor’s other property and
shall deliver it forthwith to the Collateral Agent in the exact form received
together with any necessary endorsement and/or appropriate stock power duly
executed in blank, substantially in the form provided in Exhibit 4(a),
to be held by the Collateral Agent as Pledged Collateral and as further
collateral security for the Secured Obligations.


 


(c)                                  Financing
Statements.  Pledgor shall execute
and deliver to the Collateral Agent such UCC or other applicable financing
statements as may be reasonably requested by the Collateral Agent in order to
perfect and protect the security interest created hereby in the Pledged
Collateral of Pledgor.


 


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(d)                                 Control.  If necessary to perfect the Secured Parties’
security interest in any Pledged Collateral consisting of uncertificated
Pledged Capital Stock, upon request of the Collateral Agent, (i) the Pledgor
shall, and shall cause each issuer of such uncertificated Pledged Capital Stock
(each an “Issuer”) to, execute a control agreement in form and substance
reasonably acceptable to the Collateral Agent. 
Pledgor hereby authorizes and instructs each Issuer that is a party to
this Pledge Agreement to comply with any instruction received by it from the
Collateral Agent in writing that (y) states that an Event of Default has
occurred and is continuing and (z) is otherwise in accordance with the terms of
this Pledge Agreement, without any other or further instructions from Pledgor,
and Pledgor agrees to indemnify such Issuer for any loss, damage or liability
incurred by such Issuer in acting upon such instructions of the Collateral
Agent.


 


5.                                       Representations
and Warranties.  Pledgor hereby
represents and warrants to the Collateral Agent, for the benefit of the Secured
Parties, that:


 


(a)                                  Authorization
of Pledged Capital Stock.  The
Pledged Capital Stock is duly authorized and validly issued, is fully paid and,
with respect any Pledged Capital Stock consisting of stock of a corporation,
nonassessable and is not subject to the preemptive rights of any Person.  All other shares of Capital Stock
constituting Pledged Collateral will be duly authorized and validly issued,
fully paid and, with respect any Pledged Capital Stock consisting of stock of a
corporation, nonassessable and not subject to the preemptive rights of any
Person.


 


(b)                                 Title.  Pledgor has good and indefeasible title to
the Pledged Collateral of Pledgor and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any Lien, other
than Permitted Liens.  There exists no
“adverse claim” within the meaning of Section 8-102 of the UCC with
respect to the Pledged Capital Stock of Pledgor.


 


(c)                                  Exercising
of Rights.  The exercise by the
Collateral Agent of its rights and remedies hereunder will not violate any law
or governmental regulation or any material contractual restriction binding on
or affecting Pledgor or any of its property.


 


(d)                                 Pledgor’s
Authority.  No authorization,
approval or action by, and no notice or filing with any Governmental Authority
or with the issuer of any Pledged Capital Stock is required either (i) for the
pledge made by Pledgor or for the granting of the security interest by Pledgor
pursuant to this Pledge Agreement or (ii) for the exercise by the Collateral
Agent or the Secured Parties of their rights and remedies hereunder (except as
may be required by laws affecting the offering and sale of securities).


 


(e)                                  Security
Interest/Priority.  This Pledge
Agreement creates a valid security interest in favor of the Collateral Agent,
for the benefit of the Secured Parties, in the Pledged Collateral.  The taking possession by the Collateral
Agent of the certificates, if any, representing the Pledged Capital Stock and
all other certificates and instruments constituting Pledged Collateral will
perfect and establish the first priority of the Collateral Agent’ security
interest in the Pledged Capital Stock and such certificates and instruments
and, upon the filing of UCC financing statements or registration of the
Collateral Agent’ security interest on the books and records of the Issuers of
any uncertificated Pledged Capital Stock, the Collateral Agent shall have a
first priority perfected security interest in all other Pledged Collateral
represented by such Pledged Capital Stock. 
Except as set forth in this Section 5(e), no action is necessary to
perfect or otherwise protect such security interest.


 


(f)                                    Partnership
and Membership Interests.  Except as
previously disclosed to the Collateral Agent, none of the Pledged Shares consisting
of partnership or limited liability company interests (i) is dealt in or traded
on a securities exchange or in a securities market, (ii) by its terms expressly
provides that it is a security governed by Article 8 of the UCC, (iii) is
an investment company security, (iv) is held in a securities account or (v)
constitutes a Security or a Financial Asset.


 


(g)                                 No
Other Capital Stock.  Pledgor owns
no Capital Stock in entity(ies) listed on Schedule 2(a) and Schedule 2(b)
other than as set forth on such schedules.


 


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(h)                                 Partnership
and Limited Liability Company Interests. 
Except as previously disclosed to the Collateral Agent, none of the
Pledged Capital Stock consisting of partnership or limited liability company
interests (i) is dealt in or traded on a securities exchange or in a securities
market, (ii) by its terms expressly provides that it is a security governed by
Article 8 of the UCC, (iii) is an investment company security, (iv) is
held in a securities account or (v) constitutes a “security” or a “financial
asset” as such terms are defined in Article 8 of the UCC.


 


6.                                       Covenants.  Pledgor hereby covenants, that until such
time as the Secured Obligations are fully satisfied, Pledgor shall:


 


(a)                                  Books
and Records.  Mark its books and
records (and shall cause the issuer of the Pledged Capital Stock of Pledgor to
mark its books and records) to reflect the security interest granted to the
Collateral Agent, for the benefit of the Secured Parties, pursuant to this
Pledge Agreement.


 


(b)                                 Defense
of Title.  Warrant and defend title
to and ownership of the Pledged Collateral of Pledgor at its own expense
against the claims and demands of all other parties claiming an interest
therein, keep the Pledged Collateral free from all Liens, except for Permitted
Liens, and not sell, exchange, transfer, assign, lease or otherwise dispose of
Pledged Collateral of Pledgor or any interest therein, except as expressly
permitted under the Subject Documents.


 


(c)                                  Further
Assurances.  Promptly execute and
deliver at its expense all further instruments and documents and take all
further action that may be necessary and desirable or that the Collateral Agent
may reasonably request in order to (i) perfect and protect the security interest
created hereby in the Pledged Collateral of Pledgor (including, without
limitation, the execution and filing of UCC financing statements and any and
all action necessary to satisfy the Collateral Agent that the Collateral Agent
has obtained a first priority perfected security interest in all Pledged
Capital Stock); (ii) enable the Collateral Agent to exercise and enforce its
rights and remedies hereunder in respect of the Pledged Collateral of Pledgor;
and (iii) otherwise effect the purposes of this Pledge Agreement, including,
without limitation and if requested by the Collateral Agent upon the occurrence
or during the continuance of an Event of Default, delivering to the Collateral
Agent irrevocable proxies in respect of the Pledged Collateral of Pledgor.  To that end, Pledgor agrees that the
Collateral Agent may file one or more financing statements disclosing the
Collateral Agent’s security interest in any or all of the Pledged Collateral of
Pledgor without Pledgor’s signature thereon, and further Pledgor also hereby
irrevocably makes, constitutes and appoints the Collateral Agent, its nominee
or any other person whom the Collateral Agent may designate, as Pledgor’s
attorney-in-fact with full power and for the limited purpose to sign in the
name of Pledgor any such financing statements (including renewal statements),
amendments and supplements, notices or any similar documents that in the
Collateral Agent’s reasonable discretion would be necessary, appropriate or
convenient in order to perfect and maintain perfection of the security
interests granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable so long as the Secured Obligations remain unpaid and
until the commitments relating thereto shall have been terminated.  Pledgor hereby agrees that a carbon,
photographic or other reproduction of this Pledge Agreement or any such
financing statement is sufficient for filing as a financing statement by the
Collateral Agent without notice thereof to Pledgor wherever the Collateral
Agent may in its sole discretion desire to file the same.  In the event for any reason the law of any
jurisdiction other than [the State of Texas] becomes or is
applicable to the Pledged Collateral of Pledgor or any part thereof, or to any
of the Secured Obligations, Pledgor agrees to execute and deliver all such
instruments and to do all such other things as the Collateral Agent reasonably
deems necessary to preserve, protect and enforce the security interests of the
Collateral Agent under the law of such other jurisdiction (and, if Pledgor
shall fail to do so promptly upon the request of the Collateral Agent, then the
Collateral Agent may execute any and all such requested documents on behalf of
Pledgor pursuant to the power of attorney granted hereinabove).  If any Pledged Collateral is in the
possession or control of Pledgor’s agents and the Collateral Agent so requests,
Pledgor agrees to notify such agents in writing of the Collateral Agent’s
security interest therein and, upon the Collateral Agent’s request, instruct
them to hold all such Pledged Collateral for its account and subject to the
Collateral Agent’s instructions. 
Pledgor agrees to mark its books and records to reflect the security
interest of the Collateral Agent in the Pledged Collateral.


 


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(d)                                 Amendments.  Not make or consent to any amendment or
other modification or waiver with respect to any of the Pledged Collateral of
Pledgor or enter into any agreement or allow to exist any restriction with
respect to any of the Pledged Collateral of Pledgor other than pursuant hereto
or as may be permitted under the Subject Documents.


 


(e)                                  Compliance
with Securities Laws.  File all
reports and other information now or hereafter required to be filed by Pledgor
with the United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the Pledged
Collateral of Pledgor.


 


(f)                                    Issuance,
Acquisition or Encumbrance of Capital Stock.  Not issue or acquire any Capital Stock or execute any warrants,
pledges or similar instruments pledging or in any manner encumbering its
currently outstanding Capital Stock except to the extent required by the
Subject Documents.


 


7.                                       Performance
of Obligations and Advances by Collateral Agent. On failure of Pledgor to
perform any of the covenants and agreements contained herein, the Collateral
Agent may, at its sole option and in its reasonable discretion, perform or
cause to be performed the same and in so doing may expend such sums as the
Collateral Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or potential Lien,
expenditures made in defending against any adverse claim and all other
expenditures which the Collateral Agent may make for the protection of the
security hereof or which may be compelled to make by operation of law.  All such sums and amounts so expended shall
be repayable by the Pledgor on a joint and several basis promptly upon timely
notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at
the default rate specified in Section 3.1 of the Revolving Credit
Agreement for loans outstanding thereunder and bearing interest based on the
Base Rate or, if such document is of no further force and effect or has been
terminate, as specified in Section 3.1 of the Term Loan Agreement
for loans outstanding thereunder.  No
such performance of any covenant or agreement by the Collateral Agent on behalf
of Pledgor, and no such advance or expenditure therefor, shall relieve the
Pledgor of any default under the terms of this Pledge Agreement or any of the
Subject Documents or any other documents relating to the Secured
Obligations.  The Collateral Agent may
make any payment hereby authorized in accordance with any bill, statement or
estimate procured from the appropriate public office or holder of the claim to
be discharged without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax
lien, title or claim except to the extent such payment is being contested in
good faith by Pledgor in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.


 


8.                                       Events
of Default. The occurrence of an event which under the Revolving Credit
Agreement or Term Loan Agreement would constitute an Event of Default shall be
an event of default hereunder (an “Event of Default”).


 


9.                                       Remedies.


 


(a)                                  General
Remedies. Upon the occurrence of an Event of Default and during the
continuation thereof, the Collateral Agent and the Secured Parties shall have,
in addition to the rights and remedies provided herein, in the Subject
Documents or in any other documents relating to the Secured Obligations, or by
law (including, without limitation, levy of attachment or garnishment), the
rights and remedies of a secured party under the UCC of the jurisdiction
applicable to the affected Pledged Collateral.


 


(b)                                 Sale
of Pledged Collateral.  Upon the
occurrence of an Event of Default and during the continuation thereof, without
limiting the generality of this Section and without notice, the Collateral
Agent may, sell or otherwise dispose of or realize upon the Pledged Collateral,
or any part thereof, in one or more parcels, at public or private sale, at any
exchange or broker’s board or elsewhere, at such price or prices and on such
other terms as the Collateral Agent may deem commercially reasonable, for cash,
credit or for future delivery or otherwise in accordance with applicable
law.  To the extent permitted by law, any
Secured Party may in such event bid for the purchase of such securities.  Pledgor agrees that, to the extent notice of
sale shall be required by law and has not been waived by Pledgor, any
requirement of reasonable notice shall be met if notice, specifying the place
of any public sale or the time after which any private sale is to be made, is
personally served on or mailed postage prepaid to Pledgor in accordance with
the notice provisions of Section 11.1 of the Revolving Credit
Agreement (or, to the extent the same has been


 


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terminated
or is otherwise ineffective as of such date, Section 11.1 of the
Term Loan Agreement) at least 10 days before the time of such sale.  The Collateral Agent shall not be obligated
to make any sale of Pledged Collateral of Pledgor regardless of notice of sale
having been given.  The Collateral Agent
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.


 


(c)                                  Private
Sale.  Upon the occurrence of an
Event of Default and during the continuation thereof, the Pledgor recognizes
that the Collateral Agent may deem it impracticable to effect a public sale of
all or any part of the Pledged Collateral and that the Collateral Agent may,
therefore, determine to make one or more private sales of any such Pledged
Collateral to a restricted group of purchasers who will be obligated to agree,
among other things, to acquire such Pledged Collateral for their own account,
for investment and not with a view to the distribution or resale thereof.  Pledgor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sale shall be deemed to
have been made in a commercially reasonable manner and that the Collateral
Agent shall have no obligation to delay sale of any such Pledged Collateral for
the period of time necessary to permit the issuer of such Pledged Collateral to
register such Pledged Collateral for public sale under the Securities Act of
1933.  Pledgor further acknowledges and
agrees that any offer to sell such Pledged Collateral which has been (i)
publicly advertised on a bona fide basis in a newspaper or other publication of
general circulation in the financial community of Charlotte, North Carolina (to
the extent that such offer may be advertised without prior registration under
the Securities Act of 1933), or (ii) made privately in the manner described
above shall be deemed to involve a “public sale” under the UCC, notwithstanding
that such sale may not constitute a “public offering” under the Securities Act
of 1933, and the Collateral Agent may, in such event, bid for the purchase of
such Pledged Collateral.


 


(d)                                 Retention
of Pledged Collateral. To the extent permitted under applicable law, in
addition to the rights and remedies hereunder, upon the occurrence of an Event
of Default, the Collateral Agent may, after providing the notices required by
Sections 9-620 and 9-621 of the UCC or otherwise complying with the
requirements of applicable law of the relevant jurisdiction, accept or retain
all or any portion of the Pledged Collateral in satisfaction of the Secured
Obligations.  Unless and until the
Collateral Agent shall have provided such notices, however, the Collateral
Agent shall not be deemed to have accepted or retained any Pledged Collateral
in satisfaction of any Secured Obligations for any reason.


 


(e)                                  Deficiency.  In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Collateral Agent or the Secured Parties are legally entitled, the Pledgor shall
be jointly and severally liable for the deficiency, together with interest
thereon at the default rate specified in Section 3.1 of the
Revolving Credit Agreement for loans outstanding thereunder and bearing
interest based on the Base Rate (or, if such document is of no further force
and effect or has been terminate, as specified in Section 3.1 of
the Term Loan Agreement for loans outstanding thereunder) and together with the
costs of collection and the reasonable fees of any attorneys employed by the
Collateral Agent to collect such deficiency. 
Any surplus remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to the Pledgor or to whomsoever a court
of competent jurisdiction shall determine to be entitled thereto.


 


(f)                                    Partial
Exercise of Remedies/Failure to Exercise Remedies.  Pledgor hereby acknowledges and agrees that
(i) the Collateral Agent shall not, in any case, be obligated to exercise any
remedies contemplated hereunder, (ii) the Collateral Agent may, in their sole
discretion, exercise any remedy contemplated hereunder with respect to all or
any portion of the Pledged Collateral, and (iii) any failure by the Collateral
Agent upon an Event of Default hereunder to exercise its remedies with respect
to any portion or the whole of the Pledged Collateral shall not constitute a
waiver of its right to exercise such remedies at any point in the future during
such Event of Default or any later Event of Default.


 


10.                                 Rights
of the Collateral Agent.


 


(a)                                  Power
of Attorney.  In addition to other
powers of attorney contained herein, Pledgor hereby designates and appoints the
Collateral Agent, on behalf of the Secured Parties, and each of their


 


7

















 


designees
or agents as attorney-in-fact of Pledgor, irrevocably and with power of
substitution, with authority to take any or all of the following actions upon
the occurrence and during the continuance of an Event of Default:


 


(i)                                     to
demand, collect, settle, compromise, adjust and give discharges and releases
concerning the Pledged Collateral of Pledgor, all as the Collateral Agent may
reasonably determine;


 


(ii)                                  to
commence and prosecute any actions at any court for the purposes of collecting
any of the Pledged Collateral of Pledgor and enforcing any other right in
respect thereof;


 


(iii)                               to defend, settle,
adjust or compromise any action, suit or proceeding brought and, in connection
therewith, give such discharge or release as the Collateral Agent may deem
reasonably appropriate;


 


(iv)                              to
pay or discharge taxes, liens, security interests, or other encumbrances levied
or placed on or threatened against the Pledged Collateral of Pledgor;


 


(v)                                 to
direct any parties liable for any payment under any of the Pledged Collateral
to make payment of any and all monies due and to become due thereunder directly
to the Collateral Agent or as the Collateral Agent shall direct;


 


(vi)                              to
receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Pledged Collateral of Pledgor;


 


(vii)                           to sign and endorse any
drafts, assignments, proxies, stock powers, verifications, notices and other
documents relating to the Pledged Collateral of Pledgor;


 


(viii)                        to execute and deliver all
assignments, conveyances, statements, financing statements, renewal financing
statements, pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Collateral Agent may determine necessary in order
to perfect and maintain the security interests and liens granted in this Pledge
Agreement and in order to fully consummate all of the transactions contemplated
herein;


 


(ix)                                to
exchange any of the Pledged Collateral of Pledgor or other property upon any
merger, consolidation, reorganization, recapitalization or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the Pledged
Collateral of Pledgor with any committee, depository, transfer agent, registrar
or other designated agency upon such terms as the Collateral Agent may
determine;


 


(x)                                   to
vote for a shareholder or member resolution, or to sign an instrument in
writing, sanctioning the transfer of any or all of the Pledged Capital Stock of
Pledgor into the name of the Collateral Agent or one or more of the Secured
Parties or into the name of any transferee to whom the Pledged Capital Stock of
Pledgor or any part thereof may be sold pursuant to Section 9 hereof; and


 


(xi)                                to
do and perform all such other acts and things as the Collateral Agent may
reasonably deem to be necessary, proper or convenient in connection with the
Pledged Collateral of Pledgor.


 


This
power of attorney is a power coupled with an interest and shall be irrevocable
for so long as any of the Credit Party Obligations are not fully
satisfied.  The Collateral Agent shall
be under no duty to exercise or withhold the exercise of any of the rights,
powers, privileges and options expressly or implicitly granted to the
Collateral Agent in this Pledge Agreement and shall not be liable for any
failure to do so or any delay in


 


8

















 


doing
so.  The Collateral Agent shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in their individual capacities or their capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence
or willful misconduct.  This power of
attorney is conferred on the Collateral Agent solely to protect, preserve and
realize upon its security interest in the Pledged Collateral.


 


(b)                                 Assignment
by the Collateral Agent.  The
Collateral Agent may from time to time assign the Secured Obligations and any
portion thereof and/or the Pledged Collateral and any portion thereof to a
successor Collateral Agent under the Credit Agreement and the assignee shall be
entitled to all of the rights and remedies of the Collateral Agent under this
Pledge Agreement in relation thereto.


 


(c)                                  The
Collateral Agent’s Duty of Care. 
Other than the exercise of reasonable care to ensure the safe custody of
the Pledged Collateral while being held by the Collateral Agent hereunder, the
Collateral Agent shall have no duty or liability to preserve rights pertaining
thereto, it being understood and agreed that the Pledgor shall be responsible
for preservation of all rights in the Pledged Collateral of Pledgor, and the
Collateral Agent shall be relieved of all responsibility for such Pledged
Collateral upon surrendering it or tendering the surrender of it to Pledgor.  The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Collateral Agent accord their own
property, which shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that the Collateral
Agent shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not the Collateral Agent have or
are deemed to have knowledge of such matters; or (ii) taking any necessary
steps to preserve rights against any parties with respect to any Pledged
Collateral.


 


(d)                                 Voting
Rights in Respect of the Pledged Collateral.


 


(i)                                     So
long as no Event of Default shall have occurred and be continuing, to the
extent permitted by law, Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of Pledgor or any part
thereof for any purpose not inconsistent with the terms of this Pledge
Agreement or the Credit Agreement (including, without limitation,
Section 6(g) hereof); and


 


(ii)                                  Upon
the occurrence and during the continuance of an Event of Default, all rights of
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to paragraph (i) of this
Section shall cease and all such rights shall thereupon become vested in
the Collateral Agent which shall then have the sole right to exercise such
voting and other consensual rights.


 


(f)                                    Dividend
and Distribution Rights in Respect of the Pledged Collateral.


 


(i)                                     So
long as no Event of Default shall have occurred and be continuing and subject
to Section 4(b) hereof, Pledgor may receive and retain any and all
dividends (other than stock dividends and other dividends constituting Pledged
Collateral which are addressed hereinabove), distributions or interest paid in
respect of the Pledged Collateral to the extent they are allowed under the
Subject Documents.


 


(ii)                                  Upon
the occurrence and during the continuance of an Event of Default:


 


(A)                              all
rights of Pledgor to receive the dividends, distributions and interest payments
which it would otherwise be authorized to receive and retain pursuant to
subsection (i) of this Section shall cease and all such rights shall
thereupon be vested in the Collateral Agent which shall then have the sole right
to receive and hold as Pledged Collateral such dividends, distributions and
interest payments; and


 


9

















 


(B)                                all
dividends, distributions and interest payments which are received by Pledgor
contrary to the provisions of subsection (A) of this Section shall be
received in trust for the benefit of the Secured Parties, shall be segregated
from other property or funds of Pledgor, and shall be forthwith paid over to
the Collateral Agent as Pledged Collateral in the exact form received, to be
held by the Collateral Agent as Pledged Collateral and as further collateral
security for the Secured Obligations.


 


(g)                                 Release
of Pledged Collateral.  The
Collateral Agent may release any of the Pledged Collateral from this Pledge
Agreement or may substitute any of the Pledged Collateral for other Pledged
Collateral without altering, varying or diminishing in any way the force,
effect, lien, pledge or security interest of this Pledge Agreement as to any
Pledged Collateral not expressly released or substituted, and this Pledge
Agreement shall continue as a first priority lien on all Pledged Collateral not
expressly released or substituted.


 


11.                                 Rights
of Required Lenders and Actions of Collateral Agent.


 


(a)                                  Rights
of Required Lenders to Act for Collateral Agent.  All rights of the Collateral Agent hereunder, if not exercised by
the Collateral Agent, may be exercised by the Required Secured Parties, as such
term is defined in the Intercreditor Agreement.


 


(b)                                 Actions
of Collateral Agent. 
Notwithstanding anything to the contrary contained herein, all actions
of the Collateral Agent hereunder (including the exercise of the remedies set
forth in Section 9 hereof) shall be taken in accordance with the
Intercreditor Agreement.


 


12.                                 Application
of Proceeds.  Upon the occurrence
and during the continuance of an Event of Default, any payments in respect of
the Secured Obligations and any proceeds of any Pledged Collateral, when
received by the Collateral Agent or any of the Secured Parties in cash or its
equivalent, will be applied in accordance with the terms of the Intercreditor
Agreement.  Pledgor irrevocably waives
the right to direct the application of such payments and proceeds and
acknowledges and agrees that the Collateral Agent shall have the continuing and
exclusive right to apply and reapply any and all such payments and proceeds in
the Collateral Agent’ sole discretion, notwithstanding any entry to the
contrary upon any of its books and records.


 


13.                                 Costs
and Expenses. At all times hereafter, whether or not upon the occurrence of
an Event of Default, the Pledgors agree to promptly pay upon demand any and all
reasonable costs and expenses (including, without limitation, reasonably
attorneys’ fees) of the Collateral Agent and the Secured Parties (a) as
required under the Subject Documents and (b) as necessary to protect the
Pledged Collateral or to exercise any rights or remedies under this Pledge
Agreement or with respect to any Pledged Collateral.  All of the foregoing costs and expenses shall constitute Secured
Obligations hereunder.


 


14.                                 Continuing
Agreement.


 


(a)                                  This
Pledge Agreement shall be a continuing agreement in every respect and shall
remain in full force and effect until such time as all of the Secured
Obligations are fully satisfied.  At
such time as such obligations are fully satisfied, this Pledge Agreement shall
be automatically terminated and the Collateral Agent and the Secured Parties
shall, upon the request and at the expense of the Pledgor, (i) return all certificates
representing the Pledged Capital Stock, all other certificates and instruments
constituting Pledged Collateral and all instruments of transfer or assignment
which have been delivered to the Collateral Agent pursuant to this Pledge
Agreement and (ii) forthwith release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements and/or
other documents reasonably requested by the Pledgor evidencing such
termination.  Notwithstanding the
foregoing, all releases and indemnities provided hereunder shall survive
termination of this Pledge Agreement.


 


(b)                                 This
Pledge Agreement shall continue to be effective or be automatically reinstated,
as the case may be, if at any time payment, in whole or in part, of any of the
Secured Obligations is rescinded or must otherwise be restored or returned by
the Collateral Agent or any Secured Party as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, all as
though such


 


10

















 


payment
had not been made; provided that in the event payment of all or any part of the
Secured Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any reasonable
legal fees and disbursements) incurred by the Collateral Agent or any Secured
Party in defending and enforcing such reinstatement shall be deemed to be
included as a part of the Secured Obligations.


 


15.                                 Amendments;
Waivers; Modifications.  This Pledge
Agreement and the provisions hereof may not be amended, waived, modified,
changed, discharged or terminated unless such amendment, waiver, modification,
change, discharge or termination is evidenced in writing and signed by the
Collateral Agent and the Pledgor.


 


16.                                 Successors
in Interest.  This Pledge Agreement
shall create a continuing security interest in the Collateral and shall be
binding upon Pledgor, its successors and assigns and shall inure, together with
the rights and remedies of the Collateral Agent and the Secured Parties
hereunder, to the benefit of the Collateral Agent and the Secured Parties and
their successors and permitted assigns; provided, however, that
the Pledgor may not assign its rights or delegate its duties hereunder without
the prior written consent of each of the Required Secured Parties (as defined
in the Intercreditor Agreement) and the Collateral Agent.  To the fullest extent permitted by law,
Pledgor hereby releases the Collateral Agent and each Secured Party, and its
successors and assigns, from any liability for any act or omission relating to
this Pledge Agreement or the Collateral, except, as applicable, for any
liability arising from the gross negligence or willful misconduct of the
Collateral Agent, or such Secured Party, or its officers, employees or agents.


 


17.                                 Notices.  All notices required or permitted to be
given under this Pledge Agreement shall be in conformance with the provisions
of the Intercreditor Agreement.


 


18.                                 Counterparts.  This Pledge Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same
instrument.  It shall not be necessary in
making proof of this Pledge Agreement to produce or account for more than one
such counterpart.


 


19.                                 Headings.  The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning, construction or interpretation of any provision of this Pledge
Agreement.


 


20.                                 Governing Law.


 


THIS
PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NORTH CAROLINA, WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF EXCEPT TO THE EXTENT THAT PERFECTION AND REMEDIES ARE
NECESSARILY GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.


 


21.                                 Waiver
of Jury Trial.


 


EACH OF THE PLEDGOR AND
THE COLLATERAL AGENT HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED
UNDER APPLICABLE LAW ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND TO THE FULLEST EXTENT PERMITTED BY LAW WAIVES ANY
RIGHTS THAT IT MAY HAVE TO CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES
IN CONNECTION WITH ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.


 


22.                                 Consent
to Jurisdiction.


 


(a)                                  Any
legal action or proceeding with respect to this Pledge Agreement may be brought
in the courts of the State of North Carolina in Mecklenburg County, or of the
United States for the Western District of North Carolina, and, by execution and
delivery of this Pledge Agreement, the Pledgor hereby irrevocably accepts for
himself and in respect of its property, generally and unconditionally, the
nonexclusive jurisdiction of such courts. 
The Pledgor further


 


11

















 


irrevocably consents to
the service of process in any manner permitted by law.  Nothing herein shall affect the right of any
Secured Party to commence legal proceedings or to otherwise proceed against the
Pledgor in any other jurisdiction.


 


(b)                                 The
Pledgor hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Pledge Agreement in the courts referred to in Section 22(a).  Each of the parties hereto hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.


 


23.                                 Severability.  If any provision of this Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.


 


24.                                 Entirety.  This Pledge Agreement, the Subject Documents
and any other documents relating to the Secured Obligations represent the
entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Subject Documents or the
transactions contemplated herein and therein.


 


25.                                 Survival.  All representations and warranties of the
Pledgor hereunder shall survive the execution and delivery of this Pledge
Agreement and the other Subject Documents and the making of the loans under the
Subject Documents.


 


26.                                 Other
Security.  To the extent that any of
the Secured Obligations are now or hereafter secured by property other than the
Pledged Collateral (including, without limitation, real and other personal
property owned by Pledgor), or by a guarantee, endorsement or property of any
other Person, then the Collateral Agent and the Secured Parties shall have the
right to proceed against such other property, guarantee or endorsement upon the
occurrence of any Event of Default, and the Collateral Agent and the Secured
Parties have the right, in their sole discretion, to determine which rights,
security, liens, security interests or remedies the Collateral Agent and the
Secured Parties shall at any time pursue, relinquish, subordinate, modify or
take with respect thereto, without in any way modifying or affecting any of
them or any of the Collateral Agent’ and the Secured Parties’ rights or the Secured
Obligations under this Pledge Agreement, the Subject Documents or any other
documents relating to the Secured Obligations.


 


[remainder of page intentionally left blank]


 


12

















 


Each
of the parties hereto has caused a counterpart of this Pledge Agreement to be
duly executed and delivered as of the date first above written.


 


	
   

  	
   

  	
  PLEDGOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  U.S.  RESTAURANT  PROPERTIES OPERATING L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:  USRP MANAGING, INC.

  
	
   

  
	
   

  	
  By:

  	
  /s/ Stacy M. Riffe

  	
   

  
	
   

  	
  Name:

  	
  Stacy M. Riffe

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  
	
  Accepted and
  agreed as of the date first above written.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COLLATERAL AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA,
  N.A.,

  as Collateral Agent for the Secured Parties

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
												



 


13

















 


Schedule 2(a)


 


to


 


Pledge Agreement


 


dated as of November 4, 2003 in favor of


 


the Collateral Agent


 


PLEDGED CAPITAL STOCK


 


1.                                       USRP
FUNDING 2002-A, L.P., a Delaware limited partnership.


 


2.                                       USRP
(JV1), LLC, a Delaware limited liability company.


 


14

















 


Schedule 2(b)


 


to


 


Pledge Agreement


 


dated as of November 4, 2003 in favor of


 


the Collateral Agent


 


PLEDGED CAPITAL STOCK 


 


[None.]


 


15

















 


Exhibit 4(a)


 


to


 


Pledge Agreement


 


dated as of November 4, 2003 in favor of


 


the Collateral Agent


 


Irrevocable Stock Power


 


FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to


 


 


the following shares of
[Capital Stock] of                                ,
a                             :


 




	
  No. of
  Shares

  	
   

  	
  Certificate No.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  






 


 


and irrevocably appoints
                                          
its agent and attorney-in-fact to transfer all or any part of such capital
stock and to take all necessary and appropriate action to effect any such
transfer.  The agent and
attorney-in-fact may substitute and appoint one or more persons to act for him.


 


	
   

  	
   

  	
  ,

  
	
   

  	
  a
                              
  corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


16