**Exhibit4.04**

 

 

NEITHER THIS SECURITY NORTHE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTEREDWITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANYSTATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACTOF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BEOFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDERTHE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN ATRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACTAND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGALOPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICHSHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITYMAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOANSECURED BY SUCH SECURITIES

 

**STOCK PURCHASE WARRANT**

 

 

To Purchase 103,226Shares of Common Stock of

 

**U.S. Restaurant Properties, Inc.**

 

THIS STOCK PURCHASE WARRANT CERTIFIES that, for valuereceived, Omicron Master Trust (the “Holder”), is entitled, upon theterms and subject to the limitations on exercise and the conditions hereinafterset forth, at any time on or after June 19, 2003 (the “Initial Exercise Date”)and on or prior to the close of business on the seventh anniversary of theInitial Exercise Date (the “Termination Date”) but not thereafter, tosubscribe for and purchase from U.S. Restaurant Properties, Inc., a corporationincorporated in the State of Maryland (the “Company”), up to 103,226shares (the “Warrant Shares”) of Common Stock, par value $0.001 pershare, of the Company (the “Common Stock”).  The purchase price of one share of Common Stock (the “ExercisePrice”) under this Warrant shall be **$16.50**, subject to adjustmenthereunder.  The Exercise Price and thenumber of Warrant Shares for which the Warrant is exercisable shall be subjectto adjustment as provided herein. **Capitalized terms used and not otherwise definedherein shall have the meanings set forth (or incorporated by reference) in thatcertain Securities Purchase Agreement (the “Purchase Agreement”), datedJune 12, 2003, between the Company and the investors signatory thereto.**

 

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# 1.     Title to Warrant. Prior to the Termination Date and subject to compliance with applicablelaws and Section 7 of this Warrant, this Warrant and all rights hereunder aretransferable, in whole or in part, at the office or agency of the Company bythe Holder in person or by duly authorized attorney, upon surrender of thisWarrant together with the Assignment Form annexed hereto properlyendorsed.  The transferee shall sign aninvestment letter in form and substance reasonably satisfactory to the Company.

 

# 2.     Authorization of Shares. The Company covenants that all Warrant Shares which may be issued uponthe exercise of the purchase rights represented by this Warrant will, uponexercise of the purchase rights represented by this Warrant, be duly authorized,validly issued, fully paid and nonassessable and free from all taxes, liens andcharges in respect of the issue thereof (other than taxes in respect of anytransfer occurring contemporaneously with such issue or liens created orpermitted to exist by the Holder).

 

# 3.     Exercise of Warrant.

 

(a)  Except as provided inSection 4 herein, exercise of the purchase rights represented by this Warrantmay be made at any time or times on or after the Initial Exercise Date and onor before the Termination Date by the surrender of this Warrant and the Noticeof Exercise Form annexed hereto duly executed, at the office of the Company (orsuch other office or agency of the Company as it may designate by notice inwriting to the registered Holder at the address of such Holder appearing on thebooks of the Company) and upon payment of the Exercise Price of the sharesthereby purchased by wire transfer or cashier’s check drawn on a United Statesbank or by means of a cashless exercise pursuant to Section 3(d), the Holdershall be entitled to receive a certificate for the number of Warrant Shares sopurchased.  Certificates for sharespurchased hereunder shall be delivered to the Holder within three (3) TradingDays after the date on which this Warrant shall have been exercised asaforesaid. This Warrant shall be deemed to have been exercised and suchcertificate or certificates shall be deemed to have been issued, and the Holderor any other person so designated to be named therein shall be deemed to havebecome a holder of record of such shares for all purposes, as of the close ofbusiness on the date the Warrant has been exercised by delivery of the Noticeof Exercise Form and payment to the Company of the Exercise Price and all taxesrequired to be paid by the Holder, if any, pursuant to Section 5 prior to theissuance of such shares, have been paid. If the Company fails to deliver to the Holder a certificate orcertificates representing the Warrant Shares pursuant to this Section 3(a) bythe third Trading Day after the date of exercise, then the Holder will have theright to rescind such exercise.  Inaddition to any other rights available to the Holder, if the Company fails todeliver to the Holder a certificate or certificates representing the WarrantShares pursuant to an exercise by the third Trading Day after the date ofexercise, and if after such third Trading Day the Holder is required by itsbroker to purchase (in an open market transaction or otherwise) shares ofCommon Stock to deliver in satisfaction of a sale by the Holder of the WarrantShares which the Holder anticipated receiving upon such exercise (a “Buy-In”),then the Company shall (1) pay in cash to the Holder the amount by which (x)the Holder’s total purchase price (including brokerage commissions, if any) forthe shares of Common

 

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Stock so purchasedexceeds (y) the amount obtained by multiplying (A) the number of Warrant Sharesthat the Company was required to deliver to the Holder in connection with theexercise at issue times (B) the price at which the sell order giving rise tosuch purchase obligation was executed, and (2) at the option of the Holder,either reinstate the portion of the Warrant and equivalent number of WarrantShares for which such exercise was not honored or deliver to the Holder thenumber of shares of Common Stock that would have been issued had the Companytimely complied with its exercise and delivery obligations hereunder; provided,however, that if the Holder exercises its option to have the relevantportion of the Warrant reinstated, it shall deliver to the Company anycertificate representing such Warrant Shares if such certificate is ultimatelydelivered to the Holder.  For example,if the Holder purchases Common Stock having a total purchase price of $11,000to cover a Buy-In with respect to an attempted exercise of shares of CommonStock with an aggregate sale price giving rise to such purchase obligation of$10,000, under clause (1) of the immediately preceding sentence the Companyshall be required to pay the Holder $1,000. The Holder shall provide theCompany written notice indicating the amounts payable to the Holder in respectof the Buy-In, together with applicable confirmations and other evidencereasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remediesavailable to it hereunder, at law or in equity including, without limitation, adecree of specific performance and/or injunctive relief with respect to theCompany’s failure to timely deliver certificates representing shares of CommonStock upon exercise of the Warrant as required pursuant to the terms hereof.

 

## (b)  If this Warrant shall have been exercised inpart, the Company shall, at the time of delivery of the certificate orcertificates representing Warrant Shares, deliver to Holder a new Warrantevidencing the rights of Holder to purchase the unpurchased Warrant Sharescalled for by this Warrant, which new Warrant shall in all other respects beidentical with this Warrant.

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## (c)  Notwithstanding anything herein to thecontrary, in no event shall the Holder be permitted to exercise this Warrantfor Warrant Shares to the extent that (i) the number of shares of Common Stockbeneficially owned by such Holder, together with any affiliate thereof (otherthan Warrant Shares issuable upon exercise of this Warrant) plus (ii) thenumber of Warrant Shares issuable upon exercise of this Warrant, would be equalto or exceed 4.9999% of the number of shares of Common Stock then issued andoutstanding**,** including shares issuable upon exercise of this Warrant heldby such Holder after application of this Section 3(c).  As used herein, beneficial ownership shallbe determined in accordance with Section 13(d) of the Exchange Act and therules promulgated thereunder.  To theextent that the limitation contained in this Section 3(c) applies, thedetermination of whether this Warrant is exercisable (in relation to othersecurities owned by the Holder) and of which a portion of this Warrant isexercisable shall be in the sole discretion of such Holder, and the submissionof a Notice of Exercise shall be deemed to be such Holder’s determination ofwhether this Warrant is exercisable (in relation to other securities owned bysuch Holder) and of which portion of this Warrant is exercisable, in each casesubject to such aggregate percentage limitation, and the Company shall have noobligation to verify or confirm the accuracy of such determination.  Nothing contained herein shall be deemed torestrict the right of a Holder

 

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to exercise thisWarrant into Warrant Shares at such time as such exercise will not violate theprovisions of this Section 3(c).  Theprovisions of this Section 3(c) may be waived by the Holder upon, at theelection of the Holder, not less than 61 days’ prior notice to the Company, andthe provisions of this Section 3(c) shall continue to apply until such 61st day(or such later date, as determined by the Holder, as may be specified in suchnotice of waiver).  No exercise of thisWarrant in violation of this Section 3(c) but otherwise in accordance with thisWarrant shall affect the status of the Warrant Shares as validly issued,fully-paid and nonassessable.

 

# (d)  If at anytime after one year from the date of issuance of this Warrant there is noeffective Registration Statement registering the resale of the Warrant Sharesby the Holder, this Warrant may also be exercised at such time by means of a“cashless exercise” in which the Holder shall be entitled to receive acertificate for the number of Warrant Shares equal to the quotient obtained bydividing [(A-B) (X)] by (A), where:

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(A) = the VWAP on the Trading Day preceding the dateof such election;

 

(B) =  the Exercise Price of theWarrants, as adjusted; and

 

(X) = the number of Warrant Shares issuable uponexercise of the Warrants in accordance with the terms of this Warrant.

 

# 4.     No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional sharesshall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise beentitled to purchase upon such exercise, the Company shall pay a cashadjustment in respect of such final fraction in an amount equal to suchfraction multiplied by the Exercise Price.

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# 5.     Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made withoutcharge to the Holder for any issue or transfer tax or other incidental expensein respect of the issuance of such certificate, all of which taxes and expensesshall be paid by the Company, and such certificates shall be issued in the nameof the Holder or in such name or names as may be directed by the Holder; provided,however, that in the event certificates for Warrant Shares are to beissued in a name other than the name of the Holder, this Warrant when surrenderedfor exercise shall be accompanied by the Assignment Form attached hereto dulyexecuted by the Holder; and the Company may require, as a condition thereto,the payment of a sum sufficient to reimburse it for any transfer tax incidentalthereto.

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# 6.     Closing of Books. The Company will not close its stockholder books or records in anymanner which prevents the timely exercise of this Warrant, pursuant to theterms hereof.

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# 7.     Transfer, Division and Combination.

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## (a)  Subject to compliance withany applicable securities laws and the conditions set forth in Sections 1 and7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement,this Warrant and all rights hereunder are transferable, in whole

 

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## or in part, uponsurrender of this Warrant at the principal office of the Company, together withthe written Assignment Form of this Warrant substantially in the form attachedhereto duly executed by the Holder or its agent or attorney and fundssufficient to pay any transfer taxes payable upon the making of suchtransfer.  Upon such surrender and, ifrequired, such payment, the Company shall execute and deliver a new Warrant orWarrants in the name of the assignee or assignees and in the denomination ordenominations specified in such instrument of assignment, and shall issue tothe assignor a new Warrant evidencing the portion of this Warrant not soassigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may beexercised by a new holder for the purchase of Warrant Shares without having anew Warrant issued.

 

## (b)  This Warrant may be dividedor combined with other Warrants upon presentation hereof at the aforesaidoffice of the Company, together with a written notice specifying the names anddenominations in which new Warrants are to be issued, signed by the Holder orits agent or attorney.  Subject tocompliance with Section 7(a), as to any transfer which may be involved in suchdivision or combination, the Company shall execute and deliver a new Warrant orWarrants in exchange for the Warrant or Warrants to be divided or combined inaccordance with such notice.

 

## (c)  The Company shall prepare,issue and deliver at its own expense (other than transfer taxes) the newWarrant or Warrants under this Section 7.

 

## (d)  The Company agrees tomaintain, at its aforesaid office, books for the registration and theregistration of transfer of the Warrants.

 

## (e)  If, at the time of thesurrender of this Warrant in connection with any transfer of this Warrant, thetransfer of this Warrant shall not be registered pursuant to an effectiveregistration statement under the Securities Act and under applicable statesecurities or blue sky laws, the Company may require, as a condition ofallowing such transfer (i) that the Holder or transferee of this Warrant, asthe case may be, furnish to the Company a written opinion of counsel (whichopinion shall be in form, substance and scope customary for opinions of counselin comparable transactions) to the effect that such transfer may be madewithout registration under the Securities Act and under applicable statesecurities or blue sky laws, (ii) that the holder or transferee execute anddeliver to the Company an investment letter in form and substance acceptable tothe Company and (iii) that the transferee be an “accredited investor” asdefined in Rule 501(a) promulgated under the Securities Act.

 

# 8.     No Rights as Shareholder until Exercise.  This Warrant does not entitle the Holder toany voting rights or other rights as a shareholder of the Company prior to theexercise hereof.  Upon the surrender ofthis Warrant and the payment of the aggregate Exercise Price (or by means of acashless exercise), the Warrant Shares so purchased shall be and be deemed tobe issued to such Holder as the record owner of such shares as of the close ofbusiness on the later of the date of such surrender or payment.

 

# 9.     Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants that upon receipt bythe Company of evidence reasonably satisfactory to it of the loss, theft,

 

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destruction or mutilationof this Warrant or any stock certificate relating to the Warrant Shares, and incase of loss, theft or destruction, of indemnity or security reasonablysatisfactory to it (which, in the case of the Warrant, shall not include theposting of any bond), and upon surrender and cancellation of such Warrant orstock certificate, if mutilated, the Company will make and deliver a newWarrant or stock certificate of like tenor and dated as of such cancellation,in lieu of such Warrant or stock certificate.

 

# 10.   Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the takingof any action or the expiration of any right required or granted herein shallbe a Saturday, Sunday or a legal holiday, then such action may be taken or suchright may be exercised on the next succeeding day not a Saturday, Sunday orlegal holiday.

 

# 11.   Adjustments of Exercise Price and Numberof Warrant Shares.

 

## (a)  Stock Splits, etc.The number and kind of securities purchasable upon the exercise of this Warrantand the Exercise Price shall be subject to adjustment from time to time uponthe happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stockor make a distribution in shares of Common Stock to holders of its outstandingCommon Stock, (ii) subdivide its outstanding shares of Common Stock into agreater number of shares, (iii) combine its outstanding shares of Common Stockinto a smaller number of shares of Common Stock, or (iv) issue any shares ofits capital stock in a reclassification of the Common Stock, then the number ofWarrant Shares purchasable upon exercise of this Warrant at the opening ofbusiness on the day following the date fixed for the determination of stockholdersentitled to receive such dividend or distribution or at the opening of businesson the day following the day on which such subdivision, combination orreclassification becomes effective, as the case may be, shall be adjusted sothat the Holder shall be entitled to receive the number of shares of CommonStock (or fraction of a share of Common Stock) or such other shares of capitalstock that such Holder would have owned or have been entitled to receive afterthe happening of any of the events described above had this Warrant beenexercised immediately prior to the record date in the case of a dividend ordistribution or the effective date in the case of a subdivision, combination orreclassification.  Any adjustment madepursuant to this Section shall become effective immediately after the recorddate for the determination of stockholders entitled to receive such dividend ordistribution and shall become effective immediately after the effective date inthe case of a subdivision, combination or reclassification.

 

## (b)  Anti-Dilution Provisions.   During the Exercise Period, the ExercisePrice and the number of Warrant Shares issuable hereunder and for which thisWarrant is then exercisable pursuant to Section 1 hereof shall be subjectto adjustment from time to time as provided in this Section 11(b).

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(i)    Adjustmentof Exercise Price.  Except as setforth in Section 11(b)(ii)(E), if and whenever the Company issues or sells, orin accordance with Section 11(b) hereof is deemed to have issued or sold, any sharesof Common Stock for an effective consideration per share of less than **[87%]**of the then Exercise Price or for no consideration (such lower price, the “BaseShare Price”

 

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and such issuances collectively, a “Dilutive Issuance”), then,the Exercise Price shall be reduced to equal **[115%](1)** (reduced by anymarket premium included in the Base Share Price)  the Base Share Price, provided, that for purposes hereof,all shares of Common Stock that are issuable upon conversion, exercise orexchange of Capital Share Equivalents shall be deemed outstanding immediatelyafter the issuance of such Common Stock. Such adjustment shall be made whenever such shares of Common Stock orCapital Share Equivalents are issued.

 

(ii)   Effecton Exercise Price of Certain Events. For purposes of determining the adjusted Exercise Price under Section11(b) hereof, the following will be applicable:

 

(A)          Issuance of Rightsor Options.  If the Company in anymanner issues or grants any warrants, rights or options, whether or notimmediately exercisable, to subscribe for or to purchase Common Stock or othersecurities exercisable, convertible into or exchangeable for Common Stock (“ConvertibleSecurities”) (such warrants, rights and options to purchase Common Stock orConvertible Securities are hereinafter referred to as “Options”) and theeffective price per share for which Common Stock is issuable upon the exerciseof such Options is less than the Exercise Price (“Below Base Price Options”),then the maximum total number of shares of Common Stock issuable upon theexercise of all such Below Base Price Options (assuming full exercise,conversion or exchange of Convertible Securities, if applicable) will, as ofthe date of the issuance or grant of such Below Base Price Options, be deemedto be outstanding and to have been issued and sold by the Company for suchprice per share and the maximum consideration payable to the Company upon suchexercise (assuming full exercise, conversion or exchange of ConvertibleSecurities, if applicable) will be deemed to have been received by theCompany.  For purposes of the precedingsentence, the “effective price per share for which Common Stock is issuableupon the exercise of such Below Base Price Options” is determined by dividing(i) the total amount, if any, received or receivable by the Company asconsideration for the issuance or granting of all such Below Base PriceOptions, plus the minimum aggregate amount of additional consideration, if any,payable to the Company upon the exercise of all such Below Base Price Options,plus, in the case of Convertible Securities issuable upon the exercise of suchBelow Base Price Options, the minimum aggregate amount of additionalconsideration payable upon the exercise, conversion or exchange thereof at thetime such Convertible Securities first become exercisable, convertible orexchangeable, by (ii) the maximum total number of shares of Common Stockissuable upon the exercise of all such Below Base Price Options (assuming fullconversion of Convertible Securities, if applicable).  No further adjustment to the Exercise Price will be made upon theactual issuance of such Common Stock upon the

 

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(1)           Subject to change depending on marketprice at time of issuance.  Determinedas premium to market.

 

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exercise of suchBelow Base Price Options or upon the exercise, conversion or exchange ofConvertible Securities issuable upon exercise of such Below Base Price Options.

 

(B)           Issuance ofConvertible Securities. If the Company in any manner issues or sells anyConvertible Securities, whether or not immediately convertible (other thanwhere the same are issuable upon the exercise of Options) and the effectiveprice per share for which Common Stock is issuable upon such exercise,conversion or exchange is less than the Exercise Price, then the maximum totalnumber of shares of Common Stock issuable upon the exercise, conversion orexchange of all such Convertible Securities will, as of the date of theissuance of such Convertible Securities, be deemed to be outstanding and tohave been issued and sold by the Company for such price per share and themaximum consideration payable to the Company upon such exercise (assuming fullexercise, conversion or exchange of Convertible Securities, if applicable) willbe deemed to have been received by the Company.  For the purposes of the preceding sentence, the “effective priceper share for which Common Stock is issuable upon such exercise, conversion orexchange” is determined by dividing (i) the total amount, if any, received orreceivable by the Company as consideration for the issuance or sale of all suchConvertible Securities, plus the minimum aggregate amount of additionalconsideration, if any, payable to the Company upon the exercise, conversion orexchange thereof at the time such Convertible Securities first becomeexercisable, convertible or exchangeable, by (ii) the maximum total number ofshares of Common Stock issuable upon the exercise, conversion or exchange ofall such Convertible Securities.  Nofurther adjustment to the Exercise Price will be made upon the actual issuanceof such Common Stock upon exercise, conversion or exchange of such ConvertibleSecurities.

 

(C)           Change in OptionPrice or Conversion Rate.  If thereis a change at any time in (i) the amount of additional consideration payableto the Company upon the exercise of any Options; (ii) the amount of additionalconsideration, if any, payable to the Company upon the exercise, conversion orexchange of any Convertible Securities; or (iii) the rate at which anyConvertible Securities are convertible into or exchangeable for Common Stock(in each such case, other than under or by reason of provisions designed toprotect against dilution), the Exercise Price in effect at the time of suchchange will be readjusted to the Exercise Price which would have been in effectat such time had such Options or Convertible Securities still outstandingprovided for such changed additional consideration or changed conversion rate,as the case may be, at the time initially granted, issued or sold.

 

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(D)          Calculation ofConsideration Received.  If anyCommon Stock, Options or Convertible Securities are issued, granted or sold forcash, the consideration received therefor for purposes of this Warrant will bethe amount received by the Company therefor, before deduction of reasonablecommissions, underwriting discounts or allowances or other reasonable expensespaid or incurred by the Company in connection with such issuance, grant orsale.  In case any Common Stock, Optionsor Convertible Securities are issued or sold for a consideration part or all ofwhich shall be other than cash, the amount of the consideration other than cashreceived by the Company will be the fair market value of such consideration,except where such consideration consists of securities, in which case theamount of consideration received by the Company will be the fair market value(closing bid price, if traded on any market) thereof as of the date ofreceipt.  In case any Common Stock,Options or Convertible Securities are issued in connection with any merger orconsolidation in which the Company is the surviving corporation, the amount ofconsideration therefor will be deemed to be the fair market value of suchportion of the net assets and business of the non-surviving corporation as isattributable to such Common Stock, Options or Convertible Securities, as thecase may be.  The fair market value ofany consideration other than cash or securities will be determined in goodfaith by an investment banker or other appropriate expert of nationalreputation selected by the Company and reasonably acceptable to the holderhereof, with the costs of such appraisal to be borne by the Company.

 

(E)           Exceptions toAdjustment of Exercise Price. Notwithstanding the foregoing, no adjustment will be made under thisSection 11(b) in respect of (1) the granting of options to employees, officersand directors of the Company pursuant to any stock option plan duly adopted bya majority of the non-employee members of the Board of Directors of the Companyor a majority of the members of a committee of non-employee directorsestablished for such purpose, (2) upon the exercise of the Preferred Stock orof any other series or security issued by the Company in connection with theoffer and sale of this Company’s securities pursuant to the Purchase Agreement,or (3) upon the exercise of or conversion of any convertible securities,options or warrants issued and outstanding on the Original Issue Date, providedthat the securities have not been amended since the date of the PurchaseAgreement, or (4) acquisitions or strategic investments, the primary purpose ofwhich is not to raise capital.

 

(iii)      MinimumAdjustment of Exercise Price.  Inthe event that any adjustment of the Exercise Price as required herein resultsin a fraction of a cent, such Exercise Price shall be rounded up or down to thenearest cent.  No adjustment of theExercise Price shall be made in an amount of less than 1% of the Exercise Pricein effect at the time such adjustment is otherwise required to be

 

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made, but any suchlesser adjustment shall be carried forward and shall be made at the time andtogether with the next subsequent adjustment which, together with anyadjustments so carried forward, shall amount to not less than 1% of suchExercise Price.

 

# 12.   Reorganization, Reclassification, Merger,Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capitalstock, consolidate or merge with or into another corporation (where the Companyis not the surviving corporation or where there is a change in or distributionwith respect to the Common Stock of the Company), or sell, transfer orotherwise dispose of all or substantially all its property, assets or businessto another corporation and, pursuant to the terms of such reorganization,reclassification, merger, consolidation or disposition of assets, shares ofcommon stock of the successor or acquiring corporation, or any cash, shares ofstock or other securities or property of any nature whatsoever (includingwarrants or other subscription or purchase rights) in addition to or in lieu ofcommon stock of the successor or acquiring corporation (“Other Property”),are to be received by or distributed to the holders of Common Stock of theCompany, then the Holder shall have the right thereafter to receive, at theoption of the Holder, (a) upon exercise of this Warrant, the number of sharesof Common Stock of the successor or acquiring corporation or of the Company, ifit is the surviving corporation, and Other Property receivable upon or as aresult of such reorganization, reclassification, merger, consolidation ordisposition of assets by a Holder of the number of shares of Common Stock forwhich this Warrant is exercisable immediately prior to such event, or (b) cashequal to the value of this Warrant as determined in accordance with theBlack-Sholes option pricing formula.  Incase of any such reorganization, reclassification, merger, consolidation ordisposition of assets, the successor or acquiring corporation (if other thanthe Company) shall expressly assume the due and punctual observance andperformance of each and every covenant and condition of this Warrant to beperformed and observed by the Company and all the obligations and liabilitieshereunder, subject to such modifications as may be deemed appropriate (asdetermined in good faith by resolution of the Board of Directors of theCompany) in order to provide for adjustments of Warrant Shares for which thisWarrant is exercisable which shall be as nearly equivalent as practicable tothe adjustments provided for in this Section 12.  For purposes of this Section 12, “common stock of the successoror acquiring corporation” shall include stock of such corporation of any classwhich is not preferred as to dividends or assets over any other class of stockof such corporation and which is not subject to redemption and shall alsoinclude any evidences of indebtedness, shares of stock or other securitieswhich are convertible into or exchangeable for any such stock, eitherimmediately or upon the arrival of a specified date or the happening of aspecified event and any warrants or other rights to subscribe for or purchaseany such stock.  The foregoingprovisions of this Section 12 shall similarly apply to successivereorganizations, reclassifications, mergers, consolidations or disposition ofassets.

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# 13.   Voluntary Adjustment by the Company.  The Company may at any time during the termof this Warrant reduce the then current Exercise Price to any amount and forany period of time deemed appropriate by the Board of Directors of the Company.

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# 14.   Notice of Adjustment.  Whenever the number of Warrant Shares ornumber or kind of securities or other property purchasable upon the exercise ofthis Warrant or the Exercise Price is adjusted, as herein provided, the Companyshall give notice thereof to the Holder, which

 

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notice shall state thenumber of Warrant Shares (and other securities or property) purchasable upon theexercise of this Warrant and the Exercise Price of such Warrant Shares (andother securities or property) after such adjustment, setting forth a briefstatement of the facts requiring such adjustment and setting forth thecomputation by which such adjustment was made.

 

# 15.   Notice of Corporate Action.  If at any time:

 

(a)           the Company shalltake a record of the holders of its Common Stock for the purpose of entitlingthem to receive a dividend or other distribution, or any right to subscribe foror purchase any evidences of its indebtedness, any shares of stock of any classor any other securities or property (other than cash), or to receive any otherright, or

 

(b)           there shall be anycapital reorganization of the Company, any reclassification or recapitalizationof the capital stock of the Company or any consolidation or merger of theCompany with, or any sale, transfer or other disposition of all orsubstantially all the property, assets or business of the Company to, anothercorporation or,

 

(c)           there shall be avoluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then, in any one or moreof such cases, subject to the requirements of SEC Regulation FD, the Companyshall give to Holder, if in compliance with Regulation FD and if possible, (i)at least 20 days’ prior written notice of the date on which a record date shallbe selected for such dividend, distribution or right or for determining rightsto vote in respect of any such reorganization, reclassification, merger,consolidation, sale, transfer, disposition, liquidation or winding up, and (ii)in the case of any such reorganization, reclassification, merger,consolidation, sale, transfer, disposition, dissolution, liquidation or windingup, at least 20 days’ prior written notice of the date when the same shall takeplace.  Such notice in accordance withthe foregoing clause also shall specify (i) the date on which any such recordis to be taken for the purpose of such dividend, distribution or right, thedate on which the holders of Common Stock shall be entitled to any suchdividend, distribution or right, and the amount and character thereof, and (ii)the date on which any such reorganization, reclassification, merger,consolidation, sale, transfer, disposition, dissolution, liquidation or windingup is to take place and the time, if any such time is to be fixed, as of whichthe holders of Common Stock shall be entitled to exchange their Warrant Sharesfor securities or other property deliverable upon such disposition, dissolution,liquidation or winding up.  Each suchwritten notice shall be sufficiently given if addressed to Holder at the lastaddress of Holder appearing on the books of the Company and delivered inaccordance with Section 17(d).

 

# 16.   Authorized Shares.  The Company covenants that during the periodthe Warrant is outstanding, it will reserve from its authorized and unissuedCommon Stock a sufficient number of shares to provide for the issuance of theWarrant Shares upon the exercise of any purchase rights under thisWarrant.  The Company further covenantsthat its issuance of this Warrant shall constitute full authority to itsofficers who are charged with the duty of executing stock certificates toexecute and issue the necessary certificates for the Warrant Shares

 

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upon the exercise of thepurchase rights under this Warrant.  TheCompany will take all such reasonable action as may be necessary to assure thatsuch Warrant Shares may be issued as provided herein without violation of anyapplicable law or regulation, or of any requirements of the Principal Marketupon which the Common Stock may be listed.

#  

Except and to theextent as waived or consented to by the Holder, the Company shall not by anyaction, including, without limitation, amending its articles of incorporationor through any reorganization, transfer of assets, consolidation, merger,dissolution, issue or sale of securities or any other voluntary action, avoidor seek to avoid the observance or performance of any of the terms of thisWarrant, but will at all times in good faith assist in the carrying out of allsuch terms and in the taking of all such actions as may be necessary orappropriate to protect the rights of Holder as set forth in this Warrantagainst impairment.  Without limitingthe generality of the foregoing, the Company will (a) not increase the parvalue of any Warrant Shares above the amount payable therefor upon suchexercise immediately prior to such increase in par value, (b) take all suchaction as may be necessary or appropriate in order that the Company may validlyand legally issue fully paid and nonassessable Warrant Shares upon the exerciseof this Warrant, and (c) use commercially reasonable efforts to obtain all suchauthorizations, exemptions or consents from any public regulatory body havingjurisdiction thereof as may be necessary to enable the Company to perform itsobligations under this Warrant.

 

Before taking anyaction which would result in an adjustment in the number of Warrant Shares forwhich this Warrant is exercisable or in the Exercise Price, the Company shallobtain all such authorizations or exemptions thereof, or consents thereto, asmay be necessary from any public regulatory body or bodies having jurisdictionthereof.

 

# 17.   Miscellaneous.

 

## (a)   Jurisdiction.  This Warrant shall constitute a contractunder the laws of Maryland, without regard to its conflict of law, principlesor rules.

##  

## (b)   Restrictions.  The Holder acknowledges that the WarrantShares acquired upon the exercise of this Warrant, if not registered, will haverestrictions upon resale imposed by state and federal securities laws.

##  

## (c)   Nonwaiver and Expenses.  No course of dealing or any delay or failureto exercise any right hereunder on the part of Holder shall operate as a waiverof such right or otherwise prejudice Holder’s rights, powers or remedies,notwithstanding all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly failsto comply with any provision of this Warrant, which results in any material damagesto the Holder, the Company shall pay to Holder such amounts as shall besufficient to cover any costs and expenses including, but not limited to,reasonable attorneys’ fees, including those of appellate proceedings, incurredby Holder in collecting any amounts due pursuant hereto or in otherwiseenforcing any of its rights, powers or remedies hereunder.

 

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## (d)   Notices.  Any notice, request or other documentrequired or permitted to be given or delivered to the Holder by the Companyshall be delivered in accordance with the notice provisions of the PurchaseAgreement.

##  

## (e)   Limitation of Liability.  No provision hereof, in the absence of anyaffirmative action by Holder to exercise this Warrant or purchase WarrantShares, and no enumeration herein of the rights or privileges of Holder, shallgive rise to any liability of Holder for the purchase price of any Common Stockor as a stockholder of the Company, whether such liability is asserted by theCompany or by creditors of the Company.

##  

## (f)    Remedies.  Holder, in addition to being entitled toexercise all rights granted by law, including recovery of damages, will beentitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damageswould not be adequate compensation for any loss incurred by reason of a breachby it of the provisions of this Warrant and hereby agrees to waive the defensein any action for specific performance that a remedy at law would be adequate.

##  

## (g)   Successors and Assigns.  Subject to applicable securities laws, thisWarrant and the rights and obligations evidenced hereby shall inure to thebenefit of and be binding upon the successors of the Company and the successorsand permitted assigns of Holder.  Theprovisions of this Warrant are intended to be for the benefit of all Holdersfrom time to time of this Warrant and shall be enforceable by any such Holderor holder of Warrant Shares.

##  

## (h)   Amendment.  This Warrant may be modified or amended orthe provisions hereof waived with the written consent of the Company and theHolder.

##  

## (i)    Severability.  Wherever possible, each provision of thisWarrant shall be interpreted in such manner as to be effective and valid underapplicable law, but if any provision of this Warrant shall be prohibited by orinvalid under applicable law, such provision shall be ineffective to the extentof such prohibition or invalidity, without invalidating the remainder of suchprovisions or the remaining provisions of this Warrant.

##  

## (j)    Headings.  The headings used in this Warrant are forthe convenience of reference only and shall not, for any purpose, be deemed apart of this Warrant.

 

********************

 

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IN WITNESS WHEREOF, the Company has caused thisWarrant to be executed by its officer thereunto duly authorized.

 

Dated:  June     , 2003

 
|   | **U.S. RESTAURANT PROPERTIES, INC.** |   |
|--------|--------------------------------------|--------|
|   |                                 |
|   |                                 |
|   | By:                                  |   |   |
|   |                                 | Name:  |
|   |                                 | Title: |
|        |                                      |        |  |  |

 

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**NOTICE OF EXERCISE**

 

To:          U.S. Restaurant Properties, Inc.

 

(1)   The undersigned hereby elects to purchase                  Warrant Shares of U.S. Restaurant Properties, Inc. pursuant to the terms of theattached Warrant (only if exercised in full), and tenders herewith payment ofthe exercise price in full, together with all applicable transfer taxes, ifany.

 

(2)   Payment shall take the form of (checkapplicable box):

 

o in lawful moneyof the United States; or

 

o thecancellation of such number of Warrant Shares as is necessary, in accordancewith the formula set forth in subsection 3(d), to exercise this Warrant withrespect to the maximum number of Warrant Shares purchasable pursuant to thecashless exercise procedure set forth in subsection 3(d).

 

(3)   Please issue a certificate or certificatesrepresenting said Warrant Shares in the name of the undersigned or in suchother name as is specified below:

 
|                                                     |   |   |   |
|----------------------------------------------------------|--------|--------|--------|
|                                                     |   |   |   |
| The Warrant Shares  shall be delivered to the following: |   |   |
|                                                     |   |   |   |
|                                                     |   |   |   |
|                                                     |   |   |   |
|                                                     |   |   |   |
|                                                     |   |   |   |
|                                                     |   |   |   |

 

(4)   Accredited Investor.  The undersigned is an “accredited investor”as defined in Regulation D promulgated under the Securities Act of 1933, asamended.

 
|   |   | [PURCHASER] |
|--------|--------|-------------|
|   |   |        |   |
|   |   |        |   |
|   |   | By:         |   |   |
|   |   |        | Name: |
|   |   |        | Title: |
|   |   |        |
|   |   | Dated:      |   |   |
|        |        |             |  |  |  |  |

 

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**ASSIGNMENT FORM**

 

(To assign the foregoingwarrant, executethis form and supply required information. Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and allrights evidenced thereby are hereby assigned to

 

 
|                                                                                                                                  whose address is                                                                                                                                                                                                              |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                     . |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   | Dated:                   ,           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Holder’s Signature: |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Holder’s Address: |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |   |   |
| Signature Guaranteed:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |  |  |  |  |

 

 

NOTE:  The signature to this Assignment Form mustcorrespond with the name as it appears on the face of the Warrant, withoutalteration or enlargement or any change whatsoever, and must be guaranteed by abank or trust company.  Officers ofcorporations and those acting in a fiduciary or other representative capacityshould file proper evidence of authority to assign the foregoing Warrant.

 

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