**Exhibit3.1**

 

**U.S.RESTAURANT PROPERTIES, INC.**

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**ARTICLESOF RESTATEMENT**

 

U.S. RestaurantProperties, Inc., a Maryland corporation, having its principal office inBaltimore, Maryland (the “Corporation”), hereby certifies to the StateDepartment of Assessments and Taxation of Maryland that:

 

**FIRST**:  The Corporation desires to restate itsCharter as currently in effect as herein provided.  The provisions set forth in these Articles of Restatement are allof the provisions of the Charter of the Corporation as currently in effect.

 

**SECOND**:  The restatement of the Charter has beenapproved by a majority of the entire Board of Directors of the Corporation.

 

**THIRD**:  The Charter is not amended by these Articlesof Restatement.

 

**FOURTH**:  The current address of the principal officeof the Corporation in the State of Maryland and the name and address of theCorporation’s current resident agent are as set forth in the restated Charterof the Corporation.  There are six (6)directors currently in office, whose names are as follows:

 

| Robert J.  Stetson |   | Darrel L. Rolph |
|--------------------|--------|-----------------|
| Fred H. Margolin   |   | David K. Rolph  |
| Gerald H. Graham   |   | Eugene G. Taper |

 

**FIFTH**:  The Charter of the Corporation is herebyrestated in its entirety to read as follows:

 

**RESTATED**

**ARTICLESOF INCORPORATION**

**OF**

**U.S.RESTAURANT PROPERTIES, INC.**

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# **ARTICLE INAME**

 

The name of the Corporation (which is hereinaftercalled the “Corporation”) is:

 

U.S. RestaurantProperties, Inc.

 

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# **ARTICLE IIPURPOSES AND POWERS**

 

The purposes for which the Corporation is formed andthe business and objects to be carried on and promoted by it are (i) to engagein any lawful act or activity (including, without limitation or obligation,engaging in business as a real estate investment trust under the InternalRevenue Code of 1986, as amended, or any successor statute (the “Code”)) forwhich corporations may be organized under the laws of the State of Maryland asnow or hereafter in force and (ii) to engage in any one or more businesses ortransactions, or to acquire all or any portion of any entity engaged in any oneor more businesses or transactions, which the Board of Directors may from timeto time authorize or approve, whether or not related to the business describedelsewhere in this Article or to any other business at the time or theretoforeengaged in by the Corporation.  Forpurposes of these Articles, “REIT” means a real estate investment trustqualifying under Section 856 through 860 of the Code.

 

The foregoing enumerated purposes and objects shall bein no way limited or restricted by reference to, or inference from, the termsof any other clause of this or any other Article of the charter of theCorporation, and each shall be regarded as independent; and they are intendedto be and shall be construed as powers as well as purposes and objects of theCorporation and shall be in addition to and not in limitation of the generalpowers of corporations under the General Laws of the State of Maryland.

 

# **ARTICLE IIIPRINCIPAL OFFICE AND RESIDENT AGENT**

 

The post office address of the principal office of theCorporation in the State of Maryland is 11 East Chase Street, Baltimore,Maryland 21202.  The name and address ofthe resident agent of the Corporation in the State of Maryland is TheCorporation Trust Incorporated, 32 South Street, Baltimore, Maryland21202.  Said resident agent is aMaryland corporation.

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# **ARTICLE IVAUTHORIZED STOCK**

 

Section 4.1.                                   TotalCapitalization.  The total number ofshares of all classes of capital stock that the Corporation has authority toissue is One Hundred Sixty Five Million (165,000,000) shares, consisting of (i)Fifty Million (50,000,000) shares of preferred stock, par value $0.001 pershare (the “Preferred Stock”); (ii) One Hundred Million (100,000,000) shares ofcommon stock, par value $0.001 per share (the “Common Stock”) and (iii) FifteenMillion (15,000,000) shares of excess stock, par value $0.001 per share (the“Excess Stock”).  The aggregate parvalue of all of the authorized shares of all classes of capital stock havingpar value is One Hundred Sixty Five Thousand Dollars ($165,000).  The Board of Directors may classify andreclassify any unissued shares of capital stock by setting or changing in anyone or more respects the preferences, conversion or other rights, votingpowers, restrictions, limitations as to dividends, qualifications or terms orconditions of redemption of such shares of stock.

 

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## Section 4.2.                                   PreferredStock.  The Preferred Stock may beissued from time to time in one or more series as authorized by the Board ofDirectors.  Prior to the issuance ofshares of each such series, the Board of Directors, by resolution and set forthin articles supplementary for such series or otherwise in the Corporation’scharter, shall fix the number of shares to be included in each series, and theterms, rights, restrictions and qualifications of the shares of eachseries.  The authority of the Board ofDirectors with respect to each series shall include, but not be limited to,determination of the following:

 

(i)                                     Thedesignation of the series, which may be by distinguishing number, letter ortitle.

 

(ii)                                  Thedividend rate on the shares of the series, if any, whether any dividends shallbe cumulative and, if so, from which date or dates, and the relative rights ofpriority, if any, of payment of dividends on shares of the series.

 

(iii)                               The redemption rights,including conditions and the price or prices, if any, for shares of the series.

 

(iv)                              Theterms and amounts of any sinking fund for the purchase or redemption of sharesof the series.

 

(v)                                 Therights of the shares of the series in the event of any voluntary or involuntaryliquidation, dissolution or winding up of the affairs of the Corporation, andthe relative rights of priority, if any, of payment of shares of the series.

 

(vi)                              Whetherthe shares of the series shall be convertible into shares of any other class orseries, or any other security, of the Corporation or any other corporation orother entity, and, if so, the specification of such other class or series ofsuch other security, the conversion price or prices or rate or rates, anyadjustments thereof, the date or dates on which such shares shall beconvertible and all other terms and conditions upon which such conversion maybe made.

 

(vii)                           Restrictions on the issuanceof shares of the same series or of any other class or series.

 

(viii)                        The voting rights, if any, ofthe holders of shares of the series.

 

(ix)                                Anyother preferences, rights, restrictions, including restrictions ontransferability, and qualification of shares of such class or series, notinconsistent with law and the charter of the Corporation.

 

Subject to the express provisions of any other seriesof Preferred Stock then outstanding, and notwithstanding any other provision ofthis charter, the Board of Directors may increase or decrease (but not belowthe number of shares of such series then outstanding) the number of shares, oralter the designation or classify or reclassify any unissued shares of aparticular series of Preferred Stock, by fixing or altering, in one or morerespects, from time to time before issuing the shares, the terms, rights,restrictions and qualifications of the shares of any such series of PreferredStock.

 

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Section 4.3.                                   Common Stock.

 

(A)                              CommonStock Subject to Terms of Preferred Stock. The Common Stock shall be subject to the express terms of any series ofPreferred Stock.

 

(B)                                DividendRights.  Subject to the provisionsof law and any preferences of any series of Preferred Stock, the holders ofshares of Common Stock shall be entitled to receive such dividends as may bedeclared by the Board of Directors of the Corporation out of funds legallyavailable therefor.

 

(C)                                RightsUpon Liquidation.  In the event ofany voluntary or involuntary liquidation, dissolution or winding up of theCorporation, the aggregate assets available for distribution to holders ofshares of the Common Stock shall be determined in accordance with applicablelaw.  Except as provided below as aconsequence of the limitations on distributions to holders of shares of ExcessStock, each holder of shares of Common Stock shall be entitled to receive,ratably with (i) each other holder of shares of Common Stock and (ii) eachholder of Excess Stock resulting from the exchange of Common Stock (pursuant toArticle VII hereof), that portion of such aggregate assets available fordistribution as the number of shares of the outstanding Common Stock held bysuch holder bears to the total number of shares of outstanding Common Stock andExcess Stock resulting from the exchange of Common Stock (pursuant to ArticleVII hereof) then outstanding.  Anythingherein to the contrary notwithstanding, in no event shall the amount payable toa holder of shares of Excess Stock exceed (i) the price per share such holderpaid for the Common Stock in the purported Transfer or Acquisition (as thoseterms are defined in Section 7.1 hereof) or change in capital structure orother transaction or event that resulted in the Excess Stock or (ii) if theholder did not give full value for such Excess Stock (as through a gift, adevise or other event or transaction) a price per share equal to the MarketPrice (as that term is defined in Section 7.1 hereof) for the shares of theCommon Stock on the date of the purported Transfer, Acquisition, change incapital structure or other transaction or event that resulted in such ExcessStock.  Any amount available fordistribution in excess of the foregoing limitations shall be paid ratably tothe holders of shares of Common Stock and other holders of Excess Stockresulting from the exchange of Common Stock to the extent permitted by theforegoing limitations.

 

(D)                               VotingRights.  Except as may be providedin this charter, and subject to the express terms of any series of PreferredStock, the holders of shares of the Common Stock shall have the exclusive rightto vote on all matters (as to which a common stockholder shall be entitled tovote pursuant to applicable law) at all meetings of the stockholders of theCorporation, and shall be entitled to one (1) vote for each share of the CommonStock entitled to vote at such meeting. Shares of Common Stock shall not have cumulative voting rights.

 

(E)                                 Conversionto Excess Stock.  Each share ofCommon Stock is convertible into Excess Stock as provided in Article VIIhereof.

 

Section 4.4.                                   Excess Stock.  A description of the preferences, conversionand other rights, voting powers, restrictions, limitations as to dividends,qualifications and terms and conditions of redemption of the Excess Stock ofthe Corporation is set forth in Article VII hereof and Section 4.3(C) hereof.

 

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Section 4.5.                                   Rank of FutureSeries of Capital Stock.  For thepurposes hereof and of any articles supplementary to the charter providing forthe classification or reclassification of any shares of capital stock or of anyother charter document of the Corporation (unless otherwise provided in anysuch articles or document), any class or series of stock of the Corporationshall be deemed to rank:

 

(A)                              priorto another class or series either as to dividends or upon liquidation, if theholders of such class or series shall be entitled to the receipt of dividendsor of amounts distributable on liquidation, dissolution or winding up, as thecase may be, in preference or priority to holders of such other class orseries;

 

(B)                                ona parity with another class or series either as to dividends or uponliquidation, whether or not the dividend rates, divided payment dates orredemption or liquidation price per share thereof be different from those ofsuch others, if the holders of such class or series of stock shall be entitledto receipt of dividends or amounts distributable upon liquidation, dissolutionor winding up, as the case may be, in proportion to their respective dividendrates or redemption or liquidation prices, without preference or priority overthe holders of such other class or series; and

 

(C)                                juniorto another class or series either as to dividends or upon liquidation, if therights of the holders of such class or series shall be subject or subordinateto the rights of the holders of such other class or series in respect of thereceipt of dividends or the amounts distributable upon liquidation, dissolutionor winding up, as the case may be.

 

Section 4.6.                                   Issuance ofRights to Purchase Securities and Other Property.  Subject to the rights of the holders of any series of PreferredStock, the Board of Directors is hereby authorized to create and to authorizeand direct the issuance (on either a pro rata or non-pro rata basis) by theCorporation of rights, options or warrants for the purchase of shares of EquityStock (as that term is defined in Section 7.1 hereof) of the Corporation, othersecurities of the Corporation or shares or other securities of any successor ininterest of the Corporation (a “Successor”), at such times, in such amounts, tosuch persons, for such consideration (if any), with such form and content(including without limitation the consideration for which any shares of EquityStock of the Corporation, other securities of the Corporation, or shares orother securities of any Successor are to be issued) and upon such terms andconditions as it may, from time to time, determine, subject only to therestrictions, limitations, conditions and requirements imposed by the terms ofthe Maryland General Corporation Law as in effect from time to time or anysuccessor statute thereto (the “MGCL”), other applicable laws and thischarter.  Without limiting thegenerality of the foregoing, the authority granted hereby includes theauthority to adopt a “rights plan” or similar plan that treats stockholders ina discriminatory or non pro rata manner, based upon the number of shares ownedthereby or otherwise.

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# **ARTICLE VBOARD OF DIRECTORS**

 

Section 5.1.                                   General.  The business and affairs of the Corporationshall be managed under the direction of the Board of Directors.

 

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Section 5.2.                                   Number ofDirectors.  The number of directorsshall initially be two (2), which number may be increased or decreased pursuantto the Bylaws of the Corporation, but shall not be less than the numberrequired by the MGCL.  Subject to theforegoing and to the express rights of the holders of any series of PreferredStock to elect additional directors under specified circumstances, the numberof directors of the Corporation shall be fixed by the Bylaws of the Corporationand may be increased or decreased from time to time in such a manner as may beprescribed by the Bylaws, but shall never be less than the minimum numberpermitted by the MGCL now or hereafter in force.

 

Section 5.3.                                   Vacancies.  Subject to the rights of the holders of anyclass of Preferred Stock then outstanding, newly created directorshipsresulting from any increase in the authorized number of directors or anyvacancies on the Board of Directors resulting from death, resignation,retirement, disqualification, removal from office, or other cause shall befilled by a majority vote of the stockholders or the directors then inoffice.  A director so chosen by thestockholders shall hold office for the balance of the term then remaining.  A director so chosen by the remainingdirectors shall hold office until the next annual meeting of stockholders, atwhich time the stockholders shall elect a director to hold office for thebalance of the term then remaining.  Nodecrease in the number of directors constituting the Board of Directors shallaffect the tenure of office of any director.

 

# **ARTICLE VIMATTERS RELATING TO THE POWERS OF THE CORPORATION AND ITS DIRECTORS AND STOCKHOLDERS**

 

The following provisions are hereby adopted for thepurpose of defining, limiting and regulating the powers of the Corporation andof the directors and stockholders thereof:

 

Section 6.1.                                   Authority as toBylaws.  Except as otherwiseprovided herein, in furtherance and not in limitation of the powers conferredby statute, the Board of Directors is expressly authorized to make, alter,amend or repeal the Bylaws of the Corporation and the Corporation may, in itsBylaws, confer powers on the Board of Directors in addition to those containedherein or conferred by applicable law. Notwithstanding any other provision of this charter or the Bylaws of theCorporation (and notwithstanding the fact that some lesser percentage may bespecified by law), the Bylaws shall not be made, repealed, amended or rescindedby the stockholders of the Corporation except by the vote of the holders of notless than two thirds of the outstanding shares of capital stock of theCorporation entitled to vote generally in the election of directors (consideredfor this purpose as one class) cast at a meeting of the stockholders for thatpurpose (provided that such notice of such proposed adoption, repeal,alteration, amendment or rescission is included in the notice of such meeting),or, as set forth above, by the Board of Directors.

 

Section 6.2.                                   Authority as toStock Issuances.  The Board ofDirectors may authorize the issuance, from time to time, of shares of its stockof any class or series, whether now or hereafter authorized, or securitiesconvertible into shares now or hereafter authorized, for such consideration asthe Board of Directors may deem advisable, and without any action by the

 

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stockholders, subject to such restrictions or limitations, if any, asmay be set forth in this charter or the Bylaws of the Corporation or in thelaws of the State of Maryland.

 

Section 6.3.                                   Manner ofElection.  Unless and except to theextent that the Bylaws of the Corporation shall so require, the election ofdirectors of the Corporation need not be by written ballot.

 

Section 6.4.                                   Removal ofDirectors.  Subject to the rights ofthe holders of any series of Preferred Stock to elect additional directors (orremove such additional directors, once elected) under specified circumstances,any director may be removed from office only for cause and only by theaffirmative vote of the holders of two thirds of the then-outstanding shares ofEquity Stock entitled to vote generally in the election of directors (the“Voting Stock”), voting together as a single class.  “Cause,” for purposes of this charter, shall mean acts or omissionsconstituting active and deliberate dishonesty established by a final judgmentor actual receipt of an improper benefit or profit in money, property orservices.

 

Section 6.5.                                   Determinations byBoard.  The determination as to anyof the following matters, made in good faith by or pursuant to the direction ofthe Board of Directors consistent with the charter of the Corporation and inthe absence of actual receipt of an improper benefit in money, property orservices or active and deliberate dishonesty established by a court, shall befinal and conclusive and shall be binding upon the Corporation and every holderof shares of its stock: (i) the amount of the net income of the Corporation forany period and the amount of assets at any time legally available for thepayment of dividends, redemption of its stock or the payment of otherdistributions on its stock; (ii) the amount of paid-in surplus, net assets,other surplus, annual or other net profit, net assets in excess of capital,undivided profits or excess of profits over losses on sales of assets; (iii)the amount, purpose, time of creation, increase or decrease, alteration orcancellation of any reserves or charges and the propriety thereof (whether ornot any obligation or liability for which such reserves shall have been createdshall have been paid or discharged); (iv) the fair value, or any sale, bid orasked priced to be applied in determining the fair value, of any asset owned orheld by the Corporation; (v) any matters relating to the acquisition, holdingand disposition of any assets by the Corporation; and (vi) whether and to whatextent and what times and places and under what conditions and regulations thebooks, accounts and documents of the Corporation, or any of them, shall be opento the inspection of stockholders, except as otherwise provided by statute orby the Bylaws, and, except as so provided, no stockholder shall have any rightto inspect any book, account or document of the Corporation unless authorizedso to do by resolution of the Board of Directors.

 

Section 6.6.                                   Reserved Powersof Board.  The enumeration anddefinition of particular powers of the Board of Directors included in thisArticle VI shall in no way be limited or restricted by reference to orinference from the terms of any other clause of this or any other provision ofthe charter of the Corporation, or construed or deemed by inference orotherwise in any manner to exclude or limit the powers conferred upon the Boardof Directors under the laws of the State of Maryland as now or hereafter inforce.

 

Section 6.7.                                   REITQualification.  The Board ofDirectors shall use its best efforts to cause the Corporation and itsstockholders to qualify for U.S. federal income tax treatment in accordancewith the provisions of the Code applicable to a REIT.  In furtherance of the

 

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foregoing, the Board of Directors shall use its best efforts to takesuch actions as are necessary, and may take such actions as it deems desirable(in its sole discretion) to preserve the status of the Corporation as a REIT;provided, however, that in the event that the Board of Directors determines, inits sole discretion, that it is no longer in the best interests of theCorporation to qualify as a REIT, the Board of Directors may revoke orotherwise terminate the Corporation’s REIT election pursuant to Section 856(g)of the Code.

 

Section 6.8.                                   AdvisorAgreements.  Subject to suchapproval of stockholders and other conditions, if any, as may be required byany applicable statute, rule or regulation, the Board of Directors mayauthorize the execution and performance by the Corporation of one or moreagreements with any person, corporation, association, company, trust,partnership (limited or general) or other organization whereby, subject to thesupervision and control of the Board of Directors, any such other person,corporation, association, company, trust, partnership (limited or general) orother organization shall render or make available to the Corporation managerial,investment, advisory and/or related services, office space and other servicesand facilities (including, if deemed advisable by the Board of Directors, themanagement or supervision of the investments of the Corporation) upon suchterms and conditions as may be provided in such agreement or agreements(including, if deemed fair and equitable by the Board of Directors, thecompensation payable thereunder by the Corporation).

 

Section 6.9.                                   Related PartyTransactions.  Without limiting anyother procedures available by law or otherwise to the Corporation, the Board ofDirectors may authorize any agreement of the character described in thisSection 6.9 or other transaction with any person, corporation, association,company, trust, partnership (limited or general) or other organization,although one or more of the directors or officers of the Corporation may be aparty to any such agreement or an officer, director, stockholder or member ofsuch other party, and no such agreement or transaction shall be invalidated orrendered void or voidable solely by reason of the existence of any suchrelationship if the existence is disclosed or known to (i) the Board ofDirectors, and the contract or transaction is approved by the affirmative voteof a majority of the disinterested directors, even if they constitute less thana quorum of the Board; or (ii) the stockholders entitled to vote, and thecontract or transaction is approved or ratified by the affirmative vote of amajority of the Voting Stock other than the votes of shares owned of record orbeneficially by the interested officer, director or corporation, firm or otherentity.  Any director of the Corporationwho is also a director, officer, stockholder or member of such other entity maybe counted in determining the existence of a quorum at any meeting of the Boardof Directors considering such matter.

 

Section 6.10.                             No Cumulative Rights.  Except as may be expressly provided withrespect to any class or series of Preferred Stock, stockholders of theCorporation shall not have cumulative voting rights in the election ofdirectors.

 

Section 6.11.                             No Preemptive Rights.  Except as may be expressly provided withrespect to any class or series of Preferred Stock, no holders of stock of theCorporation, of whatever class or series, shall have any preemptive right tosubscribe for the purchase of any shares of stock of any class or series or forthe purchase of any securities convertible into shares of stock of any class orseries of the Corporation other than such rights, if any, as the Board ofDirectors, in its sole discretion, may determine, and for such consideration asthe Board of Directors, in its

 

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sole discretion, may fix; and except as may be expressly provided withrespect to any class or series of Preferred Stock, any shares of stock of anyclass or series of convertible securities which the Board of Directors maydetermine to offer for subscription to the holders of stock may, as the Boardof Directors shall determine in its sole discretion, be offered to holders ofany then-existing class, classes or series of stock or other securities to theexclusion of holders of any or all other then-existing classes or series ofsecurities.

 

Section 6.12.                             Consideration of AllRelevant Factors.  The Board ofDirectors shall, in connection with the exercise of its business judgmentinvolving a Business Combination (as defined in Section 3 601 of theCorporations and Associations Article of the Annotated Code of Maryland) or anyactual or proposed transaction which would or may involve a change in controlof the Corporation (whether by purchases of shares of stock or any othersecurities of the Corporation in the open market, or otherwise, tender offer,merger, consolidation, dissolution, liquidation, sale of all or substantiallyall of the assets of the Corporation, proxy solicitation or otherwise), indetermining what is in the best interests of the Corporation and itsstockholders and in making any recommendation to its stockholders, give dueconsideration to all relevant factors, including, but not limited to (A) theeconomic effect, both immediate and long term, upon the Corporation’sstockholders, including stockholders, if any, who do not participate in thetransaction; (B) the social and economic effect on the employees, customers of,and others dealing with, the Corporation and its subsidiaries and on thecommunities in which the Corporation and its subsidiaries operate or arelocated; (C) whether the proposal is acceptable based on the historical andcurrent operating results or financial condition of the Corporation; (D)whether a more favorable price could be obtained for the Corporation’s stock orother securities in the future; (E) the reputation and business practices ofthe offeror and its management and affiliates as they would affect theemployees of the Corporation and its subsidiaries; (F) the future value of thestock or any other securities of the Corporation; (G) any antitrust or otherlegal and regulatory issues that are raised by the proposal; and (H) thebusiness and financial condition and earnings prospects of the acquiring personor entity, including, but not limited to, debt service and other existingfinancial obligations, financial obligations to be incurred in connection withthe acquisition, and other likely financial obligations of the acquiring personor entity.  If the Board of Directorsdetermines that any proposed Business Combination (as defined in Section 3 601of the Corporations and Associations Article of the Annotated Code of Maryland)or actual or proposed transaction which would or may involve a change incontrol of the Corporation should be rejected, it may take any lawful action todefeat such transaction, including, but not limited to, any or all of thefollowing: advising stockholders not to accept the proposal; institutinglitigation against the party making the proposal; filing complaints withgovernmental and regulatory authorities; acquiring the stock or any of thesecurities of the Corporation; selling or otherwise issuing authorized butunissued stock, other securities or granting options or rights with respectthereto; acquiring a company to create an antitrust or other regulatory problemfor the party making the proposal; and obtaining a more favorable offer fromanother individual or entity.

 

Section 6.13.                             Stockholder Proposals.  For any stockholder proposal to be presentedin connection with an annual meeting of stockholders of the Corporation,including any proposal relating to the nomination of a director to be electedto the Board of Directors of the Corporation, the stockholders must have giventimely written notice thereof in writing to the Secretary of the Corporation inthe manner and containing the information required by the Bylaws.  Stockholder

 

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proposals to be presented in connection with a special meeting ofstockholders will be presented by the Corporation only to the extent requiredby Section 2 502 of the Corporations and Associations Article of the AnnotatedCode of Maryland.

 

Section 6.14.                             Required Vote.  Notwithstanding any provision of lawrequiring the authorization of any action by a greater proportion than amajority of the total number of shares of all classes of capital stock or ofthe total number of shares of any class of capital stock, such action shall bevalid and effective if authorized by the affirmative vote of the holders of amajority of the total number of shares of all classes outstanding and entitledto vote thereon, except as otherwise provided in this charter.

 

# **ARTICLE VIIRESTRICTIONS ON OWNERSHIP, TRANSFER, ACQUISITION AND REDEMPTION OF SHARES**

 

Section 7.1.                                   Definitions.  For purposes of this charter, the followingterms shall have the following meanings:

 

“Acquire” shall mean theacquisition of Beneficial Ownership or Constructive Ownership of shares ofEquity Stock by any means, including, without limitation, the exercise of anyrights under any option, warrant, convertible security, pledge or othersecurity interest or similar right to acquire shares, but shall not include theacquisition of any such rights unless, as a result, the acquirer would beconsidered a Beneficial Owner or Constructive Owner.  The terms “Acquires” and “Acquisition” shall have correlativemeanings.

 

“Beneficial Ownership”shall mean ownership of shares of Equity Stock by an individual who would betreated as an owner of such shares under Section 542(a)(2) of the Code, eitherdirectly or constructively through the application of Section 544 of the Code,as modified by Section 856(h)(1)(B) of the Code.  For purposes of this definition, the term “individual” also shallinclude any organization, trust or other entity that is treated as anindividual for purposes of Section 542(a)(2) of the Code.  The terms “Beneficial Owner,” “BeneficiallyOwn,” “Beneficially Owns” and “Beneficially Owned” shall have correlativemeanings.

 

“Beneficiary” shall mean,with respect to any Trust, one or more organizations described in each ofSection 170(b)(1)(A) (other than clauses (vii) or (viii) thereof) and Section170(c)(2) of the Code that are named by the Corporation as the beneficiary orbeneficiaries of such Trust, in accordance with the provisions of Section7.2(G) hereof.

 

“Board of Directors”shall mean the Board of Directors of the Corporation.

 

“Bylaws” shall mean theBylaws of the Corporation, as the same are in effect from time to time.

 

“Closing Price” on anyday shall mean the last sale price, regular way on such day, or, if no suchsale takes place on that day, the average of the closing bid and asked prices,regular way, in either case as reported on the principal consolidatedtransaction reporting system with respect to securities listed or admitted totrading on the New York Stock Exchange, or if the affected

 

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class or series of Equity Stock is not so listed or admitted totrading, as reported in the principal consolidated transaction reporting systemwith respect to securities listed on the principal national securities exchange(including the National Market System of the National Association of SecuritiesDealers, Inc. Automated Quotation System) on which the affected class or seriesof Equity Stock is listed or admitted to trading or, if the affected class orseries of Equity Stock is not so listed or admitted to trading, the last quotedprice or, if not quoted, the average of the high bid and low asked prices inthe over-the-counter market, as reported by the National Association ofSecurities Dealers, Inc. Automated Quotation System or, if such system is nolonger in use, the principal automated quotation system then in use or, if theaffected class or series of Equity Stock is not so quoted by any such system,the average of the closing bid and asked prices as furnished by a professionalmarket maker selected by the Board of Directors making a market in the affectedclass or series of Equity Stock, or, if there is no such market maker or suchclosing prices otherwise are not available, the fair market value of theaffected class or series of Equity Stock as of such day, as determined by theBoard of Directors in its discretion.

 

“Code” shall mean theInternal Revenue Code of 1986, as amended from time to time, or any successorstatute thereto.  Reference to anyprovision of the Code shall mean such provision as in effect from time to time,as the same may be amended, and any successor provision thereto, as interpretedby any applicable regulations as in effect from time to time.

 

“Common Stock OwnershipLimit” shall mean 9.8% of the outstanding shares of Common Stock of theCorporation, subject to adjustment pursuant to Section 7.10 hereof.

 

“Constructive Ownership”shall mean ownership of shares of Equity Stock by a Person who would be treatedas an owner of such shares, either actually or constructively, directly orindirectly, through the application of Section 318 of the Code, as modified bySection 856(d)(5) thereof.  The terms“Constructive Owner,” “Constructively Own,” “Constructively Owns” and“Constructively Owned” shall have correlative meanings.

 

“Equity Stock” shall meancollectively stock of the Corporation that is either Common Stock or PreferredStock.

 

“Excess Stock” shall meanshares of Equity Stock Beneficially Owned by any Person in excess of theOwnership Limit or in violation of any of the restrictions described inparagraphs (B), (C), (D) and (E) of Section 7.2 hereof.

 

“Existing Holder” shallmean QSV Properties, Inc., a Delaware corporation, and its successors andassigns.

 

“Existing Holder Limit”shall mean 12% of the outstanding Common Stock of the Corporation, subject toadjustment pursuant to Section 7.9 hereof and to the limitations contained inSection 7.11 hereof.  For purposes ofthe application of the Existing Holder Limit, the Existing Holder shall bedeemed to own the sum of (A) the Common Stock Beneficially Owned orConstructively Owned by the Existing Holder and (B) the Common Stock theExisting Holder would Beneficially Own or Constructively Own upon exercise ofany conversion right, option or other right (without regard to any temporal orother restrictions on the exercise thereof) to directly or indirectly AcquireBeneficial Ownership or Constructive Ownership of Common

 

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Stock.  For purposes ofdetermining the Existing Holder Limit, the shares of Common Stock outstandingshall be deemed to include the maximum number of shares that the ExistingHolder may Beneficially Own and Constructively Own pursuant to any conversionright, option or other right (without regard to any temporal or otherrestrictions on the exercise thereof). From the date of the Initial Public Offering and prior to the RestrictionTermination Date, the Secretary of the Corporation, or such other person asshall be designated by the Board of Directors, shall maintain and, uponrequest, make available to the Existing Holder or the Board of Directors, aschedule which sets forth the then-current Existing Holder Limit.

 

“Initial Public Offering”shall mean the closing of the sale of shares of Common Stock pursuant to theCorporation’s first effective registration statement for such Common Stock,filed under the Securities Act of 1933, as amended.

 

“Market Price” on any dayshall mean the average of the Closing Prices for the ten (10) consecutiveTrading Days immediately preceding such day (or those days during such 10-dayperiod for which Closing Prices are available).

 

“Non Transfer Event”shall mean an event (other than a purported Transfer) that would cause (A) anyPerson (other than the Existing Holder with respect to Common Stock) toBeneficially Own or Constructively Own Equity Stock in excess of the OwnershipLimit or (B) the Existing Holder to Beneficially Own or Constructively OwnCommon Stock in excess of the Existing Holder Limit, including, but not limitedto, the granting of any option or entering into any agreement for the Transferor other disposition of Equity Stock or the Transfer or other disposition ofany securities or rights convertible into or exchangeable for Equity Stock.

 

“Ownership Limit” shallmean the Common Stock Ownership Limit or the Preferred Stock Ownership Limit,or both, as the context may require.

 

“Permitted Transferee”shall mean any Person designated as a Permitted Transferee in accordance withthe provisions of Section 7.13 hereof.

 

“Person” shall mean anindividual, corporation, partnership, estate, trust (including a trustqualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trustpermanently set aside for or to be used exclusively for the purposes describedin Section 642(c) of the Code, association, private foundation within themeaning of Section 509(a) of the Code, joint stock company or other entity, ora group as that term is used for purposes of Section 13(d)(3) of the SecuritiesExchange Act of 1934, as amended.

 

“Preferred StockOwnership Limit” shall mean 9.8% of the outstanding shares of a particularseries of Preferred Stock of the Corporation, subject to adjustment pursuant toSection 7.10 hereof.

 

“Prohibited Owner” shallmean, with respect to any purported Transfer or Non Transfer Event, any Personwho, but for the provisions of Section 7.2(B), (C), (D) or (E) hereof would ownrecord title to the shares of Equity Stock.

 

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“Restriction TerminationDate” shall mean the first day after the date of the Initial Public Offering onwhich the Board of Directors determines that it is no longer in the bestinterests of the Corporation to attempt, or continue, to qualify as a REIT.

 

“Trading Day” shall meana day on which the principal national securities exchange on which the affectedclass or series of Equity Stock is listed or admitted to trading is open forthe transaction of business or, if the affected class or series of Equity Stockis not listed or admitted to trading, shall mean any day other than a Saturday,Sunday or other day on which banking institutions in the State of Texas areauthorized or obligated by law or executive order to close.

 

“Transfer” shall mean anysale, transfer, gift, hypothecation, assignment, devise or other disposition ofa direct or indirect interest in Equity Stock or the right to vote or receivedividends on Equity Stock (including (A) the granting of any option (includingany option to acquire an option or any series of such options) or entering intoany agreement for the sale, transfer or other disposition of Equity Stock orthe right to vote or receive dividends on Equity Stock or (B) the sale,transfer, assignment or other disposition of any securities or rightsconvertible into or exchangeable for Equity Stock (including the exchangerights (“Exchange Rights”), if any, granted under each of the Third Amended andRestated Agreement of Limited Partnership of U.S. Restaurant Properties MasterL.P., as the same may be amended or restated from time to time, and the ThirdAmended and Restated Agreement of Limited Partnership of U.S. RestaurantProperties Operating L.P., as the same may be amended or restated from time totime (collectively, the “Partnership Agreements”), to the limited partnersthereunder, to acquire Common Stock), whether voluntary or involuntary, ofrecord, constructively or beneficially, and whether by operation of law orotherwise.  The terms “Transfers,”“Transferred” and “Transferable” shall have correlative meanings.

 

“Trust” shall mean thetrust created pursuant to Section 7.2(G).

 

Section 7.2.                                   Ownership andTransfer Limitations.

 

(A)                              Exceptas provided in Sections 7.8 and 7.17 hereof, from the date of the InitialPublic Offering and prior to the Restriction Termination Date, (i) no Person(other than the Existing Holder) shall Beneficially Own or Constructively Ownshares of Common Stock in excess of the Common Stock Ownership Limit; (ii) theExisting Holder shall not Beneficially or Constructively Own shares of CommonStock in excess of the Existing Holder Limit; and (ii) no Person shallBeneficially Own or Constructively Own shares of any series of Preferred Stockin excess of the Preferred Stock Ownership Limit.

 

(B)                                Exceptas provided in Sections 7.8 and 7.17 hereof, from the date of the InitialPublic Offering and prior to the Restriction Termination Date, any Transfer,Acquisition, change in the capital structure of the Corporation or otherpurported change in Beneficial Ownership or Constructive Ownership of EquityStock or other event or transaction that, if effective, would result in (i) anyPerson (other than the Existing Holder with respect to Common Stock)Beneficially Owning or Constructively Owning Equity Stock in excess of theapplicable Ownership Limit or (ii) the Existing Holder Beneficially Owning orConstructively Owning Common Stock in excess of the Existing Holder Limit shallbe void abinitio as to the Transfer, Acquisition, change in thecapital structure of the Corporation or other purported change in

 

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Beneficial Ownership or Constructive Ownership or other event ortransaction with respect to that number of shares of Equity Stock which wouldotherwise be Beneficially Owned or Constructively Owned by such Person inexcess of the applicable Ownership Limit, and the intended transferee, shallacquire no rights in such number of shares of Equity Stock.

 

(C)                                Exceptas provided in Sections 7.8 and 7.17 hereof, from the date of the InitialPublic Offering and prior to the Restriction Termination Date, any Transfer,Acquisition, change in the capital structure of the Corporation or otherpurported change in Beneficial Ownership or Constructive Ownership (includingactual ownership) of shares of Equity Stock or other event or transaction that,if effective, would result in the Equity Stock being actually owned by fewerthan 100 Persons (determined without reference to any rules of attribution)shall be void abinitio as to the Transfer, Acquisition, changein the capital structure of the Corporation or other purported change inBeneficial Ownership or Constructive Ownership (including actual ownership) orother event or transaction with respect to that number of shares of EquityStock which otherwise would be owned by the transferee, and the intendedtransferee or subsequent owner (including a Beneficial Owner or ConstructiveOwner) shall acquire no rights in such number of shares of Equity Stock.

 

(D)                               Exceptas provided in Sections 7.8 and 7.17 hereof, from the date of the InitialPublic Offering and prior to the Restriction Termination Date, any Transfer,Acquisition, change in the capital structure of the Corporation or otherpurported change in Beneficial Ownership or Constructive Ownership of shares ofEquity Stock or other event or transaction that, if effective, would cause theCorporation to fail to qualify as a REIT by reason of being “closely held”within the meaning of Section 856(h) of the Code or otherwise, directly orindirectly, would cause the Corporation to fail to qualify as a REIT shall bevoid abinitio as to the Transfer, Acquisition, change in thecapital structure of the Corporation or other purported change in BeneficialOwnership or Constructive Ownership or other event or transaction with respectto that number of shares of Equity Stock which would cause the Corporation tobe “closely held” within the meaning of Section 856(h) of the Code orotherwise, directly or indirectly, would cause the Corporation to fail toqualify as a REIT, and the intended transferee shall acquire no rights in suchnumber of shares of Equity Stock.

 

(E)                                 Exceptas provided in Sections 7.8 and 7.17 hereof, from the date of the InitialPublic Offering and prior to the Restriction Termination Date, any Transfer,Acquisition, change in capital structure of the Corporation or other purportedchange in Beneficial Ownership or Constructive Ownership of shares of EquityStock or other event or transaction that, if effective, would (i) cause theCorporation to own (directly or Constructively) 10% or more of the ownershipinterests in a tenant of the Corporation’s real property, within the meaning ofSection 856(d)(2)(B) of the Code and (ii) cause the Corporation to fail tosatisfy any of the gross income requirements of Section 856(c) of the Code,shall be void abinitio as to the Transfer, Acquisition, changein capital Structure of the Corporation or other purported change in BeneficialOwnership or Constructive Ownership or other event or transaction with respectto that number of shares of Equity Stock which would cause the Corporation toown (directly or Constructively) 10% or more of the ownership interests in a tenantof the Corporation’s real property, within the meaning of Section 856(d)(2)(B)of the Code, and the intended transferee shall acquire any no rights in suchnumber of shares of Equity Stock.

 

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(F)                                 Itis expressly intended that the restrictions on ownership and transfer describedin this Section 7.2 shall apply to the Exchange Rights.  Notwithstanding any of the provisions of thePartnership Agreements to the contrary, a partner of U.S. Restaurant PropertiesMaster L.P. or U.S. Restaurant Properties Operating L.P. shall not be entitledto effect an exchange of an interest in U.S. Restaurant Properties Master L.P.or U.S. Restaurant Properties Operating L.P. into shares of Common Stock if theBeneficial Ownership or Constructive Ownership of such shares of Common Stockwould be prohibited under the provisions of this Section 7.2.

 

(G)                                (i)                                     If,notwithstanding the other provisions contained in this Article VII, from thedate of the Initial Public Offering and prior to the Restriction TerminationDate, there is a purported Transfer, Acquisition, change in capital structureof the Corporation, other purported change in Beneficial Ownership orConstructive Ownership of shares of Equity Stock or other event or transactionsuch that (a) any Person (other than the Existing Holder with respect to CommonStock) would either Beneficially Own or Constructively Own Equity Stock inexcess of the Ownership Limit or (b) the Existing Holder would Beneficially Ownor Constructively Own Common Stock in excess of the Existing Holder Limit,then, (x) except as otherwise provided in Sections 7.8 and 7.17 hereof, thepurported transferee shall acquire no right or interest (or, in the case of aNon Transfer Event, the person holding record title to the Equity StockBeneficially Owned or Constructively Owned by such Beneficial Owner orConstructive Owner, shall cease to own any right or interest) in such number ofshares of Equity Stock which would cause such Beneficial Owner or ConstructiveOwner to Beneficially Own or Constructively Own shares of Equity Stock inexcess of the Ownership Limit or the Existing Holder Limit, as applicable, (y)such number of shares of Equity Stock in excess of the Ownership Limit or theExisting Holder Limit, as applicable (rounded up to the nearest whole share),shall be designated as Excess Stock and, in accordance with the provisions ofSection 7.13 hereof, transferred automatically and by operation of law to atrustee (the “Trustee”) in its capacity as Trustee of a trust (the “Trust”) forthe benefit of one or more Beneficiaries to be held in accordance with thatSection 7.13 and (z) the Prohibited Owner shall submit such number of shares ofEquity Stock to the Corporation for registration into the name of theTrust.  Such transfer to a Trust and thedesignation of shares as Excess Stock shall be effective as of the close ofbusiness on the business day prior to the date of the Transfer or Non TransferEvent, as the case may be.

 

(ii)                                  If,notwithstanding the other provisions contained in this Section 7.2, at any timeafter the date of the Initial Public Offering and prior to the RestrictionTermination Date, there is a purported Transfer or Non Transfer Event that, ifeffective, would (a) result in the shares of Equity Stock being BeneficiallyOwned (directly or Constructively) by fewer than 100 Persons (determinedwithout reference to any rules of attribution), (b) result in the Corporationbeing “closely held” within the meaning of Section 856(h) of the Code or (c)cause the Corporation to own (directly or Constructively) 10% or more of theownership interests in a tenant of the Corporation’s real property, within themeaning of Section 856(d)(2)(B) of the Code, then (x) the purported transfereeshall acquire no right or interest (or, in the case of a Non Transfer Event,the person holding record title of the Equity Stock with respect to which suchNon Transfer Event occurred, shall cease to own any right or interest) in suchnumber of shares of Equity Stock, the ownership of which by such purportedtransferee or record holder would (1) result in the shares of Equity Stockbeing beneficially owned by fewer than 100 Persons (determined withoutreference to any rules of attribution), (2) result in the Corporation being

 

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“closely held” within the meaning of Section 856(h) of the Code or (3)cause the Corporation to own (directly or Constructively) 10% or more of theownership interests in a tenant of the Corporation’s real property, within themeaning of Section 856(d)(2)(B) of the Code, (y) such number of shares ofEquity Stock (rounded up to the nearest whole share) shall be designated asExcess Stock and, in accordance with the provisions of Section 7.13 hereof,transferred automatically and by operation of law to the Trust to be held inaccordance with that Section 7.13 and (z) the Prohibited Owner shall submitsuch number of shares of Equity Stock to the Corporation for registration intothe name of the Trust.  Such transfer toa Trust and the designation of shares as Excess Stock shall be effective as ofthe close of business on the business day prior to the date of the Transfer orNon Transfer Event.

 

(iii)                               TheTrustee shall be appointed by the Corporation and shall be a Personunaffiliated with either the Corporation or any Prohibited Owner.  The Trustee may be an individual or a bankcompany duly licensed to conduct a trust business.

 

(iv)                              Bywritten notice to the Trustee, the Corporation shall, within two days of thediscovery of Excess Stock, designate one or more nonprofit organizations to bethe Beneficiary of the interest in the Trust relating to such Excess Stock ifthe shares of Equity Stock held in the Trust would not violate the OwnershipLimit in the hands of such Beneficiary.

 

(H)                               ATransfer of a share of Equity Stock that is null and void under Section 7.2(B),(C), (D) or (E) hereof because it could, if effective, result in (i) any Person(other than the Existing Holder with respect to Common Stock) BeneficiallyOwning or Constructively Owning Equity Stock in excess of the Ownership Limit,(ii) the Existing Holder either Beneficially Owning or Constructively Owningshares of Common Stock in excess of the Existing Holder Limit, (iii) the sharesof Equity Stock being Beneficially Owned by fewer than 100 Persons (determinedwithout reference to any rules of attribution), (iv) the Corporation being“closely held” within the meaning of Section 856(h) of the Code or (v) theCorporation otherwise failing to qualify as a REIT, shall not adversely affectthe validity of the Transfer of any other share of Equity Stock in the same orany other related transaction.

 

Section 7.3.                                   Remedies ForBreach.  If the Board of Directorsor its designee shall at any time determine in good faith that a Transfer,Acquisition, or change in the capital structure of the Corporation or otherpurported change in Beneficial Ownership or Constructive Ownership or otherevent or transaction has taken place in violation of Section 7.2 hereof or thata Person intends to Acquire or has attempted to Acquire Beneficial Ownership orConstructive Ownership of any shares of Equity Stock in violation of Section7.2 hereof, the Board of Directors or its designee shall take such action as itdeems advisable to refuse to give effect to or to prevent such Transfer,Acquisition, or change in the capital structure of the Corporation or otherattempt to Acquire Beneficial Ownership or Constructive Ownership of any sharesof Equity Stock or other event or transaction, including, but not limited to,refusing to give effect thereto on the books of the Corporation or institutinginjunctive proceedings with respect thereto; provided that any Transfers,Acquisitions, events or actions in violation of Section 7.2 hereof shall bevoid abinitio and automatically result in the conversiondescribed in Section 7.2(G) hereof, irrespective of any action (or non action)by the Board of Directors or its designees.

 

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Section 7.4.                                   Notice ofRestricted Transfer.  Any Person whoAcquires or attempts to Acquire Beneficial Ownership or Constructive Ownershipof shares of Equity Stock in violation of Section 7.2 hereof and any Person whoBeneficially Owns or Constructively Owns Excess Stock immediately shall givewritten notice to the Corporation, or, in the event of a proposed or attemptedTransfer or Acquisition or purported change in Beneficial Ownership orConstructive Ownership, shall give at least fifteen (15) days prior writtennotice to the Corporation, of such event and shall promptly provide to theCorporation such other information as the Corporation, in its sole discretion,may request in order to determine the effect, if any, of such Transfer,attempted Transfer, Acquisition, attempted Acquisition or other purportedchange in Beneficial Ownership or Constructive Ownership on the Corporation’sstatus as a REIT.

 

Section 7.5.                                   Owners RequiredTo Provide Information.  From thedate of the Initial Public Offering and prior to the Restriction TerminationDate:

 

(A)                              EveryBeneficial Owner or Constructive Owner of more than 5%, or such lowerpercentage or percentages as determined pursuant to regulations under the Codeor as may be requested by the Board of Directors in its sole discretion, of theoutstanding shares of any class or series of Equity Stock of the Corporationannually shall, no later than January 31 of each calendar year, give writtennotice to the Corporation stating (i) the name and address of such BeneficialOwner or Constructive Owner; (ii) the number of shares of each class or seriesof Equity Stock Beneficially Owned or Constructively Owned; and (iii) adescription of how such shares are held. Each such Beneficial Owner or Constructive Owner promptly shall provideto the Corporation such additional information as the Corporation, in its solediscretion, may request in order to determine the effect, if any, of suchBeneficial Ownership or Constructive Ownership on the Corporation’s status as aREIT and to ensure compliance with the applicable Ownership Limit or theExisting Holder Limit and other restrictions set forth herein.

 

(B)                                EachPerson who is a Beneficial Owner or Constructive Owner of Equity Stock and eachPerson (including the stockholder of record) who is holding Equity Stock for aBeneficial Owner or Constructive Owner promptly shall provide to theCorporation such information as the Corporation, in its sole discretion, mayrequest in order to determine the Corporation’s status as a REIT, to complywith the requirements of any taxing authority or other governmental agency, todetermine any such compliance or to ensure compliance with the applicableOwnership Limit or the Existing Holder Limit and other restrictions set forthherein.

 

Section 7.6.                                   Remedies NotLimited.  Nothing contained in thisArticle VII except Section 7.16 hereof shall limit the scope or application ofthe provisions of this Article VII, the ability of the Corporation to implementor enforce compliance with the terms hereof or the authority of the Board ofDirectors to take any such other action or actions as it may deem necessary oradvisable to protect the Corporation and the interests of its stockholders bypreservation of the Corporation’s status as a REIT and to ensure compliancewith the applicable Ownership Limit or the Existing Holder Limit and otherrestrictions set forth herein, including, without limitation, refusal to giveeffect to a transaction on the books of the Corporation.

 

Section 7.7.                                   Ambiguity.  In the case of ambiguity in the applicationof any of the provisions of this Article VII, including any definitioncontained in Section 7.1 hereof, the Board of Directors shall have the powerand authority, in its sole discretion, to determine the

 

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application of the provisions of this Article VII with respect to anysituation, based on the facts known to it.

 

Section 7.8.                                   Exceptions.  The Ownership Limit shall not apply to theacquisition of shares of Equity Stock by an underwriter that participates in apublic offering of such shares for a period of 180 days following the purchaseby such underwriter of such shares, provided that the restrictions contained inSections 7.2(B), (C), (D) and (E) hereof will not be violated following thedistribution by such underwriter of such shares.  In addition, the Board of Directors, upon receipt of a rulingfrom the Internal Revenue Service, an opinion of counsel or other evidencesatisfactory to the Board of Directors, in its sole discretion, in each case tothe effect that the restrictions contained in Sections 7.2(B), (C), (D) and (E)hereof will not be violated, may waive or change, in whole or in part, theapplication of the applicable Ownership Limit with respect to any Person thatis not an individual, as such term is defined in Section 542(a)(2) of theCode.  In connection with any suchwaiver or change, the Board of Directors may require such representations andundertakings from such Person or affiliates and may impose such otherconditions, as the Board of Directors deems necessary, advisable or prudent, inits sole discretion, to determine the effect, if any, of the proposedtransaction or ownership of Equity Stock on the Corporation’s status as a REIT.

 

Section 7.9.                                   Reduction ofExisting Holder Limit.  The Board ofDirectors may reduce the Existing Holder Limit, with the written consent of theExisting Holder, after (A) any Transfer permitted in this Article VII by theExisting Holder or (B) whenever there is a change in the number of shares ofCommon Stock outstanding.

 

Section 7.10.                             Increase in OwnershipLimit.  Subject to the limitationscontained in Section 7.11 hereof, the Board of Directors may from time to timeincrease the Ownership Limit.

 

Section 7.11.                             Limitations onModifications.

 

(A)                              TheOwnership Limit for a class or series of Equity Stock may not be increased andno additional ownership limitations may be created if, after giving effect tosuch increase or creation the Corporation would be “closely held” within themeaning of Section 856(h) of the Code (assuming ownership of shares of EquityStock by all Persons equal to the greatest of (i) the actual ownership, (ii)the Beneficial Ownership of Equity Stock by each Person or (iii) the applicableOwnership Limit with respect to such Person, and assuming the ownership by theExisting Holder of shares of Common Stock equal to the Existing Holder Limitand shares of any series of Preferred Stock equal to the Preferred StockOwnership Limit).

 

(B)                                Priorto any modification of the Ownership Limit or the Existing Holder Limit withrespect to any Person, the Board of Directors may require such opinions ofcounsel, affidavits, undertakings or agreements as it may deem necessary,advisable or prudent, in its sole discretion, in order to determine or ensurethe Corporation’s status as a REIT.

 

(C)                                TheExisting Holder Limit may not be increased.

 

Section 7.12.                             Legend.  Each certificate for shares of Equity Stockshall bear substantially the following legend:

 

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“Thesecurities represented by this certificate are subject to restrictions ontransfer and ownership for the purpose of maintenance of the Corporation’sstatus as a real estate investment trust (a “REIT”) under Sections 856 through860 of the Internal Revenue Code of 1986, as amended (the “Code”).  Except as otherwise provided pursuant to theCharter of the Corporation, no Person may (i) Beneficially Own orConstructively Own shares of Common Stock of the Corporation in excess of 8.75%(or such greater percent as may be determined by the Board of Directors of theCorporation) of the outstanding shares of such Common Stock (except in suchcircumstances as the Existing Holder Limit shall apply); (ii) Beneficially Ownor Constructively Own shares of any series of Preferred Stock of theCorporation in excess of 9.8% (or such greater percent as may be determined bythe Board of Directors of the Corporation) of the outstanding shares of suchseries of Preferred Stock; or (iii) Beneficially Own or Constructively Ownshares of Equity Stock (of any class or series) which would result in theshares of Equity Stock being Beneficially Owned by fewer than 100 Persons, theCorporation being “closely held” under Section 856(h) of the Code or in theCorporation owning (directly or Constructively) 10% or more of the ownershipinterests in a tenant of the Corporation’s real property, within the meaning ofSection 856(d)(2)(B) of the Code.  AnyPerson who has Beneficial Ownership or Constructive Ownership, or who Acquiresor attempts to Acquire Beneficial Ownership or Constructive Ownership of CommonStock and/or Preferred Stock in excess of the above limitations and any Personwho Beneficially Owns or Constructively Owns Excess Stock as a transferee ofshares of Common Stock or Preferred Stock resulting in an exchange for ExcessStock (as described below) immediately must notify the Corporation in writingor, in the event of a proposed or attempted Transfer or Acquisition orpurported change in the Beneficial Ownership or Constructive Ownership, mustgive written notice to the Corporation at least fifteen (15) days prior to theproposed or attempted transfer, transaction or other event.  Any Transfer or Acquisition of shares ofCommon Stock and/or Preferred Stock or other event which results in violationof the ownership or transfer limitations set forth in the Corporation’s Chartershall be void abinitio and the intended transferee shall nothave or Acquire any rights in such shares of Common Stock and/or PreferredStock.  If the transfer and ownershiplimitations referred to herein are violated, the shares of Common Stock orPreferred Stock represented hereby automatically will be designated as shares ofExcess Stock to the extent of violation of such limitations, and such shares ofExcess Stock will be held in trust, all as provided by the Corporation’sCharter.  All capitalized terms used inthis legend have the meanings identified in the Corporation’s Charter, as thesame may be amended from time to time, a copy of which, including therestrictions on transfer, will be sent without charge to each stockholder whoso requests.”

 

Section 7.13.                             Ownership In Trust.

 

(A)                              Anyshares of Equity Stock transferred to a Trust and designated as Excess Stockpursuant to Section 7.2(G) hereof shall be held for the exclusive benefit ofthe Beneficiary.  Any transfer to aTrust, and subsequent designation of shares of Equity Stock as Excess Stock

 

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pursuant to Section 7.2(G) hereof, shall be effective as of the closeof business on the business day prior to the date of the Transfer or NonTransfer Event that results in the transfer to the Trust.  Excess Stock shall remain issued andoutstanding shares of Equity Stock of the Corporation and shall be entitled tothe same rights and privileges on identical terms and conditions as all otherissued and outstanding shares of Equity Stock of the same class andseries.  When transferred to a PermittedTransferee in accordance with the provisions of Section 7.13(E) hereof, suchExcess Stock shall cease to be designated as Excess Stock.

 

(B)                                TheTrust, as record holder of Excess Stock, shall be entitled to receive alldividends and distributions as may be declared by the Board of Directors onsuch shares of Equity Stock and shall hold such dividends or distributions intrust for the benefit of the Beneficiary. The Prohibited Owner with respect to Excess Stock shall repay to the Trustthe amount of any dividends or distributions received by it that (i) areattributable to any shares of Equity Stock designated as Excess Stock and (ii)the record date for which was on or after the date that such shares becameExcess Stock.  The Corporation shalltake all measures that it determines reasonably necessary to recover the amountof any such dividend or distribution paid to a Prohibited Owner, including, ifnecessary, withholding any portion of future dividends or distributions payableon shares of Equity Stock Beneficially Owned or Constructively Owned by thePerson who, but for the provisions of Section 7.2 hereof, would ConstructivelyOwn or Beneficially Own the Excess Stock; and, as soon as reasonablypracticable following the Corporation’s receipt or withholding thereof, shall payover to the Trust for the benefit of the Beneficiary the dividends ordistributions so received or withheld, as the case may be.

 

(C)                                Inthe event of any voluntary or involuntary liquidation, dissolution or windingup of, or any distribution of the assets of, the Corporation, each holder ofExcess Stock shall be entitled to receive, ratably with each other holder ofshares of Equity Stock of the same class or series, that portion of the assetsof the Corporation which is available for distribution to the holders of suchclass or series of Equity Stock.  TheTrust shall distribute to the Prohibited Owner the amounts received upon suchliquidation, dissolution or winding up, or distribution; provided, however,that the Prohibited Owner shall not be entitled to receive amounts pursuant tothis Section 7.13(C) in excess of, (i) in the case of a purported Transfer inwhich the Prohibited Owner gave value for the shares of Equity Stock and whichTransfer resulted in the transfer of the shares to the Trust, the price pershare, if any, such Prohibited Owner paid for the shares of Equity Stock and,(ii) in the case of a Non Transfer Event or Transfer in which the ProhibitedOwner did not give value for such shares (e.g., if the shares were receivedthrough a gift or devise) and which Non Transfer Event or Transfer, as the casemay be, resulted in the transfer of shares to the Trust, the price per shareequal to the Market Price on the date of such Non Transfer Event orTransfer.  Any remaining amount in suchTrust shall be distributed to the Beneficiary.

 

(D)                               TheTrustee shall be entitled to vote all Excess Stock.  Any vote by a Prohibited Owner as a holder of shares of EquityStock prior to the discovery by the Corporation that the shares of Equity Stockare Excess Stock shall, subject to applicable law be rescinded and shall bevoid abinitio with respect to such Excess Stock and theProhibited Owner shall be deemed to have given, as of the close of business onthe business day prior to the date of the purported Transfer or Non TransferEvent that results in the transfer to the Trust of shares of Equity Stock underSection 7.2(G) hereof, an irrevocable proxy to the Trustee to vote the ExcessStock in the manner in which the Trustee, in its sole and absolute discretion,desires.

 

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(E)                                 TheTrustee shall have the exclusive and absolute right to designate a PermittedTransferee of any and all Excess Stock. In an orderly fashion so as not to materially adversely affect theMarket Price of the Excess Stock, the Trustee shall designate any Person as aPermitted Transferee; provided, however, that (i) the Permitted Transferee sodesignated purchases for valuable consideration (whether in a public or privatesale), at a price as set forth in Section 7.15 hereof, the Excess Stock and(ii) the Permitted Transferee so designated may acquire such Excess Stockwithout such acquisition resulting in a transfer to a Trust and theredesignation of such shares of Equity Stock so acquired as Excess Stock underSection 7.2(G) hereof.  Upon thedesignation by the Trustee of a Permitted Transferee in accordance with theprovisions of this Section 7.13(E), the Trustee shall (a) cause to betransferred to the Permitted Transferee that number of shares of Excess Stockacquired by the Permitted Transferee, (b) cause to be recorded on the books ofthe Corporation that the Permitted Transferee is the holder of record of suchnumber of shares of Equity Stock, (c) cause the shares of Excess Stock to becancelled and (d) distribute to the Beneficiary any and all amounts held withrespect to the shares of Excess Stock after making the payment to theProhibited Owner pursuant to Section 7.13(F) hereof.

 

(F)                                 AnyProhibited Owner shall be entitled (following discovery of the Excess Stock andsubsequent designation of the Permitted Transferee in accordance with Section7.13(E) hereof or following the acceptance of the offer to purchase such sharesin accordance with Section 7.15 hereof) to receive from the Trustee followingthe sale or other disposition of such Excess Stock the lesser of (i) in thecase of (a) a purported Transfer in which the Prohibited Owner gave value forshares of Equity Stock and which Transfer resulted in the transfer of theshares to the Trust, the price per share, if any, such Prohibited Owner paidfor the shares of Equity Stock, or (b) a Non Transfer Event or Transfer inwhich the Prohibited Owner did not give value for such shares (e.g., if theshares were received through a gift or devise) and which Non Transfer Event orTransfer, as the case may be, resulted in the transfer of shares to the Trust,the price per share equal to the Market Price on the date of such Non TransferEvent or Transfer and (ii) the price per share received by the Trustee from thesale or other disposition of such Excess Stock in accordance with Section7.13(E) hereof.  Any amounts received bythe Trustee in respect of such Excess Stock and in excess of such amounts to bepaid the Prohibited Owner pursuant to this Section 7.13(F) shall be distributedto the Beneficiary in accordance with the provisions of Section 7.13(E)hereof.  Each Beneficiary and ProhibitedOwner waive any and all claims that they may have against the Trustee and theTrust arising out of the disposition of Excess Stock, except for claims arisingout of the gross negligence or willful misconduct of, or any failure to makepayments in accordance with this Section 7.13, by such Trustee or theCorporation.

 

(G)                                Ifany of the Transfer restrictions set forth in this Section 7.13 or anyapplication thereof is determined to be void, invalid or unenforceable by anycourt having jurisdiction over the issue, the Prohibited Owner may be deemed,at the option of the Corporation, to have acted as the agent of the Corporationin acquiring the Excess Stock as to which such restrictions would otherwise, bytheir terms, apply and to hold such Excess Stock on behalf of the Corporation.

 

Section 7.14.                             Rights in Excess Stock.  Excess Stock held or purported to be held byany Person or Persons shall, automatically and without the necessity of anyaction by the Board of Directors or otherwise, (A) be voted in accordance withthe provisions of Section 7.13 hereof,

 

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(B) have any dividends and distributions in respect of such ExcessStock placed in the Trust at the time of the payment thereof for payment inaccordance with the provisions of Section 7.13 hereof, (C) be subject torepurchase or resale on behalf of the holder as set forth in Section 7.15hereof and (D) be considered held in Trust by the Trustee in accordance withthe provision of Section 7.13 hereof.

 

Section 7.15.                             Purchase Right inExcess Stock.  Shares of ExcessStock shall be deemed to have been offered for sale to the Corporation or itsdesignee at a price per share equal to the lesser of (A) the price per share inthe transaction that created such Excess Stock (or, in the case of a devise,gift or Non Transfer Event, the Market Price at the time of such devise, giftor Non Transfer Event) or (B) the Market Price of the Equity Stock exchangedfor such Excess Stock on the date the Corporation or its designee accepts suchoffer.  Subject to the satisfaction ofany applicable requirements of the General Laws of the State of Maryland, theCorporation and its assignees shall have the right to accept such offer for aperiod of ninety (90) days after the later of (i) the date of the purportedTransfer, Acquisition, change in capital structure of the Corporation orpurported change in Beneficial Ownership or Constructive Ownership or otherevent or transaction which resulted in such Excess Stock and (ii) the date onwhich the Board of Directors determines in good faith that a Transfer,Acquisition, change in capital structure of the Corporation or purported changein Beneficial Ownership or Constructive Ownership or other event or transactionresulting in Excess Stock has occurred, if the Corporation does not receive anotice pursuant to Section 7.4 hereof.

 

Section 7.16.                             Settlements.  Notwithstanding any provision containedherein to the contrary, nothing in this charter shall preclude the settlementof any transaction entered into through the facilities of the New York StockExchange.

 

Section 7.17.                             Waiver.  The Corporation shall have authority at anytime to waive the requirements that Excess Stock be issued or be deemedoutstanding in accordance with the provisions of this Article VII if theCorporation determines, based on an opinion of tax counsel, that the issuanceof such Excess Stock or the fact that such Excess Stock is deemed to beoutstanding would jeopardize the status of the Corporation as a REIT.

 

Section 7.18.                             Severability.  If any provision of this Article VII or anyapplication of any such provision is determined in a final and unappealablejudgment to be void, invalid or unenforceable by any Federal or state courthaving jurisdiction over the issue, the validity and enforceability of theremaining provisions shall not be affected and other applications of suchprovision shall be affected only to the extent necessary to comply with thedetermination of such court.

# ** **

# **ARTICLE VIIIDIRECTORS’ AND OFFICERS’ LIABILITY**

 

To the fullest extent permitted by Maryland statutoryor decisional law, as amended or interpreted, no director or officer of theCorporation shall be personally liable to the Corporation or to itsstockholders for money damages.  Noamendment of the charter of the Corporation or repeal of any of its provisions,nor the adoption or amendment of any provision of the Bylaws of

 

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the Corporation inconsistent with this Article VIII, shall apply to,affect, limit or eliminate in any respect the benefits provided to directorsand officers under this provision with respect to any act or failure to actwhich occurred prior to such amendment, repeal or adoption.

# ** **

# **ARTICLE IXINDEMNIFICATION**

 

The Corporation shall provide any indemnificationpermitted by the laws of the State of Maryland and shall indemnify directors,officers, agents and employees as follows: (A) the Corporation shall indemnifyits directors and officers, whether serving the Corporation or at its requestand any other entity, to the full extent required or permitted by the GeneralLaws of the State of Maryland now or hereafter in force, including the advanceof expenses under the procedures and to the full extent permitted by law and(B) the Corporation shall indemnify other employees and agents, whether servingthe Corporation or at its request any other entity, to such extent as shall beauthorized by the Board of Directors or the Bylaws and be permitted bylaw.  The foregoing rights ofindemnification shall not be exclusive of any other rights to which thoseseeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry outthese indemnification provisions and is expressly empowered to adopt, approveand amend from time to time such bylaws, resolutions or contracts implementingsuch provisions or such further indemnification arrangements as may bepermitted by law.  No amendment of thecharter of the Corporation or repeal of any of its provisions shall limit oreliminate the right to indemnification provided hereunder with respect to actsor omissions occurring prior to such amendment or repeal or shall limit oreliminate the rights granted under indemnification agreements entered into bythe Corporation and its directors, officers, agents and employees.

# ** **

# **ARTICLE XAMENDMENT**

 

The Corporation reserves the right from time to timeto make any amendments of its charter which may now or hereafter be authorizedby law, including any amendments changing the terms or contract rights, asexpressly set forth in its charter, of any of its outstanding stock byclassification, reclassification or otherwise, but no such amendment whichchanges such terms or contract rights of any of its outstanding stock shall bevalid unless such amendment shall have been authorized by not less than amajority of the aggregate number of the votes entitled to be cast thereon, by avote at a meeting or in writing with or without a meeting; provided, however,that any amendment to, repeal of or adoption of any provision inconsistent withArticles V, VI and VII hereof shall have been authorized by not less than twothirds of the aggregate votes entitled to be cast thereon (considered for thispurpose as a single class), by vote at a meeting or in writing with or withouta meeting and provided further that any amendment or repeal of Articles VIII orIX hereof or this Article X shall not adversely affect any right or protectionexisting hereunder immediately prior to such amendment or repeal.

 

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# **ARTICLE XISPECIAL VOTING REQUIREMENTS**

 

Pursuant to Section 3 603(e)(1)(iii) of the MGCL, theCorporation expressly elects not to be governed by the provisions of Section 3602 of the MGCL with respect to any business combination (as defined in Section3 601 of the MGCL) involving QSV Properties, Inc., a Delaware corporation(“QSV”), or any present or future affiliates, associates or any other person orpersons acting in concert or as a group with such entity or any present orfuture affiliates or associates (as such terms are defined in Section 3 601 ofthe MGCL) of QSV, or any other person acting in concert or as a group with it.

 

The provisions of Title 3, Subtitle 7 of the MGCLshall not apply to the voting rights of Stock presently or in the future ownedor acquired by QSV or any present or future affiliates associated or otherperson acting in concert or as a group with such person or any present orfuture affiliates or associates (as such terms are defined in Section 3 601 ofthe MGCL) of QSV, or other person acting in concert or as a group with it.

 

**ARTICLEXII**

 

**MISCELLANEOUS**

 

Section 12.1.                             Duration.  The duration of the Corporation shall beperpetual.

 

Section 12.2.                             Severability.  If any provision of this charter or anyapplication of any such provision is determined to be void, invalid orunenforceable by any court having jurisdiction over the issue, the validity andenforceability of the remainder of this charter shall not be affected and otherapplications of such provision shall be affected only to the extent necessaryto comply with the determination of such court.

 

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IN WITNESS WHEREOF, U.S. Restaurant Properties, Inc.has caused these presents to be signed in its name and on its behalf by itsPresident and witnessed by its Secretary on November 11, 1997.

 
| **WITNESS:**                           |   | **U.S.  RESTAURANT PROPERTIES, INC.** |                                                                    |
|----------------------------------------|--------|---------------------------------------|-------------------------------------------------------------------------|
|                                   |   |                                  |                                                                    |
|                                   |   |                                  |                                                                    |
|    /s/Fred  H. Margolin |   | By:                                   |   /s/ Robert J. Stetson                                            |
| Fred H. Margolin,  Secretary           |   |                                  |        Robert  J. Stetson, President |
|                                        |        |                                       |                                                                         |  |

 

THE UNDERSIGNED, President of U.S. RestaurantProperties, Inc., who executed on behalf of the Corporation the foregoingArticles of Restatement of which this certificate is made a part, herebyacknowledges in the name and on behalf of said Corporation the foregoingArticles of Restatement to be the corporate act of said Corporation and herebycertifies that to the best of his knowledge, information, and belief thematters and facts set forth therein with respect to the authorization andapproval thereof are true in all material respects under the penalties of perjury.

 
|   |   /s/Robert J. Stetson |
|--------|----------------------------------|
|   |                             | Robert J. Stetson,  President |

 

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