<PAGE>   1

                                                                    EXHIBIT 10.6


Draft of May 11, 1998
================================================================================







                    U.S. RESTAURANT PROPERTIES OPERATING L.P.





                 $111,000,000 7.15% Senior Notes due May 1, 2005

                        --------------------------------

                             NOTE PURCHASE AGREEMENT
                        --------------------------------




                             Dated as of May 1, 1998








================================================================================




<PAGE>   2



                                TABLE OF CONTENTS

                          (Not a part of the Agreement)

<TABLE>
<CAPTION>
SECTION                                                       HEADING                                                           PAGE
<S>                        <C>                                                                                                 <C>
SECTION 1.                 AUTHORIZATION OF NOTES................................................................................1


SECTION 2.                 SALE AND PURCHASE OF NOTES............................................................................1


SECTION 3.                 CLOSING...............................................................................................2


SECTION 4.                 CONDITIONS TO CLOSING.................................................................................2

       Section 4.1.            Guaranty Agreements...............................................................................2
       Section 4.2.            Representations and Warranties....................................................................3
       Section 4.3.            Performance; No Default...........................................................................3
       Section 4.4.            Compliance Certificates...........................................................................3
       Section 4.5.            Opinions of Counsel...............................................................................4
       Section 4.6.            Purchase Permitted by Applicable Law, Etc.........................................................4
       Section 4.7.            Sale of Other Notes...............................................................................4
       Section 4.8.            Payment of Special Counsel Fees...................................................................4
       Section 4.9.            Private Placement Number..........................................................................4
       Section 4.10.           Changes in Organizational Structure...............................................................4
       Section 4.11.           Funding Instructions..............................................................................5
       Section 4.12.           Proceedings and Documents.........................................................................5

SECTION 5.                 REPRESENTATIONS AND WARRANTIES OF THE CONSTITUENT COMPANIES...........................................5

       Section 5.1.            Organization; Power and Authority.................................................................5
       Section 5.2.            Authorization, Etc................................................................................5
       Section 5.3.            Disclosure........................................................................................6
       Section 5.4.            Organization and Ownership of Equity Interests of Subsidiaries;
                               Affiliates........................................................................................6
       Section 5.5.            Financial Statements..............................................................................7
       Section 5.6.            Compliance with Laws, Other Instruments, Etc......................................................7
       Section 5.7.            Governmental Authorizations, Etc..................................................................8
       Section 5.8.            Litigation; Observance of Agreements, Statutes and Orders.........................................8
       Section 5.9.            REIT Status; Taxes................................................................................8
       Section 5.10.           Title to Property; Leases.........................................................................9
       Section 5.11.           Licenses, Permits, Etc............................................................................9
</TABLE>


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<PAGE>   3

<TABLE>
<S>                       <C>                                                                                                 <C>
       Section 5.12.           Compliance with ERISA.............................................................................9
       Section 5.13.           Private Offering.................................................................................10
       Section 5.14.           Use of Proceeds; Margin Regulations..............................................................10
       Section 5.15.           Existing Indebtedness; Future Liens..............................................................11
       Section 5.16.           Foreign Assets Control Regulations, Etc..........................................................11
       Section 5.17.           Status under Certain Statutes....................................................................11
       Section 5.18.           Obligations Rank Pari Passu; Credit Rating.......................................................11
       Section 5.19.           Environmental Matters............................................................................12

SECTION 6.                 REPRESENTATIONS OF THE PURCHASER.....................................................................12

       Section 6.1.            Purchase for Investment..........................................................................12
       Section 6.2.            Source of Funds..................................................................................13

SECTION 7.                 INFORMATION AS TO THE TRUST..........................................................................14

       Section 7.1.            Financial and Business Information...............................................................14
       Section 7.2.            Officer's Certificate............................................................................17
       Section 7.3.            Inspection.......................................................................................17

SECTION 8.                 PREPAYMENT OF THE NOTES..............................................................................18

       Section 8.1.            Required Prepayments.............................................................................18
       Section 8.2.            Optional Prepayments with Make-Whole Amount......................................................18
       Section 8.3.            Change in Control................................................................................18
       Section 8.4.            Allocation of Partial Prepayments................................................................21
       Section 8.5.            Maturity; Surrender, Etc.........................................................................21
       Section 8.6.            Purchase of Notes................................................................................21
       Section 8.7.            Make-Whole Amount................................................................................21

SECTION 9.                 AFFIRMATIVE COVENANTS................................................................................23

       Section 9.1.            Compliance with Law..............................................................................23
       Section 9.2.            Insurance........................................................................................23
       Section 9.3.            Maintenance of Properties........................................................................23
       Section 9.4.            Payment of Taxes and Claims......................................................................23
       Section 9.5.            Legal Existence, Maintenance of REIT Status......................................................24
       Section 9.6.            Nature of Business...............................................................................24
       Section 9.7.            Obligations to Rank Pari Passu...................................................................24
       Section 9.8.            Additional Subsidiary Guarantors.................................................................25
       Section 9.9.            Additional Notices...............................................................................26

SECTION 10.                NEGATIVE COVENANTS...................................................................................26

       Section 10.1.           Incurrence of Indebtedness.......................................................................26
       Section 10.2.           Unencumbered Asset Coverage......................................................................27
       Section 10.3.           Merger, Consolidation, Etc.......................................................................27
       Section 10.4.           Guaranties.......................................................................................28
       Section 10.5.           Transactions with Affiliates.....................................................................28
</TABLE>


                                      -ii-

<PAGE>   4

<TABLE>
<S>                       <C>                                                                                                 <C>
       Section 10.6.           Termination of Pension Plans.....................................................................28

SECTION 11.                EVENTS OF DEFAULT....................................................................................28


SECTION 12.                REMEDIES ON DEFAULT, ETC.............................................................................31

       Section 12.1.           Acceleration.....................................................................................31
       Section 12.2.           Other Remedies...................................................................................31
       Section 12.3.           Rescission.......................................................................................32
       Section 12.4.           No Waivers or Election of Remedies, Expenses, Etc................................................32

SECTION 13.                REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES........................................................32

       Section 13.1.           Registration of Notes............................................................................32
       Section 13.2.           Transfer and Exchange of Notes...................................................................33
       Section 13.3.           Replacement of Notes.............................................................................33

SECTION 14.                PAYMENTS ON NOTES....................................................................................34

       Section 14.1.           Place of Payment.................................................................................34
       Section 14.2.           Home Office Payment..............................................................................34

SECTION 15.                EXPENSES, ETC........................................................................................34

       Section 15.1.           Transaction Expenses.............................................................................34
       Section 15.2.           Survival.........................................................................................35

SECTION 16.                SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.........................................35


SECTION 17.                AMENDMENT AND WAIVER.................................................................................35

       Section 17.1.           Requirements.....................................................................................35
       Section 17.2.           Solicitation of Holders of Notes.................................................................36
       Section 17.3.           Binding Effect, Etc..............................................................................36
       Section 17.4.           Notes held by Constituent Company, Etc...........................................................36

SECTION 18.                NOTICES..............................................................................................37


SECTION 19.                REPRODUCTION OF DOCUMENTS............................................................................37


SECTION 20.                CONFIDENTIAL INFORMATION.............................................................................38


SECTION 21.                SUBSTITUTION OF PURCHASER............................................................................39


SECTION 22.                MISCELLANEOUS........................................................................................39
</TABLE>

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<TABLE>
<S>                           <C>                                                                                             <C>
       Section 22.1.           Successors and Assigns...........................................................................39
       Section 22.2.           Payments due on Non-Business Days................................................................39
       Section 22.3.           Severability.....................................................................................39
       Section 22.4.           Construction.....................................................................................39
       Section 22.5.           Counterparts.....................................................................................40
       Section 22.6.           Governing Law....................................................................................40

Signature.......................................................................................................................41
</TABLE>



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<PAGE>   6


ATTACHMENTS TO THE NOTE PURCHASE AGREEMENT:


<TABLE>
<S>                      <C>    
SCHEDULE A                 --     Information Relating to Purchasers

SCHEDULE B                 --     Defined Terms

SCHEDULE 4.10              --     Changes in Organizational Structure

SCHEDULE 5.3               --     Disclosure Materials

SCHEDULE 5.4              --     Subsidiaries of the Trust and Ownership of Equity Interests

SCHEDULE 5.5               --     Financial Statements

SCHEDULE 5.8               --     Certain Litigation

SCHEDULE 5.11              --     Patents, Etc.

SCHEDULE 5.14              --     Use of Proceeds

SCHEDULE 5.15              --     Existing Indebtedness

EXHIBIT 1                 --     Form of 7.15% Senior Note due May 1, 2005

EXHIBIT 2                  --     Form of Guaranty Agreement

EXHIBIT 3                 --     Form of Subsidiary Guaranty Agreement

EXHIBIT 4.5(a)            --     Form of Opinion of Special Counsel for the Constituent Companies

EXHIBIT 4.5(b)            --     Form of Opinion of Special Counsel for the Purchasers
</TABLE>



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<PAGE>   7




                    U.S. RESTAURANT PROPERTIES OPERATING L.P.
                        U.S. RESTAURANT PROPERTIES, INC.
                        5310 HARVEST HILL ROAD, SUITE 270
                               DALLAS, TEXAS 75230

                       7.15% Senior Notes due May 1, 2005

                                                                     Dated as of
                                                                     May 1, 1998

TO THE PURCHASER LISTED IN THE
 ATTACHED SCHEDULE A WHO IS A
 SIGNATORY HERETO:

Ladies and Gentlemen:

         U.S. RESTAURANT PROPERTIES OPERATING L.P., a Delaware limited
partnership, and U.S. RESTAURANT PROPERTIES, INC., a Maryland corporation
(respectively, the "Operating Partnership" and the "Trust," collectively, the
"Constituent Companies" and individually a "Constituent Company"), jointly and
severally agree with you as follows:

SECTION 1.     AUTHORIZATION OF NOTES.

         The Operating Partnership will authorize the issue and sale of
$111,000,000 aggregate principal amount of its 7.15% Senior Notes due May 1,
2005 (the "Notes," such term to include any such notes issued in substitution
therefor pursuant to SECTION 13 of this Agreement or the Other Agreements (as
hereinafter defined)). The Notes shall be substantially in the form set out in
EXHIBIT 1, with such changes therefrom, if any, as may be approved by you and
the Operating Partnership. Certain capitalized terms used in this Agreement are
defined in SCHEDULE B; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

SECTION 2.     SALE AND PURCHASE OF NOTES.

         Subject to the terms and conditions of this Agreement, the Operating
Partnership will issue and sell to you and you will purchase from the Operating
Partnership, at the Closing provided for in SECTION 3, Notes in the principal
amount specified opposite your name in SCHEDULE A at the purchase price of 100%
of the principal amount thereof. Contemporaneously with entering into this
Agreement, the Constituent Companies are entering into separate Note Purchase
Agreements (the "Other Agreements") identical with this Agreement with each of
the other purchasers named in SCHEDULE A (the "Other Purchasers"), providing for
the sale at such Closing to each of the Other Purchasers of Notes 


<PAGE>   8

in the principal amount specified opposite its name in SCHEDULE A. Your
obligation hereunder, and the obligations of the Other Purchasers under the
Other Agreements, are several and not joint obligations, and you shall have no
obligation under any Other Agreement and no liability to any Person for the
performance or nonperformance by any Other Purchaser thereunder.

         The obligations of the Operating Partnership hereunder and under the
Other Agreements and the Notes are unconditionally guaranteed by the Trust
pursuant to that certain Guaranty Agreement dated as of the date hereof (the
"Guaranty Agreement") substantially in the form of EXHIBIT 2 and by USRP
(Consolidating), LLC, a Texas limited liability company, USRP (West Virginia)
Partners, L.P., a Texas limited partnership, Restaurant Renovation Partners,
L.P., a Texas limited partnership, U.S. Restaurant Properties Development L.P.,
a Texas limited partnership, USRP (Lincoln), Ltd., a Texas limited partnership,
USRP (Norman) Ltd., a Texas limited partnership, and USRP (Carolina), Ltd., a
Texas limited partnership (collectively, the "Subsidiary Guarantors") pursuant
to that certain Subsidiary Guaranty Agreement dated as of the date hereof (the
"Subsidiary Guaranty Agreement") substantially in the form of EXHIBIT 3.

SECTION 3.     CLOSING.

         The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603, at 10:00 a.m. Chicago time, at a closing on May
12, 1998 (the "Closing"). At the Closing, the Operating Partnership will deliver
to you the Notes to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name (or in the
name of your nominee), against delivery by you to the Operating Partnership or
its order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the
Operating Partnership to account number 7611017455 at Comerica Bank - Texas,
1508 West Mockingbird Lane, Dallas, Texas 75265-0282, ABA number 111000753. If
at the Closing the Operating Partnership shall fail to tender such Notes to you
as provided above in this SECTION 3, or any of the conditions specified in
SECTION 4 shall not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such
nonfulfillment.

SECTION 4.     CONDITIONS TO CLOSING.

         Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or at
the Closing, of the following conditions:

         Section 4.1. Guaranty Agreements. (a) The Guaranty Agreement shall have
been executed and delivered by the Trust.



                                      -2-
<PAGE>   9

           (b) The Subsidiary Guaranty Agreement shall have been executed and
delivered by the Subsidiary Guarantors.

         Section 4.2. Representations and Warranties. (a) The representations
and warranties of the Constituent Companies in this Agreement shall be correct
when made and at the time of the Closing.

           (b) The representations and warranties of each Subsidiary Guarantor
in the Subsidiary Guaranty Agreement shall be correct when made at the time of
the Closing.

         Section 4.3. Performance; No Default. The Constituent Companies shall
have performed and complied with all agreements and conditions contained in this
Agreement required to be performed or complied with by them prior to or at the
Closing, and after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by SCHEDULE 5.14), no
Default or Event of Default shall have occurred and be continuing. Neither
Constituent Company nor any Subsidiary shall have entered into any transaction
since the date of the Memorandum that would have been prohibited by SECTION 10
hereof have such Section applied since such date.

         Section 4.4. Compliance Certificates.

           (a) Officer's Certificate. (1) Each Constituent Company shall have
delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in SECTIONS 4.2, 4.3 and 4.10 have been
fulfilled.

           (2) Each Subsidiary Guarantor shall have delivered to you a
certificate of an authorized officer, dated the date of the Closing, certifying
that the conditions specified in SECTION 4.1(B) and 4.2(B) have been satisfied.

           (b) Secretary's Certificate. (1) Each Constituent Company shall have
delivered to you a certificate certifying as to the resolutions attached thereto
and other proceedings relating to the authorization, execution and delivery of,
this Agreement and, as applicable, the Notes and the Guaranty Agreement.

           (2) Each Subsidiary Guarantor shall have delivered to you a
certificate certifying as to the resolutions attached thereto and other
proceedings relating to the authorization, execution and delivery of the
Subsidiary Guaranty Agreement.

           (c) ERISA Certificate. If you shall have made the disclosures
referred to in SECTION 6.2(b), (c) or (e), you shall have received from each
Constituent Company the certificates described in the penultimate paragraph of
SECTION 6.2 and each such certificate shall state that (1) such Constituent
Company is neither a "party in interest" nor a "disqualified person" (as defined
in Section 4975(e)(2) of the Code), with respect to any plan identified pursuant
to SECTION 6.2(b) or (e) or (2) with respect to any plan, identified pursuant to
SECTION 6.2(c), neither such Constituent Company nor any "affiliate" (as defined
in 



                                      -3-
<PAGE>   10

Section V(c) of the QPAM Exemption) of such Constituent Company has, at such
time or during the immediately preceding one year, exercised the authority to
appoint or terminate the QPAM as manager of the assets of any plan identified in
writing pursuant to SECTION 6.2(c) or to negotiate the terms of said QPAM's
management agreement on behalf of any such identified plans.

         Section 4.5. Opinions of Counsel. You shall have received opinions in
form and substance satisfactory to you, dated the date of the Closing (a) from
Middleberg, Riddle & Gianna, counsel for the Constituent Companies and the
Subsidiary Guarantors, covering the matters set forth in EXHIBIT 4.5(a) and
covering such other matters incident to the transactions contemplated hereby as
you or your counsel may reasonably request (and the Constituent Companies hereby
instruct their counsel to deliver such opinion to you) and (b) from Chapman and
Cutler, your special counsel in connection with such transactions, substantially
in the form set forth in EXHIBIT 4.5(b) and covering such other matters incident
to such transactions as you may reasonably request.

         Section 4.6. Purchase Permitted by Applicable Law, Etc. On the date of
the Closing, your purchase of Notes shall (a) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to
provisions (such as Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as to the
character of the particular investment, (b) not violate any applicable law or
regulation (including, without limitation, Regulation T, U or X of the Board of
Governors of the Federal Reserve System) and (c) not subject you to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
such purchase is so permitted.

         Section 4.7. Sale of Other Notes. Contemporaneously with the Closing,
the Operating Partnership shall sell to the Other Purchasers, and the Other
Purchasers shall purchase, the Notes to be purchased by them at the Closing as
specified in SCHEDULE A.

         Section 4.8. Payment of Special Counsel Fees. Without limiting the
provisions of SECTION 15.1, the Operating Partnership shall have paid on or
before the Closing the fees, charges and disbursements of your special counsel
referred to in SECTION 4.5 to the extent reflected in a statement of such
counsel rendered to the Operating Partnership at least one Business Day prior to
the Closing.

         Section 4.9. Private Placement Number. A Private Placement Number
issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities Valuation Office of the National Association of Insurance
Commissioners) shall have been obtained for the Notes.

         Section 4.10. Changes in Organizational Structure. Except as specified
in SCHEDULE 4.10, neither Constituent Company shall have changed its
jurisdiction of 



                                      -4-
<PAGE>   11

organization or been a party to any merger or consolidation and shall not have
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in SCHEDULE 5.5.

         Section 4.11. Funding Instructions. At least three Business Days prior
to the date of the Closing, you shall have received written instructions
executed by a Responsible Officer of the Operating Partnership directing the
manner of the payment of funds and setting forth (a) the name and address of the
transferee bank, (b) such transferee bank's ABA number, (c) the account name and
number into which the purchase price for the Notes is to be deposited and (d)
the name and telephone number of the account representative responsible for
verifying receipt of such funds.

         Section 4.12. Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or other copies
of such documents as you or they may reasonably request.

SECTION 5.     REPRESENTATIONS AND WARRANTIES OF THE CONSTITUENT COMPANIES.

         Each Constituent Company represents and warrants to you that:

         Section 5.1. Organization; Power and Authority. (a) The Trust is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Trust
has the corporate power and authority to own or hold under lease the properties
it purports to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement, the Other
Agreements and the Guaranty Agreement and to perform the provisions hereof and
thereof. The Trust is owner and holder of all of the outstanding capital stock
of USRP Managing, Inc., a Delaware corporation (the "General Partner"), the sole
general partner of the Operating Partnership.

           (b) The Operating Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and is duly qualified as a foreign entity and is
in good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Operating Partnership has the
power and authority to own or hold under lease the properties it purports to own
or hold under lease, to transact the business it transacts, to execute and
deliver this Agreement, the Other Agreements and the Notes and to perform the
provisions hereof and thereof.




                                      -5-
<PAGE>   12

         Section 5.2. Authorization, Etc. (a) This Agreement, the Other
Agreements and the Guaranty Agreement have been duly authorized by all corporate
action on the part of the Trust, and this Agreement, the Other Agreements and
the Guaranty Agreement constitute legal, valid and binding obligations of the
Trust enforceable against the Trust in accordance with their respective terms,
except as such enforceability may be limited by (1) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (2) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

           (b) This Agreement, the Other Agreements and the Notes have been duly
authorized by all necessary action on the part of the General Partner on behalf
of the Operating Partnership, and this Agreement and the Other Agreements
constitute, and upon execution and delivery thereof each Note will constitute,
legal, valid and binding obligations of the Operating Partnership enforceable
against the Operating Partnership in accordance with their respective terms,
except as such enforceability may be limited by (1) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (2) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

         Section 5.3. Disclosure. The Trust, through its agent, Salomon Smith
Barney, has delivered to you and each Other Purchaser a copy of a Private
Placement Memorandum, dated March 1998 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Trust and its Subsidiaries. Except as disclosed in SCHEDULE 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
delivered to you by or on behalf of the Constituent Companies in connection with
the transactions contemplated hereby and the financial statements listed in
SCHEDULE 5.5, taken as a whole, do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading in light of the circumstances under which they
were made. Except as disclosed in the Memorandum or as expressly described in
SCHEDULE 5.3, or in one of the documents, certificates or other writings
identified therein, or in the financial statements listed in SCHEDULE 5.5, since
December 31, 1997, there has been no change in the financial condition,
operations, business, properties or prospects of the Trust or any Subsidiary
except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to either
Constituent Company that could reasonably be expected to have a Material Adverse
Effect that has not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or on behalf of
either Constituent Company specifically for use in connection with the
transactions contemplated hereby.

         Section 5.4. Organization and Ownership of Equity Interests of
Subsidiaries; Affiliates. (a) SCHEDULE 5.4 contains (except as noted therein)
complete and correct lists (1) of the Trust's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization, and
the percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Trust and each other Subsidiary, (2) of the
Trust's Affiliates, other than Subsidiaries, and (3) of the Trust's directors
and senior officers.



                                      -6-
<PAGE>   13

           (b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in SCHEDULE 5.4 as being owned by the Trust
and its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Trust or another Subsidiary free and clear of any Lien
(except as otherwise disclosed in SCHEDULE 5.4).

           (c) Each Subsidiary identified in SCHEDULE 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.

           (d) No Subsidiary is a party to, or otherwise subject to, any legal
restriction or any agreement (other than the agreements listed on SCHEDULE 5.4
and customary limitations imposed by corporate law statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make any other
similar distributions of profits to the Trust or any of its Subsidiaries that
owns outstanding shares of capital stock or similar equity interests of such
Subsidiary.

         Section 5.5. Financial Statements. The Trust has delivered to each
Purchaser copies of the financial statements of the Trust and its Subsidiaries
listed on SCHEDULE 5.5. All of said financial statements (including in each case
the related schedules and notes) fairly present in all material respects the
consolidated financial position of the Trust and its Subsidiaries or U.S.
Restaurant Properties Master L.P. and its Subsidiaries, as applicable, as of the
respective dates specified in such financial statements and the consolidated
results of their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto
(subject, in the case of any interim financial statements, to normal year-end
adjustments).

         Section 5.6. Compliance with Laws, Other Instruments, Etc. (a) The
execution, delivery and performance by the Trust of this Agreement, the Other
Agreements and the Guaranty Agreement will not (1) contravene, result in any
breach of, or constitute a default under, or result in the creation of any Lien
in respect of any property of the Trust or any Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate
charter, by-law, partnership agreement or any other agreement or instrument to
which the Trust or any Subsidiary is bound or by which the Trust or any
Subsidiary or any of their respective properties may be bound or affected, (2)
conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Trust or any Subsidiary or (3) violate
any provision of any statute or other rule or regulation of any Governmental
Authority applicable to the Trust or any Subsidiary.




                                      -7-
<PAGE>   14

           (b) The execution, delivery and performance by the Operating
Partnership of this Agreement, the Other Agreements and the Notes will not (1)
contravene, result in any breach of, or constitute a default under, or result in
the creation of any Lien in respect of any property of the Operating Partnership
or any of its Subsidiaries under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, charter, by-law, partnership agreement or
any other agreement or instrument to which the Operating Partnership or any of
its Subsidiaries is bound or by which the Operating Partnership or any of its
Subsidiaries or any of their respective properties may be bound or affected, (2)
conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Operating Partnership or any of its
Subsidiaries or (3) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Operating Partnership
or any of its Subsidiaries.

         Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by (a) the Trust of this Agreement, the Other Agreements or the Guaranty
Agreement or (b) the Operating Partnership of this Agreement, the Other
Agreements or the Notes.

         Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except as disclosed in SCHEDULE 5.8, there are no actions, suits or
proceedings pending or, to the knowledge of the Trust, threatened against or
affecting the Trust or any Subsidiary or any property of the Trust or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

           (b) Neither the Trust nor any Subsidiary is in default under any term
of any agreement or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

         Section 5.9. REIT Status; Taxes. (a) The Trust has made or will make
all filings necessary to qualify as a real estate investment trust under the
Code for the taxable year of the Trust ended December 31, 1997. Each corporate
Subsidiary of the Trust is a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.

           (b) The Trust and its Subsidiaries have filed all tax returns that 
are required to have been filed in any jurisdiction, and have paid all taxes
shown to be due and payable on such returns and all other taxes and assessments
levied upon them or their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent, except for any taxes and assessments (a) the amount 




                                      -8-
<PAGE>   15

of which is not individually or in the aggregate Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Trust or a Subsidiary, as
applicable, has established adequate reserves in accordance with GAAP. Neither
Constituent Company knows of any basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect. The charges,
accruals and reserves on the books of the Trust and its Subsidiaries in respect
of Federal, state or other taxes for all fiscal periods are adequate. For all
taxable years ending on or prior to December 31, 1993, the Federal income tax
liability of the Trust and its Subsidiaries has been satisfied and either the
period of limitations on assessment of additional Federal income tax has expired
or the Trust and its Subsidiaries have entered into an agreement with the
Internal Revenue Service closing conclusively the total tax liability for the
taxable year.

         Section 5.10. Title to Property; Leases. The Trust and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in SECTION 5.5 or purported to
have been acquired by the Trust or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business). All leases
that individually or in the aggregate are Material are valid and subsisting and
are in full force and effect in all material respects.

         Section 5.11. Licenses, Permits, Etc. Except as disclosed in SCHEDULE
5.11,

           (a) the Trust and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;

           (b) to the best knowledge of the Trust, no product of the Trust or
any Subsidiary infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and

           (c) to the best knowledge of the Trust, there is no Material
violation by any Person of any right of the Trust or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Trust or any of its Subsidiaries.

         Section 5.12. Compliance with ERISA. (a) The Constituent Companies and
each of their ERISA Affiliates have operated and administered each Plan in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to result in a
Material Adverse Effect. Neither Constituent Company nor any of their ERISA
Affiliates has incurred any liability pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans
(as defined in Section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the incurrence
of any such liability by either Constituent Company or any of their ERISA
Affiliates, or in the imposition of any Lien 




                                      -9-
<PAGE>   16

on any of the rights, properties or assets of either Constituent Company or any
of their ERISA Affiliates, in either case pursuant to Title I or IV of ERISA or
to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or in
the aggregate Material.

           (b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities. The term "benefit liabilities" has the
meaning specified in Section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in Section 3 of ERISA.

           (c) The Constituent Companies and each of their ERISA Affiliates have
not incurred withdrawal liabilities (and are not subject to contingent
withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.

           (d) The expected post-retirement benefit obligation (determined as of
the last day of the Trust's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by Section 4980B of
the Code) of the Trust and its Subsidiaries is not Material.

           (e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of Section 406 of ERISA or in connection with which a tax could
be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation
by the Constituent Companies in the first sentence of this SECTION 5.12(e) is
made in reliance upon and subject to the accuracy of your representation in
SECTION 6.2 as to the sources of the funds used to pay the purchase price of the
Notes to be purchased by you.

         Section 5.13. Private Offering. Neither Constituent Company nor anyone
acting on their behalf has offered the Notes, the Guaranty Agreement, the
Subsidiary Guaranty Agreement or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than you, the Other
Purchasers and not more than 110 other Institutional Investors, each of which
has been offered the Notes, the Guaranty Agreement and the Subsidiary Guaranty
Agreement at a private sale for investment. Neither Constituent Company nor
anyone acting on their behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes or the delivery of the Guaranty
Agreement or the Subsidiary Guaranty Agreement to the registration requirements
of Section 5 of the Securities Act.

         Section 5.14. Use of Proceeds; Margin Regulations. The Operating
Partnership will apply the proceeds of the sale of the Notes as set forth in
SCHEDULE 5.14. No part of the proceeds from the sale of the Notes hereunder will
be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the 




                                      -10-
<PAGE>   17

Board of Governors of the Federal Reserve System (12 CFR 221), or for the
purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Trust or any Subsidiary in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 5% of the value of the consolidated assets of the Trust and
its Subsidiaries and the Constituent Companies do not have any present intention
that margin stock will constitute more than 10% of the value of such assets. As
used in this Section, the terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said Regulation U.

         Section 5.15. Existing Indebtedness; Future Liens. (a) Except as
described therein, SCHEDULE 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Trust and its Subsidiaries as of April 30, 1998,
since which date there has been no Material change in the amounts, interest
rates, sinking funds, installment payments or maturities of the Indebtedness of
the Trust or its Subsidiaries. Neither the Trust nor any Subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Indebtedness of the Trust or such Subsidiary and no
event or condition exists with respect to any Indebtedness of the Trust or any
Subsidiary that would permit (or that with notice or the lapse of time, or both,
would permit) one or more Persons to cause such Indebtedness to become due and
payable before its stated maturity or before its regularly scheduled dates of
payment.

           (b) Except as disclosed in SCHEDULE 5.15, neither the Trust nor any
Subsidiary has agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property, whether now owned
or hereafter acquired, to be subject to a Lien not permitted by this Agreement.

         Section 5.16. Foreign Assets Control Regulations, Etc. Neither the sale
of the Notes by the Operating Partnership hereunder nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.

         Section 5.17. Status under Certain Statutes. Neither the Trust nor any
Subsidiary is an "investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, or is subject to
regulation under the Public Utility Holding Company Act of 1935, as amended, the
ICC Termination Act of 1995 or the Federal Power Act, as amended.

         Section 5.18. Obligations Rank Pari Passu; Credit Rating (a) The
obligations of the Trust under this Agreement, the Other Agreements and the
Guaranty Agreement rank at least pari passu in right of payment with all other
senior unsecured Indebtedness (actual or contingent) of the Trust, including,
without limitation, all senior unsecured Indebtedness of the Trust described in
SCHEDULE 5.15 hereto.

           (b) The obligations of the Operating Partnership under this
Agreement, the Other 




                                      -11-
<PAGE>   18

Agreements and the Notes rank at least pari passu in right of payment with all
other senior unsecured Indebtedness (actual or contingent) of the Operating
Partnership including, without limitation, all senior unsecured Indebtedness of
the Operating Partnership described in SCHEDULE 5.15 hereto.

           (c) The long-term senior unsecured indebtedness of the Operating
Partnership is rated at least "BBB-" by Duff & Phelps Rating Co.

         Section 5.19. Environmental Matters. Neither the Trust nor any
Subsidiary has knowledge of any claim or has received any notice of any claim,
and no proceeding has been instituted raising any claim against the Trust or any
of its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing:

                  (a) neither the Trust nor any Subsidiary has knowledge of any
         facts which would give rise to any claim, public or private, of
         violation of Environmental Laws or damage to the environment emanating
         from, occurring on or in any way related to real properties now or
         formerly owned, leased or operated by any of them or to other assets or
         their use, except, in each case, such as could not reasonably be
         expected to result in a Material Adverse Effect;

                  (b) neither the Trust nor any of its Subsidiaries has stored
         any Hazardous Materials on real properties now or formerly owned,
         leased or operated by any of them or has disposed of any Hazardous
         Materials in a manner contrary to any Environmental Laws in each case
         in any manner that could reasonably be expected to result in a Material
         Adverse Effect; and

                  (c) all buildings on all real properties now owned, leased or
         operated by the Trust or any of its Subsidiaries are in compliance with
         applicable Environmental Laws, except where failure to comply could not
         reasonably be expected to result in a Material Adverse Effect.

SECTION 6.     REPRESENTATIONS OF THE PURCHASER.

         Section 6.1. Purchase for Investment. You represent that you are
purchasing the Notes for your own account or for one or more separate accounts
maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof; provided that the disposition of
your or their property shall at all times be within your or their control. You
understand that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Operating Partnership is not required to register the
Notes.

         Section 6.2. Source of Funds. You represent that at least one of the
following 




                                      -12-
<PAGE>   19

statements is an accurate representation as to each source of funds (a "Source")
to be used by you to pay the purchase price of the Notes to be purchased by you
hereunder:

                  (a) the Source is an "insurance company general account"
         within the meaning of Department of Labor Prohibited Transaction
         Exemption ("PTE") 95-60 (issued July 12, 1995) and there is no employee
         benefit plan, treating as a single plan, all plans maintained by the
         same employer or employee organization, with respect to which the
         amount of the general account reserves and liabilities for all
         contracts held by or on behalf of such plan, exceed 10% of the total
         reserves and liabilities of such general account (exclusive of separate
         account liabilities) plus surplus, as set forth in the NAIC Annual
         Statement filed with your state of domicile; or

                  (b) the Source is either (1) an insurance company pooled
         separate account, within the meaning of PTE 90-1 (issued January 29,
         1990), or (2) a bank collective investment fund, within the meaning of
         the PTE 91-38 (issued July 12, 1991) and, except as you have disclosed
         to the Constituent Companies in writing pursuant to this paragraph (b),
         no employee benefit plan or group of plans maintained by the same
         employer or employee organization beneficially owns more than 10% of
         all assets allocated to such pooled separate account or collective
         investment fund; or

                  (c) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the meaning of Section V(c)(1) of
         the QPAM Exemption) of such employer or by the same employee
         organization and managed by such QPAM, exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part l(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a Person controlling
         or controlled by the QPAM (applying the definition of "control" in
         Section V(e) of the QPAM Exemption) owns a 5% or more interest in
         either Constituent Company and (1) the identity of such QPAM and (2)
         the names of all employee benefit plans whose assets are included in
         such investment fund have been disclosed to the Constituent Companies
         in writing pursuant to this paragraph (c); or

                  (d) the Source is a governmental plan; or

                  (e) the Source is one or more employee benefit plans, or a
         separate account or trust fund comprised of one or more employee
         benefit plans, each of which has been identified to the Constituent
         Companies in writing pursuant to this paragraph (e); or

                  (f) the Source does not include assets of any employee benefit
         plan, other than a plan exempt from the coverage of ERISA.




                                      -13-
<PAGE>   20

         If you or any subsequent transferee of the Notes indicates that you or
such transferee are relying on any representation contained in paragraph (b),
(c) or (e) above, each Constituent Company shall deliver on the date of the
Closing or on the date of transfer, as applicable, a certificate, which shall
state whether (i) it is a party in interest or a "disqualified person" (as
defined in Section 4975(e)(2) of the Code), with respect to any plan identified
pursuant to paragraphs (b) or (e) above, or (ii) with respect to any plan
identified pursuant to paragraph (c) above, whether it or any "affiliate" (as
defined in Section V(c) of the QPAM Exemption) has at such time, and during the
immediately preceding one year, exercised the authority to appoint or terminate
said QPAM as manager of any plan identified in writing pursuant to paragraph (c)
above or to negotiate the terms of said QPAM's management agreement on behalf of
any such identified plan.

         As used in this SECTION 6.2, the terms "employee benefit plan,"
"governmental plan," "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.

SECTION 7.     INFORMATION AS TO THE TRUST.

         Section 7.1. Financial and Business Information. The Trust shall
deliver to each holder of Notes that is an Institutional Investor:

                  (a) Quarterly Statements -- within 60 days after the end of
         each quarterly fiscal period in each fiscal year of the Trust (other
         than the last quarterly fiscal period of each such fiscal year),
         duplicate copies of:

                      (1) a consolidated balance sheet of the Trust and its
                  Subsidiaries as at the end of such quarter, and

                      (2) consolidated statements of income, stockholders' 
                  equity and cash flows of the Trust and its Subsidiaries for
                  such quarter and (in the case of the second and third
                  quarters) for the portion of the fiscal year ending with such
                  quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer of the Trust as fairly presenting, in
all material respects, the financial position of the companies being reported on
and their results of operations and cash flows, subject to changes resulting
from year-end adjustments; provided that delivery within the time period
specified above of copies of the Trust's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this SECTION
7.1(a);

                  (b) Annual Statements -- within 105 days after the end of each
         fiscal year of the Trust, duplicate copies of,




                                      -14-
<PAGE>   21

                           (1) a consolidated balance sheet of the Trust and its
                  Subsidiaries, as at the end of such year, and

                           (2) consolidated statements of income, stockholders'
                  equity and cash flows of the Trust and its Subsidiaries, for
                  such year,

         setting forth in each case in comparative form the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied by:

                                 (i) an opinion thereon of independent certified
                           public accountants of recognized national standing,
                           which opinion shall state that such financial
                           statements present fairly, in all material respects,
                           the financial position of the companies being
                           reported upon and their results of operations and
                           cash flows and have been prepared in conformity with
                           GAAP, and that the examination of such accountants in
                           connection with such financial statements has been
                           made in accordance with generally accepted auditing
                           standards, and that such audit provides a reasonable
                           basis for such opinion in the circumstances, and

                                 (ii) a certificate of such accountants stating 
                           that they have reviewed this Agreement and stating
                           further whether, in making their audit, they have
                           become aware of any condition or event that then
                           constitutes a Default or an Event of Default, and, if
                           they are aware that any such condition or event then
                           exists, specifying the nature and period of the
                           existence thereof (it being understood that such
                           accountants shall not be liable, directly or
                           indirectly, for any failure to obtain knowledge of
                           any Default or Event of Default unless such
                           accountants should have obtained knowledge thereof in
                           making an audit in accordance with generally accepted
                           auditing standards or did not make such an audit),

         provided that the delivery within the time period specified above of
         the Trust's Annual Report on Form 10-K for such fiscal year (together
         with the Trust's annual report to shareholders, if any, prepared
         pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance
         with the requirements therefor and filed with the Securities and
         Exchange Commission, together with the accountant's certificate
         described in clause (2) above, shall be deemed to satisfy the
         requirements of this SECTION 7.1(b);

                  (c) SEC and Other Reports -- promptly upon their becoming
         available, one copy of (1) each financial statement, report, notice or
         proxy statement sent by the Trust or any Subsidiary to public
         securities holders generally, and (2) each regular or periodic report,
         each registration statement (without exhibits except as expressly
         requested by such holder), and each prospectus and all amendments
         thereto filed by the Trust or any Subsidiary with the Securities and
         Exchange Commission and of all press releases and other statements made
         available generally by the Trust or any Subsidiary to the public
         concerning developments that are Material;



                                      -15-
<PAGE>   22

                  (d) Notice of Default or Event of Default -- promptly, and in
         any event within five days after a Responsible Officer becoming aware
         of the existence of any Default or Event of Default or that any Person
         has given any notice or taken any action with respect to a claimed
         default hereunder or that any Person has given any notice or taken any
         action with respect to a claimed default of the type referred to in
         SECTION 11(f), a written notice specifying the nature and period of
         existence thereof and what action the Trust is taking or proposes to
         take with respect thereto;

                  (e) ERISA Matters -- promptly, and in any event within five
         days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the nature thereof and the
         action, if any, that the applicable Constituent Company or its ERISA
         Affiliate proposes to take with respect thereto:

                            (1) with respect to any Plan, any reportable event,
                  as defined in Section 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                            (2) the taking by the PBGC of steps to institute, or
                  the threatening by the PBGC of the institution of, proceedings
                  under Section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by either Constituent Company or any of their ERISA
                  Affiliates of a notice from a Multiemployer Plan that such
                  action has been taken by the PBGC with respect to such
                  Multiemployer Plan; or

                            (3) any event, transaction or condition that could
                  result in the incurrence of any liability by either
                  Constituent Company or any of their ERISA Affiliates pursuant
                  to Title I or IV of ERISA or the penalty or excise tax
                  provisions of the Code relating to employee benefit plans, or
                  in the imposition of any Lien on any of the rights, properties
                  or assets of either Constituent Company or any of their ERISA
                  Affiliates pursuant to Title I or IV of ERISA or such penalty
                  or excise tax provisions, if such liability or Lien, taken
                  together with any other such liabilities or Liens then
                  existing, could reasonably be expected to have a Material
                  Adverse Effect;

                  (f) Notices from Governmental Authority -- promptly, and in
         any event within 30 days of receipt thereof, copies of any notice to
         the Trust or any Subsidiary from any Federal or state Governmental
         Authority relating to any order, ruling, statute or other law or
         regulation that could reasonably be expected to have a Material Adverse
         Effect; and

                   (g) Requested Information -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Trust or any
         of its Subsidiaries or relating to the ability of the Constituent
         Companies or any Subsidiary Guarantor to perform their respective




                                      -16-
<PAGE>   23

         obligations hereunder, under the Guaranty Agreement, or under the
         Subsidiary Guaranty Agreement or under the Notes as from time to time
         may be reasonably requested by any such holder of Notes, including
         without limitation, such information as is required by SEC Rule 144A
         under the Securities Act to be delivered to the prospective transferee
         of the Notes.

         Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to SECTION 7.1(a) or SECTION 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer of
the Trust setting forth:

                   (a) Covenant Compliance -- the information (including
         detailed calculations) required in order to establish whether the Trust
         was in compliance with the requirements of SECTION 10.1 and 10.2 hereof
         during the quarterly or annual period covered by the statements then
         being furnished (including with respect to each such Section, where
         applicable, the calculations of the maximum or minimum amount, ratio or
         percentage, as the case may be, permissible under the terms of such and
         the calculation of the amount, ratio or percentage then in existence);
         and

                   (b) Event of Default -- a statement that such officer has
         reviewed the relevant terms hereof and has made, or caused to be made,
         under his or her supervision, a review of the transactions and
         conditions of the Trust and its Subsidiaries from the beginning of the
         quarterly or annual period covered by the statements then being
         furnished to the date of the certificate and that such review shall not
         have disclosed the existence during such period of any condition or
         event that constitutes a Default or an Event of Default or, if any such
         condition or event existed or exists (including, without limitation,
         any such event or condition resulting from the failure of the Trust or
         any Subsidiary to comply with any Environmental Law), specifying the
         nature and period of existence thereof and what action the Trust shall
         have taken or proposes to take with respect thereto.

         Section 7.3. Inspection. The Trust shall permit the representatives of
each holder of Notes that is an Institutional Investor:

                   (a) No Default -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Trust, to visit the principal executive office of the Trust, to
         discuss the affairs, finances and accounts of the Trust and its
         Subsidiaries with the Trust's officers, and (with the consent of the
         Trust, which consent will not be unreasonably withheld) its independent
         public accountants, and (with the consent of the Trust, which consent
         will not be unreasonably withheld) to visit the other offices and
         properties of the Trust and each Subsidiary, all at such reasonable
         times and as often as may be reasonably requested in writing; and

                   (b) Default -- if a Default or Event of Default then exists,
         at the expense of the Constituent Companies, to visit and inspect any
         of the offices or properties of the Trust or any Subsidiary, to examine
         all their respective books of account, records, 





                                      -17-
<PAGE>   24

         reports and other papers, to make copies and extracts therefrom, and to
         discuss their respective affairs, finances and accounts with their
         respective officers and independent public accountants (and by this
         provision the Trust authorizes said accountants to discuss the affairs,
         finances and accounts of the Trust and its Subsidiaries), all at such
         times and as often as may be requested.

SECTION 8.     PREPAYMENT OF THE NOTES.

         Section 8.1. Required Prepayments. No regularly scheduled prepayments
of principal of the Notes are required prior to the maturity thereof.

         Section 8.2. Optional Prepayments with Make-Whole Amount. The Operating
Partnership may, at its option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes, in an amount not less
than $1,000,000 of the aggregate principal amount of the Notes then outstanding
in the case of a partial prepayment, at 100% of the principal amount so prepaid,
together with interest accrued thereon to the date of such prepayment, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Operating Partnership will give each holder of Notes
written notice of each optional prepayment under this SECTION 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with SECTION 8.4), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer of the Operating Partnership as to the estimated Make-Whole Amount due
in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation.
Two Business Days prior to such prepayment, the Operating Partnership shall
deliver to each holder of Notes a certificate of a Senior Financial Officer of
the Operating Partnership specifying the calculation of such Make-Whole Amount
as of the specified prepayment date.

         Section 8.3. Change in Control. (a) Notice of Change in Control or
Control Event. The Constituent Companies will, within five Business Days after
any Responsible Officer has knowledge of the occurrence of any Change in Control
or Control Event, give written notice of such Change in Control or Control Event
to each holder of Notes unless notice in respect of such Change in Control (or
the Change in Control contemplated by such Control Event) shall have been given
pursuant to subparagraph (b) of this Section. If a Change in Control has
occurred, such notice shall contain and constitute an offer to prepay Notes as
described in subparagraph (c) of this Section and shall be accompanied by the
certificate described in subparagraph (g) of this Section.

           (b) Condition to Constituent Company Action. Neither Constituent
Company will take any action that consummates or finalizes a Change in Control
unless (1) at least 30 days prior to such action the Operating Partnership shall
have given to each holder of Notes written notice containing and constituting an
offer to prepay Notes as described in 




                                      -18-
<PAGE>   25

subparagraph (c) of this Section, accompanied by the certificate described in
subparagraph (g) of this Section, and (2) contemporaneously with such action,
the Operating Partnership prepays all Notes required to be prepaid in accordance
with this Section.

           (c) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraphs (a) and (b) of this Section shall be an offer to prepay, in
accordance with and subject to this Section, all, but not less than all, the
Notes held by each holder (in this case only, "holder" in respect of any Note
registered in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on a date specified in such offer (the "Proposed
Prepayment Date"). If such Proposed Prepayment Date is in connection with an
offer contemplated by subparagraph (a) of this Section, such date shall be not
less than 30 days and not more than 120 days after the date of such offer (if
the Proposed Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the first Business Day after the 60th day after the
date of such offer).

           (d) Acceptance. A holder of Notes may accept the offer to prepay made
pursuant to this Section by causing a notice of such acceptance to be delivered
to the Operating Partnership not later than 15 days after receipt by such holder
of the most recent offer of prepayment. A failure by a holder of Notes to
respond to an offer to prepay made pursuant to this Section shall be deemed to
constitute a rejection of such offer by such holder.

           (e) Prepayment. Prepayment of the Notes to be prepaid pursuant to
this Section shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to the date of prepayment, but without
Make-Whole Amount or other premium. The prepayment shall be made on the Proposed
Prepayment Date except as provided in subparagraph (f) of this Section.

           (f) Deferral Pending Change in Control. The obligation of the
Operating Partnership to prepay Notes pursuant to the offers required by
subparagraph (b) and accepted in accordance with subparagraph (d) of this
Section is subject to the occurrence of the Change in Control in respect of
which such offers and acceptances shall have been made. In the event that such
Change in Control has not occurred on the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until, and shall be made on, the date
on which such Change in Control occurs. The Operating Partnership shall keep
each holder of Notes reasonably and timely informed of (1) any such deferral of
the date of prepayment, (2) the date on which such Change in Control and the
prepayment are expected to occur, and (3) any determination by either
Constituent Company that efforts to effect such Change in Control have ceased or
been abandoned (in which case the offers and acceptances made pursuant to this
Section in respect of such Change in Control shall be deemed rescinded).

           (g) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Operating Partnership and dated the date of such offer,
specifying: (1) the Proposed Prepayment Date; (2) that such offer is made
pursuant to this SECTION 8.3; (3) the principal amount of each Note offered to
be prepaid; (4) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (5) that the conditions of
this Section have been 




                                      -19-
<PAGE>   26

fulfilled; and (6) in reasonable detail, the nature and date or proposed date of
the Change in Control.

           (h) "Change in Control" Defined. Change in Control means, at any
time:

                   (1) the acquisition, holding or control, directly or
         indirectly, by any person (as such term is used in Section 13(d) and
         Section 14(d)(2) of the Exchange Act as in effect on the date of the
         Closing) or related Persons constituting a group (as such term is used
         in Rule 13d-5 under the Exchange Act as in effect on the date of the
         Closing), other than a Permitted Management Transferee, of more than
         50% of the Voting Equity Interests of the Trust; or

                   (2) the acquisition, holding or control, directly or
         indirectly, by any person (as such term is used in Section 13(d) and
         Section 14(d)(2) of the Exchange Act as in effect on the date of the
         Closing) or related Persons constituting a group (as such term is used
         in Rule 13d-5 under the Exchange Act as in effect on the date of the
         Closing), other than the Trust or a Permitted Management Transferee, of
         more than 50% of the Voting Equity Interests of the General Partner; or

                   (3) the acquisition, holding or control, directly or
         indirectly, by any person (as such term is used in Section 13(d) and
         Section 14(d)(2) of the Exchange Act as in effect on the date of the
         Closing) or related Persons constituting a group (as such term is used
         in Rule 13d-5 under the Exchange Act as in effect on the date of the
         Closing), other than the Trust, the General Partner, a Permitted
         Management Transferee or a wholly-owned Subsidiary of the Trust or a
         Permitted Management Transferee, of more than 50% of the Voting Equity
         Interests of the Operating Partnership.

           (i) "Control Event" Defined. Control Event means:

                   (1) the execution by the Trust or a Permitted Management
         Transferee or any of their respective Subsidiaries or Affiliates of any
         agreement or letter of intent with respect to any proposed transaction
         or event or series of transactions or events which, individually or in
         the aggregate, may reasonably be expected to result in a Change in
         Control, or

                   (2) the execution of any written agreement which, when fully
         performed by the parties thereto, would result in a Change in Control.

           (j) "Permitted Management Transferee" Defined. Permitted Management
Transferee means, with respect to the Trust, (1) each of Robert J. Stetson and
Fred H. Margolin or (2) related Persons constituting a Group (as such term is
used in Rule 13d-5 under the Exchange Act as in effect on the date of the
Closing) which includes, and is controlled by, Robert J. Stetson and/or Fred H.
Margolin.

           (k) All calculations contemplated in this SECTION 8.3 involving the
Voting Equity Interests of any Person, shall be made with the assumption that
all convertible securities of such Person then outstanding and all convertible
securities issuable upon the exercise of any 




                                      -20-
<PAGE>   27

warrants, options and other rights outstanding at such time were converted at
such time and that all options, warrants and similar rights to acquire Voting
Equity Interests of such Person were exercised at such time.

         Section 8.4. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to SECTION 8.2, the principal amount of
the Notes to be prepaid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the respective unpaid
principal amounts thereof not theretofore called for prepayment. All partial
prepayments made pursuant to SECTION 8.3 shall be applied only to the Notes of
the holders who have elected to participate in such prepayment.

         Section 8.5. Maturity; Surrender, Etc. In the case of each prepayment
of Notes pursuant to this SECTION 8, the principal amount of each Note to be
prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Operating Partnership shall fail to pay such principal amount when so due
and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Operating Partnership and
cancelled and shall not be reissued, and no Note shall be issued in lieu of any
prepaid principal amount of any Note.

         Section 8.6. Purchase of Notes. The Operating Partnership will not and
will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire,
directly or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the
Notes. The Operating Partnership will promptly cancel all Notes acquired by it
or any Affiliate pursuant to any payment, prepayment or purchase of Notes
pursuant to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.

         Section 8.7. Make-Whole Amount. The term "Make-Whole Amount" means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal; provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:

                  "Called Principal" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to SECTION 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         SECTION 12.1, as the context requires.

                  "Discounted Value" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called




                                      -21-
<PAGE>   28

         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "Reinvestment Yield" means, with respect to the Called
         Principal of any Note, 0.50% over the yield to maturity implied by (a)
         the yields reported, as of 10:00 a.m. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as "Page PX1" or other
         appropriate page of the Bloomberg Financial Markets Services Screen (or
         such other display as may replace Page PX1 or other appropriate page of
         the Bloomberg Financial Markets Services Screen) for actively traded
         U.S. Treasury securities having a maturity equal to the Remaining
         Average Life of such Called Principal as of such Settlement Date, or
         (b) if such yields are not reported as of such time or the yields
         reported as of such time are not ascertainable, the Treasury Constant
         Maturity Series Yields reported, for the latest day for which such
         yields have been so reported as of the second Business Day preceding
         the Settlement Date with respect to such Called Principal, in Federal
         Reserve Statistical Release H.15(519) (or any comparable successor
         publication) for actively traded U.S. Treasury securities having a
         constant maturity equal to the Remaining Average Life of such Called
         Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (1) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
         financial practice and (2) interpolating linearly between (i) the
         actively traded U.S. Treasury security with the average life closest to
         and greater than the Remaining Average Life and (ii) the actively
         traded U.S. Treasury security with the average life closest to and less
         than the Remaining Average Life.

                  "Remaining Average Life" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (a) such Called Principal into (b) the sum
         of the products obtained by multiplying (1) the principal component of
         each Remaining Scheduled Payment with respect to such Called Principal
         by (2) the number of years (calculated to the nearest one-twelfth year)
         that will elapse between the Settlement Date with respect to such
         Called Principal and the scheduled due date of such Remaining Scheduled
         Payment.

                  "Remaining Scheduled Payments" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such Called Principal
         were made prior to its scheduled due date; provided that if such
         Settlement Date is not a date on which interest payments are due to be
         made under the terms of the Notes, then the amount of the next
         succeeding scheduled interest payment will be reduced by the amount of
         interest accrued to such Settlement Date and required to be paid on
         such Settlement Date pursuant to SECTION 8.2 or 12.1.

                  "Settlement Date" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to SECTION 8.2 or has become or is declared to be immediately
         due and payable pursuant to SECTION 12.1, as the context requires.




                                      -22-
<PAGE>   29

SECTION 9.     AFFIRMATIVE COVENANTS.

         The Constituent Companies covenant that so long as any of the Notes are
outstanding:

         Section 9.1. Compliance with Law. The Constituent Companies will, and
will cause each Subsidiary to, comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including, without
limitation, ERISA and all Environmental Laws, and will obtain and maintain in
effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

         Section 9.2. Insurance. The Constituent Companies will, and will cause
each Subsidiary to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.

         Section 9.3. Maintenance of Properties. The Constituent Companies will,
and will cause each Subsidiary to, maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times; provided that
this Section shall not prevent either Constituent Company or any Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Trust has
concluded that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

         Section 9.4. Payment of Taxes and Claims. The Constituent Companies
will, and will cause each Subsidiary to, file all tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
or levies imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent and all claim for which sums have become
due and payable that have or might become a Lien on properties or assets of
either Constituent Company or any Subsidiary; provided that neither Constituent
Company nor any Subsidiary need pay any such tax or assessment or claims if (a)
the amount, applicability or 




                                      -23-
<PAGE>   30

validity thereof is contested by such Constituent Company or such Subsidiary on
a timely basis in good faith and in appropriate proceedings, and such
Constituent Company or a Subsidiary has established adequate reserves therefor
in accordance with GAAP on the books of such Constituent Company or such
Subsidiary or (b) the nonpayment of all such taxes and assessments in the
aggregate could not reasonably be expected to have a Material Adverse Effect.

         Section 9.5. Legal Existence, Maintenance of REIT Status. (a) The
Constituent Companies will at all times preserve and keep in full force and
effect their legal existence. Subject to SECTION 10.3, the Constituent Companies
will at all times preserve and keep in full force and effect the corporate or
other legal existence of each Subsidiary (unless merged into a Constituent
Company or a Subsidiary) and all rights and franchises of the Constituent
Companies and each Subsidiary unless, in the good faith judgment of the Trust,
the termination of or failure to preserve and keep in full force and effect such
legal existence, right or franchise could not, individually or in the aggregate,
have a Material Adverse Effect.

           (b) The Trust will qualify as a real estate investment trust under
the Code for the taxable year of the Trust ended December 31, 1997 and will
maintain its qualification as a real estate investment trust under the Code and
the applicability to the Trust and its stockholders of the method of taxation
provided for in Section 857(b) of the Code (and any successor provision
thereto).

           (c) The General Partner will at all times be the sole general partner
of the Operating Partnership.

         Section 9.6. Nature of Business. Neither Constituent Company nor any
Subsidiary will engage in any business if, as a result, the general nature of
the business, taken on a consolidated basis, which would then be engaged in by
such Constituent Company and its Subsidiaries would be substantially changed
from the general nature of the business engaged in by such Constituent Company
and its Subsidiaries on the date of this Agreement.

         Section 9.7. Obligations to Rank Pari Passu. (a) All obligations under
this Agreement and the Guaranty Agreement of the Trust are and at all times
shall remain direct and unsecured obligations of the Trust ranking pari passu as
against the assets of the Trust and pari passu with all other present and future
unsecured Indebtedness (actual or contingent) of the Trust which is not
expressed to be subordinate or junior in rank to any other unsecured
Indebtedness of the Trust.

           (b) The Notes and all other obligations under this Agreement of the
Operating Partnership are and at all times shall remain direct and unsecured
obligations of the Operating Partnership ranking pari passu as against the
assets of the Operating Partnership with all other Notes from time to time
issued and outstanding hereunder without any preference among themselves and
pari passu with all other present and future unsecured Indebtedness (actual or
contingent) of the Operating Partnership which is not expressed to be
subordinate or junior in rank to any other unsecured Indebtedness of the
Operating Partnership.




                                      -24-
<PAGE>   31

         Section 9.8. Additional Subsidiary Guarantors. (a) Concurrently with
any Subsidiary entering into a guaranty in respect of any Debt of either
Constituent Company, the Constituent Companies shall cause such Subsidiary to
execute and deliver a supplement to the Subsidiary Guaranty Agreement in the
form of Exhibit A to the Subsidiary Guaranty Agreement.

           (b) Concurrently with the execution and delivery by a Subsidiary of a
supplement to the Subsidiary Guaranty Agreement, the Constituent Companies shall
cause such Subsidiary to deliver to each holder of Notes (1) such documents and
evidence with respect to such Subsidiary as any holder may reasonably request in
order to establish the existence and good standing of such Subsidiary and
evidence that the Board of Directors or similar group of persons of such
Subsidiary has adopted resolutions authorizing the execution and delivery of a
supplement to the Subsidiary Guaranty Agreement, (2) evidence of compliance with
such Subsidiary's outstanding debt instruments in the form of (i) a compliance
certificate from such Subsidiary to the effect that such Subsidiary has complied
with all terms and conditions of its outstanding debt instruments, (ii) consents
or approvals of the holder or holders of any evidence of Indebtedness or
security, and/or (iii) amendments of agreements pursuant to which any evidence
of Indebtedness or security may have been issued, all as may be reasonably
deemed necessary by the holders of Notes to permit the execution and delivery of
a supplement to the Subsidiary Guaranty Agreement by such Subsidiary, (3) an
opinion of counsel to the effect that (i) such Subsidiary is a corporation or
other business entity, duly organized, validly existing and in good standing, if
applicable, under the laws of its jurisdiction of organization, has the power
and the authority to execute and deliver a supplement to the Subsidiary Guaranty
Agreement and to perform the Subsidiary Guaranty Agreement, (ii) the execution
and delivery of a supplement to the Subsidiary Guaranty Agreement and
performance of the Subsidiary Guaranty Agreement has been duly authorized by all
necessary action on the part of such Subsidiary, a supplement to the Subsidiary
Guaranty Agreement has been duly executed and delivered by such Subsidiary and
the Subsidiary Guaranty Agreement constitutes the legal, valid and binding
contract of such Subsidiary enforceable against such Subsidiary in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally, and general principles of
equity (regardless of whether the application of such principles is considered
in a proceeding in equity or at law), (iii) the execution and delivery of a
supplement to the Subsidiary Guaranty Agreement and the performance by such
Subsidiary of the Subsidiary Guaranty Agreement do not conflict with or result
in any breach of any of the provisions of or constitute a default under or
result in the creation of a Lien upon any of the property of such Subsidiary
pursuant to the provisions of its charter documents or any agreement or other
instrument known to such counsel to which such Subsidiary is a party to or by
which such Subsidiary may be bound and (iv) no approval, consent or withholding
of objection on the part of, or filing, registration or qualification with, any
Governmental Authority, Federal or state, is necessary in connection with the
lawful execution and delivery of a supplement to the Subsidiary Guaranty
Agreement by such Subsidiary or the performance of the Subsidiary Guaranty
Agreement by such Subsidiary, which opinion may contain such assumptions and
qualifications as are reasonably acceptable to the Required Holders, and (4) all
other documents and showings reasonably requested by the holders of 




                                      -25-
<PAGE>   32

Notes in connection with the execution and delivery of a supplement to the
Subsidiary Guaranty Agreement, which documents shall be satisfactory in form and
substance to such holders and their special counsel, and each holder of Notes
shall have received a copy (executed or certified as may be appropriate) of all
of the foregoing legal documents.

         Section 9.9. Additional Notices. The Constituent Companies will deliver
to each holder of the Notes promptly, and in any event within five days after a
Responsible Officer becoming aware of the occurrence thereof, or aware of the
reasonable likelihood of the occurrence thereof, a written notice describing the
facts and circumstances set forth in any notice delivered under Article II of
the Intercreditor Agreement.

SECTION 10.    NEGATIVE COVENANTS.

         The Trust covenants that so long as any of the Notes are outstanding:

         Section 10.1. Incurrence of Indebtedness. The Trust will not, and will
not permit any Subsidiary to, directly or indirectly, create, incur, assume,
guarantee, or otherwise become directly or indirectly liable with respect to,
any Indebtedness, other than Indebtedness owing to either Constituent Company or
any Wholly-Owned Subsidiary, unless on the date the Trust or such Subsidiary
becomes liable with respect to any such Indebtedness and immediately after
giving effect thereto, to the application of the proceeds thereof and the
concurrent retirement of any other Indebtedness,

                   (a) no Default or Event of Default exists,

                   (b) Consolidated Indebtedness does not exceed an amount equal
         to 60% of Consolidated Total Capitalization,

                   (c) Consolidated Income Available for Debt Service for the
         four consecutive fiscal quarter period of the Trust then most recently
         ended shall have been at least 1.5 times the amount of Annual Service
         Charge for such four consecutive fiscal quarter period, and

                   (d) in the case of the incurrence of Priority Debt, Priority
         Debt does not exceed an amount equal to 40% of the sum of (1)
         Consolidated Total Assets as at the end of the fiscal quarter of the
         Trust then most recently ended, (2) the purchase price of real estate
         assets and mortgage loan receivables acquired by the Trust or any
         Subsidiary since the end of such fiscal quarter and (3) the amount of
         any proceeds received from the issuance and sale of any securities or
         the incurrence of any Indebtedness by the Trust or any Subsidiary
         (other the amount of any such proceeds used to acquire real estate
         assets or mortgage loan receivables or applied to repay outstanding
         Indebtedness of the Trust or any Subsidiary) since the end of such
         fiscal quarter.

For the purposes of this SECTION 10.1, there shall be excluded (i) from any
determination of Indebtedness, all Indebtedness that is at the date of such
determination non-recourse to the Trust, the Operating Partnership and the
General Partner and (ii) from any determination of 




                                      -26-
<PAGE>   33

Consolidated Total Assets, all assets related to such non-recourse Indebtedness.

Additionally, for the purposes of this SECTION 10.1, any Person becoming a
Subsidiary after the date hereof shall be deemed, at the time it becomes a
Subsidiary, to have incurred all of its then outstanding Indebtedness, and any
Person extending or renewing any Indebtedness, or, in the case of any refunding
of Indebtedness if the maturity date thereof has been extended, then such
Indebtedness shall be deemed to have been incurred at the time of such
extension, renewal or refunding.

         Section 10.2. Unencumbered Asset Coverage. The Trust will not at any
time permit Total Unencumbered Assets to be less than 150% of Unsecured
Indebtedness.

         Section 10.3. Merger, Consolidation, Etc. Neither Constituent Company
will consolidate with or merge with or into any other corporation or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to any Person, except

                  (a)  in the case of any such transaction involving the Trust,

                       (1) the successor formed by such consolidation or the 
                  survivor of such merger or the Person that acquires by
                  conveyance, transfer or lease substantially all of the assets
                  of the Trust as an entirety, as the case may be (the
                  "Successor Corporation"), shall be a solvent Person organized
                  and existing under the laws of the United States of America,
                  any State thereof or the District of Columbia; and

                       (2) if either the Trust or the Operating Partnership is 
                  not the Successor Corporation, such Person shall have executed
                  and delivered to each holder of Notes its assumption of the
                  due and punctual performance and observance of each covenant
                  and condition of this Agreement and the Guaranty Agreement
                  (pursuant to such agreements and instruments as shall be
                  reasonably satisfactory to the Required Holders), such Person
                  shall have caused to be delivered to each holder of Notes an
                  opinion of nationally recognized independent counsel, or other
                  independent counsel reasonably satisfactory to the Required
                  Holders, to the effect that all agreements or instruments
                  effecting such assumption are enforceable in accordance with
                  their terms and comply with the terms hereof and each
                  Subsidiary Guarantor shall have delivered to each holder of
                  the Notes a certificate whereby such Subsidiary Guarantor
                  shall have reaffirmed its obligations under the Subsidiary
                  Guaranty Agreement,

                  (b)  in the case of any such transaction involving the
         Operating Partnership, either the Trust or the Operating Partnership is
         the survivor or successor of such merger or consolidation,

                  (c)  immediately after giving effect to such transaction, no
         Default or Event of Default would exist, and




                                      -27-
<PAGE>   34

                  (d)  the Successor Corporation would be permitted by the
         provisions of SECTION 10.1 hereof to incur at least $1.00 of additional
         Indebtedness owing to a Person other than a Subsidiary of the Successor
         Corporation.

         Section 10.4. Guaranties. The Constituent Companies will not, and will
not permit any Subsidiary to, become or be liable in respect of any Guaranty
except (a) Guaranties existing on the date of the Closing and described on
SCHEDULE 5.15 hereto, (b) the Guaranty Agreement and the Subsidiary Guaranty
Agreement and (c) Guaranties by a Constituent Company which are limited in
amount to a stated maximum dollar exposure or which constitute Guaranties of
obligations incurred by any Subsidiary in compliance with the provisions of this
Agreement.

         Section 10.5. Transactions with Affiliates. The Constituent Companies
will not, and will not permit any Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of such Constituent Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
such Constituent Company or such Subsidiary than would be obtained in a
comparable arm's-length transaction with a Person other than an Affiliate.

         Section 10.6. Termination of Pension Plans. The Constituent Companies
will not and will not permit any Subsidiary to withdraw from any Multiemployer
Plan or permit any employee benefit plan maintained by it to be terminated if
such withdrawal or termination could result in withdrawal liability (as
described in Part 1 of Subtitle E of Title IV of ERISA) or the imposition of a
Lien on any property of either Constituent Company or any Subsidiary pursuant to
Section 4068 of ERISA.

SECTION 11.    EVENTS OF DEFAULT.

         An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:

                   (a) the Operating Partnership defaults in the payment of any
         principal or Make-Whole Amount, if any, on any Note when the same
         becomes due and payable, whether at maturity or at a date fixed for
         prepayment or by declaration or otherwise; or

                   (b) the Operating Partnership defaults in the payment of any
         interest on any Note for more than five Business Days after the same
         becomes due and payable; or

                   (c) either Constituent Company defaults in the performance of
         or compliance with any term contained in SECTION 7.1(d) or SECTIONS
         10.1 through 10.3, both inclusive; or

                   (d) either Constituent Company defaults in the performance of
         or compliance with any term contained herein (other than those referred
         to in paragraphs (a), (b) and 




                                      -28-
<PAGE>   35

         (c) of this SECTION 11) and such default is not remedied within 30 days
         after the earlier of (1) a Responsible Officer obtaining actual
         knowledge of such default and (2) such Constituent Company receiving
         written notice of such default from any holder of a Note (any such
         written notice to be identified as a "notice of default" and to refer
         specifically to this paragraph (d) of SECTION 11); or

                   (e) any representation or warranty made in writing by or on
         behalf of either Constituent Company or any Subsidiary Guarantor or by
         any officer of either Constituent Company or any Subsidiary Guarantor
         in this Agreement, the Guaranty Agreement, the Subsidiary Guaranty
         Agreement or in any writing furnished in connection with the
         transactions contemplated hereby proves to have been false or incorrect
         in any material respect on the date as of which made; or

                   (f) (1) the Trust or any Subsidiary is in default (as
         principal or as guarantor or other surety) in the payment of any
         principal of or premium or make-whole amount or interest on any
         Indebtedness that is outstanding in an aggregate principal amount of at
         least $10,000,000 beyond any period of grace provided with respect
         thereto, or (2) the Trust or any Subsidiary is in default in the
         performance of or compliance with any term of any evidence of any
         Indebtedness in an aggregate outstanding principal amount of at least
         $10,000,000 or of any mortgage, indenture or other agreement relating
         thereto or any other condition exists, and as a consequence of such
         default or condition such Indebtedness has become, or has been declared
         (or one or more Persons are entitled to declare such Indebtedness to
         be), due and payable before its stated maturity or before its regularly
         scheduled dates of payment, or (3) as a consequence of the occurrence
         or continuation of any event or condition (other than the passage of
         time or the right of the holder of Indebtedness to convert such
         Indebtedness into equity interests), (i) the Trust or any Subsidiary
         has become obligated to purchase or repay Indebtedness before its
         regular maturity or before its regularly scheduled dates of payment in
         an aggregate outstanding principal amount of at least $10,000,000, or
         (ii) one or more Persons have the right to require the Trust or any
         Subsidiary so to purchase or repay such Indebtedness; or

                   (g) (1) the Guaranty Agreement or the Subsidiary Guaranty
         Agreement shall prove to be unenforceable or invalid or the Trust or
         any Subsidiary Guarantor shall deny or disaffirm its obligations under
         the Guaranty Agreement or the Subsidiary Guaranty Agreement,
         respectively, or (2) default shall occur in the observance or
         performance by the Trust or any Subsidiary Guarantor of any provision
         of the Guaranty Agreement or the Subsidiary Guaranty Agreement,
         respectively, which is not remedied within five Business Days after the
         earlier of (i) a Responsible Officer of the Trust or such Subsidiary
         Guarantor obtaining actual knowledge of such default and (ii) the Trust
         or such Subsidiary Guarantor receiving written notice of such default
         from any holder of a Note; or

                   (h) the Trust or any Subsidiary (1) is generally not paying,
         or admits in writing its inability to pay, its debts as they become
         due, (2) files, or consents 




                                      -29-
<PAGE>   36

         by answer or otherwise to the filing against it of, a petition for
         relief or reorganization or arrangement or any other petition in
         bankruptcy, for liquidation or to take advantage of any bankruptcy,
         insolvency, reorganization, moratorium or other similar law of any
         jurisdiction, (3) makes an assignment for the benefit of its creditors,
         (4) consents to the appointment of a custodian, receiver, trustee or
         other officer with similar powers with respect to it or with respect to
         any substantial part of its property, (5) is adjudicated as insolvent
         or to be liquidated, or (6) takes corporate action for the purpose of
         any of the foregoing; or

                   (i) a court or governmental authority of competent
         jurisdiction enters an order appointing, without consent by the Trust
         or any of its Subsidiaries, a custodian, receiver, trustee or other
         officer with similar powers with respect to it or with respect to any
         substantial part of its property, or constituting an order for relief
         or approving a petition for relief or reorganization or any other
         petition in bankruptcy or for liquidation or to take advantage of any
         bankruptcy or insolvency law of any jurisdiction, or ordering the
         dissolution, winding-up or liquidation of the Trust or any of its
         Subsidiaries, or any such petition shall be filed against the Trust or
         any of its Subsidiaries and such petition shall not be dismissed within
         60 days; or

                   (j) a final judgment or judgments for the payment of money
         aggregating in excess of $10,000,000 (excluding for purposes of such
         determination such amount of any insurance proceeds paid by or on
         behalf of the Trust or any of its Subsidiaries in respect of such
         judgment or judgments or unconditionally acknowledged in writing to be
         payable by the insurance carrier that issued the related insurance
         policy) are rendered against one or more of the Trust and its
         Subsidiaries and which judgments are not, within 60 days after entry
         thereof, bonded, discharged or stayed pending appeal, or are not
         discharged within 60 days after the expiration of such stay; or

                   (k) if (1) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under Section 412 of the Code, (2) a notice of intent
         to terminate any Plan shall have been or is reasonably expected to be
         filed with the PBGC or the PBGC shall have instituted proceedings under
         ERISA Section 4042 to terminate or appoint a trustee to administer any
         Plan or the PBGC shall have notified either Constituent Company or any
         of their ERISA Affiliates that a Plan may become a subject of any such
         proceedings, (3) the aggregate "amount of unfunded benefit liabilities"
         (within the meaning of Section 4001(a)(18) of ERISA) under all Plans,
         determined in accordance with Title IV of ERISA, shall exceed
         $1,000,000, (4) either Constituent Company or any of their ERISA
         Affiliates shall have incurred or is reasonably expected to incur any
         liability pursuant to Title I or IV of ERISA or the penalty or excise
         tax provisions of the Code relating to employee benefit plans, (5)
         either Constituent Company or any of their ERISA Affiliates withdraws
         from any Multiemployer Plan, or (6) the Trust or any Subsidiary
         establishes or amends any employee welfare benefit plan that provides
         post-employment welfare benefits in a manner that would increase the
         liability of the Trust or any Subsidiary thereunder; and any such event
         or events described in clauses (1) through (6) above, 




                                      -30-
<PAGE>   37

         either individually or together with any other such event or events,
         could reasonably be expected to have a Material Adverse Effect.

As used in SECTION 11(k), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

SECTION 12.    REMEDIES ON DEFAULT, ETC.

         Section 12.1. Acceleration. (a) If an Event of Default with respect to
a Constituent Company described in paragraph (h) or (i) of SECTION 11 (other
than an Event of Default described in clause (1) of paragraph (h) or described
in clause (6) of paragraph (h) by virtue of the fact that such clause
encompasses clause (1) of paragraph (h)) has occurred, all the Notes then
outstanding shall automatically become immediately due and payable.

           (b) If any other Event of Default has occurred and is continuing, any
holder or holders of more than 33-1/3% in principal amount of the Notes at the
time outstanding may at any time at its or their option, by notice or notices to
either Constituent Company, declare all the Notes then outstanding to be
immediately due and payable.

           (c) If any Event of Default described in paragraph (a) or (b) of
SECTION 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by such Event of Default may at any time, at its or
their option, by notice or notices to either Constituent Company, declare all
the Notes held by it or them to be immediately due and payable.

         Upon any Note's becoming due and payable under this SECTION 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (1) all accrued and unpaid
interest thereon and (2) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. Each Constituent
Company acknowledges, and the parties hereto agree, that each holder of a Note
has the right to maintain its investment in the Notes free from repayment by the
Operating Partnership (except as herein specifically provided for), and that the
provision for payment of a Make-Whole Amount by the Operating Partnership in the
event that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.

         Section 12.2. Other Remedies. If any Default or Event of Default has
occurred and is continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under SECTION 12.1, the holder of
any Note at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note, or for an injunction against a violation of any of the
terms hereof or thereof, or in aid of the exercise of any power granted hereby
or thereby or by law or otherwise.




                                      -31-
<PAGE>   38

         Section 12.3. Rescission. At any time after any Notes have been
declared due and payable pursuant to clause (b) or (c) of SECTION 12.1, the
holders of not less than 67% in principal amount of the Notes then outstanding,
by written notice to the Constituent Companies, may rescind and annul any such
declaration and its consequences if (a) the Operating Partnership has paid all
overdue interest on the Notes, all principal of and Make-Whole Amount, if any,
on any Notes that are due and payable and are unpaid other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of Default
and Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
SECTION 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this SECTION 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.

         Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Constituent Companies under SECTION 15,
the Constituent Companies will pay to the holder of each Note on demand such
further amount as shall be sufficient to cover all costs and expenses of such
holder incurred in any enforcement or collection under this SECTION 12,
including, without limitation, reasonable attorneys' fees, expenses and
disbursements.

SECTION 13.    REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

         Section 13.1. Registration of Notes. The Operating Partnership shall
keep at its principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder of one
or more Notes, each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name any Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Operating Partnership shall not be affected by
any notice or knowledge to the contrary. The Operating Partnership shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

         Section 13.2. Transfer and Exchange of Notes. Upon surrender of any
Note at the principal executive office of the Operating Partnership for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or its 




                                      -32-
<PAGE>   39

attorney duly authorized in writing and accompanied by the address for notices
of each transferee of such Note or part thereof), the Operating Partnership
shall execute and deliver, at the Operating Partnership's expense (except as
provided below), one or more new Notes (as requested by the holder thereof) in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of
EXHIBIT 1. Each such new Note shall be dated and bear interest from the date to
which interest shall have been paid on the surrendered Note or dated the date of
the surrendered Note if no interest shall have been paid thereon. The Operating
Partnership may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be transferred in denominations of less than $100,000; provided that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $100,000. Any
transferee, by its acceptance of a Note registered in its name (or the name of
its nominee), shall be deemed to have made the representation set forth in
SECTION 6.2, provided, however, that, such transferee will not be deemed to have
chosen the options set forth in SECTION 6.2(b), (c) or (e) unless such
transferee shall have made the disclosures referred to therein at least five
Business Days prior to its acceptance of such Note and shall have received prior
to such acceptance of such Note the certificate provided for in the penultimate
paragraph of SECTION 6.2 and such certificate shall contain the statement set
forth in either SECTION 4.3(c)(1) or (2), as applicable; and provided, further,
that, such transferee will not be deemed to have chosen an option set forth in
SECTION 6.2(a), (b) or (d) unless the applicable Class Exemption referred to
therein remains in effect at that time or another similar Class Exemption is
then available. The Constituent Companies shall exercise reasonable due
diligence as is necessary to respond to any such disclosure, provided that, if
either Constituent Company shall not respond within five Business Days following
receipt of any such disclosure, such Constituent shall be deemed to have made
the statement set forth in either Section 4.3(c)(1) or (2), as applicable.

         Section 13.3. Replacement of Notes. Upon receipt by the Operating
Partnership of evidence reasonably satisfactory to it of the ownership of and
the loss, theft, destruction or mutilation of any Note (which evidence shall be,
in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and

                   (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original Purchaser or another holder of a
         Note with a minimum net worth of at least $50,000,000, such Person's
         own unsecured agreement of indemnity shall be deemed to be
         satisfactory), or

                   (b) in the case of mutilation, upon surrender and 
         cancellation thereof,

the Operating Partnership at its own expense shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.



                                      -33-
<PAGE>   40

SECTION 14.    PAYMENTS ON NOTES.

         Section 14.1. Place of Payment. Subject to SECTION 14.2, payments of
principal, Make-Whole Amount, if any, and interest becoming due and payable on
the Notes shall be made in the Borough of Manhattan, City and State of New York
at the principal office of Citibank, N.A. in such jurisdiction. The Operating
Partnership may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Operating Partnership in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

         Section 14.2. Home Office Payment. So long as you or your nominee shall
be the holder of any Note, and notwithstanding anything contained in SECTION
14.1 or in such Note to the contrary, the Operating Partnership will pay all
sums becoming due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such purpose below your
name in SCHEDULE A, or by such other method or at such other address as you
shall have from time to time specified to the Operating Partnership in writing
for such purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of the
Operating Partnership made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Operating
Partnership at its principal executive office or at the place of payment most
recently designated by the Operating Partnership pursuant to SECTION 14.1. Prior
to any sale or other disposition of any Note held by you or your nominee you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Operating Partnership in exchange for a new Note or Notes
pursuant to SECTION 13.2. The Operating Partnership will afford the benefits of
this SECTION 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by you under this Agreement and that has made
the same agreement relating to such Note as you have made in this SECTION 14.2.

SECTION 15.    EXPENSES, ETC.

         Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Constituent Companies will pay all
costs and expenses (including reasonable attorneys' fees of a special counsel
and, if reasonably required, local or other counsel) incurred by you and each
Other Purchaser or holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement, the Guaranty Agreement, the Subsidiary Guaranty Agreement or the
Notes (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights
under this Agreement, the Guaranty Agreement, the Subsidiary Guaranty Agreement
or the Notes or in responding to 




                                      -34-
<PAGE>   41

any subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Guaranty Agreement, the Subsidiary Guaranty
Agreement or the Notes, or by reason of being a holder of any Note or the
beneficiary of the Guaranty Agreement or the Subsidiary Guaranty Agreement, and
(b) the costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of either Constituent Company or
any Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby, by the Guaranty Agreement, by the Subsidiary
Guaranty Agreement and by the Notes. The Constituent Companies will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other
than those retained by you).

         Section 15.2. Survival. The obligations of the Constituent Companies
under this SECTION 15 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement, the
Guaranty Agreement, the Subsidiary Guaranty Agreement or the Notes, and the
termination of this Agreement, the Guaranty Agreement or the Subsidiary Guaranty
Agreement.

SECTION 16.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

         All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of either Constituent Company pursuant to this
Agreement shall be deemed representations and warranties of such Constituent
Company under this Agreement. Subject to the preceding sentence, this Agreement,
the Guaranty Agreement, the Subsidiary Guaranty Agreement and the Notes embody
the entire agreement and understanding between you and the Constituent Companies
and supersede all prior agreements and understandings relating to the subject
matter hereof.

SECTION 17.    AMENDMENT AND WAIVER.

         Section 17.1. Requirements. This Agreement and the Notes may be
amended, and the observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the written
consent of the Constituent Companies and the Required Holders, except that (a)
no amendment or waiver of any of the provisions of SECTION 1, 2, 3, 4, 5, 6 or
21 hereof, or any defined term (as it is used therein), will be effective as to
you unless consented to by you in writing, and (b) no such amendment or waiver
may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (1) subject to the provisions of SECTION 12
relating to acceleration or rescission, change the amount or time of any
prepayment or payment of principal of, or reduce the rate or change the time of
payment or method of computation of interest or of the Make-Whole Amount on, the
Notes, (2) change the percentage of the principal amount of the Notes the
holders of which are required to consent to any such amendment or waiver, or (3)
amend any of SECTIONS 8, 11(a), 11(b), 12, 17 or 20.




                                      -35-
<PAGE>   42

         Section 17.2. Solicitation of Holders of Notes.

           (a) Solicitation. The Constituent Companies will provide each holder
of the Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Constituent Companies will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this SECTION 17 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.

           (b) Payment. The Constituent Companies will not directly or
indirectly pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, or grant any security, to
any holder of Notes as consideration for or as an inducement to the entering
into by any holder of Notes of any waiver or amendment of any of the terms and
provisions hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.

         Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to
as provided in this SECTION 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the
Constituent Companies without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver will extend to or
affect any obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No course of
dealing between the Constituent Companies and the holder of any Note nor any
delay in exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.

         Section 17.4. Notes held by Constituent Company, Etc. Solely for the
purpose of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to
any amendment, waiver or consent to be given under this Agreement or the Notes,
or have directed the taking of any action provided herein or in the Notes to be
taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by either Constituent Company or any of their Affiliates shall
be deemed not to be outstanding.




                                      -36-
<PAGE>   43

SECTION 18.    NOTICES.

         All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

                   (1) if to you or your nominee, to you or it at the address
         specified for such communications in SCHEDULE A, or at such other
         address as you or it shall have specified to the Trust in writing,

                   (2) if to any other holder of any Note, to such holder at
         such address as such other holder shall have specified to the Trust in
         writing, or

                   (3) if to either Constituent Company, to the Trust at its
         address set forth at the beginning hereof to the attention of the
         Treasurer and Secretary, or at such other address as the Trust shall
         have specified to the holder of each Note in writing.

Notices under this SECTION 18 will be deemed given only when actually received.

SECTION 19.    REPRODUCTION OF DOCUMENTS.

         This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. Each
Constituent Company agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
SECTION 19 shall not prohibit either Constituent Company or any other holder of
Notes from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the inaccuracy
of any such reproduction.

SECTION 20.    CONFIDENTIAL INFORMATION.

         For the purposes of this SECTION 20, "Confidential Information" means
information delivered to you by or on behalf of the Trust or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified in writing when received by you as being
confidential information of the Trust or such Subsidiary; provided that such
term does not include information that (a) was publicly known or 




                                      -37-
<PAGE>   44

otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any Person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Trust or any Subsidiary or (d) constitutes financial statements delivered to
you under SECTION 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you; provided that you may deliver or disclose
Confidential Information to (1) your directors, trustees, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (2)
your financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this SECTION 20, (3) any other holder of any Note, (4) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this SECTION 20), (5) any Person from which you offer to purchase any security
of either Constituent Company (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
SECTION 20), (6) any Federal or state regulatory authority having jurisdiction
over you, (7) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (8) any other Person to which
such delivery or disclosure may be necessary or appropriate (i) to effect
compliance with any law, rule, regulation or order applicable to you, (ii) in
response to any subpoena or other legal process, (iii) in connection with any
litigation to which you are a party or (iv) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement, the
Guaranty Agreement or the Subsidiary Guaranty Agreement. Each holder of a Note,
by its acceptance of a Note, will be deemed to have agreed to be bound by and to
be entitled to the benefits of this SECTION 20 as though it was a party to this
Agreement. On reasonable request by the Trust in connection with the delivery to
any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Trust embodying the provisions of this SECTION 20.

SECTION 21.    SUBSTITUTION OF PURCHASER.

         You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Trust, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in SECTION 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this SECTION 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to 




                                      -38-
<PAGE>   45

you all of the Notes then held by such Affiliate, upon receipt by the Trust of
notice of such transfer, wherever the word "you" is used in this Agreement
(other than in this SECTION 21), such word shall no longer be deemed to refer to
such Affiliate, but shall refer to you, and you shall have all the rights of an
original holder of the Notes under this Agreement.

SECTION 22.    MISCELLANEOUS.

         Section 22.1. Successors and Assigns. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.

         Section 22.2. Payments due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or Make-Whole Amount or interest on any Note that is due on a date other than
a Business Day shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of the interest payable
on such next succeeding Business Day.

         Section 22.3. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

         Section 22.4. Construction. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

         Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, the same shall be done in accordance with GAAP, to the extent
applicable, except where such principles are inconsistent with the requirements
of this Agreement.

         Section 22.5. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.

         Section 22.6. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the law of the State of New York, excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.

                                    * * * * *



                                      -39-
<PAGE>   46

         If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Constituent Companies, whereupon the foregoing shall become a binding agreement
between you and the Constituent Companies.

                                      Very truly yours,

                                      U.S. RESTAURANT PROPERTIES OPERATING L.P.

                                      By:  USRP Managing, Inc.,
                                             Its General Partner


                                           By
                                             ----------------------------------
                                              Its
                                                 ------------------------------

                                      U.S. RESTAURANT PROPERTIES, INC.


                                           By
                                             ----------------------------------
                                              Its
                                                 ------------------------------


Accepted as of May 1, 1998.

                                           [VARIATION]



                                           By
                                             ----------------------------------
                                              Its
                                                 ------------------------------





                                      -40-
<PAGE>   47

                                   SCHEDULE A
                          (to Note Purchase Agreement)

                       INFORMATION RELATING TO PURCHASERS


<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                         <C>        
LIFE INVESTORS INSURANCE COMPANY OF AMERICA                                                                 $10,000,000
c/o AEGON USA Investment Management, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa  52499-5335
Attention:  Director of Private Placements
Fax Number:  (319) 369-2666
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Citibank, N.A. (ABA #021000089)
         111 Wall Street
         New York, New York  10043
         DDA #36112805
         ABA #021000089
         DDA #36112805
         for credit to:  Life Investors Insurance Company of America
         Custody Account Number 847658

Notices

All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:

         Life Investors Insurance Company of America
         c/o AEGON USA Investment Management, Inc.
         4333 Edgewood Road N.E.
         Cedar Rapids, Iowa  52499-5215
         Attention:  Michael Meese

All notices and communications, other than notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  42-0191090


<PAGE>   48


<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>    
PEOPLES SECURITY LIFE INSURANCE COMPANY                                                                       $10,000,000
c/o AEGON USA Investment Management, Inc.
400 West Market Street
Louisville, Kentucky  40202
Attention:  Securities Department - 10th Floor
Fax Number:  (502) 560-2030
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Bankers - NYC (ABA #021-001-033)
         Account No. 99-911-145

         for further credit to:  Peoples Security Life Insurance Company
         Account No. 099312

Notices

Contemporaneous with the above wire transfer, an advice setting forth (1) the
full name, interest rate and maturity date of the bond or note; (2) allocation
of payment between principal and interest; and (3) name and address of bank from
which wire transfer was sent, should be mailed to:


         Attention:  Securities Processing - 10th Floor
         Peoples Security Life Insurance Company
         c/o AEGON USA Investment Management, Inc.
         400 West Market Street
         Louisville, Kentucky  40202
         Fax Number:  (502) 560-2068

All notices and communications other than those in respect to payment to be
addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number for Peoples Security Life Insurance Company:  56-0267250




                                      A-2
<PAGE>   49

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                           <C>       
THE CANADA LIFE ASSURANCE COMPANY                                                                             $1,500,000
330 University Avenue
Toronto, Ontario, Canada  M5G 1R8
Attention:   U.S. Private Placements, SP-11
             Brian Lynch, Treasurer, U.S.
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:

         Chase Manhattan Bank
         ABA #021-000-021
         A/C #900-9-000200
         Trust Account No. G52708, The Canada Life Assurance Company
         Attention:  Bond Interest

         reference: name of issuer, rate, maturity date, type of security,
         whether principal and/or interest and due date

Notices

All notices and communications to be addressed as first provided above, except
notice with respect to payment, and written confirmation of each such payment,
to be addressed:

         Chase Manhattan Bank
         North America Insurance
         3 Chase MetroTech Centre - 6th Floor
         Brooklyn, New York  11245
         Attention:  Ms. Doll Balbadar

with a copy to:

         The Canada Life Assurance Company
         330 University Avenue, SP-12
         Toronto, Ontario, Canada  M5G 1R8
         Attention:  Supervisor, Securities Accounting

Name of Nominee in which Notes are to be issued:  J. Romeo & Co.

Taxpayer I.D. Number:  38-0397420




                                      A-3
<PAGE>   50

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                           <C>       
CANADA LIFE INSURANCE COMPANY OF AMERICA                                                                      $3,000,000
c/o The Canada Life Assurance Company
330 University Avenue
Toronto, Ontario, Canada  M5G 1R8
Attention:        U.S. Private Placements, SP-11
                  Brian Lynch, Treasurer, U.S.
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:

         Chase Manhattan Bank
         ABA #021-000-021
         Account #900-9-000200
         Trust Account No. G52709, Canada Life Insurance Company of America
         Attention:  Ms. Doll Balbadar

         reference: name of issuer, rate, maturity date, type of security,
         whether principal and/or interest and due date

Notices

All notices and communications to be addressed as first provided above, except
notice with respect to payment, and written confirmation of each such payment,
to be addressed:

         Chase Manhattan Bank
         North America Insurance
         3 Chase MetroTech Centre - 6th Floor
         Brooklyn, New York  11245
         Attention:  Ms. Doll Balbadar

with a copy to:

         The Canada Life Assurance Company
         330 University Avenue, SP-12
         Toronto, Ontario, Canada  M5G 1R8
         Attention:  Supervisor, Securities Accounting

Name of Nominee in which Notes are to be issued:  J. Romeo & Co.

Taxpayer I.D. Number:  38-2816473




                                      A-4
<PAGE>   51

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                            <C>     
CANADA LIFE INSURANCE COMPANY OF NEW YORK                                                                      $500,000
c/o The Canada Life Assurance Company
330 University Avenue
Toronto, Ontario, Canada  M5G 1R8
Attention:    U.S. Private Placements, SP-11
              Brian Lynch, Treasurer, U.S.
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds to:

         Chase Manhattan Bank
         ABA #021-000-021
         Account #900-9-000200
         Trust Account No. G52685, Canada Life Insurance Company of New York
         Attention:  Bond Interest

         reference: name of issuer, rate, maturity date, type of security,
         whether principal and/or interest and due date

Notices

All notices and communications to be addressed as first provided above, except
notice with respect to payment, and written confirmation of each such payment,
to be addressed:

         Chase Manhattan Bank
         North America Insurance
         3 Chase MetroTech Centre - 6th Floor
         Brooklyn, New York  11245
         Attention:  Ms. Doll Balbadar

with a copy to:

         The Canada Life Assurance Company
         330 University Avenue, SP-12
         Toronto, Ontario, Canada  M5G 1R8
         Attention:  Supervisor, Securities Accounting

Name of Nominee in which Notes are to be issued:  J. Romeo & Co.

Taxpayer I.D. Number:  13-2690792




                                      A-5
<PAGE>   52

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                       <C>       
GE CAPITAL EDISON LIFE INSURANCE COMPANY                                                                      $8,000,000
c/o GE Financial Assurance
Two Union Square, 601 Union Street
Seattle, Washington  98101
Attention:  Investment Accounting - 14th Floor
Telephone No.: (206) 516-2871
Fax No.: (206) 516-4740
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Bankers Trust Company (ABA #021001033)
         16 Wall Street
         New York, New York  10015

         Acct:  00154093
         FCC #501551253

Notices

All notices and communications with respect to payments and written confirmation
of each such payment to be addressed as first provided above. All other
communications to be addressed:

         GE Capital Edison Life Insurance Company
         c/o GE Financial Assurance
         Two Union Square, 601 Union Street
         Seattle, WA  98101
         Attn:  Investment Dept., VP Private Placements
         Telephone No.:  (206) 516-2894
         Fax No.: (206) 516-4998


Name of Nominee in which Notes are to be issued: AUER & CO.

Taxpayer I.D. Number:  16-1202227




                                      A-6
<PAGE>   53

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
FIRST COLONY LIFE INSURANCE COMPANY                                                                           $5,000,000
c/o GE Financial Assurance
Two Union Square, 601 Union Street
Seattle, WA  98101
Attn:  Investment Dept., Nancy McFadden
Telephone No.:  (206) 516-2894
Fax No.:  (206) 916-4863
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal or interest") to:

         Bankers Trust Company
         16 Wall Street
         New York, NY  10015
         ABA #021001033
         Acct: 99-911-145
         FCC #098069


Notices

All notices with respect to payments and written confirmation of each such
payment to be addressed:

         First Colony Life Insurance Company
         c/o GE Financial Assurance
         Two Union Square, 601 Union Street
         Seattle, Washington  98101
         Attention:  Investment Accounting - 14th Floor
         Telephone No.:  (206) 516-2871
         Fax No.:  (206) 516-4740

All other communications to be addressed as first provided above.



Name of Nominee in which Notes are to be issued:  Salkeld & Co.

Taxpayer I.D. Number:  54-0596414




                                      A-7
<PAGE>   54

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
THE LIFE INSURANCE COMPANY OF VIRGINIA                                                                        $4,000,000
c/o GE Financial Assurance
Two Union Square, 601 Union Street
Seattle, WA  98101
Attention:  Investment Department, Nancy McFadden
Phone:  (206) 516-2894
Fax:  (206) 516-4863
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Bankers Trust Company
         16 Wall Street
         New York, New York  10015
         ABA #021001033
         Acct.:  99-911-145
         FCC #097828

Notices

All notices and communications with respect to payments and written confirmation
of each such payment, to be addressed to:

         The Life Insurance Company of Virginia
         c/o GE Financial Assurance
         Two Union Square, 601 Union Street
         Seattle, WA  98101
         Investment Accounting, 14th Floor
         Phone:  (206) 516-2871
         Fax:  (206) 516-4740

All other communications to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  Salkeld & Co.

Taxpayer I.D. Number:  54-0283385




                                      A-8
<PAGE>   55

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                     <C>       
HERITAGE LIFE INSURANCE COMPANY                                                                               $1,000,000
c/o GE Financial Assurance
Two Union Square, 601 Union Street
Seattle, Washington  98101
Attention:  Investment Dept., VP - Private Placements
Telephone No.: (206) 516-2894
Fax No.: (206) 516-4863
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Bankers Trust Company (ABA #021001033)
         16 Wall Street
         New York, New York  10015
         Acct.:  99-911-145
         FCC #097825

Notices

All notices and communications with respect to payments and written confirmation
of each such payment, to be addressed:

         Heritage Life Insurance Company
         c/o GE Financial Assurance
         Two Union Square, 601 Union Street
         Seattle, Washington  98101
         Attention:  Investment Accounting - 14th Floor
         Telephone No.:  (206) 516-2871
         Fax No.:  (206) 516-4740

All other communications to be addressed as first provided above.


Name of Nominee in which Notes are to be issued:  Salkeld & Co.

Taxpayer I.D. Number:  86-0165716




                                      A-9
<PAGE>   56

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
HARTFORD ACCIDENT & INDEMNITY CO.                                                                             $3,000,000
c/o The Hartford Investment Management Company
c/o Investment Department, 10th Floor - Private Placements
P. O. Box 1744
Hartford, Connecticut  06114-1744
Telefacsimile:  (860) 297-8884
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, interest or premium") to:

         Chase Manhattan Bank
         4 New York Plaza
         New York, New York  10004
         ABA #021000021
         Chase NYC/Cust
         A/C #900-9-000200 for F/C/T Hartford Acct G06239 HAI

Notices

All notices and communications to be addressed as first provided above, except
notices with respect to payments, and written confirmation of each such payment,
to be addressed:

         The Hartford Investment Management Company
         c/o Portfolio Support, 9th Floor
         P. O. Box 1744
         Hartford, Connecticut  06114-1744
         Telefacsimile:  (860) 297-8876

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  06-0383030




                                      A-10
<PAGE>   57

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED

<S>                                                                                                      <C>       
HARTFORD LIFE INSURANCE COMPANY                                                                               $5,000,000
c/o The Hartford Investment Management Company                                                                $2,000,000
c/o Investment Department, 10th Floor - Private Placements
P. O. Box 1744
Hartford, Connecticut  06114-1744
Telefacsimile:  (860) 297-8884
</TABLE>

Payments (in respect of the Note in the principal amount of $5,000,000):

All payments on or in respect of the Note to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, interest or premium") to:

         Chase Manhattan Bank
         4 New York Plaza
         New York, New York  10004
         ABA #021000021
         Chase NYC/Cust
         A/C #900-9-000200 for F/C/T Hartford Acct G06641 CRC

Payments (in respect of the Note in the principal amount of $2,000,000):

All payments on or in respect of the Note to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, interest or premium") to:

         Chase Manhattan Bank
         4 New York Plaza
         New York, New York  10004
         ABA #021000021
         Chase NYC/Cust
         A/C #900-9-000200 for F/C/T Hartford Acct G06612 HVA


Notices

All notices and communications to be addressed as first provided above, except
notices with respect to payments, and written confirmation of each such payment,
to be addressed:

         The Hartford Investment Management Company
         c/o Portfolio Support, 9th Fl.
         P. O. Box 1744
         Hartford, Connecticut  06114-1744
         Telefacsimile:  (860) 297-8876

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  06-0974148




                                      A-11
<PAGE>   58

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                     <C>       
JEFFERSON-PILOT LIFE INSURANCE COMPANY                                                                        $7,500,000
P. O. Box 21008
Greensboro, North Carolina  27420
Attention:  Securities Administration - 3630
Telefacsimile:  (910) 691-3025
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, interest or premium") to:

         Jefferson-Pilot Life Insurance Company
         c/o The Bank of New York
         ABA #021 000 018  BNF:  IOC566
         Attention:  P&I Department

Notices

All notices of payment on or in respect of the Notes and written confirmation of
each such payment, to be addressed to:

         Jefferson-Pilot Life Insurance Company
         c/o The Bank of New York
         Attention:  P&I Department
         P. O. Box 19266
         Newark, NJ  07195

with duplicate notice to Jefferson-Pilot Life Insurance Company at the address
first provided above.

All notices and communications other than those in respect to payments to be
addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  56-0359860




                                      A-12
<PAGE>   59

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
JEFFERSON PILOT FINANCIAL INSURANCE COMPANY                                                                   $7,500,000
P. O. Box 21008
Greensboro, North Carolina  27420
Attention:  Securities Administration - 3630
Telefacsimile:  (336) 691-3025
</TABLE>

[For hand delivery:  100 North Greene Street
Greensboro, North Carolina 27401]

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, interest or premium") to:

         Jefferson Pilot Financial Insurance Company
         c/o The Bank of New York
         ABA #021 000 018  BNF:  IOC566
         Attention:  P&I Department

Notices

All notices of payment on or in respect of the Notes and written confirmation of
each such payment, to be addressed to:

         Jefferson Pilot Financial Insurance Company
         c/o The Bank of New York
         P. O. Box 19266
         Newark, New Jersey  07195
         Attention:  P&I Department

with duplicate notice to Jefferson Pilot Financial Insurance Company Insurance
Company at the address first provided above.

All other notices and communications to be addressed as first provided above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  62-0395665




                                      A-13
<PAGE>   60

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
THE LAFAYETTE LIFE INSURANCE COMPANY                                                                          $5,000,000
1905 Teal Road
P. O. Box 7007
Lafayette, Indiana  47903
Attention:  Investment Department
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal or interest") to:

         Federal Reserve Bank of Chicago for Merchants National
         Bank/Indianapolis

         for credit to the account of: The Lafayette Life Insurance Company
         Attention: Interest Clerk/Security Custody

Notices

All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.

Name of Nominee in which Notes are to be issued:  None




                                      A-14
<PAGE>   61

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                       <C>        
THE OHIO NATIONAL LIFE INSURANCE COMPANY                                                                      $10,000,000
P.O. Box 237
Cincinnati, Ohio  45201
Attention:  Investment Department
Facsimile:  (513) 794-4506
</TABLE>

Overnight Delivery Address:
[One Financial Way
Cincinnati, Ohio  45242]

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Star Bank, N.A. (ABA #042-0000-13)
         Fifth and Walnut Streets
         Cincinnati, Ohio  45202

         for credit to: The Ohio National Life Insurance Company
         Account Number 910-275-7

Notices

All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  31-0397080





                                      A-15
<PAGE>   62

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                     <C>       
PACIFIC LIFE INSURANCE COMPANY                                                                                $5,000,000
700 Newport Center Drive                                                                                      $5,000,000
Newport Beach, California  92658-9000                                                                         $5,000,000
Attention:  Securities Administration                                                                         $5,000,000
Telephone:  (714) 640-3379; Facsimile:  (714) 640-3199
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Chase Manhattan Bank, N.A.
         ABA #021-000-021
         A/C = 900-9-002206
         BBK = Chase Manhattan Bank/SSTO
         A/C Name:  Pacific Life General Account/89930705
         A/C Number:  47363300
         Regarding:  Security Description and PPN

Notices

All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment,
to be addressed:

         The Chase Manhattan Bank, N.A.
         P.O. Box 456, Wall Street Station
         New York, New York  10005

Name of Nominee in which Notes are to be issued:  ATWELL & CO

General Taxpayer I.D. Number:  95-1079000




                                      A-16
<PAGE>   63

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
NORTHERN LIFE INSURANCE COMPANY                                                                                  $5,500,000
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota  55401-2121
Attention:  James Tobin
Phone:  (612) 372-5773
Fax:  (612) 372-5368
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         U.S. Bank N.A./Mpls.
         601 2nd Avenue South
         Account #1602-3237-6105
         ABA #091000022
         Attention:  Securities Accounting
         Ref:  Issuer, Cusip, Coupon & Maturity

Notices

All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  41-1295933




                                      A-17
<PAGE>   64

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
WASHINGTON SQUARE ADVISERS PRIVATE                                                                               $1,500,000
  PLACEMENT TRUST FUND
c/o Washington Square Advisers, Inc.
Attn: WSA Private Placement Trust Fund
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota  55401-2121
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         U.S. Bank NA (DTC #2839; Inst. ID #93696; Agent Bank #93697)
         F/F/C U.S. Bank
         ABA #091000022
         A/C 180121167365
         ITG A/C 47300020
         Ref:  Washington Square Advisers Private Placement Trust Fund
               Account #:  10604960


Notices

All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.

Name of Nominee in which Notes are to be issued:  None

Taxpayer I.D. Number:  41-6424976




                                      A-18
<PAGE>   65

<TABLE>
<CAPTION>
              NAME AND ADDRESS                                                                            PRINCIPAL AMOUNT OF
                OF PURCHASER                                                                             NOTES TO BE PURCHASED
<S>                                                                                                      <C>       
RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK                                                                     $1,000,000
c/o ReliaStar Investment Research, Inc.
100 Washington Avenue South, Suite 800
Minneapolis, Minnesota  55401-2121
Attention:  James Tobin
Phone:  (612) 372-5257
Fax:  (612) 372-5368
</TABLE>

Payments

All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Restaurant Properties Operating L.P., 7.15% Senior Notes due 2005, PPN 90346# AC
4, principal, premium or interest") to:

         Chase Manhattan
         New York, NY
         A/C #544755102
         F/F/C #653095 Dept. 571 NonStandard Securities Acct. #1960
         Bank ABA #021000021

Notices

All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.

Name of Nominee in which Notes are to be issued:  SIGLER & CO.

Taxpayer I.D. Number:  53-0242530






                                      A-19
<PAGE>   66

                                   SCHEDULE B
                          (to Note Purchase Agreement)

                                  DEFINED TERMS

         As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

         "Affiliate" means, at any time, (a) with respect to any Person, any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) with respect to the Trust or any Subsidiary, any
Person beneficially owning or holding, directly or indirectly, 10% or more of
any class of Voting Equity Interests of the Trust or any Subsidiary or any
corporation or other legal entity of which the Trust and its Subsidiaries
beneficially own or hold, in the aggregate, directly or indirectly, 10% or more
of any class of Voting Equity Interests. As used in this definition, "Control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Equity Interests, by contract or otherwise. Unless the
context otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of the Trust.

         "Annual Service Charge" for any period means sum of (a) all interest
expense and all amortization of debt discount and expense during such period in
respect of Indebtedness of the Trust and its Subsidiaries, and (b) all dividends
payable during such period in respect of Disqualified Stock of the Trust and its
Subsidiaries.

         "Business Day" means (a) for the purposes of SECTION 8.7 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York,
New York are required or authorized to be closed, and (b) for the purposes of
any other provision of this Agreement, any day other than a Saturday, a Sunday
or a day on which commercial banks in New York, New York or Dallas, Texas are
required or authorized to be closed.

         "Capital Lease" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

         "Closing" is defined in SECTION 3.

         "Change in Control" is defined in SECTION 8.3(h).

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.

         "Confidential Information" is defined in SECTION 20.
<PAGE>   67

         "Consolidated Income Available for Debt Service" for any period shall
mean the sum of (a) Consolidated Net Income prior to the recognition of any
gains or losses on the sale or other disposition of properties during such
period plus (to the extent deducted in determining Consolidated Net Income), (b)
all provisions for any Federal, state or other income taxes made by the Trust
and its Subsidiaries during such period, (c) all interest expense and all
amortization of debt discount and expense during such period in respect of
Indebtedness of the Trust and its Subsidiaries, (d) the amount of all
depreciation and amortization expense and any non-cash charge resulting from a
change in accounting principles of the Trust and its Subsidiaries during such
period, and (e) the amortization of deferred charges of the Trust and its
Subsidiaries during such period.

         "Consolidated Indebtedness" means, as of any date of determination, and
without duplication, the total of all Indebtedness of the Trust and its
Subsidiaries outstanding on such date, after eliminating all offsetting debits
and credits among the Trust and its Subsidiaries and all other items required to
be eliminated in the course of the preparation of consolidated financial
statements of the Trust and its Subsidiaries in accordance with GAAP.

         "Consolidated Net Income" for any period means the gross revenues of
the Trust and its Subsidiaries for such period less all expenses and other
proper charges (including taxes on income), determined on a consolidated basis
in accordance with GAAP after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:

                  (a) any gains or losses on the sale or other disposition of
         investments or fixed or capital assets, and any taxes on such excluded
         gains and any tax deductions or credits on account of any such excluded
         losses;

                  (b) the proceeds of any life insurance policy;

                  (c) net earnings and losses of any Subsidiary accrued prior to
         the date it became a Subsidiary;

                  (d) net earnings and losses of any corporation (other than a
         Subsidiary), substantially all the assets of which have been acquired
         in any manner by the Trust or any Subsidiary, realized by such
         corporation prior to the date of such acquisition;

                  (e) net earnings and losses of any corporation (other than a
         Subsidiary) with which the Trust or a Subsidiary shall have
         consolidated or which shall have merged into or with the Trust or a
         Subsidiary prior to the date of such consolidation or merger;

                  (f) net earnings of any business entity (other than a
         Subsidiary) in which the Trust or any Subsidiary has an ownership
         interest unless such net earnings shall have actually been received by
         the Trust or such Subsidiary in the form of cash distributions;

                  (g) any portion of the net earnings of any Subsidiary which
         for any reason is unavailable for payment of dividends to the Trust or
         any other Subsidiary;


                                      B-2
<PAGE>   68

                  (h) earnings resulting from any reappraisal, revaluation or
         write-up of assets;

                  (i) any deferred or other credit representing any excess of
         the equity in any Subsidiary at the date of acquisition thereof over
         the amount invested in such Subsidiary;

                  (j) any gain arising from the acquisition of any securities of
         the Trust or any Subsidiary;

                  (k) any reversal of any contingency reserve, except to the
         extent that provision for such contingency reserve shall have been made
         from income arising during such period; and

                  (l) any other extraordinary gain or loss.

         "Consolidated Net Worth" means, as of the date of any determination
thereof, the amount of the capital stock accounts (net of treasury stock, at
cost) plus (or minus in the case of a deficit) the surplus and retained earnings
of the Trust and its Subsidiaries as determined in accordance with GAAP.

         "Consolidated Total Assets" means, as of any date of determination, the
sum of (a) all Undepreciated Real Estate Assets of the Trust and its
Subsidiaries and (b) all other assets of the Trust and its Subsidiaries (other
than accounts receivables and intangible assets), after eliminating all
offsetting debits and credits among the Trust and its Subsidiaries and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Trust and its Subsidiaries in accordance with GAAP.

         "Consolidated Total Capitalization" means, as of the date of any
determination thereof, the sum of (a) Consolidated Indebtedness, (b)
Consolidated Net Worth as at the end of the fiscal quarter of the Trust then
most recently ended and (c) the amount of accumulated depreciation and
amortization set forth on the consolidated balance sheet of the Trust and its
Subsidiaries as at the end of the fiscal quarter of the Trust then most recently
ended.

         "Constituent Companies" is defined in the Preamble.

         "Control Event" is defined in SECTION 8.3(i).

         "Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.

         "Default Rate" means that rate of interest that is the greater of (a)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (b) 2% over the rate of interest publicly announced by
Citibank, N.A. in New York, New York as its "base" or "prime" rate.


                                       B-3
<PAGE>   69

         "Disqualified Stock" means any capital stock of a Person which by the
terms of such capital stock (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable), upon the happening
of any event or otherwise (a) matures or is mandatorily redeemable, pursuant to
a sinking fund obligation or otherwise (other than capital stock which is
redeemable solely in exchange for common stock), (b) is convertible into or
exchangeable or exercisable for Indebtedness or Disqualified Stock or (c) is
redeemable at the option of the holder thereof, in whole or in part (other than
capital stock which is redeemable solely in exchange for capital stock which is
not Disqualified Stock or the redemption price of which may, at the option of
such Person, be paid in capital stock which is not Disqualified Stock), in each
case, on or prior to the stated maturity of the Notes.

         "Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.

         "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with either
Constituent Company under Section 414 of the Code.

         "Event of Default" is defined in SECTION 11.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.

         "General Partner" is defined in SECTION 5.1(A).

         "Governmental Authority" means

                  (a)    the government of

                         (1) the United States of America or any State or other 
                  political subdivision thereof, or

                         (2) any jurisdiction in which the Trust or any
                  Subsidiary conducts all or any part of its business, or which
                  asserts jurisdiction over any properties of the Trust or any
                  Subsidiary, or



                                      B-4
<PAGE>   70

                  (b) any entity exercising executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to, any such
         government.

         "Guaranty" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person:

                  (a) to purchase such Indebtedness or obligation or any
         property constituting security therefor;

                  (b) to advance or supply funds (1) for the purchase or payment
         of such Indebtedness or obligation, or (2) to maintain any working
         capital or other balance sheet condition or any income statement
         condition of any other Person or otherwise to advance or make available
         funds for the purchase or payment of such Indebtedness or obligation;

                  (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such Indebtedness or
         obligation of the ability of any other Person to make payment of the
         Indebtedness or obligation; or

                  (d) otherwise to assure the owner of such Indebtedness or
         obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

         "Guaranty Agreement" is defined in SECTION 2.

         "Hazardous Material" means any and all pollutants, toxic or hazardous
wastes or any other substances, including all substances listed in or regulated
in any Environmental Law that might pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
or shall be restricted, regulated, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls).

         "holder" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to SECTION
13.1.

         "Indebtedness" with respect to any Person means, at any time, without
duplication, 



                                      B-5
<PAGE>   71

and whether or not contingent, (a) its liabilities for borrowed money,
including, without limitation, all such liabilities evidenced by bonds, notes,
debentures or similar instruments whether or not such liabilities are secured by
any Lien existing on property owned by such Person, (b) all indebtedness for
borrowed money of any other Person which is secured by any Lien existing on
property owned by such first Person, to the extent of the lesser of (1) the
amount of indebtedness so secured and (2) the fair market value of the property
subject to such Lien, (c) all reimbursement obligations, contingent or
otherwise, in connection with any letters of credit actually issued and amounts
representing the balance deferred and unpaid of the purchase price of any
property or services except any such balance that constitutes an accrued expense
or trade payable, and all conditional sale obligations and obligations under any
title retention agreement, (d) the principal amount of all obligations of such
Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock, (e) any lease of property by the such Person as lessee which
is reflected on such Person's consolidated balance sheet as a Capital Lease in
accordance with GAAP, (f) all interest rate swaps, caps or similar agreements
and foreign exchange contracts, currency swaps or similar agreements, to the
extent, in the case of items of indebtedness under (a) through (c) above, that
any such items (other than letters of credit) would appear as a liability on
such Person's consolidated balance sheet in accordance with GAAP, and (g) to the
extent not otherwise included, any obligation by such Person to be liable for,
or to pay, as obligor, guarantor under a Guaranty or otherwise (other than for
purposes of collection in the ordinary course of business), Indebtedness of
another Person.

         "Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.

         "Intercreditor Agreement" shall mean that certain Intercreditor
Agreement dated as of January 9, 1998, among the parties to the 1997 Note
Purchase Agreement and the Revolving Credit Agreement, as amended from time to
time.

         "Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).

         "Make-Whole Amount" is defined in SECTION 8.7.

         "Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Trust and
its Subsidiaries, taken as a whole.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets, properties or
prospects of the Trust and its 


                                      B-6
<PAGE>   72

Subsidiaries, taken as a whole, or (b) the ability of the Trust to perform its
obligations under this Agreement and the Guaranty Agreement, (c) the ability of
the Operating Partnership to perform its obligations under this Agreement or the
Notes, or (d) the validity or enforceability against the Constituent Companies
of this Agreement, the Guaranty Agreement or the Notes.

         "Memorandum" is defined in SECTION 5.3.

         "Minority Interest" shall mean any shares of stock of any class of, or
any partnership, membership or other ownership in, a Subsidiary (other than
directors qualifying shares as required by law) that are not owned by the Trust
and/or one or more of its Subsidiaries.

         "Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).

         "1997 Note Purchase Agreements" shall mean those certain separate Note
Purchase Agreements each dated as of January 31, 1997, as amended by the First
Amendment dated January 9, 1998, among the Operating Partnership, the Trust,
certain Subsidiaries thereto and the Purchasers named in Annex I thereto, as
amended from time to time.

         "Notes" is defined in SECTION 1.

         "Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Trust or of the general partner of the
Operating Partnership, as applicable, whose responsibilities extend to the
subject matter of such certificate.

         "Operating Partnership" is defined in the Preamble.

         "Other Agreements" is defined in SECTION 2.

         "Other Purchasers" is defined in SECTION 2.

         "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.

         "Permitted Management Transferee" is defined in SECTION 8.3(J).

         "Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.

         "Plan" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by either Constituent Company or any of
their ERISA Affiliates or with respect to which either Constituent Company or
any of their ERISA Affiliates may have any liability.

         "Priority Debt" means all Indebtedness of the Trust and its
Subsidiaries secured by Liens.

                                       B-7


<PAGE>   73

         "property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.

         "Proposed Prepayment Date" is defined in SECTION 8.3(c).

         "PTE" is defined in SECTION 6.2(a).

         "QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.

         "Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Trust or any of its Affiliates).

         "Responsible Officer" means any Senior Financial Officer and any other
officer of the Trust, the general partner of the Operating Partnership or any
Subsidiary Guarantor, as applicable, with responsibility for the administration
of the relevant portion of this Agreement.

         "Revolving Credit Agreement" shall mean that certain Revolving Credit
Agreement dated January 9, 1998, among the Operating Partnership, the
institutions party thereto and Union Bank of Switzerland, New York Branch, as
Agent, as amended from time to time.

         "Securities Act" means the Securities Act of 1933, as amended from time
to time.

         "Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Trust, the Operating
Partnership or any Subsidiary Guarantor, as applicable.

         "Source" is defined in SECTION 6.2.

         "Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient Voting Equity
Interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). Unless the context otherwise clearly requires, any reference to a
"Subsidiary" is a reference to a Subsidiary of the Trust.

         "Subsidiary Guarantor" is defined in SECTION 2.

         "Subsidiary Guaranty Agreement" is defined in SECTION 2.



                                      B-8
<PAGE>   74

         "Successor Corporation" is defined in SECTION 10.3.

         "Total Unencumbered Assets" as of any date means the sum of (a)
Undepreciated Real Estate Assets not subject to a Lien securing indebtedness for
borrowed money; and (b) the book value of all other assets of the Trust and its
Subsidiaries (other than accounts receivables and intangible assets) not subject
to a Lien securing indebtedness for borrowed money, determined on a consolidated
basis in accordance with GAAP.

         "Undepreciated Real Estate Assets" as of any date means the cost
(original cost plus capital improvements) of real estate assets of the Trust and
its Subsidiaries on such date, before depreciation and amortization, determined
on a consolidated basis in accordance with GAAP.

         "Unsecured Indebtedness" means at any time the aggregate unpaid
principal amount of all Indebtedness of the Trust and its Subsidiaries other
than (a) Indebtedness of a Subsidiary owing to a Constituent Company or to a
Wholly-Owned Subsidiary and (b) Priority Debt.

         "Voting Equity Interests" means with respect to any Person,

                   (a) at any time that such Person is a corporation, the
         capital stock of any class or classes of such Person the holders of
         which are ordinarily, in the absence of contingencies, entitled to vote
         in the election of corporate directors,

                   (b) at any time that such Person is a partnership, joint
         venture or similar entity, the capital interest or profits interest of
         such Person,

                   (c) at any time that such Person is a limited liability
         company, the membership interests of such Person, and

                   (d) at any time that such Person is a trust, business trust,
         association or other unincorporated organization, the beneficial
         interest of such Person.

         "Wholly-Owned Subsidiary" means, at any time, any Subsidiary one
hundred percent (100%) of all of the Voting Equity Interests (except directors'
qualifying shares) and Voting Equity Interests of which are owned by any one or
more of the Trust and the Trust's other Wholly-Owned Subsidiaries at such time.



                                     B-9
<PAGE>   75



                                  SCHEDULE 4.10
                          (to Note Purchase Agreement)
                       CHANGES IN ORGANIZATIONAL STRUCTURE


                                      None

<PAGE>   76



                                  SCHEDULE 5.3
                          (to Note Purchase Agreement)
                              DISCLOSURE MATERIALS


                                      None

<PAGE>   77



                                  SCHEDULE 5.4
                          (to Note Purchase Agreement)
                            SUBSIDIARIES OF THE TRUST
                        AND OWNERSHIP OF EQUITY INTERESTS




<PAGE>   78



                                  SCHEDULE 5.4
                          (to Note Purchase Agreement)

                          DIRECTORS AND SENIOR OFFICERS
                                  OF THE TRUST

Directors

         Robert J. Stetson
         Fred H. Margolin
         Darrel Rolph
         David Rolph
         Gerald H. Graham
         Eugene P. Taper



Officers

         Robert J. Stetson
              President and Chief Executive Officer

         Fred H. Margolin
              Chairman and Treasurer

         Michael D. Warren
              Director of Finance



<PAGE>   79



                                  SCHEDULE 5.5
                          (to Note Purchase Agreement)
                              FINANCIAL STATEMENTS


1.       SEC Form 10-K for the fiscal year ended December 31, 1997.

2.       Unaudited consolidated balance sheet, income statement and statement of
         cash flows for the fiscal quarter ended March 31, 1998.



<PAGE>   80



                                  SCHEDULE 5.8
                          (to Note Purchase Agreement)
                               CERTAIN LITIGATION


                                      None

<PAGE>   81



                                  SCHEDULE 5.11
                          (to Note Purchase Agreement)
                                  PATENTS, ETC.


                                      None

<PAGE>   82



                                  SCHEDULE 5.14
                          (to Note Purchase Agreement)
                                 USE OF PROCEEDS

         Proceeds from the sale of the Notes will be used to pay down existing
indebtedness of the Operating Partnership to Union Bank of Switzerland and for
general corporate purposes.



<PAGE>   83



                                  SCHEDULE 5.15
                          (to Note Purchase Agreement)

                            EXISTING INDEBTEDNESS AT
                                 APRIL 30, 1998


         1. $175,000,000 Revolving Credit Agreement dated as of January 9, 1998,
between Union Bank of Switzerland and the Operating Partnership ("Bank Loan").

         The Bank Loan is guaranteed by U.S. Restaurant Properties, Inc.

         2. $12,500,000 aggregate amount of notes, due January 31, 2000, and
$27,500,000 aggregate amount of notes due January 31, 2002, issued pursuant to
the Note Purchase Agreement dated as of January 31, 1997 (the "Notes") from the
Operating Partnership to Pacific Mutual Life Insurance Company, The Ohio
National Life Insurance Company, Jefferson-Pilot Life Insurance Company,
Alexander Hamilton Life Insurance Company of America, First Alexander Hamilton
Life Insurance Company, Reliastar Life Insurance Company, Northern Life
Insurance Company, Reliastar Bankers Security Life Insurance Company, and
Reliastar United Services Life Insurance Company.

         The Notes are guaranteed, jointly and severally, by U.S. Restaurant
         Properties, Inc., USRP (Consolidating), LLC, USRP (West Virginia)
         Partners, L.P., Restaurant Renovation Partners, L.P., U.S. Restaurant
         Properties Development L.P., USRP (Lincoln), Ltd., USRP (Norman), Ltd.,
         and USRP (Carolina), Ltd.

         3. $200,000,000 Warehouse Line of Credit from U.S. Restaurant Lending
Group I, L.P., payable to Goldman Sachs Mortgage Company.

         4. $1,038,888.00 Standby Letters of Credit issued by Comerica Bank -
Texas.


<PAGE>   84



                                    EXHIBIT 1
                          (to Note Purchase Agreement)


                                  FORM OF NOTE

                    U.S. RESTAURANT PROPERTIES OPERATING L.P.

                        7.15% Senior Note due May 1, 2005

No. _________                                                  ___________, 199_
$____________                                                    PPN 90345# AC 4

         FOR VALUE RECEIVED, the undersigned, U.S. RESTAURANT PROPERTIES
OPERATING L.P. (herein called the "Operating Partnership"), a limited
partnership organized and existing under the laws of the State of Delaware,
hereby promises to pay to ____________________, or registered assigns, the
principal sum of ____________________ DOLLARS on May 1, 2005, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the rate of 7.15% per annum from the date hereof,
payable semiannually, on the first day of May and November in each year,
commencing with the May 1 or November 1 next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of interest and any overdue payment of any
Make-Whole Amount (as defined in the Note Purchase Agreements referred to
below), payable semiannually as aforesaid (or, at the option of the registered
holder hereof, on demand), at a rate per annum from time to time equal to the
greater of (1) 9.15% or (2) 2% over the rate of interest publicly announced by
Citibank, N.A. from time to time in New York, New York as its "base" or "prime"
rate.

         Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at Citibank, N.A. or at such other place as the Operating Partnership
shall have designated by written notice to the holder of this Note as provided
in the Note Purchase Agreements referred to below.

         This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to separate Note Purchase Agreements, dated as of as of
May 1, 1998 (as from time to time amended, the "Note Purchase Agreements"),
between the Operating Partnership, U.S. Restaurant Properties, Inc., a Maryland
corporation, and the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by its acceptance
hereof, (i) to have agreed to the confidentiality provisions set forth in
SECTION 20 of the Note Purchase Agreements and (ii) to have made the
representation set forth in SECTION 6.2 or SECTION 13.2 of the Note Purchase
Agreements, as applicable.

         This Note is a registered Note and, as provided in the Note Purchase
Agreements, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written 


<PAGE>   85

instrument of transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Note for a like principal
amount will be issued to, and registered in the name of, the transferee. Prior
to due presentment for registration of transfer, the Operating Partnership may
treat the person in whose name this Note is registered as the owner hereof for
the purpose of receiving payment and for all other purposes, and the Operating
Partnership will not be affected by any notice to the contrary.

         This Note and the holders hereof are entitled equally and ratably with
the holders of all other Notes to the rights and benefits provided pursuant to
the terms and provisions of the Guaranty Agreement and the Subsidiary Guaranty
Agreement (as such terms are defined in the Note Purchase Agreements). Reference
is hereby made to the Guaranty Agreement and the Subsidiary Guaranty Agreement
for a statement of the nature and extent of the benefits and security for the
Notes afforded thereby and the rights of the holders of the Notes in respect
thereof.

         This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreements, but not otherwise.

         If an Event of Default, as defined in the Note Purchase Agreements,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreements.

         This Note shall be construed and enforced in accordance with, and the
rights and parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State which would require
application of the laws of the jurisdiction other than such State.


                                      U.S. RESTAURANT PROPERTIES OPERATING L.P.

                                      By:  USRP Managing, Inc.


                                           By
                                             ----------------------------------
                                              Its
                                                 ------------------------------




<PAGE>   86



                                 EXHIBIT 4.5(a)
                          (to Note Purchase Agreement)


                       FORM OF OPINION OF SPECIAL COUNSEL
                          TO THE CONSTITUENT COMPANIES

         The closing opinion of Middleberg, Riddle & Gianna, counsel for the
Constituent Companies, which is called for by SECTION 4.5 of the Agreement,
shall be dated the date of the Closing and addressed to you and the Other
Purchasers, shall be satisfactory in scope and form to you and the Other
Purchasers and shall be to the effect that:

                    1. The Trust is a corporation, duly incorporated, validly
         existing and in good standing under the laws of the State of Maryland,
         has the corporate power and authority to execute and perform the
         Agreement, the Other Agreements and the Guaranty Agreement, has the
         full corporate power and authority to conduct the activities in which
         it is now engaged and is duly licensed or qualified and is in good
         standing as a foreign corporation in each jurisdiction in which the
         character of the properties owned or leased by it or the nature of the
         business transacted by it makes such licensing or qualification
         necessary.

                    2. The Operating Partnership is a limited partnership, duly
         organized, validly existing and in good standing under the laws of the
         State of Delaware, has the power and authority to execute and perform
         the Agreement, the Other Agreements and to issue the Notes, has full
         power and authority to conduct the activities in which it is now
         engaged and is duly qualified and is in good standing as a foreign
         entity in each jurisdiction in which the character of the properties
         owned or leased by it or the nature of the business transacted by it
         makes such licensing or qualification necessary.

                    3. Each Subsidiary Guarantor is a limited liability company
         or limited partnership, duly organized, validly existing and in good
         standing, if applicable, under the laws of its jurisdiction of
         organization, has the power and authority to execute and perform the
         Subsidiary Guaranty Agreement, has the full power and authority to
         conduct the activities in which it is now engaged and is duly licensed
         or qualified and is in good standing as a foreign corporation or other
         legal entity in each jurisdiction in which the character of the
         properties owned or leased by it or the nature of the business
         transacted by it makes such licensing or qualification necessary.

                    4. Each Subsidiary of the Trust (other than the Operating
         Partnership and the Subsidiary Guarantors) is a corporation or other
         legal entity duly organized, validly existing and in good standing
         under the laws of its jurisdiction of organization and is duly licensed
         or qualified and is in good standing in each jurisdiction in which the
         character of the properties owned or leased by it or the nature of the
         business transacted by it makes such licensing or qualification
         necessary and all of the issued and outstanding shares of capital stock
         or other equity interests of each Subsidiary of the 


<PAGE>   87

         Trust (including the Operating Partnership) have been duly issued, are
         fully paid and non-assessable and are owned by the Trust, by one or
         more Subsidiaries, or by the Trust and one or more Subsidiaries.

                    5. The Agreement and the Other Agreements have been duly
         authorized by all necessary action on the part of each Constituent
         Company, have been duly executed and delivered by each Constituent
         Company and constitute the legal, valid and binding contracts of each
         Constituent Company enforceable in accordance with their respective
         terms, subject to bankruptcy, insolvency, reorganization, moratorium,
         fraudulent conveyance and similar laws affecting creditors' rights
         generally, and general principles of equity (regardless of whether the
         application of such principles is considered in a proceeding in equity
         or at law).

                    6. The Notes have been duly authorized by all necessary
         action on the part of the Operating Partnership, and the Notes being
         delivered on the date of the Closing have been duly executed and
         delivered by the Operating Partnership and constitute the legal, valid
         and binding obligations of the Operating Partnership enforceable in
         accordance with their respective terms, subject to bankruptcy,
         insolvency, reorganization, moratorium, fraudulent conveyance and
         similar laws affecting creditors' rights generally, and general
         principles of equity (regardless of whether the application of such
         principles is considered in a proceeding in equity or at law).

                    7. The Guaranty Agreement has been duly authorized by all
         necessary corporate action on the part of the Trust, has been duly
         executed and delivered by the Trust and constitutes the legal, valid
         and binding contract of the Trust enforceable in accordance with its
         terms, subject to bankruptcy, insolvency, reorganization, moratorium,
         fraudulent conveyance and similar laws affecting creditors' rights
         generally, and general principles of equity (regardless of whether the
         application of such principles is considered in a proceeding in equity
         or at law).

                    8. The Subsidiary Guaranty Agreement has been duly
         authorized by all necessary action on the part of each Subsidiary
         Guarantor, has been duly executed and delivered by each Subsidiary
         Guarantor and constitutes the legal, valid and binding contract of each
         Subsidiary Guarantor enforceable in accordance with its terms, subject
         to bankruptcy, insolvency, reorganization, moratorium, fraudulent
         conveyance and similar laws affecting creditors' rights generally, and
         general principles of equity (regardless of whether the application of
         such principles is considered in a proceeding in equity or at law).

                    9. No approval, consent or withholding of objection on the
         part of, or filing, registration or qualification with, any
         Governmental Authority, Federal or state is necessary in connection
         with the execution and delivery of the Agreement, the Other Agreements,
         the Guaranty Agreement, the Subsidiary Guaranty Agreement or the Notes.


<PAGE>   88

                   10. The issuance and sale of the Notes and the execution,
         delivery and performance by the Operating Partnership of the Agreement,
         the Other Agreements do not conflict with or result in any breach of
         any of the provisions of or constitute a default under or result in the
         creation or imposition of any Lien upon any of the property of the
         Operating Partnership pursuant to the provisions of the Certificate of
         Limited Partnership or the Limited Partnership Agreement of the
         Operating Partnership or any agreement or other instrument known to
         such counsel to which the Operating Partnership is a party or by which
         the Operating Partnership may be bound.

                   11. The execution, delivery and performance by the Trust of
         the Agreement, the Other Agreements and the Guaranty Agreement do not
         conflict with or result in any breach of any of the provisions of or
         constitute a default under or result in the creation or imposition of
         any Lien upon any of the property of the Trust pursuant to the
         provisions of the Articles of Incorporation or Bylaws of the Trust or
         any agreement or other instrument known to such counsel to which the
         Trust is a party or by which the Trust may be bound.

                   12. The execution, delivery and performance by the Subsidiary
         Guarantors of the Subsidiary Guaranty Agreement do not conflict with or
         result in any breach of any of the provisions of or constitute a
         default under or result in the creation or imposition of any Lien upon
         any of the property of any Subsidiary Guarantor pursuant to the
         provisions of the organizational documents of such Subsidiary Guarantor
         or any agreement or other instrument known to such counsel to which
         such Subsidiary Guarantor is a party or by which such Subsidiary
         Guarantor may be bound.

                   13. The issuance, sale and delivery of the Notes under the
         circumstances contemplated by the Agreement and the Other Agreements
         and the delivery of the Guaranty Agreement and the Subsidiary Guaranty
         Agreement do not, under existing law, require the registration of the
         Notes or the Guaranty Agreement or the Subsidiary Guaranty Agreement
         under the Securities Act of 1933, as amended, or the qualification of
         an indenture under the Trust Indenture Act of 1939, as amended.

                   14. Since its organization, the Trust has been organized in
         conformity with the requirements for qualification and taxation as a
         "real estate investment trust" under the Code.

                   15. To the best of such counsel's knowledge after due
         inquiry, there are no actions, suits or proceedings pending or
         threatened against or affecting the Trust or any Subsidiary, at law or
         in equity in any court or before any Governmental Authority, which if
         adversely determined would individually or in the aggregate have a
         Material Adverse Effect.

The opinion of Middleberg, Riddle & Gianna, counsel to the Constituent
Companies, shall cover such other matters relating to the sale of the Notes as
you and the Other Purchasers may reasonably request. With respect to matters of
fact on which such opinion is based, such counsel shall be entitled to rely on
appropriate certificates of public officials and officers of the Constituent
Companies.



<PAGE>   89


                                 EXHIBIT 4.5(b)
                          (to Note Purchase Agreement)

                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

         The closing opinion of Chapman and Cutler, special counsel to you and
the Other Purchasers, called for by SECTION 4.5 of the Agreement, shall be dated
the date of the Closing and addressed to you and the Other Purchasers, shall be
satisfactory in form and substance to you and the Other Purchasers and shall be
to the effect that:

                    1. The Trust is a corporation, validly existing and in good
         standing under the laws of the State of Maryland and has the power and
         authority to execute and deliver the Agreement, the Other Agreements
         and the Guaranty Agreement.

                    2. The Operating Partnership is a limited partnership,
         validly existing and in good standing under the laws of the State of
         Delaware and has the power and the authority to execute and deliver the
         Agreement, the Other Agreements and to issue the Notes.

                    3. The Agreement and the Other Agreements have been duly
         authorized by all necessary action on the part of each Constituent
         Company, have been duly executed and delivered by each Constituent
         Company and constitute the legal, valid and binding contracts of each
         Constituent Company enforceable in accordance with their respective
         terms, subject to bankruptcy, insolvency, fraudulent conveyance and
         similar laws affecting creditors' rights generally, and general
         principles of equity (regardless of whether the application of such
         principles is considered in a proceeding in equity or at law).

                    4. The Notes have been duly authorized by all necessary
         action on the part of the Operating Partnership, and the Notes being
         delivered on the date of such Closing have been duly executed and
         delivered by the Operating Partnership and constitute the legal, valid
         and binding obligations of the Operating Partnership enforceable in
         accordance with their respective terms, subject to bankruptcy,
         insolvency, fraudulent conveyance and similar laws affecting creditors'
         rights generally, and general principles of equity (regardless of
         whether the application of such principles is considered in a
         proceeding in equity or at law).

                    5. The Guaranty Agreement has been duly authorized by all
         necessary action on the part of the Trust, has been duly executed and
         delivered by the Trust and constitutes the legal, valid and binding
         contract of the Trust enforceable in accordance with its terms, subject
         to bankruptcy, insolvency, fraudulent conveyance and similar laws
         affecting creditors' rights generally, and general principles of equity
         (regardless of whether the application of such principles is considered
         in a proceeding in equity or at law).


<PAGE>   90

                    6. The issuance, sale and delivery of the Notes under the
         circumstances contemplated by the Agreement and the Other Agreements
         and the delivery of the Guaranty Agreement do not, under existing law,
         require the registration of the Notes or the Guaranty Agreement under
         the Securities Act of 1933, as amended, or the qualification of an
         indenture under the Trust Indenture Act of 1939, as amended.

         The opinion of Chapman and Cutler shall also state that the opinion of
Middleberg, Riddle & Gianna, counsel for the Constituent Companies, is
satisfactory in scope and form to Chapman and Cutler and that, in their opinion,
you and the Other Purchasers are justified in relying thereon.

         In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely solely upon an examination of the Articles of Incorporation and
Bylaws of the Trust and the general corporate law of the State of Maryland. In
rendering the opinion set forth in paragraph 2 above, Chapman and Cutler may
rely solely upon an examination of the Limited Partnership Agreement of the
Operating Partnership and the limited partnership laws of the State of Delaware.
The opinion of Chapman and Cutler is limited to the laws of the State of New
York, the general corporate law of the State of Maryland, the limited
partnership laws of the State of Delaware and the Federal laws of the United
States.

         With respect to matters of fact upon which such opinion is based,
Chapman and Cutler may rely on appropriate certificates of public officials and
officers of the Constituent Companies and upon representations of the
Constituent Companies and you and the Other Purchasers delivered in connection
with the issuance and sale of the Notes.