Document:

Exhibit 4.02

 

SECURITIES
PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”)
is dated as of June 12, 2003, among U.S. Restaurant Properties, Inc., a
Maryland corporation (the “Company”), and the purchasers identified on
the signature pages hereto (each, including its successors and assigns, a “Purchaser”
and collectively the “Purchasers”).

 

WHEREAS, subject to the terms and conditions
set forth in this Agreement and pursuant to Section 4(2) of the Securities Act
of 1933, as amended (the “Securities Act”), and Rule 506 promulgated
thereunder, the Company desires to issue and sell to each Purchaser, and each
Purchaser, severally and not jointly with the other Purchasers, desires to
purchase from the Company securities of the Company as more fully described in
this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the
mutual covenants contained in this Agreement, and for other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
Company and each Purchaser agrees as follows:

 

ARTICLE I

DEFINITIONS

 

1.1                                 Definitions.  In addition to the terms defined elsewhere
in this Agreement: (a) capitalized terms that are not otherwise defined herein
have the meanings given to such terms in the Articles Supplementary (as defined
herein), and (b) the following terms have the meanings indicated in this
Section 1.1:

 

“Actual Minimum” means, as of any date, the maximum aggregate
number of shares of Common Stock then issued or potentially issuable in the
future pursuant to the Transaction Documents, including any Underlying Shares
issuable upon exercise or conversion in full of all Warrants and shares of
Preferred Stock, ignoring any conversion or exercise limits set forth therein,
and assuming that any previously unconverted shares of Preferred Stock are held
until the third anniversary of the Closing Date and all dividends are paid in
shares of Common Stock until such third anniversary, subject to the limitation
on the number of shares of Common Stock issuable hereunder set forth in Section
5(a)(iii) of the Articles Supplementary.

 

“Affiliate” means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under
Rule 144 under the Securities Act.  With
respect to a Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as such Purchaser will
be deemed to be an Affiliate of such Purchaser.

 

 

“Articles Supplementary” means the Articles Supplementary to be filed prior to the Closing by the Company with the State Department of Assessment and Taxation of Maryland, in the form of Exhibit A attached hereto.

 

“Capital
Shares” means the Common Stock and any shares of any other class of common
stock whether now or hereafter authorized, having the right to participate in
the distribution of earnings and assets of the Company.

 

“Capital
Shares Equivalents” means any securities, rights, or obligations that are
convertible into or exchangeable for or give any right to subscribe for or
purchase, directly or indirectly, any Capital Shares of the Company or any
warrants, options or other rights to subscribe for or purchase, directly or
indirectly, Capital Shares or any such convertible or exchangeable securities.

 

“Closing” means the Closing of the purchase and sale of the
Securities pursuant to Section 2.1.

 

“Closing Date” means the date of the Closing.

 

“Commission” means the Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value
$0.001 per share, and any securities into which such common stock shall
hereinafter been reclassified into.

 

“Company Counsel” means Locke Liddell & Sapp LLP, outside
counsel to the Company, with offices at 2200 Ross Avenue, Suite 2200, Dallas,
Texas 75201-6776.

 

“Disclosure Schedules” shall have the meaning ascribed to such
term in Section 3.1.

 

“Effective Date” means the date that the Registration Statement
initially filed with the Commission pursuant to the Registration Rights
Agreement is first declared effective by the Commission.

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“FW” means Feldman Weinstein LLP with offices at Suite 2620, 420
Lexington Avenue, New York, New York 10170-0002

 

“GAAP” shall have the meaning ascribed to such term in Section
3.1(h).

 

“Liens” shall have the meaning ascribed to such term in Section
3.1(a).

 

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“Losses” means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including without limitation costs of
preparation and reasonable attorneys’ fees.

 

“Material Adverse Effect” shall have the meaning assigned to
such term in Section 3.1(b).

 

“Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.

 
“Preferred Stock” means the 16,000 shares of the Company’s 8% Series B Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Articles Supplementary.
 

“Principal Market” initially means the New York Stock Exchange
and shall also include the NASDAQ Small-Cap Market, the American Stock Exchange
or the NASDAQ National Market, whichever is at the time the principal trading
exchange or market for the Common Stock, based upon share volume.

 

“Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.

 

“Purchaser Percentage” means, with respect to a Purchaser, the
percentage equal to the product of (x) a fraction, the numerator of which shall
be the Subscription Amount paid by such Purchaser on the Closing Date and the
denominator of which shall be the aggregate Subscription Amount paid by all
Purchasers on the Closing Date times (y) 100.

 

“Registration Rights Agreement” means the Registration Rights
Agreement, dated the date hereof, among the Company and each Purchaser, in the
form of Exhibit B.

 

“Required Approvals” shall have the meaning ascribed to such
term in Section 3.1(e).

 

“Required Minimum” means, as of any date, the maximum aggregate
number of shares of Common Stock then issued or potentially issuable in the
future pursuant to the Transaction Documents, including any Underlying Shares
issuable upon exercise or conversion in full of all Warrants and Preferred
Stock, ignoring any conversion or exercise limits set forth therein, and
assuming that (i) any previously unconverted shares of Preferred Stock are held
until the third anniversary of the Closing Date and all dividends thereon are
paid in shares of Common Stock until such third anniversary, and (ii) the VWAP
at all times on and after the date of determination equals 80% of the actual
VWAP on the Trading Day immediately prior to the date of determination and the
company has sold its securities for such VWAP on such date, subject to the
limitation on the number of shares of Common Stock issuable hereunder set forth
in Section 5(a)(iii) of the Articles Supplementary.

 

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“Rule 144” means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in
Section 3.1(h).

 

“Securities” means the Preferred Stock, the Warrants and the
Underlying Shares.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Stated Value” means $1,000 per share of Preferred Stock.

 

“Stockholder Approval” means such approval as may be required by
the applicable rules and regulations of the Principal Market (or any successor
entity) from the shareholders of the Company with respect to the transactions
contemplated by the Transaction Documents, including the issuance of all of the
Underlying Shares and shares of Common Stock issuable upon exercise of the
Warrants in excess of 20% of the Company’s issued and outstanding Common Stock
on the Closing Date.

 

“Subscription Amount” shall mean, as to each Purchaser, the amount to
be paid for the Preferred Stock purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement, in United States
Dollars.

 

“Subsidiary” means any subsidiary of the Company that is
required to be listed in Schedule 3.1(a).

 

“Trading Day” means any day during which the Principal Market
shall be open for business.

 

“Transaction Documents” means this Agreement, the Articles
Supplementary, the Warrants, the Registration Rights Agreement and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.

 

“Underlying Shares” means the shares of Common Stock issuable
upon conversion of the Preferred Stock, upon exercise of the Warrants and
issued and issuable in lieu of the cash payment of dividends on the Preferred
Stock.

 

“Underlying Shares Registration Statement” or “Registration
Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale of the
Underlying Shares by each Purchaser as provided for in the Registration Rights
Agreement.

 
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Principal Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Principal Market on which the Common Stock is then

 

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listed or quoted as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not then listed or quoted on the Principal Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers and reasonably acceptable to the Company.

 

“Warrants” means collectively the Stock Purchase Warrants, in
the form of Exhibit C delivered to each Purchaser at the Closing in
accordance with Section 2.2.

 

ARTICLE II

PURCHASE AND SALE

 

2.1                                 
Investment.

 

(a)  Upon the terms and subject to the conditions
set forth herein, concurrent with the execution and delivery of this Agreement
by the parties hereto or such other time as shall be agreed to by the parties
hereto, each Purchaser shall purchase, severally and not jointly, and the
Company shall sell to such Purchaser, a number of shares of Preferred Stock
equal to such Purchaser’s Subscription Amount divided by the Stated Value for
an aggregate number of shares of Preferred Stock sold hereunder equal to 16,000
for an aggregate Subscription Amount equal to $16,000,000.

 

(b) Upon
satisfaction of the conditions set forth in Section 2.2, the Closing shall
occur at the offices of FW, or such other location as the parties shall
mutually agree.

 

2.2                                 Conditions
to Closing.  The Closing is subject
to the satisfaction or waiver by the party to be benefited thereby of the
following conditions:

 

(a)                                  The
Company shall have delivered or caused to be delivered to each Purchaser the
following:

 

(i)                                     this
Agreement duly executed by the Company;

 

(ii)                                  a
certificate evidencing a number of shares of Preferred Stock equal to such
Purchaser’s Subscription Amount divided by the Stated Value, registered in the
name of such Purchaser;

 

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(iii)                               a
Warrant, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to acquire up to a number of shares of Common
Stock equal to 20% of such Purchaser’s Subscription Amount divided by $15.50,
subject to adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that
occur after the date of this Agreement. 
The Warrant shall have a term of exercise of seven years beginning on
their date of issuance and an exercise price equal to $16.50, as adjusted
therein and subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement;

 

(iv)                              a
legal opinion of Company Counsel, in the form of Exhibit D attached
hereto, addressed to each Purchaser;

 

(v)                                 the
Registration Rights Agreement duly executed by the Company; and

 

(vi)                              executed
agreements, in the form attached hereto as Exhibit E, by Robert J.
Stetson and Lone Star Fund III (U.S.), L.P.

 

(b)                                 At
the Closing, each Purchaser shall have delivered or caused to be delivered to
the Company the following:

 

(i)                                     this
Agreement duly executed by such Purchaser;

 

(ii)                                  such
Purchaser’s Subscription Amount, by wire transfer to the account of the
Company; and

 

(iii)                               the
Registration Rights Agreement duly executed by such Purchaser.

 

(c)                                  All
representations and warranties of the other party contained herein shall remain
true and correct as of the applicable Closing Date.

 

(d)                                 There
shall have been no Material Adverse Effect (as defined in Section 3.1(b)) with
respect to the Company since the date hereof.

 

(e)                                  From
the date hereof to the Closing Date, trading in the Common Stock shall not have
been suspended by the Commission (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated prior
to the Closing), and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg Financial Markets shall not have
been suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on the Principal
Market, nor shall a banking moratorium have been declared either by the United
States or New York State authorities, nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change

 

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in, any
financial market which, in each case, in the reasonable judgment of the
Purchasers, makes it impracticable or inadvisable to purchase the shares of
Preferred Stock at the Closing.

 

ARTICLE III

REPRESENTATIONS
AND WARRANTIES

 

3.1                                 Representations
and Warranties of the Company. 
Except as set forth under the corresponding section of the disclosure
schedules delivered to the Purchasers concurrently herewith (the “Disclosure
Schedules”), the Company hereby makes the following representations and
warranties to each Purchaser:

 

(a)                                  Subsidiaries.  The Company has no direct or indirect
subsidiaries.  The Company owns,
directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any lien, charge, security interest,
encumbrance, right of first refusal or other restriction (collectively, “Liens”),
and all the issued and outstanding shares of capital stock of each Subsidiary
are validly issued and are fully paid, non-assessable and free of preemptive
and similar rights. If the Company has no subsidiaries, then references in the
Transaction Documents to the Subsidiaries will be disregarded.

 

(b)                                 Organization
and Qualification.  Each of the
Company and the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing, as applicable, and in good standing under the laws
of the jurisdiction of its incorporation or organization (as applicable), with
the requisite power and authority to own and use its properties and assets and
to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not reasonably be
expected to, individually or in the aggregate: (i) adversely affect the
legality, validity or enforceability of any Transaction Document, (ii) have or
result in or be reasonably likely to have or result in a material adverse
effect on the results of operations, assets, business or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii)
adversely impair the Company’s ability to perform fully on a timely basis its
obligations under any of the Transaction Documents (any of (i), (ii) or (iii),
a “Material Adverse Effect”).

 

(c)                                  Authorization;
Enforcement.  The Company has the
requisite corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out
its obligations hereunder or thereunder. 
The execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby or
thereby have been duly authorized by all necessary action on the part of the
Company and no

 

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further consent or action is required by the Company, other than the
Required Approvals.  Each of the
Transaction Documents has been (or upon delivery will be) duly executed by the
Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and general principles of
equity.

 

(d)                                 No
Conflicts.  The execution, delivery
and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated thereby do not and
will not: (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) subject to obtaining the Required
Approvals (as defined below), conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority as currently in effect to which the Company
or a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not reasonably be expected to, individually or in the aggregate,
have or result in a Material Adverse Effect.

 

(e)                                  Filings,
Consents and Approvals.  Neither the
Company nor any Subsidiary is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than (i) the filings required under Section 4.9, (ii) the filing with
the Commission of the Underlying Shares Registration Statement, (iii) the
application(s) to each applicable Principal Market for the listing of the
Underlying Shares for trading thereon in the time and manner required thereby,
(iv) the filing with the Commission of a Form D pursuant to Commission
Regulation D, and (v) applicable Blue Sky filings (collectively, the “Required
Approvals”).

 

(f)                                    Issuance
of the Securities.  The Securities
are duly authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens, other than any Liens created or
permitted to exist by the Purchasers. 
The Company has reserved from its duly authorized capital stock a number
of shares of Common Stock for issuance of the Underlying Shares at least equal
to the Required Minimum on the date hereof.

 

8

 

(g)                                 Capitalization.  The number of shares and type of all
authorized, issued and outstanding capital stock of the Company is set forth in
the Disclosure Schedules.  No securities
of the Company are entitled to preemptive or similar rights, and no Person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the
Transaction Documents.  Except as a
result of the purchase and sale of the Securities, there are no outstanding
options other than as set forth in the SEC Reports, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exchangeable for, or
giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares
of Common Stock.  The issuance and sale
of the Securities will not obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Purchasers) and will not
result in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities.

 

(h)                                 SEC
Reports; Financial Statements.  The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials
being collectively referred to herein as the “SEC Reports”) on a timely
basis or has received a valid extension of such time of filing and has filed
any such SEC Reports prior to the expiration of any such extension.  The Company has made available to each
Purchaser a copy of all SEC Reports filed within the 10 days preceding the date
hereof.  As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The financial statements of
the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with GAAP, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects
the financial position of the Company and its consolidated subsidiaries as of
and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(i)                                     Material
Changes.  Since the date of the
latest audited financial statements included within the SEC Reports, except as
specifically disclosed in the SEC Reports: (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses

 

9

 

incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) other than in the ordinary
course of business, the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock, and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option or
similar plans.

 

(j)                                     Litigation.  There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which: (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) could, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
nor any director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. The Company does not
have pending before the Commission any request for confidential treatment of
information.  There has not been, and to
the knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

 

(k)                                  Compliance.  Except as set forth in the SEC Reports,
neither the Company nor any Subsidiary: (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, except in each
case as could not, individually or in the aggregate, have or result in a
Material Adverse Effect.

 

(l)                                     Labor
Relations.  No material labor dispute
exists or, to the knowledge of the Company, is imminent with respect to any of
the employees of the Company.

 

(m)                               Regulatory
Permits.  The Company and the
Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or

 

10

 

foreign regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the failure to possess
such permits could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit.

 

(n)                                 Title
to Assets.  The Company and the
Subsidiaries have good and marketable title in fee simple to all real property
owned by them that is material to the business of the Company and the
Subsidiaries and good and marketable title in all personal property owned by
them that is material to the business of the Company and the Subsidiaries, in
each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries.  Except in each case as
could not, individually or in the aggregate, have or result in a Material
Adverse Effect, any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in material
compliance.

 

(o)                                 Patents
and Trademarks.  To the knowledge of
the Company, the Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other similar rights that are
necessary or material for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have could have a
Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violates or infringes upon the rights of any Person.
To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights.

 

(p)                                 Insurance.  The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which the Company and the Subsidiaries are engaged. A list of the Company’s
insurance contracts and policies are set forth on the Disclosure
Schedules.  To the best of Company’s
knowledge, such insurance contracts and policies are accurate and
complete.  Neither the Company nor any
Subsidiary has any knowledge that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.

 

(q)                                 Transactions
With Affiliates and Employees. 
Except as set forth in the SEC Reports, none of the executive officers
or directors of the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other

 

11

 

arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or
partner.

 

(r)                                    Internal
Accounting Controls.  Except as set
forth in the SEC Reports, the Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.  There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the accountants and lawyers formerly or
presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers. Except as set forth in the SEC
Reports, the Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and designed
such disclosures controls and procedures to ensure that material information
relating to the Company, including its subsidiaries, is made known to the
certifying officers by others within those entities, particularly during the
period in which the Company’s Form 10-K or 10-Q, as the case may be, is being
prepared.  The Company’s certifying
officers have evaluated the effectiveness of the Company’s controls and
procedures as of a date within 90 days prior to the filing date of the Form
10-K for the fiscal year ended December 31, 2002 (such date, the “Evaluation
Date”).  The Company presented in
the Form 10-K for the fiscal year ended December 31, 2002 the conclusions of
the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been
no significant changes in the Company’s internal controls (as such term is
defined in Item 307(b) of Regulation S-K under the Exchange Act) or, the
Company’s knowledge, in other factors that could significantly affect the
Company’s internal controls.

 

(s)                                  Solvency/Indebtedness.  Based on the financial condition of the
Company as of the Closing Date: (i) the fair market value of the Company’s
assets exceeds the amount that will be required to be paid on or in respect of
the Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business for the current fiscal year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted
by the Company, and projected capital requirements and capital availability
thereof; and (iii) the current cash flow of the Company, together with the
proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its

 

12

 

debt when such amounts are required to be paid.  The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt). The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing
Date.  The SEC Reports set forth as of
the date thereof all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this
Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed
money or amounts owed in excess of $50,000 (other than trade accounts payable
incurred in the ordinary course of business), (b) all guaranties, endorsements
and other contingent obligations in respect of Indebtedness of others, whether
or not the same are or should be reflected in the Company’s balance sheet (or
the notes thereto), except guaranties by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business; and (c) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness.

 

(t)                                    Certain
Fees.  No brokerage or finder’s fees
or commissions are or will be payable by the Company to any broker, financial
advisor or consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this Agreement,
and the Company has not taken any action that would cause any Purchaser to be
liable for any such fees or commissions. 
The Company agrees that each Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of any
Person for fees of the type contemplated by this Section with the transactions
contemplated by this Agreement.

 

(u)                                 Private
Placement.  Assuming the accuracy of
the representations and warranties of each Purchaser set forth in Sections 3.2,
the offer, issuance and sale of the Preferred Stock and Warrants to each
Purchaser as contemplated hereby are exempt from the registration requirements
of the Securities Act.  The issuance and
sale of the Securities hereunder does not contravene the rules and regulations
of the Principal Market and no shareholder approval is required for the Company
to fulfill its obligations under the Transaction Documents.

 

(v)                                 Listing
and Maintenance Requirements.  The
Company has not, in the 12 months preceding the date hereof, received notice
from any Principal Market on which the Common Stock is or has been listed or
quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Principal Market. The Company is, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

 

(w)                               Registration
Rights.  The Company has not granted
or agreed to grant to any Person any rights (including “piggy-back”
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority that have not been satisfied.

 

13

 

(x)                                   Application
of Takeover Protections.  The
Company and its Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s Certificate of
Incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to each Purchaser as a result
of each Purchaser and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation as a
result of the Company’s issuance of the Securities and each Purchaser’s
ownership of the Securities.

 

(z)                                   Disclosure.  The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers or their
agents or counsel with any information that constitutes or might constitute
material, nonpublic information.  The
Company understands and confirms that each Purchaser will rely on the foregoing
representations in effecting transactions in securities of the Company.  All disclosure provided to each Purchaser
regarding the Company, its business and the transactions contemplated hereby,
including the Schedules to this Agreement, furnished by or on behalf of the
Company with respect to the representations and warranties made herein are true
and correct with respect to such representations and warranties and do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2.

 

(aa)                            Form S-3 Eligibility.  The Company is eligible to register the
resale of the Underlying Shares for resale by the Purchaser under Form S-3
promulgated under the Securities Act.

 

(bb)                          Seniority.  As of the date of this Agreement, no other
equity of the Company is senior to the Preferred Stock in right of payment,
whether with respect to interest or upon liquidation or dissolution, or
otherwise.

 

(cc)                            Tax Status.  The Company and each of its Subsidiaries has
made or filed all material federal, state and foreign income and all other
material tax returns, reports and declarations required by any jurisdiction to
which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and
other governmental assessments and charges that are material in amount, shown
or determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.  The Company has not executed a waiver with
respect to the statute of limitations relating to the assessment or collection
of any

 

14

 

foreign, federal, statue or local tax. 
None of the Company’s tax returns is presently being audited by any
taxing authority.

 

(dd)                          Acknowledgment Regarding
Purchasers’ Purchase of Securities. 
The Company acknowledges and agrees that the Purchasers are acting
solely in the capacity of arm’s length purchasers with respect to this
Agreement and the transactions contemplated hereby.  The Company further acknowledges that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any
statement made by any Purchaser or any of their respective representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to the
Purchasers’ purchase of the Securities. 
The Company further represents to each Purchaser that the Company’s
decision to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives.

 

(ee)                            No General Solicitation
or Advertising in Regard to this Transaction.  Neither the Company nor, to the knowledge of the Company, any of
its directors or officers (i) has conducted or will conduct any general
solicitation (as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to the sale of the Preferred Stock or the Warrants, or
(ii) made any offers or sales of any security or solicited any offers to buy
any security under any circumstances that would require registration of the
Preferred Stock, the Underlying Shares or the Warrants under the Securities Act
or made any “directed selling efforts” as defined in Rule 902 of Regulation S.

 

(ff)                                Acknowledgment of
Dilution.  The Company acknowledges
that the issuance of the Securities will result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain market
conditions.  The Company further
acknowledges that its obligations under the Transaction Documents, including
without limitation its obligation to issue the Underlying Shares pursuant to
the Transaction Documents, are unconditional and absolute and not subject to
any right of set off, counterclaim, delay or reduction, regardless of the
effect of any such dilution and regardless of the dilutive effect that such
issuance may have on the ownership of the other stockholders of the Company.

 

3.2                                 Representations
and Warranties of each Purchaser. 
Each Purchaser hereby, for itself and for no other Purchaser, represents
and warrants to the Company as follows:

 

(a)                                  Organization;
Authority.  Such Purchaser is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations thereunder. The purchase by such Purchaser of the
Securities hereunder has been duly authorized by all necessary action on the
part of such Purchaser.  Each of this
Agreement, and the Registration Rights Agreement has been duly executed

 

15

 

by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms.

 

(b)                                 Investment
Intent.  Such Purchaser is acquiring
the Securities as principal for its own account for investment purposes only
and not with a view to or for distributing or reselling such Securities or any
part thereof, without prejudice, however, to such Purchaser’s right, subject to
the provisions of this Agreement, at all times to sell or otherwise dispose of
all or any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such registration
and in compliance with applicable federal and state securities laws.  Nothing contained herein shall be deemed a
representation or warranty by such Purchaser to hold Securities for any period
of time.  Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business.  Such Purchaser does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Securities.

 

(c)                                  Purchaser
Status.  At the time such Purchaser
was offered the Securities, it was, and at the date hereof it is, and on each
date on which it exercises any Warrants or converts any Preferred Stock, it
will be an “accredited investor” as defined in Rule 501(a) under the Securities
Act. Such Purchaser has not been formed solely for the purpose of acquiring the
Securities.  Such Purchaser is not a
broker-dealer requiring registration under Section 15 of the Exchange Act.

 

(d)                                 Experience
of such Purchaser.  Such Purchaser,
either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford
a complete loss of such investment.

 

(e)                                  General
Solicitation.  Such Purchaser is not
purchasing the Securities as a result of any advertisement, article, notice or
other communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement.

 

ARTICLE IV

OTHER AGREEMENTS OF
THE PARTIES

 

4.1                                 Transfer
Restrictions.

 

(a)                                  The
Securities may only be disposed of in compliance with state and federal
securities laws.  In connection with any
transfer of Securities other than pursuant to an effective registration
statement, to the Company or to an Affiliate of a Purchaser, the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor, the form and substance of which opinion shall be

 

16

 

reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.  As a condition of
transfer, any such transferee shall agree in writing to be bound by the terms
of this Agreement and shall have the rights of a Purchaser under this Agreement
and the Registration Rights Agreement.

 

(b)                                 Each
Purchaser agrees to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing Securities:

 

[NEITHER] THESE SECURITIES
[NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE]
[CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.

 

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON OWNERSHIP AND TRANSFER FOR
THE PURPOSE OF THE COMPANY’S MAINTENANCE OF ITS STATUS AS A REAL ESTATE
INVESTMENT TRUST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMEMDED (THE
“CODE”).  EXCEPT AS OTHERWISE PROVIDED PURSUANT TO THE CHARTER OF THE
CORPORATION, NO PERSON MAY (1) BENEFICIALLY OWN SHARES OF STOCK IN EXCESS OF
9.8% (OR SUCH OTHER PERCENTAGE AS MAY BE PROVIDED IN THE CHARTER OF THE
CORPORATION) OF THE AGRREGATE VALUE OF ALL OUTSTANDING STOCK OR (2)
BENEFICIALLY OWN STOCK THAT WOULD RESULT IN THE COMPANY BEING “CLOSELY HELD”
UNDER SECTION 856(h) OF THE CODE.  ANY PERSON WHO ATTEMPTS TO BENEFECIALLY
OWN SHARES OF STOCK IN EXCESS OF THE ABOVE LIMITATIONS MUST IMMEDIATELY NOTIFY
THE COMPANY.  IF THE RESTRICTIONS ON OWNERSHIP OR TRANSFER ARE VIOLATED,
THE SHARES OF STOCK REPRESENTED HEREBY WILL BE AUTOMATICALLY CONVERTED INTO
SHARES OF EXCESS STOCK WHICH WILL BE HELD IN TRUST BY THE COMPANY.  THE
COMPANY HAS THE OPTION TO REDEEM SHARES OF EXCESS STOCK UNDER CERTAIN

 

17

 

CIRCUMSTANCES.  ALL
TERMS IN THIS LEGEND NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS ASCRIBED
THERETO IN THE COMPANY’S CHARTER, AS THE SAME MAY BE FURTHER AMENDED FROM TIME
TO TIME,  A COPY OF WHICH, INCLUDING THE RESTRICTIONS ON OWNERSHIP AND
TRANSFER, WILL BE SENT WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS.

 

The Company acknowledges and
agrees that a Purchaser may from time to time pledge pursuant to a bona fide
margin agreement or grant a security interest in some or all of the Securities
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Securities to the pledgees or secured parties
subject to the limitations set forth in this Section 4.1.  Such a pledge or transfer would not be
subject to approval of the Company and no legal opinion of the pledgee, secured
party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such
pledge.  At the appropriate Purchaser’s
expense, the Company will execute and deliver such reasonable documentation as
a pledgee or secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities, including the preparation and filing
of any required prospectus supplement under Rule 424(b)(3) of the Securities
Act or other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder.

 

(c)                                  Certificates
evidencing Underlying Shares shall not contain any legend (including the legend
set forth in Section 4.1(b)): (i) while a registration statement (including the
Underlying Shares Registration Statement) covering the resale of such
Underlying Shares is effective under the Securities Act, or (ii) following any
sale of such Underlying Shares pursuant to Rule 144, or (iii) if such
Securities are eligible for sale under Rule 144(k), or (iv) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission).  If all or any shares of
Preferred Stock or any portion of a Warrant is converted or exercised (as
applicable) at a time when there is an effective registration statement to
cover the resale of the Underlying Shares, or if such Underlying Shares may be
sold under Rule 144(k) or if such legend is not otherwise required under
applicable requirements of the Securities Act (including judicial
interpretations thereof) then such Underlying Shares shall be issued free of
all legends.  The Company agrees that
following the Effective Date or at such time as such legend is no longer
required under this Section 4.1(c), it will, no later than three Trading Days
following the delivery by a Purchaser to the Company or the Company’s transfer
agent of a certificate representing Securities issued with a restrictive
legend, deliver or cause to be delivered to such Purchaser a certificate
representing such Underlying Shares that is free from all restrictive and other
legends.  The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this Section.

 

(d)                                 In
addition to such Purchaser’s other available remedies, the Company shall pay to
a Purchaser, in cash, as liquidated damages and not as a penalty, for each
$1,000 of Underlying Shares (based on the VWAP on the date such Securities are

 

18

 

submitted to the
Company’s transfer agent) delivered for removal of the restrictive legend and
subject to this Section 4.1(c), $10 per Trading Day (increasing to $20 per
Trading Day 3 Trading Days after such damages have begun to accrue) for each
Trading Day after such third Trading Day until such certificate is delivered
without a legend.

 

4.3                                 Furnishing
of Information.  As long as any
Purchaser owns Securities, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act.  Upon the request of
any Purchaser, the Company shall deliver to such Purchaser a written certification
of a duly authorized officer as to whether it has complied with the preceding
sentence. As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
each Purchaser and make publicly available in accordance with Rule 144(c) such
information as is required for each Purchaser to sell the Securities under Rule
144.  The Company further covenants that
it will take such further action as any holder of Securities may reasonably request,
all to the extent required from time to time to enable such Person to sell such
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144.

 

4.4                                 Integration.  The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that
would require the registration under the Securities Act of the sale of the
Securities to each Purchaser, or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any
Principal Market.

 

4.5                                 Reservation
and Listing of Securities.

 

(a)                                  The
Company shall maintain a reserve from its duly authorized shares of Common
Stock for issuance pursuant to the Transaction Documents in such amount as may
be required to fulfill its obligations in full under the Transaction Documents.

 

(b)                                 If,
on any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than 130% of (i) the Actual Minimum on such
date, minus (ii) the number of shares of Common Stock previously issued
pursuant to the Transaction Documents, then the Board of Directors of the
Company shall use commercially reasonable efforts to amend the Company’s
certificate or articles of incorporation to increase the number of authorized
but unissued shares of Common Stock to at least the Required Minimum at such
time (minus the number of shares of Common Stock previously issued pursuant to
the Transaction Documents), as soon as possible and in any event not later than
the 75th day after such date; provided that the Company will not be required at
any time to authorize a number of shares of Common Stock greater than the
maximum remaining number of shares of Common Stock that could possibly be
issued after such time pursuant to the Transaction Documents.

 

19

 

(c)                                  The
Company shall: (i) in the time and manner required by the Principal Market,
prepare and file with such Principal Market an additional shares listing
application covering a number of shares of Common Stock at least equal to the
Required Minimum on the date of such application, (ii) take all steps necessary
to cause such shares of Common Stock to be approved for listing on the
Principal Market as soon as possible thereafter, (iii) provide to each Purchaser
evidence of such listing, and (iv) use reasonable efforts to maintain the
listing of such Common Stock on such Principal Market or another Principal
Market.

 

(d)                                 If,
on any date, the number of shares of Common Stock previously listed on a
Principal Market is less than 130% of the Actual Minimum on such date, then the
Company shall take the necessary actions to list on such Principal Market, as
soon as reasonably possible, a number of shares of Common Stock at least equal
to the Required Minimum on such date; provided that the Company will not be
required at any time to list a number of shares of Common Stock greater than
the maximum number of shares of Common Stock that could possibly be issued
pursuant to the Transaction Documents. In addition, the Company shall, at its
next regularly scheduled annual or special meeting of shareholders, but in no
event later than September 30, 2003, include a proposal for Stockholder
Approval, with the recommendation of the Company’s Board of Directors that such
proposal be approved, and the Company shall solicit proxies from its
shareholders in connection therewith in the same manner as all other management
proposals in such proxy statement and all management-appointed proxyholders
shall vote their proxies in favor of such proposal.

 

4.6                                 Conversion
and Exercise Procedures.  The form
of Election to Purchase included in the Warrants and the forms of Conversion
Notice included in the Articles Supplementary set forth the totality of the
procedures required in order to exercise the Warrants or convert the Preferred
Stock.  No additional legal opinion or
other information or instructions shall be necessary to enable each Purchaser
to exercise their Warrants or convert their Preferred Stock.  The Company shall honor exercises of the
Warrants and conversions of the Preferred Stock and shall deliver Underlying
Shares in accordance with the terms, conditions and time periods set forth in
the Transaction Documents.

 

4.7                                 Future Financings.  From the date hereof until 90 days after the
Effective Date, other than as contemplated by this Agreement, neither the
Company nor any Subsidiary (with respect to Capital Shares Equivalents) shall
issue or sell any Capital Shares or Capital Shares Equivalents (other than
units of limited partnership issued by U.S. Restaurant Properties Operating
L.P. in the ordinary course of acquiring properties) entitling any Person to
acquire shares of Common Stock. 
Notwithstanding anything herein to the contrary, the 30 day period set
forth in this Section 4.7 shall be extended for the number of Trading Days
during such period in which (i) trading in the Common Stock is suspended by any
Principal Market, or (ii) following the Effective Date, the Registration
Statement is not effective or the prospectus included in the Registration
Statement may not be used by each Purchaser for the resale of the Underlying
Shares.  Notwithstanding anything to the
contrary herein, this Section 4.7 shall not apply to the following (a) the
granting or issuance of shares of Common Stock or options to employees,

 

20

 

officers
and directors of the Company pursuant to any stock option plan or employee
incentive plan or agreement duly adopted or approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such
purpose, (b) the exercise of any Preferred Stock or any other security issued
by the Company in connection with the offer and sale of this Company’s
securities pursuant to this Agreement, or (c) the exercise of or conversion of
any convertible securities, options or warrants issued and outstanding on the
date hereof, provided that such securities have not been amended since the date
hereof.  In addition, unless Stockholder
Approval has been obtained and deemed effective in accordance with Section
4.5(d), the Company shall not make any issuance whatsoever of Capital Shares or
Capital Shares Equivalents which would cause any adjustment of the Set Price
(other than pursuant to Section 5(c)(ii) of the Articles Supplementarys) to the
extent the holders of Preferred Stock would not be permitted, pursuant to
Section 5(a)(iii) of the Articles Supplementarys, to convert their respective
outstanding Preferred Stock in full.

 

4.8                                 Additional
Investment.  From the date hereof
until 12 months after the Closing Date, each Purchaser may, in its sole
determination, elect to purchase, in the ratio of such Purchaser’s Subscription
Amount to the aggregate Subscription Amounts of all Purchasers, additional
shares of Preferred Stock and warrants to acquire shares of Common Stock for an
aggregate purchase price of $4,000,000. 
Any additional investment will be on terms identical those set forth in
the Transaction Documents, mutatis  mutandis, except that, (a)
Section 4.7 will not apply and (b) the set price per share of the Common Stock
for such additional investment shall equal 110% of the average of the VWAPs for
the Common Stock during the 5 Trading Days immediately before such election is
made in writing to the Company and the exercise price of the warrants for such
additional investment shall equal 115% of the average of the VWAPs during the 5
Trading Days immediately before such election is made in writing to the
Company.  In order to effectuate a
purchase and sale of the additional shares of preferred stock and warrants, the
Company and the Purchasers shall enter into the following agreements: (x) a securities
purchase agreement identical to this Agreement, mutatis mutandis and shall
include updated disclosure schedules and (y) a registration rights agreement
identical to the Registration Rights Agreement, mutatis mutandis and shall
include updated disclosure schedules.

 

4.9                                 Securities
Laws Disclosure; Publicity.  The
Company shall, within one Trading Day after the Closing Date, issue a press
release or file a Current Report on Form 8-K reasonably acceptable to each
Purchaser disclosing all material terms of the transactions contemplated hereby.  The Company and each Purchaser shall consult
with each other in issuing any press releases with respect to the transactions
contemplated hereby.  Notwithstanding
the foregoing, other than in any registration statement filed pursuant to the
Registration Rights Agreement and filings related thereto, the Company shall
not publicly disclose the name of any Purchaser or the terms hereof, or include
the name of any Purchaser or the terms hereof in any filing with the Commission
or any regulatory agency or Principal Market, without the prior written consent
of such Purchaser, except to the extent such disclosure is required by law or
Principal Market regulations, in which case the Company shall provide each
Purchaser with prior notice of such disclosure.

 

21

 

4.10                           Non-Public
Information.  The Company covenants
and agrees that neither it nor any other Person acting on its behalf will
provide any Purchaser or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. 
The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in
securities of the Company.

 

4.11                           Use
of Proceeds.  The Company shall use
the net proceeds from the sale of the Securities hereunder for working capital
purposes or for the satisfaction of any portion of the Company’s debt as
identified on Schedule 4.11 hereto, and not to redeem any Company equity
or equity-equivalent securities or to settle any outstanding litigation.

 

4.12           Reimbursement. If any Purchaser
becomes involved in any capacity in any Proceeding by or against any Person who
is a stockholder of the Company, solely as a result of such Purchaser’s
acquisition of the Securities under this Agreement and without causation by any
other activity, obligation, condition or liability pertaining to such Purchaser
and not to the transactions contemplated by this Agreement, the Company will
reimburse such Purchaser, to the extent such reimbursement is not provided for
in Section 4.13, for its reasonable legal and other expenses (including the
cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred. The
reimbursement obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any Affiliates of each Purchaser who are
actually named in such action, proceeding or investigation, and partners,
directors, agents, employees and controlling persons (if any), as the case may
be, of each Purchaser and any such Affiliate, and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of the Company, each Purchaser and any such Affiliate and any
such Person. The Company also agrees that neither each Purchaser nor any such
Affiliates, partners, directors, agents, employees or controlling persons shall
have any liability to the Company or any Person asserting claims on behalf of
or in right of the Company solely as a result of acquiring the Securities under
this Agreement.

 

4.13                           Indemnification
of Purchasers.  Subject to the
provisions of this Section 4.13, the Company will indemnify and hold each
Purchaser and their directors, officers, shareholders, partners, employees and
agents (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents.  If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing.  Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume

 

22

 

such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict on any material issue between the position of the Company and
the position of such Purchaser Party. 
The Company will not be liable to any Purchaser Party under this
Agreement (i) for any settlement by an Purchaser Party effected without the
Company’s prior written consent; or (ii) to the extent that any loss, claim,
damage or liability is attributable to any Purchaser Party’s breach of any of
the representations, warranties, covenants or agreements made by each Purchaser
in this Agreement or in the other Transaction Documents.

 

4.14                           Shareholders Rights Plan.  In the event that a shareholders rights plan
is adopted by the Company, no claim will be made or enforced by the Company or
any other Person that any Purchaser is an “Acquiring Person” under the plan or
in any way could be deemed to trigger the provisions of such plan by virtue of
receiving Securities under the Transaction Documents.

 

ARTICLE V

MISCELLANEOUS

 

5.1                                 Termination.  This Agreement may be terminated by the
Company or any Purchaser, by written notice to the other parties, if the
Closing has not been consummated by the tenth Trading Day following the date of
this Agreement; provided that no such termination will affect the right of any
party to sue for any breach by the other party (or parties).

 

5.2                                 Fees
and Expenses.  The Company agrees to
pay $35,000 to Omicron Master Trust as reimbursement for the Omicron Master Trust’s
legal and other fees and expenses incurred in connection with the investigation
and negotiation of the transaction and the preparation and negotiation of the
Transaction Documents, of which $15,000 has been received by FW, counsel to
Omicron Master Trust.  Accordingly, in
lieu of the foregoing payments, on the Closing Date, the aggregate amount that
Omicron Master Trust are to pay for the Securities at the Closing will be
reduced by $20,000.  Each party shall
pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement.  The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in
connection with the issuance of any Securities.

 

5.3                                 Entire
Agreement.  The Transaction
Documents, together with the exhibits and schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.

 

5.4                                 Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified on the signature pages hereto prior to 5:30 p.m.
(New York City time) on a Trading Day, (b) the next Trading Day after the date
of transmission, if

 

23

 

such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is
not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, or (c) the Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service.  The addresses for such notices and communications are those set
forth on the signature pages hereof, or such other address as may be designated
in writing hereafter, in the same manner, by such Person.

 

5.5                                 Amendments;
Waivers.  No provision of this
Agreement may be waived or amended except in a written instrument signed, in
the case of an amendment, by the Company and each Purchaser or, in the case of
a waiver, by the party against whom enforcement of any such waiver is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

5.6                                 Construction.  The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof. 
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

 

5.7                                 Successors
and Assigns.  This Agreement shall
be binding upon and inure to the benefit of the parties and their successors
and permitted assigns.  The Company may
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of each Purchaser. Any Purchaser may assign its rights
under this Agreement and the Registration Rights Agreement to any Person to
whom such Purchaser assigns or transfers any Securities.

 

5.8                                 No
Third-Party Beneficiaries.  This Agreement
is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth in Section 4.13.

 

5.9                                 Governing
Law; Venue; Waiver of Jury Trial. 
All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper or inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such

 

24

 

service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by
law.  The parties hereby waive all
rights to a trial by jury.  If either
party shall commence an action or proceeding to enforce any provisions of this
Agreement, then the prevailing party in such action or proceeding shall be reimbursed
by the other party for its attorneys fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

 

5.10                           Survival.  The representations, warranties, agreements
and covenants contained herein shall survive the Closing and the delivery,
exercise and/or conversion of the Securities, as applicable.

 

5.11                           Execution.  This Agreement may be executed in two or
more counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party, it being understood that
both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.

 

5.12                           Severability.  If any provision of this Agreement is held
to be invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

5.13                           Rescission
and Withdrawal Right. 
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents, whenever any
Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods therein provided, then such Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to
its future actions and rights; provided, however, in the case of
a rescission of a conversion of the Preferred Stock or exercise of the Warrant,
the Purchaser shall be required to return any shares of Common Stock subject to
such conversion or exercise notice.

 

5.14                           Replacement
of Securities.  If any certificate
or instrument evidencing any Securities is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested.  The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities.

 

25

 

5.15                           Remedies.  In addition to being entitled to exercise
all rights provided herein or granted by law, including recovery of damages,
each of each Purchaser and the Company will be entitled to specific performance
under the Transaction Documents.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.

 

5.16                           Payment
Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or
exercises its rights thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.

 

5.18                           Independent Nature of
Purchasers’ Obligations and Rights. 
The obligations of each Purchaser under any Transaction Document are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under any Transaction Document.  Nothing contained herein or in any Transaction
Document, and no action taken by any Purchaser pursuant thereto, shall be
deemed to constitute each Purchaser as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that each
Purchaser is in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document.  Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser was
introduced to the Company by Ladenburg Thalmann & Co., Inc., which has
acted solely as agent for the Company and not for any Purchaser.  Each Purchaser has been represented by its
own separate legal counsel in their review and negotiation of the Transaction
Documents.  For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW.  FW does not represent all of the Purchasers but only Omicron
Master Trust.  The Company has elected
to provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do
so by the Purchasers.

 

5.19                           Liquidated Damages.  The Company’s obligations to pay any
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
liquidated damages and other amounts have been paid notwithstanding the fact
that the instrument or security pursuant to which such liquidated damages or
other amounts are due and payable shall have been canceled.

 

26

 

[SIGNATURE PAGE FOLLOWS]

 

27

 

IN WITNESS WHEREOF, the parties hereto have
caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.

 

 

	
   

  	
  U.S. RESTAURANT PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address for
  Notice:

  
	
   

  	
  12240 Inwood
  Road, Suite 300

  
	
   

  	
  Dallas,
  Texas 75244

  
	
   

  	
  Attn: Chief
  Financial Officer

  
	
   

  	
  Tel:  (972) 387-1487

  
	
   

  	
  Fax:  (972) 490-9119

  
	
   

  	
   

  
	
  With a copy to:

  	
  Kenneth
  L. Betts

  
	
   

  	
  Locke
  Liddell & Sapp LLP

  
	
   

  	
  2200
  Ross Avenue, Suite 2200

  
	
   

  	
  Dallas,
  Texas 75201

  
	
   

  	
  Tel:  (214) 740-8743

  
	
   

  	
  Fax:

  
	
   

  	
   

  
	
  Wire Instructions:

  	
  attached as
  Annex A

  

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

28

 

[PURCHASER’S SIGNATURE PAGE]

 

IN WITNESS WHEREOF, the undersigned have
caused this Securities Purchase Agreement to be duly executed by their
respective authorized signatories as of the date first indicated above.

 

	
  OMICRON MASTER TRUST

  	
  Address for
  Notice:

  
	
  By:  Omicron Capital L.P., as subadvisor

  	
  c/o Omicron
  Capital L.P.

  
	
  By:  Omicron Capital Inc., its
  general partner

  	
  810 Seventh Avenue, 39th 
  Fl.

  
	
   

  	
  New York, NY 10019

  
	
   

  	
  Attn:  Brian Daly

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  Subscription
  Amount:  $

  	
   

  
	
   

  	
   

  
	
  With a copy
  to:

  	
   

  
	
  Feldman
  Weinstein LLP

  	
   

  
	
  420
  Lexington Avenue

  	
   

  
	
  New York,
  New York 10170-0002

  	
   

  
	
  Tel:  (212) 931-8704

  	
   

  
	
  Fax:  (212) 410-4741

  	
   

  
	
  Attn: Robert
  F. Charron

  	
   

  
				

 

[ADDITIONAL PURCHASER SIGNATURES FOLLOW]

 

29

 

[PURCHASER’S SIGNATURE PAGE]

 

	
  RIVERVIEW GROUP, LLC

  	
  Address for
  Notice:

  
	
   

  	
  C/o
  Millennium Partners, L.P.

  
	
   

  	
  666 5th
  Avenue

  
	
  By:

  	
   

  	
   

  	
  8th
  Floor

  
	
  Name:

  	
  New York,
  New York 10103

  
	
  Title:

  	
  Fax:  (212) 841-6302

  
	
   

  	
  Attn:  Fund Manager

  
	
  Subscription
  Amount:  $

  	
   

  
				

 

30

 

ANNEX A

 

31

EXHIBIT
4.02

 

EXHIBIT
E

 

The Purchasers of U.S.
Restaurant Properties, Inc. 8% Series B Convertible Preferred Stock and
Warrants

 

Gentlemen:

 

This letter
will confirm my agreement to vote all shares of U.S. Restaurant Properties,
Inc. (“USV”) voting stock over which I have voting control in favor of
any resolution presented to the shareholders of USV to approve the issuance, in
the aggregate, more than 19.999% of the number of shares of common stock of USV
outstanding on the date of closing of the pursuant to that certain Securities
Purchase Agreement, dated June 12, 2003, among USV and the investors signatory
thereto (the “Purchase Agreement”) and the other agreements entered into
in connection therewith or as otherwise may be required by the applicable rules
and regulations of the New York Stock Exchange (or any successor entity).  This agreement is given in consideration of,
and as a condition to your agreement to purchase shares of such Preferred Stock
and warrants, and is not revocable by me.

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:Exhibit 4.03

 

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is made and entered
into as of June 12, 2003, among U.S. Restaurant Properties, Inc., a Maryland
corporation (the “Company”), and the purchasers signatory hereto (each
such purchaser is a “Purchaser” and all such purchasers are,
collectively, the “Purchasers”).

 

This Agreement
is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof among the Company and the Purchasers (the “Purchase Agreement”).

 

The Company
and the Purchasers hereby agree as follows:

 

1. Definitions

 

Capitalized terms
used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase  Agreement. As used
in this Agreement, the following terms shall have the following meanings:

 

“Effectiveness Date” means, the 90th
calendar day (150th calendar day in the event of a “full review” by
the Commission) following the Closing Date, and, with respect to any additional
Registration Statements which may be required pursuant to Section 3(c), the 60th
calendar day following the date on which the Company first knows, or reasonably
should have known, that such additional Registration Statement is required
hereunder; provided, however, in the event the Company is
notified by the Commission that one of the above Registration Statements will
not be reviewed or is no longer subject to further review and comments, the
Effectiveness Date as to such Registration Statement shall be the fifth Trading
Day following the date on which the Company is so notified if such date
precedes the dates required above.

 

“Effectiveness Period” shall have the
meaning set forth in Section 2(a).

 

“Filing Date” means the 60th
day following the Closing Date and, with respect to any additional Registration
Statements which may be required pursuant to Section 3(c), the 15th
day following the date on which the Company first knows, or reasonably should
have known that such additional Registration Statement is required hereunder

 

“Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

 

1

 

“Indemnified Party” shall have the
meaning set forth in Section 5(c) hereof.

 

“Indemnifying Party” shall have the
meaning set forth in Section 5(c) hereof.

 

“Prospectus” means the prospectus
included in a Registration Statement (including, without limitation, a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by a Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

 

“Registrable Securities” means all of
the shares of Common Stock issuable upon conversion in full of the Preferred
Stock, exercise in full of the Warrants, shares of Common Stock issuable as
payment of dividends on the Preferred Stock (assuming for purposes that all of
the shares of Preferred Stock are held for three years after their date of
issuance), together with any securities issued or issuable upon any stock
split, dividend or other distribution recapitalization or similar event with
respect to the foregoing or in connection with any anti-dilution provisions
attached to the Preferred Stock and Warrants.

 

“Registration Statement” means the
registration statements required to be filed hereunder and any additional
registration statements contemplated by Section 3(c), including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.

 

“Rule 415” means Rule 415 promulgated
by the Commission pursuant to the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated
by the Commission pursuant to the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
Commission having substantially the same purpose and effect as such Rule.

 

“Warrants” shall mean the Common Stock
purchase warrants issued to the Purchasers pursuant to the Purchase Agreement.

 

2

 

2. Shelf
Registration

 

(a)  On or prior to each Filing
Date, the Company shall prepare and file with the Commission a “Shelf”
Registration Statement covering the resale of 130% of the Registrable
Securities on such Filing Date for an offering to be made on a continuous basis
pursuant to Rule 415.  The Registration
Statement shall be on Form S-3 (unless the Company is not then eligible to
register for resale the Registrable Securities on Form S-3, in which case such
registration shall be on another appropriate form in accordance herewith) and
shall contain (unless otherwise directed by the Holders and except to the
extent the Company determines that modifications thereto are required under
applicable law) substantially the “Plan of Distribution” attached hereto as Annex
A.  Subject to the terms of this
Agreement, the Company shall use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the applicable
Effectiveness Date, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until the date which
is two years after the date that such Registration Statement is declared
effective by the Commission or such earlier date when all Registrable
Securities covered by such Registration Statement have been sold or may be sold
without volume restrictions pursuant to Rule 144(k) as determined by the
counsel to the Company pursuant to a written opinion letter to such effect,
addressed and acceptable to the Company’s transfer agent and the affected
Holders (the “Effectiveness Period”).

 

(b) 
If: (i) a Registration Statement is not filed on or prior to its Filing
Date (if the Company files a Registration Statement without affording the
Holders the opportunity to review and comment on the same as required by
Section 3(a), the Company shall not be deemed to have satisfied clause (i)), or
(ii) the Company fails to file with the Commission a request for acceleration
in accordance with Rule 461 promulgated under the Securities Act, within five
Trading Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not
be “reviewed,” or not subject to further review, or (iii) prior to its
Effectiveness Date, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect of
such Registration Statement within 15 Trading Days after the receipt of
comments by or notice from the Commission that such amendment is required in
order for a Registration Statement to be declared effective, or (iv) a
Registration Statement filed or required to be filed hereunder is not declared
effective by the Commission by its Effectiveness Date, or (v) after the
Effectiveness Date, a Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities for which it is required
to be effective, or the Holders are not permitted to utilize the Prospectus
therein to resell such Registrable Securities for 5 consecutive Trading Days or
in any individual case an aggregate of 15 Trading Days during any 12 month
period (which need not be consecutive Trading Days) (any such failure or breach
being referred to as an “Event”, and for purposes of clause (i) or (iv)
the date on which such Event occurs, or for purposes of clause (ii) the date on
which such five Trading Day period is exceeded, or for purposes of clause (iii)
the date which such 15 Trading Day period is exceeded, or for purposes of
clause (v) the date on which such 5 or 15 Trading Day period, as applicable, is
exceeded

 

3

 

being referred to as “Event
Date”), then, on each such Event Date and every monthly anniversary thereof
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as liquidated damages and not as a penalty, equal to 2.0% per
month of (i) the Subscription Amount paid by such Holder pursuant to the
Purchase Agreement for Securities then held by such Holder, and (ii) if the
Warrants are “in the money” and then held by the Holder, the value of any
outstanding Warrants (valued at the difference between the average VWAP during
the applicable month and the Exercise Price multiplied by the number of shares
of Common Stock the Warrants are exercisable into). 
If the Company fails to pay any liquidated damages pursuant
to this Section in full within seven days after the date payable, the Company
will pay interest thereon at a rate of 18% per annum (or such lesser maximum
amount that is permitted to be paid by applicable law) to the Holder, accruing
daily from the date such liquidated damages are due until such amounts, plus
all such interest thereon, are paid in full. The liquidated damages pursuant to
the terms hereof shall apply on a pro-rata basis for any portion of a month
prior to the cure of an Event.

 

3. Registration Procedures

 

In connection
with the Company’s registration obligations hereunder, the Company shall:

 

(a) Not less
than five Trading Days prior to the filing of each Registration Statement or
any related Prospectus or any amendment or supplement thereto (excluding any
document that would be incorporated or deemed incorporated therein by
reference), the Company shall, (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of
such Holders, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities shall reasonably and in good faith object, provided, the
Company is notified of such objection in writing no later than 5 Trading Days
after the Holders have been so furnished copies of such documents.

 

(b) (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep a Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of
this Agreement), and as so supplemented or amended to be filed pursuant to Rule
424; (iii) respond as promptly as reasonably possible, and in any event within
15 Trading Days, to any comments received from the Commission with respect to

 

4

 

a Registration Statement or any
amendment thereto and as promptly as reasonably possible provide the Holders
true and complete copies of all correspondence from and to the Commission
relating to a Registration Statement; and (iv) comply in all material respects
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all Registrable Securities covered by a Registration Statement
during the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented.

 

(c)  If during the Effectiveness Period, the
number of Registrable Securities at any time exceeds 90% of the number of
shares of Common Stock then registered in a Registration Statement, then the
Company shall file as soon as reasonably practicable but in any case prior to
the applicable Filing Date, an additional Registration Statement covering the
resale of by the Holders of not less than 130% of the number of such
Registrable Securities.

 

(d) Notify the
Holders of Registrable Securities to be sold (which notice shall, pursuant to
clauses (ii) through (vi) hereof shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible (and, in the case of (i)(A) below, not less
than five Trading Days prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one Trading Day following
the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement (the Company shall provide true and complete copies
thereof and all written responses thereto to each of the Holders); and (C) with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other Federal
or state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes the
financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in a Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to a
Registration Statement, Prospectus or other documents so that, in the case of a
Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; and
(vi) the occurrence or existence of any pending corporate development with
respect to the

 

5

 

Company that the Company
believes may be material and that, in the determination of the Company, makes
it not in the best interests of the Company to allow continued availability or
the Registration Statement or Prospectus.

 

(e) Promptly
deliver to each Holder, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request. Subject to the terms
of this Agreement, the Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

 

(f) Use commercially
reasonable efforts to register or qualify the resale of such Registrable
Securities as required under applicable securities or Blue Sky laws of each
State within the United States as any Holder requests in writing, to keep each
such registration or qualification (or exemption therefrom) effective during
the Effectiveness Period; provided, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or subject the Company to any material tax in any such jurisdiction
where it is not then so subject.

 

(g) Cooperate
with the Holders to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as any such Holders may request.

 

(h) Upon the
occurrence of any event contemplated this Section 3, as promptly as reasonably
possible, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, neither a Registration Statement nor such Prospectus will contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with clauses (ii) through (vi) of Section
3(d) above to suspend the use of the use of any Prospectus until the requisite
changes to such Prospectus have been made, or the Company otherwise notifies
the Holders of its election to suspend the availability of a Registration
Statement and Prospectus pursuant to clause (vi) of Section 3(d), then the
Holders shall suspend use of such Prospectus. 
The Company will use its best efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable, except that in the case
of suspension of the availability of a Registration Statement and Prospectus
pursuant to clause (vi) of Section 3(d), the Company shall not be required to
take such action until such time as it shall determine that the continued
availability of the Registration Statement and Prospectus is no longer not in
the best interests of the Company.

 

6

 

(i)            Comply with all applicable rules and
regulations of the Commission.

 

(j)            Use its best
efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i)
any order suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.

 

(k)           The Company may require, at any time
prior to the third Trading Day prior to the Filing Date, each Holder to furnish
to the Company a statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if requested by the Commission, the
controlling person thereof, within three Trading days of the Company’s
request.  During any periods that the
Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder fails to
furnish such information within three Trading Days of the Company’s request,
any liquidated damages that are accruing at such time shall be tolled  until such information is delivered to the
Company.

 

4. Registration
Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to
be made with the Principal Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky
laws (including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as requested by
the Holders )), (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing
prospectuses requested by the Holders), (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Company, and (v) fees
and expenses of all other Persons retained by the Company in connection with
the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall
the Company be responsible for any broker or similar commissions or, except to
the extent provided for in the Transaction Documents, any legal fees or other
costs of the Holders.

 

7

 

5. Indemnification

 

(a) Indemnification
by the Company. The Company shall, notwithstanding any termination
of this Agreement, indemnify and hold harmless each Holder, the officers,
directors, agents, brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, costs of
preparation and reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue statements or omissions or alleged untrue statements or
omissions are based upon information regarding such Holder furnished in writing
to the Company by such Holder expressly for use therein, or to the extent that
such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in a Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto or (2) in
the case of an occurrence of an event of the type specified in Section
3(d)(ii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding arising from or in
connection with the transactions contemplated by this Agreement of which the
Company is aware.

 

(b) Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify
and hold harmless the Company, its directors, officers, agents and employees,
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses (as determined
by a court of competent jurisdiction in a final judgment not subject to appeal
or review) arising out of or based upon any untrue statement of a material fact
contained in any Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising out of or
based upon: (i) such Holder’s failure to comply with the prospectus delivery
requirements of the Securities Act or (ii) any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent, such untrue statement or
omission is contained in any information so furnished in writing by such Holder
to the Company specifically for inclusion in such Registration Statement or
such Prospectus or to the extent that (1) such untrue statements or omissions

 

8

 

are based upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent such information relates to such
Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto or (2) in the case of
an occurrence of an event of the type specified in Section 3(d)(ii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in Section
6(e). In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.

 

(c) Conduct of
Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that such failure shall have
prejudiced the Indemnifying Party.

 

An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless:
(1) the Indemnifying Party has agreed in writing to pay such fees and expenses;
or (2) the Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the expense of one such counsel for each Holder shall
be at the expense of the Indemnifying Party). The Indemnifying Party shall not
be liable for any settlement of any such Proceeding effected without its
written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

 

9

 

Subject to the
terms of this Agreement, all fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not inconsistent
with this Section) shall be paid to the Indemnified Party, as incurred, within
ten Trading Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified Party is
not entitled to indemnification hereunder; provided, that the Indemnifying
Party may require such Indemnified Party to undertake to reimburse all such
fees and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder).

 

(d) Contribution.
If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. 
The relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to
include, subject to the limitations set forth in Section 5(c), any reasonable
attorneys’ or other reasonable fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.

 

The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(d) were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this
Section 5(d), no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the proceeds actually received by such
Holder from the sale of the Registrable Securities subject to the Proceeding
exceeds the amount of any damages that such Holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.

 

The indemnity
and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

 

10

 

6. Miscellaneous

 

(a) Amendments
and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and all of the
Holders of the then outstanding Registrable Securities. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders and that
does not directly or indirectly affect the rights of other Holders may be given
by Holders of all of the Registrable Securities to which such waiver or consent
relates; provided, however, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with the
provisions of the immediately preceding sentence.

 

(b) No
Inconsistent Agreements. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or any
of its subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as and to the extent specified in
Schedule 6(b) hereto, neither the Company nor any of its subsidiaries has
previously entered into any agreement granting any registration rights with
respect to any of its securities to any Person that have not been satisfied in
full.

 

(c) No Piggyback
on Registrations. Except as and to the extent specified in Schedule
6(c) hereto, neither the Company nor any of its security holders (other than
the Holders in such capacity pursuant hereto) may include securities of the
Company in the Registration Statement other than the Registrable Securities,
and the Company shall not after the date hereof enter into any agreement
providing any such right to any of its security holders.

 

(d) Compliance.
Each Holder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to the Registration Statement.

 

(e) Discontinued
Disposition. Each Holder agrees by its acquisition of such
Registrable Securities that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Sections 3(d)(ii), (iii) or
(vi), such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until such Holder’s receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(h), or until it is advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus may be resumed, and,
in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company may provide appropriate stop
orders to enforce the provisions of this paragraph. The Company agrees and
acknowledges that any periods during which the Holder is required to
discontinue the disposition of the Registrable Securities hereunder shall be
subject to the provisions of Section 2(c).

 

11

 

(f) Piggy-Back
Registrations. If at any time during the Effectiveness Period there
is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Holder written notice of such
determination and, if within fifteen days after receipt of such notice, any
such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
holder requests to be registered; provided, that, the Company shall not be
required to register any Registrable Securities pursuant to this Section 6(f)
that are eligible for resale pursuant to Rule 144(k) promulgated under the
Securities Act.

 

(g) Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be delivered as set forth in the Purchase
Agreement.

 

(h) Successors
and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of all of the
Holders of the then-outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.

 

(i) Counterparts.
This Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement. In the event that any
signature is delivered by facsimile transmission, such signature shall create a
valid binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

 

(j) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this

 

12

 

Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding
to enforce any provisions of this Agreement, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its attorneys fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such Proceeding.

 

(k) Cumulative
Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

 

(l) Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

 

(m) Headings.
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

 

(n) Independent
Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser hereunder is several and not joint with the obligations of any
other Purchaser hereunder, and no Purchaser shall be responsible in any way for
the performance of the obligations of any other Purchaser hereunder. Nothing
contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Purchaser pursuant hereto or thereto, shall
be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert with respect to such obligations or
the transactions contemplated by this Agreement. Each Purchaser shall be
entitled to protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.

 

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

 

13

 

IN WITNESS
WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

 

 

	
   

  	
  U.S. RESTAURANT
  PROPERTIES, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  [SIGNATURE PAGE OF HOLDERS FOLLOWS]

  
				

 

14

 

[PURCHASER’S SIGNATURE PAGE TO RRA]

 

	
  OMICRON MASTER
  TRUST

  	
   

  
	
  By:

  	
  Omicron Capital L.P., as subadvisor

  	
   

  
	
  By:

  	
  Omicron Capital Inc., its general partner

  	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
						

 

 

[ADDITIONAL PURCHASER SIGNATURES FOLLOW]

 

15

 

[PURCHASER’S RRA SIGNATURE PAGE]

 

	
  RIVERVIEW GROUP,
  LLC

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

16

 

Plan of
Distribution

 

The selling
stockholders and any of their pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their shares of common stock on any
stock exchange, market or trading facility on which the shares are traded or in
private transactions.  These sales may
be at fixed or negotiated prices.  The
selling stockholders may use any one or more of the following methods when
selling shares:

 

•                  ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;

 

•                  block trades in which the
broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction;

 

•                  purchases by a broker-dealer as
principal and resale by the broker-dealer for its account;

 

•                  an exchange distribution in accordance
with the rules of the applicable exchange;

 

•                  privately negotiated transactions;

 

•                  settlement of short sales

 

•                  broker-dealers may agree with the
selling stockholders to sell a specified number of such shares at a stipulated
price per share;

 

•                  a combination of any such methods of
sale; and

 

•                  any other method permitted pursuant
to applicable law.

 

The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.  Broker-dealers engaged by the selling
stockholders may arrange for other brokers-dealers to participate in sales.
 Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares,
from the purchaser) in amounts to be negotiated.  The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

 

The selling stockholder may from time to time pledge
or grant a security interest in some or all of the Shares or common stock or
Warrant owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell the shares of
common stock from time to time under this prospectus, or under an amendment to
this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933 amending the list of selling stockholders to

 

17

 

include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.

 

The selling stockholders also may transfer the shares
of common stock in other circumstances, in which case the transferees, pledgees
or other successors in interest will be the selling beneficial owners for
purposes of this prospectus.

 

The selling stockholders and any broker-dealers or
agents that are involved in selling the shares may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with such
sales.  In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.  The
selling stockholders have informed the Company that none of them have any
agreement or understanding, directly or indirectly, with any person to
distribute the common stock.

 

The Company is required to pay all fees and expenses
incurred by the Company incident to the registration of the shares.  The Company has agreed to indemnify the
selling stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.

 

18

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