Document:

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                                                                    EXHIBIT 10.3
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                    U.S. RESTAURANT PROPERTIES OPERATING L.P.

                                       and

                            USRP FUNDING 2001-A, L.P.

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

                             CONTRIBUTION AGREEMENT
                           Dated as of January 9, 2001

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

                                  $175,000,000
                            USRP Funding 2001-A, L.P.
                         Triple Net Lease Mortgage Notes

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                             CONTRIBUTION AGREEMENT

                  This CONTRIBUTION AGREEMENT, dated as of January 9, 2001 (this
"Agreement"), is made between U.S. Restaurant Properties Operating L.P.
("USRP"), a Delaware limited partnership, and USRP Funding 2001-A, L.P. (the
"Issuer"), a Delaware limited partnership.

                              PRELIMINARY STATEMENT

                  Reference is made to an Indenture, dated as of January 9, 2001
(the "Indenture"), among the Issuer and Wells Fargo Bank Minnesota, N.A., as
indenture trustee (the "Indenture Trustee"), related to the issuance by the
Issuer of its $175,000,000 Triple Net Lease Mortgage Notes (the "Notes"). Terms
used without definition herein shall have the respective meanings assigned to
them in the Indenture, and to the extent not defined therein, such terms shall
have the respective meanings assigned to them in the Property Management
Agreement, dated as of January 9, 2000 (the Property Management Agreement"),
among the Issuer, the Indenture Trustee and USRP, as property manager (the
"Property Manager").

                  USRP is the sole limited partner of, and owns 99.99% of the
beneficial interest in, the Issuer.

                  USRP and affiliates of USRP described in Schedule 1 (the
"Record Owners") are the record owners of the fee title to, or ground leasehold
(or ground subleasehold) interests in, the commercial real properties described
on Schedule 1 (the "Franchise Units"). On or before the date hereof, (i) such
Record Owners will transfer all of their right, title and interest in and to the
Franchise Units to USRP (which transfer will not be required to be reflected in
the public records of the applicable jurisdictions), and USRP will make a
contribution to the capital of the Issuer, by transferring all of its right,
title and interest in and to the Franchise Units to the Issuer effective as of
the date hereof, together with all of its right, title and interest in and to
the Leases with respect to the Franchise Units, including, without limitation,
all Rents and other amounts due under such Leases on or after the date hereof
and all rights under the Leases against the Tenants with respect to the
Franchise Units, including, without limitation, rights to Insurance Proceeds,
Liquidation Proceeds and Condemnation Proceeds arising on or after the date
hereof, and all Tenant security deposits (whether in the form of cash or other
security) and escrow funds related to the Leases with respect to the Franchise
Units.

                  The Issuer will grant a security interest in each of the
Franchise Units to the Indenture Trustee pursuant to the Security Instruments to
secure repayment of the Notes. The Issuer intends to sell the Notes to Banc of
America Mortgage Capital Corporation ("Banc of America") pursuant to a Purchase
Agreement, dated as of January 9, 2001 (the "Purchase Agreement"), among the
Issuer and Banc of America.

                  1. CAPITAL CONTRIBUTION. USRP hereby agrees to transfer,
assign, set over and otherwise convey all of its right, title and interest in
and to the Franchise Units and the Leases with respect to the Franchise Units to
the Issuer on the Effective Date (as defined in Section 4 below), including,
without limitation, all Rents and other amounts due under such Leases with
respect

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to the Franchise Units on or after the date hereof, and all rights under the
Leases with respect to the Franchise Units against the Tenants, including,
without limitation, rights to Insurance Proceeds, Liquidation Proceeds and
Condemnation Proceeds arising on or after the date hereof and all Tenant
security deposits (whether in the form of cash or other security) and escrow
funds related to the Leases, pursuant to a General Warranty Deed and Assignment
of Leases and Rents for each Franchise Unit and Lease. Each such General
Warranty Deed and Assignment of Leases and Rents may be made directly by the
applicable Record Owner to the Issuer on behalf of USRP. The parties agree that
such transfer shall be treated as a contribution to the capital of the Issuer by
USRP.

                 (b) USRP hereby agrees to deliver to and deposit with the
         Indenture Trustee, or cause to be so delivered and deposited, the Lease
         File for each of the Leases within the time periods and in accordance
         with the Indenture.

                 (c) The Issuer shall own and be entitled to receive with
         respect to each Franchise Unit (i) all Rent due under each such Lease
         on or after the Closing Date, (ii) all other payments on such Franchise
         Unit or Lease attributable to the Franchise Unit, other than the
         portion of any such payment allocable to a period prior to the Closing
         Date (which has been retained by USRP hereunder) and all rights under
         the Leases against the Tenants or otherwise with respect to the
         Franchise Units, including, without limitation, rights to Insurance
         Proceeds, Liquidation Proceeds and Condemnation Proceeds arising on or
         after the Closing Date and (iii) all Tenant security deposits (whether
         in the form of cash or other security) and escrow funds related to the
         Leases with respect to the Franchise Units.

                  2. REPRESENTATIONS, WARRANTIES AND COVENANTS.

                  2.1 USRP hereby represents and warrants to the Issuer and the
Indenture Trustee, as third party beneficiary hereunder, with respect to itself
and the Record Owners, as of the date hereof, as of the Closing Date and as of
the date of any substitution, exchange or other transfer of a Franchise Unit to
the Issuer hereunder, that:

                  (i) Each of USRP and each Record Owner is duly organized,
         validly existing and in good standing under the laws of the state of
         its organization;

                  (ii) The execution, delivery and performance of this Agreement
         by USRP and the General Warranty Deeds and Assignments of Leases and
         Rents by the Record Owners (i) are within the power and authority of
         USRP and the Record Owners; (ii) have been authorized by all requisite
         organizational action; (iii) have received all necessary approvals and
         consents, organizational, governmental or otherwise; (iv) will not
         violate, conflict with, result in a breach of or constitute (with
         notice or lapse of time, or both) a material default under any
         provision of law, any order or judgment of any court or governmental
         authority, any of the organizational documents of USRP or the Record
         Owners, or any indenture, agreement or other instrument to which USRP
         or any of the Record Owners are a party or by which USRP or any of the
         Record Owners or any of their assets or the Properties are or may be
         bound or affected; (v) will not result in the creation or imposition of
         any lien, charge or encumbrance whatsoever upon any of their assets or
         the Properties; and (vi) will not require any authorization or license
         from, or any filing with, any governmental or other body (except for
         the recordation of the General Warranty Deeds);

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                  (iii) This Agreement, assuming due authorization, execution
         and delivery by the other parties hereto, constitutes a valid, legal
         and binding obligation of USRP, enforceable against USRP in accordance
         with its terms, subject to (A) applicable bankruptcy, insolvency,
         reorganization, moratorium and other laws affecting the enforcement of
         creditors' rights generally and (B) general principles of equity,
         regardless of whether such enforcement is considered in a proceeding in
         equity or at law; and

                  (iv) No litigation is pending or, to USRP's knowledge,
         threatened against USRP or any of the Record Owners that, if determined
         adversely to USRP or any of the Record Owners, would prohibit USRP from
         entering into and performing its obligations under this Agreement or
         such Record Owners making the transfers contemplated by this Agreement,
         or that may adversely affect the ability of USRP to perform its
         obligations under this Agreement or the Record Owners from making the
         transfers contemplated by this Agreement.

                  2.2 USRP hereby represents and warrants to the Issuer and the
Indenture Trustee, as third party beneficiary hereunder, as to each Lease and
Franchise Unit and the Tenant thereunder, as of the time immediately prior to
each transfer of such Franchise Unit and Lease to the Issuer, unless otherwise
specified below, that:

                  (a) Except with respect to the Leases described on Schedule
         2.2(a) (the "Master Leases"), USRP owns such Lease free and clear of
         any and all liens and other encumbrances and, with respect to each
         Master Lease, USRP owns such Master Lease as it relates to any of the
         Franchise Units free and clear of any and all liens and other
         encumbrances.

                  (b) Each of the applicable Record Owner and USRP has full
         right, power and authority to sell, assign and transfer such Lease.

                  (c) The information set forth in Schedule 1 was true and
         correct in all material respects as of the Closing Date.

                  (d) Except as set forth on Schedule 2.2(d), such Lease was not
         delinquent (giving effect to any applicable grace period) in the
         payment of Rent as of the Closing Date, and has not been during the
         twelve-month period prior thereto, 30 days or more delinquent in the
         payment of Rent required thereunder without giving effect to any
         applicable grace period.

                  (e) Immediately prior to the transfer of such Franchise Unit
         to USRP, the related Record Owner has, and immediately prior to the
         transfer of such Franchise Unit to the Issuer, USRP has fee simple
         title to, or a ground leasehold or ground subleasehold interest in, the
         Franchise Units, free and clear of all encumbrances and liens except
         for the following ("Permitted Exceptions"): (i) liens for real estate
         taxes and special assessments not yet due and payable or due but not
         yet delinquent, (ii) covenants, conditions and restrictions,
         rights-of-way, easements and other matters of public record, such
         exceptions being of a type or nature which are acceptable to mortgage
         lending institutions generally, (iii) liens encumbering the fee owner's
         interest with respect to ground lease transactions, (iv) tenant

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         purchase options described on Schedule 2.2(e) ("Tenant Purchase
         Options") and (v) other matters to which like properties are commonly
         subject, which matters referred to in clauses (ii), (iii), (iv) and (v)
         do not, individually or in the aggregate, materially interfere with the
         value of the Franchise Unit, or materially interfere or restrict the
         current use or operation of the Franchise Unit as a restaurant or
         convenience store, as applicable.

                  (f) Lessor estoppels containing customary protection
         provisions have been obtained from the owner of the fee simple interest
         in each Franchise Unit in which the Issuer has only a ground leasehold
         interest and from the owner of the fee simple interest and the owner of
         the ground lessee's interest in each Franchise Unit in which the Issuer
         has only a ground subleasehold interest.

                  (g) Except as set forth on Schedule 2.2(g), there is no
         default, breach, violation or event of acceleration existing under such
         Lease or other agreement, document or instrument executed in connection
         with such Lease and there is no existing event which, with the passage
         of time or with notice and the expiration of any grace period, would
         constitute a default, breach, violation or event of acceleration under
         such Lease or other agreement, document or instrument executed in
         connection with such Lease, and neither the Record Owner nor USRP has,
         within the 180 day period immediately preceding the Closing Date,
         waived any default, breach, violation or event of acceleration existing
         under such Lease or other agreement, document or instrument executed in
         connection with such Lease.

                  (h) Neither such Lease nor any other agreement, document or
         instrument executed in connection with such Lease has been waived,
         modified, altered, satisfied, canceled or subordinated in any material
         respect, and such Lease has not been terminated or canceled, nor has
         any instrument been executed that would effect any such waiver,
         modification, alteration, satisfaction, termination, cancellation,
         subordination or release, except in each case by a written instrument
         which is part of the related Lease File.

                  (i) Such Franchise Unit is covered by an American Land Title
         Association (or an equivalent form thereof as adopted in the applicable
         jurisdiction) mortgagee's title insurance policy (the "Title Policy")
         in an amount at least equal to the Allocated Loan Amount with respect
         to such Franchise Unit. The Title Policy insures, as of the date of
         such policy (or any date-down endorsement to such policy), that the
         Indenture Trustee has a valid security interest in such Franchise Unit
         prior to any other security interest subject only to the Permitted
         Exceptions (to the extent stated therein); such title insurance policy
         is in full force and effect and inures to the benefit of the Indenture
         Trustee as a mortgagee of record; all premiums thereon have been paid;
         and no material claims have been made thereunder.

                  (j) The Tenant is in possession and paying Rent pursuant to
         such Lease; the Lease is not a Defaulted Lease or a Delinquent Lease.

                  (k) To the best of USRP's knowledge, the Tenant has all
         material licenses, permits, material agreements, including without
         limitation franchise agreements, necessary for the operation and
         continuance of the Tenant's business on the Franchise Unit; and, to the

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         best of USRP's knowledge, the Tenant is not in default of its
         obligations under any such applicable license, permit or agreement.

                  (l) The Tenant is not the subject of any bankruptcy or
         insolvency proceeding.

                  (m) There are no pending actions, suits or proceedings by or
         before any court or governmental authority against or affecting, such
         Lease, such Franchise Unit or, to USRP's knowledge, the Tenant, that if
         determined would materially and adversely affect the value of the Lease
         or Franchise Unit, or the ability of the Tenant to pay Rent or any
         other amounts due under the Lease.

                  (n) Except as set forth on Schedule 2.2(n), as of the Closing
         Date, all of the material improvements built or to be built on the
         Franchise Unit lay within the boundaries and building restriction lines
         of such property (unless affirmatively covered in the Title Policy);
         the improvements located on or forming part of the Franchise Unit
         comply in all material respects with applicable zoning laws and
         ordinances, except for legal nonconforming uses; the applicable zoning
         laws and ordinances permit the use of the Franchise Unit as a
         restaurant or convenience store, as applicable.

                  (o) There are no delinquent or unpaid taxes or assessments, or
         other outstanding charges affecting any Franchise Unit which are or may
         become a lien of priority equal to or higher than the lien of the
         Mortgages in favor of the Indenture Trustee, other than such amounts
         which do not materially and adversely affect the value of the Lease or
         Franchise Unit. For purposes of this representation and warranty, real
         property taxes and assessments shall not be considered unpaid until the
         date on which interest and/or penalties would be payable thereon.

                  (p) The assignment of Rents contained in the related
         Assignment of Leases and Rents constitutes the legal, valid, binding
         and enforceable assignment of the related Record Owner's and USRP's
         rights in the Lease to the Issuer.

                  (q) As of the Closing Date, the assignment of Rents contained
         in the related Mortgage constitutes the legal, valid, binding and
         enforceable assignment of the Issuer's rights in the Lease to the
         Indenture Trustee.

                  (r) There is no valid dispute, claim, offset, defense or
         counterclaim to the related Record Owner's or USRP's rights in the
         Lease.

                  (s) There is no proceeding pending or threatened for the total
         or, except as set forth on Schedule 2.2(s), partial condemnation of the
         Franchise Unit, and the Franchise Unit is free and clear of any damage
         that would materially and adversely affect the value of such Franchise
         Unit as security for the related Lease.

                  (t) The Lease or other agreement, document or instrument
         executed in connection with such Lease or securing such Lease is the
         legal, valid and binding obligation of the

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         Tenant (subject to certain creditors' rights exceptions and other
         exceptions of general application).

                  (u) Except as set forth on Schedule 2.2(u) with respect to
         Leases whose Tenants are permitted to self-insure (that is, to maintain
         no insurance) for casualty losses, such Lease requires the Tenant to
         maintain in respect of the Franchise Unit insurance against loss by
         hazards and comprehensive general liability insurance in amounts
         generally required by USRP and its Affiliates, all of such insurance
         required under the Lease for such Franchise Unit is in full force and
         effect and names the Record Owner and its respective successors or
         assigns as an additional insured; all premiums on any insurance
         policies required to be paid as of the date hereof have been paid; all
         insurance policies require prior notice to the lessor under the Lease
         of termination or cancellation, and as of the date hereof, no such
         notices have been received; in the event that the Tenant fails to
         maintain the insurance required thereunder, the Lease (or other
         applicable document) authorizes the lessor under the Lease to maintain
         such insurance at the Tenant's cost and expense and to seek
         reimbursement therefor from such Tenant.

                  (v) Such Franchise Unit either (i) is insured under the
         Environmental Policy or (ii) was subject to a Phase I environmental
         site assessment (each, a "Phase I Assessment") or a Phase II
         environmental site assessment (each, a "Phase II Assessment") performed
         by a reputable environmental consultant no earlier than one year prior
         to the Closing Date with respect to each Franchise Unit operated as a
         convenience and gasoline store or two years and six months prior to the
         Closing Date with respect to each Franchise Unit operated as a
         restaurant (or if such Phase I Assessment or Phase II Assessment was
         performed in excess of such time period, a "Vista" database search was
         performed within such time period) and (A) any such Phase I Assessment
         concluded that no further investigation was necessary or (B) if any
         such Phase I Assessment recommended further investigation, a Phase II
         Assessment was performed, and such Phase II Assessment concluded that
         no remediation or further action was required with respect to such
         Franchise Unit; USRP has no knowledge of any material and adverse
         environmental condition or circumstance or violation of applicable
         environmental laws affecting such Franchise Unit that was: (i) not
         disclosed in the related Phase I Assessment or Phase II Assessment or
         (ii) that was disclosed, but (A) remains uncured or unremediated, (B)
         for which monitoring efforts are ongoing or (C) is not insured under
         the Environmental Policy; except as set forth in the related Phase I
         Assessment or Phase II Assessment and to the best of USRP's knowledge,
         no Hazardous Substances are or have been (including the period prior to
         USRP's acquisition of such Franchise Unit) discharged, generated,
         treated, disposed of or stored on, incorporated in, or removed or
         transported from each Franchise Unit other than in compliance with all
         Environmental Laws; to the best of USRP's knowledge other than as set
         forth in the related Phase I or Phase II Assessment or as set forth on
         Schedule 2.2(v), no notice of violation of such laws has been issued by
         any governmental agency or authority; and neither the related Record
         Owner nor USRP has taken any action which would cause the related
         Franchise Unit not to be in compliance with all federal, state and
         local laws pertaining to environmental hazards. For purposes of this
         Agreement, "Hazardous Substances" means petroleum and petroleum
         products and compounds containing them, including gasoline, diesel fuel
         and oil; explosives; flammable materials; radioactive materials;
         polychlorinated biphenyls ("PCBs") and

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         compounds containing them; lead and lead-based paint; asbestos or
         asbestos-containing materials in any form that is or could become
         friable; underground or above-ground storage tanks, whether empty or
         containing any substance; any substance the presence of which on the
         Franchise Unit is regulated by or prohibited by any federal, state or
         local authority; any substance that requires special handling; and any
         other material, substance or waste now or in the future defined as a
         "hazardous substance," "hazardous material," " hazardous waste," "toxic
         substance," "toxic pollutant," "contaminant," "pollutant" or other
         words of similar import within the meaning of any Environmental Law.
         For purposes of this Agreement, "Environmental Law" means any present
         and future federal, state and local laws, statutes, ordinances, rules,
         regulations, standards, policies, consent decrees, consent or
         settlement agreements and other governmental directives or
         requirements, as well as common law, that apply to the Franchise Unit
         and relate to Hazardous Substances, including, without limitation,
         CERCLA and RCRA.

                  (w) As of the Closing Date, such Franchise Unit is free and
         clear of any mechanics' and materialmen's liens or liens in the nature
         thereof (unless affirmatively covered under the Title Policy) which
         would materially and adversely affect the value, use or operation of
         such Franchise Unit.

                  (x) The Lease, together with applicable state law, contains
         customary and enforceable provisions such as to render the rights and
         remedies of the lessors thereof adequate for the practical realization
         against the related Franchise Unit of the principal benefits of the
         security intended to be provided thereby.

                  (y) With respect to each Lease:

                      (1) the Franchise Unit is not subject to any lease other
                  than a ground lease and/or the Lease and, subleases to related
                  entities or franchisees; no person has any possessory interest
                  in, or right to occupy, the Franchise Unit except under and
                  pursuant to the Lease or such sublease; the Tenant (or
                  sub-tenant) is in occupancy of the Franchise Unit; and, in the
                  case of any sublease, the Tenant remains primarily liable on
                  the Lease;

                      (2) the obligations of the Tenant, including, but not
                  limited to, the obligation to pay fixed and additional Rent,
                  are not affected by reason of: any damage to or destruction of
                  any portion of the Franchise Unit; any taking of the Franchise
                  Unit or any part thereof by condemnation or otherwise; except
                  with respect to certain abatement and termination rights in
                  connection with casualty and condemnation occurrences which
                  may be provided for under such Lease;

                      (3) neither the Record Owner nor USRP, as lessor under the
                  Lease, has any monetary obligations under the Lease which have
                  not been satisfied;

                      (4) the Tenant has not been released, in whole or in part,
                  from its obligations under the terms of the Lease;

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                      (5) except as set forth on Schedule 2.2(y)(5), every
                  obligation associated with managing, owning, developing and
                  operating the Franchise Unit, including, but not limited to,
                  the costs associated with utilities, taxes, insurance, ground
                  rent, capital and structural improvements, maintenance and
                  repairs is an obligation of the Tenant, other than certain
                  state franchise taxes that are prohibited under state law from
                  being passed through to a Tenant;

                      (6) except as set forth on Schedule 2.2(y)(6), and other
                  than obligations related to the initial construction of the
                  Improvements which have been satisfied, and the obligation to
                  rebuild the Improvements after a casualty (which obligation is
                  limited by available insurance proceeds), the lessor does not
                  have any nonmonetary obligations under the Lease and has made
                  no representation or warranty under the Lease, the breach of
                  which would result in the abatement of Rent, a right of setoff
                  or termination of the Lease;

                      (7) there is no right of rescission, set-off, abatement
                  (except in the case of casualty or condemnation), diminution,
                  defense or counterclaim to the Lease, nor will the operation
                  of any of the terms of the Lease, or the exercise of any
                  rights thereunder, render the Lease unenforceable, in whole or
                  in part, or subject to any right of recission, set-off,
                  abatement, diminution, defense or counterclaim, and no such
                  right has been asserted;

                      (8) except as set forth in Schedule 2.2(y)(8), the Tenant
                  may not terminate the Lease for any reason prior to the
                  Termination Date of the Lease, except (i) in the case of
                  ground lease properties, if the ground lease terminates, (ii)
                  in the event of a casualty or condemnation, in some cases,
                  (iii) the exercise of the Tenant Purchase Option, or (iv) the
                  exercise of the Tenant's right of first refusal; and the
                  Tenant's right to terminate is subject to the payment of all
                  insurance proceeds or condemnation awards to the lessor;

                      (9) except as set forth in Schedule 2.2(y)(9), except for
                  assignments to (a) affiliates of the Tenant, (b) permitted
                  franchisees, (c) assignees meeting the lessor's then current
                  concept and credit standards and (d) certain other assignees
                  where the Tenant remains liable under the Lease, the Tenant
                  may not assign or sublease the Franchise Unit without the
                  consent of the lessor, and in the event the Tenant assigns or
                  sublets the Franchise Unit, the Tenant remains primarily
                  obligated under the Lease;

                      (10) the Tenant has agreed to indemnify the lessor from
                  any claims of any nature relating to the Lease and the related
                  Franchise Unit, including, without limitation, arising as a
                  result of violations of Environmental Laws resulting from the
                  Tenant's operation of the property;

                      (11) any obligation or liability imposed on the lessor by
                  any easement or reciprocal easement agreement is also an
                  obligation of the Tenant under the Lease;

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                      (12) the Tenant is required to make rental payments as
                  directed by the lessor and its successors and assigns; and

                      (13) in the event the Indenture Trustee acquires title to
                  a Franchise Unit by foreclosure or otherwise, except in
                  certain cases where the Tenant may exercise a right of first
                  refusal, the Lease is freely assignable by the lessor and its
                  successors and assigns to any person without the consent of
                  the Tenant, and in the event the lessor's interest is so
                  assigned, the Tenant will be obligated to recognize the
                  assignee as lessor under such Lease, whether under the Lease
                  or by operation of law.

                  (z) In connection with Leases with a guaranty:

                      (1) such guaranty, on its face, is unconditional,
                  irrevocable and absolute, and is a guaranty of payment and not
                  merely of collection and contains no conditions to such
                  payment, other than a notice and right to cure; the guaranty
                  provides that it is the guaranty of both the performance and
                  payment of the financial obligations of the Tenant under the
                  Lease and does not provide for offset, counterclaim or
                  defense; and

                      (2) such guaranty is binding on the successors and assigns
                  of the guarantor and inures to the benefit of the lessor's
                  successors and assigns.

                  (aa) The Record Owner has inspected or caused to be inspected
         such Franchise Unit within 6 months of origination of the Lease.

                  (bb) No fraudulent acts were committed by the Record Owner,
         USRP or any of their Affiliates during the origination process of such
         Lease and the origination, servicing and collection of such Lease is in
         all respects legal, proper and prudent in accordance with customary
         industry standards.

                  (cc) To the extent required under applicable law, each of the
         Record Owner and USRP was authorized to transact and do business in the
         jurisdiction in which such Franchise Unit is located at all times that
         the Record Owner or USRP was the lessor, except where such failure to
         qualify would not result in a Material Adverse Effect.

                  (dd) Such Franchise Unit (i) is located on or adjacent to a
         dedicated road, or has access to an irrevocable easement permitting
         ingress and egress, (ii) is served by public utilities, water and sewer
         (or septic facilities) and (iii) has parking as required under
         applicable law or is a legal non-conforming use.

                  (ee) Each Lease File contains a survey with respect to such
         Franchise Unit, which survey (i) was prepared by a duly licensed
         surveyor or registered engineer in the state in which said property is
         located and is signed and sealed by same, (ii) was deemed sufficient to
         replace the standard title survey exception with an exception referring
         specifically to such survey in the Title Policy, and (iii) is certified
         to USRP or the Record Owner.

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                  (ff) The information delivered by on or behalf of USRP to Banc
         of America or the Indenture Trustee is true and accurate in all
         material respects and does not omit any material fact necessary to make
         such information not misleading.

                  (gg) Except as set forth on Schedule 2.2(gg), and based on an
         estoppel letter obtained from the Tenant, with respect to each
         Franchise Unit operated by a franchisee, the term of the related
         franchise agreement is for a period equal to or longer than the initial
         Lease term and, the franchisee is in good standing under the terms of
         such franchise agreement.

                  (hh) No adverse selection was employed in selecting the
         Leases.

                  (ii) With respect to each Franchise Unit in which USRP has a
         ground leasehold or ground subleasehold interest:

                      (1) the ground lease or a memorandum thereof has been duly
                  recorded, the ground lease (or a recorded estoppel letter)
                  permits the interest of the lessee thereunder to be encumbered
                  by the related Mortgage, and there has not been a material
                  change in the terms of the ground lease since its recordation,
                  with the exception of written instruments which are part of
                  the Lease File;

                      (2) except as indicated in the related title insurance
                  policy or opinion of title, the ground lessee's interest in
                  the ground lease is not subject to any liens or encumbrances
                  superior to, or of equal priority with, the related Mortgage,
                  other than the related ground lessor's fee interest and those
                  subject to non-disturbance rights;

                      (3) as of the Closing Date, the ground lease is in full
                  force and effect and no default has occurred under the ground
                  lease and there is no existing condition which, but for the
                  passage of time or the giving of notice, would result in a
                  default under the terms of the ground lease;

                      (4) the ground lease or an estoppel letter executed by the
                  ground lessor requires the lessor thereunder to give notice of
                  any default by the lessee to the Indenture Trustee; or the
                  ground lease or an estoppel letter received by the Indenture
                  Trustee from the lessor provides that notice of termination
                  given under the ground lease is not effective against the
                  Indenture Trustee unless a copy of the notice has been
                  delivered to the Indenture Trustee in the manner described in
                  such ground lease;

                      (5) the Indenture Trustee is permitted a reasonable
                  opportunity (including, where necessary, sufficient time to
                  gain possession of the interest of the lessee under the ground
                  lease) to cure any default under the ground lease, which is
                  curable after the receipt of notice of any default before the
                  lessor thereunder may terminate the ground lease;

                      (6) the ground lease has a term which is at least as long
                  as the term of the related Lease;

                                       11
<PAGE>   12

                      (7) the ground lease or an estoppel letter executed by the
                  ground lessor requires the ground lessor to enter into a
                  substitute ground lease containing identical terms with the
                  Indenture Trustee upon termination of the ground lease by the
                  lessee for any reason, including, without limitation,
                  rejection of the ground lease in a bankruptcy proceeding of
                  the lessee;

                      (8) under the terms of the ground lease, any related
                  casualty insurance proceeds will be available for the repair
                  or restoration of all or part of the related Franchise Unit;
                  and

                      (9) either (i) the ground lease does not impose
                  restrictions on subletting or (ii) the ground lessor has
                  consented to the existing lease with respect to the related
                  Franchise Unit.

                  3. DEFECT, BREACH, CURE, SUBSTITUTION AND REPURCHASE.
Effective upon the issuance of the Notes under the Indenture, USRP hereby agrees
as follows:

                  (a) Within 90 days of being notified that, with respect to any
         Franchise Unit, Lease or Tenant, (x) any document constituting part of
         a Lease File has not been properly executed, is missing, contains
         information that does not conform in any respect with the corresponding
         information set forth in Schedule 1 hereto or does not appear to be
         regular on its face (each, a "Document Defect"), or (y) a breach of any
         representation or warranty relating to any Franchise Unit, Lease or
         Tenant set forth in this Agreement (a "Breach") has occurred, and that
         such Document Defect or Breach materially and adversely affects the
         value of, or interests of the Issuer in, such Franchise Unit or Lease
         (a "Defective Franchise Unit or Lease"), USRP shall (i) promptly cure
         such Document Defect or Breach in all material respects, (ii)
         repurchase such Defective Franchise Unit at the related Allocated Loan
         Amount by wire transfer of funds to the Payment Account or (iii) with
         the prior written consent of the Directing Noteholder which shall not
         be unreasonably withheld, substitute one or more Qualified Substitute
         Franchise Units for such Defective Franchise Unit, provided, that if
         (A) such Document Defect or Breach is capable of being cured but not
         within such 90-day period, (B) USRP has commenced during such 90_day
         period and is diligently proceeding with the cure of such Document
         Defect or Breach, and (C) USRP has delivered to the Issuer and the
         Indenture Trustee a certification executed on its behalf by one of its
         officers (1) setting forth the reason such Document Defect or Breach is
         not capable of being cured within such 90-day period and what actions
         USRP is pursuing in connection with the cure thereof, and (2) stating
         that USRP anticipates that such Document Defect or Breach will be cured
         within an additional period not to exceed 90 days, then USRP shall have
         an additional 90 days to complete such cure commencing on the 91st day
         from receipt by USRP of the notice referred to above. It is understood
         and agreed that the obligations of USRP set forth in this Section 3(a)
         to cure a Document Defect or Breach or to repurchase or substitute one
         or more Qualified Substitute Franchise Units for the related Defective
         Franchise Unit constitute the sole remedies available to any Person
         respecting such Document Defect or Breach.

                                       12
<PAGE>   13

                  "Qualified Substitute Franchise Unit" means a commercial real
property with respect to which USRP or an affiliate of USRP owns the fee title
to, or ground leasehold (or ground sub-leasehold) interests in, and which is
approved by the Directing Noteholder in its reasonable discretion. With respect
to any Defective Franchise Unit for which USRP substitutes one or more Qualified
Substitute Franchise Units, USRP shall effect such substitution by deeding each
Qualified Substitute Franchise Unit (or assigning the ground leasehold interest
therein) to the Issuer and delivering to and depositing with the Indenture
Trustee (i) the deed (or assignment of ground lease) and any other transfer
documents transferring such Qualified Substitute Franchise Unit (or ground
leasehold interest) to the Issuer and (ii) the Lease Files for such Qualified
Substitute Franchise Units in accordance with Section 1 (b) above, together with
an "as-built" ALTA survey for such Qualified Substitute Franchise Unit and
opinions of counsel, all of which shall meet or exceed the customary commercial
real estate legal and business standards applied to the Lease File for such
Defective Franchise Unit as determined by the Directing Noteholder, and by
furnishing to the Issuer and the Indenture Trustee an Opinion of Counsel to the
effect that such substitution will not result in an imposition of entity level
tax on the Issuer. No substitution of a Qualified Substitute Franchise Unit
shall be made in any calendar month after the related Determination Date. The
Rent due with respect to a Qualified Substitute Franchise Unit prior to the
Determination Date in the month of substitution shall be retained by USRP, and
the Issuer shall be entitled to the Rent due in respect of the related Defective
Franchise Unit prior to such Determination Date. Thereafter, USRP shall be
entitled to retain all amounts received in respect of such Defective Franchise
Unit and the Issuer shall be entitled to all amounts received in respect of the
Qualified Substitute Franchise Units. USRP shall be deemed to have made, as of
the date of substitution, the representations and warranties set forth in
Section 2.2 above with respect to the Qualified Substitute Franchise Units.

                  For any month in which one or more Qualified Substitute
Franchise Units are substituted for a Defective Franchise Unit, USRP will
determine the amount, if any, by which the aggregate Allocated Loan Amounts (as
determined by the Directing Noteholder in its reasonable discretion) of all such
Qualified Substitute Franchise Units as of the date of substitution is less than
the Allocated Loan Amount of such Defective Franchise Unit. USRP shall remit to
the Indenture Trustee for deposit in the Payment Account the amount of such
shortfall on the day of substitution, without any reimbursement therefor, and
such remittance shall be accompanied by any other expenses as have been made or
incurred with respect to such Defective Franchise Unit and have not been
reimbursed. Promptly upon making such deposit, USRP shall give written notice of
such deposit to the Property Manager, the Indenture Trustee and the Issuer,
which notice shall be accompanied by an Officer's Certificate as to the
calculation of such shortfall and expenses.

                  (b) In connection with any repurchase of, or substitution for,
         a Defective Franchise Unit by USRP, the Issuer shall execute and
         deliver to USRP, without recourse, such instruments of transfer or
         assignment in the forms presented by USRP as shall be necessary to vest
         in USRP, on a servicing-released basis (that is, such Defective
         Franchise Unit shall not be subject to any third-party management
         agreement after such repurchase or substitution), the legal and
         beneficial ownership of such Defective Franchise Unit (including any
         property acquired in respect thereof free and clear of the liens of the
         Indenture and the related Mortgage.

                                       13
<PAGE>   14

                  (c) In connection with any repurchase of, or substitution for,
         a Defective Franchise Unit by USRP, USRP shall provide a revised
         Schedule 1 hereto and a revised Schedule A to the Indenture Trustee and
         the Directing Noteholder.

                  4. CLOSING; CLOSING DOCUMENTS. The closing of the transfer and
contribution of the Franchise Units and Leases contemplated by this Agreement
shall take place on such day on or prior to the Closing Date (the "Effective
Date") and at such place as may be agreed by USRP and the Issuer. USRP shall
furnish such information, certificates, letters, opinions of counsel and other
documents with respect to the transfer and contribution of the right, title and
interest in and to the Franchise Units and Leases contemplated by this Agreement
and the issuance of the Notes as the Issuer requests in order to perform any of
the obligations or satisfy any of the conditions on its part to be performed or
satisfied pursuant to the Purchase Agreement and the Indenture at or prior to
the Closing Date.

                  5. COSTS. USRP shall pay all expenses that are incidental to
the performance of the obligations of USRP under this Agreement and all expenses
of the Issuer that are incidental to the issuance of the Notes.

                  6. NOTICES. All notices, requests and other communications
hereunder to any party hereto shall be in writing and, unless otherwise provided
herein, shall be deemed to have been duly given if delivered by courier or
mailed by first class mail, postage prepaid, or if transmitted by telecopier and
confirmed in a writing delivered or mailed as aforesaid, to such party, in the
case of U.S. Restaurant Properties Operating L.P. at 12440 Inwood Road, Suite
300, Dallas Texas 75244 Attention: Asset Management Department, telecopier (972)
490-9119 telephone (972) 387-1487; in the case of USRP Funding 2001-A, L.P. at
12240 Inwood Road, Suite 300, Dallas, Texas 75244, Attention.: Asset Management
Department, telecopier (972) 490-9119, telephone (972) 387-1487; and in the case
of the Indenture Trustee as third party beneficiary, at 11000 Broken Land
Parkway, Columbia, Maryland 21044-3562, Attention: Corporate Trust Services
(CMBS) - USRP 2000-1, telecopier (410) 884-2360 , telephone (410) 884-2000, or
to such other address and telecopier number as may be designated by any such
party in a written notice to each of other parties hereto.

                  7. SURVIVAL; ASSIGNMENT. The representations, warranties and
agreements made by USRP in this Agreement shall survive the transfer and
contribution contemplated hereby. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
assigns. The Issuer may assign its rights and obligations hereunder to the
Indenture Trustee for the benefit of the Noteholders under the Indenture.

                  8. INDENTURE TRUSTEE AS THIRD PARTY BENEFICIARY. The Indenture
Trustee for the benefit of the Noteholders shall be a third party beneficiary
under this Agreement with the right to enforce the terms and conditions hereof
as if it were a party. For the avoidance of doubt, the Indenture Trustee may
enforce this Agreement without regard to whether an Event of Default or other
default has occurred and is continuing under the Indenture. No person other than
the parties hereto and the Indenture Trustee as third party beneficiary shall
have any rights hereunder.

                  9. MISCELLANEOUS. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a writing signed by
the party against whom enforcement

                                       14
<PAGE>   15

of such change, waiver, discharge or termination is sought. The provisions of
this Agreement shall be severable. This Agreement may be executed in any number
of counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall together constitute but one and the same
instrument.

                  10. GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the substantive laws of the State of New York.

                  11. COOPERATION. USRP agrees to cooperate with and assist the
Issuer and the Directing Noteholder in all reasonable respects concerning the
issuance and sale of securities secured by the Properties for the purpose of
refinancing the Notes, including, without limitation, executing all agreements
and certificates and making such representations, warranties, covenants and
indemnities as may reasonably be requested by the Issuer and/or the Directing
Noteholder or required by any rating agency or note insurer, including without
limitations, restating as of the date of any such securitization the
representations and warranties with respect to itself, the Record Owners, the
Properties, the Leases as of the date of any such securitization and the Tenants
as are set forth herein.

                                       15
<PAGE>   16

                  IN WITNESS WHEREOF, USRP and the Issuer have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.

                                        U.S. RESTAURANT PROPERTIES L.P., a
                                        Delaware limited partnership

                                        By:   USRP Managing, Inc., a Delaware
                                              corporation, its general partner

                                        By:   /s/ FRED MARGOLIN
                                              ----------------------------------
                                              Name: Fred Margolin
                                              Title: President

                                        USRP FUNDING 2001-A, L.P., a Delaware
                                        limited partnership

                                        By:   USRP (SFGP), LLC, a Delaware
                                              limited liability company, its
                                              general partner

                                        By:   /s/ FRED MARGOLIN
                                              ----------------------------------
                                              Name: Fred Margolin
                                              Title: Manager<PAGE>   1
                                                                    EXHIBIT 10.4

                        ENVIRONMENTAL INDEMNITY AGREEMENT

         ENVIRONMENTAL INDEMNITY AGREEMENT (this "Agreement") made as of the 9th
day of January, 2001 by USRP FUNDING 2001, L.P., a Delaware limited partnership,
("Borrower"), and U.S. RESTAURANT PROPERTIES, INC., a Delaware corporation and
U.S. RESTAURANT PROPERTIES OPERATING, L.P., a Delaware limited partnership
("Principal Guarantors"), all having offices at 12240 Inwood Road, Suite 200,
Dallas, Texas 75244 (Borrower and Principal Guarantors hereinafter referred to,
individually and collectively, as the context requires, as "Indemnitors"), in
favor of WELLS FARGO BANK MINNESOTA, N.A., AS INDENTURE TRUSTEE, a national
banking association, having an address at 11000 Broken Land Parkway, Columbia,
Maryland 21044-3542, (the "Indenture Trustee") for the benefit of the
Noteholders, BANC OF AMERICA MORTGAGE CAPITAL CORPORATION (the "Purchaser") and
other Indemnified Parties (defined below) (the Indenture Trustee, the Purchaser
and the Other Indemnified Partes collectively "Indemnitee").

                                    RECITALS:

         Borrower is the owner of certain properties described in the Indenture
(defined below) (individually, a "Property" and collectively, the "Properties).
Indemnitee is prepared to make a loan (the "Loan") to Borrower in the principal
amount of $175,000,000, to be evidenced by certain promissory notes of even date
herewith made by Borrower to Purchaser (together with any and all extensions,
renewals, substitutions, replacements, amendments, modifications and/or
restatements thereof, the "Notes") and secured by, among other things, certain
mortgage and security agreements, deed of trust and security agreements, and
deed to secure debt and security agreements given by Borrower to Indenture
Trustee (together with any and all extensions, renewals, substitutions,
replacements, amendments, modifications and/or restatements thereof, the
"Security Instruments") which will encumber the Properties, and that certain
indenture between Borrower and Indenture Trustee (the "Indenture").

         Indemnitee is unwilling to make the Loan unless Indemnitors agree,
jointly and severally, to provide the indemnification, representations,
warranties, and covenants and other matters described in this Agreement for the
benefit of Indemnified Parties.

                                    AGREEMENT

         In order to induce the Indemnitee to make the Loan to Borrower, and in
consideration of the substantial benefit each and every Indemnitor will derive
from the Loan:

                              ARTICLE - DEFINITIONS

         1.1 DEFINITIONS. Capitalized terms used herein and not specifically
defined herein shall have the respective meanings ascribed to such terms in the
Indenture. As used in this Agreement, the following terms shall have the
following meanings:

<PAGE>   2

         The term "ENVIRONMENTAL LAW" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations, standards,
policies and other governmental directives or requirements, as well as common
law, that apply to Borrower or any Property and relate to Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act and the Resource Conservation and Recovery Act.

         The term "HAZARDOUS MATERIALS" shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil;
explosives, flammable materials; radioactive materials; polychlorinated
biphenyls and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on a Property is prohibited by
any federal, state or local authority; any substance that requires special
handling; and any other material or substance now or in the future defined as a
"hazardous substance," "hazardous material," "hazardous waste," "toxic
substance," "toxic pollutant," "contaminant," "pollutant" or other words of
similar import within the meaning of any Environmental Law.

         The term "INDEMNIFIED PARTIES" means Indemnitee, any person or entity
who is or will have been involved in the origination of the Loan, any person or
entity who is or will have been involved in the servicing of the Loan, any
person or entity in whose name the encumbrance created by the Security
Instruments is or will have been recorded, persons and entities who may hold or
acquire or will have held a full or partial interest in the Loan (including, but
not limited to, Investors (defined below) or prospective Investors in the
Securities (defined below), as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan for the
benefit of third parties) as well as the respective directors, officers,
shareholders, partners, members, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including but not limited to any
other person or entity who holds or acquires or will have held a participation
or other full or partial interest in the Loan or a Property, whether during the
term of the Loan or as a part of or following a foreclosure of the Loan and
including, but not limited to, any successors by merger, consolidation or
acquisition of all or a substantial portion of Indemnitee's assets and
business).

         The term "LEGAL ACTION" means any claim, suit or proceeding, whether
administrative or judicial in nature.

         The term "LOSSES" shall mean any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties, charges,
fees, expenses, judgments, awards, amounts paid in settlement of whatever kind
or nature (including but not limited to attorneys' fees and other costs of
defense).

         The term "RELEASE" with respect to any Hazardous Substance means any
release, deposit, discharge, emission, leaking, leaching, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing
or other movement of Hazardous Materials.

                           ARTICLE 2 - INDEMNIFICATION

                                       -2-
<PAGE>   3

         2.1 INDEMNIFICATION. Indemnitors covenant and agree at their sole cost
and expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) any presence
of any Hazardous Materials in, on, above, or under any Property; (b) any past,
present or threatened Release of Hazardous Materials in, on, above, under or
from any Property; (c) any activity by any Indemnitor, any person or entity
affiliated with any Indemnitor, and any tenant or other user of any Property in
connection with any actual, proposed or threatened use, treatment, storage,
holding, existence, disposition or other Release, generation, production,
manufacturing, processing, refining, control, management, abatement, removal,
handling, transfer or transportation to or from any Property of any Hazardous
Materials at any time located in, under, on or above any Property or any actual
or proposed remediation of any Hazardous Materials at any time located in,
under, on or above any Property, whether or not such remediation is voluntary or
pursuant to court or administrative order, including but not limited to any
removal, remedial or corrective action; (d) any past, present or threatened
non-compliance or violations of any Environmental Laws (or permits issued
pursuant to any Environmental Law) in connection with any Property or operations
thereon, including but not limited to any failure by any Indemnitor, any person
or entity affiliated with any Indemnitor, and any tenant or other user of any
Property to comply with any order of any governmental authority in connection
with any Environmental Laws; (e) the imposition, recording or filing or the
threatened imposition, recording or filing of any Environmental Lien encumbering
any Property; (f) any acts of any Indemnitor, any person or entity affiliated
with any Indemnitor, and any tenant or other user of any Property in (i)
arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Materials at any facility or
incineration vessel containing such or similar Hazardous Materials or (ii)
accepting any Hazardous Materials for transport to disposal or treatment
facilities, incineration vessels or sites from which there is a Release, or a
threatened Release of any Hazardous Substance which causes the incurrence of
costs for remediation; and (g) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Agreement or the Security
Instruments relating to environmental matters.

         2.2 DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES. Upon
written request by any Indemnified Party, Indemnitors shall defend same (if
requested by any Indemnified Party, in the name of the Indemnified Party) by
attorneys and other professionals approved by the Indemnified Parties.
Notwithstanding the foregoing, any Indemnified Parties may, in their sole
discretion, engage their own attorneys and other professionals to defend or
assist them, and, at the option of Indemnified Parties, their attorneys shall
control the resolution of any claim or proceeding. Upon demand, Indemnitors
shall pay or, in the sole discretion of the Indemnified Parties, reimburse, the
Indemnified Parties for the payment of reasonable fees and disbursements of
attorneys, engineers, environmental consultants, laboratories and other
professionals in connection therewith.

         2.3 SUBROGATION. Indemnitors shall take any and all reasonable actions,
including institution of legal action against third-parties, necessary or
appropriate to obtain reimbursement, payment or compensation from such persons
responsible for the presence of any Hazardous Materials at, in, on, under or
near any Property or otherwise obligated by law to bear the cost.

                                       -3-
<PAGE>   4

Indemnified Parties shall be and hereby are subrogated to all of Indemnitor's
rights now or hereafter in such claims.

         2.4 INTEREST. Any amounts payable to any Indemnified Parties under this
Agreement shall become immediately due and payable on demand and, if not paid
within thirty (30) days of such demand therefor, shall bear interest at a per
annum rate equal to the lesser of (a) the Note Interest Rate (as defined in the
Indenture) or (b) the maximum interest rate which Borrower or any other
Indemnitor may by law pay or Indemnified Parties may charge and collect, from
the date payment was due.

         2.5 SURVIVAL. The obligations and liabilities of Indemnitors under this
Agreement shall fully survive indefinitely notwithstanding any termination,
satisfaction, assignment, entry of a judgment of foreclosure, exercise of any
power of sale, or delivery of a deed in lieu of foreclosure of any Security
Instrument.

         2.6 NOTICE OF LEGAL ACTIONS. Each party hereto shall, within five (5)
business days of receipt thereof, give written notice to the other party hereto
of (i) any notice, advice or other communication from any governmental entity or
any source whatsoever with respect to Hazardous Materials on, from or affecting
any Property, and (ii) any Legal Action brought against such party or related to
any Property, with respect to which any Indemnitor may have liability under this
Agreement. Such notice shall comply with the provisions of Section hereof.

            ARTICLE 3- REPRESENTATIONS AND WARRANTIES AND COVENANTS

         3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Indemnitors hereby make
the representations, warranties and covenants contained in Section 11.11 of the
Indenture and agree that the same are hereby made a part of this Agreement to
the same extent and with the same force as if fully set forth herein.

                                ARTICLE 4 - GENERAL

         4.1 UNIMPAIRED LIABILITY. The liability of Indemnitors under this
Agreement shall in no way be limited or impaired by, and Indemnitors hereby
consent to and agree to be bound by, any amendment or modification of the
provisions of the Notes, the Indenture, the Security Instruments or any other
document which evidences, secures or guarantees all or any portion of the Loan
or is executed and delivered in connection with the Loan (together with any and
all extensions, renewals, substitutions, replacements, amendments, modifications
and/or restatements thereof, the "Other Security Documents"; the Notes, the
Indenture, the Security Instruments, this Agreement and the Other Security
Documents shall collectively be referred to herein as the "Loan Documents") to
or with Indemnitee by any Indemnitor or any person who succeeds any Indemnitor
or any person as owner of any Property. In addition, the liability of
Indemnitors under this Agreement shall in no way be limited or impaired by (i)
any extensions of time for performance required by any of the Loan Documents,
(ii) any sale or transfer of all or part of any Property, (iii) except as
provided herein, any exculpatory provision in any of the Loan Documents limiting
Indemnitee's recourse to any Property

                                       -4-
<PAGE>   5

or to any other security for the Notes, or limiting Indemnitee's rights to a
deficiency judgment against any Indemnitor, (iv) the accuracy or inaccuracy of
the representations and warranties made by any Indemnitor under any of the Loan
Documents, (v) the release of any Indemnitor or any other person from
performance or observance of any of the agreements, covenants, terms or
condition contained in any of the Loan Documents by operation of law,
Indemnitee's voluntary act, or otherwise, (vi) the release or substitution in
whole or in part of any security for the Notes, or (vii) Indemnitee's failure to
record any Security Instrument or file any UCC financing statements (or
Indemnitee's improper recording or filing of any thereof) or to otherwise
perfect, protect, secure or insure any security interest or lien given as
security for the Notes; and, in any such case, whether with or without notice to
Indemnitors and with or without consideration.

         4.2 ENFORCEMENT. Indemnified Parties may enforce the obligations of
Indemnitors without first resorting to or exhausting any security or collateral
or without first having recourse to any of the Loan Documents or any Property,
through foreclosure proceedings or otherwise, provided, however, that nothing
herein shall inhibit or prevent Indemnitee from suing on the Notes, foreclosing,
or exercising any power of sale under, any Security Instrument, or exercising
any other rights and remedies thereunder. This Agreement is not collateral or
security for the debt of Borrower pursuant to the Loan, unless Indemnitee
expressly elects in writing to make this Agreement additional collateral or
security for the debt of Borrower pursuant to the Loan, which Indemnitee is
entitled to do in its sole discretion. It is not necessary for an Event of
Default to have occurred pursuant to and as defined in the Indenture for
Indemnified Parties to exercise their rights pursuant to this Agreement.
Notwithstanding any provision of the Indenture, the obligations pursuant to this
Agreement are exceptions to any non-recourse or exculpation provision of the
Indenture; Indemnitors are fully and personally liable for such obligations, and
their liability is not limited to the original or amortized principal balance of
the Loan or the value of any Property.

         4.3 WAIVERS. (a) Indemnitors hereby waive (i) any right or claim of
right to cause a marshalling of any Indemnitor's assets or to cause Indemnitee
or other Indemnified Parties to proceed against any of the security for the Loan
before proceeding under this Agreement against any Indemnitor; (ii) and
relinquish all rights and remedies accorded by applicable law to indemnitors or
guarantors, except any rights of subrogation which any Indemnitor may have,
provided that the indemnity provided for hereunder shall neither be contingent
upon the existence of any such rights of subrogation nor subject to any claims
or defenses whatsoever which may be asserted in connection with the enforcement
or attempted enforcement of such subrogation rights including, without
limitation, any claim that such subrogation rights were abrogated by any acts of
Indemnitee or other Indemnified Parties; (iii) the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against or by Indemnitee or other Indemnified Parties;
(iv) notice of acceptance hereof and of any action taken or omitted in reliance
hereon; (v) presentment for payment, demand of payment, protest or notice of
nonpayment or failure to perform or observe, or other proof, or notice or
demand; and (vi) all homestead exemption rights against the obligations
hereunder and the benefits of any statutes of limitations or repose.
Notwithstanding anything to the contrary contained herein, Indemnitors hereby
agree to postpone the exercise of any rights of subrogation with respect to any
collateral securing the Loan until the Loan shall have been paid in full. No
delay by any Indemnified Party in exercising any right, power or privilege under
this Agreement shall operate as a waiver of any such privilege, power or right.

                                       -5-
<PAGE>   6

         (b) INDEMNITORS HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THE NOTES, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTES, THE
LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION
THEREWITH.

                        ARTICLE 5 - MISCELLANEOUS

         5.1 NOTICES. All notices required or permitted hereunder shall be given
and shall become effective as provided in the Indenture and the Guaranty (as
defined in the Indenture).

         5.2 NO THIRD-PARTY BENEFICIARY. The terms of this Agreement are for the
sole and exclusive protection and use of Indemnified Parties. No party shall be
a third-party beneficiary hereunder, and no provision hereof shall operate or
inure to the use and benefit of any such third party. It is agreed that those
persons and entities included in the definition of Indemnified Parties are not
such excluded third party beneficiaries.

         5.3 DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be executed
in any number of duplicate originals and each duplicate original shall be deemed
to be an original. This Agreement may be executed in several counterparts, each
of which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement. The failure of any party hereto to
execute this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.

         5.4 NO ORAL CHANGE. This Agreement, and any provisions hereof, may not
be modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of any Indemnitor or any Indemnified
Party, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.

         5.5 HEADINGS, ETC. The headings and captions of various paragraphs of
this Agreement are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.

         5.6 NUMBER AND GENDER/SUCCESSORS AND ASSIGNS. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural as the identity of the person or persons referred to may
require. Without limiting the effect of specific references in any provision of
this Agreement, the term "Indemnitors" shall be deemed to refer to each and
every person or entity comprising an Indemnitor from time to time, as the sense
of a particular provision may require, and to include the heirs, executors,
administrators, legal representatives, successors and assigns of Indemnitors,
all of whom shall be bound by the provisions of this Agreement, provided that no
obligation of any Indemnitor may be assigned except with the

                                       -6-
<PAGE>   7

written consent of Indemnitee. Each reference herein to Indemnitee shall be
deemed to include its successors and assigns. This Agreement shall inure to the
benefit of Indemnified Parties and their respective successors and assigns
forever.

         5.7 JOINT AND SEVERAL LIABILITY. If Indemnitor consists of more than
one person or entity, the obligations and liabilities of each such person and
entity hereunder are joint and several.

         5.8 RELEASE OF LIABILITY. Any one or more parties liable upon or in
respect of this Agreement may be released without affecting the liability of any
party not so released.

         5.9 RIGHTS CUMULATIVE. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies which Indemnitee has
under any of the Loan Documents or would otherwise have at law or in equity.

         5.10 INAPPLICABLE PROVISIONS. If any term, condition or covenant of
this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such provision.

         5.11 GOVERNING LAW. This Agreement shall be deemed to be a contract
entered into pursuant to the laws of the State of New York.

         5.12 APPROVALS. Wherever pursuant to this Agreement (i) Indemnified
Parties exercise any right given to it to approve or disapprove, (ii) any
arrangement or term is to be satisfactory to Indemnified Parties, or (iii) any
other decision or determination is to be made by Indemnified Parties, the
decision of Indemnified Parties to approve or disapprove, all decisions that
arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Indemnified Parties, shall be in the sole
discretion of Indemnified Parties, except as may be otherwise expressly and
specifically provided herein.

         5.13 LEGAL FEES. Wherever pursuant to this Agreement it is provided
that Indemnitors pay any costs and expenses, such costs and expenses shall
include, but not be limited to, reasonable legal fees and disbursements of
Indemnified Parties, whether with respect to retained firms, the reimbursement
for the expenses of the in-house staff or otherwise.

         5.14 TRANSFER OF LOAN. Indemnitee may, at any time, sell, transfer or
assign the Loan Documents, and any or all servicing rights with respect thereto,
or grant participations therein or issue mortgage pass-through certificates or
other securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Indemnitee may forward to each
purchaser, transferee, assignee, servicer, participant or investor in such
Securities or any credit rating agency rating such Securities (collectively, the
"Investor") and each prospective Investor, all documents and information which
Indemnitee now has or may hereafter acquire relating to Indemnitors and any
Property, whether furnished by any Guarantor (as defined in the Indenture),
Indemnitor or otherwise, as Indemnitee determines necessary or desirable.
Indemnitors and any Guarantor agree to cooperate with Indemnitee in connection
with any transfer made or any Securities created pursuant to this Section,
including, without limitation, the delivery of an estoppel certificate

                                       -7-
<PAGE>   8

required in accordance with Article 11 of the Indenture and such other documents
as may be reasonably requested by Indemnitee. Indemnitors shall also furnish and
Indemnitors and any Guarantor hereby consent to Indemnitee furnishing to such
Investors or such prospective Investors any and all information concerning the
financial condition of Indemnitors and any Guarantor and any and all information
concerning any Property and the Leases (as defined in the Security Instruments)
as may be requested by Indemnitee, any Investor or any prospective Investor in
connection with any sale, transfer or participation interest.

                                       -8-
<PAGE>   9

         IN WITNESS WHEREOF, this Agreement has been executed by Indemnitors and
is effective as of the day and year first above written.

                                        USRP FUNDING 2001-A, L.P.a Delaware
                                        limited partnership

                                        By: USRP (SFGP), LLC, a Delaware limited
                                            liability company

                                            By:
                                               ---------------------------------
                                                Name: Fred Margolin
                                                Title: Manager

                                        U.S. RESTAURANT PROPERTIES, INC.

                                            By:
                                               ---------------------------------
                                                Name: Fred Margolin
                                                Title: President

                                        U.S. RESTAURANT PROPERTIES OPERATING,
                                        L.P., a Delaware limited partnership

                                        By:   USRP MANAGING, INC., a Delaware
                                              corporation, its general partner

                                            By:
                                               ---------------------------------
                                                Name: Fred Margolin
                                                Title: President

                                       -9-

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