3,200,000 Shares
U.S. RESTAURANT PROPERTIES, INC.
$1.93 Series A Cumulative Convertible Preferred Stock
$0.001 Par Value
UNDERWRITING AGREEMENT
November 11, 1997
PAINEWEBBER INCORPORATED
XXXXXX XXXXXX & COMPANY, INC.
EVEREN SECURITIES, INC.
XXXXXXX, XXXXXX & CO.
as representatives of the several underwriters,
c/o PaineWebber Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
U.S. Restaurant Properties, Inc., a Maryland corporation (together with its
predecessors, the "Company"), confirms its agreement with the Underwriters named
in SCHEDULE A hereto (the "Underwriters") for whom PaineWebber Incorporated,
Xxxxxx Xxxxxx & Company, Inc., EVEREN Securities, Inc. and Xxxxxxx, Xxxxxx & Co.
are acting as representatives, as follows:
1. DESCRIPTION OF SHARES.
(a) The Company proposes to issue and sell to the
Underwriters, severally and not jointly, 3,200,000 shares of $1.93
Series A Cumulative Convertible Preferred Stock, par value $0.001 per
share (the "Series A Preferred Stock"). The shares of Series A
Preferred Stock to be issued and sold by the Company are hereinafter
referred to as the "Firm Shares."
(b) In addition, the Company is granting to the
Underwriters an option to purchase up to an additional 480,000 shares
of Series A Preferred Stock on the terms and for the purposes set forth
in Section 12 hereof (the "Option Shares" and, together with the Firm
Shares, the "Shares").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (File No.
333-34263), with respect to the Shares, including a prospectus, has
been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and
regulations (the "1933 Act Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, has been filed
with the Commission and has been declared effective. Such registration
statement and prospectus may have been amended or supplemented prior to
the date of this Underwriting Agreement; any such amendment or
supplement was so prepared and filed, and any such amendment filed
after the effective date of such registration statement has been
declared effective. No stop order suspending the effectiveness of such
registration statement has been issued, and no proceeding for that
purpose has been instituted or threatened by the Commission. A
prospectus supplement (the "Prospectus Supplement") setting forth the
terms of the offering, sale and plan of distribution of the Shares and
additional information concerning the Company and its business has been
or will be so prepared and will be filed pursuant to Rule 424(b) of the
1933 Act Rules and Regulations on or before the second business day
after the date hereof (or such earlier time as may be required by the
1933 Act Rules and Regulations). Copies of such registration statement
and prospectus, any such amendments or supplements and all documents
incorporated by reference therein that were filed with the Commission
on or prior to the date of this Underwriting Agreement (including one
fully executed copy of the registration statement and of each amendment
thereto for the Underwriters and their counsel) have been delivered to
the Underwriters and Underwriters' counsel. The registration statement,
as it may have heretofore been amended, is referred to herein as the
"Registration Statement," and the final form of prospectus included in
the Registration Statement, as supplemented by the Prospectus
Supplement, is referred to herein as the "Prospectus." Any reference
herein to the Registration Statement, the Prospectus, any preliminary
prospectus or any amendment or supplement thereto shall be deemed to
refer to and include the documents incorporated by reference therein,
and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Prospectus
or any preliminary prospectus shall be deemed to refer to and include
the filing after the execution hereof of any document with the
Commission deemed to be incorporated by reference therein. For purposes
of this Underwriting Agreement, all references to the Registration
Statement, the Prospectus, any preliminary prospectus or to any
amendment or supplement thereto shall be deemed to include any copy
filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System (XXXXX), and such copy shall be identical
in content to any Prospectus delivered to the Underwriters for use in
connection with the offering of the Shares.
(b) Each part of the Registration Statement, when
such part became or becomes effective, and the Prospectus and any
amendment or supplement thereto, on the date of filing thereof with the
Commission and at the Closing Date (as hereinafter defined), and, if
later, at an Option Closing Date (as hereinafter defined), conformed or
will conform in all material respects with the requirements of the Act
and the 1933 Act
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Rules and Regulations; each part of the Registration Statement, when
such part became or becomes effective, or when such part was filed with
the Commission, did not or will not 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 not misleading; the
Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at the Closing Date, and, if
later, at an Option Closing Date, did not or will not include an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that the foregoing shall
not apply to statements in, or omissions from, any such document in
reliance upon, and in conformity with, written information concerning
the Underwriters that was furnished to the Company by the Underwriters
specifically for use in the preparation thereof.
(c) The documents incorporated by reference in the
Registration Statement, the Prospectus or any amendment or supplement
thereto, when they became or become effective under the Act or were or
are filed with the Commission under the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as the case may be,
conformed or will conform in all material respects with the
requirements of the Act, the 1933 Act Rules and Regulations, the
Exchange Act and/or the rules and regulations of the Commission under
the Exchange Act (the "Exchange Act Rules and Regulations"), as
applicable.
(d) The consolidated financial statements of the
Company, together with the related schedules and notes thereto, set
forth or included or incorporated by reference in the Registration
Statement and Prospectus fairly present the financial condition of the
Company and its consolidated subsidiaries as of the dates indicated and
the results of operations, changes in financial position, stockholders'
equity and cash flows for the periods therein specified, in conformity
with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein).
The summary and selected financial and statistical data included or
incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the
extent based upon or derived from the financial statements, have been
compiled on a basis consistent with the financial statements presented
therein. In addition, the pro forma financial statements of the
Company, and the related notes thereto, included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma
financial statements and have been properly compiled on the basis
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
Furthermore, all financial statements required by Rule 3-14 of
Regulation S-X ("Rule 3-14") have been included or incorporated by
reference in the Registration Statement and the Prospectus and any such
financial statements are in conformity with the requirements of Rule
3-14. No other financial statements are required to be set forth or to
be incorporated by reference in the Registration Statement or the
Prospectus under the Act or the 1933 Act Rules and Regulations
thereunder.
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(e) Deloitte & Touche LLP, whose reports are
incorporated by reference in the Registration Statement, are and,
during the periods covered by their reports, were independent public
accountants as required by the Act and the 1933 Act Rules and
Regulations.
(f) The Company has been duly formed and is validly
existing as a corporation in good standing under the laws of the State
of Maryland, is duly qualified to do business and is in good standing
in each jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification, and has full
corporate power and authority necessary to own or hold its properties,
to conduct the business in which it is engaged and to enter into and
perform its obligations under this Underwriting Agreement. Except for
the Subsidiaries (as hereinafter defined), the Company owns no direct
or indirect equity or other beneficial interest in any corporation,
partnership, joint venture or other business entity.
(g) U.S. Restaurant Properties Operating L.P., a
Delaware limited partnership subsidiary of the Company (the "Operating
Partnership"), has been duly formed and is validly existing as a
limited partnership under the laws of the State of Delaware, is duly
qualified to do business as a foreign limited partnership in each
jurisdiction in which its ownership or lease of property or the conduct
of its business requires such qualification (except where the failure
to be so qualified would not have a material adverse effect on the
earnings, assets or business affairs of the Company and its
Subsidiaries taken as a whole), and has all partnership power and
authority necessary to own or hold its properties and its interests in
its subsidiaries, to conduct the business in which it is engaged and to
enter into and perform its obligations under this Underwriting
Agreement. USRP Managing, Inc., a wholly-owned Delaware corporate
subsidiary of the Company ("USRP Managing"), is the sole general
partner of the Operating Partnership. The Agreement of Limited
Partnership of the Operating Partnership (the "Operating Partnership
Agreement") is in full force and effect, and the aggregate percentage
interests of the Company, USRP Managing and the limited partners in the
Operating Partnership are as set forth in the Prospectus. To the extent
the Shares are issued in accordance with this Underwriting Agreement,
(i) the percentage interest of the partners in the Operating
Partnership will be adjusted accordingly and (ii) the Company will
contribute the proceeds from the sale of the Shares to the Operating
Partnership in exchange for a number of preferred units equal to the
number of Shares issued.
(h) USRP Managing has been duly formed and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, is duly qualified to do business and is in good standing
in each jurisdiction in which its ownership or lease of property or the
conduct of its business requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on
the earnings, assets or business affairs of the Company and its
Subsidiaries taken as a whole), and has all corporate power and
authority necessary to own or hold its assets, to conduct the business
in which it is engaged and to enter into and perform its obligations
under this Underwriting Agreement. All of the issued and outstanding
capital stock of USRP Managing has been duly authorized and validly
issued and is fully paid and non-
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assessable, is owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim, restriction or
equities and has been offered and sold in compliance with all
applicable laws (including, without limitation, federal or state
securities laws). No shares of capital stock of USRP Managing are
reserved for any purpose, and there are no outstanding securities
convertible into or exchangeable for any capital stock of USRP
Managing, and no outstanding options, rights (preemptive or otherwise)
or warrants to purchase or to subscribe for shares of such capital
stock or any other securities of USRP Managing.
(i) All of the subsidiaries (as defined in the 1933
Act Rules and Regulations) of the Company, including the Operating
Partnership and USRP Managing, are listed on SCHEDULE B hereto
(collectively, the "Subsidiaries"). Each of the Subsidiaries has been
duly incorporated or formed, as the case may be, and is an existing
corporation, general or limited partnership, or other legal entity, as
the case may be, in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be. Each of the
Subsidiaries has full power (corporate and other) and authority to own
or hold its properties and to conduct the business in which it is
engaged, and is duly qualified or registered to do business in each
jurisdiction in which it owns or leases real property or in which the
conduct of its business requires such qualification or registration,
except where the failure to be so qualified or registered, considering
all such cases in the aggregate, would not have a material adverse
effect on the business, properties, financial position or results of
operations of the Company and its Subsidiaries taken as a whole.
(j) All of the issued and outstanding capital stock
or ownership interests of each Subsidiary have been duly authorized and
are validly issued, fully paid and nonassessable and, except for the
8.31% limited partner interest in the Operating Partnership which is
owned by QSV Properties, Inc. ("QSV"), is wholly owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(k) The Company has authorized, issued and
outstanding capital stock as set forth under the caption
"Capitalization" in the Prospectus. All of the issued and outstanding
shares of capital stock of the Company have been duly authorized and
are validly issued, fully paid and nonassessable and conform to the
description thereof in the Registration Statement and the Prospectus.
The stockholders of the Company have no preemptive rights with respect
to the Shares.
(l) The Shares will be as of the Closing Date, and
the Option Shares will be as of any Option Closing Date, duly
authorized by the Company for issuance and sale pursuant to this
Underwriting Agreement; and when issued and delivered by the Company
pursuant to this Underwriting Agreement against payment of the
consideration therefor specified herein, will be validly issued, fully
paid and nonassessable. The Shares conform to the description thereof
in the Registration Statement, the Prospectus and the articles
supplementary determining the terms of the Shares (the "Articles
Supplementary") and will not be subject to any preemptive rights of any
stockholder of the Company.
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(m) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, the Company and its
Subsidiaries have not incurred any liabilities or obligations, direct
or contingent, or entered into any transactions, not in the ordinary
course of business, that are material to the Company and its
Subsidiaries on a consolidated basis; and there has not been any
material change in the capital stock or structure, short-term debt or
long-term debt of the Company and its Subsidiaries; or any material
adverse change, or any development that is reasonably likely to involve
a prospective material adverse change, in the condition (financial or
other), business, prospects, net worth or results of operations of the
Company and its Subsidiaries on a consolidated basis; and, except for
regular dividends on the Company's common stock, par value $0.001 per
share (the "Common Stock"), in amounts per share that are consistent
with past practice or the charter documents of the Company, there has
been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(n) Except as set forth in the Prospectus, there is
not pending or, to the knowledge of the Company, threatened any
litigation, action, suit or proceeding to which the Company, any of its
Subsidiaries or any of its officers or directors is a party, or that
any of its properties or other assets is the subject of, before or by
any court or governmental agency or body, that is reasonably likely to
result in any material adverse change in the condition (financial or
other), business, prospects, net worth or results of operations of the
Company and its Subsidiaries, or might materially and adversely affect
their properties or other assets.
(o) During the period of at least the last 24
calendar months prior to the date of this Underwriting Agreement, the
Company has timely filed with the Commission all documents and other
material required to be filed pursuant to Sections 13, 14 and 15(d)
under the Exchange Act. During the period of at least the last 36
calendar months preceding the filing of the Registration Statement, the
Company has filed all reports required to be filed pursuant to Sections
13, 14 and 15(d) under the Exchange Act. Immediately preceding the
filing of the Registration Statement, the aggregate market value of the
Company's voting stock held by non-affiliates of the Company was equal
to or greater than $150 million.
(p) There are no contracts or documents of the
Company that are required to be filed as exhibits to the Registration
Statement or to any of the documents incorporated by reference therein
by the Act or the Exchange Act or by the 1933 Act Rules and Regulations
and the Exchange Act Rules and Regulations that have not been so filed.
All of the contracts to which any of the Company or its Subsidiaries is
a party (i) have been duly authorized, executed and delivered by such
entity, constitute valid and binding agreements of such entity and are
enforceable against such entity in accordance with the terms thereof,
except as such enforcement may be limited by (A) bankruptcy,
insolvency, reorganization or similar other laws affecting creditors'
rights generally and (B) general equity principles and limitations on
the availability of equitable relief or (ii) in the case of any
contract to be executed on or before the Closing Date, will on the
Closing
6
Date be duly authorized, executed and delivered by the Company and/or a
Subsidiary, and constitute valid and binding agreements of such entity
enforceable against each entity in accordance with the terms thereof,
except as such enforcement may be limited by (A) bankruptcy,
insolvency, reorganization or similar other laws affecting creditors'
rights generally and (B) general equity principles and limitations on
the availability of equitable relief.
(q) The Company has full corporate power and
authority to enter into this Agreement. This Underwriting Agreement has
been duly authorized, executed and delivered by the Company.
(r) The execution and performance of this
Underwriting Agreement and the consummation of the transactions
contemplated herein will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, (i) any
agreement or instrument to which the Company or its Subsidiaries is a
party or by which they are bound or to which any of the property or
other assets of the Company or its Subsidiaries is subject, (ii) the
articles of incorporation, charter, by-laws, certificate of general or
limited partnership, partnership agreement or other organizational
document, as applicable, of the Company or its Subsidiaries, or (iii)
to the best of the Company's knowledge, any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its Subsidiaries or any of their
properties or other assets; no consent, approval, authorization or
order of, filing with, or notice to any court or governmental agency or
body is required for the consummation of the transactions contemplated
by this Underwriting Agreement in connection with the issuance or sale
of the Shares by the Company, except such as may be required under the
Act and applicable state securities, blue sky, or real estate
syndication laws, if any, or pursuant to the listing requirements of
the New York Stock Exchange ("NYSE") and the Company has full power and
authority to authorize, issue and sell the Shares as contemplated by
this Underwriting Agreement, free of any preemptive rights. The
issuance of the Shares will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, bond, debenture,
note agreement, evidence of indebtedness, contract or other agreement
or instrument to which the Company or its Subsidiaries are a party.
(s) The Company and its Subsidiaries have complied in
all respects with all laws, regulations and orders applicable to them
or their respective businesses; the Company and its Subsidiaries are
not in default under any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note agreement or
evidence of indebtedness, lease, contract or other agreement or
instrument to which they are a party or by which they or any of their
properties or other assets are bound, violation of which would
individually or in the aggregate have a material adverse effect on the
Company and its Subsidiaries on a consolidated basis, and no other
party under any such agreement or instrument to which the Company or
its Subsidiaries are a party is, to the knowledge of the Company, in
default in any material respect thereunder; and the Company and its
Subsidiaries are not in violation of their respective articles of
incorporation, charter, by-
7
laws, certificate of general or limited partnership, partnership
agreement or other organizational documents, as the case may be.
(t) Except for those properties listed on SCHEDULE C
below as being subject to leases, the Company and each of its
Subsidiaries have good and marketable title to all properties and
assets, as described in the Prospectus, owned by them, free and clear
of all liens, charges, encumbrances, claims, restrictions or defects,
except such as are described in the Prospectus or are not material in
relation to the business or operations of the Company and its
Subsidiaries, and the Company and its Subsidiaries have valid,
subsisting and enforceable leases for the properties listed on SCHEDULE
C hereto as leased to the Company and its Subsidiaries, with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such properties by the Company and its
Subsidiaries; all liens, charges, encumbrances, claims or restrictions
on or affecting any of the properties or the assets of the Company and
its Subsidiaries which are required to be disclosed in the Prospectus
are disclosed therein; except for the tenants listed on SCHEDULE D
hereto, no tenant under any of the leases pursuant to which the Company
or its Subsidiaries lease their properties has an option or right of
first refusal to purchase the premises demised under such lease; to the
best of the Company's knowledge, the use and occupancy of each of the
properties of the Company and its Subsidiaries complies in all material
respects with all applicable codes and zoning laws and regulations; the
Company and its Subsidiaries have no knowledge of any pending or
threatened condemnation or zoning change that will in any material
respect affect the size of, use of, improvement of, construction on, or
access to any of the properties of the Company and its Subsidiaries;
and the Company and its Subsidiaries have no knowledge of any pending
or threatened proceeding or action that will in any manner materially
affect the size of, use of, improvements or construction on, or access
to any of the properties of the Company or its Subsidiaries.
(u) Title insurance in favor of the Company and its
Subsidiaries is maintained with respect to each of the properties
described in the Prospectus in an amount at least equal to the cost of
acquisition of such property.
(v) The mortgages and deeds of trust encumbering the
properties and assets described or referred to in the Prospectus are
not convertible into the equity securities of the Company or any
Subsidiary.
(w) Except as would not, singularly or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise) or the earnings, business affairs or business prospects
of the Company or any of its Subsidiaries, (i) there does not exist on
any of the properties described in the Prospectus any Hazardous
Materials (as hereinafter defined) in unlawful quantities, (ii) there
has not occurred on or off such properties any unlawful spills,
releases, discharges or disposal of Hazardous Materials and (iii) the
Company and its Subsidiaries have not failed to comply with all
applicable local, state and federal environmental laws, regulations,
ordinances and administrative and judicial orders relating to the
generation, recycling, sale, storage, handling, transport and disposal
of any Hazardous Materials.
8
As used herein, "Hazardous Material" shall include, without
limitation, any flammable explosives, radioactive materials, oil,
petroleum, petroleum products, hazardous materials, hazardous wastes,
hazardous or toxic substances, asbestos or any material as defined by
any environmental laws, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended (42 U.S.C. Section 9601, et seq.) (CERCLA), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section
1801, ET SEQ.), the Resource Conservation and Recovery Act, as amended
(42 U.S C. Section 9601, et seq.), and in the regulations adopted
pursuant to each of the foregoing or by any Federal, state or local
governmental authority having jurisdiction over the properties as
described in the Prospectus.
Except for the 123 Burger King properties in the Company's
portfolio at the time current management took control in May 1994, all
of the properties have been, and it is contemplated that all future
acquisitions will be, subjected to a Phase I or similar environmental
assessment (which generally includes a site inspection, interviews and
a records review, but no subsurface sampling). These assessments and
certain follow-up investigations (including, as appropriate, asbestos,
radon and lead surveys, additional public records review, subsurface
sampling and other testing) of the properties have not revealed any
environmental liability that the Company believes would have a material
adverse effect upon the business, results of operations, prospects or
condition (financial or otherwise) of the Company or any of its
Subsidiaries.
(x) Property and casualty insurance in favor of each
of the Company and its Subsidiaries is maintained with respect to each
of the properties owned or leased by each of them in an amount and on
such items as is reasonable and customary for businesses of this type.
(y) Each national, regional or local restaurant brand
or franchise identified in the Prospectus as a brand or franchise being
operated on a property is in actual operation on such property. Except
as described in the Prospectus, each tenant (a "Tenant") of a property
owned or leased by the Company is in actual possession of such property
under a lease to such Tenant (each, a "Lease"). Except as disclosed in
the Prospectus, each Lease is in full force and effect and neither the
Company nor any of its Subsidiaries has notice of any defense to the
obligations of the Tenant thereunder or any claim asserted or
threatened by any person or entity, which claim would have a material
adverse effect upon the business, results of operations, prospects or
condition (financial or otherwise) of the Company or any of its
Subsidiaries. To the knowledge of the Company, no Tenant of any of the
properties is in default under any of the Leases governing such
properties and there is no event which, but for the passage of time or
the giving of notice, or both, would constitute a material default
under any of such Leases.
(z) Except as disclosed in SCHEDULE E hereto, all
Leases with Tenants are "triple net leases" and generally provide that
the Tenant is responsible for property operating costs, including
property taxes, insurance and maintenance.
9
(aa) Except as specifically disclosed in the
Prospectus, there is no material defect in the condition of any
property, the improvements thereon, the structural elements thereof, or
the mechanical systems therein, nor any material damage from casualty
or other cause, nor any soil condition of any such property that will
not support all of the improvements thereon without the need for
unusual or new subsurface excavations, fill, footings, caissons or
other installations, except for (a) ordinary wear and tear and (b) any
such defect, damage or condition that has been corrected or will be
corrected in the ordinary course of the business of such property as
part of the Company's scheduled annual maintenance and improvement
program.
(bb) As a result of, and in connection with, the
merger, effected on October 15, 1997 (the "First Merger"), of USRP
Acquisition, L.P., an indirectly wholly-owned Delaware limited
partnership subsidiary of the Company, with and into U.S. Restaurant
Properties Master L.P., a Delaware limited partnership ("Master L.P."),
(i) USRP Acquisition, L.P. ceased to exist, (ii) Master L.P. became a
wholly-owned direct subsidiary of the Company and (iii) USRP Managing
replaced QSV as the sole general partner of each of Master L.P. and the
Operating Partnership. Following the completion of the First Merger and
the Conversion (as defined in the Prospectus), (i) the Company owned
100% of the issued and outstanding capital stock of USRP Managing and a
99% limited partner interest in Master L.P., (ii) USRP Managing owned a
1% general partner interest in Master L.P. and a 1% general partner
interest in the Operating Partnership, (iii) Master L.P. owned a 90.69%
limited partner interest in the Operating Partnership and (iv) QSV
owned an 8.31% limited partner interest in the Operating Partnership.
As a result of the merger, to be effected prior to the Closing Date
(the "Second Merger" and, together with the First Merger, the
"Mergers"), of Master L.P. with and into the Operating Partnership, (i)
Master L.P. will cease to exist and (ii) the Operating Partnership will
become a direct subsidiary of the Company. Following the completion of
the Second Merger, (i) the Company will continue to own 100% of the
issued and outstanding capital stock of USRP Managing and will own a
90.69% limited partner interest in the Operating Partnership, (ii) USRP
Managing will continue to own a 1% general partner interest in the
Operating Partnership and (iii) QSV will continue to own an 8.31%
limited partner interest in the Operating Partnership. In accordance
with the terms of their respective organizational documents and the
applicable laws of their respective jurisdictions, each of the Company,
Master L.P., the Operating Partnership, USRP Managing, USRP
Acquisition, L.P. and QSV received the necessary approval from their
respective security holders and, where applicable, boards of directors
to participate in, and to consummate, the Mergers, the Conversion and
the other transactions related thereto as set forth in, or incorporated
by reference into, the Prospectus (the "Related Transactions"). The
First Merger has become effective under the applicable laws of, and the
related certificates of merger have been duly filed in, the State of
Delaware, and the Second Merger will become effective, prior to the
Closing Date, under the applicable laws of, and the related
certificates of merger will be duly filed in, the State of Delaware.
(cc) The consummation of the Mergers, the Conversion
and the Related Transactions did not result in a breach or violation of
any of the terms and provisions of, or constitute a default under, (i)
any statute, agreement or instrument to which the
10
Company or its Subsidiaries is a party or by which they are bound or to
which any of the property or other assets of the Company or its
Subsidiaries is subject, (ii) the articles of incorporation, charter,
by-laws, certificate of general or limited partnership, partnership
agreement or other organizational document, as applicable, of the
Company or its Subsidiaries, or (iii) any statute, order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its Subsidiaries or any of their
properties or other assets.
(dd) The Proxy Statement/Prospectus delivered to
limited partners in Master L.P. in connection with the solicitation of
their approval of the First Merger (the "Proxy"), when such Proxy was
declared effective by the Commission and on the date of the Special
Meeting (as such term is defined in the Proxy), conformed in all
material respects with the requirements of the Act, the Exchange Act,
the 1933 Act Rules and Regulations and the Exchange Act Rules and
Regulations; the Proxy, on the date it was declared effective by the
Commission and on the date of the Special Meeting, did not include an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(ee) No holder of outstanding shares of capital stock
of the Company has any rights to the registration of shares of capital
stock of the Company which would or could require such securities to be
included in the Registration Statement.
(ff) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as described therein, (i) there has not been any material
adverse change in the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company or any of its Subsidiaries, whether or not arising from
transactions in the ordinary course of business; (ii) neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with its assets, businesses or properties (whether owned
or leased) from fire, explosion, earthquake, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or any
court or legislative or other governmental action, order or decree; and
(iii) neither the Company nor any of its Subsidiaries has undertaken
any liability or obligation, direct or contingent, except such
liabilities or obligations undertaken in the ordinary course of
business.
(gg) The Company has filed all federal, state, local,
franchise and foreign income tax returns which have been required to be
filed and has paid all taxes indicated by said returns and all
assessments received by it to the extent that such taxes have become
due, and the Company has no knowledge, after due inquiry, of any tax
deficiency which has been asserted or threatened against the Company.
To the knowledge of the Company, there are no tax returns of the
Company or any of its Subsidiaries that are currently being audited by
state, local or federal taxing authorities or agencies which would have
a material adverse effect on the financial position, stockholders'
equity, results of operations, business or prospects of the Company and
its Subsidiaries.
11
(hh) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with
the execution and delivery by the Company of this Underwriting
Agreement and the consummation of the transactions herein contemplated
has been obtained or made and is in full force and effect.
(ii) The Company and its Subsidiaries hold all
material licenses, certificates and permits from governmental
authorities which are necessary to the conduct of their businesses and
are in compliance with the terms and conditions of such licenses,
certificates and permits; and the Company and its Subsidiaries have not
infringed on any patents, patent rights, trade names, trademarks or
copyrights, which infringement is material to the business of the
Company and its Subsidiaries taken as a whole.
(jj) The Company and its Subsidiaries are conducting
their respective businesses in material compliance with all applicable
laws, rules and regulations of the jurisdictions in which they are
conducting business, including, without limitation, the Americans with
Disabilities Act of 1990 and all applicable local, state and federal
employment, truth-in-advertising, franchising and immigration laws and
regulations, except where the failure to be so in compliance would not
have a material adverse effect on the assets or properties, business,
results of operations, prospects or condition (financial or otherwise)
of the Company and its Subsidiaries taken as a whole.
(kk) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described or incorporated by reference in the
Registration Statement and the Prospectus.
(ll) The Company has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization
or manipulation of the price of any capital stock of the Company or the
Series A Preferred Stock to facilitate the sale or resale of any of the
Shares.
(mm) Commencing with the taxable year ending on
December 31, 1997, the Company will be organized and operated in
conformity with the requirements for qualification as a "real estate
investment trust" under the Internal Revenue Code of 1986, as amended
(the "Code"). The Company's method of operation will permit it to meet
and to continue to meet the requirements for taxation as a real estate
investment trust under the Code. The Company has no intention of
changing its operations or engaging in activities which would cause it
to fail to qualify, or make economically undesirable its continued
qualification, as a real estate investment trust.
(nn) Neither the Company nor any Subsidiary is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended.
12
(oo) The Shares have been approved for listing on
the NYSE, subject to official notice of issuance.
(pp) The Company and its Subsidiaries maintain a
system of internal accounting controls which the Company believes is
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
the preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to financial assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(qq) Neither the Company or any of its Subsidiaries
nor, to the knowledge of the Company, any employee or agent of the
Company or any Subsidiary, has made any payment of funds of the Company
or any Subsidiary or received or retained any funds in violation of any
law, rule or regulation or of a character required to be disclosed in
the Prospectus.
(rr) The Company has not distributed and, prior to
the later to occur of (i) the Closing Date or (ii) completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering and sale of the Shares other than the
Registration Statement, the Prospectus or other materials, if any,
permitted by the Act.
3. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of
the representations, warranties and agreements contained herein, but subject to
the terms and conditions set forth herein, the Company agrees to issue and sell
the Shares, severally and not jointly, to the several Underwriters, and each of
the Underwriters, severally and not jointly, agrees to purchase from the
Company, the number of Shares set forth opposite that Underwriter's name in
SCHEDULE A hereto, at a purchase price of $23.97 per share (the "Purchase
Price").
The Shares to be purchased by the Underwriters will be
delivered by the Company to the office of PaineWebber Incorporated at 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, in accordance with the terms
of this Underwriting Agreement and against payment of the Purchase Price
therefor by wire transfer of same day funds payable to the order of the Company
in the amount of $76,704,000 at the bank account designated in writing by the
Company at least one business day prior to the Closing Date, at 10:00 a.m., New
York time, on November 17, 1997 (or if the NYSE or American Stock Exchange or
commercial banks in the City of New York are not open on such day, the next day
on which such exchanges and banks are open), or at such other time not later
than eight full business days thereafter as the Underwriters and the Company
mutually agree, such time being herein referred to as the "Closing Date." If
requested by the Underwriters, the Shares will be prepared in definitive form
and in such authorized denominations and registered in such names as the
Underwriters may request upon at least two business days' prior notice to the
Company and will be made available for checking and packaging at the office of
PaineWebber Incorporated at least one business day prior to the Closing Date.
13
4. COVENANTS. The Company covenants and agrees with the
Underwriters that:
(a) The Company will cause the Prospectus Supplement
to be filed as required by Section 2(a) hereof (but only if the
Underwriters or their counsel have not reasonably objected thereto by
notice to the Company after having been furnished a copy a reasonable
time prior to filing) and will notify the Underwriters promptly of such
filing. During the period in which a prospectus relating to the Shares
is required to be delivered under the Act or such date which is 90 days
after the Closing Date, whichever is later, the Company will notify the
Underwriters promptly of the time when any subsequent amendment to the
Registration Statement has become effective or any subsequent
supplement to the Prospectus has been filed, or of any request by the
Commission for any amendment or supplement to the Registration
Statement or Prospectus or for additional information; the Company will
prepare and file with the Commission, promptly upon the Underwriters'
request, any amendments or supplements to the Registration Statement or
Prospectus that, in the Underwriters' opinion, may be necessary or
advisable in connection with the Underwriters' distribution of the
Shares; and the Company will file no amendment or supplement to the
Registration Statement or Prospectus (other than any prospectus
supplement relating to the offering of other securities registered
under the Registration Statement or any document required to be filed
under the Exchange Act that upon filing is deemed to be incorporated by
reference therein) to which the Underwriters or their counsel shall
reasonably object by notice to the Company after having been furnished
a copy a reasonable time prior to the filing.
(b) The Company will advise the Underwriters,
promptly after it shall receive notice or obtain knowledge thereof, of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, of the suspension of the
qualification or registration of the Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for
any such purpose; and it will promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if such a
stop order should be issued.
(c) The Company will comply with all requirements
imposed upon it by the Act, the 1933 Act Rules and Regulations, the
Exchange Act and the Exchange Act Rules and Regulations as from time to
time in force, so far as necessary to permit the continuance of sales
of, or dealings in, the Shares as contemplated by the provisions hereof
and the Prospectus. If during such period where a prospectus relating
to the Shares is required to be delivered under the Act or such date
which is 90 days after the Closing Date, whichever is later, any event
occurs as a result of which, in the opinion of Underwriters' counsel,
the Registration Statement contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or the
Prospectus as then amended or supplemented contains an untrue statement
of a material fact or omits to state a material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statement or
Prospectus to comply with the Act, the Company will promptly notify the
Underwriters and will amend or supplement the
14
Registration Statement or Prospectus (at the expense of the Company) so
as to correct such statement or omission or effect such compliance.
(d) The Company will furnish to the Underwriters
copies of the Registration Statement, the Prospectus (including all
documents incorporated by reference therein), each preliminary
prospectus and all amendments and supplements to the Registration
Statement and Prospectus that are filed with the Commission during the
period in which a prospectus relating to the Shares is required to be
delivered under the Act or such date which is 90 days after the Closing
Date, whichever is later (including all documents filed with the
Commission during such period that are deemed to be incorporated by
reference therein), in each case as soon as available and in such
quantities as the Underwriters may from time to time reasonably
request.
(e) During the period of five years commencing on the
date upon which the Prospectus Supplement is filed pursuant to Rule
424(b) under the Act, the Company will furnish the Underwriters with
copies of filings of the Company under the Act and Exchange Act and
with all other financial statements and periodic and special reports it
distributes generally to the holders of any class of its capital stock.
(f) The Company will make generally available to its
stockholders as soon as practicable, and in the manner contemplated by
Rule 158 of the 1933 Act Rules and Regulations but in any event not
later than 15 months after the end of the Company's current fiscal
quarter, an earning statement (which need not be audited) covering a
12- month period beginning after the date upon which the Prospectus
Supplement is filed pursuant to Rule 424(b) under the Act that shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the
1933 Act Rules and Regulations and will advise the Underwriters in
writing when such statement has been made available.
(g) Whether or not the transactions contemplated by
this Underwriting Agreement are consummated or this Underwriting
Agreement is terminated, the Company will pay, or reimburse if paid by
the Underwriters, all costs and expenses incident to the performance of
the obligations of the Company under this Underwriting Agreement,
including but not limited to costs and expenses of or relating to (i)
the preparation, printing and filing of the Registration Statement and
exhibits thereto, each preliminary prospectus, the Prospectus and any
amendment or supplement to the Registration Statement or the
Prospectus, (ii) the preparation and delivery of certificates
representing the Shares, (iii) the word processing, printing and
reproduction of this Underwriting Agreement, (iv) the costs incurred by
the Company in furnishing (including costs of shipping, mailing and
courier) such copies of the Registration Statement, the Prospectus and
any preliminary prospectus, and all amendments and supplements thereto,
as may be requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be
sold, (v) the listing of the Shares on the NYSE, (vi) the registration
or qualification of the Shares for offer and sale under the securities
or blue sky laws of such jurisdictions designated by the Underwriters
or the notification with respect thereto required by any such
jurisdiction, including the fees, disbursements and other charges of
Underwriters' counsel in connection therewith, and the
15
preparation and printing of blue sky memoranda, (vii) counsel to the
Company, (viii) the transfer agent for the Shares and (ix) the
accountants of the Company.
(h) If this Underwriting Agreement shall be
terminated pursuant to Section 8 hereof or if for any reason the
Company shall be unable to perform its obligations hereunder, the
Company will reimburse the Underwriters for all out-of-pocket expenses
(including the fees, disbursements and other charges of Underwriters'
counsel) reasonably incurred by the Underwriters in connection
herewith.
(i) The Company will not at any time, directly or
indirectly, take any action designed to, or which might reasonably be
expected to, cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization of the
price of its capital stock to facilitate the sale or resale of any of
the Shares.
(j) The Company will apply the net proceeds from the
sale of the Shares as set forth under the caption "Use of Proceeds" in
the Prospectus Supplement.
(k) The Company, its executive officers and the
members of its Board of Directors and QSV will not, directly or
indirectly, offer, sell, contract to sell, pledge, grant any option to
purchase or otherwise dispose of any shares of capital stock, or any
securities convertible into, or exercisable, exchangeable or redeemable
for, shares of capital stock, or register for sale under the Act any
shares of capital stock, or any securities convertible into, or
exercisable, exchangeable or redeemable for, shares of capital stock,
except for the sale of the Shares by the Company, for a period of 180
days from the date of the Prospectus Supplement, without the prior
written consent of PaineWebber Incorporated.
(l) Commencing with its taxable year ending December
31, 1997, the Company will elect to, and continue to qualify as a "real
estate investment trust" under the Code, and will use its best efforts
to continue to meet the requirements to qualify as a "real estate
investment trust."
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The Underwriters'
obligation to purchase and pay for the Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date (as if made
at the Closing Date), of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Registration Statement shall have been
declared effective under the Act; the Prospectus shall have been filed
as required by Section 2(a) hereof; and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceeding for that purpose shall have been instituted or, to the
Underwriters' knowledge or the knowledge of the Company, threatened by
the Commission, nor has any state securities authority suspended the
qualification or registration of the Shares for offering or sale in any
jurisdiction and any request of the Commission for additional
information (to be included in the Registration Statement or
16
the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Underwriters and Underwriters' counsel.
(b) The Underwriters shall not have advised the
Company that the Registration Statement or any amendment thereto
contains an untrue statement of fact that in the opinion of the
Underwriters or Underwriters' counsel is material or omits to state a
fact that in the opinion of the Underwriters or Underwriters' counsel
is material, and is required to be stated therein or is necessary to
make the statements therein not misleading, or that the Prospectus, or
any amendment or supplement thereto, contains an untrue statement of
fact that in the opinion of the Underwriters or Underwriters' counsel
is material or omits to state a fact that in the opinion of the
Underwriters or Underwriters' counsel is material and is necessary, in
the light of the circumstances under which they were made, to make the
statements therein not misleading.
(c) Except as contemplated in the Prospectus
Supplement, subsequent to the respective dates as of which information
is included or incorporated by reference in the Registration Statement
and the Prospectus, there shall not have been any change, on a
consolidated basis, in the equity capitalization, short-term debt or
long-term debt of the Company, or any adverse change, or any
development involving a prospective adverse change, in the condition
(financial or other), business, prospects, net worth or results of
operations of the Company or its Subsidiaries or any adverse change in
the rating assigned to any securities of the Company, that, in the
Underwriters' judgment, makes it impractical or inadvisable to offer or
deliver the Shares on the terms and in the manner contemplated in the
Prospectus.
(d) Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., counsel for the
Company, shall have furnished to the Underwriters its written opinion,
as counsel to the Company, addressed to the Underwriters and dated such
Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) Each of the Company, the Operating
Partnership, Master L.P. and USRP Managing has been duly
incorporated or formed, as the case may be, and is validly
existing as a corporation, general or limited partnership, or
other legal entity, as the case may be, in good standing under
the laws of its jurisdiction of incorporation or formation, as
the case may be, and has full power (corporate or other) and
authority to own or hold its properties and to conduct the
business in which it is engaged, and is duly qualified or
registered to do business in each jurisdiction listed on a
schedule attached to such counsel's opinion. All of the issued
and outstanding capital stock or ownership interests of each
of the Operating Partnership, Master L.P. and USRP Managing
have been duly authorized and are validly issued, fully paid
and nonassessable and, except for the 8.31% limited partner
interest in the Operating Partnership owned by QSV, are
wholly-owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity;
17
(ii) The Company has authorized, issued and
outstanding capital stock as set forth under the caption
"Capitalization" in the Prospectus; all of the issued and
outstanding shares of capital stock of the Company have been
duly and validly authorized and issued; and all of the issued
and outstanding shares of capital stock of the Company are
fully paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right. The Shares
have been duly authorized by the Company for issuance and sale
and when issued and sold pursuant to this Underwriting
Agreement will be duly and validly issued, fully paid and
nonassessable and none of them will have been issued in
violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus,
there is no outstanding option, warrant or other right calling
for the issuance of, and, to the knowledge of such counsel, no
commitment, plan or arrangement to issue, any share of capital
stock of the Company or any security convertible into,
exercisable for, or exchangeable for capital stock of the
Company. To the best of such counsel's knowledge, no holder of
any security of the Company has the right to have any security
owned by such holder included for registration in the
Registration Statement or to demand registration of any
security owned by such holder during the 180 days after the
date of this Underwriting Agreement. The issued and
outstanding capital stock of the Company and the Shares
conform, or will conform, in all material respects to the
descriptions thereof contained in the Registration Statement,
the Prospectus and the Articles Supplementary, as the case may
be. The form of certificate used to evidence the Shares is in
due and proper form and complies with all applicable statutory
requirements, with any applicable requirements of the
Company's organizational documents and with the requirements
of the NYSE;
(iii) The Registration Statement has become
effective under the Act, the Prospectus Supplement has been
filed as required by Section 2(a) hereof and, to the best
knowledge of such counsel, after due inquiry, no stop order
suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been
instituted or threatened by the Commission;
(iv) Each part of the Registration
Statement, when such part became effective, and the Prospectus
and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, complied
as to form in all material respects with the requirements of
the Act and the 1933 Act Rules and Regulations, and such
counsel has no reason to believe that either (i) any part of
the Registration Statement, when such part became effective or
was filed under the Act or Exchange Act, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Prospectus and
any amendment or supplement thereto, on the date of filing
thereof with the Commission or at the Closing Date, included
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and the documents (excluding any exhibits thereto)
incorporated by
18
reference in the Registration Statement or Prospectus or any
amendment or supplement thereto, when they became effective
under the Act or were filed with the Commission under the Act
or Exchange Act, as the case may be, complied as to form in
all material respects with the requirements of the Act, the
Exchange Act, the 1933 Act Rules and Regulations or the
Exchange Act Rules and Regulations, as applicable; it being
understood that such counsel need express no opinion as to the
financial statements or other financial data included in any
of the documents mentioned in this clause;
(v) The descriptions in the Registration
Statement and Prospectus of statutes, legal and governmental
proceedings, contracts and other documents are accurate and
fairly present the information required to be shown; and such
counsel does not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that
are not described as required, or of any contracts or
documents of a character required to be described in the
Registration Statement or Prospectus (or required to be filed
under the Exchange Act if upon such filing they would be
incorporated by reference therein) or to be filed as exhibits
to the Registration Statement that are not described and filed
as required;
(vi) This Underwriting Agreement and the
Articles Supplementary have been duly authorized, executed and
delivered by the Company and constitute the legal, valid and
binding obligations of the Company enforceable against it in
accordance with their terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles; the execution, delivery and performance
of this Underwriting Agreement and the consummation of the
transactions contemplated herein, including the issuance of
the Shares, will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under,
(a) any statute, indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note
agreement or evidence of indebtedness, lease, contract or
other agreement or instrument known to such counsel to which
the Company or its Subsidiaries are a party or by which they
are bound or to which any of the property or other assets of
the Company or its Subsidiaries is subject, (b) the articles
of incorporation, charter, by-laws, certificate of general or
limited partnership, partnership agreement, or other
organizational document of the Company or any of its
Subsidiaries, as applicable, or (c) any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or its
Subsidiaries or any of their properties or other assets; and
no consent, approval, authorization, notice to, order of, or
filing with, any court or governmental agency or body is
required for the consummation of the transactions contemplated
by this Underwriting Agreement in connection with the issuance
or sale of the Shares by the Company, except such as have been
obtained under the Act or from the NYSE;
19
(vii) Commencing with the taxable year
ending December 31, 1997, the Company will be organized and
operated in conformity with the requirements for qualification
as a "real estate investment trust" under the Code. The
Company's method of operation will permit it to meet and to
continue to meet the requirements for taxation as a "real
estate investment trust" under the Code. The federal income
tax treatment described in the Prospectus under the caption
"Federal Income Tax Considerations" is accurate;
(viii) The agreement of each of the Company
and QSV that for a period of 180 days from the date of the
Prospectus Supplement they will not, except for the sale of
the Shares by the Company, without the prior written consent
of PaineWebber Incorporated, offer, sell, contract to sell,
grant any option to sell, or otherwise dispose of, directly or
indirectly, any share of capital stock or securities
convertible into or exchangeable for, or any rights to
purchase or acquire, shares of capital stock owned by them,
has been duly and validly executed and delivered by them and
constitutes the legal, valid and binding obligation of the
Company and QSV, as the case may be, enforceable against them
in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles;
(ix) To the best of such counsel's
knowledge, neither the Company nor any of its Subsidiaries is
in violation of any term or provision of their respective
articles of incorporation, charter, by-laws, certificate of
general or limited partnership, partnership agreement or other
organizational document, as applicable, or in violation of or
default under any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note
agreement or evidence of indebtedness, lease, contract,
permit, judgment, decree, order, statute, rule or regulation;
(x) To the best of such counsel's knowledge,
there is no litigation or governmental or other proceeding or
investigation, before any court or before or by any public
body or board pending or threatened against, or involving the
assets, properties or businesses of, the Company or any of its
Subsidiaries, involving the Company's or any of its
Subsidiaries' officers or directors or to which any of the
Company's or any of its Subsidiaries' properties or other
assets are subject which would have a material adverse effect
upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole;
(xi) Neither the Company nor any of its
Subsidiaries is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended;
20
(xii) Following the completion of the First
Merger and the Conversion, (i) the Company owned 100% of the
issued and outstanding capital stock of USRP Managing and a
99% limited partner interest in Master L.P., (ii) USRP
Managing owned a 1% general partner interest in Master L.P.
and a 1% general partner interest in the Operating
Partnership, (iii) Master L.P. owned a 90.69% limited partner
interest in the Operating Partnership and (iv) QSV owned an
8.31% limited partner interest in the Operating Partnership.
Following the completion of the Second Merger, (i) the Company
owns 100% of the issued and outstanding capital stock of USRP
Managing and a 90.69% limited partner interest in the
Operating Partnership, (ii) USRP Managing owns a 1% general
partner interest in the Operating Partnership and (iii) QSV
owns an 8.31% limited partner interest in the Operating
Partnership. In accordance with the terms of their respective
organizational documents and the applicable laws of their
respective jurisdictions, each of the Company, Master L.P.,
the Operating Partnership, USRP Managing, USRP Acquisition,
L.P. and QSV received the necessary approval from their
respective security holders and, where applicable, boards of
directors to participate in, and to consummate, the Mergers,
the Conversion and the Related Transactions. The Mergers have
become effective under the applicable laws of, and the related
certificates of merger have been duly filed in, the State of
Delaware; and
(xiii) The consummation of the Mergers, the
Conversion and the Related Transactions did not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any statute, agreement or
instrument to which the Company or its Subsidiaries is a party
or by which they are bound or to which any of the property or
other assets of the Company or its Subsidiaries is subject,
(ii) the articles of incorporation, charter, by-laws,
certificate of general or limited partnership, partnership
agreement or other organizational document, as applicable, of
the Company or its Subsidiaries, or (iii) any statute, order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or its Subsidiaries or
any of their properties or other assets.
(e) Middleberg, Xxxxxx & Gianna, counsel for the
Company, shall have furnished to the Underwriters its written opinion,
as counsel to the Company, addressed to the Underwriters and dated such
Closing Date, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) Each of the Company's Subsidiaries
(other than the Operating Partnership, Master L.P. and USRP
Managing) has been duly incorporated of formed, as the case
may be, and is validly existing as a corporation, general or
limited partnership, or other legal entity, as the case may
be, in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be, and has full
power (corporate or other) and authority to own or hold its
properties and to conduct the business in which it is engaged,
and is duly qualified or registered to do business in each
jurisdiction in
21
which it owns or leases real property or in which the conduct
of its business requires such qualification or registration,
except where the failure to be so qualified or registered,
considering all such cases in the aggregate, does not involve
a material risk to the business, properties, financial
position or results of operations of the Company and its
Subsidiaries taken as a whole. All of the issued and
outstanding capital stock or ownership interests of each
Subsidiary (other than the Operating Partnership, Master L.P.
and USRP Managing) have been duly authorized and are validly
issued, fully paid and nonassessable and are wholly-owned by
the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; and
(ii) To the best of such counsel's
knowledge, no holder of any security of the Company has the
right to have any security owned by such holder included for
registration in the Registration Statement or to demand
registration of any security owned by such holder during the
180 days after the date of this Underwriting Agreement.
(f) Piper & Marbury L.L.P. shall have furnished to
the Underwriters its written opinion, as special Maryland counsel to
U.S. Restaurant Properties, Inc., addressed to the Underwriters and
dated such Closing Date, in form and substance satisfactory to the
Underwriters, to the effect that:
(i) U.S. Restaurant Properties, Inc. has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of
Maryland and is in good standing with the State Department of
Assessments and Taxation of Maryland, and has full corporate
power and authority to own or hold its properties and to
conduct its business as described in the Registration
Statement and Prospectus, and to enter into and perform its
obligations under this Underwriting Agreement;
(ii) U.S. Restaurant Properties, Inc. (and
not its predecessors) has authorized, issued and outstanding
capital stock as set forth under the caption "Capitalization"
in the Prospectus; all of the issued and outstanding shares of
capital stock of U.S. Restaurant Properties, Inc. have been
duly and validly authorized and issued; and all of the issued
and outstanding shares of capital stock of U.S. Restaurant
Properties, Inc. are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other
similar right under the charter of U.S. Restaurant Properties,
Inc. or Maryland law. The Shares have been duly authorized
by U.S. Restaurant Properties, Inc. for issuance and sale
and when issued and sold pursuant to this Underwriting
Agreement will be duly and validly issued, fully paid and
nonassessable and none of them will have been issued in
violation of any preemptive or other similar right under the
charter of U.S. Restaurant Properties, Inc. or Maryland law.
The issued and outstanding capital stock of U.S. Restaurant
Properties, Inc. and the Shares conform, or will conform, in
all material respects to the descriptions thereof contained
in the Registration Statement, the Prospectus and the Articles
Supplementary, as the case
22
may be. The form of certificate used to evidence the Shares is
in due and proper form and complies with all applicable
statutory requirements under Maryland law and with any
applicable requirements of the charter and by-laws of U.S.
Restaurant Properties, Inc.;
(iii) This Underwriting Agreement and the
Articles Supplementary have been duly authorized by U.S.
Restaurant Properties, Inc.; the execution, delivery and
performance of this Underwriting Agreement and the
consummation of the transactions contemplated herein,
including the issuance of the Shares, will not result in a
breach or violation of any of the terms and provisions of, or
constitute a default under, (a) any statute under Maryland
law to which U.S. Restaurant Properties, Inc. is bound or to
which any of the property or other assets of U.S. Restaurant
Properties, Inc. is subject, (b) the charter or by- laws of
U.S. Restaurant Properties, Inc. or (c) except as may be
required under the blue sky laws of the State of Maryland, any
order, rule or regulation known to such counsel of any court
or governmental agency or body of the State of Maryland that
has jurisdiction over U.S. Restaurant Properties, Inc. or any
of its properties or other assets; and except such as may be
related to the filing of the Articles Supplementary or may be
required under the blue sky laws of the State of Maryland, no
consent, approval, authorization, notice to, order of, or
filing with, any court or governmental agency or body of the
State of Maryland is required to be obtained by U.S.
Restaurant Properties, Inc. for the consummation of the
transactions contemplated by this Underwriting Agreement in
connection with the issuance or sale of the Shares by U.S.
Restaurant Properties, Inc.; and
(iv) To the best of such counsel's
knowledge, there is no litigation or governmental or other
proceeding or investigation, before any court or before or by
any public body or board pending or threatened against, or
involving the assets, properties or businesses of, U.S.
Restaurant Properties, Inc. or any of its Subsidiaries,
involving U.S. Restaurant Properties, Inc.'s or any of its
Subsidiaries' officers or directors or to which any of U.S.
Restaurant Properties, Inc.'s or any of its Subsidiaries'
properties or other assets are subject which would have a
material adverse effect upon the assets or properties,
business, results of operations, prospects or condition
(financial or otherwise) of U.S. Restaurant Properties, Inc.
and its Subsidiaries taken as a whole.
(g) The Underwriters shall have received from Xxxxxx
& Xxxxx, counsel to the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the validity of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Underwriters reasonably may request, and such counsel shall have
received such papers and information as they request to enable them to
pass upon such matters.
(h) At the time of execution of this Underwriting
Agreement and at the Closing Date, the Underwriters shall have received
a letter, dated the date of delivery thereof, from Deloitte & Touche
LLP, the independent public accountants of the Company, in the form
previously agreed to by the Underwriters.
23
(i) The Underwriters shall have received from the
Company a certificate, signed by the President or the Chairman of the
Board and by the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that, to the best of
their knowledge based upon reasonable investigation:
(i) The representations and warranties of
the Company in this Underwriting Agreement are true and
correct, as if made at and as of the Closing Date, and the
Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) No stop order suspending the
effectiveness of the Registration Statement has been issued,
and no proceeding for that purpose has been instituted or is
threatened by the Commission nor has any state securities
authority suspended the qualification or registration of the
Shares for offering or sale in any jurisdiction;
(iii) Since the effective date of the
Registration Statement, there has occurred no event required
to be set forth in an amendment or supplement to the
Registration Statement or Prospectus that has not been so set
forth, and there has been no document required to be filed
under the Exchange Act and the Exchange Act Rules and
Regulations of the Commission thereunder that upon such filing
would be deemed to be incorporated by reference in the
Prospectus that has not been so filed;
(iv) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (a) there has not been, and no development has
occurred which could reasonably be expected to result in, a
material adverse change in the general affairs, business,
business prospects, properties, management, condition
(financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
in each case other than as set forth in or contemplated by the
Registration Statement and the Prospectus and (b) neither the
Company nor any of its Subsidiaries has sustained any material
loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not
covered by insurance, or from any labor dispute or any court
or legislative or other governmental action, order or decree,
which is not set forth in the Registration Statement and the
Prospectus; and
(v) such other matters as the Underwriters
or Underwriters' counsel may reasonably request.
(j) On or prior to the Closing Date, the Underwriters
shall have received the executed agreements referred to in Section
4(k).
(k) Prior to the Closing Date, the Shares shall have
been duly authorized for listing by the NYSE, subject to official
notice of issuance.
24
(l) All such opinions, certificates, letters and
other documents will be in compliance with the provisions hereof only
if they are satisfactory in form and substance to the Underwriters or
Underwriters' counsel. The Company will furnish the Underwriters with
such conformed copies of such opinions, certificates, letters and other
documents as the Underwriters shall reasonably request and the Company
shall furnish to the Underwriters such further certificates and
documents as the Underwriters shall have reasonably requested.
(m) Subsequent to the execution and delivery of this
Underwriting Agreement (i) no downgrading or adverse change shall have
occurred in the rating accorded any security of the Company by any
"nationally recognized statistical rating organization," as that term
is defined by the Commission for purposes of Rule 436(g)(2) of the 1933
Act Rules and Regulations and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any security of the
Company, that, in either event, makes it impractical or inadvisable, in
the Underwriters' judgment, to offer or deliver the Shares on the terms
and in the manner contemplated by the Prospectus.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold the
Underwriters harmless, their directors, officers, employees and agents
and each person, if any, who controls them within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act from and
against any and all losses, claims, liabilities, expenses and damages
(including, but not limited to, any and all investigative, legal and
other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between
any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim
asserted), as and when incurred to which the Underwriters, or any such
person, may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or
any amendment or supplement to the Registration Statement or the
Prospectus or in any documents filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus, or in any
application or other document executed by or on behalf of the Company
or based on written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify the Shares under
the securities or blue sky laws thereof or filed with the Commission,
(ii) the omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the
statements in it, in the light of the circumstances under which they
were made, not misleading or (iii) any act or failure to act or any
alleged act or failure to act by the Underwriters in connection with,
or relating in any manner to, the Shares or the offering contemplated
hereby, and which is included as part of or referred to in any loss,
claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company
25
shall not be liable under this clause (iii) to the extent it is finally
judicially determined by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by the
Underwriters through their gross negligence or willful misconduct);
provided that the Company will not be liable to the extent that such
loss, claim, liability, expense or damage arises from the sale of the
Shares in the public offering to any person and is based on an untrue
statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the
Underwriters furnished in writing to the Company by the Underwriters
expressly for inclusion in the Registration Statement or the
Prospectus. The Underwriters confirm to the Company and the Company
acknowledges that only the following information appearing in the
Prospectus with respect to the public offering of the Shares has been
furnished to the Company by the Underwriters for use in the Prospectus:
(i) the names of the Underwriters contained on the cover page and back
cover page of the Prospectus Supplement; (ii) the stabilization legend
on the inside front cover page of the Prospectus Supplement; and (iii)
the information in the first, second and sixth paragraphs under the
caption "Underwriting" in the Prospectus Supplement. This indemnity
agreement will be in addition to any liability that the Company might
otherwise have.
(b) The Underwriters will indemnify and hold harmless
the Company, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act,
each director of the Company and each officer of the Company who signs
the Registration Statement to the same extent as the foregoing
indemnity from the Company to the Underwriters, but only insofar as
losses, claims, liabilities, expenses or damages arise out of or are
based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information
relating to the Underwriters furnished in writing to the Company by the
Underwriters expressly for use in the Registration Statement or the
Prospectus. This indemnity will be in addition to any liability that
the Underwriters might otherwise have; provided, however, that in no
case shall the Underwriters be liable or responsible for any amount in
excess of the underwriting discounts and commissions received by the
Underwriters.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice
of commencement of any action against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section 6, notify each such indemnifying party of the commencement of
such action, enclosing a copy of all papers served, but the omission so
to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Section 6 unless, and only to the extent that, such
omission results in the forfeiture of substantive rights or defenses by
the indemnifying party. If any such action is brought against any
indemnified party and it notifies the indemnifying party of its
commencement, the indemnifying party will be entitled to participate in
and, to the extent that it elects by delivering written notice to the
indemnified party promptly after receiving notice of the commencement
of the action from the indemnified party, jointly with any other
indemnifying party similarly notified,
26
to assume the defense of the action, with counsel reasonably
satisfactory to the indemnified party, and after notice from the
indemnifying party to the indemnified party of its election to assume
the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided
below and except for the reasonable costs of investigation subsequently
incurred by the indemnified party in connection with the defense. The
indemnified party will have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel
will be at the expense of such indemnified party unless (i) the
employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (ii) the indemnified party has
reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying
party, (iii) a conflict or potential conflict exists (based on advice
of counsel to the indemnified party) between the indemnified party and
the indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of the
indemnified party) or (iv) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the indemnifying
party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one additional firm
admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they
are incurred. An indemnifying party will not be liable for any
settlement of any action or claim effected without its written consent
(which consent will not be unreasonably withheld); provided, however,
no indemnifying party shall, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 6 (whether or not
any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising or that may arise out of
such claim, action or proceeding. Notwithstanding any other provision
of this Section 6(c), if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt
by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of
such settlement.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for
in the foregoing paragraphs of this Section 6 is applicable in
accordance with its terms but for any reason is held to be unavailable
from the Company or the Underwriters, the Company and the Underwriters
27
will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted,
but after deducting any contribution received by the Company from
persons other than the Underwriters, such as persons who control the
Company within the meaning of the Act, officers of the Company who
signed the Registration Statement and directors of the Company, who
also may be liable for contribution) to which the Company and the
Underwriters may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page
of the Prospectus Supplement. If, but only if, the allocation provided
by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is
appropriate to reflect not only the relative benefits referred to in
the foregoing sentence but also the relative fault of the Company on
the one hand, and the Underwriters, on the other, with respect to the
statements or omissions which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other
relevant equitable considerations with respect to such offering. Such
relative fault shall be determined by reference to whether the untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
the Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant
to this Section 6(d) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or payable
by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in
this Section 6(d) shall be deemed to include, for purpose of this
Section 6(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
6(d), the Underwriters shall not be required to contribute any amount
in excess of the underwriting discounts and commissions received by the
Underwriters and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(d), any person who
controls a party to this Underwriting Agreement within the meaning of
the Act will have the same rights to contribution as that party, and
each officer of the Company who signed the Registration Statement will
have the same rights to contribution as the Company, subject in each
case to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against
such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from
whom contribution may be sought, but the omission so to notify will not
relieve the party or parties from whom contribution may be sought from
any other
28
obligation it or they may have under this Section 6(d). Except for a
settlement entered into pursuant to the last sentence of Section 6(c)
hereof, no party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will
not be unreasonably withheld).
(e) The indemnity and contribution agreements
contained in this Section 6 and the representations and warranties of
the Company contained in this Underwriting Agreement shall remain
operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Underwriters, (ii) acceptance
of the Shares and payment therefor or (iii) any termination of this
Underwriting Agreement.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company contained herein or in
certificates delivered pursuant hereto, and the Underwriters' agreements
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Underwriters
or any controlling persons, or the Company or any of its officers, directors or
any controlling persons, and shall survive delivery of and payment for the
Shares hereunder.
8. TERMINATION. The Underwriters shall have the right by
giving notice as hereinafter specified at any time at or prior to the Closing
Date, to terminate this Underwriting Agreement if (i) the Company shall have
failed, refused or been unable, at or prior to the Closing Date, to perform any
agreement on its part to be performed hereunder, (ii) any condition of the
Underwriters' obligations specified in Section 5 hereof is not fulfilled when
due, (iii) trading on the NYSE shall have been wholly suspended, (iv) minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for the Common Stock shall have been required, on the NYSE by the NYSE or by
order of the Commission or any other governmental authority having jurisdiction,
(v) a banking moratorium shall have been declared by federal or New York
authorities, or (vi) an outbreak of major hostilities in which the United States
is involved, a declaration of war by Congress, any other substantial national or
international calamity or any other event or occurrence of a similar character
shall have occurred since the execution of this Underwriting Agreement that, in
the Underwriters' judgment, makes it impractical or inadvisable to proceed with
the completion of the sale of and payment for the Shares. Any such termination
shall be without liability of any party to any other party with respect to
Shares not purchased by reason of such termination except that the provisions of
Section 4(g), Section 4(h) and Section 6 hereof shall at all times be effective.
If the Underwriters elect to terminate this Underwriting Agreement as provided
in this Section, the Company shall be notified promptly by the Underwriters by
telephone, telex or telecopy, confirmed by letter.
9. NOTICES. All notices or communications hereunder shall be
in writing and if sent to the Underwriters shall be mailed, delivered, telexed
or telecopied and confirmed to the Underwriters in care of PaineWebber
Incorporated at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, c/o Real
Estate Investment Banking, attention: Xxxxx X. Xxxxxx (with copy, which shall
not constitute notice, to Xxx X. Xxxxxxxxx, Esq., c/o Rogers & Xxxxx, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 10166), or if sent to the Company, shall be mailed,
delivered, telexed or telecopied and confirmed to Xxxxxx X. Xxxxxxx c/o the
Company at 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000 (with copy,
which shall not constitute notice, to Xxxxxxx
29
X. Xxxxx, Esq., x/x Xxxxxxxx Xxxxxxxx & Xxxxxx X.X., 0000 Renaissance Tower,
0000 Xxx Xxxxxx, Xxxxxx, Xxxxx 75270). Any party to this Underwriting Agreement
may change such address for notices by sending to the other party to this
Underwriting Agreement written notice of a new address for such purpose.
10. PARTIES. This Underwriting Agreement shall inure to the
benefit of, and be binding upon, the Company and the Underwriters and their
respective successors and the controlling persons, officers, directors,
employees and representatives referred to in Section 6 hereof, and no other
person will have any right or obligation hereunder.
11. APPLICABLE LAW. This Underwriting Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
12. OVER-ALLOTMENT OPTION.
(a) Upon written notice from the Underwriters given
to the Company not more than 30 days subsequent to the date of the
public offering of the Shares, the Underwriters may purchase all or
less than all of the Option Shares at the Purchase Price per share to
be paid for the Firm Shares. Such Option Shares may be purchased by the
Underwriters only for the purpose of covering over-allotments made in
connection with the sale of the Firm Shares. No Option Shares shall be
sold or delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered. The right to purchase the
Option Shares or any portion thereof may be surrendered and terminated
at any time upon notice by the Underwriters to the Company. The
"Closing Date" as defined in Section 3 hereof shall be deemed to be the
"Closing Date," and the time for the delivery of, and payment for, the
Option Shares is herein referred to as the "Option Closing Date" (which
may be the Closing Date). The Option Closing Date shall be determined
by the Underwriters but shall be not later than 10 days after the
Underwriters give to the Company written notice of election to purchase
Option Shares. The preparation, registration, checking and delivery of,
and payment for, the Option Shares shall occur or be made in the same
manner as provided in Section 3 hereof for the Firm Shares, except as
the Underwriters and the Company may otherwise agree.
(b) The conditions to the Underwriters' obligations
set forth in Section 5 shall be deemed to be conditions to the
Underwriters' obligation to purchase and pay for the Shares to be
purchased on each of the Closing Date and the Option Closing Date, as
the case may be; references in that Section and in Sections 2, 8 and 13
hereof to the "Closing Date" shall be deemed to be references to the
Closing Date or the Option Closing Date, as the case may be, and
references to the "Shares" in Section 5 hereof shall be deemed to be
references to the Shares to be purchased at such Closing Date. A
termination of this Underwriting Agreement as to the Option Shares
after the Closing Date will not terminate this Underwriting Agreement
as to the Firm Shares.
13. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If, on either
the Closing Date or the Option Closing Date, any Underwriter defaults in the
performance of its obligations under this Underwriting Agreement, the remaining
non-defaulting Underwriters shall be obligated to
30
purchase the Shares which the defaulting Underwriter agreed but failed to
purchase on such Closing Date in the respective proportions which the number of
Firm Shares set forth opposite the name of each remaining non-defaulting
Underwriter in SCHEDULE A hereto bears to the total number of Firm Shares set
forth opposite the names of all the remaining non-defaulting Underwriters in
SCHEDULE A hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Shares on such
Closing Date if the total number of Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total number of Shares to be purchased on such Closing Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of Shares which it agreed to purchase on such Closing Date. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Underwriters who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Shares to be purchased on such Closing
Date. If the remaining non-defaulting Underwriters or other underwriters
satisfactory to the Underwriters do not elect to purchase the Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Closing Date, this Underwriting Agreement (or, with respect to the Option
Closing Date, the obligation of the Underwriters to purchase, and of the Company
to sell, the Option Securities) shall terminate without liability on the part of
any non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 4(g) and 4(h). As used in this Underwriting Agreement, the term
"Underwriter" includes, for all purposes of this Underwriting Agreement unless
the context requires otherwise, any party not listed in SCHEDULE A hereto who,
pursuant to this Section 13, purchases Firm Shares which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have to the Company for damages caused by
its default. If other underwriters are obligated or agree to purchase the Shares
of a defaulting or withdrawing Underwriter, either the Underwriters or the
Company may postpone the Closing Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
31
If the foregoing correctly sets forth the understanding
between the Company and the Underwriters, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement between the Company and the Underwriters.
Very truly yours,
U.S. RESTAURANT PROPERTIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
and President
U.S. RESTAURANT PROPERTIES
OPERATING L.P.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
USRP Managing, Inc.,
its general partner
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
and President
ACCEPTED as of the date first above
written
PAINEWEBBER INCORPORATED
By: /s/ Xxxxxxx X. XxxXxxx XX
-------------------------------
Name: Xxxxxxx X. XxxXxxx XX
Title: Vice President
For itself and as representative
of the several Underwriters named
in SCHEDULE A hereto
32
SCHEDULE A
----------
UNDERWRITERS
------------
UNDERWRITER NUMBER OF SHARES
----------- ----------------
PaineWebber Incorporated................................. 1,500,000
Xxxxxx Xxxxxx & Company, Inc............................. 750,000
EVEREN Securities, Inc................................... 450,000
Xxxxxxx, Xxxxxx & Co..................................... 300,000
Xxxxx Xxxxxxx Inc. ...................................... 100,000
Southwest Securities, Inc. .............................. 100,000
===========
Total........................................... 3,200,000
Sch. A
SCHEDULE B
----------
SUBSIDIARIES
------------
1. U.S. Restaurant Properties Operating L.P. (Delaware)
2. U.S. Restaurant Properties Master L.P. (Delaware)
3. U.S. Restaurant Properties Business Trust I (Delaware)
4. U.S. Restaurant Properties Business Trust II (Delaware)
5. USRP (West Virginia) Partners, L.P. (Texas)
6. Restaurant Renovation Partners, L.P.(Texas)
7. USRP (Lincoln), Ltd. (Texas)
8. USRP (Xxxxxx), Ltd. (Texas)
9. USRP (Carolina), Ltd. (Texas)
10. Restaurant Acquisition Corp. (Texas)
11. USRP Renovation Corp. (Texas)
12. Restaurant Contractor Corp. (Texas)
13. USRP (XxxXxx), LLC (Texas)
14. USRP (Sybra), LLC (Texas)
15. USRP (Ribbit), LLC (Texas)
16. USRP (Xxxxx), LLC (Texas)
17. USRP (Central Avenue), LLC (Texas)
18. USRP (Midon), LLC (Texas)
19. USRP Managing, Inc. (Delaware)
Sch. B
SCHEDULE C
----------
PROPERTIES IN WHICH THE COMPANY HOLDS A LEASEHOLD INTEREST
----------------------------------------------------------
1. BK 0000 Xxxx Xxxx Xxxx. Xxx Xxxxx, XX
2. BK 00000 X.X. Xxxxxxx X. Xxxxxxxxxx, XX
3. BK 000 Xxxxxxxxxxx Xxxxxx Xxxxxxx, XX
4. Jose's Mexican 000 Xxxxx "X" Xxxxxx Xxx Xxxxxxxxxx, XX
5. BK 0000 X. Xxxxxxx Xxxxx Xxxxxxx, XX
6. BK 0000 X. 00xx Xxxxxx Xxxxxx, XX
7. BK 000 Xxxxx Xxxxx 00 Xxxxxxx, XX
8. BK 000 Xxxxx Xxxxxxx Xxxxxx Xxxxxx, XX
9. BK 000 Xxxx Xxxxxx Xxxxxxxx, XX
10. BK 00000 Xxxxxxx Xxxxxxx Xxxxx Xxxx, XX
11. BK 0000 Xxxx Xxxx Xxxxx, XX
12. BK 000 Xxx Xxxx Xxxxxxx Xxxxx, XX
13. BK 000 Xxxxx Xxxx Xxxxxx Xxxxxx, XX
14. BK 0000 Xxxxx Xxxxxx Xxxxxx Xxxxxxxxxxxx, XX
15. BK 000 X. Xxxxx Xxxxxx (Xxxxxx Xxxx) Xxxxxx, XX
16. BK 000 Xxxxx Xxxxxx Xxxxxxxxxxx, XX
17. BK 0000 Xxxxx Xxx "X" Xxxx Xxxxxx, XX
18. BK 0000 Xxxxxxx Xxxx Xxxxxxx Xxxxxxx Xxxxxxxx, XX
19. BK 000 Xxxxx Xxxxxxx Xxxxx Xxxxxxx, XX
20. BK 0000 Xxxxx Xxxxx Xxxx. Xxxxxxx, XX
21. BK 000 Xxxxxxxxx Xxxx Xxxxxxx, XX
22. BK 0000 Xxxxxxx Xxxxxx Xxxx Xxxxxxx, XX
23. BK Crossroads Shopping Center Westminster, MD
24. BK 0000 Xxxxxxxxx Xxxxxx Xx Xxxxxx, XX
25. BK 0000 Xxxx Xxxxx Xx Xxxxxx Xxxxxxxxx, XX
26. BK 0000 Xxxxxx Xxxx Xxxxx, XX
27. BK 0000 Xxxxxxxx Xxxx Xxxxxxxxxxx, XX
28. BK 000 Xxxx Xxxxxx Xxxxxxxxxx, XX
29. BK 0000 X. Xxxxx Xxxxxx Xxxxxx, XX
30. BK 0000 Xxxxx Xxxxx Xxxxxx Xxxxxx, XX
31. BK 0000 X. Xxxxx Xxxxxx Xxxxxx, XX
32. XX X. 00000 Xxxxxxx Xxxxxx Xxxxxxx, XX
33. BK Xx. 000 & Xx. 0-00 X. Xxxxxxxxxx, XX
00. BK 0000 Xxxxxxxxx-Xxxxxxxxx Xxxx Xxxxxxxxx, XX
35. BK 0 Xxxxxxx Xxxxx Xxxxxxx, XX
36. BK Xx. 0X & X. Xxxxx Xxxxxx Xxxxxxxxx, XX
00. BK 0000 Xxxxx Xxxxxxx Xxxx Xxxxxxx Xxxxx, XX
38. BK 000 X. Xxxxxx Xxxx Xxxx Xxxxxxxxxx, XX
39. BK 000 X. Xxxxxxxx Xxxxxx Xxxxxx Xxxx, XX
40. BK Argonne & Xxxx Spokane, WA
41. BK 00 Xxxxx 0xx Xxxxxx Xxxxxxxxxxxx, XX
42. BK 000 X. Xxxxxxx Xxxxxx Xxxxxxxx, XX
Sch. C
43. BK 0000 - 00xx Xxxxxx Xxxxx, XX
44. BK 0000 Xxxx Xxxxxx Xxxxxx XxXxxxxx, XX
45. BK 0000 Xxxxx Xxxx Xxxxxxx, XX
46. BK 0000 Xxxxx Xxxxxx Xxxxxxx, XX
47. BK 0000 X. Xxxxxxx Xxxxxx Xxxxxxx, XX
48. BK R.D. 0 - Xxxxx 00 Xxxxxxx, XX
49. BK 000 Xxxxxx Xxxxxx Xxxxxxxxxx, XX
50. BK 0000 Xxxxxx Xxxxx Xxxx Xxxxxx Xxxx, XX
51. BK 0000 Xxxxxxxxx Xxxxxx Xxxxxxxxx, XX
52. BK 0000 Xxxxxx Xxxx., X.X. Xxxxxx, XX
53. BK 0000 Xxxxx Xx Xxxxxx Xxxx Xxx Xxxxx, XX
54. BK 000 Xxxx Xx Xxxxx Xxx Xxxxxx, XX
55. BK 00 Xxxxx Xxxxxx Xxxx Xxxxxx, AZ(a)
56. BK 0000 Xx. Xxxxxx Xxxxxx Xxxxxx, XX
57. XX Xxxxxxxxx Xxxx & Xxxxx Xxxx Xxxxx, XX
58. BK Route 00 Xxxxxxx Xxxxxx Xxxxxxxxx, XX
59. XX XX 000 X. Xxxxxxx Xxxx Xxxxxxxxxx, XX
60. XX XX 0000 Xxxxx Xxxxxx Xxxxxx Xxxx, XX
61. XX XX 0000 Xxxxx Xxxxxxx Xxxxxxxx, XX
62. XX XX 0000 X. Xxxxxx Xxxxxx Xxxxxx, XX
63. XX XX Xxx. 00 & Xxxxxxx Xx. Xxxxxxxxxx, XX
64. XX XX 0000 X. Xxxxxx Xxxx Xxxxx, XX
65. XX XX 000 Xxxxxxxx Xxxxxxxx Xxxxxx, XX
66. XX XX 0000 X. Xxxxxx Xxxx Xxxxxx, XX
67. XX XX 0000 Xxxxxx Xxxxxx Xxxxxxxxxxx, XX
68. XX XX 0000 X. Xxxxxxxxx Xxxx Xxxxxxxx, XX
69. BK 00 X. Xxxxxxxxx Xxxxxxx Xx. Xxxxxxx, XX
70. BK 0000 Xxxxxxx Xxxxxx Xxxxxx, XX
71. BK 0000 X. Xxxx Xxxxxx Xxxxxxxx, XX
72. BK 0000 Xxxxx Xxxxxxx 00 Xxxxxx, XX
73. BK 000 Xxxxxx Xxxx Xxxx Xxxxxxxxx, XX
74. BK 000 Xxxx Xxxxxx Xxxxxxxxxxx, XX
75. BK 0000 Xxxxx 00 Xxxx, XX
76. Hardee's 0000 Xxxxxxxx Xx., XX Xxx. 00 Xxxxxxxx, XX
77. Hardee's 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, XX
78. Hardee's 000 Xxxxxxx 00 Xxxxxx Xxxx, XX
79. Hardee's X.X. Xxx 0000, Xxx. 000 & 00 Xxxxxxxx Xxxx, XX
80. Hardee's 000 Xxxxxxxx Xxxxx Xxxxxxxx, XX
81. Fazoli's 000 Xxxxxxx Xxxx Xxxxx Xxxxxxxxxxx, XX
82. Memphis Best 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, XX
83. Pizza Hut 0000 Xxxx 00xx Xxxxxx Xxxxxxxxxxx, XX
84. Pizza Hut 0000 Xxxxxxxxx Xxxxxxxx Xxxxxxxxx, XX
85. Xxxxxx'x Restaurant 0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxxxxx, XX
Sch. C
SCHEDULE D
----------
TENANT RIGHTS OF FIRST REFUSAL/FIRST OFFER
------------------------------------------
1. Memphis Best 0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, XX
2. Xxxxxx'x Restaurant 0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxxxxx, XX
Sch. D
SCHEDULE E
----------
PROPERTIES WHICH ARE NOT TRIPLE NET LEASED
------------------------------------------
1. BK 000 Xxxxxx Xxxxxx Xxxxxxxxx, XX
2. BK-closed 00000 X. Xxxxxxx 00 Xxxxxxxxxxxx, XX
3. Puerta Vallarta 000 Xxxx Xxxxxxxx Xxxx. Xxxxxx, XX
4. Chili's 0000 X-00 X. Xxxxx Xxxxxx, XX
5. Pilot Point Bank 0000 X-00 X. Xxxxx Xxxxxx, XX
6. Red Pepper Chinese 0000 X-00 X. Xxxxx Xxxxxx, XX
7. Tumbleweeds 000 Xxxxxxxxx-Xxxx Xxxxxxxxx Xx. Xxxx Xxxxxxxxx, XX
Sch. E
