EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of the 29/th/ day of December, 2000, by and among U.S. Restaurant
Properties, Inc., a Maryland corporation ("USRP"), QSV Properties, Inc. a
Delaware corporation ("QSV"), Xxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxxx X. Xxxxx
("X.X. Xxxxx"), Xxxxx X. Xxxxx ("X.X. Xxxxx") and Xxxxxx X. Xxxxxxx ("Xxxxxxx"
and collectively with Xxxxxxxx, X.X. Xxxxx and X.X. Xxxxx, the "Stockholders").
RECITALS
WHEREAS, the merger of QSV with and into USRP (the "Merger") was
contemplated if certain conditions were satisfied as described in that certain
Withdrawal Agreement dated as of October 15, 1997 by and among USRP, U.S.
Restaurant Properties Master L.P., U.S. Restaurant Properties Operating L.P.,
and QSV (the "Withdrawal Agreement");
WHEREAS, USRP is contemplating entering into an agreement with Lone Star
U.S. Acquisitions, LLC, a Delaware limited liability company ("Lone Star"),
pursuant to which USRP will sell $20 million of USRP common stock to Lone Star
(the "REIT Stock Purchase Agreement");
WHEREAS, the parties hereto desire to effect the Merger pursuant to this
Agreement; and
WHEREAS, on May 10, 2000 QSV borrowed $4,000,000 from Intrust Bank, N.A. of
Wichita, Kansas (the "Loan") and pledged as security for such loan certain
securities issued by USRP described on Schedule 3.8 hereto. Concurrent with the
Closing (defined herein) (i) X.X. Xxxxx will lend to QSV (the "Xxxxx Loan"),
under the terms of a promissory note in the form of Exhibit 2 hereto (the "QSV
Note"), an amount equal to the then outstanding principal and accrued interest
owing on the Loan, and QSV will pay the Loan in full, (ii) X.X. Xxxxx, X.X.
Xxxxx and Xxxxxxxx will each make a capital contribution to QSV in an amount
equal to their Pro Rata Share (as defined in the Settlement Agreement referred
to in Section 7.7 hereof) of the Loan, leaving a principal balance on the QSV
Note of $959,102.28, (iii) the QSV Note will be renewed and extended through the
issuance by USRP to X.X. Xxxxx of a promissory note in the principal amount of
$959,102.28 and in the form of Exhibit 3 hereto (the "USRP Note") and (iv)
Stetson will execute and deliver to USRP his promissory note (the "Stetson
Note") in the principal amount of $959,102.28 and in the form of Exhibit 4
hereto, which note shall be secured by a first lien in favor of USRP encumbering
196,204.8 shares of USRP Common Stock issuable to Stetson under the terms of
this Agreement (the "Group One Shares"), which shares will be held by USRP, a
second lien in favor of USRP encumbering 399,000 shares of USRP Common Stock
issuable to Stetson under the terms of this Agreement (the "Group Two Shares")
that are subject to a judgment lien, and a first lien in favor of USRP
encumbering 174,474.6 shares of USRP Common Stock issuable to Stetson under the
terms of this Agreement (the "Group Three Shares"), which shares will be in the
possession or control of Stetson. The Stetson Note represents his Pro Rata Share
of the Loan, which he is obligated to assume or pay under the terms of the
Settlement Agreement. The USRP Note will be secured by a second lien in favor of
X.X. Xxxxx encumbering the Group One Shares, a third lien in favor of X.X. Xxxxx
encumbering
the Group Two Shares, and a second lien in favor of X.X. Xxxxx encumbering the
Group Three Shares. The making of the Xxxxx Loan and the issuance of the QSV
Note, the payment of the Loan, the issuance of the Stetson Note and the USRP
Note, the pledge of Stetson's USRP Common Stock to USRP as security for the
Stetson Note and to X.X. Xxxxx as security for the USRP Note, and the
transactions contemplated by the foregoing are referred to herein as the
"Intrust Transaction."
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Unless the context otherwise requires, the terms defined in this Article I
shall have the meanings herein specified for all purposes of this Agreement,
applicable to both the singular and plural forms of any of the terms herein
defined.
"Affiliate" shall mean with respect to any person, any other person
controlling, controlled by or under common control with such person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
"Agreement" shall mean this Agreement and Plan of Merger, including the
recitals and all schedules and exhibits hereto, as this Agreement may be from
time to time be amended, modified or supplemented.
"Closing" shall have the meaning assigned to it in Section 2.4.
"Closing Date" shall have the meaning assigned to it in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Effective Time" shall have the meaning assigned to it in Section 2.3.
"Equitable Remedies" shall mean with respect to the enforceability of any
obligation (i) as such enforcement may be limited by any bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to or affecting creditor's rights generally or (ii) as the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court or other similar
person before which any proceeding therefor may be brought.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or
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administrative functions of or pertaining to government, including, without
limitation, any court, government authority, agency, department, board,
commission or instrumentality of the United States, any state of the United
States or any political subdivision thereof, and any tribunal or arbitrator of
competent jurisdiction, and any self-regulatory organization as defined in
Section 3(a)(26) of the Exchange Act.
"Lien" shall mean any mortgage, pledge, security interest, option, right of
first refusal, security agreement, lien or encumbrance, including, without
limitation, any Tax liens, any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction and including any lien arising by statute or other law.
"Merger" shall have the meaning assigned to it in the Recitals to this
Agreement.
"person" shall mean all natural persons, corporations, business trusts,
associations, companies, partnerships, joint ventures and other entities and
governments and agencies and political subdivisions.
"QSV Common Stock" shall have the meaning assigned to it in Section 2.6(b).
"REIT" shall mean a real estate investment trust, as such term is defined
in Sections 856 through 860 of the Code.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholders" shall have the meaning assigned to it in the introductory
paragraph of this Agreement.
"Surviving Corporation" shall mean USRP in its capacity as the corporation
surviving in the Merger.
"Tax" means any federal, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"USRP Common Stock" shall mean the Common Stock of USRP, par value $0.001
per share.
"Withdrawal Agreement" means the Withdrawal Agreement referred to in the
first paragraph of the Recitals.
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ARTICLE II.
THE MERGER
2.1. The Merger. As of the Effective Time, QSV shall be merged with and
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into USRP, the separate existence of QSV shall cease and USRP (a) shall continue
as the Surviving Corporation under the corporate name it possesses immediately
prior to the Effective Time; and (b) shall continue to be governed by the laws
of the State of Maryland.
2.2. Effect of the Merger. The Merger shall have the effects set forth in
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this Agreement and the applicable provisions of the Maryland General Corporation
Law and the Delaware General Corporation Law. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time all the property,
rights, privileges, immunities, powers and franchises of each of USRP and QSV
(together, the "Constituent Corporations") shall be deemed to be transferred to
and vested in the Surviving Corporation, and all debts, liabilities, duties and
obligations of each of the Constituent Corporations shall become the debts,
liabilities, duties and obligations of the Surviving Corporation.
2.3. Consummation of the Merger. On the Closing Date, the parties hereto
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shall file (a) with the State Department of Assessments and Taxation of the
State of Maryland (the "SDAT"), Articles of Merger, in such form and executed in
accordance with the relevant provisions of Maryland law; and (b) with the
Secretary of State of the State of Delaware, a Certificate of Merger, in such
form and executed in accordance with the relevant provisions of Delaware law.
The Merger shall become effective upon the filing of the Articles of Merger
with, and acceptance for record of the Articles of Merger by, the SDAT (the
"Effective Time").
2.4. The Closing. The closing of the transactions contemplated by this
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Agreement (the "Closing") shall take place as soon as practicable following the
satisfaction of the conditions precedent set forth in Articles VII and VIII of
this Agreement at the offices of Xxxxx Xxxxxxx & Xxxx LLP, 0000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx 00000 (or at such other location and on such date and
at such time as the parties may mutually agree). As used herein, the actual
date of Closing is herein sometimes referred to as the "Closing Date."
2.5. Articles of Incorporation; Bylaws; Directors and Officers. The
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Articles of Incorporation and Bylaws of USRP, as in effect immediately prior to
the Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation and thereafter shall continue to be its Articles of
Incorporation and Bylaws until amended as provided therein and under Maryland
law. The Directors of USRP holding office immediately prior to the Effective
Time shall be the directors of the Surviving Corporation immediately after the
Effective Time and shall serve until their successors are duly elected and shall
qualify. The officers of USRP holding office immediately prior to the Effective
Time shall be the officers (holding the same offices as they held with USRP) of
the Surviving Corporation immediately after the Effective Time and shall serve
until their successors are duly elected and shall qualify.
2.6. Conversion of Securities. Subject to the terms and conditions of this
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Agreement, on the Closing Date, by virtue of the Merger and without any action
on the part of USRP, QSV or the holders of any of the following securities:
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(a) Each share of USRP Common Stock outstanding on the Closing Date
shall remain outstanding as USRP Common Stock and shall not be converted into
any other security pursuant to the Merger. The certificates for such shares
shall not be surrendered or in any way modified by reason of the effectiveness
of the Merger.
(b) Each share of QSV common stock, par value $0.01 per share (the
"QSV Common Stock"), owned by the Stockholders shall be automatically converted
without any action on the part of such holders into the right to receive (i)
4,088 shares of USRP Common Stock, (ii) cash in an amount equal to $11.80 per
share of USRP Common Stock that would otherwise be issued in the Merger or (iii)
any combination of USRP Common Stock and cash with a total value equal to the
value of 4,088 shares of USRP Common Stock based on a value of $11.80 per share
(the "Merger Consideration"); provided, however, the cash portion of the Merger
Consideration will not exceed the amount that USRP determines, in the opinion of
counsel to USRP, is necessary to enable USRP to continue to qualify as a REIT;
and provided further, however, that the number of shares of USRP Common Stock
issuable to the Stockholders hereunder shall be reduced by the number of shares
of USRP Common Stock distributed by QSV to any Stockholder prior to the Closing
on a share-for-share basis.
(c) Each right to receive Contingent Shares under the Withdrawal
Agreement and OP Unit held by QSV (as set forth on Schedule 3.8) shall be
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terminated.
(d) Notwithstanding anything to the contrary contained in this
Agreement, no Stockholder has the right to have his QSV Common Stock converted
into USRP Common Stock and no Stockholder has the right to have USRP Common
Stock issued to such Stockholder if such conversion or issuance (or the right to
such conversion or issuance) would, in the opinion of counsel to USRP, cause
USRP to own (directly or constructively through the application of Section 318
of the Code, as modified by Section 856(d)(5) of the Code) an interest in a
tenant that is described in Section 856(d)(2)(B) of the Code and accordingly
cause USRP to receive or accrue rental income that fails to constitute "rents
from real property" within the meaning of Sections 856(c)(2)(C) or 856(c)(3)(A)
of the Code and (i) any attempt to effect such conversion or issuance in the
case of the existence of such an opinion shall be null and void and shall have
no effect for any purpose and (ii) that portion of any document or instrument
indicating that such conversion or issuance may be made will have no force or
effect.
2.7. Obligations at Closing. At the Closing:
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(a) QSV and the Stockholders shall deliver to USRP:
(i) the stock books, stock ledgers and minute books of QSV;
(ii) original-executed copies of a Certificate of Merger; and
(iii) certificates representing all of the QSV Common Stock owned
by the Stockholders, duly endorsed (or accompanied by appropriate stock powers
duly endorsed) in blank by the registered holder thereof for transfer, together
with such supporting documents, releases, endorsements, assignments, affidavits
and other necessary instruments of sale and transfer as are necessary to permit
USRP to cancel such shares in connection with the Merger.
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(b) USRP shall deliver to the Stockholders the Merger Consideration
by delivering cash by wire transfer of immediately available funds to accounts
designated by the Stockholders to USRP prior to closing or stock certificates
representing shares of USRP Common Stock, as applicable.
(c) USRP shall deliver to the Stockholders certified resolutions of
the Board of Directors (or applicable committee) with respect to:
(i) the satisfaction or waiver of the conditions precedent to
the issuance of the Contingent Shares;
(ii) the waiver by USRP of the effective date with respect to
the Contingent Shares; and
(iii) the matters referred to in Section 6.14.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF QSV AND THE STOCKHOLDERS
QSV and the Stockholders jointly and severally represent and warrant to
USRP as follows:
3.1. Organization and Good Standing. QSV is a corporation, validly existing
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and in good standing under the laws of the State of Delaware and, has all
requisite corporate power and authority to carry on its business as now being
conducted. QSV is not required to be qualified as a foreign corporation in any
jurisdiction. QSV has delivered to USRP true and complete copies of its
Certificate of Incorporation and Bylaws as in effect at the date of this
Agreement. QSV is not in violation of any provisions of its Certificate of
Incorporation or Bylaws.
3.2. Subsidiaries of QSV. Except for USRP Common Stock, options to purchase
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USRP Common Stock, rights to receive Contingent Shares under the Withdrawal
Agreement and OP Units as set forth on Schedule 3.8, QSV does not own, directly
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or indirectly, any shares of capital stock (or other ownership interests) of any
corporation, partnership, joint venture, limited liability company or other
legal entity.
3.3. Capitalization. The authorized capital stock of QSV consists of 1,000
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shares of QSV Common Stock. As of the date hereof, 625 shares of QSV Common
Stock are issued and outstanding. QSV has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with QSV Common Stock on any matter. All of the issued and outstanding shares of
QSV Common Stock are duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights. There are not at the date of this Agreement any
existing options, warrants, calls, subscriptions, convertible securities, or
other rights, agreements or commitments which obligate QSV to issue, transfer or
sell any shares of QSV Common Stock.
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3.4. Authority. QSV has all requisite corporate power and authority to
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enter into this Agreement and any other Transaction Documents (hereinafter
defined) to which it is a party and to consummate the transactions contemplated
hereby or thereby. The execution and delivery of this Agreement and the other
Transaction Documents to which QSV is a party and the consummation by QSV of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary corporate action on the part of QSV. This Agreement and the
Transaction Documents to which QSV is a party have been, or upon execution and
delivery will be, duly executed and delivered and constitute, or upon execution
and delivery will constitute, the valid and binding obligations of QSV
enforceable against it in accordance with their respective terms, except as
enforceability may be limited by Equitable Remedies. As used in this Agreement
with respect to any party hereto, "Transaction Documents" means this Agreement
and any other agreements referred to in Section 2.7 to which it or he is a
party.
3.5. No Conflict; Required Filings and Consents. The execution and delivery
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of this Agreement and the other Transaction Documents to which QSV is a party do
not, and the performance by QSV of the transactions contemplated hereby or
thereby will not, subject to obtaining the consents, approvals, authorizations
and permits and making the filings described in this Section 3.5 (a) violate,
conflict with or result in any breach of any provision of QSV's Certificate of
Incorporation or Bylaws, (b) give rise to the creation of any lien upon any of
the assets of QSV under, any of the terms, conditions or provisions of any loan
or credit agreement, note, bond, mortgage, indenture or deed of trust to which
QSV is a party or by which QSV or any of its assets are bound, or (c) violate
any order, writ, judgment, injunction, decree, statute, law, rule or regulation
of any Governmental Authority binding upon QSV or by which or to which any of
QSV's assets is bound or subject. No consent, approval, authorization or permit
of, or registration, declaration or filing with, any Governmental Authority is
required by or with respect to QSV in connection with the execution and delivery
of this Agreement and any other Transaction Documents by QSV or the consummation
of the transactions contemplated hereby or thereby, except for (i) the filing
and recordation of the Certificate of Merger as required by the Delaware General
Corporation Law and the Maryland General Corporation Law, (ii) applicable
requirements, if any, of the Code and state, local and foreign tax laws, (iii)
filings and submissions referred to in Section 4.2(b), and (iv) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
registrations, declarations or filings, would not prevent or delay consummation
of any of the transactions contemplated hereby in any material respect, or
otherwise prevent QSV from performing its obligations under this Agreement.
3.6. Absence of Litigation. Except as set forth on Schedule 3.6, there is
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no claim, action, suit, inquiry, judicial or administrative proceeding,
grievance or arbitration pending or, to the knowledge of the Stockholders,
threatened against QSV or any of QSV's assets by or before any arbitrator or
Governmental Authority, nor are there any investigations relating to QSV or any
of its assets pending or, to the knowledge of the Stockholders, threatened by or
before any arbitrator or Governmental Authority. Except as set forth on
Schedule 3.6, there is no judgment, decree, injunction, order, determination,
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award, finding or letter of deficiency of any Governmental Authority or
arbitrator, or settlement agreement, outstanding against QSV or any of QSV's
assets. There is no claim, action, suit, inquiry or judicial or administrative
proceeding pending or, to the knowledge of the Stockholders, threatened against
QSV relating to the transactions contemplated by this Agreement or the other
Transaction Documents.
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3.7. Operation of QSV. Since October 15, 1997, except for the transactions,
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agreements and arrangements contemplated by this Agreement, QSV has (i) engaged
in no business or activities other than the ownership of shares of USRP Common
Stock, options to purchase USRP Common Stock (the "Options"), rights to receive
shares of USRP Common Stock pursuant to the Withdrawal Agreement and limited
partnership interests in U.S. Restaurant Properties Operating L.P. (the "OP
Units"), and (ii) incurred no material obligations or material liabilities and
has no material assets other than such securities and rights and the liabilities
and assets set forth on Schedule 3.7.
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3.8. Security Ownership by QSV. As of the date of this Agreement, QSV is
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the holder of record and owns beneficially (a) shares of USRP Common Stock, (b)
Options, (c) OP Units and (d) the right to receive Contingent Shares pursuant
to the Withdrawal Agreement, in each case as set forth on Schedule 3.8, free and
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clear of all Liens except as are imposed under the Withdrawal Agreement and set
forth on Schedule 3.8.
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3.9. S Corporation. QSV (and any predecessor of QSV) became a validly
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electing S corporation within the meaning of Sections 1361 and 1362 of the Code
during its ownership by the Stockholders and remained such until the election
was terminated by reason of the Merger.
ARTICLE IV.
ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder further severally as to himself and not jointly represents
and warrants to USRP as follows (such representations and warranties being
deemed to be made on a continuous basis until the Closing):
4.1. Ownership of Shares.
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(a) As of the date of this Agreement, such Stockholder is the holder
of record and owns beneficially the number of shares of QSV Common Stock set
forth opposite his name on Schedule 4.1(a) hereto, free and clear of all Liens,
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except as set forth on Schedule 4.1(a). At the Closing, USRP will receive good
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and valid title to the shares of QSV Common Stock owned by such Stockholder,
free and clear of all Liens; and
(b) As of the date hereof, such Stockholder owns, directly or
indirectly, no equity interest in USRP other than as disclosed on Schedule
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4.1(a).
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4.2. Authority; No Violations; Consents and Approvals.
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(a) Such Stockholder has full legal capacity to enter into this
Agreement and all other agreements referred to in Section 2.7 to which the
Stockholder is a party (collectively, the "Stockholder Transaction Documents")
and to consummate the transactions contemplated hereby and thereby. The
Stockholder Transaction Documents to which such Stockholder is a party, upon
execution and delivery by such Stockholder and, assuming the Stockholder
Transaction Documents to which other persons are parties constitute the valid
and binding obligations of such other persons, constitute valid and binding
obligations of such Stockholder, enforceable in accordance with their terms,
except as such enforceability may be limited by Equitable Remedies.
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(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, or permit from any Governmental Authority is
required by or with respect to such Stockholder in connection with the execution
and delivery of the Transaction Documents by such Stockholder or the
consummation by such Stockholder of the transactions contemplated hereby or
thereby, except for: (i) the filing with the Securities and Exchange Commission
(the "SEC") of such reports under Sections 13(a) and 16(a) of the Exchange Act
and such other compliance with the Securities Act and the rules and regulations
thereunder, as may be required in connection with the Transaction Documents and
the transactions contemplated hereby or thereby; (ii) the submission to the New
York Stock Exchange (the "NYSE") of a supplemental listing application regarding
the shares of USRP Common Stock issuable in the Merger; (iii) any filings
required under state securities laws; (iv) such filings and approvals as may be
required by any applicable state takeover laws; (v) such filings and approvals
as may be required by any foreign premerger notification, securities, corporate
or other law, rule or regulation; and (vi) the filing, if applicable, of a pre-
merger notification and report by USRP under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the expiration or termination of the
applicable waiting period thereunder.
4.3. Agreements with USRP, its Subsidiaries or Affiliates. Schedule 4.3
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hereto sets forth all agreements to which such Stockholder is a party relating
to (a) the equity interest of such Stockholder in USRP or any of its
subsidiaries or Affiliates, (b) any rights or obligations of such Stockholder as
an officer, director or stockholder of USRP or any of its Affiliates or
subsidiaries, (c) any right to compensation or other remuneration by USRP or any
of its subsidiaries or Affiliates and (d) any other agreement with USRP or any
subsidiary of USRP.
4.4. Legend. Such Stockholder acknowledges and agrees that the
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certificates representing the USRP Common Stock he will receive in connection
with the Merger will bear a restrictive legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND THEY MAY
NOT BE OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT THEREUNDER OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
Notwithstanding the foregoing, USRP acknowledges and agrees the
Stockholders contemplate entering into a Stock Purchase Agreement with Lone Star
(the "Stock Purchase Agreement") pursuant to which certain of the Stockholders
will sell certain securities of USRP, including the USRP Common Stock issued
pursuant hereto. USRP consents to the sale of any or all of the USRP Common
Stock issued pursuant hereto to Lone Star solely in accordance with the terms
and conditions of the Stock Purchase Agreement and waives any requirement that
an opinion of counsel be delivered in connection with such sale.
4.5. Consents. To the knowledge of such Stockholder, the execution and
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delivery of this Agreement and the other Transaction Documents to which QSV is a
party do not, and the performance by QSV of the transactions contemplated hereby
or thereby will not, subject to obtaining the approvals, consents,
authorizations and permits and making the filings described in Section 3.5 or as
described on Schedule 3.7, violate, conflict with or result in a violation or
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breach
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of or constitute a default (with or without due notice or lapse of time or both)
under or give any party the right to terminate or accelerate (whether as a
result of a change of control of QSV or otherwise as a result of this Agreement)
any obligation, or results in the loss of any benefit or give any person the
right to require any security to be repurchased or give rise to the creation of
any lien upon any of the assets of QSV under any of the terms, conditions or
provisions of any material contract to which QSV is a party or by which its
assets are bound.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF USRP
USRP represents and warrants to QSV and the Stockholders as follows:
5.1. Organization and Standing; Corporate Power and Authority. USRP is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland, and has all requisite authority and power (corporate
and other), licenses, authorizations, consents and approvals to carry on its
business, to own, hold and operate its properties and assets, and to enter into
this Agreement.
5.2. Authorization and Validity of this Agreement. The execution, delivery
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and performance by USRP of this Agreement are within USRP's corporate powers,
have been duly authorized by all necessary corporate action, do not require from
the Board of Directors or stockholders of USRP any consent or approval that has
not been validly and lawfully obtained, require no authorization, consent,
approval, license, exemption of or filing or registration with any Governmental
Authority that has not been validly and lawfully obtained, do not and will not
violate or contravene (i) any provision of law; (ii) any rule or regulation of
any agency or government, domestic or foreign; (iii) any order, writ, judgment,
injunction, decree, determination or award; or (iv) any provision of the
Articles of Incorporation or Bylaws of USRP, do not and will not violate or be
in conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under, or result in the termination of, or
accelerate the performance required by (or give any party any right to terminate
or accelerate upon notice or lapse of time or both), any indenture, license,
franchise, loan or credit agreement, note, deed of trust, mortgage, security
agreement or other agreement, lease or instrument, commitment or arrangement to
which USRP is a party or by which USRP or any of its properties, assets or
rights is bound or affected and do not and will not require the consent,
approval or authorization of any other party to agreements, licenses, leases,
sales orders, permits, franchises, rights and other obligations of USRP that
will not have been obtained prior to the Closing.
5.3. Binding Obligation. This Agreement constitutes the legal, valid and
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binding obligation of USRP and is enforceable against USRP in accordance with
its terms, except as such enforcement is limited by Equitable Remedies.
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ARTICLE VI.
COVENANTS
6.1. Further Assurances. Each of the Stockholders, shall, at any time and
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from time to time after the Closing, upon request of USRP and at USRP's sole
cost and expense, execute and deliver such instruments of conveyance and
assignment and shall take such actions as are necessary to carry out the
transactions contemplated by this Agreement.
6.2. Corporate Action and Consents of USRP. USRP will take all necessary
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corporate and other action and will use its commercially reasonable efforts to
obtain the consents and applicable approvals, including approvals of any
regulatory authority, required to be obtained by USRP to enable it to carry out
the transactions contemplated by this Agreement.
6.3. Cooperation of QSV and the Stockholders. QSV and the Stockholders
---------------------------------------
will cooperate with USRP in supplying such information as may be reasonably
requested by USRP in connection with obtaining consents and approvals to the
transactions contemplated by this Agreement.
6.4. Stockholder Action. On or prior to the Closing Date, each Stockholder
------------------
agrees that, with respect to the QSV indebtedness listed on Schedule 3.7, he
------------
shall pay or personally assume his pro rata portion of such indebtedness based
on his ownership of QSV Common Stock.
6.5. Cooperation of USRP. USRP will cooperate with QSV and the
-------------------
Stockholders in supplying such information as may be reasonably requested by QSV
or the Stockholders in connection with obtaining consents and approvals to the
transactions contemplated by this Agreement.
6.6. Termination of Management Agreement. QSV and the Stockholders shall
-----------------------------------
take all actions necessary to terminate that certain Management Agreement by and
among QSV, Xxxxxxxx and Xxxxxxx.
6.7. Assistance. If USRP requests, QSV shall cooperate in all reasonable
----------
respects in connection with any filings that may be made by USRP or its
Affiliates (other than QSV) with the SEC, all at the sole expense of USRP.
6.8. Notification of Certain Matters. Each of the parties shall give the
-------------------------------
other parties prompt written notice of (a) the occurrence, or failure to occur,
of any event of which he has knowledge that has caused or that would be likely
to cause any representation or warranty of any party contained in this Agreement
or the other Transaction Documents to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date or (b) the failure
of any party to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder or
thereunder. No such notification shall affect the representations or warranties
of the parties or the conditions to their respective obligations hereunder.
11
6.9. Transfer of QSV Common Stock. None of the Stockholders shall, other
----------------------------
than as a result of the death of such Stockholder, (a) transfer (which term
shall include, without limitation, for the purposes of this Agreement, any sale,
gift, pledge, assignment, encumbrance or other disposition), whether directly or
indirectly (including by operation of law), or consent to any transfer of, any
or all of the shares of QSV Common Stock or any interest therein, except
pursuant to the Merger, (b) grant any proxies with respect to the shares of QSV
Common Stock, deposit the shares of QSV Common Stock into a voting trust or
enter into a voting agreement or similar arrangement with respect to the shares
of QSV Common Stock, or (c) enter into any contract, option or other agreement
or understanding with respect to any transfer of any or all such shares of QSV
Common Stock or any interest therein or take any other action with respect
thereto in a manner that would prevent the Stockholder from performing its
obligations under this Agreement or any other Transaction Documents to which
such Stockholder is a party. The Stockholders and QSV agree that any transfer of
the shares of QSV Common Stock made other than in compliance with this Agreement
shall be null and void, that any such transfer shall convey no interest in any
of the shares of QSV Common Stock purported to be transferred, and that the
transferee shall not be deemed to be a stockholder of QSV nor entitled to
receive a new share certificate or any rights, dividends or other distributions
on or with respect to such shares of QSV Common Stock.
6.10. Stop Transfer. Each Stockholder hereby agrees that such Stockholder
-------------
shall not request that QSV register the transfer (book entry or otherwise) of
any certificate or uncertificated interest representing any of its shares of QSV
Common Stock, unless such transfer is made in compliance with this Agreement.
QSV agrees not to register the transfer (book entry or otherwise) of any
certificate or uncertificated interest representing any of the shares of QSV
Common Stock, unless such transfer is made in compliance with this Agreement.
6.11. Additional Agreements. If, after the Closing Date, USRP seeks
---------------------
indemnification or recovery from one or more other parties to a contract or
agreement or otherwise seeks to enforce such contract or agreement and, in order
to obtain such indemnification, recovery or enforcement, it is necessary for a
Stockholder to participate in any enforcement proceeding or otherwise provide
assistance to USRP, then, at the request, upon reasonable prior notice, during
normal business hours and without unreasonable interruption of such person's
business activities, and at the sole expense of USRP, each Stockholder shall
take such action as USRP may reasonably request in connection with USRP's
efforts to obtain such indemnification, recovery or enforcement.
6.12. Covenants Relating to the Business of QSV. Except as contemplated
-----------------------------------------
by or otherwise permitted under this Agreement or to the extent that USRP shall
otherwise consent in writing, from the date of this Agreement until the Closing,
the Stockholders, severally and not jointly, covenant and agree with USRP that
no Stockholder shall cause QSV to:
(a) conduct its business in any manner except in the ordinary course
consistent with past practice of QSV;
(b) amend, terminate, or fail to use all commercially reasonable
efforts to renew any agreement or contract (provided that QSV shall not be
required to renew any agreement or contract on terms that are less favorable to
QSV), or default in any material respect (or take or omit to take any action
that, with or without the giving of notice or the passage of time, would
constitute a material default) under any agreement or contract or enter into any
agreement or contracts under
12
which any party thereto becomes obligated to provide goods or services having a
value of, or to make payments aggregating, $5,000 or more per year;
(c) other than pursuant to this Agreement, merge or consolidate with
or into any other legal entity, dissolve, or liquidate;
(d) establish, adopt or enter into any (i) "employee benefit plan,"
as such term is defined in section 3(3) of ERISA (including, but not limited to,
employee benefit plans, such as foreign plans, which are not subject to the
provisions of ERISA), (ii) personnel policy, stock option plan, stock purchase
plan, stock appreciation rights, phantom stock plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or agreement, deferred compensation
agreement or arrangement, executive compensation or supplemental income
arrangement, consulting agreement, employment agreement or other employee
benefit plan, agreement, arrangement, program, practice or understanding or
(iii) collective bargaining agreement;
(e) enter into any employment or severance agreement with, any
director, officer, or employee of QSV, either individually or as part of a class
of similarly situated persons;
(f) acquire (including, without limitation, by merger, consolidation,
or the acquisition of any equity interest or assets) or sell (whether by merger,
consolidation, or the sale of an equity interest or assets), lease, or dispose
of any assets of QSV, except the declaration and payment of a dividend of
581,582 shares of USRP Common Stock and the declaration and payment of a
dividend of the Options;
(g) mortgage, pledge, or subject to any material Lien, any assets of
QSV, except as set forth on Schedule 3.7;
------------
(h) fail to pay or otherwise satisfy (except if being contested in
good faith) any material accounts payable, liabilities, or obligations when due
and payable other than on a basis, and within the time, consistent with past
practice;
(i) split, combine, divide, distribute, or reclassify any shares of
its capital stock, declare, pay, or set aside for payment any dividend or other
distribution in respect of its capital stock (other than any dividends or
distributions paid in cash and as described in Schedule 3.8), or directly or
indirectly redeem, purchase, or otherwise acquire any shares of its capital
stock or other securities;
(j) issue, sell, pledge, dispose of, encumber, or deliver (whether
through the issuance or granting of any options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
securities convertible into or exercisable or exchangeable for shares of stock
of any class (other than the issuance of certificates in replacement of lost
certificates and as described in Schedule 3.8);
(k) change or amend its charter documents or bylaws;
(l) incur or assume any long-term debt (including obligations in
respect of capital leases and for interest), assume, guarantee, endorse, or
otherwise become liable or
13
responsible (whether directly, contingently, or otherwise) for the obligations
of any other person (other than endorsements of checks in the ordinary course)
or make any loans, advances, or capital contributions to, or investments in, any
person;
(m) make any settlement of or compromise any tax liability, change
any tax election or tax method of accounting or make any new tax election or
adopt any new tax method of accounting;
(n) engage in any transactions with any of its Affiliates other
than the Settlement Agreement (as hereinafter defined) and transactions approved
by USRP in writing; or
(o) agree to or make any commitment, orally or in writing, to take
any actions prohibited by this Agreement.
6.13. No Solicitation. QSV shall not, directly or indirectly, through any
---------------
officer, director, agent, financial advisor, banker or other representative, or
otherwise, solicit, initiate, or encourage the submission of any inquiry,
proposal or offer from any Person relating to, or any other efforts or attempts
that constitute or may reasonably be expected to lead to, any acquisition,
purchase or financing of all or any material portion of the assets of QSV, USRP
or any of their respective Subsidiaries or Affiliates or any equity interest in
QSV, USRP or any of their respective Subsidiaries or Affiliates or any tender or
exchange offer, merger, consolidation, share exchange, business combination, or
other similar transaction with QSV, USRP or any of their respective Subsidiaries
or Affiliates (other than the Merger) or participate in any negotiations
regarding, or furnish to any other Person any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate, or
encourage, any effort or attempt by any other Person to do or seek any of the
foregoing. USRP understands, acknowledges and agrees that the Stockholders are
officers, directors, or both of USRP and as such have fiduciary obligations to
USRP, and its stockholders, and nothing to the contrary contained herein
withstanding, no action taken or which any such Stockholder fails to take in his
capacity as an officer or director of USRP shall be a breach of this Section
6.13 or any other provision of this Agreement.
6.14. Actions Prior to Closing. The resolutions described in Exhibit 1
------------------------ ---------
shall be adopted as described therein.
6.15. Additional Covenants of USRP. USRP covenants to each Stockholder as
----------------------------
follows:
(a) Notification of Certain Matters. USRP shall give prompt written
-------------------------------
notice to each Stockholder of (i) the occurrence, or failure to occur, of any
event of which it has Knowledge that has caused or that would be likely to cause
any representation or warranty of USRP contained in this Agreement or the other
Transaction Documents to be untrue or inaccurate in any material respect at any
time from the date hereof to the Closing Date, (ii) the occurrence, or failure
to occur, of any event of which it had Knowledge that has caused or that would
be likely to cause any representation or warranty of USRP contained in the REIT
Stock Purchase Agreement to be untrue or inaccurate in any material respect at
any time from the date hereof to the closing date of the REIT Stock Purchase
Agreement or (iii) the failure of USRP, or, to the extent of its Knowledge, the
failure of Lone Star, to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
hereunder or under the REIT Stock Purchase
14
Agreement. No such notification shall affect the representations or warranties
of the parties or the conditions to their respective obligations hereunder.
(b) No Amendment of REIT Stock Purchase Agreement. USRP agrees it
---------------------------------------------
shall not amend, waive, terminate (except in the event of a material breach of
the REIT Stock Purchase Agreement by Lone Star) or breach any provision of the
REIT Stock Purchase Agreement unless such amendment, waiver, termination or
breach would not adversely affect the ability of Lone Star or USRP to perform on
a timely basis any material obligation under this Agreement, the REIT Stock
Purchase Agreement or any of the other Transaction Documents to which USRP is a
party or to consummate the transactions contemplated hereby or thereby.
(c) Stockholders Meeting. As promptly as practicable, but not later
--------------------
than 45 days following the execution of this Agreement, USRP shall determine
whether approval of the transactions contemplated by this Agreement, the Stock
Purchase Agreement or the REIT Stock Purchase Agreement require approval of the
USRP stockholders. If such stockholder approval is required, USRP shall
immediately give the Stockholders notice thereof and shall call a meeting of its
stockholders, to be held as promptly as practicable after the date hereof, but
no sooner than 20 business days following the date the Proxy Statement (defined
below) is mailed to the USRP stockholders, to obtain such approval. USRP shall
prepare and file with the SEC a proxy statement (the "Proxy Statement") with
respect to such meeting and shall use all reasonable efforts to have the Proxy
Statement approved by the staff of the SEC as promptly as practicable after such
filing. USRP will use its reasonable efforts to cause the Proxy Statement to be
mailed to USRP's stockholders as promptly as practicable after the Proxy
Statement is approved by the staff of the SEC, and to call and hold a meeting of
USRP's stockholders to vote, to the extent required, on proposals (i) to adopt
and approve this Agreement and the transactions contemplated hereby and/or (ii)
to adopt and approve the REIT Stock Purchase Agreement and the transactions
contemplated thereby.
(d) Execution of Releases. At the closing of the REIT Stock Purchase
---------------------
Agreement, USRP shall execute and deliver a "Release" (as defined in the Stock
Purchase Agreement) to each of Xxxxxxxx and the Rolphs and shall pay Xxxxxxxx
the severance required under his Release at the time required by his Release.
(e) Registration Rights. In the event the closing under the Stock
-------------------
Purchase Agreement has not occurred within 150 days after the date hereof, USRP
agrees to register under the Securities Act the USRP Common Stock issued to X.X.
Xxxxx, X.X. Xxxxx and Xxxxxxxx pursuant to Section 2.6 hereof, and any USRP
Common Stock issuable upon exercise of the Options, pursuant to an agreement
providing such mutual indemnification provisions as are customary in similar
situations. Except for underwriters' discounts and commissions, if any, USRP
shall bear all reasonable costs and expenses associated with such registration.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF USRP
The obligations of USRP under this Agreement are subject to the
fulfillment, at or prior to the Closing Date, of the following conditions:
15
7.1. Representations and Warranties. The representations and warranties of
------------------------------
the Stockholders set forth in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though all such representations and warranties had been made on and as of the
Closing Date; except to the extent that the failure of any such representations
or warranties to be true and correct, individually or in the aggregate, would
not have a material adverse effect on USRP and its subsidiaries taken as a
whole.
7.2. Governmental Approvals. All consents, permits and other approvals of
----------------------
any Governmental Authority which are necessary to consummate the transaction
contemplated hereby shall have been received.
7.3. Corporate Authorization. All corporate, stockholder and other actions
-----------------------
necessary to authorize and effectuate the consummation of the transactions
contemplated hereby by QSV shall have been duly taken prior to the Closing Date.
7.4. Performance of Covenants. Each of the Stockholders shall have
------------------------
performed in all material respects all of the covenants and agreements required
to be performed by them under this Agreement prior to the Closing Date.
7.5. Absence of Injunction. As of the Closing Date, there shall not be any
---------------------
injunction, writ or temporary restraining order or any other order of any nature
issued by a court or Governmental Authority of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
7.6. NYSE Listing. The shares of USRP Common Stock to be issued to the
------------
Stockholders by USRP pursuant to the terms hereof shall be qualified for listing
on the NYSE, subject to notice of issuance.
7.7. Settlement of Litigation. The litigation described on Schedule 3.6
------------------------ ------------
shall have been settled in accordance with the terms of that certain Settlement
Agreement dated December 29, 2000 by and among QSV, and each of the Stockholders
(the "Settlement Agreement") and USRP shall have received evidence of the filing
of Agreed Motions for Dismissal with Prejudice with the 000/xx/ Xxxxxxxx
Xxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxx and the U.S. District Court for the
District of Kansas (together, the "Dismissal Motions").
7.8. Lien Releases. The Stockholders shall have delivered to USRP evidence
-------------
of the release and termination of any Lien listed on Schedule 3.7.
------------
7.9. Intrust Transaction. All of the transactions contemplated by the
-------------------
Intrust Transaction shall have occurred.
16
ARTICLE VIII.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE STOCKHOLDERS
The obligations of QSV and the Stockholders under this Agreement are
subject to the fulfillment, on or before the Closing Date, of the following
conditions:
8.1. Representations and Warranties. All representations and warranties of
------------------------------
USRP contained herein shall be true and correct in all material respects on and
as of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
8.2. Corporate Authorization. All corporate and other actions necessary to
-----------------------
authorize and effectuate the consummation of the transactions contemplated
hereby by USRP shall have been duly taken prior to the Closing Date.
8.3. Governmental Approvals. All consents, permits and other approvals of
----------------------
any Governmental Authority which are necessary to consummate the transaction
contemplated hereby shall have been received.
8.4. Absence of Injunction. As of the Closing Date, there shall not be any
---------------------
injunction, writ or temporary restraining order or any other order of any nature
issued by a court or Governmental Authority of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.
8.5. Performance of Covenants. USRP shall have performed in all material
------------------------
respects all of the covenants and agreements required to be performed by it
under this Agreement prior to the Closing Date.
8.6. NYSE Listing. The shares of USRP Common Stock to be issued to the
------------
Stockholders by USRP pursuant to the terms hereof shall be qualified for listing
on the NYSE, subject to notice of issuance.
8.7. Settlement of Litigation. The litigation described on Schedule 3.6
------------------------ ------------
shall have been settled in accordance with the terms of the Settlement Agreement
and USRP shall have received evidence of the filing of the Dismissal Motions.
8.8. USRP Board Action. The Stockholders shall have received certified
-----------------
copies of the resolutions required to be adopted by USRP pursuant to Section
6.14 hereof.
8.9. Intrust Transaction. All of the transactions contemplated by the
-------------------
Intrust Transaction shall have occurred.
17
ARTICLE IX.
INDEMNIFICATION
9.1. Indemnification for Breaches. Each of the parties hereto (hereafter,
----------------------------
the "Indemnifying Party") will severally indemnify and hold harmless the other
party and its respective representatives, successors and assigns, and any
officer, director, agent or employee of any such person or entity (hereafter,
collectively the "Indemnified Parties"), from and against any damages, loss,
cost, expense, obligation, claim or liability, including reasonable attorneys'
fees and reasonable third-party expenses of investigating, defending or
prosecuting litigation (collectively, the "Damages") suffered by the Indemnified
Parties, arising from or by reason of the breach by or any inaccuracy of any
warranty, representation or covenant made by the Indemnifying Party.
Indemnification pursuant to this Section 9.1 shall be the sole and exclusive
remedy for any breach of this Agreement by any parties hereto.
9.2. Nature and Survival of Representations, Warranties and Indemnities.
------------------------------------------------------------------
Unless otherwise provided in this Agreement, all representations, warranties,
covenants and agreements made by the parties hereto in this Agreement or in the
documents and instruments delivered pursuant hereto or in connection herewith
shall survive the Closing, the delivery of any instrument of conveyance, and the
Merger and shall remain effective and enforceable for a period of one year from
the Closing Date. Any claim for indemnification asserted in writing before the
expiration of the survival period, including any rights to contribution pursuant
to Section 9.5, shall survive until resolved or determined by arbitration or
barred by the applicable statute of limitations.
9.3. Assumption of Defense. If any action or claim shall be brought or
---------------------
asserted against an Indemnified Party in respect of which indemnity may be
sought from an Indemnifying Party, the Indemnified Party shall promptly notify
the Indemnifying Party in writing (but the omission to notify the Indemnifying
Party shall not release such person from any liability which it may have to the
Indemnified Party, except to the extent that such failure materially prejudices
the rights of the Indemnifying Party) and the Indemnifying Party shall assume
the defense thereof and the payment of all reasonable third party expenses
arising therefrom. The legal counsel selected by the Indemnifying Party shall be
subject to the consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed. The Indemnified Party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party, unless (a) the employment thereof has been specifically
authorized in writing by the Indemnifying Party; (b) the Indemnifying Party has
failed to assume the defense and employ counsel; or (c) the named parties to
such action include both the Indemnifying Party and the Indemnified Party, and
the Indemnified Party shall have been advised in good faith by its counsel that
the representation of the Indemnifying Party and the Indemnified Party by the
same counsel may be inappropriate due to actual or potential differing interests
between them, in which case the fees of counsel for the Indemnified Party shall
be paid by the Indemnifying Party. In such events, the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of the
Indemnified Party. The Indemnifying Party shall not, in connection with any one
such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expense of more than one separate firm of
attorneys at any time for the Indemnified Party, which firm shall be designated
by the Indemnified Party in writing. The
18
Indemnifying Party shall not be liable for any settlement of any such action
effected without its written consent, but if any such action is settled with the
Indemnifying Party's written consent, or if there shall be a final judgment for
the plaintiff in any such action, the Indemnifying Party shall indemnify and
hold harmless the Indemnified Party from and against any loss or liability by
reason of such settlement or judgment.
9.4. Cooperation. In any event involving a claim of any third party, the
-----------
Indemnified Party and the Indemnifying Party shall cooperate fully with each
other in the defense of any such claim under this Article IX. Without limiting
the generality of the foregoing, the Indemnified Party shall furnish the
Indemnifying Party with such documentation or other evidence as is then in its
possession as may reasonably be requested by the Indemnifying Party for the
purpose of defending against any such claim.
9.5. Contribution. After the Closing of the Merger, no Stockholder shall
------------
be entitled to seek contribution from QSV in respect of any liability resulting
from the breach of any representation, warranty or covenant made by QSV or the
Stockholder in this Agreement. Each Stockholder shall contribute to the amount
paid or payable pursuant to this Article IX by the Stockholders as a result of
any claim, damage, loss, liability or expense for which the Stockholders are
jointly liable in such proportion as is appropriate to reflect (i) the relative
benefits received by each Stockholder, (ii) the relative fault of each
Stockholder, (iii) the relative ability of each Stockholder to have prevented
the breach and (iv) any relevant equitable considerations. The relative fault of
each Stockholder shall be determined by reference to, among other things, the
Stockholders' relative intent, actual knowledge, access to information and
opportunity to correct or prevent the alleged act or omission giving rise to
such loss, claim, damage, liability or expense. The Stockholders agree that it
would not be just and equitable if contribution were determined without
reference to the equitable considerations referred to above. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities or expense (or actions in respect thereof) referred to above shall
be deemed to include any legal or other expenses incurred by such indemnified
party in connection with investigating or defending any such claim.
ARTICLE X.
MISCELLANEOUS
10.1. Expenses. Each of the parties hereto shall pay the fees and
--------
expenses of its own counsel, accountants or other experts, and all expenses
incurred by such party incident to the negotiation, preparation, execution,
consummation and performance of this Agreement and the transactions contemplated
hereby. Notwithstanding the foregoing, upon the closing under the REIT Stock
Purchase Agreement, USRP shall pay cash in an amount equal to $60,000 to
Xxxxxxxxxxx Xxxx & Company, Inc. as a result of the consummation of the
transactions contemplated thereby.
10.2. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, the Transaction Documents, and the transactions contemplated
herein or therein, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in accordance with its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The
arbitration shall be conducted under the Emergency Interim Relief Procedures of
the AAA Commercial Arbitration
19
Rules. The arbitration tribunal shall be composed of a single arbitrator, to be
appointed pursuant to AAA rules and Emergency Interim Relief Procedures. The
Optional Rules for Large, Complex Commercial Disputes shall not apply. Pursuant
to Rule E-8, the arbitration hearing shall be conducted in Dallas, Texas, within
30 days after confirmation of the arbitrator's appointment. The arbitrator shall
not have the authority to award punitive damages.
10.3. Notices. Any notice necessary under this Agreement shall be in
-------
writing and shall be considered delivered three (3) days after the mailing is
sent certified mail, return receipt requested, or when received, if sent by
telecopy, prepaid courier, express mail or personal delivery to the following
addresses:
If to USRP: U.S. Restaurant Properties, Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
If to the Stockholders: At the addresses set forth below their
signature on the signature pages hereto.
10.4. Waiver. No amendment or waiver of any provision of this Agreement,
------
nor consent to any departure therefrom, shall be effective unless the same shall
be in writing and signed by an officer of each party hereto, and then such
waiver or consent shall be effective only in a specific instance and for the
specific purpose for which given. No failure on the part of a party hereto to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided in this Agreement are cumulative and not exclusive
of any remedies provided by law.
10.5. Prior Agreements Superseded. This Agreement and the documents
---------------------------
executed in connection herewith at the Closing constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede any
and all prior written or oral agreements and understandings with respect to the
matters covered hereby, including the Withdrawal Agreement.
10.6. Binding Effect. This Agreement shall be binding upon and inure to
--------------
the benefit of the parties hereto and their respective successors and assigns.
10.7. Governing Law. THIS AGREEMENT, AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HERETO, SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICT OF LAWS.
10.8. Headings; Interpretation. The headings used in this Agreement have
------------------------
been inserted for convenience only and do not constitute matters to be construed
or interpreted in connection with this Agreement. Unless the context of this
Agreement otherwise requires, (a) words using the singular or plural number
shall also include the plural or singular number, respectively; and (b) the
20
terms "hereof," "herein," "hereby," "hereto" and derivative or similar words
shall refer to this entire Agreement.
10.9. Attorneys' Fees. The prevailing party in any legal or arbitration
---------------
proceedings brought by or against the other party to enforce any provision of
this Agreement, as determined by the arbiter of such dispute, shall be entitled
to recover against the non-prevailing party the reasonable attorneys' fees,
court or arbitration costs and other expenses incurred by the prevailing party.
10.10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.11. Severability and Reformation. If any provision of this Agreement
----------------------------
is held to be illegal, invalid or unenforceable under any current or future law,
and if the rights or obligations of the parties under this Agreement would not
be materially and adversely affected thereby, such provision shall be fully
separable, and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part thereof,
and the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance therefrom. In lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement, a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible, and the parties
hereto request the court or any arbitrator to whom disputes relating to this
Agreement are submitted to reform the otherwise illegal, invalid or
unenforceable provision in accordance with this Section 10.11.
10.12. Third Parties. Except for the rights of indemnified parties under
-------------
Section 9.1 hereof, nothing expressed or implied in this Agreement is intended,
or shall be construed, to confer upon or give any person or entity other than
QSV, USRP and the Stockholders (or their successors, heirs, representatives and
permitted assigns) any rights or remedies under or by reason of this Agreement.
10.13. Announcements. The parties hereto agree that all public
-------------
announcements relating to the Merger will be made only as mutually agreed upon;
provided, however, that either party may make any public announcements as may be
required by law without the approval of the other party.
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
U.S. RESTAURANT PROPERTIES, INC.
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------------------
By: Xxxxxxx X. Xxxxxx, Chief Financial Officer
QSV PROPERTIES, INC.
/s/ Xxxx X. Xxxxxxxx
--------------------------------------------------
By: Xxxx X. Xxxxxxxx
Title: General Manager
STOCKHOLDERS:
/s/ Xxxx X. Xxxxxxxx
--------------------------------------------------
Xxxx X. Xxxxxxxx
Address: 00000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
/s/ Xxxxxx X. Xxxxx
--------------------------------------------------
Xxxxxx X. Xxxxx
Address: 0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxx 00000
/s/ Xxxxx X. Xxxxx
--------------------------------------------------
Xxxxx X. Xxxxx
Address: 0000 Xxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxx 00000
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------------------
Xxxxxx X. Xxxxxxx
Address: 0000 Xxx Xxxxx, Xxxx 000
Xxxxxx, Xxxxx 00000
22
The undersigned spouse has joined in this Agreement for the sole purpose of
subjecting to the provisions of this Agreement any community property interest
in the QSV Common Stock that such spouse may own.
/s/ Xxx Xxxxxxxx
-----------------------------------
Xxx Xxxxxxxx
23
SCHEDULE 3.6
------------
Litigation
Xxxxxx X. Xxxxxxx v. Xxxx X. Xxxxxxxx, Xxxxxx Xxxxx, Xxxxx Xxxxx, and QSV
Properties, Inc., Cause No. DV99-8188M, 000/xx/ Xxxxxxxx Xxxxxxxx Xxxxx, Xxxxxx,
Xxxxxx, Texas, and Xxxxxx Xxxxx and Xxxxx Xxxxx v. Xxxxxx X. Xxxxxxx, Xxxx X.
Xxxxxxxx, and QSV Properties, Inc., Civ. Act. No 00-0000-XXX, X. X. Xxxxxxxx
Xxxxx for the District of Kansas.
SCHEDULE 3.7
------------
Assets and Liabilities
Assets Liabilities
------ -----------
USRP Securities described in
Schedule 3.8
Legal fees and expenses described in the
Settlement Agreement, and legal fees and
expenses incurred in connection with the
transaction contemplated by this Agreement.
Accounting fees.
Principal and interest owed under promissory
note payable to Xxxxxx X. Xxxxx dated
December 29, 2000, the proceeds of which were
used to pay a note payable of QSV to Intrust
Bank, N.A. dated May 10, 2000 in the original
principal amount of $4,000,000.
Loans from Stockholders to QSV in the
aggregate principal amount of $637,000, which
loans shall be contributed to the capital of
QSV at the Closing.
SCHEDULE 3.8
------------
USRP Securities Owned by QSV
581,582 shares of USRP Common Stock (1)(2)
Options to purchase 85,077 shares of USRP Common Stock (1)(2)
1,148,418 OP Units (1)
Right to receive 825,000 Contingent Shares pursuant to the Withdrawal Agreement
_____________________________________
(1) Securities pledged to secure the Loan
(2) Securities distributed to the Stockholders as of December 29, 2000 prior to
the Closing
SCHEDULE 4.1(a)
---------------
Ownership of USRP Securities
Ownership of QSV Common Stock
Stockholder Number of Shares
----------- ----------------
Xxxxxxxx 187.5 shares
Stetson 187.5 shares
X.X. Xxxxx 125.0 shares
X.X. Xxxxx 125.0 shares
-----
Total 625.0 shares
=====
Ownership of USRP Securities by Stockholders
Individual Stock Ownership of Xxxxxxxx and his affiliates:
Common Shares of USRP Stock:
Xxx X. Xxxx X. Xxxxxxxx, Xx. Tn. 27,932
Xxx X. Xxxxxxxx XXX 2,190
Xxx X. Xxxxxxxx, Custodian for Xxxx X. Xxxxxxxx UTXUTMA 2,823
Xxx X. Xxxxxxxx, Custodian for Xxxxxxx Xxxxxxxx 4,110
Xxx X. Xxxxxxxx Trustee of Xxxx X. Xxxxxxxx Legacy Trust 1,833.5
Xxxx X. Xxxxxxxx XXX 4,324
Xxxx X. Xxxxxxxx Trustee of Xxx X. Xxxxxxxx Legacy Trust 1,833.5
The Xxx X. and Xxxx X. Xxxxxxxx Foundation 8,800
Preferred Shares of USRP Stock:
Xxx X. Xxxxxxxx XXX 1,200
Xxx X. Xxxxxxxx, Custodian for Xxxxxxx Xxxxxxxx UTXUTMA 5,000
Xxxx X. Xxxxxxxx XXX 4,000
The Xxx X. and Xxxx X. Xxxxxxxx Foundation 5,000
Stetson:
Direct 80,000 shares
Indirect 6,000 shares
Xxxxxx X. Xxxxx, Trustee of the Xxxxxx X.
Xxxxx Living Trust U/A/D 4/21/97 16,000 shares
Xxxxx X. Xxxxx & Xxxxxx X. Xxxxx, Trustees
of the Xxxxx X. Xxxxx Living Trust U/A/D 4/21/97 51,000 shares
Xxxxx X. Xxxxx, Trustee of the Xxxx Xxxxx Xxxxx
Trust DTD 12/21/77 4,000 shares
Xxxxx X. Xxxxx, Trustee of the Xxxxxx Xxxx Xxxxx
Trust DTD 12/21/77 3,000 shares
------------
74,000 shares
Xxxxxx X. Xxxxx, Trustee of the Xxxxxxx X. Xxxxx
Charitable Trust U/A/D 12/23/97 8,000 shares
Xxxxx X. Xxxxx 4,500 shares
SCHEDULE 4.3
------------
a. Voting Agreement between Stetson and Xxxxxxxx dated May 25, 1994.
b. Indemnification rights under (i) charter and bylaws of USRP and QSV and
(ii) Indemnification Agreements between USRP and each of the Stockholders
dated October 15, 1997.
c. Employment Agreement between QSV and Xxxxxxxx
d. Noncompetition and Release Agreements between USRP and each of Xxxxxxxx,
X.X. Xxxxx and X.X. Xxxxx to be entered into at the closing under the Stock
Purchase Agreement.
e. This Merger Agreement
f. Noncompetition and Release Agreement between USRP and Stetson
g. Settlement Agreement
h. Ownership of USRP Securities as set forth on Schedule 4.1(a).
i. Agreements between USRP and each of the Stockholders relating to the
Options.
EXHIBIT 1
---------
Resolutions adopted by USRP
Prior to the Closing Date, the Board of Directors of USRP, or a committee
of the Board of Directors of USRP that is composed solely of two or more "non-
employee directors" as such term is defined in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall adopt
preambles and resolutions that are substantially as follows:
WHEREAS, the Corporation, QSV Properties, Inc., a Delaware corporation
("QSV"), Xxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxxx X. Xxxxx ("X.X. Xxxxx"), Xxxxx X.
Xxxxx ("X.X. Xxxxx") and Xxxxxx X. Xxxxxxx ("Xxxxxxx" and collectively with
Xxxxxxxx, X.X. Xxxxx and X.X. Xxxxx the "Stockholders") have previously entered
into that certain Agreement and Plan of Merger dated as of December 29, 2000
(the "Merger Agreement");
WHEREAS, pursuant to the terms of the Merger Agreement, QSV shall be merged
with and into the Corporation (the "Merger"), and the Stockholders shall
exchange their shares of QSV common stock in whole or part for common stock of
the Corporation, par value $.001 per share ("Common Stock");
WHEREAS, each of the Stockholders is currently serving as a director of the
Corporation; and
WHEREAS, it is desirable and in the best interests of the Corporation to
specifically approve the acquisition of Common Stock by each of the Stockholders
so that such acquisition is exempt for purposes of Rule 16b-3 promulgated under
the Exchange Act.
NOW THEREFORE, BE IT RESOLVED, that subject to the occurrence of the
Merger, the acquisition by each Stockholder of that number of shares of Common
Stock set forth opposite such Stockholder's name set forth below pursuant to the
terms and conditions of the Merger Agreement is hereby approved and authorized
in all respects for purposes of exempting such acquisition of Common Stock by
such Stockholder under Rule 16b-3 under the Exchange Act:
Number of Shares of
Name of Director USRP Common Stock to be Acquired
---------------- --------------------------------
Xxxxxxxx 592,025
X.X. Xxxxx 394,683
X.X. Xxxxx 394,683
Stetson 592,025
RESOLVED FURTHER, that all actions heretofore taken by the officers of the
Corporation, for and on behalf of the Corporation, in connection with the
matters described in these resolutions are hereby ratified, confirmed and
approved in all respects as the actions of the Corporation.
RESOLVED FURTHER, that each of the proper officers of the Corporation is
hereby severally authorized and empowered, for and on behalf of the Corporation,
to execute and file all such instruments and documents, to enter into all
agreements and to do or cause to be done all acts and things that may be
necessary or appropriate to carry out the purposes of the foregoing resolutions.
