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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report: January 21, 1999
REALTY INCOME CORPORATION
-------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-13318 33-0580106
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(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
220 West Crest Street, Escondido, California 92025
(Address of principal executive offices) (Zip Code)
(760) 741-740-2111
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(Registrant's telephone number, including area code)
None
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(former name or former address, if changed since last report)
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Item 5. Other Events.
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Realty Income Corporation (the "Company") is filing
this Current Report on Form 8-K in connection with the issuance
of $20,000,000 principal amount of 8% Notes due January 15, 2009
(the "Notes"), pursuant to the shelf registration statement on
Form S-3 under the Securities Act of 1933, as amended (the "1933
Act"), filed with the Securities and Exchange Commission (the
"Commission") on August 25, 1997 (File No. 333-34311), as
amended by Amendment No. 1 filed with the Commission on
September 16, 1997 (as so amended, the "Registration
Statement"). The exhibits listed below are being listed
herewith in lieu of filing them as an exhibit to the
Registration Statement, and, since this form is incorporated by
reference in the Registration Statement, such exhibits are set
forth in full in the Registration Statement.
Item 7. Exhibits.
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1.1 Purchase Agreement, dated January 15, 1999, between
Donaldson, Lufkin & Jenrette Securities Corporation
(as Representative of the Underwriter named on
Schedule A thereto), and the Company.
4.1 Form of Indenture dated as of October 28, 1998 between
the Company and The Bank of New York (filed as an
exhibit to Realty Income's Form 8-K, filed on
October 28, 1998 and incorporated herein by
reference).
4.2 Pricing Committee Resolutions and Form of 8% Note due
2009.
5.1 Opinion of Latham & Watkins.
5.2 Opinion of Ballard Spahr Andrews and Ingersoll
23.1 Consent of Latham & Watkins (contained in the opinion
filed as Exhibit 5.1 hereto).
23.2 Consent of Ballard Spahr Andrews & Ingersoll
(contained in the opinion filed as Exhibit 5.2
hereto).
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SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
Dated: January 21, 1999
REALTY INCOME CORPORATION
By: /s/ Michael R. Pfeiffer, Esq.
-----------------------------
Name: Michael R. Pfeiffer, Esq.
Title: Senior Vice President,
General Counsel and
Secretary
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EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
1.1 Purchase Agreement, dated January 15, 1999,
between Donaldson, Lufkin & Jenrette Securities
Corporation (as Representative of the Underwriter
named on Schedule A thereto), and the Company.
4.1 Form of Indenture dated as of October 28, 1998
between the Company and The Bank of New York
(filed as an exhibit to Realty Income's Form 8-K,
filed on October 28, 1998 and incorporated herein
by reference).
4.2 Pricing Committee Resolutions and Form of 8% Note
due 2009.
5.1 Opinion of Latham & Watkins.
5.2 Opinion of Ballard Spahr Andrews and Ingersoll
23.1 Consent of Latham & Watkins (contained in the
opinion filed as Exhibit 5.1 hereto).
23.2 Consent of Ballard Spahr Andrews & Ingersoll
(contained in the opinion filed as Exhibit 5.2
hereto).
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Exhibit 1.1
$20,000,000
REALTY INCOME CORPORATION
8% Notes due 2009
PURCHASE AGREEMENT
January 15, 1999
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Table of Contents
Page
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THE PURCHASE AGREEMENT 1
SECTION 1. Representations and Warranties 3
(a) Representations and Warranties by the Company 3
(i) Compliance with Registration Requirements 3
(ii) Incorporated Documents 4
(iii) Independent Accountants 5
(iv) Financial Statements 5
(v) No Material Adverse Change in Business 5
(vi) Good Standing of the Company 6
(vii) Good Standing of Subsidiaries 6
(viii) Capitalization 7
(ix) Authorization of Agreement 7
(x) Authorization of Common Stock 7
(xi) Absence of Defaults and Conflicts 7
(xii) Absence of Labor Dispute 8
(xiii) Absence of Proceedings 9
(xiv) Accuracy of Exhibits 9
(xv) Possession of Intellectual Property 9
(xvi) Absence of Further Requirements 10
(xvii) Possession of Licenses and Permits 10
(xviii) Investment Company Act 10
(xix) Partnership Agreements 11
(xx) Properties 11
(xxi) Insurance 13
(xxii) Environmental Matters 13
(xxiii) Qualification as a Real Estate Investment Trust 15
(xxiv) Registration Rights 15
(xxv) Tax Treatment of Certain Entities 16
(xxvi) Indenture 16
(xxvii) Securities 16
(xxviii) Description of Indenture and Securities 17
(xxix) Ranking of Securities 17
(xxx) Prior Registration Statement 17
(b) Officer's Certificates 17
SECTION 2. Sale and Delivery to Underwriter; Closing 17
(a) Securities 17
(b) Payment 17
(c) Denominations; Registration 18
SECTION 3. Covenants of the Company 18
(a) Compliance with Securities Regulations and Commission
Requests 18
(b) Filing of Amendments 18
(c) Rule 434 19
(d) Delivery of Registration Statements 19
(e) Delivery of Prospectuses 19
(f) Continued Compliance with Securities Laws 19
(g) Blue Sky Qualifications 20
(h) Rule 158 20
(i) Use of Proceeds 20
(j) Reporting Requirements 20
(k) Restriction on Sale of Securities 20
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SECTION 4. Payment of Expenses 21
(a) Expenses 21
(b) Termination of Agreement 22
SECTION 5. Conditions of Underwriter's Obligations 22
(a) Effectiveness of Registration Statement 22
(b) Opinions of Counsel for Company 22
(c) Opinion of Counsel for Underwriter 22
(d) Officers' Certificate 23
(e) Accountant's Comfort Letter 23
(f) Rating Requirement 24
(g) Letter Regarding Compliance with the Acquisition
Credit Agreement 24
(h) Letter Regarding Waiver from Lock-Up 24
(i) Additional Documents 24
(j) Termination of Agreement 24
SECTION 6. Indemnification 25
(a) Indemnification of Underwriter 25
(b) Indemnification of Company, Directors and Officers 26
(c) Actions against Parties; Notification 26
(d) Settlement without Consent if Failure to Reimburse 27
SECTION 7. Contribution 27
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery 29
SECTION 9. Termination of Agreement 29
(a) Termination; General 29
(b) Liabilities 30
SECTION 10. Notices 30
SECTION 11. Parties 30
SECTION 12. GOVERNING LAW AND TIME 31
SECTION 13. Effect of Headings and Table of Contents 31
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$20,000,000
REALTY INCOME CORPORATION
(a Maryland corporation)
8% Notes due 2009
PURCHASE AGREEMENT
January 15, 1999
Donaldson, Lufkin & Jenrette Securities Corporation
as Representative of the Underwriter
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Realty Income Corporation, a Maryland corporation (the
"Company"), confirms its agreement with the Underwriter named in
Schedule A hereto (the "Underwriter"), for whom Donaldson, Lufkin
& Jenrette Securities Corporation ("Donaldson, Lufkin &
Jenrette") is acting as representative (in such capacity, the
"Representative"), with respect to the sale by the Company and
the purchase by the Underwriter of $20,000,000 aggregate
principal amount of the Company's 8% Notes due 2009 (the "Notes"
or the "Securities"). The Securities are to be issued pursuant
to an indenture dated as of October 28, 1998 (the "Indenture")
between the Company and The Bank of New York, as trustee (the
"Trustee").
The Company understands that the Underwriter proposes to
make a public offering of the Securities as soon as the
Representative deems advisable after this Agreement has been
executed and delivered.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-
3 (No. 333-34311) and Amendment No. 1 thereto covering the
registration of, among other things, the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), in each case
including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus supplement
and, if required by Rule 424(b) (as defined below), a prospectus
in accordance with the provisions of Rule 415 ("Rule 415") of the
rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
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424(b)") of the 1933 Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in
accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such Term Sheet that was omitted from
such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the
time the Term Sheet is filed with the Commission pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434
Information." Each prospectus, together with any related
prospectus supplement, relating to the Securities used before
such registration statement became effective, and each
prospectus, together with the related prospectus supplement,
relating to the Securities that omitted the Rule 434 Information
or that was captioned "Subject to Completion" that was used after
such effectiveness and prior to the execution and delivery of
this Agreement, is herein called, together with the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, a "preliminary prospectus." Such
registration statement, as amended and including the exhibits
thereto, schedules, if any, and the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933
Act, at the time it became effective and including, if
applicable, the Rule 434 Information, is herein called the
"Registration Statement." Any registration statement filed
pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and
after such filing the term "Registration Statement" shall include
the Rule 462(b) Registration Statement. The prospectus dated
October 1, 1997 and the final prospectus supplement relating to
the offering of the Securities, including the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, in the form first furnished to the
Underwriter for use in connection with the offering of the
Securities are herein called, collectively, the "Prospectus." If
Rule 434 is relied on, the term "Prospectus" shall refer to the
prospectus dated October 1, 1997 and the Term Sheet and all
documents incorporated by reference therein pursuant to Item 12
of Form S-3, and all references in this Agreement to the date of
the Prospectus shall mean the date of the Term Sheet. For
purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing
shall be deemed to include any copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("EDGAR").
All references in this Agreement to financial statements and
schedules and other information which is "described,"
"disclosed," "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the
Prospectus (or other references of like import) shall be deemed
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to mean and include all such financial statements and schedules
and other information which is incorporated or deemed to be
incorporated by reference in the Registration Statement, any
preliminary prospectus or the Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to
the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to mean and include the filing of any
document under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), which is incorporated or deemed to be
incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
All references in this Agreement to properties or
improvements "owned by" or "of" the Company or any of its
subsidiaries shall be deemed to mean and include all properties
and improvements which are leased by the Company or any of its
subsidiaries, as lessee.
As used in this Agreement, the term "Consolidation" means
the merger of 25 limited partnerships (the "Partnerships") and
RIC Properties Ltd., a California limited partnership ("RIC
Properties"), into the Company on August 15, 1994; "Merger" means
the merger of R.I.C. Advisor, Inc., a California corporation (the
"Advisor"), into the Company on August 17, 1995; and
"Reincorporation" means the reincorporation of the Company in the
State of Maryland, which was effectuated by merging the Company
into Realty Income of Maryland, Inc., a Maryland corporation (the
"Maryland Corporation") which subsequently changed its name to
Realty Income Corporation, with the Maryland Corporation as the
surviving corporation of such merger.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The
Company represents and warrants to the Underwriter as of the date
hereof and as of the Closing Time referred to in Section 2(b)
hereof, and agrees with the Underwriter, as follows:
(i) Compliance with Registration
Requirements. The Company meets the requirements for
use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and
no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or
are pending or, to the knowledge of the Company, are
threatened by the Commission, and any request on the
part of the Commission for additional information has
been complied with. The Indenture has been duly
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qualified under the Trust Indenture Act of 1939, as
amended (the "1939 Act"), and the Trustee has duly
filed with the Commission a Statement of Eligibility on
Form T-1 as part of the Registration Statement.
At the respective times the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective, at the date hereof and
at the Closing Time, the Registration Statement, any Rule
462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material
respects with the applicable requirements of the 1933 Act
and the 1933 Act Regulations and the 1939 Act and the rules
and regulations of the Commission under the 1939 Act (the
"1939 Act Regulations"), and did not and 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, and, at the date
hereof and at the Closing Time, neither the Prospectus nor
any amendments or supplements thereto contained or will
contain any untrue statement of a material fact or omitted
or will omit to state a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided, however, that the representations and warranties
in this paragraph shall not apply to statements in or
omissions from the Registration Statement or Prospectus made
in reliance upon and in conformity with information
furnished to the Company in writing by Donaldson, Lufkin &
Jenrette expressly for use in the Registration Statement or
Prospectus.
Each preliminary prospectus and Prospectus filed as
part of the Registration Statement as originally filed or as
part of any amendment thereto, or filed pursuant to Rule 424
under the 1933 Act, complied when so filed in all material
respects with the 1933 Act and the 1933 Act Regulations and,
if applicable, each preliminary prospectus and the
Prospectus delivered to the Underwriter for use in
connection with this offering was identical to the
electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR except to the extent permitted
by Regulation S-T.
(ii) Incorporated Documents. The documents
incorporated or deemed to be incorporated by reference
in the Registration Statement and the Prospectus, at
the time they were or hereafter are filed with the
Commission, complied and will comply in all material
respects with the requirements of the 1934 Act and the
rules and regulations of the Commission thereunder (the
"1934 Act Regulations"), and, when read together with
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the other information in the Prospectus, at the date
hereof and at the Closing Time, did not and will not
contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein
or necessary in order to make the statements therein,
in the light of the circumstances under which they were
made, not misleading.
(iii) Independent Accountants. The accountants
who certified the financial statements and supporting
schedules included in the Registration Statement are
independent public accountants as required by the 1933
Act and the 1933 Act Regulations.
(iv) Financial Statements. The consolidated
financial statements of the Company included in the
Registration Statement and the Prospectus, together
with the related schedule and notes, present fairly the
financial position of the Company and its subsidiaries
at the dates indicated and the consolidated statements
of income, stockholders' equity and cash flows of the
Company and its subsidiaries for the periods specified;
said consolidated financial statements have been
prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved. The supporting
schedules included in the Registration Statement
present fairly in accordance with GAAP the information
required to be stated therein. The selected financial
data, if any, and summary financial information, if
any, included in the Prospectus present fairly the
information shown therein and have been compiled on a
basis consistent with that of the audited financial
statements included in the Registration Statement. The
Company's ratios of earnings to fixed charges (actual
and, if any, pro forma) included in the Prospectus have
been calculated in compliance with Item 503(d) of
Regulation S-K of the Commission.
(v) No Material Adverse Change in Business. Since
the respective dates as of which information is given
in the Registration Statement and the Prospectus,
except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries
considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course
of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries,
other than those in the ordinary course of business,
which are material with respect to the Company and its
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subsidiaries considered as one enterprise, and
(C) except for regular monthly distributions on the
Common Stock, par value $1.00 per share, of the Company
(the "Common Stock") in amounts per share that are
consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or
made by the Company on any class of its stock.
(vi) Good Standing of the Company. The Company is
a corporation duly organized and validly existing 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 corporate power and
authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus
and to enter into and perform its obligations under
this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good
standing in each other jurisdiction in which such
qualification is required, whether by reason of the
ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to
be in good standing would not result in a Material
Adverse Effect.
(vii) Good Standing of Subsidiaries. The only
subsidiaries of the Company are Realty Income Texas
Properties, L.P., a Delaware limited partnership, and
Realty Income Texas Properties, Inc., a Delaware
corporation, and the Company does not hold any equity
interest in any corporation, limited liability
company, partnership, joint venture or entity other
than such subsidiaries. Each subsidiary of the
Company has been duly organized and is validly existing
as a partnership or corporation, as the case may be, in
good standing under the laws of the state of its
organization and has power and authority as a
partnership or corporation, as the case may be, to own,
lease and operate its properties and to conduct its
business as described in the Prospectus; each such
subsidiary is duly qualified as a foreign partnership
or corporation, as the case may be, to transact
business and is in good standing in each other
jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of
property or the conduct of business, except where the
failure so to qualify or to be in good standing would
not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all
of the issued and outstanding partnership interests and
shares of capital stock, as the case may be, of each
such subsidiary have been duly authorized (if
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applicable) and validly issued and are fully paid and
are non-assessable (except to the extent that the
general partners of subsidiaries which are partnerships
may be liable for the obligations of such partnerships)
and are owned by the Company, directly or through
subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity;
none of the outstanding partnership interests or shares
of capital stock, as the case may be, of such
subsidiaries were issued in violation of preemptive or
other similar rights arising by operation of law, under
the partnership agreement or charter or bylaws, as the
case may be, of any such subsidiary or under any
agreement or instrument to which the Company or any
such subsidiary is a party.
(viii) Capitalization. The authorized stock of
the Company and the issued and outstanding stock of the
Company are as set forth in the line items "Preferred
Stock" and "Common Stock" under the caption
"Consolidated Balance Sheets" in the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1998
(except for subsequent issuances, if any, pursuant to
employee benefit plans referred to in the Prospectus or
pursuant to the exercise of options referred to in the
Prospectus).
(ix) Authorization of Agreement. This Agreement
has been duly authorized, executed and delivered by the
Company.
(x) Authorization of Common Stock. The shares of
issued and outstanding Common Stock have been duly
authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of
Common Stock was issued in violation of preemptive or
other similar rights arising by operation of law, under
the charter or bylaws of the Company, under any
agreement or instrument to which the Company or any of
its subsidiaries is a party or otherwise.
(xi) Absence of Defaults and Conflicts. Neither
the Company nor any of its subsidiaries is in violation
of its charter or bylaws or its partnership agreement,
as the case may be, or in default in the performance or
observance of any obligation, agreement, covenant or
condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by
which any of them may be bound, or to which any of the
respective properties or assets of the Company or any
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subsidiary is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not
have a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the
Indenture and the Securities and the consummation of
the transactions contemplated herein and therein
(including the use of the proceeds from the sale of the
Securities to repay borrowings under the Amended and
Restated Revolving Credit Agreement dated as of
December 30, 1997 among the Company, the banks named
therein and The Bank of New York, as agent and swing
line bank and BNY Capital Markets, Inc., as arranger,
as amended by that certain letter agreement dated as of
November 13, 1998 extending the termination date and
increasing the commitments for certain lenders therein
(as so amended, the "Acquisition Credit Agreement"), as
described in the Prospectus under the caption "Use of
Proceeds" but excluding any use of proceeds for other
general corporate purposes for which specific corporate
authorization may be required) and compliance by the
Company with its obligations hereunder and thereunder
have been duly authorized by all necessary corporate
action and do not and will not, whether with or without
the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or
Repayment Event (as defined below) under, or result in
the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company
or any subsidiary pursuant to, any Agreement or
Instrument, except for such conflicts, breaches or
defaults or liens, charges or encumbrances that,
individually or in the aggregate, would not have a
Material Adverse Effect, nor will such action result in
any violation of the provisions of the charter or
bylaws of the Company or any applicable law, rule,
regulation, or governmental or court judgment, order,
writ or decree. As used herein, a "Repayment Event"
means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the
right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by
the Company or any subsidiary of the Company or any of
its subsidiaries.
(xii) Absence of Labor Dispute. No labor dispute
with the employees of the Company or any subsidiary of
the Company exists or, to the best knowledge of the
Company, is imminent; and the Company is not aware of
any existing or imminent labor disturbance by the
employees of any of its or any subsidiary's tenants,
which, in either case, could reasonably be expected,
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individually or in the aggregate, to result in a
Material Adverse Effect.
(xiii) Absence of Proceedings. The Company has
not received any notice of any action, suit,
proceeding, inquiry or investigation before or by any
court or governmental agency or body, domestic or
foreign, and, to the best knowledge of the Company,
there is no such proceeding now pending or threatened,
against or affecting the Company or any of its
subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed
therein), or which could reasonably be expected to
result in a Material Adverse Effect, or which could
reasonably be expected to materially and adversely
affect the consummation of this Agreement or the
performance by the Company of its obligations under
this Agreement, the Indenture or the Securities; the
aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or
assets is the subject which are not described in the
Registration Statement, including ordinary routine
litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse
Effect.
(xiv) Accuracy of Exhibits. There are no
contracts or documents which are required to be
described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or
to be filed as exhibits thereto which have not been so
described and filed as required.
(xv) Possession of Intellectual Property. The
Company and its subsidiaries own or possess, or can
acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks,
trade names or other intellectual property
(collectively, "Intellectual Property") necessary to
carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received
any notice or is otherwise aware of any infringement of
or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or
circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest
of the Company or any of its subsidiaries therein, and
which infringement or conflict (if the subject of any
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unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result
in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing
with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any
court or governmental authority or agency is necessary
or required for the performance by the Company of its
obligations under this Agreement, the Indenture or the
Securities, in connection with the offering, issuance
or sale of the Securities hereunder or the consummation
of the other transactions contemplated by this
Agreement, the Indenture or the Securities, except such
as have been already made or obtained under the 1933
Act, the 1933 Act Regulations, the 1939 Act and the
1939 Act Regulations or as may be required under state
securities laws.
(xvii) Possession of Licenses and Permits. The
Company and its subsidiaries possess such permits,
licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business
now operated by them and the Company and its
subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except
where the failure so to possess or comply would not,
singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and
in full force and effect, except where the invalidity
of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect
would not, singly or in the aggregate, have a Material
Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such
Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse
Effect.
(xviii) Investment Company Act. The Company is
not, and upon the issuance and sale of the Securities
as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will
not be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended (the
"1940 Act").
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(xix) Partnership Agreements. Each of the
partnership and, if applicable, joint venture
agreements to which the Company or any of its
subsidiaries is a party has been duly authorized,
executed and delivered by the Company or the relevant
subsidiary, as the case may be, and constitutes the
valid and binding agreement of the Company or such
subsidiary, as the case may be, enforceable in
accordance with its terms, except as the enforcement
thereof may be limited by (A) the effect of bankruptcy,
insolvency or other similar laws now or hereafter in
effect relating to or affecting creditors' rights
generally or (B) the effect of general principles of
equity, and the execution, delivery and performance of
such agreements did not, at the time of execution and
delivery, and does not constitute a breach of or
default under the charter or bylaws or partnership
agreement, as the case may be, of the Company or any of
its subsidiaries or any of the Agreements and
Instruments or any law, administrative regulation or
administrative or court order or decree.
(xx) Properties. Except as otherwise disclosed in
the Prospectus: (i) the Company and its subsidiaries
have good and marketable title (either in fee simple or
pursuant to a valid leasehold interest) to all
properties and assets described in the Prospectus as
being owned or leased, as the case may be, by them and
to all properties reflected in the Company's most
recent consolidated financial statements included in
the Prospectus, and neither the Company nor any of its
subsidiaries has received notice of any claim that has
been or may be asserted by anyone adverse to the rights
of the Company or any subsidiary with respect to any
such properties or assets (or any such lease) or
affecting or questioning the rights of the Company or
any such subsidiary to the continued ownership, lease,
possession or occupancy of such property or assets,
except for such claims that would not, singly or in the
aggregate, have a Material Adverse Effect; (ii) all
liens, charges, encumbrances, claims or restrictions on
or affecting the properties and assets of the Company
or any of its subsidiaries which are required to be
disclosed in the Registration Statement or the
Prospectus are disclosed therein, and all such liens,
charges, encumbrances, claims or restrictions which are
not disclosed in the Prospectus could not reasonably be
expected, singly or in the aggregate, to have a
Material Adverse Effect; (iii) no person or entity,
including, without limitation, any tenant under any of
the leases pursuant to which the Company or any of its
subsidiaries leases (as lessor) any of its properties
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(whether directly or indirectly through other
partnerships, joint ventures or otherwise) has an
option or right of first refusal or any other right to
purchase any of such properties, except for such
options, rights of first refusal or other rights to
purchase which, individually or in the aggregate, are
not material with respect to the Company and its
subsidiaries considered as one enterprise; (iv) to the
Company's best knowledge, each of the properties of the
Company or any of its subsidiaries has access to
public rights of way, either directly or through
insured easements, except where the failure to have
such access would not, singly or in the aggregate, have
a Material Adverse Effect; (v) to the Company's best
knowledge, each of the properties of the Company or any
of its subsidiaries is served by all public utilities
necessary for the current operations on such property
in sufficient quantities for such operations, except
where the failure to have such public utilities would
not, singly or in the aggregate, have a Material
Adverse Effect; (vi) to the best knowledge of the
Company, each of the properties of the Company or any
of its subsidiaries complies with all applicable codes
and zoning and subdivision laws and regulations, except
for such failures to comply which would not, either
individually or in the aggregate, have a Material
Adverse Effect; (vii) all of the leases under which the
Company or any of its subsidiaries holds or uses any
real property or improvements or any equipment relating
to such real property or improvements are in full force
and effect, except where the failure to be in full
force and effect would not, singly or in the aggregate,
have a Material Adverse Effect, and neither the Company
nor any of its subsidiaries is in default in the
payment of any amounts due under any such leases or in
any other default thereunder and the Company knows of
no event which, with the passage of time or the giving
of notice or both, would constitute a default under any
such lease, except such defaults that would not,
individually or in the aggregate, have a Material
Adverse Effect; (viii) to the best knowledge of the
Company, there is no pending or threatened
condemnation, zoning change, or other proceeding or
action that could in any manner affect the size of, use
of, improvements on, construction on or access to the
properties of the Company or any of its subsidiaries,
except such proceedings or actions that, either singly
or in the aggregate, would not have a Material Adverse
Effect; and (ix) neither the Company nor any of its
subsidiaries nor any lessee of any of the real property
or improvements of the Company or any of its
subsidiaries is in default in the payment of any
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amounts due or in any other default under any of the
leases pursuant to which the Company or any of its
subsidiaries leases (as lessor) any of its real
property or improvements (whether directly or
indirectly through partnerships, joint ventures or
otherwise), and the Company knows of no event which,
with the passage of time or the giving of notice or
both, would constitute such a default under any of such
leases, except such defaults as would not, individually
or in the aggregate, have a Material Adverse Effect.
(xxi) Insurance. With such exceptions as would
not, individually or in the aggregate, have a Material
Adverse Effect, the Company and its subsidiaries have
title insurance on all real property and improvements
described in the Prospectus as being owned or leased
under a ground lease, as the case may be, by them and
to all real property and improvements reflected in the
Company's most recent consolidated financial statements
included in the Prospectus in an amount at least equal
to the original cost of acquisition and the Company and
its subsidiaries are entitled to all benefits of the
insured thereunder, and each such property is insured
by extended coverage hazard and casualty insurance in
amounts and on such terms as are customarily carried by
lessors of properties similar to those owned by the
Company and its subsidiaries (in the markets in which
the Company's and subsidiaries' respective properties
are located), and the Company and its subsidiaries
carry comprehensive general liability insurance and
such other insurance as is customarily carried by
lessors of properties similar to those owned by the
Company and its subsidiaries in amounts and on such
terms as are customarily carried by lessors of
properties similar to those owned by the Company and
its subsidiaries (in the markets in which the Company's
and its subsidiaries' respective properties are
located) and the Company or one of its subsidiaries is
named as an additional insured on all policies required
under the leases for such properties.
(xxii) Environmental Matters. Except as otherwise
disclosed in the Prospectus: (i) all real property and
improvements owned or leased by the Company or any of
its subsidiaries, including, without limitation, the
Environment (as defined below) associated with such
real property and improvements, is free of any
Contaminant (as defined below), except such
Contaminants which, individually or in the aggregate,
would not have a Material Adverse Effect; (ii) neither
the Company, nor any of its subsidiaries nor any
Partnership has caused or suffered to exist or occur
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any Release (as defined below) of any Contaminant into
the Environment or any other condition that,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or could
result in any violation of any Environmental Laws (as
defined below) or constitute a health, safety or
environmental hazard to any person or property except
for such violations or hazards that could not
reasonably be expected to have a Material Adverse
Effect; (iii) neither the Company nor any of its
subsidiaries is aware of any notice from any
governmental body claiming any violation of any
Environmental Laws or requiring or calling attention to
the need for any work, repairs, construction,
alterations, removal or remedial action or installation
on or in connection with such real property or improve
ments, whether in connection with the presence of
asbestos-containing materials in such properties or
otherwise, except for such violations, work, repairs,
construction, alterations, removal or remedial actions
or installations as would not, individually or in the
aggregate, have a Material Adverse Effect; (iv) any
such work, repairs, construction, alterations, removal
or remedial action or installation, if required, would
not result in the incurrence of liabilities, which,
individually or in the aggregate, would have a Material
Adverse Effect; (v) neither the Company nor any of its
subsidiaries has caused or suffered to exist or occur
any condition on any of the properties or improvements
of the Company or any of its subsidiaries that could
give rise to the imposition of any Lien (as defined
below) under any Environmental Laws, except such Liens
which, individually or in the aggregate, would not have
a Material Adverse Effect; and (vi) to the Company's
best knowledge, no real property or improvements owned
or leased by the Company or any of its subsidiaries is
being used or has been used for manufacturing or for
any other operations that involve or involved the use,
handling, transportation, storage, treatment or
disposal of any Contaminant, where such operations
require or required permits or are or were otherwise
regulated pursuant to the Environmental Laws and where
such permits have not been or were not obtained or such
regulations are not being or were not complied with,
except in all instances where any failure to obtain a
permit or comply with any regulation could not
reasonably be expected, singly or in the aggregate, to
have a Material Adverse Effect. "Contaminant" means
any pollutant, hazardous substance, toxic substance,
hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, asbestos or
asbestos-containing materials, PCBs, lead, pesticides
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or radioactive materials or any constituent of any such
substance or waste, including any such substance
identified or regulated under any Environmental Law.
"Environmental Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601 et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. 6901, et seq., the Clean Air
Act, 42 U.S.C. 7401, et seq., the Clean Water Act, 33
U.S.C. 1251, et seq., the Toxic Substances Control Act,
15 U.S.C. 2601, et seq., the Occupational Safety and
Health Act, 29 U.S.C. 651, et seq., and all other
federal, state and local laws, ordinances, regulations,
rules, orders, decisions, permits, and the like, which
are directed at the protection of human health or the
Environment. "Lien" means, with respect to any asset,
any mortgage, deed of trust, lien, pledge, encumbrance,
charge or security interest in or on such asset.
"Environment" means any surface water, drinking water,
ground water, land surface, subsurface strata, river
sediment, buildings, structures, and ambient, workplace
and indoor air. "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, emanating or
disposing of any Contaminant into the Environment,
including, without limitation, the abandonment or
discard of barrels, containers, tanks or other
receptacles containing or previously containing any
Contaminant or any release, emission or discharge as
those terms are defined or used in any Environmental
Law.
(xxiii) Qualification as a Real Estate Investment
Trust. The Company was and is organized in conformity
with the requirements for qualification and taxation as
a "real estate investment trust" under the Internal
Revenue Code of 1986, as amended (the "Code"); the
Company at all times has met and continues to meet all
the requirements of the Code for qualification and
taxation as a "real estate investment trust"; the
Company's method of operation will enable it to meet
the requirements for qualification and taxation as a
"real estate investment trust" under the Code; and the
Company is qualified as a "real estate investment
trust" under the Code and will be so qualified for the
taxable year in which sales of the Securities occur.
(xxiv) Registration Rights. There are no persons
with registration or other similar rights to have any
securities registered pursuant to the Registration
Statement or otherwise registered by the Company under
the 1933 Act, or included in the offering contemplated
hereby.
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(xxv) Tax Treatment of Certain Entities. Each of
R.I.C. Trade Center, Ltd., Empire Business Center,
Ltd., and Silverton Business Center, Ltd., each a
California limited partnership (the "Sub-Limited
Partnerships"), was, from the time of the Consoli
dation through and including the time of its merger
into the Company, treated as a partnership (rather than
as an association taxable as a corporation) for federal
income tax purposes. The Company's ownership interests
in three properties held through tenancies in common
with unrelated third parties (which are the only
properties which, since the Consolidation, have been
held in tenancies in common with unrelated third
parties) have not been, since the Consolidation, and
will not be treated as ownership interests in
associations taxable as corporations for federal income
tax purposes. Realty Income Texas Properties, L.P., a
Delaware limited partnership, is not and has never been
treated as an association taxable as a corporation for
federal income tax purposes. Realty Income Texas
Properties, Inc., a Delaware corporation, is and has
been at all times treated as a "qualified REIT
subsidiary" within the meaning of Section 856(i) of the
Code.
(xxvi) Indenture. The Indenture has been duly
qualified under the 1939 Act. The Indenture has been
duly authorized, executed and delivered by the Company
and constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or
affecting creditor's rights generally or by general
equitable principles.
(xxvii) Securities. The Securities have been duly
authorized by the Company and, at the Closing Time,
will have been duly executed by the Company and, when
authenticated in the manner provided for in the
Indenture and delivered against payment of the purchase
price therefor specified in this Agreement, will
constitute valid and binding obligations of the
Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or
affecting creditors' rights generally or by general
equitable principles, and will be entitled to the
benefits of the Indenture.
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(xxviii) Description of Indenture and Securities.
The Securities and the Indenture will conform in all
material respects to the respective statements relating
thereto contained in the Prospectus and will be in
substantially the respective forms filed or
incorporated by reference, as the case may be, as
exhibits to the Registration Statement.
(xxix) Ranking of Securities. The Securities rank
and will rank on a parity with all unsecured
indebtedness of the Company (other than subordinated
indebtedness of the Company) that is outstanding on the
date hereof or that may be incurred hereafter, and
senior to all subordinated indebtedness of the Company
that is outstanding on the date hereof or that may be
incurred hereafter.
(xxx) Prior Registration Statement. All of the
securities previously registered by the Company under
its registration statement on Form S-3 (No. 33-95374),
as amended, have been issued and sold.
(b) Officer's Certificates. Any certificate signed by any
officer of the Company and delivered to the Representative or to
counsel for the Underwriter shall be deemed a representation and
warranty by the Company to the Underwriter as to the matters
covered thereby.
SECTION 2. Sale and Delivery to Underwriter; Closing.
(a) Securities. On the basis of the representations and
warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to the
Underwriter and the Underwriter agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate
principal amount of Securities set forth in Schedule A opposite
the name of the Underwriter.
(b) Payment. Payment of the purchase price for, and
delivery of certificates for, the Securities shall be made at the
office of Latham & Watkins, 650 Town Center Drive, 20th Floor,
Costa Mesa, California 92626-1925, or at such other place as
shall be agreed upon by the Representative and the Company, at
6:00 A.M. (California time) on the third (fourth, if the pricing
occurs after 4:30 P.M. New York City time, on any given day)
business day after the date hereof, or such other time not later
than ten business days after such date as shall be agreed upon by
the Representative and the Company (such time and date of payment
and delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of
immediately available funds to an account at a bank designated by
the Company, against delivery to the Representative for the
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account of the Underwriter of certificates for the Securities to
be purchased by it.
(c) Denominations; Registration. Certificates for the
Securities shall be in such denominations and registered in such
names as the Representative may request in writing at least one
full business day before the Closing Time. The certificates for
the Securities will be made available for examination and
packaging by the Representative in The City of New York not later
than 2:00 P.M. (New York City time) on the business day prior to
the Closing Time.
SECTION 3. Covenants of the Company. The Company covenants
with the Underwriter as follows:
(a) Compliance with Securities Regulations and
Commission Requests. The Company, subject to Section 3(b), will
notify the Representative immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the
Registration Statement or any Rule 462(b) Registration Statement
shall become effective or any supplement to the Prospectus, any
Term Sheet or any amended Prospectus shall have been filed, (ii)
of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration
Statement or any Rule 462(b) Registration Statement or any
amendment or supplement to the Prospectus or for additional
information, and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or of any
order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such
purposes. The Company will promptly effect the filings necessary
pursuant to Rule 424(b) and, if applicable, will take such steps
as it deems necessary to ascertain promptly whether the form of
prospectus supplement, prospectus or term sheet transmitted for
filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly
file such prospectus supplement, prospectus or term sheet, as the
case may be. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible
moment.
(b) Filing of Amendments. The Company will give the
Representative notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing
under Rule 462(b)), any Term Sheet or any amendment, supplement
or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, will
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furnish the Representative with copies of any such documents a
reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to
which the Representative or counsel for the Underwriter shall
object.
(c) Rule 434. If the Company uses Rule 434, it will
comply with the requirements of such Rule.
(d) Delivery of Registration Statements. The Company
has furnished or will deliver to the Representative and counsel
for the Underwriter, without charge, as many signed and conformed
copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) as the
Representative and counsel for the Underwriter may reasonably
request. If applicable, the copies of the Registration Statement
and each amendment thereto furnished to the Underwriter will be
identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, if any, except to the
extent permitted by Regulation S-T.
(e) Delivery of Prospectuses. The Company has
delivered to the Underwriter, without charge, as many copies of
each preliminary prospectus as such Underwriter reasonably
requested, and the Company hereby consents to the use of such
copies for purposes permitted by the 1933 Act. The Company will
furnish to the Underwriter, without charge, during the period
when the Prospectus is required to be delivered under the 1933
Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably
request. If applicable, the Prospectus and any amendments or
supplements thereto furnished to the Underwriter will be
identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, if any, except to the
extent permitted by Regulation S-T.
(f) Continued Compliance with Securities Laws. The
Company will comply with the 1933 Act and the 1933 Act
Regulations and the 1934 Act and the 1934 Act Regulations so as
to permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Prospectus. If at any
time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event
shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriter or for
the Company, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus will not
include any untrue statements of a material fact or omit to state
a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances existing at the
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time it is delivered to a purchaser, or if it shall be necessary,
in the opinion of any such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus
comply with such requirements, and the Company will furnish to
the Underwriter such number of copies of such amendment or
supplement as the Underwriter may reasonably request.
(g) Blue Sky Qualifications. The Company will use its
best efforts, in cooperation with the Underwriter, to qualify the
Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions of the United States
as the Representative may designate and to maintain such
qualifications in effect for a period of not less than one year
from the date hereof; provided, however, that the Company shall
not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or
to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the date
hereof.
(h) Rule 158. The Company will timely file such
reports pursuant to the 1934 Act as are necessary in order to
make generally available to its security holders as soon as
practicable an earning statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
(i) Use of Proceeds. The Company will use the net
proceeds received by it from the sale of the Securities in the
manner specified in the Prospectus under "Use of Proceeds."
(j) Reporting Requirements. The Company, during the
period when the Prospectus is required to be delivered under the
1933 Act or the 1934 Act, will file all documents required to be
filed with the Commission pursuant to the 1934 Act within the
time periods required by the 1934 Act and the 1934 Act
Regulations.
(k) Restriction on Sale of Securities. During the
period from the date of this Agreement through and including the
Closing Time, the Company will not, without the prior written
consent of Donaldson, Lufkin & Jenrette, (i) offer, pledge, sell,
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contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right
or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any Securities or substantially similar
securities of the Company or any securities convertible into, or
exercisable or exchangeable for, any of the foregoing, or file
any registration statement under the 1933 Act with respect to any
of the foregoing, or (ii) enter into any swap or any other
agreement or transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of
any Securities or substantially similar securities of the
Company, whether any such swap, agreement or transaction
described in clause (i) or (ii) above is to be settled by
delivery of Securities, other securities, in cash or otherwise,
other than the Securities sold to the Underwriter pursuant to
this Agreement.
SECTION 4. Payment of Expenses
(a) Expenses. The Company will pay all expenses incident to
the performance of its obligations under this Agreement,
including (i) the word processing, printing and filing of the
Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii)
the printing and delivery to the Underwriter of this Agreement,
the Indenture and such other documents as may be required in
connection with the offering, purchase, sale, issuance or
delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the
Underwriter, including any transfer taxes or other duties payable
upon the sale of the Securities to the Underwriter, (iv) the fees
and disbursements of the Company's counsel, accountants and other
advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(g)
hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriter in connection
therewith, (vi) the printing and delivery to the Underwriter of
copies of each preliminary prospectus, any Term Sheet and the
Prospectus and any amendments or supplements thereto, (vii) the
fees and expenses of any transfer agent or registrar for the
Securities, (viii) if required, the filing fees incident to, and
the reasonable fees and disbursements of counsel to the
Underwriter (such fees and disbursements not to exceed $10,000)
in connection with, the review, if any, by the National
Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities, (ix) the fees and expenses of the
Trustee, including, if required, the fees and disbursements of
counsel for the Trustee in connection with the Indenture and the
Securities, (x) any fees payable in connection with the rating of
the Securities or in connection with any listing of the
Securities on a securities exchange and (xi) and the fees and
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expenses of any depositary in connection with holding the
Securities in book-entry form.
(b) Termination of Agreement. If this Agreement is
terminated by the Representative in accordance with the
provisions of Section 5 or Section 9(a)(i) or 9(a)(v) hereof, the
Company shall reimburse the Underwriter for all of its out-of-
pocket expenses, including the reasonable fees and disbursements
of counsel for the Underwriter.
SECTION 5. Conditions of Underwriter's Obligations. The
obligations of the Underwriter hereunder are subject to the
accuracy of the representations and warranties of the Company
contained in Section 1 hereof or in certificates of any officer
of the Company or any subsidiary of the Company delivered
pursuant to the provisions hereof, to the performance by the
Company of its covenants and other obligations hereunder, and to
the following further conditions:
(a) Effectiveness of Registration Statement. The
Registration Statement, including any Rule 462(b)
Registration Statement, has become effective not later than
5:30 P.M. on the date hereof and at Closing Time no stop
order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement shall
have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request
on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction
of counsel to the Underwriter. If required by the 1933 Act
or the 1933 Act Regulations, the Prospectus shall have been
filed with the Commission in accordance with Rule 424(b)
and, if the Company has elected to rely upon Rule 434, a
Term Sheet shall have been filed with the Commission in
accordance with Rule 434 and Rule 424(b).
(b) Opinions of Counsel for Company. At Closing Time,
the Representative shall have received the favorable
opinions, dated as of Closing Time, of Latham & Watkins,
counsel for the Company, Michael R. Pfeiffer, Senior Vice
President, General Counsel and Secretary of the Company, and
Ballard Spahr Andrews & Ingersoll, special Maryland counsel
to the Company, each in form and substance satisfactory to
counsel for the Underwriter, to the effect set forth in
Exhibits A, B and C hereto, respectively, and to such
further effect as counsel to the Underwriter may reasonably
request pursuant to Section 5(i).
(c) Opinion of Counsel for Underwriter. At Closing
Time, the Representative shall have received the favorable
opinion, dated as of Closing Time, of Brown & Wood llp,
counsel for the Underwriter, with respect to the matters set
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forth in clauses (iii), (iv), (xii), (xiii), (xiv), (xv) and
the antepenultimate paragraph of Exhibit A and the first
sentence of clause (i) of Exhibit C. In giving such opinion
such counsel may rely, as to all matters arising under or
governed by the laws of the State of Maryland, upon the
opinion of Ballard Spahr Andrews & Ingersoll delivered
pursuant to Section 5(b) and, as to all matters governed by
the laws of other jurisdictions (other than the law of the
State of New York and the federal law of the United States)
upon the opinions of counsel satisfactory to you. Such
counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent
they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public
officials.
(d) Officers' Certificate. At Closing Time there shall
not have been, since the date hereof or since the respective
dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary
course of business, and the Representative shall have
received a certificate of the Chairman or the President of
the Company and of the chief financial or chief accounting
officer of the Company, dated as of Closing Time, to the
effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1
hereof are true and correct with the same force and effect
as though expressly made at and as of Closing Time,
(iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been
issued and no proceedings for that purpose have been
initiated or, to the best of their knowledge, threatened by
the Commission.
(e) Accountant's Comfort Letter. At the Closing Time,
the Representative shall have received from KPMG LLP a
letter dated as of the Closing Time, in form and substance
satisfactory to the Representative, together with signed or
reproduced copies of such letter for the Underwriter,
containing statements and information of the type ordinarily
included in accountants' "comfort letters" to Underwriter
with respect to the financial statements, and certain
financial information contained in the Registration
Statement and the Prospectus.
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(f) Rating Requirement. At the date of this Agreement
and at the Closing Time, the Securities shall be rated at
least Baa3 by Moody's Investor's Service Inc., BBB- by
Standard & Poor's Corporation and BBB by Duff & Phelps, and
the Company shall have delivered to the Representative a
letter, dated the Closing Time, from each such rating
agency, or other evidence satisfactory to the
Representative, confirming that the Securities have such
ratings.
(g) Letter Regarding Compliance with the Acquisition
Credit Agreement. Prior to the Closing Time, the
Representative shall have received a letter, executed by
Agent (as defined in the Acquisition Credit Agreement) to
the effect that the Agent has reviewed the preliminary
prospectus relating to the Securities or the Prospectus and
has determined that the agreements and covenants entered
into the connection with the Securities and the Indenture
are no more restrictive on the Company than the agreements
and covenants in the Acquisition Credit Agreement.
(h) Letter Regarding Waiver from Lock-Up. Prior to
the Closing Time, the Representative shall have received a
written waiver executed by Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
to the effect that Merrill Lynch consents to offering hereby
and has waived the 90 day prohibition on the sale of debt
securities contained in the Purchase Agreement dated
October 23, 1998 among the Company and Merrill Lynch, A.G.
Edwards & Sons, Inc., PaineWebber Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation, EVEREN Securities,
Inc., Sutro & Co. Incorporated and Wheat First Securities,
Inc., as representatives of the several underwriters named
in Schedule A thereto.
(i) Additional Documents. At Closing Time, counsel for
the Underwriter shall have been furnished with such
documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and
sale of the Securities as herein contemplated, or in order
to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and
substance to the Representative and counsel for the
Underwriter.
(j) Termination of Agreement. If any condition
specified in this Section shall not have been fulfilled when
and as required to be fulfilled, this Agreement may be
terminated by the Representative by notice to the Company at
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any time at or prior to Closing Time and such termination
shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 6
and 7 shall survive any such termination and remain in full
force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriter. The Company agrees to
indemnify and hold harmless the Underwriter and each person, if
any, who controls the Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any
amendment thereto), including the Rule 434 Information, if
applicable, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency
or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, provided that
(subject to Section 6(d) below) any such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel
chosen by Donaldson, Lufkin & Jenrette), reasonably incurred
in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or
(ii) above;
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provided, however, that this indemnity agreement shall not apply
to any loss, liability, claim, damage or expense to the extent
arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity
with written information furnished to the Company by the
Underwriter through Donaldson, Lufkfin & Jenrette expressly for
use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); and provided further that this indemnity
agreement with respect to any preliminary prospectus shall not
inure to the benefit of the Underwriter, or any person
controlling the Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any
such amendments or supplements thereto, but excluding documents
incorporated or deemed to be incorporated by reference therein)
was not sent or given by or on behalf of the Underwriter to such
person, if such is required by law, at or prior to the written
confirmation of the sale of such Securities to such person and if
the Prospectus (as so amended or supplemented, if applicable)
would have corrected the defect giving rise to such loss,
liability, claim, damage or expense, except that this proviso
shall not be applicable if such defect shall have been corrected
in a document which is incorporated or deemed to be incorporated
by reference in the Prospectus.
(b) Indemnification of Company, Directors and Officers.
The Underwriter agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or
any amendment thereto), including the Rule 434 Information, if
applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by
the Underwriter through Donaldson, Lufkin & Jenrette expressly
for use in the Registration Statement (or any amendment thereto)
or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified
party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure
to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have
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<PAGE>
otherwise than on account of this indemnity agreement. In the
case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by
Donaldson, Lufkin & Jenrette, and, in the case of parties
indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified
parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party
shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii)
does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. 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 of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 60 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 45 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.
SECTION 7. Contribution. If the indemnification provided
for in Section 6 hereof is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of
any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and
expenses incurred by such indemnified party, as incurred, (i) in
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such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the
Underwriter on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriter on the other
hand in connection with the statements or omissions which
resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one
hand and the Underwriter on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net
proceeds from the offering of the Securities pursuant to this
Agreement (before deducting expenses) received by the Company and
the total underwriting discount received by the Underwriter, in
each case as set forth on the cover of the Prospectus (or, if
Rule 434 is used, the corresponding location on the Term Sheet)
bear to the aggregate initial public offering price of the
Securities as set forth on such cover (or corresponding location
on the Term Sheet, as the case may be).
The relative fault of the Company on the one hand and the
Underwriter on the other hand shall be determined by reference
to, among other things, whether any such 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 by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above
in this Section 7 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon
any such untrue or alleged untrue statement or omission or
alleged omission.
Notwithstanding the provisions of this Section 7, the
Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the
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<PAGE>
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls the Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights
to contribution as the Underwriter, and each director of the
Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the
Company.
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements
contained in this Agreement or in certificates of officers of the
Company submitted pursuant hereto shall remain operative and in
full force and effect, regardless of any investigation made by or
on behalf of the Underwriter or controlling person, or by or on
behalf of the Company, and shall survive delivery of the
Securities to the Underwriter.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representative may terminate
this Agreement, by notice to the Company, at any time at or prior
to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of
which information is given in the Prospectus, any material
adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the
financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development
involving a prospective change in national or international
political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the
Representative, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or
limited by the Commission, the New York Stock Exchange or the
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Nasdaq National Market, or if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the Nasdaq
National Market has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such
system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal,
California or New York authorities, or (v) if since the date of
this Agreement, there has occurred a downgrading in the rating
assigned to the Securities or any of the Company's other debt
securities by any nationally recognized securities rating agency,
or such securities rating agency has publicly announced that it
has under surveillance or review, with possible negative
implications or without indicating the direction of the possible
change, its rating of the Securities or any of the Company's
other debt securities.
(b) Liabilities. If this Agreement is terminated pursuant
to this Section, such termination shall be without liability of
any party to any other party except as provided in Section 4
hereof, and provided further that Sections 6 and 7 shall survive
such termination and remain in full force and effect.
SECTION 10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed
to the Representative at 277 Park Avenue, New York, New York
10172, attention of Eric Anderson; and notices to the Company
shall be directed to it at Realty Income Corporation, 220 West
Crest Street, Escondido, California 92025-1725, attention of
Legal Department.
SECTION 11. Parties. This Agreement shall inure to the
benefit of and be binding upon the Underwriter and the Company
and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriter and the
Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and
7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriter and the Company and
their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No
purchaser of Securities from the Underwriter shall be deemed to
be a successor by reason merely of such purchase.
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SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED IN SAID STATE. EXCEPT AS OTHERWISE SET FORTH HEREIN,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 13. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction
hereof.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement between the
Underwriter and the Company in accordance with its terms.
Very truly yours,
REALTY INCOME CORPORATION
By:
---------------------------
Michael R. Pfeiffer
Senior Vice President,
General Counsel and
Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-------------------------
Name: Eric Anderson
Title: Managing Director
As Representative of the Underwriter named in
Schedule A hereto.
SCHEDULE A
Name of Underwriter Aggregate
- ------------------- Principal
Amount of
Securities
----------
Donaldson, Lufkin & Jenrette Securities Corporation $20,000,000
===========
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SCHEDULE B
Price Schedule
--------------
1. The initial public offering price for the Securities
shall be 98.757% of the principal amount thereof, plus accrued
interest from January 21, 1999.
2. The underwriting discount for the Securities shall be
0.65% of the principal amount thereof. Accordingly, the purchase
price to be paid for the Securities by the Underwriter shall be
98.107% of the principal amount thereof.
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Exhibit A
FORM OF OPINION OF LATHAM & WATKINS
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) Based solely on certificates from public
officials, the Company is duly qualified as a foreign corporation
to transact business and is in good standing in the State of
California.
(ii) None of the outstanding shares of stock of
the Company was issued, to the best of our knowledge and
information, in violation of preemptive rights or other similar
rights arising under any agreement or instrument to which the
Company or any of its subsidiaries is a party.
(iii) Each of the Registration Statement and any
Rule 462(b) Registration Statement has been declared effective
under the 1933 Act; to the best of our knowledge and information,
the Prospectus has been filed pursuant to Rule 424(b) under the
1933 Act in the manner and within the time period required by
Rule 424(b); and, to the best of our knowledge and information,
no stop order suspending the effectiveness of either the
Registration Statement or any Rule 462(b) Registration Statement
has been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission.
(iv) Each of the Registration Statement, any
Rule 462(b) Registration Statement and the Prospectus (in each
case excluding the documents incorporated or deemed to be
incorporated by reference therein and the financial statements,
supporting schedules and other financial data included or
incorporated by reference therein and excluding any Statement of
Eligibility on Form T-1 (a "Form T-1"), as to which no opinion
need be rendered), as of their respective effective or issue
dates, complied as to form in all material respects with the
applicable requirements of the 1933 Act and the 1933 Act
Regulations.
(v) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than the
financial statements, supporting schedules and other financial
data therein, as to which no opinion need be rendered), when they
were filed with the Commission, complied as to form in all
material respects with the applicable requirements of the 1934
Act and the 1934 Act Regulations.
(vi) The information in the Prospectus under
"Certain Federal Income Tax Considerations" and the information
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in the Company's 1997 Form 10-K under "Business--Other Items--
Taxation of the Company" and "Business--Other Items--Effect of
Distribution Requirements," in each case to the extent that it
constitutes matters of law, summaries of legal matters or legal
conclusions, has been reviewed by us and is correct in all
material respects.
(vii) No authorization, approval, consent or
order of any federal, New York or California state governmental
authority or agency (other than under the 1933 Act, the 1933 Act
Regulations, the 1939 Act and 1939 Act Regulations, which have
been obtained, or as may be required under the securities or blue
sky laws of the various states, as to which we express no
opinion) is required in connection with the due authorization,
execution or delivery of the Purchase Agreement, the Indenture or
the Securities or for the offering, issuance or sale of the
Securities;
(viii) The execution, delivery and performance on
or prior to the date hereof of the Purchase Agreement, the
Indenture and the Securities by the Company (including the
issuance and sale of the Securities to the Underwriter and the
use of the proceeds from the sale of the Securities as described
in the Prospectus under the caption "Use of Proceeds") will not,
whether with or without the giving of notice or lapse of time or
both, constitute a breach or violation of, or default or
Repayment Event under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, the
Acquisition Credit Agreement, or the indenture dated as of May 6,
1997 between the Company and the Bank of New York, as trustee
(the "1997 Indenture"), or any securities outstanding under the
1997 Indenture, nor to the best of our knowledge and information,
any applicable provision of any federal, State of New York or
State of California law, statute, administrative regulation or
administrative or court decree applicable to the Company. The
execution, delivery and performance on or prior to the date
hereof of the Purchase Agreement and the Securities by the
Company (including the issuance and sale of the Securities to the
Underwriter and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use
of Proceeds") will not, whether with or without the giving of
notice or lapse of time or both, constitute a breach or violation
of, or default or Repayment Event under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any of its subsidiaries
pursuant to the Indenture or any securities outstanding under the
Indenture.
(ix) The Company is not an "investment company"
as such term is defined in the 1940 Act.
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<PAGE>
(x) Commencing with the Company's taxable year
ended December 31, 1994, the Company has been organized in
conformity with the requirements for qualification and taxation
as a real estate investment trust under the Code and its proposed
method of operation will enable the Company to meet the
requirements for qualification and taxation as a real estate
investment trust under the Code.
(xi) Realty Income Texas Properties, L.P., a
Delaware limited partnership, is not and has never been treated
as an association taxable as a corporation for federal income tax
purposes. Realty Income Texas Properties, Inc., a Delaware
corporation, is and has, at all times during its existence, been
treated as a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.
(xii) Assuming the due authorization, execution
and delivery of the Indenture by the Company under the laws of
the State of Maryland and the due authorization, execution and
delivery of the Indenture by the Trustee, the Indenture
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by
general equitable principles.
(xiii) Assuming the due authorization and
execution of the Securities by the Company under the laws of the
State of Maryland, the Securities, when authenticated by the
Trustee in the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee) and delivered against payment of the purchase price
therefor specified in the Purchase Agreement, will constitute
valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms, and will be entitled
to the benefits of the Indenture, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting
creditor's rights generally or by general equitable principles,
and will be entitled to the benefits of the Indenture.
(xiv) The Indenture has been qualified under the
1939 Act.
(xv) The Securities and the Indenture conform
in all material respects to the descriptions thereof contained in
the Prospectus.
Although we are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
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Prospectus and have not made any independent judgment, check or
verification thereof (except with respect to the opinion set
forth in paragraphs (vi), (x), (xi), and (xv) hereof), we have,
however, participated in conferences with certain officers and
other representatives of the Company, representatives of KPMG LLP
and your representatives at which the Registration Statement, any
Rule 462(b) Registration Statement and the Prospectus (including,
in each case, the documents incorporated or deemed to be
incorporated by reference therein) and any amendments or
supplements to any of the foregoing and related matters were
discussed, and in the course of such conferences (relying in
connection with questions of materiality on representations of
factual matters of officers and other representatives of the
Company), nothing has come to our attention which has led us to
believe that the Registration Statement, any Rule 462(b)
Registration Statement or any amendment thereto (except for the
financial statements, supporting schedules and other financial
data included therein and any Form T-1, as to which we express no
belief), as of the time the Registration Statement, any such Rule
462(b) Registration Statement or any such post-effective or other
amendment thereto became effective, 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 that the Prospectus or any amendment or
supplement thereto (except for the financial statements,
supporting schedules and other financial data included therein,
as to which we express no belief), as of January 15, 1999 or as
of the Closing Time, contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely insofar as
such opinion involves factual matters, to the extent they deem
proper, on certificates of responsible officers of the Company
and public officials. Such opinion shall not state that it is to
be governed or qualified by, or that it is otherwise subject to,
any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord
of the ABA Section of Business Law (1991). Such opinion shall
state that, insofar as it concerns the Indenture and the
Securities, such counsel has assumed that the Indenture and the
Securities are governed by the laws of the State of California.
The matters set forth in (vi), (x) and (xi) above may be
covered in one or more separate legal opinions, which may be
subject to such assumptions, limitations and qualifications as
shall be satisfactory to counsel for the Underwriter. In
particular, the opinions set forth in paragraphs (vi), (x) and
(xi) above (the "Tax Opinions") may be conditioned upon certain
representations made by the Company as to factual matters through
a certificate of an officer of the Company (the "Officer's
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<PAGE>
Certificate"). In addition, the Tax Opinions may be based upon
the factual representations of the Company concerning its
business and properties as set forth in the Registration
Statement and Prospectus. The Tax Opinions may state that they
relate only to the federal income tax laws of the United States
and such counsel need not express any opinion with respect to the
applicability thereto, or the effect thereon, of other federal
laws, the laws of any state or other jurisdiction or as to any
matters of municipal law or the laws of any other local agencies
within any state. The Tax Opinions may state that they are based
on various statutory provisions, regulations promulgated
thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all
of which are subject to change either prospectively or
retroactively, that any such change may affect the conclusions
stated therein, and that any variation or difference in the facts
from those set forth in the Registration Statement, the
Prospectus or the Officer's Certificate may affect the
conclusions stated therein. Moreover, the Tax Opinions may state
that the Company's qualification and taxation as a real estate
investment trust depends upon the Company's ability to meet
(through actual annual operating results, distribution levels and
diversity of stock ownership) the various qualification tests
imposed under the Code, the results of which have not been and
will not be reviewed by such counsel, and, accordingly, no
assurance can be given that the actual results of the Company's
operation for any one taxable year will satisfy such
requirements.
Page 37
<PAGE>
Exhibit B
FORM OF OPINION OF MICHAEL R. PFEIFFER
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not have a Material Adverse Effect.
(ii) The only subsidiaries of the Company are Realty
Income Texas Properties, L.P., a Delaware limited partnership and
Realty Income Texas Properties, Inc., a Delaware corporation.
Each of Realty Income Texas Properties, L.P. and Realty Income
Texas Properties, Inc. has been duly organized and is validly
existing as a partnership or corporation, as the case may be, in
good standing under the laws of the State of Delaware, has power
and authority as a partnership or corporation, as the case may
be, to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and each such
subsidiary is duly qualified as a foreign partnership or corpora-
tion, as the case may be, to transact business and is in good
standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where failure to so
qualify or to be in good standing would not result in a Material
Adverse Effect; and all of the issued and outstanding partnership
interests and shares of capital stock, as the case may be, of
each of Realty Income Texas Properties, L.P. and Realty Income
Texas Properties, Inc. have been duly authorized (if applicable)
and validly issued, are fully paid and non-assessable (except to
the extent that the general partners of Realty Income Texas
Properties, L.P. may be liable for the obligations of such
partnership) and, to the best of my knowledge and information,
are owned by the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(iii) The information in the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1997 under
"Business--Other Items--Environmental Liabilities," to the extent
that it constitutes matters of law, summaries of legal matters,
instruments or agreements or legal proceedings, or legal
conclusions, has been reviewed by me and is correct in all
material respects.
(iv) To the best of my knowledge and information, there
is not pending or threatened any action, suit, proceeding,
Page 38
<PAGE>
inquiry or investigation to which the Company or any subsidiary
is a party, or to which the property of the Company or any
subsidiary is subject, before or brought by any court or
governmental agency or authority, which could reasonably be
expected to result in a Material Adverse Effect, or which could
reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the Purchase
Agreement or the performance by the Company of its obligations
under the Purchase Agreement, the Indenture or the Securities.
(v) All descriptions in the Prospectus of leases,
contracts and other documents to which the Company or any
subsidiary is a party are accurate in all material respects.
(vi) To the best of my knowledge and information, there
are no franchises, contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be
described in the Registration Statement or to be filed as
exhibits thereto other than those described therein or filed or
incorporated by reference as exhibits thereto, and the
descriptions thereof or references thereto are correct in all
material respects.
(vii) To the best of my knowledge and information, neither
the Company nor any of its subsidiaries is in violation of its
charter or bylaws or its partnership agreement, as applicable,
and no default by the Company or any of its subsidiaries exists
in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed or incorporated
by reference as an exhibit to the Registration Statement.
(viii) The execution, delivery and performance of the
Purchase Agreement, the Indenture and the Securities by the
Company (including the issuance and sale of the Securities to the
Underwriter and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use
of Proceeds") and compliance by the Company with its obligations
under the Purchase Agreement, the Indenture and the Securities
will not, whether with or without the giving of notice or lapse
of time or both, constitute a breach or violation of, or default
or Repayment Event under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any contract,
indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to me, to
which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, except for such breaches, violations or defaults or
Page 39
<PAGE>
liens, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect, nor will
such action result in any violation of the provisions of the
charter or bylaws of the Company or the partnership agreement or
charter or bylaws, as the case may be, of any of its
subsidiaries, or, to the best of my knowledge and information,
any applicable provision of any law, statute or administrative
regulation of the State of California, or, to the best of my
knowledge and information, any judgment, order, writ or decree of
any government instrumentality or court, domestic or foreign,
applicable to the Company or any of its subsidiaries or any of
their respective properties, assets or operations.
In rendering such opinion, such counsel may rely as to
matters of fact (but not as to legal conclusions), to the extent
he deems proper, on certificates of responsible officers of the
Company and public officials. Such opinion shall not state that
it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991).
Page 40
<PAGE>
Exhibit C
FORM OF OPINION OF BALLARD SPAHR ANDREWS & INGERSOLL
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) The Company has been duly incorporated and
is validly existing under the laws of the State of Maryland and
is in good standing with the State Department of Assessments and
Taxation of Maryland. The Company has the corporate power to
own, lease and operate its current properties and to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under the Purchase Agreement, the
Indenture and the Securities.
(ii) The authorized, issued and outstanding
stock of the Company is as set forth in the line items "Preferred
Stock" and "Common Stock" under the caption "Consolidated Balance
Sheets" in the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 (except for subsequent issuances
pursuant to employee benefit plans or the exercise of options
referred to in the Prospectus and the forfeiture of 82 shares of
Common Stock by a terminated employee). The shares of issued and
outstanding Common Stock (the "Outstanding Shares") have been
duly authorized and validly issued and are fully paid and non-
assessable and none of the Outstanding Shares was issued in
violation of preemptive rights arising under the Maryland General
Corporation Law (the "MGCL") or the charter or bylaws of the
Company.
(iii) The Purchase Agreement and the Indenture
have been duly authorized, executed and delivered by the Company.
(iv) No authorization, approval, consent or
order of any Maryland state government authority or agency (other
than as may be required under Maryland securities or blue sky
laws) is required in connection with the due authorization,
execution or delivery of the Purchase Agreement, the Indenture or
the Securities or for the offering, issuance or sale of the
Securities.
(v) The execution, delivery and performance of
the Purchase Agreement, the Indenture and the Securities by the
Company (including the issuance and sale of the Securities to the
Underwriter and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use
of Proceeds") do not result in any violation of the provisions of
the charter or bylaws or, so far as is known to such counsel, any
applicable provision of any Maryland law, statute,
Page 41
<PAGE>
administrative regulation or administrative or court decree
applicable to the Company.
(vi) The Securities have been duly authorized
and executed by the Company and, when duly authenticated by the
Trustee in the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee) and delivered against payment of the purchase price
therefor specified in the Purchase Agreement.
(vii) In rendering such opinion, such counsel
shall state that each of Latham & Watkins and Brown & Wood LLP,
in rendering their opinions pursuant to the Purchase Agreement,
may rely upon such opinion of special Maryland counsel as to all
matters arising under or governed by the laws of the State of
Maryland. In addition, in rendering such opinion, such counsel
may rely insofar as such opinion involves factual matters, to the
extent they deem proper, on certificates of responsible officers
of the Company and public officials. Such opinion shall not
state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
Page 42
<PAGE>
<PAGE>
Exhibit 4.1
Form of Indenture dated as of October 28, 1998 between
the Company and The Bank of New York (filed as an exhibit to
Realty Income's Form 8-K, filed on October 28, 1998 and
incorporated herein by reference).
<PAGE>
<PAGE>
Exhibit 4.2
Pricing Committee Resolutions and Form of 8% Note due 2009.
RESOLUTIONS OF THE PRICING COMMITTEE
OF THE BOARD OF DIRECTORS OF
REALTY INCOME CORPORATION
WHEREAS, in resolutions adopted on July 15, 1997 (the
"Resolutions"), the Board of Directors authorized the
registration, issuance and sale of up to $300 million of
securities, such securities to be either debt securities, common
stock or preferred stock (collectively, the "Securities"); and
WHEREAS, pursuant to the Resolutions, the Company filed
with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (File No. 333-34311) (as
amended, the "Registration Statement") relating to the Securities
and the Commission declared the Registration Statement effective
on September 16, 1997;
WHEREAS, the Board of Directors has determined to issue
a series of debt securities to be known as the 8% Notes due 2009
(the "Notes") pursuant to an indenture dated as of
October 28, 1998 (the "Indenture"), between the Company and The
Bank of New York, as Trustee (the "Trustee"), and to offer and
sell the Notes to Donaldson, Lufkin & Jenrette Securities
Corporation (the "Underwriter"), pursuant to a purchase agreement
(the "Purchase Agreement") between the Company and the
Underwriter for reoffering by the Underwriter to the public; and
WHEREAS, pursuant to resolutions adopted by the Board of
Directors on January 13, 1999, the Board of Directors established
a Pricing Committee of the Board of Directors for the purpose of
approving, among other things, the amount, manner and terms of
the issuance and sale of the Notes and appointed William E.
Clark, Thomas A. Lewis, Richard J. VanDerhoff and Willard H.
Smith to serve on such committee.
NOW THEREFORE, BE IT RESOLVED, that in accordance with
Section 301 of the Indenture, the form and terms of the Notes are
hereby established (capitalized terms used in these resolutions
and not otherwise defined herein having the same definitions as
in the Indenture):
1. The Notes shall constitute a series of Securities
having the title "8% Notes due 2009."
2. The aggregate principal amount of Notes that may
be authenticated and delivered under the Indenture (except for
<PAGE>
Notes authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Notes pursuant to
Sections 304, 305, 306, 906, 1107 or 1305 of the Indenture) shall
be limited in aggregate principal amount to $20,000,000. Such
series may not be reopened for the issuance of additional
Securities of such series.
3. The entire outstanding principal of the Notes
shall be payable on January 15, 2009 (the "Maturity Date").
4. The rate at which the Notes shall bear interest
shall be 8% per annum; the date from which such interest shall
accrue shall be January 21, 1999, the Interest Payment Dates on
which such interest will be payable shall be January 15 and July
15 of each year, beginning July 15, 1999; the Regular Record
Dates for the interest payable on the Notes on any Interest
Payment Date shall be January 1 or July 1, as the case may be,
immediately preceding the applicable Interest Payment Date; and
the basis upon which interest shall be calculated shall be that
of a 360-day year consisting of twelve 30-day months. If any
principal of or premium, if any, or interest on any of the Notes
is not paid when due, then such overdue principal and, to the
extent permitted by law, such overdue premium or interest, as the
case may be, shall bear interest, until paid or until such
payment is duly provided for, at the rate of 8% per annum.
5. The place where the principal of, premium, if any,
and interest on the Notes shall be payable, where Notes may be
surrendered for the registration of transfer or exchange, and
where notices or demands to or upon the Company in respect of the
Notes and the Indenture may be served shall be the office or
agency maintained by the Company for such purpose in the Borough
of Manhattan, The City of New York, which shall initially be the
Corporate Trust Office of the Trustee at 101 Barclay St., Floor
21 West, New York, New York 10286.
6. The Notes shall be redeemable at any time at the
option of the Company, in whole or from time to time in part, at
a Redemption Price (payable in Dollars) equal to the sum of (i)
the principal amount of the Notes being redeemed plus accrued
interest thereon to the Redemption Date and (ii) the Make-Whole
Amount (as defined in the form of Note attached hereto as Exhibit
A), if any, with respect to such Notes; provided that
installments of interest on Notes whose Stated Maturity is on or
prior to the relevant Redemption Date shall be payable to the
Holders of such Notes (or one or more Predecessor Securities)
registered as such at the close of business on the relevant
record dates according to their terms and the provisions of
Section 307 of the Indenture. As used in the Indenture and these
resolutions, all references to "premium" and "premium, if any" on
the Notes, and all similar references with respect to the Notes,
shall be deemed to refer to and include the Make-Whole Amount, if
any.
<PAGE>
7. The Notes shall not be redeemable at the option of
any Holder thereof, upon the occurrence of any particular
circumstance or otherwise. The Notes will not have the benefit
of any mandatory sinking fund.
8. The Notes shall be issued in denominations of
$1,000 and any integral multiples thereof.
9. The Trustee shall be the initial Security
Registrar, transfer agent and Paying Agent for the Notes.
10. The entire outstanding principal amount of the
Notes shall be payable upon declaration of acceleration of the
maturity of the Notes pursuant to Section 502 of the Indenture.
11. Payment of the principal of, premium, if any, and
interest on the Notes shall be made in Dollars, and the Notes
shall be denominated in Dollars.
12. The amount of payments of principal of, premium,
if any, and interest on the Notes shall not be determined with
reference to an index, formula or other similar method.
13. Payments of the principal of, premium, if any,
and interest on the Notes shall be made in Dollars, and the
Holders have no right to elect the currency in which such
payments are made.
14. In addition to the covenants of the Company set
forth in the Indenture, the covenants set forth in the form of
Note attached hereto as Exhibit A under the captions "Limitation
on Incurrence of Total Debt," "Limitation on Incurrence of
Secured Debt," "Debt Service Coverage " and "Maintenance of Total
Unencumbered Assets" (collectively, the "Additional Covenants")
shall be and hereby are added to the Indenture for the benefit of
the Notes, and the Additional Covenants, together with the
defined terms (the "Additional Definitions") set forth in such
form of Note under the caption "Certain Definitions," are hereby
incorporated by reference in and made a part of these resolutions
and the Indenture as if set forth in full herein and therein;
provided that the Additional Covenants shall only be effective
for so long as any of the Notes is Outstanding; and provided,
further, that except as set forth in (23) below, the definitions
of "Subsidiary" set forth in the form of Note attached hereto as
Exhibit A shall only be applicable with respect to the Additional
Covenants, insofar as they pertain to the Notes, and the
Additional Definitions.
15. The Notes shall be issuable only as Registered
Securities without coupons and shall initially be issued in
permanent global form (the "Global Note"). Beneficial owners of
interests in the Global Note may exchange such interests for
Notes of like tenor of any authorized denomination only under the
circumstances provided in Section 305 of the Indenture. The
<PAGE>
Depository Trust Company ("DTC") shall be the initial depository
with respect to the Global Note.
16. The Notes will not be issuable as Bearer
Securities, and a temporary global certificate will not be
issued.
17. Except as otherwise provided in the Indenture and
in these resolutions with respect to the payment of Defaulted
Interest, interest on any Note shall be payable only to the
Person in whose name that Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest. Payments of principal, premium,
if any, and interest in respect of the Notes will be made by the
Company by wire transfer of immediately available funds; provided
that, in the event that any Notes are issued in definitive
certificated form, the Holders thereof shall have given
appropriate wire transfer instructions to the Company and, in the
event that such wire transfer instructions shall not have been
given to the Company by the Holder of any Note issued in
definitive certificated form, payments of interest on such Note
may be made by mailing a check for such interest to the address
of such Holder as it appears on the Security Register.
18. Sections 1402 and 1403 of the Indenture shall be
applicable to the Notes, and the provisions of Section 1403 shall
also be applicable with respect to the Company's obligations
under the Additional Covenants; provided that the Company shall
be entitled to effect defeasance or covenant defeasance only with
respect to all, and not less than all, of the Notes.
19. The Notes will be authenticated and delivered as
provided in Section 303 of the Indenture.
20. The Company shall not be required to pay
Additional Amounts with respect to the Notes as contemplated by
Section 1010 of the Indenture.
21. The Notes shall not be convertible into Common
Stock or Preferred Stock.
22. The Notes will be direct, senior unsecured
obligations of the Company and will rank equally with all other
senior unsecured indebtedness of the Company from time to time
outstanding.
23. Insofar as Section 801 of the Indenture is
applicable to the Notes, the term "Subsidiary," as used in
Section 801(2) of the Indenture, shall have the meaning set forth
in the form of Note attached hereto as Exhibit A (instead of the
meaning set forth in Section 101 of the Indenture), and the term
"indebtedness," as used in Section 801(2), shall be deemed to
include "Debt" and "Secured Debt" (as such terms are defined in
the form of Note attached hereto as Exhibit A).
<PAGE>
24. The provisions of Section 1011 of the Indenture
shall be applicable with respect to any term, provision or
condition set forth in the Additional Covenants, in addition to
any term, provision and condition set forth in Sections 1004 to
1008, inclusive, of the Indenture.
25. The Notes shall have such additional terms as are
set forth in the form of Note attached hereto as Exhibit A, which
terms are hereby incorporated by reference in and made a part of
these resolutions and the Indenture as if set forth in full
herein and therein.
RESOLVED, that the public offering price of the Notes
shall be 98.757% of the principal amount thereof plus accrued
interest from January 21, 1999, and the Notes shall be sold to
the Underwriter at a price equal to 98.107% of the principal
amount thereof.
RESOLVED, that the form of Purchase Agreement presented
to and reviewed by this committee, and the form of Note attached
hereto as Exhibit A, be, and each of them hereby is, approved (it
being understood that, in the event that Notes are ever issued in
definitive certificated form, the legends appearing as the first
two paragraphs on the first page of such form of Notes may be
removed); and the form and terms of the Indenture, and the
execution and delivery thereof by the Company, are hereby
authorized, approved, ratified and reconfirmed in all respects.
RESOLVED, that each of the Chairman of the Board, Chief
Executive Officer, President, any Senior Vice President,
Secretary and Treasurer of the Company be, and each of them
acting singly, hereby is, authorized and directed, in the name
and on behalf of the Company and where appropriate under its
corporate seal, attested by its Secretary or Treasurer, to
execute and deliver the Notes and the Purchase Agreement in
substantially the forms approved hereby, with such changes as
shall have been approved by the executing officer, such approval
to be conclusively evidenced by the execution thereof (it being
understood that any signatures, attestations and corporate seals
appearing on the Notes may be facsimiles thereof).
RESOLVED, that the prospectus dated October 1, 1997 and
prospectus supplement dated January 15, 1999 relating to the
Notes be, and the same hereby are, ratified and approved in all
respects.
RESOLVED, that all officers of the Company be, and each
of them hereby is, authorized, in the name and on behalf of the
Company, to make, execute and deliver or cause to be made,
executed and delivered, and to evidence the approval of the Board
of Directors of, all such officers' certificates, depository
agreements, letters of representation or other agreements or
arrangements necessary or appropriate in connection with the
<PAGE>
administration of any book-entry arrangements for the Notes, and
such other agreements, undertakings, documents or instruments,
and to perform all such acts and make all such payments, as may,
in the judgment of such officer, be necessary, appropriate or
desirable to effectuate the purpose of these resolutions,
including the performance of the obligations of the Company under
the Indenture, the Notes, the Purchase Agreement and any other
agreement, undertaking, document or instrument referred to herein
or therein.
RESOLVED, that any and all actions heretofore taken by
the officers of the Company pursuant to the authority conferred
by the preceding resolutions and consistent therewith is
ratified, approved and confirmed.
<PAGE>
FORM OF 8% NOTE DUE 2009
PRINCIPAL AMOUNT
$20,000,000
REGISTERED NO.: R-1
CUSIP NO.: 756109 AD 6
REALTY INCOME CORPORATION
8% NOTES DUE 2009
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
SET FORTH IN THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A
DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR
ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND, UNLESS AND UNTIL IT IS EXCHANGED FOR SECURITIES
IN DEFINITIVE FORM AS AFORESAID, MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY OR BY THE DEPOSITARY OR ITS NOMINEE TO A SUCCESSOR
DEPOSITARY OR ITS NOMINEE.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), 55 WATER
STREET, NEW YORK, NEW YORK TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SUCH
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
Realty Income Corporation, a Maryland corporation (the
"Company," which term shall include any successor under the
Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the
principal sum of Twenty Million Dollars on January 15, 2009, and
to pay interest thereon from January 21, 1999, or from the most
recent date to which interest has been paid or duly provided for,
semi-annually in arrears on January 15 and July 15 of each year
(each, an "Interest Payment Date"), commencing July 15, 1999, at
the rate of 8% per annum, until the entire principal amount
hereof is paid or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid
to the Person in whose name this Note (or one or more Predecessor
Securities) is registered in the Security Register applicable to
the Notes at the close of business on the Regular Record Date for
such interest, which shall be January 1 or July 1, as the case
<PAGE>
may be, immediately preceding the applicable Interest Payment
Date. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may either be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes of
this series not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the
Indenture. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. If any principal of or premium, if
any, or interest on any of the Notes is not paid when due, then
such overdue principal and, to the extent permitted by law, such
overdue premium or interest, as the case may be, shall bear
interest, until paid or until such payment is duly provided for,
at the rate of 8% per annum.
Payments of principal, premium, if any, and interest in
respect of this Note will be made by the Company in Dollars by
wire transfer of immediately available funds; provided that, in
the event that this Note is issued in definitive certificated
form, the Holder hereof shall have given appropriate wire
transfer instructions to the Company and, in the event that such
wire transfer instructions shall not have been given to the
Company by the Holder of any Note issued in definitive
certificated form, payments of interest on such Note may be made
by mailing a check for such interest to the address of such
Holder as it appears on the Security Register. The place where
the principal of, premium, if any, and interest on this Note
shall be payable, where this Note may be surrendered for the
registration of transfer or exchange and where notices or demands
to or upon the Company in respect of the Notes and the Indenture
may be served shall be the office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of
New York, which shall initially be the Corporate Trust Office of
the Trustee at 101 Barclay St., Floor 21 West, New York, New York
10286.
This Note is one of a duly authorized issue of
Securities of the Company (herein called the "Notes"), issued as
a series of Securities under an indenture dated as of
October 28, 1998 (the "Indenture"), between the Company and The
Bank of New York, as trustee (the "Trustee," which term includes
any successor trustee under the Indenture with respect to the
Notes), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the
Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the duly
<PAGE>
authorized series designated as the "8% Notes due 2009," limited
(subject to exceptions provided in the Indenture) in aggregate
principal amount to $20,000,000. All terms used in this Note
which are defined in the Indenture and not defined herein shall
have the meanings assigned to them in the Indenture.
The Notes may be redeemed at any time at the option of
the Company, in whole or from time to time in part, at a
Redemption Price equal to the sum of (i) the principal amount of
the Notes being redeemed plus accrued interest thereon to the
Redemption Date and (ii) the Make-Whole Amount, if any, with
respect to such Notes (the "Redemption Price"); provided that
installments of interest on Notes whose Stated Maturity is on or
prior to the relevant Redemption Date shall be payable to the
Holders of such Notes (or one or more Predecessor Securities)
registered as such at the close of business on the relevant
record dates according to their terms and the Indenture.
If notice has been given as provided in the Indenture
and funds for the redemption of any Notes called for redemption
shall have been made available on the Redemption Date referred to
in such notice, such Notes will cease to bear interest on the
date fixed for such redemption specified in such notice and the
only right of the Holders of such Notes will be to receive
payment of the Redemption Price.
Notice of any optional redemption of any Notes will be
given to Holders at their addresses, as shown in the Security
Register for the Notes, not more than 60 nor less than 30 days
prior to the date fixed for redemption. The notice of redemption
will specify, among other items, the Redemption Price and the
principal amount of the Notes held by such Holder to be redeemed.
The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Company on the Notes
and (b) certain restrictive covenants and the related defaults
and Events of Default applicable to the Company, in each case,
upon compliance by the Company with certain conditions set forth
in the Indenture, which provisions apply to this Note.
In addition to the covenants of the Company contained
in the Indenture, the Company makes the following covenants with
respect to, and for the benefit of the Holders of, the Notes:
Limitation on Incurrence of Total Debt. The Company
will not, and will not permit any Subsidiary to, incur any Debt,
other than Intercompany Debt, if, immediately after giving effect
to the incurrence of such additional Debt and the application of
the proceeds therefrom on a pro forma basis, the aggregate
principal amount of all outstanding Debt of the Company and its
Subsidiaries on a consolidated basis determined in accordance
with GAAP is greater than 60% of the sum of (i) the Company's
Total Assets as of the end of the latest fiscal quarter covered
in the Company's Annual Report on Form 10-K or Quarterly Report
<PAGE>
on Form 10-Q, as the case may be, most recently filed with the
Commission (or, if such filing is not required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
with the Trustee) prior to the incurrence of such additional Debt
and (ii) the increase, if any, in Total Assets from the end of
such quarter including, without limitation, any increase in Total
Assets caused by the application of the proceeds of such
additional Debt (such increase together with the Company's Total
Assets is referred to as the "Adjusted Total Assets").
Limitation on Incurrence of Secured Debt. The Company
will not, and will not permit any Subsidiary to, incur any
Secured Debt, other than Intercompany Debt, if, immediately after
giving effect to the incurrence of such additional Secured Debt
and the application of the proceeds therefrom on a pro forma
basis, the aggregate principal amount of all outstanding Secured
Debt of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP is greater than 40% of the
Company's Adjusted Total Assets.
Debt Service Coverage. The Company will not, and will
not permit any Subsidiary to, incur any Debt, other than
Intercompany Debt, if the ratio of Consolidated Income Available
for Debt Service to the Annual Debt Service Charge for the period
consisting of the four consecutive fiscal quarters most recently
ended prior to the date on which such additional Debt is to be
incurred is less than 1.5 to 1.0, on a pro forma basis after
giving effect to the incurrence of such Debt and the application
of the proceeds therefrom, and calculated on the assumption that
(i) such Debt and any other Debt incurred by the Company or any
of its Subsidiaries since the first day of such four-quarter
period and the application of the proceeds therefrom (including
to refinance other Debt since the first day of such four-quarter
period) had occurred on the first day of such period, (ii) the
repayment or retirement of any other Debt of the Company or any
of its Subsidiaries since the first day of such four-quarter
period had occurred on the first day of such period (except that,
in making such computation, the amount of Debt under any
revolving credit facility, line of credit or similar facility
shall be computed based upon the average daily balance of such
Debt during such period), and (iii) in the case of any
acquisition or disposition by the Company or any Subsidiary of
any asset or group of assets since the first day of such four-
quarter period, including, without limitation, by merger, stock
purchase or sale, or asset purchase or sale, such acquisition or
disposition had occurred on the first day of such period with the
appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation. If the
Debt giving rise to the need to make the foregoing calculation or
any other Debt incurred after the first day of the relevant four-
quarter period bears interest at a floating rate then, for
purposes of calculating the Annual Debt Service Charge, the
interest rate on such Debt shall be computed on a pro forma basis
as if the average interest rate which would have been in effect
<PAGE>
during the entire such four-quarter period had been the
applicable rate for the entire such period.
Maintenance of Total Unencumbered Assets. The Company
will maintain at all times Total Unencumbered Assets of not less
than 150% of the aggregate outstanding principal amount of the
Unsecured Debt of the Company and its Subsidiaries, computed on a
consolidated basis in accordance with GAAP.
Certain Definitions. As used herein, the following
terms will have the meanings set forth below:
"Annual Debt Service Charge" as of any date means the
amount which is expensed in any 12-month period for interest
on Debt of the Company and its Subsidiaries.
"Business Day" means any day, other than a Saturday or
a Sunday, that is not a day on which banking institutions in
The City of New York are authorized or required by law,
regulation or executive order to close.
"Consolidated Income Available for Debt Service" for
any period means Consolidated Net Income plus, without
duplication, amounts which have been deducted in determining
Consolidated Net Income during such period for (i)
Consolidated Interest Expense, (ii) provisions for taxes of
the Company and its Subsidiaries based on income, (iii)
amortization (other than amortization of debt discount) and
depreciation, (iv) provisions for losses from sales or joint
ventures, (v) provisions for impairment losses, (vi)
increases in deferred taxes and other non-cash charges,
(vii) charges resulting from a change in accounting
principles, and (viii) charges for early extinguishment of
debt, and less, without duplication, amounts which have been
added in determining Consolidated Net Income during such
period for (a) provisions for gains from sales or joint
ventures, and (b) decreases in deferred taxes and other non-
cash items.
"Consolidated Interest Expense" for any period, and
without duplication, means all interest (including the
interest component of rentals on capitalized leases, letter
of credit fees, commitment fees and other like financial
charges) and all amortization of debt discount on all Debt
(including, without limitation, payment-in-kind, zero coupon
and other like securities) but excluding legal fees, title
insurance charges, other out-of-pocket fees and expenses
incurred in connection with the issuance of Debt and the
amortization of any such debt issuance costs that are
capitalized, all determined for the Company and its
Subsidiaries on a consolidated basis in accordance with
GAAP.
<PAGE>
"Consolidated Net Income" for any period means the
amount of consolidated net income (or loss) of the Company
and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP.
"Debt" means any indebtedness of the Company or any
Subsidiary, whether or not contingent, in respect of (i)
money borrowed or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness secured by any
mortgage, pledge, lien, charge, encumbrance, trust deed,
deed of trust, deed to secure debt, security agreement or
any security interest existing on property owned by the
Company or any Subsidiary, (iii) letters of credit or
amounts representing the balance deferred and unpaid of the
purchase price of any property except any such balance that
constitutes an accrued expense or trade payable or (iv) any
lease of property by the Company or any Subsidiary as lessee
that is reflected on the Company's consolidated balance
sheet as a capitalized lease in accordance with GAAP, in the
case of items of indebtedness under (i) through (iii) above
to the extent that any such items (other than letters of
credit) would appear as liabilities on the Company's
consolidated balance sheet in accordance with GAAP, and also
includes, to the extent not otherwise included, any
obligation of the Company or any Subsidiary to be liable
for, or to pay, as obligor, guarantor or otherwise (other
than for purposes of collection in the ordinary course of
business), indebtedness of another person (other than the
Company or any Subsidiary) of the type referred to in (i),
(ii), (iii) or (iv) above (it being understood that Debt
shall be deemed to be incurred by the Company or any
Subsidiary whenever the Company or such Subsidiary shall
create, assume, guarantee or otherwise become liable in
respect thereof).
"Executive Group" means, collectively, those
individuals holding the offices of Chairman, Vice-Chairman,
Chief Executive Officer, President, Chief Operating Officer
or any Vice President of the Company.
"Intercompany Debt" means indebtedness owed by the
Company or any Subsidiary solely to the Company or any
Subsidiary.
"Make-Whole Amount" means, in connection with any
optional redemption of any Notes, the excess, if any, of (i)
the aggregate present value as of the date of such
redemption of each dollar of principal being redeemed and
the amount of interest (exclusive of interest accrued to the
date of redemption) that would have been payable in respect
of each such dollar if such redemption had not been made,
determined by discounting, on a semi-annual basis, such
principal and interest at the Reinvestment Rate (determined
on the third Business Day preceding the date such notice of
<PAGE>
redemption is given) from the respective dates on which such
principal and interest would have been payable if such
redemption had not been made to the date of redemption over
(ii) the aggregate principal amount of the Notes being
redeemed. All references herein and in the Indenture to
"premium" or "premium, if any" on the Notes, and all similar
references with respect to the Notes, shall be deemed to
refer to and include the Make-Whole Amount, if any.
"Reinvestment Rate" means .25% plus the arithmetic mean
of the yields under the heading "Week Ending" published in
the most recent Statistical Release under the caption
"Treasury Constant Maturities" for the maturity (rounded to
the nearest month) corresponding to the remaining life to
maturity of the Notes, as of the payment date of the
principal being redeemed. If no maturity exactly
corresponds to such maturity, yields for the two published
maturities most closely corresponding to such maturity shall
be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest
month. For the purposes of calculating the Reinvestment
Rate, the most recent Statistical Release published prior to
the date of determination of the Make-Whole Amount shall be
used.
"Secured Debt" means Debt secured by any mortgage,
lien, charge, encumbrance, trust deed, deed of trust, deed
to secure debt, security agreement, pledge, conditional sale
or other title retention agreement, capitalized lease or
other security interest or agreement granting or conveying
security title to or a security interest in real property or
other tangible assets.
"Statistical Release" means the statistical release
designated "H.15(519)" or any successor publication which is
published weekly by the Federal Reserve System and which
reports yields on actively traded U.S. government securities
adjusted to constant maturities, or, if such statistical
release is not published at the time of any determination
under the Indenture, then such other reasonably comparable
index which shall be designated by the Company.
"Subsidiary" means (i) any corporation, partnership,
joint venture, limited liability company or other entity the
majority of the shares, if any, of the non-voting capital
stock or other equivalent ownership interests of which
(except directors' qualifying shares) are at the time
directly or indirectly owned by the Company, and the
majority of the shares of the voting capital stock or other
equivalent ownership interests of which (except for
directors' qualifying shares) are at the time directly or
indirectly owned by the Company, any other Subsidiary or
<PAGE>
Subsidiaries, and/or one or more individuals of the
Executive Group (or, in the event of death or disability of
any of such individuals, his/her respective legal
representative(s), or such individuals' successors in office
as an officer of the Company), and (ii) any other entity the
accounts of which are consolidated with the accounts of the
Company. This definition shall apply only for purposes of
the covenants set forth above under the captions "Limitation
on Incurrence of Total Debt," "Limitation on Incurrence of
Secured Debt," "Debt Service Coverage," and "Maintenance of
Total Unencumbered Assets," the other definitions set forth
herein under the caption "Certain Definitions," and, insofar
as Section 801 of the Indenture is applicable to the Notes,
the term "Subsidiary," as used in Section 801(2) of the
Indenture, shall have the meaning set forth in this
definition (instead of the meaning set forth in Section 101
of the Indenture).
"Total Assets" as of any date means the sum of (i)
Undepreciated Real Estate Assets and (ii) all other assets
of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP (but excluding
accounts receivable and intangibles).
"Total Unencumbered Assets" as of any date means Total
Assets minus the value of any properties of the Company and
its Subsidiaries that are encumbered by any mortgage,
charge, pledge, lien, security interest, trust deed, deed of
trust, deed to secure debt, security agreement or other
encumbrance of any kind (other than those relating to
Intercompany Debt), including the value of any stock of any
Subsidiary that is so encumbered determined on a
consolidated basis in accordance with GAAP. For purposes of
this definition, the value of each property shall be equal
to the purchase price or cost of each such property and the
value of any stock subject to any encumbrance shall be
determined by reference to the value of the properties owned
by the issuer of such stock as aforesaid.
"Undepreciated Real Estate Assets" as of any date means
the amount of real estate assets of the Company and its
Subsidiaries on such date, before depreciation and
amortization, determined on a consolidated basis in
accordance with GAAP.
"Unsecured Debt" means Debt of the Company or any
Subsidiary that is not Secured Debt.
If an Event of Default with respect to the Notes shall
occur and be continuing, the principal of the Notes may be
declared due and payable in the manner and with the effect
provided in the Indenture.
<PAGE>
As provided in and subject to the provisions of the
Indenture, the Holder of this Note shall not have the right to
institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with
respect to the Notes, the Holders of not less than 25% in
principal amount of the Notes at the time Outstanding shall have
made written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity and the Trustee shall not have
received from the Holders of a majority in principal amount of
the Notes at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and
offer of indemnity. The foregoing shall not apply to any suit
instituted by the Holder of this Note for the enforcement of any
payment of principal of, or premium, if any, or interest on, this
Note on or after the respective due dates therefor.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Notes under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of not
less than a majority in aggregate principal amount of the
Outstanding Notes. The Indenture also contains provisions
permitting the Holders of not less than a majority in principal
amount of the Notes at the time Outstanding, on behalf of the
Holders of all Notes, to waive compliance by the Company with
certain provisions of the Indenture. Furthermore, provisions in
the Indenture permit the Holders of not less than a majority of
the aggregate principal amount of the Outstanding Notes to waive,
in certain circumstances, on behalf of all Holders of the Notes,
certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of, and premium, if any, and interest on,
this Note at the times, places and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note
for registration of transfer at the office or agency of the
Company in any Place of Payment for the Notes, duly endorsed by,
<PAGE>
or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar for the
Notes duly executed by, the Holder hereof or his or her attorney
duly authorized in writing, and thereupon one or more new Notes
of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or
transferees.
As provided in the Indenture and subject to certain
limitations therein set forth, Notes of this series are
exchangeable for a like aggregate principal amount of Notes of
this series of different authorized denominations, as requested
by the Holder surrendering the same.
The Notes of this series are issuable only in
registered form without coupons in denominations of $1,000 and
any integral multiple thereof. No service charge shall be made
for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name this
Note is registered as the owner hereof for all purposes, whether
or not this Note be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the
principal of, or premium, if any, or the interest on this Note,
or for any claim based hereon, or otherwise in respect hereof, or
based on or in respect of the Indenture or any indenture
supplemental thereto, against any past, present or future
stockholder, employee, officer or director, as such, of the
Company or of any successor, either directly or through the
Company or any successor, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof,
expressly waived and released.
THE INDENTURE AND THE NOTES, INCLUDING THIS NOTE, SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes as a
convenience to the Holders of the Notes. No representation is
made as to the correctness or accuracy of such CUSIP numbers as
printed on the Notes, and reliance may be placed only on the
other identification numbers printed hereon.
<PAGE>
Unless the certificate of authentication hereon has
been executed by the Trustee by manual signature of one of its
authorized signatories, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
The headings included in this Note are for convenience
only and shall not affect the construction hereof.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
REALTY INCOME CORPORATION
[SEAL] By:
-------------------------
Thomas A. Lewis
Chairman of the Board and
Chief Executive Officer
Attest:
By:
-------------------------
Michael R. Pfeiffer
Senior Vice President, General Counsel
and Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
----------------------
Authorized Signatory
Dated: January , 1999
<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers to
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
(Please Print or Typewrite Name and Address
including Zip Code of Assignee)
the within Note of REALTY INCOME CORPORATION, and _______________
hereby does irrevocably constitute and appoint __________________
_________________________________________________________________
Attorney to transfer said Note on the books of the within-named
Company with full power of substitution in the premises.
Dated:
----------------- ---------------------------------
---------------------------------
NOTICE: The signature to this assignment must correspond with
the name as it appears on the first page of the within Note in
every particular, without alteration or enlargement or any change
whatever.
Signature Guaranty
--------------------------------
(Signature must be guaranteed by
a participant in a signature
guarantee medallion program)
<PAGE>
<PAGE>
Exhibit 5.1
Opinion of Latham & Watkins.
[LETTERHEAD]
January 21,1999
Realty Income Corporation
220 West Crest Street
Escondido, California 92025
Re: Registration Statement No. 333-34311; $20,000,000
Aggregate Principal Amount of 8% Notes due 2009
-------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to you in connection
with the issuance of $20,000,000 aggregate principal amount of 8%
Notes due 2009 (the "Securities"), pursuant to a registration
statement on Form S-3 under the Securities Act of 1933, as
amended (the "1933 Act"), filed with the Securities and Exchange
Commission (the "Commission") on August 25, 1997 (File No. 333-
34311), as amended by Amendment No. 1 filed with the Commission
on September 16, 1997 (as so amended, the "Registration
Statement") and a prospectus supplement dated January 15, 1999
and a related prospectus dated October 1, 1997 (collectively the
"Prospectus"). Except as otherwise expressly indicated, the
terms Registration Statement and Prospectus shall include all
documents incorporated by reference therein.
As such counsel, we have made such legal and factual
examinations and inquiries as we have deemed necessary or
appropriate for purposes of this opinion. In our examination, we
have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us
as copies. As to facts material to the opinions, statements and
assumptions expressed herein, we have, with your consent, relied
upon oral or written statements and representations of officers
and other representatives of the Company and others. In
addition, we have obtained and relied upon such certificates and
assurances from public officials as we have deemed necessary.
<PAGE>
We are opining herein as to the effect on the subject
transaction only of the internal laws of the State of New York, and
we express no opinion with respect to the applicability thereto, or
the effect thereon, of the laws of any other jurisdiction or as
to any matters of municipal law or the laws of any local agencies
within any state. Various issues concerning Maryland law are
addressed in the opinion of Ballard Spahr Andrews & Ingersoll,
LLP, which has been separately provided to you, and we express no
opinion with respect to those matters.
Capitalized terms used herein without definition have
the meanings assigned to them in the Purchase Agreement.
Subject to the foregoing and the other matters set
forth herein, it is our opinion that, as of the date hereof:
1. Assuming the due authorization, execution and
delivery of the Indenture by the Company under the laws of the
State of Maryland and the due authorization, execution and
delivery of the Indenture by the Trustee, the Indenture
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
2. Assuming the due authorization and execution of
the Securities by the Company under the laws of the State of
Maryland, the Securities, when authenticated by the Trustee in
the manner provided in the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the
Trustee) and delivered against payment of the purchase price
therefor specified in the Purchase Agreement, will constitute
valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms.
The opinions rendered in the foregoing paragraphs
relating to the enforceability of the Indenture and the
Securities, respectively, are subject to the following
exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting
the rights and remedies of creditors; (ii) the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or law, and the discretion of the court
before which any proceeding therefor may be brought; (iii) the
unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy;
(iv) we express no opinion concerning the enforceability of the
waiver of rights or defenses contained in Section 514 of the
Indenture; and (v) we express no opinion with respect to whether
acceleration of the Securities may affect the collectibility of
that portion of the stated principal amount thereof which might
be determined to constitute unearned interest thereon.
<PAGE>
To the extent that the obligations of the Company under
the Indenture may be dependent upon such matters, we assume for
purposes of this opinion that the Trustee under the Indenture is
duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization; that the Trustee has
complied with any applicable requirement to file returns and pay
taxes under the Franchise Tax Law of the State of California;
that the Trustee is duly qualified to engage in the activities
contemplated by the Indenture; that the Indenture has been duly
authorized, executed and delivered by the Trustee and constitutes
a legally valid, binding and enforceable obligation of the
Trustee enforceable against the Trustee in accordance with its
terms; and the Trustee is in compliance, generally and with
respect to acting as trustee under the Indenture, with all
applicable laws and regulations; and that the Trustee has the
requisite organizational and legal power and authority to perform
its obligations under the Indenture.
We consent to your filing this opinion as an exhibit to
a current report on Form 8-K and to the reference to our firm in
the prospectus supplement dated January 15, 1999 contained under
the heading "Legal Matters."
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE>
<PAGE>
Exhibit 5.2
Opinion of Ballard Spahr Andrews and Ingersoll
[LETTERHEAD]
FILE NUMBER
863100
January 21, 1999
Realty Income Corporation
220 West Crest Street
Escondido, California 92025
Re: Registration Statement on Form S-3
Registration No. 333-34311
----------------------------------
Ladies and Gentlemen:
We have served as Maryland counsel to Realty Income
Corporation, a Maryland corporation (the "Company"), in
connection with certain matters of Maryland law arising out of
the Company's registration statement on Form S-3 (No. 333-34311),
and all amendments thereto (the "Registration Statement"),
previously declared effective by the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933,
as amended (the "1933 Act"), relating to the proposed public
offering of securities of the Company that may be offered and
sold by the Company from time to time as set forth in the
prospectus dated October 1, 1997 which forms a part of the
Registration Statement (the "Base Prospectus"). This opinion is
rendered in connection with the sale and issuance of up to
$20,000,000 of the Company's 8% Notes due 2009 (the "Notes"), as
described in a Prospectus Supplement dated October 23, 1998 (the
"Prospectus Supplement" and, together with the Base Prospectus,
the "Prospectus"). Capitalized terms used but not defined herein
shall have the meanings given to them in the Registration
Statement.
In connection with our representation of the Company,
and as a basis for the opinion hereinafter set forth, we have
examined originals, or copies certified or otherwise identified
to our satisfaction, of the following documents (hereinafter
collectively referred to as the "Documents"):
<PAGE>
1. The Registration Statement and the related form of
Prospectus in the form in which it was transmitted to the
Commission, under the 1933 Act;
2. A certificate representing the Notes, certified as
of a recent date by the Secretary of the Company.
3. The charter of the Company (the "Charter"),
certified as of a recent date by the State Department of
Assessments and Taxation of Maryland (the "SDAT");
4. The Bylaws of the Company (the "Bylaws"),
certified as of a recent date by its Secretary;
5. Resolutions adopted by the Board of Directors of
the Company (the "Board"), relating to the sale, issuance and
registration of the Notes, certified as of a recent date by the
Secretary of the Company;
6. Resolutions adopted by the Pricing Committee of
the Board, relating to the terms of the Notes, including the
interest rate thereunder and the price thereof, certified as of a
recent date by the Secretary of the Company;
7. A certificate of the SDAT as to the good standing
of the Company, dated as of a recent date;
8. A certificate executed by Michael R. Pfeiffer,
Secretary of the Company, dated as of a recent date;
9. An indenture, dated October 28, 1998 (the
"Indenture"), between the Company and The Bank of New York, as
Trustee, as supplemented and/or amended;
10. An Officer's Certificate, dated January 21, 1999,
pursuant to Section 301 of the Indenture;
11. The Company's Current Report on Form 8-K filed
with the Commission on January 21, 1999 (the "8-K"); and
12. Such other documents and matters as we have deemed
necessary or appropriate to express the opinion set forth in this
letter, subject to the assumptions, limitations and
qualifications stated herein.
In expressing the opinion set forth below, we have
assumed, and so far as is known to us there are no facts
inconsistent with, the following:
1. Each individual executing any of the Documents,
whether on behalf of such individual or another person, is
legally competent to do so.
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2. Each individual executing any of the Documents on
behalf of a party (other than the Company) is duly authorized to
do so.
3. Each of the parties (other than the Company)
executing any of the Documents has duly and validly executed and
delivered each of the Documents to which such party is a
signatory, and such party's obligations set forth therein are
legal, valid and binding and are enforceable in accordance with
all stated terms
4. All Documents submitted to us as originals are
authentic. The form and content of the Documents submitted to us
as unexecuted drafts do not differ in any respect relevant to
this opinion from the form and content of such Documents as
executed and delivered. All Documents submitted to us as
certified or photostatic copies conform to the original
documents. All signatures on all such Documents are genuine.
All public records reviewed or relied upon by us or on our behalf
are true and complete. All statements and information contained
in the Documents are true and complete. There has been no oral
or written modification or amendment to any of the Documents, and
there has been no waiver of any provision of any of the
Documents, by action or omission of the parties or otherwise.
The phrase "known to us" is limited to the actual
knowledge, without independent inquiry, of the lawyers at our
firm who have performed legal services in connection with the
issuance of this opinion.
Based upon the foregoing, and subject to the
assumptions, limitations and qualifications stated herein, it is
our opinion that:
1. The Company is a corporation duly incorporated and
existing under and by virtue of the laws of the State of Maryland
and is in good standing with the SDAT.
2. The Notes have been duly authorized, and upon the
due execution, countersignature and delivery of the Notes in
certificated form, or the issuance of the Notes in uncertificated
form, in accordance with the Indenture, the Notes will be duly
and validly issued.
The foregoing opinion is limited to the substantive
laws of the State of Maryland and we do not express any opinion
herein concerning any other law. We express no opinion as to the
applicability or effect of any federal or state securities laws,
including the securities laws of the State of Maryland, or as to
federal or state laws regarding fraudulent transfers. To the
extent that any matter as to which our opinion is expressed
herein would be governed by any jurisdiction other than the State
of Maryland, we do not express any opinion on such matter.
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We assume no obligation to supplement this opinion if
any applicable law changes after the date hereof or if we become
aware of any fact that might change the opinion expressed herein
after the date hereof.
This opinion is being furnished to you for your
submission to the Commission as an exhibit to the 8-K and
incorporation by reference into the Registration Statement and,
accordingly, may not be relied upon by, quoted in any manner to,
or delivered to any other person or entity (other than Latham &
Watkins, counsel to the Company) without, in each instance, our
prior written consent.
We hereby consent to the filing of this opinion as an
exhibit to the 8-K and to the use of the name of our firm
therein. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by
Section 7 of the 1933 Act.
Very truly yours,
/s/ BALLARD, SPAHR, ANDREWS & INGERSOLL
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