UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
Commission File Number 1-13318
REALTY INCOME CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 33-0580106
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
220 West Crest Street, Escondido, California 92025
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(Address of principal executive offices)
Registrant's telephone number, including area code: (760)741-2111
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Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
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Common Stock, $1.00 Par Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
8.25% Monthly Income Senior Notes,
due 2008 New York Stock Exchange
Class B Preferred Stock, $1.00 Par Value New York Stock Exchange
Class C Preferred Stock, $1.00 Par Value New York Stock Exchange
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Securities registered pursuant to Section 12 (g) of the Act: None
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
At March 1, 2000 the aggregate market value of the Registrant's shares of
common stock, $1.00 par value, held by non-affiliates of the Registrant was
$541,780,000, at the New York Stock Exchange closing price of $20.75.
As of March 1, 2000, the number of common shares outstanding was
26,808,370, the number of Class B preferred shares outstanding was
2,745,700 and the number of Class C preferred shares outstanding was
1,380,000.
Documents incorporated by reference: Part III, Item 10, 11 and 12
incorporate by reference certain specific portions of the definitive proxy
statement for Realty Income Corporation's Annual Meeting to be held on
May 3, 2000, to be filed pursuant to Regulation 14A. Only those portions
of the proxy statement which are specifically incorporated by reference
herein shall constitute a part of this Annual Report.
FORWARD-LOOKING STATEMENTS
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This annual report on Form 10-K, including documents incorporated by
reference, contain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. When used
in this annual report, the words estimated, anticipated and similar
expressions are intended to identify forward-looking statements. Forward-
looking statements are subject to risks, uncertainties, and assumptions
about Realty Income Corporation, including, among other things:
- Our anticipated growth strategies;
- Our intention to acquire additional properties;
- Anticipated trends in our business, including trends in the market
for long-term net leases of freestanding, single-tenant retail
properties;
- Future expenditures for development projects; and
- Availability of capital to finance our business.
Future events and actual results, financial and otherwise, may differ
materially from the results discussed in the forward-looking statements.
In particular, some of the factors that could cause actual results to
differ materially are:
- Our continued qualification as a real estate investment trust;
- General business and economic conditions;
- Competition;
- Interest rates;
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- Accessibility of debt and equity capital markets; and
- Other risks inherent in the real estate business including tenant
defaults, potential liability relating to environmental matters and
illiquidity of real estate investments.
Additional factors that may cause risks and uncertainties include those
discussed in the sections entitled "Business" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in this
annual report.
Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date that this annual report was
filed with the Securities and Exchange Commission. We undertake no
obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect events or
circumstances after the date of this annual report or to reflect the
occurrence of unanticipated events. In light of these risks and
uncertainties, the forward-looking events discussed in this annual report
might not occur.
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REALTY INCOME CORPORATION
Index To Form 10-K
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Page
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<S> <C>
PART I
Item 1: Business......................................... 5
Item 2: Properties....................................... 27
Item 3: Legal Proceedings................................ 27
Item 4: Submission of Matters to a
Vote of Security Holders......................... 27
PART II
Item 5: Market for the Registrant's Common
Equity and Related Stockholder Matters........... 28
Item 6: Selected Financial Data.......................... 29
Item 7: Management's Discussion and Analysis
of Financial Condition and Results of
Operations....................................... 31
Item 7A: Quantitative and Qualitative Disclosures about
Market Risk...................................... 42
Item 8: Financial Statements and Supplementary Data...... 43
Item 9: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........... 69
PART III
Item 10: Directors and Executive Officers
of the Registrant................................ 69
Item 11: Executive Compensation........................... 69
Item 12: Security Ownership of Certain
Beneficial Owners and Management................. 69
Item 13: Certain Relationships and Related
Transactions..................................... 69
PART IV
Item 14: Exhibits, Financial Statement Schedules
and Reports on Form 8-K.......................... 70
SIGNATURES.................................................... 74
EXHIBIT INDEX................................................. 76
Schedule III: Real Estate and Accumulated Depreciation....... F-1
</TABLE>
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PART I
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ITEM 1: BUSINESS
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THE COMPANY
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Realty Income Corporation, "The Monthly Dividend Company", a Maryland
corporation ("Realty Income", the "Company", "us", "our" or "we") is
organized to operate as an equity real estate investment trust ("REIT").
We are a fully integrated, self-administered real estate company with in-
house acquisition, leasing, legal, retail and real estate research,
portfolio management and capital markets expertise. As of December 31,
1999, we owned a diversified portfolio of 1,076 retail properties located
in 45 states with over 8.6 million square feet of leasable space leased to
72 separate retail chains doing business in 23 separate retail industries.
Of the 1,076 properties in the portfolio, 1,069 are single-tenant retail
properties with the remainder being multi-tenant properties. As of
December 31, 1999, 1,052, or 98.4%, of the 1,069 single-tenant properties
were leased with an average remaining lease term (excluding extension
options) of approximately 8.7 years.
Our primary business objective is to generate dependable monthly dividends
from a consistent and predictable level of funds from operations ("FFO")
per share. Additionally, we seek to increase distributions to stockholders
and FFO per share through both active portfolio management and the
acquisition of additional properties.
Our portfolio management focus includes:
- Contractual rent increases on existing leases;
- Rental increases at the termination of existing leases when market
conditions permit; and
- The active management of our property portfolio, including
selective sales of properties.
Our acquisition of additional properties adheres to a focused strategy of
acquiring primarily:
- Freestanding, single-tenant, retail properties;
- Properties leased to regional and national retail chains; and
- Properties under long-term, net-lease agreements.
We typically acquire, then lease back, retail store locations from chain
store operators, providing capital to the operators for continued expansion
and other corporate purposes. Our acquisitions and investment activities
are concentrated in well-defined target markets and focus generally on
middle-market retailers providing goods and services that satisfy basic
consumer needs.
Our net-lease agreements generally:
- Are for initial terms of 10 to 20 years;
- Require the tenant to pay a minimum monthly rent and property
operating expenses (taxes, insurance and maintenance); and
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- Provide for future rent increases (typically subject to ceilings)
based on increases in the consumer price index, fixed increases, or
additional rent calculated as a percentage of the tenant's gross
sales above a specified level.
Realty Income was formed on September 9, 1993 in the State of Delaware and
reincorporated in Maryland in May 1997. Realty Income commenced operations
as a REIT on August 15, 1994 through the merger of 25 public and private
real estate limited partnerships with and into the Company. Each of the
partnerships was formed between 1970 and 1989 for the purpose of acquiring
and managing long-term, net-leased properties.
The five senior officers of the Company, who have each managed our
properties and operations for between 2 and 14 years, owned 0.6% of the
Company's outstanding common stock with a market value of $3.3 million as
of March 1, 2000. The directors and five senior officers of the Company,
as a group, owned 2.6% of the Company's outstanding common stock with a
market value of $14.4 million as of March 1, 2000.
Realty Income's common stock is listed on the New York Stock Exchange
("NYSE") under the ticker symbol "O", our central index key ("CIK") number
is 726728 and cusip number is 756109-104.
Realty Income's 8.25% Monthly Income Senior Notes due 2008, are listed on
the NYSE under the ticker symbol "OUI". The cusip number of these notes is
756109-203.
Realty Income has 44 employees as of March 1, 2000.
RECENT DEVELOPMENTS
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ACQUISITION OF 110 PROPERTIES DURING 1999. During 1999, we acquired 110
additional properties (the "New Properties"), and selectively sold three
properties, increasing the number of properties in the portfolio by 10.9%
to 1,076 properties at December 31, 1999 from 970 properties at
December 31, 1998. During 1999, we diversified our portfolio with the
addition of two new retail industries, Entertainment and Theaters, and
eight new retail chains.
During 1999, we invested $181.4 million in New Properties and properties
under development (excluding estimated unfunded development costs on
properties under construction at December 31, 1999 of $15.4 million). The
weighted average annual unleveraged return on the $181.4 million invested
in 1999 is estimated to be 10.5%, computed as estimated contractual net
operating income (which in the case of a net-leased property is equal to
the base rent or, in the case of properties under construction, the
estimated base rent under the lease) for the first year of each lease,
divided by the estimated total costs of each property. Since it is
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possible that a tenant could default on the payment of contractual rent, no
assurance can be given that the actual return on the funds invested will
not differ from the foregoing percentage.
The New Properties are leased to 21 separate retail chains operating in 16
different retail industries, are located in 26 states, will contain
approximately 948,000 leasable square feet and are 100% leased under net
leases, with an average initial lease term of 17.4 years. Of the New
Properties, 102 were occupied as of March 1, 2000 and the remaining
properties were pre-leased and under construction pursuant to contracts
under which the tenants have agreed to develop the properties (with
development costs funded by the Company) and to begin paying rent when the
premises open for business.
INCREASES IN MONTHLY DISTRIBUTIONS TO COMMON STOCKHOLDERS. In April, July
and October 1999, and January 2000, the monthly distributions to common
stockholders were increased $0.0025 to $0.1725, $0.1750, $0.1775 and
$0.1800 per share, respectively. We are committed to our policy of paying
monthly distributions to common stockholders. During 1999, we paid three
distributions of $0.1700 per common share, three distributions of $0.1725
per common share, three distributions of $0.1750 per common share, and
three distributions of $0.1775 per common share. Common stock
distributions for 1999 totaled $2.085 per share. In December 1999, January
2000 and February 2000, we declared distributions of $0.18 per common
share, which were paid on January 18, 2000, February 15, 2000 and
March 15, 2000, respectively. The monthly distribution of $0.18 per common
share represents a current annualized distribution of $2.16 per share, and
an annualized distribution yield of approximately 10.4% based on the last
reported sale price of our common stock on the NYSE of $20.75 on March 1,
2000. Although we expect to continue our policy of paying monthly
distributions, there can be no assurance that the current level of
distributions per share will be maintained by the Company, that we will
continue our pattern of increasing distributions per share, or as to the
actual distribution yield for any future period.
UNSECURED REVOLVING CREDIT FACILITIES. In December 1999, we entered into a
$200 million, three-year, revolving unsecured acquisition credit facility,
which expires in December 2002. Simultaneously with the execution of the
$200 million credit facility our $170 million credit facility was
cancelled. As of March 1, 2000, we had $70.7 million available for
borrowing under the $200 million credit facility. At that time, the
outstanding balance was $129.3 million with an effective interest rate of
7.3%.
In February 2000, we entered into a $25 million, three-year, revolving
credit facility, which expires in February 2003. This credit facility can
be used for the acquisition of property and for making capital
contributions to subsidiaries for the purpose of acquiring properties.
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STOCK AND SENIOR DEBT REPURCHASE PROGRAM. In January 2000, our Board of
Directors authorized the purchase of up to $10 million of our outstanding
common and preferred shares and senior debt securities during the next 12
months. We may make periodic purchases on the open market at prevailing
prices or in privately negotiated transactions. The purchases will be
funded using available working capital which consists primarily of cash
flow from operations.
FORMATION OF SUBSIDIARY. In January 2000, we formed Crest Net Lease, Inc.,
of which we own 95% of the common stock, all of which is non-voting, and
certain members of management own 5% of the common stock, all of which is
voting stock. Crest Net Lease was created to actively buy and sell certain
select properties, primarily to buyers using tax-deferred exchanges, under
Section 1031 of the Internal Revenue Service Code.
PREFERRED STOCK OFFERINGS. In May 1999, we issued 2,760,000 shares of
9 3/8% Class B cumulative redeemable preferred stock (the "Class B
Preferred") at a price of $25.00 per share. The Class B Preferred trades
on the New York Stock Exchange ("NYSE") under the symbol "OprB" and its
cusip number is 756109-302. Dividends on the Class B Preferred are payable
quarterly. The net proceeds of $66.5 million were used to pay down bank
borrowings.
In July 1999, we issued 1,380,000 shares of 9 1/2% Class C cumulative
redeemable preferred stock (the "Class C Preferred") at a price of $25.00
per share. The Class C Preferred trades on the NYSE under the symbol
"OprC" and its cusip number is 756109-500. Dividends on the Class C
Preferred are payable monthly. The net proceeds of $33.2 million were used
to pay down bank borrowings.
NOTES OFFERING. In January 1999, we issued $20 million of 8.0% unsecured
senior notes due 2009 (the "1999 Notes"). The 1999 Notes were sold at
98.757% of par to yield 8.1%. The proceeds from the offering were used to
pay down bank borrowings and for other corporate purposes. Currently,
there is no formal trading market for the 1999 Notes and we have not listed
and do not intend to list the 1999 Notes on any securities exchange.
BUSINESS PHILOSOPHY AND STRATEGY
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INVESTMENT PHILOSOPHY. We believe that the long-term ownership of an
actively managed, diversified portfolio of retail properties under long-
term, net-lease agreements produces consistent, predictable income. Under
a net-lease agreement, the tenant agrees to pay a minimum monthly rent and
property operating expenses (taxes, maintenance, and insurance) plus,
typically, future rent increases (generally subject to ceilings) based on
increases in the consumer price index, fixed increases or additional rent
calculated as a percentage of the tenant's gross sales above a specified
level. We believe that long-term leases, coupled with the tenant's
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responsibility for property expenses, generally produce a more predictable
income stream than many other types of real estate portfolios, while
continuing to offer the potential for growth in rental income.
INVESTMENT STRATEGY. In identifying new properties for acquisition, we
focus on providing expansion capital to retail chains by acquiring, then
leasing back, their retail store locations. We classify retail tenants
into three categories: venture, middle market, and upper market. Venture
companies are those which typically offer a new retail concept in one
geographic region of the country and operate between five and 50 retail
outlets. Middle market retail chains are those which typically have 50 to
500 retail outlets, operations in more than one geographic region, have
been successful through one or more economic cycles, and have a proven,
replicable concept. The upper market retail chains typically consist of
companies with 500 or more stores, operating nationally in a proven mature
retail concept. Upper market retail chains generally have strong operating
histories and access to several sources of capital.
Realty Income primarily focuses on acquiring properties leased to middle
market retail chains which we believe are attractive for investment
because:
- They generally have overcome many of the operational and managerial
obstacles that tend to adversely affect venture retailers;
- They typically require capital to fund expansion but have more
limited financing options;
- They generally have provided us with attractive risk-
adjusted returns over time since their financial strength has in
many cases tended to improve as their businesses have matured;
- Their relatively large size allows them to spread corporate expenses
across a greater number of stores; and
- Middle market retailers typically have the critical mass to survive
if a number of locations have to be closed due to underperformance.
In 1998, we expanded our investment focus to include upper market retail
chains and have made some acquisitions on a selective basis. We believe
upper market retail chains can be attractive for investment because:
- They typically are of a higher credit quality;
- They are usually larger brand name, public and private retailers;
- They utilize a larger building ranging in size from 10,000 to 50,000
square feet; and
- Their ability to grow because of access to capital facilitates
larger transaction sizes.
While our investment strategy focuses primarily on acquiring properties
leased to middle and upper market retail chains, we also selectively seek
incremental investment opportunities with venture market retail chains.
Periodically, venture market opportunities arise where we feel that the
real estate used by the tenant is of high quality and can be purchased at
prices that are favorable in the marketplace. To meet our stringent
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investment standards, however, venture retail companies must have a well-
defined retailing concept and strong financial prospects. These
opportunities are examined on a case by case basis and we are highly
selective in making investments in this area.
The Internet has become an important delivery channel for many retail
businesses and our investment strategy has positioned us to compete in such
an environment. Many research analysts and experts in retail trends
believe that bricks and mortar retail businesses will successfully co-exist
with Internet retail businesses. We believe that the companies most
vulnerable, and possibly subject to the greatest impact from the Internet,
are retail chains that sell books, consumer electronics, music, office
supplies, and, possibly, pharmaceuticals.
Our exposure to these types of retail chains is minimal. We believe retail
chains that provide services rather than goods, such as child care centers
and auto service stores, as well as those that provide a service with their
products, such as restaurants, convenience stores and home improvement
stores, have tended to be more stable operators than retailers that only
sell goods. Historically, our investment focus has been on retail
industries that have a service component because we believe the lease
revenue from these types of businesses is more stable. Because of this
investment focus, as of January 1, 2000, over 76% of our annualized revenue
is derived from retailers with a service component in their business. We
believe these service-oriented businesses would be difficult to duplicate
over the Internet and, as a result, our property portfolio should be fairly
well positioned for competition from Internet businesses.
CREDIT STRATEGY. Realty Income principally provides sale leaseback
financing primarily to less than investment grade retail chains. Since
1970 and through December 31, 1999, Realty Income has acquired and leased
back to regional and national retail chains 1,054 properties (including 36
properties that have been sold) and has collected in excess of 98% of the
original contractual rent obligations on those properties. We believe that
within this market we can achieve an attractive risk-adjusted return on the
financing that we provide to retailers.
We believe that the primary financial obligations of most retailers
typically include their bank and other debt, payment obligations to
suppliers and real estate lease obligations. Because we own the land and
buildings on which the tenant conducts its retail business, we believe that
the risk of default on the retailers' lease obligations is less than the
retailers' unsecured general obligations. It has been our experience that
since retailers must retain their profitable retail locations in order to
survive in the event of reorganization they are less likely to reject a
lease for a profitable location, which would terminate their right to use
the property. Thus, as the property owner, we believe we will fare better
than unsecured creditors of the same retailer in the event of reorgani-
zation. If a property is rejected by the tenant during the reorganization,
we still own the property and can either lease it to a new tenant or sell
the property. In addition, we believe that the risk of default on the real
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estate leases can be further mitigated by monitoring the performance of the
retailers' individual unit locations and selling those units that are
weaker performers.
In order to qualify for inclusion in our portfolio, new property
acquisitions must meet stringent investment and credit requirements. The
properties must generate attractive current yields, and the tenant must
meet our credit standards. We have established a three-part analysis that
examines each potential investment based on:
- Industry, company, market conditions and credit profile;
- Location profitability, if profitability data is available; and
- Overall real estate characteristics, value, and comparative rental
rates.
Companies that have been approved for acquisitions are generally those with
fifty or more retail stores which are located in highly visible areas, with
easy access to major thoroughfares and attractive demographics.
ACQUISITION STRATEGY. We seek to invest in industries in which several,
well-organized, regional and national chains are capturing market share
through service, quality control, economies of scale, mass media
advertising, and the selection of prime retail locations. We execute our
acquisition strategy by acting as a source of capital to regional and
national retail chain stores in a variety of industries by acquiring, then
leasing back, their retail store locations. We undertake thorough research
and analysis to identify appropriate industries, tenants, and property
locations for investment. The abundance of information on the Internet
adds to our research capabilities and allows us to uncover net-lease
opportunities in markets where our real estate financing program adds
value. In selecting real estate for potential investment, we generally
seek to acquire properties that have the following characteristics:
- Freestanding, commercially zoned property with a single tenant;
- Properties that are important retail locations for regional and
national retail chains;
- Properties that are located within attractive demographic areas
relative to the business of their tenants, with high visibility and
easy access to major thoroughfares; and
- Properties that can be purchased with the simultaneous execution or
assumption of long-term, net-lease agreements, providing the
opportunity for both current income and future rent increases.
PORTFOLIO MANAGEMENT STRATEGY. The active management of the property
portfolio is an essential component of our long-term strategy. We
continually monitor our portfolio for changes that could affect the
performance of the industries, tenants, and locations in which we have
invested. The portfolio is analyzed on an ongoing basis with a view
towards optimizing performance and returns. Realty Income's investment
committee meets frequently and is made up of our Chief Executive Officer
and two Executive Vice Presidents. Our investment committee reviews
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industry research, tenant research, property due diligence, and significant
portfolio management activities. This monitoring typically includes
ongoing review and analysis of:
- The performance of various retail industries;
- The operation, management, business planning, and financial
condition of the tenants; and
- The health of the individual markets in which we own properties,
from both an economic and real estate standpoint.
In November 1999, we implemented a plan to sell three of our multi-tenant
locations. We anticipate these properties will be sold in 2000. At
December 31, 1999, they had a combined carrying value of $29 million.
CAPITAL MARKETS STRATEGY. We have a $200 million revolving, unsecured
acquisition credit facility that expires in December 2002 and a $25 million
revolving, unsecured credit facility that expires in February 2003. As of
March 1, 2000, the outstanding balance on the $200 million credit facility
was $129.3 million with an effective interest rate of approximately 7.3%.
At March 1, 2000, no balance was outstanding on the $25 million credit
facility. A commitment fee of 0.225% per annum accrues on the total credit
commitment of each credit facility. The $200 million credit facility has
been and is expected to be used to acquire additional retail properties
leased to regional and national retail chains under long term net lease
agreements. The $25 million credit facility can be used for the
acquisition of property and for making capital contributions to
subsidiaries for the purpose of funding the acquisition of properties.
We use our credit facilities as a vehicle for the short-term financing of
the acquisition of new properties. When outstanding borrowings under the
$200 million credit facility reach a certain level (generally in the range
of $75 to $175 million) and capital is available on acceptable terms, we
generally seek to refinance those borrowings with the net proceeds of long-
term or permanent financing, which may include the issuance of common
stock, preferred stock, convertible preferred stock, debt securities or
convertible debt securities. We cannot assure you, however, that we will
be able to obtain any such refinancing or that market conditions prevailing
at the time of refinancing will enable us to issue equity or debt
securities upon acceptable terms. We intend to pay off borrowings on our
$25 million credit facility with proceeds from the sale of properties
acquired by us or our subsidiaries. We believe that we are best served by
a conservative capital structure, with a majority of our capital consisting
of equity. As of March 1, 2000, our total outstanding credit facility
borrowings and outstanding notes were $359.3 million or approximately 35.3%
of our total capitalization of $1.0 billion (defined as shares of our
common stock outstanding multiplied by the last reported sales price of the
common stock on the NYSE on March 1, 2000 of $20.75 per share plus the
liquidation value of the Class B Preferred Stock, the Class C Preferred
Stock, the outstanding borrowings on the credit facilities and outstanding
notes at March 1, 2000).
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We received investment grade credit ratings from Duff & Phelps Credit
Rating Company, Moody's Investor Service, Inc., and Standard & Poor's
Rating Group in December 1996. Currently, Duff & Phelps has assigned a
rating of BBB, Moody's has assigned a rating of Baa3, and Standard & Poor's
has assigned a rating of BBB- to our senior debt. These ratings could
change based upon, among other things, our results of operations and
financial condition.
We have also received credit ratings from the same rating agencies on our
preferred stock. Duff & Phelps Rating Company has assigned a rating of
BBB-, Moody's Investor Service, Inc. has assigned a rating of Ba1, and
Standard & Poor's Rating Group has assigned a rating of BB+. These ratings
could change based upon, among other things, our results of operations and
financial condition.
Historically, we have met our long-term capital needs through the issuance
of common stock, preferred stock and investment grade long-term unsecured
debt. We believe that the Company is best served by having the majority of
our future issuances of securities be in the form of common stock. The
Company will issue common stock when we believe that the share price of our
common stock is at a level that allows for the proceeds of any offering to
be invested on an accretive basis into additional properties or to pay down
any short-term borrowings on our credit facilities. We do not presently
view our price per common share as attractive for additional issuances of
common stock. We do not anticipate issuing additional shares of common
stock until we determine the common stock price has risen to acceptable
levels. In addition, we seek to maintain a conservative debt level on our
balance sheet, which should result in conservative interest and fixed
charge coverage ratios. We do not anticipate issuing significant amounts
of additional debt until additional equity can be issued to offset the
increase in debt. If the share price levels do not increase and we do not
issue additional equity or debt, we will reduce our level of property
acquisitions. In these circumstances, we intend to achieve our growth
objectives by investing cash flow in excess of distributions and stock
repurchases, and by strategically selling properties that have appreciated
in value and investing the proceeds in new properties that will generate
rental revenue in excess of those generated by the properties that were
sold.
COMPETITIVE STRATEGY. We believe that, to utilize our investment
philosophy and strategy most successfully, we must seek to maintain the
following competitive advantages:
- - Size and Type of Investment Properties: We believe that smaller
($500,000 to $10,000,000) retail net-leased properties represent an
attractive investment opportunity in today's real estate environment.
Due to the complexities of acquiring and managing a large portfolio of
relatively small assets, we believe that these types of properties have
not experienced significant institutional participation or the
corresponding yield reduction experienced by larger income producing
properties. We believe the less intensive day to day property
management required by net-lease agreements, coupled with the active
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management of a large portfolio of smaller properties by us, is an
effective investment strategy. The tenants of our freestanding retail
properties generally provide goods and services which satisfy basic
consumer needs. In order to grow and expand, they generally need
capital. Since the acquisition of real estate is typically the single
largest capital expenditure of many of these retailers, our method of
purchasing the property and then leasing it back under a net-lease
arrangement allows the retail chain to free up capital.
- - Investment in New Retail Industries: Though we specialize in single-
tenant properties, we will seek to further diversify our portfolio
among a variety of retail industries. We believe that diversification
will allow us to invest in retail industries that are currently growing
and have characteristics we find attractive. These characteristics
include, but are not limited to, retail industries dominated by local
operators where regional and national chain operators can gain market
share and dominance through more efficient operations, as well as
industries taking advantage of major demographic shifts in the
population base. During 1999, we added two new retail industries to our
portfolio, Entertainment and Theaters, bringing the total number of
retail industries in our portfolio to 23.
- - Diversification: Diversification of the portfolio by retail industry
type, tenant and geographic location is key to our objective of
providing predictable investment results for our stockholders. As we
expand we will seek to further diversify our portfolio. During 1999,
eight new retail chains were added to our portfolio, bringing the total
number of retail chains in our portfolio to 72. These retail chains
operate 1,015 of our properties located in 45 states.
- - Management Specialization: We believe that our management's
specialization in single-tenant retail properties operated under net-
lease agreements is important to meeting our objectives. We plan to
maintain this specialization and will seek to employ and train high
quality professionals in this specialized area of real estate ownership,
finance and management.
- - Technology: We intend to stay at the forefront of technology in our
efforts to efficiently and economically carry out our operations. We
maintain a sophisticated information system that allows us to analyze
our portfolio's performance and actively manage our investments. We
believe that technology and information based systems will play an
increasingly important role in our competitiveness as an investment
manager and source of capital to a variety of industries and tenants.
Page 14
PROPERTIES
==========
As of December 31, 1999, we owned a diversified portfolio of 1,076
properties located in 45 states with over 8.6 million square feet of
leasable space. At December 31, 1999, 1,052 or 97.8% of the 1,076
properties were under net-lease agreements. Net leases typically require
the tenant to be responsible for minimum monthly rent and property
operating expenses including property taxes, insurance and maintenance.
Our net-leased retail properties are primarily leased to regional and
national retail chain store operators. The average leasable retail space
of the 1,076 properties is approximately 8,000 square feet on approximately
56,000 square feet of land. Generally, buildings are single-story
properties with adequate parking on site to accommodate peak retail traffic
periods. The properties tend to be on major thoroughfares with relatively
high traffic counts and adequate access, egress and proximity to a
sufficient population base to constitute a suitable market or trade area
for the retailer's business.
The table on the next page sets forth certain information regarding our
1,076 properties classified according to the business of the respective
tenants (dollars in thousands):
Page 15
<PAGE>
<TABLE>
Annualized Percentage of Total
Rent as of Rental Revenue for
Number Jan. 1, 2000(1) the Year
of ------------------- -------------------
Prop- Rental Percentage
Industry erties Revenue of Total 1999 1998 1997
- -------------------- ------ -------- ---------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Apparel Stores 5 $ 3,927 3.4% 3.8% 4.1% 0.7%
Automotive Parts 141 9,707 8.3 8.6 7.8 9.1
Automotive Service 105 6,723 5.7 6.6 7.5 6.4
Book Stores 1 450 0.4 0.5 0.6 0.5
Business Services 1 124 0.1 0.1 * --
Child Care 336 28,275 24.2 25.3 29.2 35.9
Consumer Electronics 37 4,659 4.0 4.4 5.4 6.5
Convenience Stores 104 9,759 8.3 7.2 6.1 5.5
Craft and Novelty 2 425 0.4 0.4 * --
Drug Stores 1 235 0.2 0.2 0.1 --
Entertainment 6 2,293 2.0 1.2 -- --
General Merchandise 11 687 0.6 0.6 * --
Grocery Stores 2 719 0.6 0.5 * --
Health and Fitness 7 3,930 3.4 0.6 0.1 --
Home Furnishings 34 6,107 5.2 6.5 7.8 5.6
Home Improvement 34 4,281 3.7 3.6 * --
Office Supplies 8 2,476 2.1 2.6 3.0 1.7
Pet Supplies and
Services 8 1,612 1.4 1.1 0.6 0.2
Private Education 6 1,695 1.4 1.2 0.9 --
Restaurants 177 14,355 12.3 13.3 16.2 19.8
Shoe Stores 4 1,234 1.0 1.1 0.8 0.2
Theaters 2 2,406 2.1 0.6 -- --
Video Rental 35 4,510 3.8 4.3 3.8 0.6
Other 9 6,331 5.4 5.7 6.0 7.3
- -------------------- ------ -------- ------ ------ ------ ------
Totals 1,076 $116,920 100.0% 100.0% 100.0% 100.0%
==================== ====== ======== ====== ====== ====== ======
</TABLE>
* Less than 0.1%
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 2000 for each of the properties by 12 and adding
the previous twelve month's historic percentage rent, which totaled $1.7
million (i.e., additional rent calculated as a percentage of the tenant's
gross sales above a specified level). For the properties under
construction, an estimated contractual base rent is used based upon the
estimated total costs of each property.
</FN>
Page 16
<PAGE>
Of the 1,076 properties in the portfolio at January 1, 2000, 1,069 were
single-tenant properties with the remaining properties being multi-tenant
properties. As of January 1, 2000, 1,052 of the 1,069 single-tenant
properties, or 98.4%, were leased with an average remaining lease term
(excluding extension options) of approximately 8.7 years.
During 1999, 31 of our leases expired. Of these leases, 26 were released
to the same tenant, four were leased to different tenants in the same
industry and one location is being marketed for lease or sale.
The following table sets forth certain information regarding the timing of
the initial lease term expirations (excluding extension options) on our
1,052 net leased, single-tenant retail properties as of January 1, 2000
(dollars in thousands).
<TABLE>
Number of Percent of
Leases Annualized Annualized
Year Expiring (2) Rent (1) (2) Rent
- ------ ------------ -------------- ----------
<S> <C> <C> <C>
2000 38 $ 2,017 1.8%
2001 48 3,958 3.6
2002 84 6,728 6.0
2003 72 5,888 5.3
2004 119 9,926 8.9
2005 82 6,098 5.5
2006 28 2,546 2.3
2007 94 6,494 5.8
2008 67 5,812 5.2
2009 29 3,270 3.0
2010 42 3,371 3.0
2011 35 5,315 4.8
2012 50 5,738 5.1
2013 96 15,580 13.9
2014 40 6,859 6.1
2015 30 3,326 3.0
2016 13 2,011 1.8
2017 11 4,130 3.7
2018 16 1,614 1.4
2019 52 8,755 7.8
2024 2 605 0.5
2033 2 1,118 1.0
2034 2 570 0.5
------- ---------- -------
Totals 1,052 $111,729 100.0%
======= ========== =======
</TABLE>
[FN]
(1) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of January 1, 2000 for each of the properties by 12 and adding
the previous twelve month's historic percentage rent, which totaled $1.7
million (i.e., additional rent calculated as a percentage of the tenant's
Page 17
<PAGE>
gross sales above a specified level.) For properties under construction,
an estimated contractual base rent is used based upon the estimated total
costs of each property.
(2) This table does not include seven multi-tenant properties and 17
vacant unleased single-tenant properties owned by the Company. The lease
expirations for properties under construction are based on the estimated
date of completion of these properties.
</FN>
The following table sets forth certain state-by-state information regarding
Realty Income's portfolio at January 1, 2000 (dollars in thousands).
<TABLE>
Approximate Percent of
Number of Percent Leasable Annualized Annualized
State Properties Leased Square Feet Rent (1) Rent
- ------------ ---------- ------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Alabama 9 100% 63,300 $ 628 0.5%
Arizona 31 99 211,700 3,060 2.6
Arkansas 5 100 36,700 614 0.5
California 61 95 1,031,300 13,741 11.8
Colorado 44 96 280,500 3,809 3.3
Connecticut 10 100 223,800 2,979 2.6
Delaware 1 100 5,400 72 0.1
Florida 87 99 947,800 12,676 10.8
Georgia 59 97 331,000 5,515 4.7
Idaho 11 100 52,000 752 0.6
Illinois 35 100 258,300 3,639 3.1
Indiana 29 100 170,400 2,213 1.9
Iowa 10 100 67,900 692 0.6
Kansas 23 100 240,500 2,629 2.3
Kentucky 13 100 43,500 1,114 1.0
Louisiana 5 100 39,600 501 0.4
Maryland 8 100 48,300 727 0.6
Massachusetts 8 100 57,500 1,069 0.9
Michigan 10 100 68,100 973 0.8
Minnesota 25 100 261,500 2,849 2.4
Mississippi 16 100 152,100 1,282 1.1
Missouri 33 100 204,500 2,600 2.2
Montana 2 100 30,000 289 0.3
Nebraska 10 100 98,700 1,240 1.1
Nevada 7 100 86,400 1,323 1.1
New Hampshire 1 100 6,400 130 0.1
New Jersey 4 75 45,400 586 0.5
New Mexico 5 100 46,000 339 0.3
New York 20 95 253,300 4,723 4.0
North Carolina 33 91 174,200 2,936 2.4
North Dakota 1 100 22,000 65 0.1
Ohio 67 100 341,200 5,400 4.6
(table continued next page)
Page 18
(table continued)
Approximate Percent of
Number of Percent Leasable Annualized Annualized
State Properties Leased Square Feet Rent (1) Rent
- ------------ ---------- ------- ----------- ---------- ----------
Oklahoma 17 100 102,200 1,284 1.1
Oregon 17 100 92,400 1,225 1.1
Pennsylvania 23 100 168,600 2,296 2.0
South Carolina 48 98 147,000 3,924 3.4
South Dakota 2 100 12,600 170 0.2
Tennessee 25 96 221,300 2,652 2.3
Texas 155 100 1,290,700 13,958 11.9
Utah 8 100 51,700 701 0.6
Virginia 30 93 140,800 2,843 2.4
Washington 43 100 252,600 3,326 2.9
West Virginia 2 100 16,800 156 0.1
Wisconsin 19 100 231,900 2,954 2.5
Wyoming 4 100 20,100 266 0.2
------ ------ --------- ---------- -------
Totals/Average 1,076 98% 8,648,000 $116,920 100.0%
====== ====== ========= ========== =======
</TABLE>
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 2000 for each of the properties by 12 and adding
the previous twelve month's historic percentage rent, which totaled $1.7
million (i.e., additional rent calculated as a percentage of the tenant's
gross sales above a specified level). For the properties under
construction, an estimated contractual base rent is used based upon the
estimated total costs of each property.
</FN>
Page 19
<PAGE>
The following table sets forth certain information regarding the properties
owned by Realty Income as of January 1, 2000, classified according to the
business of the respective tenants (dollars in thousands).
<TABLE>
Percent of
Number of Annualized Annualized
Industry Properties Rent (1) Rent
- -------- ---------- ---------- ----------
<S> <C> <C> <C>
Tenants providing services
- --------------------------
Automotive Service 105 $ 6,723 5.7%
Child Care 336 28,275 24.2
Entertainment 6 2,293 2.0
Health and Fitness 7 3,930 3.4
Private Education 6 1,695 1.4
Theaters 2 2,406 2.1
Other 9 6,331 5.4
---------- ---------- ----------
471 51,653 44.2
---------- ---------- ----------
Tenants selling goods and services
- ----------------------------------
Automotive Parts 60 5,100 4.4
Business Services 1 124 0.1
Convenience Stores 104 9,759 8.3
Home Improvement 21 2,903 2.5
Pet Supplies and Services 6 1,146 1.0
Restaurants 177 14,355 12.3
Video Rental 35 4,510 3.8
---------- ---------- ----------
404 37,897 32.4
---------- ---------- ----------
Tenants selling goods
- ---------------------
Apparel Stores 5 3,927 3.4
Automotive Parts 81 4,606 3.9
Book Stores 1 450 0.4
Consumer Electronics 37 4,659 4.0
Craft and Novelty 2 425 0.4
Drug Stores 1 235 0.2
General Merchandise 11 687 0.6
Grocery Stores 2 719 0.6
Home Furnishings 34 6,107 5.2
Home Improvement 13 1,378 1.2
Office Supplies 8 2,476 2.1
Pet Supplies 2 467 0.4
Shoe Stores 4 1,234 1.0
---------- ---------- ----------
201 27,370 23.4
---------- ---------- ----------
TOTALS 1,076 $ 116,920 100.0%
========== ========== ==========
</TABLE> Page 20
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 2000 for each of the properties by 12 and adding
the previous twelve month's historic percentage rent, which totaled $1.7
million (i.e., additional rent calculated as a percentage of the tenant's
gross sales above a specified level). For the properties under
construction, an estimated contractual base rent is used based upon the
estimated total costs of each property.
</FN>
DESCRIPTION OF LEASING STRUCTURE. At December 31, 1999, 1,052 or 97.8% of
the Company's 1,076 properties were leased pursuant to net leases. In most
cases, the leases:
- Were for initial terms of from 10 to 20 years and the tenant has an
option to extend the initial term;
- In general, the leases require the tenant to pay property taxes,
insurance, and expenses of maintaining the property;
- Generally provide for a minimum base rent plus future increases
(typically subject to ceilings) based on increases in the consumer
price index, additional rent based upon the tenant's gross sales
above a specified level (i.e., percentage rent) or fixed increases.
Where leases provide for rent increases based on increases in the
consumer price index, generally these increases permanently become
part of the base rent. Where leases provide for percentage rent,
this additional rent is typically payable only if the tenant's gross
sales for a given period (usually one year) exceed a specified
level, and then is typically calculated as a percentage of only the
amount of gross sales in excess of that level.
Matters Pertaining to Certain Properties and Tenants
- ----------------------------------------------------
Seventeen of our properties were vacant as of January 1, 2000 (all of which
are single-tenant properties) and available for lease. Eight of the vacant
properties were previously leased to automotive service facility operators,
three to restaurant operators, two to automotive parts store operators, two
to child care operators, one to a home furnishings store operator and one
to a convenience store operator. As of January 1, 2000, 19 of our
properties under lease were vacant and available for sublease by the
tenants, all of which were current with their rent and other obligations.
Our two largest tenants are Children's World Learning Centers and La Petite
Academy, which accounted for approximately 13.8% and 10.3%, respectively,
of our rental revenue for the year ended December 31, 1999. No other
tenant comprised 10% or more of our rental revenue. In general, a downturn
in the industry represented by these tenants, whether nationwide or limited
to specific sectors of the United States, could adversely affect tenants in
this industry, which in turn could materially adversely affect our
financial position and results of operations and our ability to make
distributions to stockholders and debt service payments. In addition, a
Page 21
<PAGE>
substantial number of our properties are leased to middle market retail
chains which generally have more limited financial and other resources than
certain upper market retail chains, and therefore are more likely to be
adversely affected by a downturn in their respective business or in the
regional or national economy generally.
Our tenants in the child care and restaurant industries accounted for
approximately 25.3% and 13.3%, respectively, of our rental revenue for the
year ended December 31, 1999. A downturn in any of these industries
generally, whether nationwide or limited to specific sectors of the United
States, could adversely affect tenants in those industries, which in turn
could materially adversely affect our financial position and results of
operations and our ability to make distributions to stockholders and debt
service payments.
In November 1999, Econo Lube N' Tune filed for reorganization under Chapter
11 of the Federal Bankruptcy Code, and rejected nine of our 34 leases with
them. One of the rejected locations was leased to another tenant in
December 1999, and we anticipate the remaining eight locations to be leased
or sold during the second or third quarter of 2000. Econo Lube N' Tune is
currently operating the remaining 25 locations, and we anticipate that they
will accept these locations, although we cannot assure you that they will
continue to pay rent for the remaining terms of the leases.
Development of Certain Properties
- ---------------------------------
Of the 110 New Properties we acquired in 1999, 102 were occupied as of
March 1, 2000 and the remaining 8 were pre-leased and under construction
pursuant to contracts under which tenants or developers have agreed to
develop the properties (with development costs funded by us) with rent
commencing when the premises open for business. In the case of development
properties, we either enter into an agreement with a tenant where the
tenant retains a contractor to construct the improvements and we fund the
costs of that development, or we fund a developer who constructs the
improvements. In either case, there is an executed lease and there is a
requirement to complete the construction on a timely basis, generally
within eight months after we purchase the land. Generally, the tenant or
developer is required to pay construction cost overruns to the extent they
exceed the construction budget by more than a predetermined amount. We
also enter into a lease with the tenant at the time we purchase the land,
which generally requires that the tenant begin paying base rent, calculated
as a percentage of our acquisition cost for the property, including
construction costs and capitalized interest, when the premises open for
business. During 1999, we acquired 37 development properties, 29 of which
have been completed, were operating and paying rent as of March 1, 2000.
We will continue to seek to acquire land for development under similar
arrangements.
Page 22
<PAGE>
DISTRIBUTION POLICY
===================
Distributions are paid to our common stockholders and Class C Preferred
stockholders on a monthly basis and paid to our Class B Preferred
stockholders on a quarterly basis if, as and when declared by our Board of
Directors. The Class B Preferred receive cumulative distributions at a
rate of 9.375% per annum of the $25 per share liquidation preference
(equivalent to $2.344 per annum per share). The Class C Preferred receive
cumulative distributions at a rate of 9.5% per annum of the $25 per share
liquidation preference (equivalent to $2.375 per annum per share).
The March 2000 distribution of $0.18 per common share represents a current
annualized distribution of $2.16 per share, and an annualized distribution
yield of approximately 10.4% based on the last reported sale price of
$20.75 of our common stock, on the NYSE on March 1, 2000. In order to
maintain our tax status as a REIT for federal income tax purposes, we are
generally required to distribute dividends to our stockholders aggregating
annually at least 95% of our REIT taxable income (determined without regard
to the dividends paid deduction and by excluding net capital gains). In
1999, our distributions totaled approximately 109.5% of our REIT taxable
income. We intend to continue to make distributions to our stockholders
that are sufficient to meet this requirement.
Future distributions by us will be at the discretion of our Board of
Directors and will depend on, among other things, our results of
operations, financial condition and capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), our debt service requirements and
other factors as the Board of Directors may deem relevant. In addition,
our credit facilities contain financial covenants which could limit the
amount of distributions payable by us in the event of a deterioration in
the results of operations or financial condition of the Company, and which
prohibit the payment of distributions on the common or preferred stock in
the event that we fail to pay when due (subject to any applicable grace
period) any principal or interest on borrowings under our credit
facilities.
Distributions by us to the extent of our current and accumulated earnings
and profits for federal income tax purposes generally will be taxable to
stockholders as ordinary income. Distributions in excess of earnings and
profits generally will be treated as a non-taxable reduction in the
stockholders' basis in its stock to the extent of that basis, and
thereafter as a gain from the sale of the stock. Approximately 9.5% of the
distributions made or deemed to have been made in 1999 were classified as a
return of capital for federal income tax purposes. We are unable to
predict the portion of 2000 or future distributions which may be classified
as a return of capital since the amount depends on our taxable income for
the entire year.
Page 23
<PAGE>
OTHER ITEMS
===========
COMPETITION FOR ACQUISITION OF REAL ESTATE. We face competition in the
acquisition, operation and sale of property. We expect competition from:
- Businesses;
- Individuals;
- Fiduciary accounts and plans; and
- Other entities engaged in real estate investment.
Some of these competitors are larger than we are and have greater financial
resources. This competition may result in a higher cost for properties
that we wish to purchase.
The tenants leasing our properties generally face significant competition
from other operators. This competition may adversely impact:
- That portion, if any, of the rental stream to be paid to us based on
a tenant's revenues; and
- The tenants' results of operations or financial condition.
ENVIRONMENTAL LIABILITIES. Investments in real property can create a
potential for environmental liability. An owner of property can face
liability for environmental contamination created by the presence or
discharge of hazardous substances on the property. We face such liability
regardless of:
- Our knowledge of the contamination;
- The timing of the contamination;
- The cause of the contamination; or
- The party responsible for the contamination of the property.
We are not aware of any material environmental problems at this time;
however, there may be environmental problems associated with our properties
that we are unaware of. In that regard, a number of our properties are
leased to operators of oil change and tune-up facilities, and convenience
stores that sell petroleum-based fuels. These facilities, or other of our
properties, use, or may have used in the past, underground tanks for the
storage of petroleum-based or waste products which could create a potential
for release of hazardous substances.
The presence of hazardous substances on a property may adversely affect our
ability to sell that property and we may incur substantial remediation
costs. Although our leases generally require our tenants to operate in
compliance with all applicable federal, state and local laws, ordinances
and regulations and to indemnify us against any environmental liabilities
arising from the tenant's activities on the property, we could nevertheless
be subject to strict liability by virtue of our ownership interest, and
there can be no assurance that our tenants would satisfy their
indemnification obligations under the leases.
Page 24
<PAGE>
We believe that our properties comply in all material respects with all
federal, state and local laws, ordinances and regulations regarding
hazardous or toxic substances or petroleum products.
We have not been notified by any governmental authority, and are not
otherwise aware, of any material noncompliance, liability or claim relating
to hazardous or toxic substances or petroleum products in connection with
any of our present properties. Nevertheless, if environmental
contamination should exist, we could be subject to strict liability by
virtue of our ownership interest.
Since December 1996, the Company has maintained an environmental insurance
policy on the property portfolio. The limit of the policy is $10 million
for each loss and $25 million in the aggregate, with a $100,000 deductible.
There is a sublimit on properties with underground storage tanks of $1
million per occurrence and $5 million in the aggregate, with a deductible
of $25,000.
TAXATION OF THE COMPANY. We believe that we have operated, and we intend
to continue to operate, so as to qualify as a REIT under Sections 856
through 860 of the Code, commencing with our taxable year ended December
31, 1994. Although we believe that we are in compliance with all REIT
qualification rules and we are organized and operate as a REIT, we can not
completely assure you that we will continue to be so organized or that we
will be able to operate in a manner so as to qualify or remain so
qualified.
Qualification as a REIT involves the satisfaction of numerous requirements
under highly technical and complex Code provisions for which there are only
limited judicial and administrative interpretations, and the determination
of various factual matters and circumstances not entirely within our
control.
We cannot assure you that legislation, new regulations, administrative
interpretations or court decisions will leave unchanged the tax laws with
respect to qualification as a REIT or the federal income tax consequences
of those qualifications.
If we were to fail to qualify as a REIT in any taxable year:
- We would be subject to federal income tax (including any applicable
alternative minimum tax) on our taxable income at regular corporate
rates;
- We would not be allowed a deduction in computing our taxable income
for amounts distributed to our stockholders;
- We would be disqualified from treatment as a REIT for the four
taxable years following the year during which qualification is lost.
This treatment would substantially reduce our net earnings available
for investment or distribution to stockholders because of the
additional tax liability for the years involved; and
- We would no longer be required to make distributions to
stockholders.
Page 25
<PAGE>
Even if we qualify for and maintain our REIT status, we are subject to
certain federal, state and local taxes on our income and property. For
example, if we have net income from a prohibited transaction, that income
will be subject to a 100% tax.
EFFECT OF DISTRIBUTION REQUIREMENTS. To maintain our status as a REIT for
federal income tax purposes, we generally are required to distribute to our
stockholders at least 95% of our taxable income each year. This taxable
income is determined without regard to the dividends paid deduction and by
excluding net capital gains.
We are also subject to tax at regular corporate rates to the extent that we
distribute less than 100% of our taxable income (including net capital
gains) each year.
In addition, we are subject to a 4% nondeductible excise tax on the amount,
if any, by which certain distributions paid by us with respect to any
calendar year are less than the sum of 85% of our ordinary income for that
calendar year, 95% of our capital gain net income for the calendar year,
and any amount of that income that was not distributed in prior years.
We intend to continue to make distributions to our stockholders to comply
with the distribution requirements of the Code and to reduce exposure to
federal income taxes and the nondeductible excise tax.
Differences in timing between the receipt of income and the payment of
expenses in arriving at taxable income and the effect of required debt
amortization payments could require us to borrow funds on a short-term
basis to meet the distribution requirements that are necessary to achieve
the tax benefits associated with qualifying as a REIT.
DILUTION OF COMMON STOCK. Our future growth will depend in large part upon
our ability to raise additional capital. If we were to raise additional
capital through the issuance of equity securities, we could dilute the
interests of holders of common stock. Likewise, our Board of Directors is
authorized to cause us to issue preferred stock of any class or series
(with dividend, voting and other rights as determined by the Board of
Directors). Accordingly, the Board of Directors may authorize the issuance
of preferred stock with voting, dividend and other similar rights that
could dilute, or otherwise adversely affect, the interests of holders of
Common Stock.
REAL ESTATE OWNERSHIP RISKS. We are subject to all of the general risks
associated with the ownership of real estate. In particular we face the
risk that rental revenue from the properties will be insufficient to cover
all corporate operating expenses and debt service payments on indebtedness
we incur. Additional real estate ownership risks include:
- Adverse changes in general or local economic conditions;
- Changes in supply of or demand for similar or competing properties;
- Changes in interest rates and operating expenses;
- Competition for tenants;
Page 26
<PAGE>
- Changes in market rental rates;
- Inability to lease properties upon termination of existing leases;
- Renewal of leases at lower rental rates;
- Inability to collect rents from tenants due to financial hardship,
including bankruptcy, and sales declines due to the impact from
Internet commerce;
- Changes in tax, real estate, zoning and environmental laws that may
have an adverse impact upon the value of real estate;
- Uninsured property liability;
- Property damage or casualty losses;
- Unexpected expenditures for capital improvements or to bring
properties into compliance with applicable federal, state and local
laws; and
- Acts of God and other factors beyond the control of our management.
DEPENDENCE ON KEY PERSONNEL. We depend on the efforts of our executive
officers and key employees. The loss of the services of our executive
officers and key employees could have a material adverse effect on our
operations.
ITEM 2: PROPERTIES
- -------------------
Information pertaining to our properties can be found under Item 1.
ITEM 3: LEGAL PROCEEDINGS
- --------------------------
The Company is subject to certain claims and lawsuits, the outcome of which
are not determinable at this time. In the opinion of management, any
liability that might be incurred by the Company upon the resolution of
these claims and lawsuits will not, in the aggregate, have a material
adverse effect on the Company's consolidated financial statements taken as
a whole.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matters were submitted to stockholders during the fourth quarter of the
fiscal year.
Page 27
<PAGE>
PART II
=======
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
- ----------------------------------------------------------
A. The common stock of the Company is traded on the New York Stock
Exchange under the ticker symbol "O." The following table shows the high
and low sales prices per share for our common stock as reported by the New
York Stock Exchange composite tape, and distributions declared per share of
common stock by us for the periods indicated.
<TABLE> Price Per Share
of Common Stock
------------------- Distributions
1999 High Low Declared (1)
<S> <C> <C> <C>
- -----------------------------------------------------------------
First quarter $24.8750 $20.3750 $0.5125
Second quarter 25.0000 20.8125 0.5200
Third quarter 24.3125 22.3125 0.5275
Fourth quarter 23.6250 20.0000 0.5350
-------
$2.0950
=======
</TABLE>
[FN]
(1) Common stock distributions currently are declared monthly by us based
on financial results for the prior months. At December 31, 1999 a
distribution of $0.18 per common share had been declared and was paid on
January 18, 2000.
</FN>
<TABLE> Price Per Share
of Common Stock
------------------- Distributions
1998 High Low Declared
- -----------------------------------------------------------------
<S> <C> <C> <C>
First quarter $27.1875 $25.2500 $0.4825
Second quarter 27.2500 25.4375 0.4900
Third quarter 27.3750 23.4375 0.4975
Fourth quarter 25.6875 23.9375 0.5050
-------
$1.9750
=======
B. There were approximately 13,600 holders of record of Realty Income's
shares of common stock as of March 1, 2000.
Page 28
ITEM 6: SELECTED FINANCIAL DATA
- --------------------------------
(not covered by Independent Auditors' Report)
</TABLE>
<TABLE> As of or for the years ended December 31,
(dollars in thousands, except per share data)
--------------------------------------------------
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Total assets
(book value) $ 905,404 $ 759,234 $ 577,021 $ 454,097 $ 417,639
Cash and cash
equivalents 773 2,533 2,123 1,559 1,650
Lines of credit and
notes payable 349,200 294,800 132,600 70,000 18,597
Total
liabilities 370,573 309,025 143,706 79,856 36,218
Stockholders'
equity 534,831 450,209 433,315 374,241 381,421
Net cash provided
by operating
activities 72,154 64,645 52,692 48,073 40,312
Net change in
cash and cash
equivalents (1,760) 410 564 (91) (10,023)
Total revenue 104,510 85,132 67,897 56,957 51,555
Income from
operations 45,295 41,004 33,688 30,768 25,582
Gain on sales
of properties 1,301 526 1,082 1,455 18
Extraordinary item (355) -- -- -- --
Cumulative effect of
change in accounting
principle -- (226) -- -- --
Net income 46,241 41,304 34,770 32,223 25,600
Preferred stock
dividends (5,229) -- -- -- --
Net income available
to common stock-
holders 41,012 41,304 34,770 32,223 25,600
Distributions
paid to common
stockholders 55,925 52,301 44,367 48,079 36,710
(table continued on next page)
Page 29
<PAGE>
(table continued)
As of or for the years ended December 31,
(dollars in thousands, except per share data)
--------------------------------------------------
1999 1998 1997 1996 1995
========== ========== ========== ========== ==========
Ratio of earnings to
fixed charges (1) 2.7x 3.8x 5.1x 13.7x 9.9x
Ratio of earnings to
combined fixed
charges and pre-
ferred stock
dividends (1) 2.3x 3.8x 5.1x 13.7x 9.9x
Basic and diluted
net income per
common share 1.53 1.55 1.48 1.40 1.27
Distributions
paid per common
share (2) 2.085 1.965 1.893 2.093 1.825
Distributions
declared per common
share (2) 2.095 1.975 1.895 1.710 2.215
Basic weighted
average number
of common shares
outstanding 26,822,285 26,629,936 23,568,831 22,976,789 20,230,886
Diluted weighted
average number
of common shares
outstanding 26,826,090 26,638,284 23,572,715 22,977,837 20,230,963
</TABLE>
[FN]
(1) Ratio of Earnings to Fixed Charges is calculated by dividing earnings
by fixed charges. For this purpose, earnings consist of net income before
interest expense. Fixed charges are comprised of interest costs (including
capitalized interest) and the amortization of debt issuance costs.
(2) 1996 distributions paid per common share and 1995 distributions
declared per common share include a special distribution of $0.23 per
share.
</FN>
Page 30
<PAGE>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------
GENERAL
- -------
Realty Income Corporation, "The Monthly Dividend Company", a Maryland
corporation ("Realty Income", the "Company", "us", "we" or "our") is
organized to operate as an equity real estate investment trust ("REIT").
We are a fully integrated self-administered real estate company with in-
house acquisition, leasing, legal, retail research, real estate research,
portfolio management and capital markets expertise. As of December 31,
1999, we owned a diversified portfolio of 1,076 retail properties located
in 45 states with over 8.6 million square feet of leasable space.
Our primary business objective is to generate dependable monthly dividends
from a consistent and predictable level of funds from operations ("FFO")
per share. Additionally, we generally will seek to increase distributions
to stockholders and FFO per share through both active portfolio management
and the acquisition of additional properties.
LIQUIDITY AND CAPITAL RESOURCES
===============================
Cash Reserves
Realty Income is organized for the purpose of operating as an equity REIT
which acquires and leases properties and distributes to stockholders, in
the form of monthly cash distributions, a substantial portion of its net
cash flow generated from leases on its retail properties. We intend to
retain an appropriate amount of cash as a working capital reserve. At
December 31, 1999, Realty Income had cash and cash equivalents totaling
$773,000.
We believe that our cash and cash equivalents on hand, cash provided from
operating activities and borrowing capacity are sufficient to meet our
liquidity needs for the foreseeable future. We intend, however, to use
additional sources of capital to fund property acquisitions and to repay
our acquisition credit facility.
Capital Funding
We have a $200 million, three-year revolving, unsecured acquisition credit
facility that expires in December 2002 and a $25 million, three-year
revolving, unsecured credit facility that expires in 2003. The credit
facilities currently bear interest at 1.225% over the London Interbank
Offered Rate, or LIBOR, and offers us other interest rate options. As of
March 1, 2000, borrowing capacity of $70.7 million was available to us
under the $200 million credit facility and $25 million was available under
the $25 million credit facility. At that time, the outstanding
Page 31
<PAGE>
balances on the $200 million credit facility was $129.3 million with an
effective interest rate of 7.33%. These credit facilities have been and
are expected to be used to acquire additional retail properties leased to
national and regional retail chains under long-term lease agreements. The
$25 million credit facility can also be used for making capital
contributions to subsidiaries for the purpose of acquiring properties. Any
additional borrowings will increase our exposure to interest rate risk.
We expect to meet our long-term capital needs for the acquisition of
properties through the issuance of public or private debt or equity. In
June 1999, we filed a universal shelf registration statement with the
Securities and Exchange Commission covering up to $400 million in value of
common stock, preferred stock and debt securities. Through March 1, 2000,
$34.5 million in value of common stock, preferred stock and debt securities
has been issued under the universal shelf registration statement.
Historically, we have met our long-term capital needs through the issuance
of common stock, preferred stock and investment grade long-term unsecured
debt. We believe that the Company is best served by having the majority of
our future issuances of securities be in the form of common stock. We will
issue common stock when we believe that the share price of our common stock
is at a level that allows for the proceeds of any offering to be invested
on an accretive basis into additional properties or to pay down any short-
term borrowings on our credit facilities. We do not presently view our
price per share as attractive for additional issuances of common stock.
We do not anticipate issuing additional shares of common stock until we
determine the common stock price has risen to acceptable levels. In
addition, we seek to maintain a conservative debt level on our balance
sheet, which should result in conservative interest and fixed charge
coverage ratios. We do not anticipate issuing significant amounts of
additional debt until additional equity can also be issued to offset the
increase in debt. If the share price levels do not increase and we do not
issue additional equity or debt, we will reduce our level of property
acquisitions. In these circumstances, we intend to achieve our growth
objectives by investing cash flow in excess of distributions in additional
retail properties and purchases of our outstanding securities, and by
strategically selling properties that have appreciated in value and
investing the proceeds in new properties that will generate rental revenue
in excess of those generated by the properties that were sold.
In January 1999, we issued $20 million of 8.0% unsecured senior notes due
2009. The 1999 notes were sold at 98.757% of par to yield 8.1%. The
proceeds from the offering were used to pay down bank borrowings.
Currently, there is no formal trading market for the 1999 notes and we have
not listed and do not intend to list the 1999 notes on any securities
exchange.
In May 1999, we issued 2,760,000 shares of 9 3/8% Class B cumulative
redeemable preferred stock (the "Class B Preferred") at a price of $25.00
per share. The Class B Preferred trades on the New York Stock Exchange, or
NYSE, under the symbol "OprB" and its cusip number is 756109-302.
Page 32
<PAGE>
Dividends on the Class B Preferred are payable quarterly. The net proceeds
of $66.5 million were used to repay bank borrowings.
In July 1999, we issued 1,380,000 shares of 9 1/2% Class C cumulative
redeemable preferred stock (the "Class C Preferred") at a price of $25.00
per share. The Class C Preferred trades on the NYSE under the symbol
"OprC" and its cusip number is 756109-500. Dividends on the Class C
Preferred are payable monthly. The net proceeds of $33.2 million were used
to repay bank borrowings.
We received investment grade corporate credit ratings on our senior
unsecured debt from Duff & Phelps Rating Company, Moody's Investor Service,
Inc., and Standard & Poor's Rating Group in December 1996. Currently, Duff
& Phelps has assigned a rating of BBB, Moody's has assigned a rating of
Baa3, and Standard & Poor's has assigned a rating of BBB- to our senior
debt. These ratings could change based upon, among other things, our
results of operations and financial condition.
We have also received credit ratings from the same rating agencies on our
preferred stock. Duff & Phelps Rating Company has assigned a rating of
BBB-, Moody's Investor Service, Inc. has assigned a rating of Ba1, and
Standard & Poor's Rating Group has assigned a rating of BB+. These ratings
could change based upon, among other things, our results of operations and
financial condition.
Property Acquisitions
During 1999, we acquired 110 additional properties (the "New Properties"),
and selectively sold three properties, increasing the number of properties
in the portfolio by 10.9% to 1,076 properties at December 31, 1999 from 970
properties at December 31, 1998. During 1999, we diversified our portfolio
with the addition of two new industry segments, Entertainment and Theaters,
and eight new retail chains. As of December 31, 1999, our portfolio of
1,076 properties consists of 72 separate retail chains doing business in 23
separate retail segments.
During 1999, we invested $181.4 million in New Properties and properties
under development (including accrued development costs of $9.1 million and
excluding estimated unfunded development costs on properties under
construction at December 31, 1999 of $15.4 million). During 1999, we also
paid $242,000 for lease commissions and $148,000 for building improvements
on existing properties in our portfolio. The weighted average annual
unleveraged return on the $181.4 million invested in 1999 is estimated to
be 10.5%, computed as estimated contractual net operating income (which in
the case of a net leased property is equal to the base rent or, in the case
of properties under construction, the estimated base rent under the lease)
for the first year of each lease, divided by the estimated total costs.
Since it is possible that a tenant could default on the payment of
contractual rent, we cannot assure you that the actual return on the funds
invested will not differ from the foregoing percentage.
Page 33
<PAGE>
The New Properties are leased to 21 separate tenants operating in 16
different retail industries, are located in 26 states, will contain
approximately 948,000 leasable square feet and are 100% leased under net
leases, with an average initial lease term of 17.4 years. Of the New
Properties, 102 were occupied as of March 1, 2000 and the remaining
properties were pre-leased and under construction pursuant to contracts
under which the tenants or developers have agreed to develop the properties
(with development costs funded by the Company) and with the tenant to begin
paying rent when the premises open for business.
During 1998, we invested $193.4 million in 149 properties and properties
under development (including accrued development costs of $1.3 million and
excluding estimated unfunded development costs on properties under
construction at December 31, 1998 of $19.7 million). The weighted average
annual unleveraged return on the $193.4 million invested in 1998 is
estimated to be 10.4%, computed in the same manner as 1999's estimated
weighted average annual unleveraged return. These 149 properties are
located in 38 states, contain approximately 1.6 million leasable square
feet and are 100% leased with an average initial lease term of 14.9 years.
Distributions
We pay monthly distributions to our common stockholders. We paid cash
distributions to our common stockholders of $55.9 million in 1999, $52.3
million in 1998 and $44.4 million in 1997. During 1999, we paid cash
distributions of $3.9 million to our Class B Preferred stockholders and
$1.4 million to our Class C Preferred stockholders. We pay distributions
quarterly on our Class B Preferred and monthly on our Class C Preferred.
We paid distributions to our common stockholders of $2.085 in 1999, $1.965
in 1998 and $1.893 in 1997. In 1999, we paid dividends per share of $1.40
to our Class B Preferred stockholders and $0.99 to our Class C Preferred
stockholders.
In December 1999, January and February 2000, we declared distributions of
$0.18 per common share, which were paid on January 18, 2000, February 15,
2000 and March 15, 2000, respectively. The monthly distribution of $0.18
per share represents a current annualized distribution of $2.16 per share,
and an annualized distribution yield of approximately 10.4% based on the
last reported sale price of the Company's Common Stock on the NYSE of
$20.75 on March 1, 2000. Although the Company expects to continue its
policy of paying monthly distributions, we cannot assure you that we will
maintain the current level of distributions per share, that we will
continue our pattern of increasing distributions per share, or as to the
actual distribution yield for any future period.
Stock and Senior Debt Repurchase Program
In January 2000, our Board of Directors authorized the purchase of up to
$10 million of our common and preferred shares and senior debt securities
during the next 12 months. We may make periodic purchases on the open
Page 34
<PAGE>
market at prevailing prices or in privately negotiated transactions. The
purchases will be funded using available working capital which consists
primarily of cash flow from operations.
Formation of Subsidiary
In January 2000, we formed Crest Net Lease, Inc., of which we own 95% of
the common stock, all of which is non-voting, and certain members of
management own 5% of the common stock, all of which is voting stock. Crest
Net Lease was created to actively buy and sell certain select properties,
primarily to buyers using tax-deferred exchanges, under Section 1031 of the
Internal Revenue Service Code.
FUNDS FROM OPERATIONS ("FFO")
=============================
FFO for 1999 increased by $3.12 million or 5% to $65.92 million versus
$62.80 million during 1998. FFO during 1997 was $52.35 million.
We define FFO as net income available to common stockholders, plus
depreciation and amortization, plus provision for impairment losses, plus
extraordinary items, less gain on sales of properties. In accordance with
the recommendations of the National Association of Real Estate Investment
Trusts, or NAREIT, we do not add back amortization of deferred financing
costs to net income to calculate FFO. We include amortization of financing
costs in interest expense in the consolidated statements of income.
The following is a reconciliation of net income to FFO and information
regarding distributions paid and the diluted weighted average number of
shares outstanding for 1999, 1998 and 1997 (dollars in thousands):
<TABLE> 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income available to common
stockholders $ 41,012 $ 41,304 $ 34,770
Plus:
Depreciation and amortization 25,952 21,935 18,596
Provision for impairment losses -- -- 165
Extraordinary item 355 -- --
Cumulative effect of change in
accounting principle -- 226 --
Less:
Depreciation of furniture, fixtures
and equipment and amortization of
organization costs (101) (140) (96)
Gain on sales of properties (1,301) (526) (1,082)
-------- -------- --------
Funds From Operations $ 65,917 $ 62,799 $ 52,353
======== ======== ========
(table continued next page)
Page 35
<PAGE>
(table continued)
1999 1998 1997
-------- -------- --------
Distributions paid to
common stockholders $ 55,925 $ 52,301 $ 44,367
FFO in excess of distributions
to common stockholders $ 9,992 $ 10,498 $ 7,986
Diluted weighted average
number of shares outstanding 26,826,090 26,638,284 23,572,715
</TABLE>
We consider FFO to be an appropriate measure of the performance of an
equity REIT. Financial analysts use FFO in evaluating REITs and FFO can be
one measure of a REIT's ability to make cash distribution payments.
Presentation of this information provides the reader with an additional
measure to compare the performance of different REITs, although it should
be noted that not all REITs calculate FFO the same way so comparisons with
other REITs may not be meaningful.
FFO is not necessarily indicative of cash flow available to fund cash needs
and should not be considered as an alternative to net income as an
indication of Realty Income's performance or to cash flows from operating,
investing, and financing activities as a measure of our liquidity or
ability to make cash distributions or to pay debt service.
RESULTS OF OPERATIONS
=====================
THE FOLLOWING IS A COMPARISON OF OUR RESULTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1999 TO THE YEAR ENDED DECEMBER 31, 1998.
Rental revenue was $104.3 million for 1999 versus $84.9 million for 1998,
an increase of $19.4 million, or 18.6%. The increase in rental revenue was
primarily due to the acquisition of 110 properties during 1999 and 149
properties during 1998. These properties generated revenue of $26.87
million in 1999 compared to $7.53 million in 1998, an increase of $19.3
million. At January 1, 2000, annualized contractual lease payments on the
funds invested in properties acquired in 1999 and 1998 are approximately
$37.2 million (excluding estimated rent from eight properties under
development and any percentage rents).
Of the 1,076 properties in the portfolio as of December 31, 1999, 1,069 are
single-tenant properties with the remaining properties being multi-tenant
properties. Of the 1,069 single-tenant properties, 1,052, or 98.4%, were
net leased with an average remaining lease term (excluding extension
options) of approximately 8.7 years. All of our 1,052 leased single-tenant
properties were under leases that provide for increases in rents through:
- Base rent increases tied to a consumer price index with adjustment
ceilings;
- Overage rent based on a percentage of the tenants' gross sales; or
- Fixed increases.
Page 36
Some leases contain more than one of these clauses. Percentage rent, which
is included in rental revenue, was $1.7 million during both 1999 and 1998.
Same store rents generated on 789 leased properties owned during all of
both 1999 and 1998 increased by $618,000 or 0.8%, to $74.34 million from
$73.72 million.
At December 31, 1999, the Company had 17 properties that were not under
lease as compared to five at December 31, 1998 and eight at December 31,
1997. At December 31, 1999, 1,059, or 98.4%, of the 1,076 properties in
the portfolio were under lease agreements with third party tenants. In
February 2000, we issued letters of intent to lease five vacant locations
and letters of intent to sell five other vacant locations. We anticipate
these ten locations to be leased or sold during the second or third quarter
of 2000.
Depreciation and amortization was $26.0 million in 1999 versus $21.9
million in 1998. The increase in 1999 was primarily due to depreciation of
the properties acquired in 1998 and 1999.
Interest expense in 1999 increased by $10.8 million to $24.5 million, as
compared to $13.7 million in 1998. The following is a summary of the five
components of interest expense for 1999 and 1998 (dollars in thousands):
<TABLE>
1999 1998 Net Change
------- ------- ----------
<S> <C> <C> <C>
Interest on outstanding
loans and notes $ 24,254 $ 13,666 $ 10,588
Amortization of settlements
on treasury lock agreements 756 38 718
Credit facility commitment fees 268 232 36
Amortization of credit facility
origination costs and deferred
bond financing costs 839 447 392
Interest capitalized (1,644) (660) (984)
-------- -------- --------
Interest Expense $ 24,473 $ 13,723 $ 10,750
======== ======== ========
Credit facility and
notes outstanding
(dollars in thousands)
Years ended, December 31, 1999 1998 Net Change
- ---------------------------- -------- -------- ----------
Average outstanding balances $325,564 $184,728 $140,836
Average interest rates 7.45% 7.40%
</TABLE>
Interest on outstanding loans and notes was $10.6 million higher in 1999
than in 1998 primarily due to an increase of $140.8 million in the average
Page 37
<PAGE>
outstanding balances and a higher average interest rate. The higher
average interest rate was due to the notes issued in October 1998 and
January 1999.
General and administrative expenses increased by $288,000 to $7.0 million
in 1999 versus $6.7 million in 1998. The increase in general and
administrative expenses was primarily due to a one-time charge taken during
the fourth quarter that was associated with the retirement of our former
President. General and administrative expenses as a percentage of revenue
decreased to 6.7% in 1999 as compared to 7.8% in 1998.
Property expenses are broken down into costs associated with non-net leased
multi-tenant properties, unleased single-tenant properties and general
portfolio expenses. Expenses related to the multi-tenant and unleased
single-tenant properties include, but are not limited to, property taxes,
maintenance, insurance, utilities, property inspections, bad debt expense
and legal fees. General portfolio costs include, but are not limited to,
insurance, legal, property inspections and title search fees.
At December 31, 1999, 17 properties were available for lease as compared to
five at December 31, 1998. Property expenses were $1.8 million in 1999 and
1998. Increases in vacant property costs in 1999 were offset by savings on
our general portfolio insurance.
We review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. We did not take a provision for impairment in 1999 or 1998.
During 1999, we sold three properties (a home furnishings store, a home
improvement store and a restaurant) for $9.4 million and recognized a gain
of $1.3 million. During 1998, we sold five properties (two child care
centers, two restaurants and one multi-tenant location) for $2.8 million
and recognized a gain of $526,000.
In December 1999, our $170 million credit facility was cancelled
simultaneously with the execution of our $200 million credit facility.
Unamortized fees of $355,000 relating to the $170 million credit facility
were charged in 1999 as extraordinary loss on early extinguishment of
credit facility.
In October 1998, we adopted SOP 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 requires that costs incurred during
start-up activities, including organization costs, be expensed as incurred.
Prior to October 1998, organization costs were amortized over 60 months.
In October 1998, the unamortized balance of organization costs of $226,000
was expensed. This is reported on the statements of income as a cumulative
effect of a change in accounting principle.
In 1999, our net income increased 11.9%, to $46.2 million versus $41.3
million in 1998. Rental revenue represented $19.4 million of the increase
and gain on sale of properties represented $775,000. The increase in
rental revenue was due to an increase in rental revenue from properties
Page 38
acquired in 1999 and 1998 of $19.3 million. These increases were
substantially offset by an increase of $14.8 million in the following
expenses:
- Depreciation and amortization of $4.0 million; and
- Interest expense of $10.8 million.
In 1999, we paid preferred stock dividends of $5.2 million. No preferred
stock was outstanding prior to 1999.
THE FOLLOWING IS A COMPARISON OF OUR RESULTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31, 1997.
Rental revenue was $84.9 million for 1998 versus $67.6 million for 1997, an
increase of $17.3 million, or 25.6%. The increase in rental revenue was
primarily due to the acquisition of 149 properties during 1998 and 96
properties during 1997. These properties generated revenue of $22.3
million in 1998 compared to $5.3 million in 1997, an increase of $17.0
million. At January 1, 1999, annualized contractual lease payments on the
funds invested in properties acquired in 1998 and 1997 were approximately
$33.1 million (excluding estimated rent from 19 properties under
development and any percentage rents).
Of the 970 properties in the portfolio as of December 31, 1998, 963 were
single-tenant properties with the remaining properties being multi-tenant
properties. Of the 963 single-tenant properties, 958, or 99.5%, were net
leased with an average remaining lease term (excluding extension options)
of approximately 8.6 years at December 31, 1998.
Percentage rent, which is included in rental revenue, was $1.7 million
during 1998 and $1.8 million in 1997. Same store rents generated on 707
leased properties owned during all of both 1998 and 1997 increased by
$672,000 or 1.1%, to $60.48 million from $59.81 million.
At December 31, 1998, the Company had five properties that were not under
lease as compared to eight at December 31, 1997. At December 31, 1998,
965, or 99.5%, of the 970 properties in the portfolio were under lease
agreements with third party tenants.
Depreciation and amortization was $21.9 million in 1998 versus $18.6
million in 1997. The increase in 1998 was due to depreciation of the
properties acquired in 1998 and 1997.
Interest expense in 1998 increased by $5.5 million to $13.7 million, as
compared to $8.2 million in 1997. The following is a summary of the five
components of interest expense for 1998 and 1997 (dollars in thousands):
Page 39
<PAGE>
<TABLE> 1998 1997 Net Change
------- ------- ----------
<S> <C> <C> <C>
Interest on outstanding
loans and notes $ 13,666 $ 8,043 $ 5,623
Amortization of settlements
on treasury lock agreements 38 (75) 113
Credit facility commitment fees 232 145 87
Amortization of credit facility
origination costs and deferred
bond financing costs 447 281 166
Interest capitalized (660) (168) (492)
-------- -------- --------
Interest Expense $ 13,723 $ 8,226 $ 5,497
======== ======== ========
Credit facility and
notes outstanding
(dollars in thousands)
Years ended, December 31, 1998 1997 Net Change
- ---------------------------- -------- -------- ----------
Average outstanding balances $184,728 $108,431 $ 76,297
Average interest rates 7.40% 7.42%
</TABLE>
Interest on outstanding loans and notes was $5.6 million higher in 1998
than in 1997 due to an increase of $76.3 million in the average outstanding
balances.
General and administrative expenses increased by $1.2 million to $6.68
million in 1998 versus $5.44 million in 1997. The increase in general and
administrative expenses was primarily due to an increase in property
acquisition expenses and employee costs. General and administrative
expenses as a percentage of revenue decreased to 7.8% in 1998 as compared
to 8.0% in 1997. During 1997, we increased our number of employees to 47
from 35. The majority of the new employees were hired in the third quarter
of 1997 and work primarily on new property acquisitions.
Property expenses were $1.8 million in 1998 and 1997. At December 31,
1998, five properties were available for lease as compared to eight at
December 31, 1997.
In 1997, we took a $165,000 charge for impairment losses to reduce the net
carrying value on three properties because they became held for sale. All
of these properties have been sold. We took no provision for impairment in
1998.
During 1998, we sold five properties for $2.8 million and recognized a gain
of $526,000. During 1997, we sold 10 properties (six restaurants, two
child care centers, one automotive parts store and a multi-tenant location)
for a total of $4.4 million and recognized a gain of $1.1 million.
Page 40
In 1998, Realty Income had net income of $41.3 million versus $34.8 million
in 1997. The $6.5 million increase in net income is primarily due to the
increase in rental revenue from properties acquired in 1998 and 1997 of
$17.0 million, which was partially offset by an increase of $10.1 million
in the following expenses:
- Depreciation and amortization of $3.34 million;
- Interest expense of $5.50 million; and
- General and administrative expense of $1.24 million.
THE YEAR 2000 ISSUE
===================
In connection with the Year 2000 issue, we completed the remediation of our
internal computer systems in October 1999. The total cost of remediation
associated with our corporate level computer systems was less than $30,000.
Through March 1, 2000, we have not experienced any Year 2000 erroneous
results or problems.
We are not aware of any Year 2000 problems that have affected the
operations of our tenants or vendors. Through March 1, 2000, any Year 2000
issues that may have impacted our tenants or vendors has not impacted us.
IMPACT OF INFLATION
===================
Tenant leases generally provide for limited increases in rent as a result
of increases in the tenant's sales volumes, increases in the consumer price
index, and/or fixed increases. We expect that inflation will cause these
lease provisions to result in increases in rent over time. During times
when inflation is greater than increases in rent as provided for in the
leases, however, rent increases may not keep up with the rate of inflation.
Approximately 97.8% or 1,052 of the properties in the portfolio are leased
to tenants under net leases in which the tenant is responsible for property
costs and expenses. These features in the leases reduce our exposure to
rising property expenses due to inflation. Inflation and increased costs
may have an adverse impact on our tenants if increases in our tenant's
operating expenses exceed increases in revenue.
Page 41
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
====================================================================
We are exposed to interest rate changes primarily as a result of our credit
facilities and long-term debt used to maintain liquidity and expand our
real estate investment portfolio and operations. Our interest rate risk
management objective is to limit the impact of interest rate changes on
earnings and cash flows and to lower our overall borrowing costs. To
achieve our objectives we borrow primarily at fixed rates and may
selectively enter into derivative financial instruments such as interest
rate lock agreements, interest rate swaps and caps in order to mitigate our
interest rate risk on a related financial instrument. We are not a party
to any derivative financial instruments at December 31, 1999. We do not
enter into any transactions for speculative or trading purposes.
Our interest rate risk is monitored using a variety of techniques. The
table below presents the principal amounts, weighted average interest
rates, fair values and other terms required by year of expected maturity to
evaluate the expected cash flows and sensitivity to interest rate changes
(dollars in table in millions).
<TABLE> Expected Maturity Data
----------------------
There- Fair
2002 after Total Value (2)
---- ------ ------ ---------
<S> <C> <C> <C> <C>
Fixed rate debt -- $230.0(1) $230.0 $199.4
Average interest rate 7.99% 7.99%
Variable rate debt $119.2 -- $119.2 $119.2
Average interest rate 7.35% -- 7.35%
(/TABLE>
<FN>
(1) $110 million matures in 2007, $100 million matures in 2008 and $20
million matures in 2009.
(2) We base the fair value of the fixed rate debt at December 31, 1999 on
the closing market price or indicative price per each note. The fair value
of the variable rate debt approximates its carrying value because its terms
are similar to those available in the market place.
</FN>
The table incorporates only those exposures that exist as of December 31,
1999, it does not consider those exposures or positions that could arise
after that date. As a result, our ultimate realized gain or loss with
respect to interest rate fluctuations will depend on the exposures that
arise during the period, our hedging strategies at the time, and interest
rates.
Page 42
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
</TABLE>
<TABLE>
Table of Contents Page
- ----------------- ----
<S> <C>
A. Independent Auditors' Report............................. 44
B. Consolidated Balance Sheets,
December 31, 1999 and 1998............................. 45
C. Consolidated Statements of Income,
Years ended December 31, 1999, 1998 and 1997........... 47
D. Consolidated Statements of Stockholders' Equity,
Years ended December 31, 1999, 1998 and 1997........... 49
E. Consolidated Statements of Cash Flows,
Years ended December 31, 1999, 1998 and 1997........... 51
F. Notes to Consolidated Financial Statements............... 53
G. Consolidated Quarterly Financial Data,
(unaudited) for 1999 and 1998.......................... 68
H. Schedule III Real Estate and Accumulated
Depreciation is attached to this report. Reference
is made to page F-1 of this report for Schedule III.... F-1
</TABLE>
Schedules not Filed: All schedules, other than that indicated in the Table
of Contents, have been omitted as the required information is inapplicable
or the information is presented in the financial statements or related
notes.
Page 43
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
Realty Income Corporation:
We have audited the consolidated financial statements of Realty Income
Corporation and subsidiaries as listed in the accompanying table of
contents. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule III
listed in the accompanying table of contents. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Realty
Income Corporation and subsidiaries as of December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1999, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule III, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/KPMG LLP
San Diego, California
January 25, 2000,
except as to note 18A,
which is as of February 1, 2000
Page 44
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
===========================
December 31, 1999 and 1998
(dollars in thousands, except per share data)
<TABLE>
1999 1998
========= =========
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $ 350,517 $ 283,043
Buildings and improvements 711,962 606,792
--------- ---------
1,062,479 889,835
Less accumulated depreciation
and amortization (195,386) (171,555)
--------- ---------
Net real estate 867,093 718,280
Cash and cash equivalents 773 2,533
Accounts receivable 3,407 2,973
Goodwill, net 19,053 19,977
Other assets 15,078 15,471
--------- ---------
Total assets $ 905,404 $ 759,234
========= =========
(table continued next page)
Page 45
(table continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
===========================
December 31, 1999 and 1998
(dollars in thousands, except per share data)
1999 1998
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $ 4,828 $ 4,559
Accounts payable and accrued expenses 12,792 4,036
Other liabilities 3,753 5,630
Lines of credit payable 119,200 84,800
Notes payable 230,000 210,000
--------- ---------
Total liabilities 370,573 309,025
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock and paid in capital,
par value $1.00 per share, 20,000,000
shares authorized, 4,140,000 shares
issued and outstanding 99,679 --
Common stock and paid in capital,
par value $1.00 per share, 100,000,000
shares authorized, 26,822,164 and
26,817,103 shares issued and outstanding
in 1999 and 1998, respectively 636,611 636,486
Distributions in excess of net income (201,459) (186,277)
--------- ---------
Total stockholders' equity 534,831 450,209
--------- ---------
Total liabilities and
stockholders' equity $ 905,404 $ 759,234
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 46
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
=================================
Years Ended December 31, 1999, 1998 and 1997
(dollars in thousands, except per share data)
<TABLE>
1999 1998 1997
========== ========== ==========
<S> <C> <C> <C>
REVENUE
Rental $ 104,270 $ 84,876 $ 67,613
Interest and other 240 256 284
---------- ---------- ----------
104,510 85,132 67,897
---------- ---------- ----------
EXPENSES
Depreciation and
amortization 25,952 21,935 18,596
Interest 24,473 13,723 8,226
General and administrative 6,968 6,680 5,437
Property 1,822 1,790 1,785
Provision for impairment
losses -- -- 165
---------- ---------- ----------
59,215 44,128 34,209
---------- ---------- ----------
Income from operations 45,295 41,004 33,688
Gain on sales of properties 1,301 526 1,082
---------- ---------- ----------
Income before extraordinary
item and cumulative
effect of change in
accounting principle 46,596 41,530 34,770
Extraordinary loss on
early extinguishment of
credit facility (355) -- --
Cumulative effect of change
in accounting principle -- (226) --
---------- ---------- ----------
Net income 46,241 41,304 34,770
Preferred stock dividends (5,229) -- --
---------- ---------- ----------
Net income available to
common stockholders $ 41,012 $ 41,304 $ 34,770
========== ========== ==========
(table continued next page)
Page 47
(table continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
=================================
Years Ended December 31, 1999, 1998 and 1997
(dollars in thousands, except per share data)
1999 1998 1997
========== ========== ==========
Basic and diluted amounts per
common share:
Income before extraordinary
item and cumulative
effect of change in
accounting principle $ 1.54 $ 1.56 $ 1.48
Extraordinary item (0.01) -- --
Cumulative effect of change
in accounting principle -- (0.01) --
---------- ---------- ----------
Net income per common share $ 1.53 $ 1.55 $ 1.48
========== ========== ==========
(/TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 48
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
========================================================
Years Ended December 31, 1999, 1998 and 1997
(dollars in thousands)
</TABLE>
<TABLE>
Preferred Common Distri-
Shares of stock stock butions
---------------------- and and in excess
Preferred Common paid in paid in of net
Stock Stock capital capital income Totals
========== ========== ======== ======== ========= ========
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31,
1996 -- 22,979,537 $ -- $538,984 $(164,743) $374,241
Net income -- -- -- -- 34,770 34,770
Distributions
paid and
payable -- -- -- -- (44,860) (44,860)
Shares issued
in stock
offering, net
of offering
costs of $4,193 -- 2,700,000 -- 68,707 -- 68,707
Shares issued -- 22,989 -- 554 -- 554
Shares forfeited -- (4,062) -- (97) -- (97)
---------- ---------- -------- -------- --------- --------
Balance,
December 31,
1997 -- 25,698,464 -- 608,148 (174,833) 433,315
Net income -- -- -- -- 41,304 41,304
Distributions
paid and
payable -- -- -- -- (52,748) (52,748)
Shares issued
in stock
offering, net
of offering
costs of $122 -- 1,123,267 -- 28,379 -- 28,379
Shares issued -- 15,933 -- 400 -- 400
Shares forfeited -- (20,561) -- (441) -- (441)
---------- ---------- -------- -------- --------- --------
Balance,
December 31,
1998 -- 26,817,103 -- 636,486 (186,277) 450,209
(table continued)
Page 49
(continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
========================================================
Years Ended December 31, 1999, 1998 and 1997
(dollars in thousands)
Preferred Common Distri-
Shares of stock stock butions
---------------------- and and in excess
Preferred Common paid in paid in of net
Stock Stock capital capital income Totals
========== ========== ======== ======== ========= ========
Net income -- -- -- -- 46,241 46,241
Distributions
paid and
payable -- -- -- -- (61,423) (61,423)
Shares issued
in stock
offering, net
of offering
costs of
$3,821 4,140,000 -- 99,679 -- -- 99,679
Shares issued -- 5,600 -- 139 -- 139
Shares forfeited -- (539) -- (14) -- (14)
---------- ---------- -------- -------- --------- --------
Balance,
December 31,
1999 4,140,000 26,822,164 $ 99,679 $636,611 $(201,459) $534,831
========== ========== ======== ======== ========= ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 50
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
=====================================
Years Ended December 31, 1999, 1998 and 1997
(dollars in thousands)
<TABLE>
1999 1998 1997
======== ======== ========
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income $ 46,241 $ 41,304 $ 34,770
Adjustments to net income:
Depreciation and amortization 25,952 21,935 18,596
Provision for impairment losses -- -- 165
Gain on sales of properties (1,301) (526) (1,082)
Extraordinary item 355 -- --
Cumulative effect of change in
accounting principle -- 226 --
Changes in assets and liabilities:
Accounts receivable and
other assets 25 144 (844)
Accounts payable, accrued expenses
and other liabilities 882 1,562 1,087
-------- -------- --------
Net cash provided by
operating activities 72,154 64,645 52,692
-------- -------- --------
CASH FLOWS FROM
INVESTING ACTIVITIES
Proceeds from sales of properties 9,431 2,770 4,432
Acquisition of and additions to
properties (174,056) (192,588) (140,389)
Payment of other liabilities (1,713) -- --
-------- -------- --------
Net cash used in
investing activities (166,338) (189,818) (135,957)
-------- -------- --------
(table continued next page)
Page 51
<PAGE>
(table continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
=====================================
Years Ended December 31, 1999, 1998 and 1997
(dollars in thousands)
1999 1998 1997
======== ======== ========
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from lines of credit 221,200 224,900 117,000
Payments of lines of credit (186,800) (162,700) (164,400)
Distributions to common
stockholders (55,925) (52,301) (44,367)
Distributions to preferred
stockholders (5,229) -- --
Proceeds from notes issued,
net of costs in 1999, 1998 and
1997 of $501, $12,764 and $848,
respectively 19,499 87,236 109,152
Proceeds from preferred stock
offerings, net of offering costs 99,679 -- --
Proceeds from common stock
offerings, net of offering costs -- 28,379 68,707
Proceeds from other stock issuances -- 69 246
Payments to the defined benefit
pension plan -- -- (2,223)
Increase in other assets -- -- (286)
-------- -------- --------
Net cash provided by
financing activities 92,424 125,583 83,829
-------- -------- --------
Net increase (decrease) in cash
and cash equivalents (1,760) 410 564
Cash and cash equivalents,
beginning of year 2,533 2,123 1,559
-------- -------- --------
Cash and cash equivalents,
end of year $ 773 $ 2,533 $ 2,123
======== ======== ========
</TABLE>
For supplemental disclosures, see note 12.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 52
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
Notes To Consolidated Financial Statements
==========================================
December 31, 1999, 1998 and 1997
1. Organization and Operation
Realty Income Corporation ("Realty Income", the "Company", "we" or "our")
is organized as a Maryland corporation. We invest in commercial retail
real estate and have elected to be taxed as a real estate investment trust
("REIT"). As of December 31, 1999, we owned 1,076 properties in 45 states
containing over 8.6 million leasable square feet.
2. Summary of Significant Accounting Policies and Procedures
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of Realty Income and entities we control
(subsidiaries) after elimination of all material intercompany balances and
transactions.
Cash Equivalents - We consider all short-term, highly liquid investments
that are readily convertible to cash and have an original maturity of three
months or less at the time of purchase to be cash equivalents.
Depreciation and Amortization - Depreciation of buildings and improvements,
and amortization of goodwill are computed using the straight-line method
over an estimated useful life of 25 years. Amortization of goodwill for
each of the years ended December 31, 1999, 1998 and 1997 was $924,000.
Leases - All leases are accounted for as operating leases. Under this
method, lease payments are recognized as revenue over the term of the
lease.
Federal Income Taxes - We have elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended ("IRS Code"). We believe Realty
Income has qualified and continues to qualify as a REIT and therefore will
be permitted to deduct distributions paid to its stockholders, eliminating
the federal taxation of income represented by those distributions at the
Company's level. Accordingly, no provision has been made for federal
income taxes in the accompanying consolidated financial statements.
Distributions Paid and Payable - Realty Income pays distributions monthly
to our common stockholders. The following is a summary of monthly cash
distributions paid per common share for the years ended December 31, 1999,
1998 and 1997.
Page 53
2. Summary of Significant Accounting Policies (continued)
<TABLE>
Month 1999 1998 1997
- ----- ------- ------- ------
<S> <C> <C> <C>
January $0.1700 $0.1600 $0.1575
February 0.1700 0.1600 0.1575
March 0.1700 0.1600 0.1575
April 0.1725 0.1625 0.1575
May 0.1725 0.1625 0.1575
June 0.1725 0.1625 0.1575
July 0.1750 0.1650 0.1575
August 0.1750 0.1650 0.1575
September 0.1750 0.1650 0.1575
October 0.1775 0.1675 0.1575
November 0.1775 0.1675 0.1575
December 0.1775 0.1675 0.1600
------- ------- -------
Totals $2.0850 $1.9650 $1.8925
======= ======= =======
</TABLE>
The following presents the federal income tax characterization of
distributions paid or deemed to be paid to common stockholders for the
years ended December 31:
<TABLE>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Ordinary income $1.8468 $1.8895 $1.7937
Return of capital 0.1986 0.0755 0.0988
Capital gain 0.0396 -- --
------- ------- -------
Totals $2.0850 $1.9650 $1.8925
======= ======= =======
</TABLE>
In May 1999, we issued 2,760,000 shares of 9 3/8% Class B cumulative
redeemable preferred stock (the "Class B Preferred"). Dividends on the
Class B Preferred are paid quarterly in arrears. For the year ended
December 31, 1999, dividends of $3.86 million were paid on the Class B
Preferred.
In July 1999, we issued 1,380,000 shares of 9 1/2% Class C cumulative
redeemable preferred stock (the "Class C Preferred"). Dividends on the
Class C Preferred are paid monthly in arrears. For the year ended
December 31, 1999, dividends of $1.37 million were paid on the Class C
Preferred.
Page 54
<PAGE>
2. Summary of Significant Accounting Policies (continued)
The following presents the federal income tax characterization of dividends
paid or deemed to be paid to Class B Preferred and Class C Preferred
stockholders for the year ended December 31, 1999:
<TABLE>
Class B Class C
Preferred Preferred
--------- ---------
<S> <C> <C>
Ordinary income $ 1.3731 $ 0.9707
Capital gain 0.0266 0.0188
--------- ---------
Totals $ 1.3997 $ 0.9895
========= =========
</TABLE>
Provision for Impairment Losses - We review long-lived assets, including
goodwill, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Generally, a provision is made for impairment loss if estimated future
operating cash flows (undiscounted and without interest charges) plus
estimated disposition proceeds (undiscounted) are less than the current
book value. If a property is held for sale, it is carried at the lower of
cost or estimated fair value, less costs to sell. For the year ended
December 31, 1997, a provision for impairment losses of $165,000 was
charged to operations to reduce the net carrying value of three properties
held for sale in 1997. All of these properties have been sold. No
provision for impairment loss was charged in 1998 or 1999.
Net Income Per Common Share - Basic net income per common share is computed
by dividing net income available to common stockholders by the weighted
average number of common shares outstanding during each period. Diluted
net income per common share is computed by dividing the amount of net
income available to common stockholders for the period by the number of
common shares that would have been outstanding assuming the issuance of
common shares for all potentially dilutive common shares outstanding during
the reporting period.
The following is a reconciliation of the denominator of the basic net
income per common share computation to the denominator of the diluted net
income per common share computation, for the years ended
December 31, 1999, 1998 and 1997:
Page 55
2. Summary of Significant Accounting Policies (continued)
<TABLE>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average shares used for
basic net income per share
computation 26,822,285 26,629,936 23,568,831
Incremental shares from the
assumed conversion of stock
options 3,805 8,348 3,884
---------- ---------- ----------
Adjusted weighted average shares
used for diluted net income
per share computation 26,826,090 26,638,284 23,572,715
========== ========== ==========
</TABLE>
In 1999 and 1998, 186,181 and 25,000 stock options, respectively, that were
anti-dilutive have been excluded in calculating the incremental shares from
the assumed conversion of stock options. No stock options were anti-
dilutive in 1997.
Stock Option Plan - We account for our stock option plan in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations.
As such, compensation expense would be recorded on the date of grant only
if the current market price of the underlying stock exceeded the exercise
price. Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS No. 123"), permits entities to
recognize as expense over the vesting period the fair value of all stock-
based awards on the date of grant. Alternatively, SFAS No. 123 allows
entities to continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and pro forma earnings per share disclosures
for employee stock option grants made in 1995 and future years as if the
fair-value based method defined in SFAS No. 123 had been applied. We have
elected to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of SFAS No. 123.
Derivative Financial Instrument - In two instances, we used interest rate
treasury lock agreements to hedge the effect of interest rate fluctuations.
These instruments each met the requirement for hedge accounting, including
a high correlation to a specific transaction. Accordingly, the amount
received and paid under the terms of the agreements is recognized in income
when interest expense related to the hedge item is recognized.
Change in Accounting Principle - In October 1998, we adopted Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-
5"). SOP 98-5 requires that costs incurred during start-up activities,
Page 56
<PAGE>
2. Summary of Significant Accounting Policies (continued)
including organization costs, be expensed as incurred. Prior to October
1998, organization costs were amortized over 60 months. In October 1998,
the unamortized balances of organization costs were written off.
Pro forma amounts assuming the adoption of SOP 98-5 was applied as of
January 1, 1997:
<TABLE>
1998 1997
------- -------
<S> <C> <C>
Net income available to common
stockholders (in thousands) $41,569 $34,505
Basic and diluted net income
per common share 1.56 1.46
</TABLE>
Use of Estimates - The preparation of the consolidated financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications - Certain of the 1998 and 1997 balances have been
reclassified to conform to the 1999 presentation.
3. Credit Facility Available for Acquisitions
In December 1999, we entered into a $200 million, three-year, revolving,
unsecured acquisition credit facility, which expires in December 2002. The
$200 million credit facility is from The Bank of New York, as
administrative agent, and several U.S. and non-U.S. banks. As of
December 31, 1999 and 1998, the outstanding balances on the credit
facilities were $119.2 million and $84.8 million, respectively, with an
effective interest rate of approximately 7.35% and 6.27%, respectively.
Our $170 million credit facility was cancelled simultaneously with the
execution of the $200 million credit facility. Unamortized fees of
$355,000 relating to the $170 million credit facility were charged in 1999
as an extraordinary loss on early extinguishment of the credit facility.
The $200 million credit facility currently bears interest at 1.225% over
the London Interbank Offered Rate ("LIBOR") and offers us other interest
rate options. A facility fee of 0.225%, per annum, accrues on the total
commitment of the credit facility.
The $200 million credit facility is and the $170 million credit facility
was subject to various leverage and interest coverage ratio limitations.
The Company is and has been in compliance with these limitations.
Page 57
3. Credit Facility Available for Acquisitions (continued)
In 1999, 1998 and 1997, interest of $1.6 million, $660,000 and $168,000,
respectively, was capitalized on properties under development.
4. Notes Payable
In January 1999, we issued $20 million of 8.0% senior notes due 2009 (the
"1999 Notes"). The 1999 Notes are unsecured and were sold at 98.757% of
par to yield 8.1%. The proceeds from 1999 Notes were used to pay down bank
borrowings. Interest on the 1999 Notes is payable semiannually.
In October 1998, we issued $100 million of 8.25% Monthly Income Senior
Notes due 2008 (the "1998 Notes"). The 1998 Notes are unsecured and were
sold at par ($25.00). After taking into effect the results of a treasury
interest rate lock agreement (see note 5), the effective rate to us on the
1998 Notes is 9.12%. Interest on the 1998 Notes is payable monthly.
In May 1997, we issued $110 million of 7.75% senior notes due 2007 (the
"1997 Notes"). The 1997 Notes are unsecured and were sold at 99.929% of
par to yield 7.76%. After taking into effect results of a treasury
interest rate lock agreement (see note 5), the effective interest rate to
us on the 1997 Notes is 7.62%. Interest on the 1997 Notes is payable
semiannually.
Interest incurred on the 1999 Notes, 1998 Notes and 1997 Notes collectively
for the years ended December 31, 1999, 1998 and 1997 were $18.3 million,
$10.0 million and $5.6 million, respectively.
5. Derivative Financial Instruments
In May 1998, we entered into a treasury interest rate lock agreement to
protect against the possibility of rising interest rates applicable to the
1998 Notes (see note 4). Under the interest rate lock agreement, we were
to receive or make a payment based on the differential between a specified
interest rate, (5.726%), and the actual 10-year treasury interest rate on a
notional principal amount of $100 million, at the end of six months. Based
on the 10-year treasury interest rate at October 23, 1998 (the interest
rate pricing date), we made a payment of $8.7 million in settlement of the
agreement in October 1998. The payment on the agreement is being amortized
over 10 years (the life of the 1998 Notes) as a yield adjustment to
interest expense.
In December 1996, we entered into a treasury interest rate lock agreement
to hedge against rising interest rates applicable to the 1997 Notes (see
note 4). Under the terms of the interest rate lock agreement, we were to
receive or make a payment based on the differential between a specified
interest rate (6.537%) and the actual 10-year treasury interest rate on a
notional principal amount of $90 million, at the end of six months. Based
on the 10-year treasury interest rate at May 1, 1997 (the interest rate
Page 58
<PAGE>
5. Derivative Financial Instruments (continued)
pricing date), we received $1.1 million in settlement of the agreement in
June 1997. The payment received on the agreement is being amortized over 10
years (the life of the 1997 Notes) as a yield adjustment to interest
expense.
Our only involvement with derivative financial instruments was the two
aforementioned treasury interest rate lock agreements and we have not used
derivative financial instruments for trading purposes.
6. Common Stock Offerings
A. In March 1998, we issued 372,093 shares of common stock to a unit
investment trust at a net price to us of $25.531 per share, based on a 5%
discount to the then market price of $26.875 per share. The net proceeds
of $9.5 million were used to repay bank borrowings of $7.9 million and to
acquire additional properties.
B. In February 1998, we issued 751,174 shares of common stock to a unit
investment trust at a net price to us of $25.295 per share, based on a 5%
discount to the then market price of $26.625 per share. The net proceeds
of $18.9 million were to be used to repay bank borrowings.
C. In October 1997, we issued 2.7 million shares of common stock at a
price of $27.00 per share. The net proceeds of $68.7 million were used to
repay bank borrowings of $62.6 million and to acquire properties.
7. Preferred Stock Offerings
A. In May 1999, we issued 2,760,000 shares of Class B Preferred at a price
of $25.00 per share. The net proceeds of $66.5 million were used to repay
bank borrowings.
B. In July 1999, we issued 1,380,000 shares of Class C Preferred stock at
a price of $25.00 per share. The net proceeds of $33.2 million were used
to repay bank borrowings.
8. Operating Leases
A. General - At December 31, 1999, we owned 1,076 properties in 45 states.
Of these 1,076 properties, 1,069 are single-tenant and the remainder are
multi-tenant. At December 31, 1999, 17 properties were vacant and
available for lease or sale.
Substantially all leases are net leases whereby the tenant pays property
taxes and assessments, maintains the interior and exterior of the building,
and carries insurance coverage for public liability, property damage, fire,
and extended coverage.
Percentage rent for 1999, 1998 and 1997 was $1.7 million, $1.7 million and
$1.8 million, respectively.
Page 59
<PAGE>
8. Operating Leases (continued)
At December 31, 1999, minimum annual rents to be received on the operating
leases are as follows (dollars in thousands):
<TABLE>
Minimum annual rents for the years ending December 31,
======================================================
<S> <C> <C>
2000 $ 111,546
2001 109,133
2002 104,429
2003 97,865
2004 90,959
Thereafter 700,245
----------
TOTAL $1,214,177
==========
</TABLE>
B. Major Tenants - The following schedule presents rental revenue,
including percentage rents, from tenants representing more than 10% of our
total revenue for the years ended December 31, 1999, 1998 or 1997 (dollars
in thousands):
<TABLE>
Tenants 1999 1998 1997
========================= ======= ======= =======
<S> <C> <C> <C>
Children's World
Learning Centers, Inc. $14,371 $14,111 $13,809
La Petite Academy, Inc. 10,730 9,445 9,311
Golden Corral Corporation N/A(1) N/A(1) 6,899
</TABLE>
[FN]
(1) Rental revenue from Golden Corral Corporation represents less than 10%
of our total revenue for 1999 and 1998.
</FN>
9. Property Acquisitions
During 1999 we invested $181.4 million in 110 new retail properties and
properties under development with an average initial contractual lease rate
of 10.5%. During 1998 we invested $193.4 million in 149 new retail
properties and properties under development with an average initial
contractual lease rate of 10.4%.
Page 60
<PAGE>
10. Gain on Sales of Properties
In 1999, we sold three properties (a home furnishings store, home
improvement store and restaurant) for $9.4 million and recognized a gain of
$1.3 million. In 1998, we sold five properties (two child care centers,
two restaurants and a multi-tenant location) for a total of $2.8 million
and recognized a gain of $526,000. In 1997, we sold ten properties (six
restaurants, two child care centers, one automotive parts store and a
multi-tenant location) for a total of $4.4 million and recognized a gain of
$1.1 million.
In November 1999, we approved a plan to sell three of our multi-tenant
locations. The carrying value of the three properties at December 31, 1999
was approximately $29.0 million and contributed $2.1 million, $1.7 million
and $1.4 million to income from operations in 1999, 1998 and 1997,
respectively. We anticipate the properties will be sold during 2000.
These properties are included in the other non-reportable segment in note
16.
11. Fair Value of Financial Instruments
We believe that the carrying values reflected in the consolidated balance
sheets at December 31, 1999 and 1998 reasonably approximate the fair values
for cash and cash equivalents, accounts receivable, and all liabilities
except the lines of credit payable and notes payable. In making these
assessments, we used estimates. The fair value of the lines of credit
payable approximates its carrying value because its terms are similar to
those available in the market place. The fair value of the notes payable at
December 31, 1999 and 1998 is estimated to be $199.4 million and $203.9
million, respectively, based upon the closing market price per note or
indicative price per each note at December 31, 1999 and 1998, respectively.
12. Supplemental Disclosures of Cash Flow Information
Interest paid during 1999, 1998 and 1997 was $22.4 million, $12.5 million
and $6.9 million, respectively.
The following non-cash investing and financing activities are included in
the accompanying consolidated financial statements:
A. In 1999 and 1998, the acquisition of properties resulted in the
following non-cash changes (dollars in thousands):
<TABLE>
1999 1998
------ ------
<S> <C> <C>
Increases in:
Building $9,057 $1,347
Other liabilities 9,057 1,347
</TABLE>
Page 61
<PAGE>
12. Supplemental Disclosure of Cash Flow Information (continued)
B. In 1998, the former shareholders of the R.I.C. Advisor, Inc., or the
Advisor, returned 20,279 shares to the Company. This fulfilled the
obligation of the Advisor's shareholders to the Company under an
indemnification agreement entered into by these parties. This transaction
resulted in the following non-cash changes in 1998 (dollars in thousands):
<TABLE>
<S> <C>
Decrease in:
Due from affiliates $ 350
Common stock 20
Paid in capital in excess of par value 413
Increase in:
Interest revenue $ 83
</TABLE>
13. Employee Benefit Plan
A. We have a 401(k) plan covering substantially all of our employees.
Under our 401(k) plan, employees may elect to make contributions to the
plan up to a maximum of 15% of their compensation, subject to limits
established by the IRS Code. We match 50% of the participants'
contributions up to a maximum of six percent of a participant's annual
compensation. Our aggregate matching contributions each year have been
immaterial to our results of operations.
B. As a result of the merger with the Advisor in 1995, the Company assumed
a defined benefit pension plan (the "Plan") covering substantially all of
its employees. The Plan was terminated on January 2, 1996 and final
disbursement of the Plan's assets occurred on February 24, 1997.
14. Stock Incentive Plan
In September 1993, our board of directors approved a stock incentive plan
(the "Stock Plan") designed to attract and retain directors, officers and
employees of the Company by enabling those individuals to participate in
the ownership of the Company. The Stock Plan authorizes the issuance in
each calendar year of up to 3% of the total shares outstanding at the end
of such year. At no time may the total number of shares granted under the
Stock Plan exceed 1,950,308. The Stock Plan provides for the award
(subject to ownership limitations) of a broad variety of stock-based
compensation alternatives such as nonqualified stock options, incentive
stock options, restricted stock and performance awards.
Stock options are granted with an exercise price equal to the underlying
stock's fair market value at the date of grant. Stock options expire 10
years from the date they are granted and vest over service periods of one,
three, four and five years. Prior to December 31, 1999, 661,270 stock
options and 29,517 restricted shares of common stock had been granted and
not cancelled under the Stock Plan.
Page 62
<PAGE>
14. Stock Incentive Plan (continued)
The following table summarizes our stock option activity for the years
ended December 31, 1999, 1998 and 1997:
<TABLE> 1999 1998
----------------------- -----------------------
Weighted Weighted
Average Average
Number Exercise Number Exercise
of shares Price of Shares Price
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding,
beginning of year 438,604 $24.77 139,500 $23.09
Options granted 220,371 24.67 305,413 25.54
Options exercised -- -- (2,933) 23.62
Options canceled (11,127) 25.16 (3,376) 25.44
--------- ------- --------- -------
Outstanding,
end of year 647,848 $24.73 438,604 $24.77
========= ======= ========= =======
Options exercisable,
end of year 380,064 196,397
Weighted average
fair value of each
option granted
during the year $2.23 $2.58
(table continued on next page)
Page 63
14. Stock Incentive Plan (continued)
(table continued)
1997
-----------------------
Weighted
Average
Options Number Exercise
Outstanding of shares Price
- -----------------------------------------
<S> <C> <C>
Outstanding,
beginning
of year 73,000 $21.64
Options granted 116,700 24.29
Options exercised (10,489) 23.47
Options canceled (39,711) 23.85
------ ------
Outstanding,
end of year 139,500 $23.09
======= ======
Options exercisable,
end of year 56,300
Weighted average
fair value of each
option granted
during the year $2.29
</TABLE>
At December 31, 1999, the options exercisable under the Stock Plan had
exercise prices ranging from $20.00 to $26.06 with a weighted average price
of $24.57, and expiration dates ranging from August 2004 to December 2008
with a weighted average remaining term of 7.6 years.
The fair value of each stock option grant was estimated at the date of
grant using the binomial option-pricing model with the following
assumptions:
<TABLE>
1999 1998 1997
------------- -------- --------
<S> <C> <C> <C>
Expected dividend yield 7.66% 8.86% 9.71%
Risk-free interest rate 5.04% 5.75% 6.70%
Volatility 15.20% 17.90% 17.40%
Expected life of options 10 years 10 years 10 years
</TABLE>
Page 64
14. Stock Incentive Plan (continued)
We apply APB Opinion No. 25 in accounting for our Stock Plan and,
accordingly, no compensation cost has been recognized for its stock options
in the consolidated financial statements. Had we determined compensation
cost based on the fair value at the grant date for its stock options under
SFAS No. 123, our net income and diluted net income per common share would
have been as follows:
<TABLE> 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income available to common
stockholders (dollars in
thousands)
As reported $ 41,012 $ 41,304 $ 34,770
Pro forma 40,536 40,914 34,722
Diluted net income per common share
As reported $ 1.53 $ 1.55 $ 1.48
Pro forma 1.51 1.54 1.47
</TABLE>
15. Stockholder Rights Plan
In June 1998, our board of directors adopted a Stockholder Rights Plan (the
"Rights Plan") that will expire in July 2008. The Rights Plan assigns one
right (a "Right") to purchase one one-hundredth (1/100th) of a share of our
Class A Junior Participating Preferred Stock, par value $1.00 per share
(the "Preferred Stock"), for each share of common stock owned on or issued
after July 1, 1998. Initially, the Rights will not be exercisable and will
not trade separately from our common stock.
Under certain circumstances, stockholders will be able to exercise their
Rights if a person or group initiates an unsolicited takeover of the
Company by acquiring 15% of our common stock or by making a tender offer to
acquire 15% or more of our common stock. If an unsolicited acquirer gains
control of the Company, stockholders other than the acquirer would be able
to purchase either our common stock or the acquirer's stock at a 50%
discount.
The dividend, liquidation, and voting rights, and the non-redemption
feature of the Preferred Stock are designed so that the value of the one
one-hundredth interest in a share of the new Preferred Stock that can be
purchased with each Right will approximate what our board of directors
believes to be the long-term value of one share of our common stock.
Page 65
16. Segment Information
We evaluate performance and make resource allocation decisions on a
property by property basis. For financial reporting purposes, we have
grouped our operating segments into eight reportable segments. Our
segments combine properties into groups based upon the business of our
tenants. All of the properties have been acquired separately and are
incorporated into one of the applicable segments. Revenue is the only
component of segment profit and loss we measure. Since our revenue is
primarily from net leases, expenditures for additions to long-lived assets
were to acquire additional properties. The accounting policies of the
segments are the same as those described in note 2.
The following tables set forth certain information regarding the properties
owned by us as of December 31, 1999 classified according the business of
the respective tenants (dollars in thousands):
<TABLE>
Revenue
----------------------------------
For the years ended December 31, 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Segment rental revenue:
Automotive parts $ 8,944 $ 6,593 $ 6,384
Automotive service 6,869 6,333 4,090
Child care 26,428 24,765 24,284
Consumer electronics 4,594 4,616 4,388
Convenience stores 7,557 5,175 3,738
Home furnishings 6,737 6,008 3,108
Restaurants 13,834 13,768 13,414
Video rental 4,444 3,185 373
Other non-reportable segments 24,863 14,433 7,834
Reconciling items -interest and other 240 256 284
-------- -------- --------
Total revenue $104,510 $ 85,132 $ 67,897
======== ======== ========
Page 66
16. Segment Information (continued)
Assets
---------------------
As of December 31, 1999 1998
-------- --------
Segment net real estate:
Automotive parts $ 77,075 $ 65,847
Automotive service 50,499 46,731
Child care 156,617 138,875
Consumer electronics 39,243 40,447
Convenience stores 83,228 43,986
Home furnishings 64,408 71,366
Restaurants 86,903 87,682
Video rental 40,712 39,650
Other non-reportable segments 268,408 183,696
------- -------
Total segment net real estate 867,093 718,280
Reconciling items 38,311 40,954
-------- --------
Total assets $905,404 $759,234
======== ========
</TABLE>
17. Commitments and Contingencies
In the ordinary course of our business, we are party to various legal
actions which we believe are routine in nature and incidental to the
operation of our business. We believe that the outcome of the proceedings
will not have a material adverse effect upon our consolidated statements
taken as a whole.
18. Subsequent Event
A. In February 2000, we entered into a $25 million, three-year, revolving
credit agreement with the Bank of Montreal, which expires in February 2003.
The credit facility currently bears interest at 1.225% over LIBOR and
offers us other interest rate options. A facility fee of 0.225%, per
annum, accrues on the total commitment of the credit facility. This credit
facility can be used for the acquisition of property and for making capital
contributions to subsidiaries for the purpose of acquiring properties.
B. In January 2000, we formed Crest Net Lease, Inc., of which we own 95% of
the common stock, all of which is non-voting, and certain members of
management own 5% of the common stock, all of which is voting stock. Crest
Net Lease was created to actively buy and sell certain select properties,
primarily to buyers using tax-deferred exchanges, under Section 1031 of the
IRS Code.
Page 67
<PAGE>
REALTY INCOME CORPORATION
AND SUBSIDIARIES
CONSOLIDATED QUARTERLY FINANCIAL DATA
(dollars in thousands, except per share data)
(not covered by Independent Auditors' Report)
<TABLE>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
======= ======= ======= ======= =======
<S> <C> <C> <C> <C> <C>
1999
====
Total revenue $23,986 $24,902 $26,900 $28,722 $104,510
Depreciation and
amortization
expense 6,090 6,237 6,660 6,965 25,952
Interest expense 5,880 6,045 6,100 6,448 24,473
Other expenses 2,087 2,192 2,232 2,279 8,790
Income from
operations 9,929 10,428 11,908 13,030 45,295
Extraordinary item -- -- -- (355) (355)
Net income 9,929 10,428 13,144 12,740 46,241
Net income
available to
common stock-
holders 9,929 9,799 10,981 10,303 41,012
Basic and diluted
net income per
common share 0.37 0.37 0.41 0.38 1.53
Dividends paid per
common share 0.5100 0.5175 0.5250 0.5325 2.0850
1998
====
Total revenue $19,222 $20,367 $21,969 $23,574 $ 85,132
Depreciation and
amortization
expense 5,084 5,369 5,630 5,852 21,935
Interest expense 2,491 2,864 3,682 4,686 13,723
Other expenses 1,938 2,137 2,164 2,231 8,470
Income from
operations 9,709 9,997 10,493 10,805 41,004
Cumulative effect
of change in
accounting
principle -- -- -- (226) (226)
Net income 9,924 10,308 10,493 10,579 41,304
Basic and diluted
net income per
common share 0.38 0.38 0.39 0.40 1.55
Dividends paid per
common share 0.4800 0.4875 0.4950 0.5025 1.9650
</TABLE>
Page 68
<PAGE>
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
- ---------------------------------------------------------
We have had no disagreements with our independent auditors' on accountancy
or financial disclosure.
PART III
========
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information set forth under the captions "Director Nominees" and
"Officers Of The Company" and "Compliance With Federal Securities Laws" in
the definitive proxy statement for the Annual Meeting of Stockholders
presently scheduled to be held on May 3, 2000, to be filed pursuant to
Regulation 14A.
ITEM 11: EXECUTIVE COMPENSATION
- --------------------------------
The information set forth under the caption "Executive Compensation" in the
definitive proxy statement for the Annual Meeting of Stockholders presently
scheduled to be held on May 3, 2000, to be filed pursuant to Regulation
14A.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- -------------------------------------------------------------
The information set forth under the caption "Security Ownership of Certain
Beneficial Owners And Management" in the definitive proxy statement for the
Annual Meeting of Stockholders presently scheduled to be held on May 3,
2000, to be filed pursuant to Regulation 14A.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The information set forth under the caption "Certain Transactions" in the
definitive proxy statement for the Annual Meeting of Stockholders presently
scheduled to be held on May 3, 2000, to be filed pursuant to Regulation
14A.
Page 69
<PAGE>
PART IV
=======
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
- ----------------------------------------------------------------
A. The following documents are filed as part of this report.
1. Financial Statements (see Item 8)
a. Independent Auditors' Report
b. Consolidated Balance Sheets,
December 31, 1999 and 1998
c. Consolidated Statements of Income,
Years ended December 31, 1999, 1998 and 1997
d. Consolidated Statements of
Stockholders' Equity,
Years ended December 31, 1999, 1998 and 1997
e. Consolidated Statements of Cash Flows,
Years ended December 31, 1999, 1998 and 1997
f. Notes to Consolidated Financial Statements
g. Consolidated Quarterly Financial Data,
(unaudited) for 1999 and 1998
2. Financial Statement Schedule is attached to this
report. Reference is made to page F-1 of this report for
Schedule III Real Estate and Accumulated Depreciation.
Schedules not Filed: All schedules, other than those
indicated in the Table of Contents, have been omitted as the
required information is inapplicable or the information is
presented in the financial statements or related notes.
3. Exhibits
2.1 Agreement and Plan of Merger dated as of May 15, 1997
between Realty Income Corporation, a Delaware
corporation, and Realty Income Maryland, Inc., a
Maryland corporation (incorporated by reference to
the Company's Form 8-B12B dated July 29, 1997
("Form 8-B") and incorporated herein by reference).
3.1 Articles of Incorporation of the Company (filed
as Appendix B to the Company's Proxy Statement
dated March 28, 1997 ("1997 Proxy Statement")
and incorporated herein by reference).
3.2 Bylaws of the Company (filed as Appendix C to the
Company's 1997 Proxy Statement and incorporated
herein by reference).
Page 70
<PAGE>
3.3 Articles Supplementary of the Class A Junior
Participating Preferred Stock of Realty Income
Corporation (filed as an exhibit to Realty Income's
registration statement on Form 8-A, dated June 26,
1998, and incorporated herein by reference).
3.4 Articles Supplementary to the Articles of Incorporation
of Realty Income Corporation classifying and designating
the Class B Preferred Stock (filed as exhibit 4.1 to the
Company's Form 8-K dated May 24, 1999 and incorporated
herein by reference).
3.5 Articles Supplementary to the Articles of Incorporation
of Realty Income Corporation classifying and designating
the Class C Preferred Stock (filed as exhibit 4.1 to the
Company's Form 8-K dated July 29, 1999 and incorporated
herein by reference).
4.1 Pricing Committee Resolutions and Form of 7.75%
Notes due 2007 (filed as Exhibit 4.2 to the Company's
Form 8-K dated May 5, 1997 and incorporated herein by
reference).
4.2 Indenture dated as of May 6, 1997 between the Company
and The Bank of New York (filed as Exhibit 4.1 to the
Company's Form 8-K dated May 5, 1997 and incorporated
herein by reference).
4.3 First Supplemental Indenture dated as of May 28, 1997,
between the Company and The Bank of New York (filed as
Exhibit 4.3 to the Company's Form 8-B and incorporated
herein by reference).
4.4 Rights Agreement, dated as of June 25, 1998, between
Realty Income Corporation and The Bank of New York
(filed as an exhibit to the Company's registration
statement on Form 8-A, dated June 26, 1998, and
incorporated herein by reference).
4.5 Pricing Committee Resolutions (filed as an exhibit
to Realty Income's Form 8-K, dated October 27, 1998
and incorporated herein by reference).
4.6 Form of 8.25% Notes due 2008 (filed as an exhibit to
Realty Income's Form 8-K, dated October 27, 1998
and incorporated herein by reference).
4.7 Indenture dated as of October 28, 1998 between
Realty Income and The Bank of New York (filed)
as an exhibit to Realty Income's Form 8-K,
dated October 27, 1998 and incorporated herein by
reference).
Page 71
4.8 Pricing Committee Resolutions and Form of 8% Notes due
2009 (filed as exhibit 4.2 to Realty Income's Form 8-K,
dated January 21, 1999 and incorporated herein by
reference).
10.1 $200 million Revolving Credit Agreement dated December 14,
1999 (filed herein).
10.2 First Amendment dated January 21, 2000 to the $200 million
Revolving Credit Agreement dated December 14, 1999 (filed
herein).
10.3 $25 million Revolving Credit Agreement dated February 1, 2000
(filed herein).
10.4 1994 Stock Option and Incentive Plan (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-8
(registration number 33-95708) and incorporated herein
by reference).
10.5 First Amendment to the 1994 Stock Option and Incentive
Plan, dated June 12, 1997 (filed as Exhibit 10.9 to the
Company's Form 8-B and incorporated herein by reference).
10.6 Second Amendment to the 1994 Stock Option and Incentive
Plan, dated December 16, 1997, (filed as Exhibit 10.9 to the
Company's Form 10-K dated December 31, 1997 and incorporated
herein by reference).
10.7 Management Incentive Plan, filed as Exhibit 10.10 to the
Company's Form 10-K dated December 31, 1997 and incorporated
herein by reference).
10.8 Form of Nonqualified Stock Option Agreement for
Independent Directors, (filed as Exhibit 10.11 to the
Company's Form 10-K dated December 31, 1997 and incorporated
herein by reference).
10.9 Form of Indemnification Agreement entered into between
the Company and the executive officers of the Company
(filed as Exhibit 10.1 to the Company's Form 8-K dated
November 21, 1997 and incorporated herein by reference).
10.10 Form of Indemnification Agreement entered into between
the Company and each director on the board of directors
of the Company (filed as Exhibit 10.2 to the Company's
Form 8-K dated November 21, 1997 and incorporated herein
by reference).
Page 72
10.11 Form of Employment Agreement between the Company and its
Executive Officers (incorporated by reference to the
Company's Form 8-B12B dated July 29, 1997 and
incorporated herein by reference).
12.1 Statement re computation of ratios, filed herein.
21.1 Subsidiaries of the Company as of January 1, 2000, filed
herein.
23.1 Consent of KPMG LLP, filed herein.
27 Financial Data Schedule, filed herein.
B. The Registrant filed no reports on Form 8-K during the last quarter of
the period covered by this report.
Page 73
SIGNATURES
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, thereunto duly authorized.
REALTY INCOME CORPORATION
By: /s/THOMAS A. LEWIS
------------------------------------
Thomas A. Lewis
Vice Chairman of the Board of Directors,
Chief Executive Officer and President
Date: March 22, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
By: /s/WILLIAM E. CLARK
------------------------------------
William E. Clark
Chairman of the Board of Directors
Date: March 22, 2000
By: /s/THOMAS A. LEWIS
------------------------------------
Thomas A. Lewis
Vice Chairman of the Board of Directors,
Chief Executive Officer and President
(Principal Executive Officer)
Date: March 22, 2000
By: /s/DONALD R. CAMERON
------------------------------------
Donald R. Cameron
Director
Date: March 22, 2000
Page 74
<PAGE>
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
By: /s/ROGER P. KUPPINGER
------------------------------------
Roger P. Kuppinger
Director
Date: March 22, 2000
By: /s/MICHAEL D. MCKEE
------------------------------------
Michael D. McKee
Director
Date: March 22, 2000
By: /s/WILLARD H. SMITH JR
------------------------------------
Willard H. Smith Jr
Director
Date: March 22, 2000
By: /s/KATHLEEN R. ALLEN, PH.D.
------------------------------------
Kathleen R. Allen, Ph.D.
Director
Date: March 22, 2000
By: /s/GARY MALINO
------------------------------------
Gary Malino
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: March 22, 2000
Page 75
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
By: /s/GREGORY J. FAHEY
------------------------------------
Gregory J. Fahey
Vice President, Controller
Date: March 22, 2000
EXHIBIT INDEX
=============
Exhibit No. Description
- ----------- -----------
10.1 $200 million Revolving Credit Agreement dated December 14,
1999
10.2 First Amendment, dated January 21, 2000, to the
$200 million Revolving Credit Agreement dated
December 14, 1999
10.3 $25 million Revolving Credit Agreement dated February 1,
2000
12.1 Statement re computation of ratios
21.1 Subsidiaries of the Company as of January 1, 2000
23.1 Consent of KPMG LLP
27 Financial Data Schedule
Page 76
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Apparel Stores
- --------------
<S> <C> <C> <C> <C>
Danbury CT 1,083,296 6,217,688 None None
Manchester CT 771,660 3,653,539 None None
Manchester CT 1,250,464 5,917,037 None None
Staten Island NY 4,202,093 3,385,021 None None
Westbury NY 6,333,590 3,952,773 None None
Automotive Parts
- ----------------
Millbrook AL 108,000 517,941 None None
Montgomery AL 254,465 502,350 None None
Wynne AR 70,000 547,547 None None
Blytheville AR 137,913 509,447 None None
Osceola AR 88,759 520,047 None None
Phoenix AZ 231,000 513,057 None None
Phoenix AZ 71,750 159,359 None None
Phoenix AZ 222,950 495,178 None None
Tucson AZ 194,250 431,434 None None
Tucson AZ 178,297 396,004 None None
Yuma AZ 120,750 268,190 None None
Fullerton CA 47,325 66,522 3,591 --
Grass Valley CA 325,000 384,955 None None
Jackson CA 300,000 390,849 None None
Sacramento CA 210,000 466,419 None None
Turlock CA 222,250 493,627 None None
Arvada CO 301,489 8,104 None None
Aurora CO 221,691 492,382 None None
Canon City CO 66,500 147,699 None None
Colorado Springs CO 280,193 622,317 None None
Colorado Springs CO 192,988 433,542 None None
Denver CO 141,400 314,056 None None
Denver CO 315,000 699,623 None None
Denver CO 283,500 629,666 None None
Littleton CO 252,925 561,758 None None
Smyrna DE 232,273 472,855 None None
Lakeland FL 500,000 645,402 None None
Tampa FL 427,395 472,030 None None
Council Bluffs IA 194,355 431,668 None None
Page F-1
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Apparel Stores
- --------------
Danbury CT 1,083,296 6,217,688 7,300,984
Manchester CT 771,660 3,653,539 4,425,199
Manchester CT 1,250,464 5,917,037 7,167,501
Staten Island NY 4,202,093 3,385,021 7,587,114
Westbury NY 6,333,590 3,952,773 10,286,363
Automotive Parts
- ----------------
Millbrook AL 108,000 517,941 625,941
Montgomery AL 254,465 502,350 756,815
Wynne AR 70,000 547,547 617,547
Blytheville AR 137,913 509,447 647,360
Osceola AR 88,759 520,047 608,806
Phoenix AZ 231,000 513,057 744,057
Phoenix AZ 71,750 159,359 231,109
Phoenix AZ 222,950 495,178 718,128
Tucson AZ 194,250 431,434 625,684
Tucson AZ 178,297 396,004 574,301
Yuma AZ 120,750 268,190 388,940
Fullerton CA 47,325 70,113 117,438
Grass Valley CA 325,000 384,955 709,955
Jackson CA 300,000 390,849 690,849
Sacramento CA 210,000 466,419 676,419
Turlock CA 222,250 493,627 715,877
Arvada CO 301,489 8,104 309,593
Aurora CO 221,691 492,382 714,073
Canon City CO 66,500 147,699 214,199
Colorado Springs CO 280,193 622,317 902,510
Colorado Springs CO 192,988 433,542 626,530
Denver CO 141,400 314,056 455,456
Denver CO 315,000 699,623 1,014,623
Denver CO 283,500 629,666 913,166
Littleton CO 252,925 561,758 814,683
Smyrna DE 232,273 472,855 705,128
Lakeland FL 500,000 645,402 1,145,402
Tampa FL 427,395 472,030 899,425
Council Bluffs IA 194,355 431,668 626,023
Page F-2
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Apparel Stores
- --------------
Danbury CT 567,365 09/29/97 300
Manchester CT 260,711 03/26/98 300
Manchester CT 422,478 03/26/98 300
Staten Island NY 240,920 03/26/98 300
Westbury NY 359,421 09/29/97 300
Automotive Parts
- ----------------
Millbrook AL 19,735 12/10/98 01/29/99 300
Montgomery AL 30,946 06/30/98 300
Wynne AR 18,921 11/10/98 02/26/99 300
Blytheville AR 31,388 06/30/98 300
Osceola AR 32,041 06/30/98 300
Phoenix AZ 227,361 11/09/87 300
Phoenix AZ 70,619 11/19/87 300
Phoenix AZ 187,144 11/02/89 300
Tucson AZ 192,447 10/30/87 300
Tucson AZ 145,752 01/19/90 300
Yuma AZ 98,709 01/23/90 300
Fullerton CA 66,522 08/21/72 234
Grass Valley CA 162,162 05/20/88 300
Jackson CA 161,081 05/17/88 300
Sacramento CA 206,692 11/25/87 300
Turlock CA 217,310 12/30/87 300
Arvada CO --
Aurora CO 181,224 01/29/90 300
Canon City CO 65,453 11/12/87 300
Colorado Springs CO 229,047 01/23/90 300
Colorado Springs CO 118,553 05/20/93 300
Denver CO 139,172 11/18/87 300
Denver CO 297,819 05/16/88 300
Denver CO 268,039 05/27/88 300
Littleton CO 244,031 02/12/88 300
Smyrna DE 25,994 07/31/98 300
Lakeland FL 32,937 06/04/98 12/30/97 300
Tampa FL 24,025 06/10/98 12/03/97 300
Council Bluffs IA 183,755 05/19/88 300
Page F-3
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Parts
- ----------------
Boise ID 158,400 351,812 None None
Boise ID 190,080 422,172 None None
Coeur D'Alene ID 165,900 368,468 None None
Lewiston ID 138,950 308,612 None None
Moscow ID 117,250 260,417 None None
Nampa ID 183,743 408,101 None None
Twin Falls ID 190,080 422,172 None None
Brazil IN 183,952 453,831 None None
Princeton IN 134,209 560,113 None None
Vincennes IN 185,312 489,779 None None
Kansas City KS 185,955 413,014 None None
Kansas City KS 222,000 455,881 None None
Alma MI 155,000 600,282 None None
Lansing MI 265,000 574,931 None None
Sturgis MI 109,558 550,274 None None
Eagan MN 902,443 845,536 None None
Blue Springs MO 222,569 494,333 None None
Grandview MO 347,150 711,024 None None
Independence MO 210,643 467,844 None None
Kansas City MO 210,070 466,571 None None
Kansas City MO 168,350 373,910 None None
Kansas City MO 248,500 551,927 None None
Jackson MS 248,483 572,485 None None
Richland MS 243,565 558,608 None None
Batesville MS 190,124 485,670 None None
Horn Lakes MS 142,702 514,779 None None
Missoula MT 163,100 362,249 None None
Kearney NE 173,950 344,393 None None
Omaha NE 196,000 435,321 None None
Omaha NE 199,100 412,042 None None
Omaha NE 253,128 812,403 None None
Cherry Hill NJ 1,074,640 1,032,304 None None
Albuquerque NM 80,500 178,794 None None
Rio Rancho NM 211,577 469,923 None None
Sante Fe NM 70,000 155,473 None None
Las Vegas NV 161,000 357,585 None None
Page F-4
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Parts
- ----------------
Boise ID 158,400 351,812 510,212
Boise ID 190,080 422,172 612,252
Coeur D'Alene ID 165,900 368,468 534,368
Lewiston ID 138,950 308,612 447,562
Moscow ID 117,250 260,417 377,667
Nampa ID 183,743 408,101 591,844
Twin Falls ID 190,080 422,172 612,252
Brazil IN 183,952 453,831 637,783
Princeton IN 134,209 560,113 694,322
Vincennes IN 185,312 489,779 675,091
Kansas City KS 185,955 413,014 598,969
Kansas City KS 222,000 455,881 677,881
Alma MI 155,000 600,282 755,282
Lansing MI 265,000 547,931 839,931
Sturgis MI 109,558 550,274 659,832
Eagan MN 902,443 845,536 1,747,979
Blue Springs MO 222,569 494,333 716,902
Grandview MO 347,150 711,024 1,058,174
Independence MO 210,643 467,844 678,487
Kansas City MO 210,070 466,571 676,641
Kansas City MO 168,350 373,910 542,260
Kansas City MO 248,500 551,927 800,427
Jackson MS 248,483 572,485 820,968
Richland MS 243,565 558,608 802,173
Batesville MS 190,124 485,670 675,794
Horn Lakes MS 142,702 514,779 657,481
Missoula MT 163,100 362,249 525,349
Kearney NE 173,950 344,393 518,343
Omaha NE 196,000 435,321 631,321
Omaha NE 199,100 412,042 611,142
Omaha NE 253,128 812,403 1,065,531
Cherry Hill NJ 1,074,640 1,032,304 2,106,944
Albuquerque NM 80,500 178,794 259,294
Rio Rancho NM 211,577 469,923 681,500
Sante Fe NM 70,000 155,473 225,473
Las Vegas NV 161,000 357,585 518,585
Page F-5
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Parts
- ----------------
Boise ID 149,762 05/06/88 300
Boise ID 179,712 05/06/88 300
Coeur D'Alene ID 165,437 09/21/87 300
Lewiston ID 138,562 09/16/87 300
Moscow ID 116,923 09/14/87 300
Nampa ID 173,723 05/06/88 300
Twin Falls ID 179,712 05/06/88 300
Brazil IN 14,358 03/31/99 300
Princeton IN 17,724 03/31/99 300
Vincennes IN 15,497 03/31/99 300
Kansas City KS 175,815 05/13/88 300
Kansas City KS 193,981 05/16/88 300
Alma MI 14,778 04/29/99 02/23/99 300
Lansing MI 19,787 04/30/99 12/03/98 300
Sturgis MI 22,825 12/29/98 300
Eagan MN 46,081 02/02/98 300
Blue Springs MO 190,447 07/31/89 300
Grandview MO 36,480 08/20/98 02/20/98 300
Independence MO 180,241 07/31/89 300
Kansas City MO 198,613 05/13/88 300
Kansas City MO 159,168 05/26/88 300
Kansas City MO 226,611 10/25/88 300
Jackson MS 2,858 12/21/99 300
Richland MS 929
Batesville MS 28,304 07/21/98 300
Horn Lakes MS 31,716 06/30/98 300
Missoula MT 161,587 10/30/87 300
Kearney NE 122,818 05/01/90 300
Omaha NE 185,310 05/26/88 300
Omaha NE 173,733 05/27/88 300
Omaha NE 9,421 07/22/99 03/31/99 300
Cherry Hill NJ 180,653 01/26/95 300
Albuquerque NM 79,754 10/29/87 300
Rio Rancho NM 204,136 02/26/88 300
Sante Fe NM 69,352 10/29/87 300
Las Vegas NV 159,507 10/29/87 300
Page F-6
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Parts
- ----------------
Reno NV 456,000 562,344 None None
Canton OH 396,560 597,553 None None
Hamilton OH 183,000 519,321 None None
Hubbard OH 147,043 481,217 None None
Oklahoma City OK 509,370 752,691 None None
Oklahoma City OK 404,815 771,625 None None
Albany OR 152,250 338,153 None None
Beaverton OR 210,000 466,419 None None
Corvallis OR 152,250 338,153 None None
Eugene OR 194,880 432,837 None None
Oak Grove OR 180,250 400,336 None None
Portland OR 190,750 423,664 None None
Portland OR 147,000 326,493 None None
Portland OR 210,000 466,412 None None
Salem OR 136,500 303,170 None None
Tigard OR 164,500 365,361 None None
Hanover PA 132,500 725,463 None None
Butler PA 339,929 633,078 None None
Dover PA 265,112 593,341 None None
Enola PA 220,228 546,026 None None
Harrisburg PA 327,781 608,291 None None
Harrisburg PA 283,417 352,473 None None
Lancaster PA 199,899 774,838 None None
New Castle PA 180,009 525,774 None None
Reading PA 379,000 658,693 None None
Sioux Falls SD 332,979 498,108 None None
Columbia TN 273,120 431,716 None None
Memphis TN 197,708 507,647 None None
Amarillo TX 140,000 419,734 None None
Austin TX 185,454 411,899 None None
Dallas TX 191,267 424,811 None None
El Paso TX 66,150 146,922 None None
El Paso TX 56,350 125,156 None None
Garland TX 242,887 539,461 None None
Harlingen TX 134,599 298,948 None None
Houston TX 151,018 335,417 None None
Page F-7
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Parts
- ----------------
Reno NV 456,000 562,344 1,018,344
Canton OH 396,560 597,553 994,113
Hamilton OH 183,000 519,321 702,321
Hubbard OH 147,043 481,217 628,260
Oklahoma City OK 509,370 752,691 1,262,061
Oklahoma City OK 404,815 771,625 1,176,440
Albany OR 152,250 338,153 490,403
Beaverton OR 210,000 466,419 676,419
Corvallis OR 152,250 338,153 490,403
Eugene OR 194,880 432,837 627,717
Oak Grove OR 180,250 400,336 580,586
Portland OR 190,750 423,664 614,414
Portland OR 147,000 326,493 473,493
Portland OR 210,000 466,412 676,412
Salem OR 136,500 303,170 439,670
Tigard OR 164,500 365,361 529,861
Hanover PA 132,500 725,463 857,963
Butler PA 339,929 633,078 973,007
Dover PA 265,112 593,341 858,453
Enola PA 220,228 546,026 766,254
Harrisburg PA 327,781 608,291 936,072
Harrisburg PA 283,417 352,473 635,890
Lancaster PA 199,899 774,838 974,737
New Castle PA 180,009 525,774 705,783
Reading PA 379,000 658,693 1,037,693
Sioux Falls SD 332,979 498,108 831,087
Columbia TN 273,120 431,716 704,836
Memphis TN 197,708 507,647 705,355
Amarillo TX 140,000 419,734 559,734
Austin TX 185,454 411,899 597,353
Dallas TX 191,267 424,811 616,078
El Paso TX 66,150 146,922 213,072
El Paso TX 56,350 125,156 181,506
Garland TX 242,887 539,461 782,348
Harlingen TX 134,599 298,948 433,547
Houston TX 151,018 335,417 486,435
Page F-8
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Parts
- ----------------
Reno NV 239,273 05/26/88 300
Canton OH 32,848 08/14/98 300
Hamilton OH 14,447 04/07/99 12/01/98 300
Hubbard OH 29,654 06/30/98 300
Oklahoma City OK 16,189 04/14/99 09/24/98 300
Oklahoma City OK 16,613 04/09/99 10/02/98 300
Albany OR 152,815 08/24/87 300
Beaverton OR 210,780 08/26/87 300
Corvallis OR 152,815 08/12/87 300
Eugene OR 188,027 02/10/88 300
Oak Grove OR 180,916 08/06/87 300
Portland OR 191,459 08/12/87 300
Portland OR 147,546 08/26/87 300
Portland OR 209,414 09/01/87 300
Salem OR 137,005 08/20/87 300
Tigard OR 165,111 08/26/87 300
Hanover PA 10,661 08/06/99 05/14/99 300
Butler PA 34,800 08/07/98 300
Dover PA 36,575 06/30/98 300
Enola PA 24,550 10/16/98 300
Harrisburg PA 37,486 06/30/98 300
Harrisburg PA 18,178 09/30/98 300
Lancaster PA 42,603 08/07/98 300
New Castle PA 32,401 06/30/98 300
Reading PA 14,006 06/09/99 12/03/98 300
Sioux Falls SD 27,161 06/01/99 02/23/98 300
Columbia TN 9,346 07/19/99 300
Memphis TN 26,201 09/30/98 300
Amarillo TX 173,534 09/12/88 300
Austin TX 150,424 02/06/90 300
Dallas TX 156,354 01/26/90 300
El Paso TX 65,537 10/27/87 300
El Paso TX 55,827 10/27/87 300
Garland TX 198,551 01/19/90 300
Harlingen TX 110,030 01/17/90 300
Houston TX 123,452 01/25/90 300
Page F-9
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Parts
- ----------------
Leon Valley TX 178,221 395,834 None None
Lubbock TX 42,000 93,284 None None
Lubbock TX 49,000 108,831 None None
Midland TX 45,500 101,058 None None
Odessa TX 50,750 112,718 None None
Pasadena TX 107,391 238,519 None None
Plano TX 187,564 417,157 700 None
San Antonio TX 245,164 544,518 None None
Bountiful UT 183,750 408,115 None None
Provo UT 125,395 278,507 None None
Bellevue WA 185,500 411,997 None None
Bellingham WA 168,000 373,133 None None
Bothell WA 199,500 443,098 None None
Everett WA 367,500 816,227 None None
Hazel Dell WA 168,000 373,135 None None
Kennewick WA 161,350 358,365 None None
Kent WA 199,500 443,091 None None
Lacey WA 171,150 380,125 None None
Marysville WA 168,000 373,135 None None
Moses Lake WA 138,600 307,831 None None
Pasco WA 161,700 359,142 None None
Puyallup WA 173,250 384,795 None None
Redmond WA 196,000 435,317 None None
Renton WA 185,500 412,003 None None
Richland WA 161,700 359,142 None None
Seattle WA 162,400 360,697 None None
Silverdale WA 183,808 419,777 None None
Spanaway WA 189,000 419,777 None None
Spokane WA 66,150 146,921 None None
Tacoma WA 191,800 425,996 None None
Tacoma WA 196,000 435,324 None None
Tacoma WA 187,111 415,579 None None
Vancouver WA 180,250 400,343 None None
Walla Walla WA 170,100 377,793 None None
Wenatchee WA 148,400 329,602 None None
Woodinville WA 171,500 380,908 None None
Page F-10
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Parts
- ----------------
Leon Valley TX 178,221 395,834 574,055
Lubbock TX 42,000 93,284 135,284
Lubbock TX 49,000 108,831 157,831
Midland TX 45,500 101,058 146,558
Odessa TX 50,750 112,718 163,468
Pasadena TX 107,391 238,519 345,910
Plano TX 187,564 417,857 605,421
San Antonio TX 245,164 544,518 789,682
Bountiful UT 183,750 408,115 591,865
Provo UT 125,395 278,507 403,902
Bellevue WA 185,500 411,997 597,497
Bellingham WA 168,000 373,133 541,133
Bothell WA 199,500 443,098 642,598
Everett WA 367,500 816,227 1,183,727
Hazel Dell WA 168,000 373,135 541,135
Kennewick WA 161,350 358,365 519,715
Kent WA 199,500 443,091 642,591
Lacey WA 171,150 380,125 551,275
Marysville WA 168,000 373,135 541,135
Moses Lake WA 138,600 307,831 446,431
Pasco WA 161,700 359,142 520,842
Puyallup WA 173,250 384,795 558,045
Redmond WA 196,000 435,317 631,317
Renton WA 185,500 412,003 597,503
Richland WA 161,700 359,142 520,842
Seattle WA 162,400 360,697 523,097
Silverdale WA 183,808 419,777 603,585
Spanaway WA 189,000 419,777 608,777
Spokane WA 66,150 146,921 213,071
Tacoma WA 191,800 425,996 617,796
Tacoma WA 196,000 435,324 631,324
Tacoma WA 187,111 415,579 602,690
Vancouver WA 180,250 400,343 580,593
Walla Walla WA 170,100 377,793 547,893
Wenatchee WA 148,400 329,602 478,002
Woodinville WA 171,500 380,908 552,408
Page F-11
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Parts
- ----------------
Leon Valley TX 145,689 01/17/90 300
Lubbock TX 41,610 10/26/87 300
Lubbock TX 48,546 10/29/87 300
Midland TX 45,078 10/27/87 300
Odessa TX 50,278 10/26/87 300
Pasadena TX 87,788 01/24/90 300
Plano TX 153,327 01/18/90 300
San Antonio TX 198,855 02/14/90 300
Bountiful UT 150,209 01/30/90 300
Provo UT 102,506 01/25/90 300
Bellevue WA 186,185 08/06/87 300
Bellingham WA 168,621 08/20/87 300
Bothell WA 200,242 08/20/87 300
Everett WA 361,708 11/17/87 300
Hazel Dell WA 155,100 05/23/88 300
Kennewick WA 161,950 08/26/87 300
Kent WA 200,237 08/06/87 300
Lacey WA 171,781 08/13/87 300
Marysville WA 168,625 08/20/87 300
Moses Lake WA 139,112 08/12/87 300
Pasco WA 162,300 08/18/87 300
Puyallup WA 172,769 09/15/87 300
Redmond WA 195,453 09/17/87 300
Renton WA 184,983 09/15/87 300
Richland WA 162,300 08/13/87 300
Seattle WA 163,004 08/20/87 300
Silverdale WA 188,474 09/16/87 300
Spanaway WA 189,701 08/25/87 300
Spokane WA 65,107 11/18/87 300
Tacoma WA 192,512 08/18/87 300
Tacoma WA 194,183 10/15/87 300
Tacoma WA 152,956 01/25/90 300
Vancouver WA 180,919 08/20/87 300
Walla Walla WA 170,728 08/06/87 300
Wenatchee WA 148,952 08/25/87 300
Woodinville WA 172,136 08/20/87 300
Page F-12
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Parts
- ----------------
Brown Deer WI 257,408 802,141 None None
Delafield WI 324,574 758,921 None None
Madison WI 452,630 811,977 None None
Oak Creek WI 420,465 852,408 None None
Automotive Service
- ------------------
Flagstaff AZ 144,821 417,485 None None
Chula Vista CA 313,293 409,654 None None
Arvada CO 201,565 339,038 None None
Arvada CO 241,044 344,753 None 57
Broomfield CO 154,930 503,626 None None
Denver CO 79,717 369,587 None None
Denver CO 341,726 433,341 None 22
Thornton CO 276,084 415,464 None None
Hartford CT 248,540 482,460 None None
Southington CT 225,882 672,910 None None
Ft. Lauderdale FL 254,090 465,890 None 775
Jacksonville FL 76,585 355,066 None None
Lauderdale Lakes FL 65,987 305,931 None None
Seminole FL 68,000 315,266 None None
Sunrise FL 80,253 372,070 None None
Tampa FL 70,000 324,538 None None
Tampa FL 67,000 310,629 None None
Tampa FL 86,502 401,041 None None
Atlanta GA 55,840 258,889 None None
Atlanta GA 78,646 364,625 None None
Bogart GA 66,807 309,733 None None
Duluth GA 222,275 316,925 None None
Gainesville GA 53,589 248,452 None None
Marietta GA 60,900 293,461 None None
Marietta GA 69,561 346,024 None None
Riverdale GA 58,444 270,961 None None
Rome GA 56,454 261,733 None None
Anderson IN 232,170 385,661 None None
Indianapolis IN 231,384 428,307 None None
Olathe KS 217,995 367,055 None None
Page F-13
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Parts
- ----------------
Brown Deer WI 257,408 802,141 1,059,549
Delafield WI 324,574 758,921 1,083,495
Madison WI 452,630 811,977 1,264,607
Oak Creek WI 420,465 852,408 1,272,873
Automotive Service
- ------------------
Flagstaff AZ 144,821 417,485 526,306
Chula Vista CA 313,293 409,654 722,947
Arvada CO 201,565 339,038 540,603
Arvada CO 241,044 344,810 585,854
Broomfield CO 154,930 503,626 658,556
Denver CO 79,717 369,587 449,304
Denver CO 341,726 433,363 775,089
Thornton CO 276,084 415,464 691,548
Hartford CT 248,540 482,460 731,000
Southington CT 225,882 672,910 898,792
Ft. Lauderdale FL 254,090 466,665 720,755
Jacksonville FL 76,585 355,066 431,651
Lauderdale Lakes FL 65,987 305,931 371,918
Seminole FL 68,000 315,266 383,266
Sunrise FL 80,253 372,070 452,323
Tampa FL 70,000 324,538 394,538
Tampa FL 67,000 310,629 377,629
Tampa FL 86,502 401,041 487,543
Atlanta GA 55,840 258,889 314,729
Atlanta GA 78,646 364,625 443,271
Bogart GA 66,807 309,733 376,540
Duluth GA 222,275 316,925 539,200
Gainesville GA 53,589 248,452 302,041
Marietta GA 60,900 293,461 354,361
Marietta GA 69,561 346,024 415,585
Riverdale GA 58,444 270,961 329,405
Rome GA 56,454 261,733 318,187
Anderson IN 232,170 385,661 617,831
Indianapolis IN 231,384 428,307 659,691
Olathe KS 217,995 367,055 585,050
Page F-14
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Parts
- ----------------
Brown Deer WI 33,258 12/15/98 07/06/98 300
Delafield WI 8,297 03/11/99 300
Madison WI 38,972 10/20/98 03/31/98 300
Oak Creek WI 40,912 08/07/98 03/12/98 300
Automotive Service
- ------------------
Flagstaff AZ 22,202 09/30/98 08/29/97 300
Chula Vista CA 59,400 05/01/96 12/22/95 300
Arvada CO 45,770 08/28/96 03/15/96 300
Arvada CO 40,407 01/03/97 07/01/96 300
Broomfield CO 67,990 08/22/96 03/06/96 300
Denver CO 240,139 10/08/85 300
Denver CO 37,829 09/25/97 06/09/97 300
Thornton CO 49,004 12/31/96 10/04/96 300
Hartford CT 63,524 09/27/96 300
Southington CT 67,895 05/30/97 300
Ft. Lauderdale FL 28,432 05/13/98 12/24/97 300
Jacksonville FL 226,895 12/23/85 300
Lauderdale Lakes FL 193,123 02/19/86 300
Seminole FL 201,461 12/23/85 300
Sunrise FL 235,999 02/14/86 300
Tampa FL 207,386 12/27/85 300
Tampa FL 198,498 12/27/85 300
Tampa FL 245,346 07/23/86 300
Atlanta GA 166,438 11/27/85 300
Atlanta GA 233,003 12/18/85 300
Bogart GA 197,926 12/20/85 300
Duluth GA 24,943 10/24/97 06/20/97 300
Gainesville GA 158,764 12/19/85 300
Marietta GA 187,526 12/26/85 300
Marietta GA 214,098 06/03/86 300
Riverdale GA 172,099 01/15/86 300
Rome GA 167,251 12/19/85 300
Anderson IN 31,326 12/19/97 300
Indianapolis IN 56,394 09/27/96 300
Olathe KS 38,525 04/22/97 10/31/96 300
Page F-15
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Service
- ------------------
Louisville KY 56,054 259,881 None None
Newport KY 323,511 289,017 None None
Lenox MA 287,769 535,273 None None
Billerica MA 399,043 462,240 None None
Clinton MD 70,880 328,620 None None
Minneapolis MN 58,000 268,903 None None
Independence MO 297,641 233,152 None None
Concord NC 237,688 357,976 None 414
Durham NC 55,074 255,336 None None
Durham NC 354,676 361,203 None None
Fayetteville NC 224,326 257,733 None None
Garner NC 218,294 319,334 None 414
Greensboro NC 287,474 316,108 None None
Matthews NC 295,580 338,472 None 414
Pineville NC 254,460 355,630 None None
Raleigh NC 89,145 413,301 None None
Raleigh NC 398,694 263,621 None None
Albion NY 170,589 317,424 None None
Dansville NY 181,664 337,991 None None
East Amherst NY 260,708 484,788 None None
East Syracuse NY 250,609 466,264 None None
Johnson City NY 242,863 451,877 None None
Wellsville NY 161,331 300,231 None None
West Amherst NY 268,692 499,619 None None
Akron OH 139,126 460,334 None None
Beaver Creek OH 205,000 492,538 None None
Centerville OH 305,000 420,448 None None
Cincinnati OH 293,005 201,340 None None
Columbus OH 71,098 329,627 None None
Columbus OH 75,761 351,247 None None
Columbus OH 245,036 470,468 None None
Dayton OH 70,000 324,538 None None
Eastlake OH 321,347 459,774 None None
Fairfield OH 323,408 235,024 None None
Findlay OH 283,515 397,004 None None
Hamilton OH 252,608 413,279 None None
Page F-16
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Service
- ------------------
Louisville KY 56,054 259,881 315,935
Newport KY 323,511 289,017 612,528
Lenox MA 287,769 535,273 823,042
Billerica MA 399,043 462,240 861,283
Clinton MD 70,880 328,620 399,500
Minneapolis MN 58,000 268,903 326,903
Independence MO 297,641 233,152 530,793
Concord NC 237,688 358,390 596,078
Durham NC 55,074 255,336 310,410
Durham NC 354,676 361,203 715,879
Fayetteville NC 224,326 257,733 482,059
Garner NC 218,294 319,748 538,042
Greensboro NC 287,474 316,108 603,582
Matthews NC 295,580 338,886 634,466
Pineville NC 254,460 355,630 610,090
Raleigh NC 89,145 413,301 502,446
Raleigh NC 398,694 263,621 662,315
Albion NY 170,589 317,424 488,013
Dansville NY 181,664 337,991 519,655
East Amherst NY 260,708 484,788 745,496
East Syracuse NY 250,609 466,264 716,873
Johnson City NY 242,863 451,877 694,740
Wellsville NY 161,331 300,231 461,562
West Amherst NY 268,692 499,619 768,311
Akron OH 139,126 460,334 599,460
Beaver Creek OH 205,000 492,538 697,538
Centerville OH 305,000 420,448 725,448
Cincinnati OH 293,005 201,340 494,345
Columbus OH 71,098 329,627 400,725
Columbus OH 75,761 351,247 427,008
Columbus OH 245,036 470,468 715,504
Dayton OH 70,000 324,538 394,538
Eastlake OH 321,347 459,774 781,121
Fairfield OH 323,408 235,024 558,432
Findlay OH 283,515 397,004 680,519
Hamilton OH 252,608 413,279 665,887
Page F-17
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Service
- ------------------
Louisville KY 166,069 12/17/85 300
Newport KY 26,166 09/17/97 300
Lenox MA 16,923 03/31/99 300
Billerica MA 49,714 03/31/97 300
Clinton MD 212,254 11/15/85 300
Minneapolis MN 171,835 12/18/85 300
Independence MO 28,367 12/20/96 300
Concord NC 20,625 05/27/98 11/05/97 300
Durham NC 164,922 11/13/85 300
Durham NC 32,786 08/29/97 03/26/97 300
Fayetteville NC 20,710 12/01/97 300
Garner NC 25,163 01/05/98 06/20/97 300
Greensboro NC 31,861 06/09/97 01/29/97 300
Matthews NC 16,140 08/28/98 02/27/98 300
Pineville NC 32,297 08/28/97 04/04/97 300
Raleigh NC 267,306 10/28/85 300
Raleigh NC 22,892 10/01/97 300
Albion NY 10,032 03/31/99 300
Dansville NY 10,684 03/31/99 300
East Amherst NY 15,332 03/31/99 300
East Syracuse NY 14,738 03/31/99 300
Johnson City NY 14,283 03/31/99 300
Wellsville NY 9,488 03/31/99 300
West Amherst NY 15,802 03/31/99 300
Akron OH 41,903 09/17/97 300
Beaver Creek OH 54,998 02/13/97 09/03/96 300
Centerville OH 58,162 07/24/96 06/27/96 300
Cincinnati OH 18,039 09/17/97 300
Columbus OH 214,175 10/02/85 300
Columbus OH 227,172 10/24/85 300
Columbus OH 76,059 12/21/95 300
Dayton OH 209,897 10/31/85 300
Eastlake OH 74,330 12/22/95 300
Fairfield OH 21,176 09/17/97 300
Findlay OH 32,250 12/24/97 300
Hamilton OH 42,002 03/31/97 09/30/96 300
Page F-18
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Service
- ------------------
Huber Heights OH 282,000 449,381 None None
Miamisburg OH 63,996 296,701 None None
Milford OH 353,324 269,997 None None
Mt. Vernon OH 216,115 375,357 None None
Northwood OH 65,978 263,912 None None
Norwalk OH 200,205 366,000 None None
Sandusky OH 264,708 404,011 None None
Springboro OH 191,911 522,902 None None
Toledo OH 91,655 366,621 None None
Toledo OH 73,408 293,632 None None
Midwest City OK 106,312 333,551 None None
The Village OK 143,655 295,422 None None
Bethel Park PA 299,595 331,264 None None
Bethlehem PA 275,328 389,067 None None
Bethlehem PA 229,162 310,526 None None
Philadelphia PA 858,500 877,744 None None
Springfield Twp. PA 82,740 383,601 None None
York PA 249,436 347,424 None None
Charleston SC 217,250 294,079 None None
Columbia SC 343,785 295,001 None None
Columbia SC 267,622 298,594 None None
Greenville SC 221,946 315,163 None None
Lexington SC 241,534 342,182 None 295
North Charleston SC 174,980 341,466 None None
Brentwood TN 305,546 505,728 None None
Nashville TN 342,960 227,440 None None
Dallas TX 234,604 325,951 None None
Houston TX 285,000 369,697 None None
Houston TX 233,406 411,197 None None
Houston TX 195,000 424,651 None None
Lewisville TX 199,942 324,736 None None
San Antonio TX 198,828 437,422 None None
Richmond VA 149,780 399,415 None 411
Roanoke VA 349,628 322,545 None None
Virginia Beach VA 287,675 382,125 None 402
Bremerton WA 261,172 373,080 None None
Page F-19
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Service
- ------------------
Huber Heights OH 282,000 449,381 731,381
Miamisburg OH 63,996 296,701 360,697
Milford OH 353,324 269,997 623,321
Mt. Vernon OH 216,115 375,357 591,472
Northwood OH 65,978 263,912 329,890
Norwalk OH 200,205 366,000 566,205
Sandusky OH 264,708 404,011 668,719
Springboro OH 191,911 522,902 714,813
Toledo OH 91,655 366,621 458,276
Toledo OH 73,408 293,632 367,040
Midwest City OK 106,312 333,551 439,863
The Village OK 143,655 295,422 439,077
Bethel Park PA 299,595 331,264 630,859
Bethlehem PA 275,328 389,067 664,395
Bethlehem PA 229,162 310,526 539,688
Philadelphia PA 858,500 877,744 1,736,244
Springfield Twp. PA 82,740 383,601 466,341
York PA 249,436 347,424 596,860
Charleston SC 217,250 294,079 511,329
Columbia SC 343,785 295,001 638,786
Columbia SC 267,622 298,594 566,216
Greenville SC 221,946 315,163 537,109
Lexington SC 241,534 342,477 584,011
North Charleston SC 174,980 341,466 516,446
Brentwood TN 305,546 505,728 811,274
Nashville TN 342,960 227,440 570,400
Dallas TX 234,604 325,951 560,555
Houston TX 285,000 369,697 654,697
Houston TX 233,406 411,197 644,603
Houston TX 195,000 424,651 619,651
Lewisville TX 199,942 324,736 524,678
San Antonio TX 198,828 437,422 636,250
Richmond VA 149,780 399,826 549,606
Roanoke VA 349,628 322,545 672,173
Virginia Beach VA 287,675 382,527 670,202
Bremerton WA 261,172 373,080 634,252
Page F-20
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Service
- ------------------
Huber Heights OH 53,174 12/03/96 07/10/96 300
Miamisburg OH 192,782 10/08/85 300
Milford OH 24,402 09/18/97 300
Mt. Vernon OH 30,485 12/30/97 300
Northwood OH 234,405 09/12/86 180
Norwalk OH 29,727 12/19/97 300
Sandusky OH 32,827 12/19/97 300
Springboro OH 57,861 02/07/97 300
Toledo OH 325,631 09/12/86 180
Toledo OH 260,802 09/12/86 180
Midwest City OK 18,146 08/06/98 07/29/97 300
The Village OK 19,941 03/06/98 06/30/97 300
Bethel Park PA 26,914 12/19/97 300
Bethlehem PA 31,646 12/19/97 300
Bethlehem PA 25,193 12/23/97 300
Philadelphia PA 267,091 05/19/95 12/05/94 300
Springfield Twp. PA 242,154 02/28/86 300
York PA 28,205 12/24/97 300
Charleston SC 27,635 07/14/97 03/11/97 300
Columbia SC 29,551 05/27/97 01/31/97 300
Columbia SC 20,091 03/31/98 10/24/97 300
Greenville SC 27,569 09/05/97 03/31/97 300
Lexington SC 9,543 02/03/99 09/24/98 300
North Charleston SC 18,512 08/06/98 03/04/98 300
Brentwood TN 39,148 03/13/98 04/16/97 300
Nashville TN 20,503 09/17/97 300
Dallas TX 44,003 08/09/96 02/14/96 300
Houston TX 32,231 08/08/97 08/08/97 300
Houston TX 2,029 09/07/99 03/23/98 300
Houston TX 2,098 10/01/99 05/28/98 300
Lewisville TX 43,839 08/02/96 01/19/96 300
San Antonio TX 75,091 09/01/95 300
Richmond VA 48,595 12/20/96 300
Roanoke VA 26,173 12/19/97 300
Virginia Beach VA 44,956 01/07/97 09/27/96 300
Bremerton WA 46,243 03/19/97 07/18/96 300
Page F-21
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Service
- ------------------
Milwaukee WI 173,005 499,244 None None
Milwaukee WI 152,509 475,480 None None
New Berlin WI 188,491 466,268 None None
Book Stores
- -----------
Tampa FL 998,250 3,696,707 None None
Business Services
- -----------------
Jackson MI 550,162 571,590 None None
Child Care
- ----------
Birmingham AL 63,800 295,791 None None
Huntsville AL 28,600 197,165 None 277
Mobile AL 78,400 237,671 None 277
Mobile AL 63,000 292,084 None 277
Mesa AZ 308,951 1,025,561 None None
Avondale AZ 242,723 1,129,103 None None
Chandler AZ 144,083 668,079 None None
Chandler AZ 291,720 647,923 None None
Chandler AZ 271,695 603,446 None None
Glendale AZ 115,000 285,172 None 76
Mesa AZ 297,500 660,755 None None
Mesa AZ 276,770 590,417 None None
Peoria AZ 281,750 625,779 None None
Phoenix AZ 318,500 707,397 None None
Phoenix AZ 264,504 587,471 None None
Phoenix AZ 260,719 516,181 None None
Scottsdale AZ 291,993 648,529 None None
Tempe AZ 292,200 648,989 None None
Tempe AZ 294,000 638,977 None None
Tucson AZ 304,500 676,303 None None
Tucson AZ 283,500 546,878 None None
Calabasas CA 156,430 725,248 None None
Carmichael CA 131,035 607,507 None None
Chino CA 155,000 634,071 None None
Chula Vista CA 350,563 778,614 None None
Page F-22
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Service
- ------------------
Milwaukee WI 173,005 499,244 672,249
Milwaukee WI 152,509 475,480 627,989
New Berlin WI 188,491 466,268 654,759
Book Stores
- -----------
Tampa FL 998,250 3,696,707 4,694,957
Business Services
- -----------------
Jackson MI 550,162 571,590 1,121,752
Child Care
- ----------
Birmingham AL 63,800 295,791 359,591
Huntsville AL 28,600 197,442 226,042
Mobile AL 78,400 237,948 316,348
Mobile AL 63,000 292,361 355,361
Mesa AZ 308,951 1,025,561 1,334,512
Avondale AZ 242,723 1,129,103 1,371,826
Chandler AZ 144,083 668,079 812,162
Chandler AZ 291,720 647,923 939,643
Chandler AZ 271,695 603,446 875,141
Glendale AZ 115,000 285,248 400,248
Mesa AZ 297,500 660,755 958,255
Mesa AZ 276,770 590,417 867,187
Peoria AZ 281,750 625,779 907,529
Phoenix AZ 318,500 707,397 1,025,897
Phoenix AZ 264,504 587,471 851,975
Phoenix AZ 260,719 516,181 776,900
Scottsdale AZ 291,993 648,529 940,522
Tempe AZ 292,200 648,989 941,189
Tempe AZ 294,000 638,977 932,977
Tucson AZ 304,500 676,303 980,803
Tucson AZ 283,500 546,878 830,378
Calabasas CA 156,430 725,248 881,678
Carmichael CA 131,035 607,507 738,542
Chino CA 155,000 634,071 789,071
Chula Vista CA 350,563 778,614 1,129,177
Page F-23
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Service
- ------------------
Milwaukee WI 80,711 12/22/95 300
Milwaukee WI 62,603 09/27/96 300
New Berlin WI 75,380 12/22/95 300
Book Stores
- -----------
Tampa FL 412,444 03/07/97 300
Business Services
- -----------------
Jackson MI 19,798 01/15/99 09/24/98 300
Child Care
- ----------
Birmingham AL 210,702 10/31/84 300
Huntsville AL 197,234 06/15/82 180
Mobile AL 237,740 10/15/82 180
Mobile AL 199,474 04/25/85 300
Mesa AZ 11,895 07/26/99 01/13/99 300
Avondale AZ 24,386 04/20/99 07/27/98 300
Chandler AZ 395,616 12/17/86 300
Chandler AZ 285,193 12/11/87 300
Chandler AZ 265,698 12/14/87 300
Glendale AZ 285,191 02/08/84 180
Mesa AZ 273,613 09/29/88 300
Mesa AZ 244,489 09/29/88 300
Peoria AZ 270,021 03/30/88 300
Phoenix AZ 292,927 09/29/88 300
Phoenix AZ 207,829 06/29/90 300
Phoenix AZ 173,788 12/26/90 300
Scottsdale AZ 285,502 12/14/87 300
Tempe AZ 280,037 03/10/88 300
Tempe AZ 226,739 09/27/90 300
Tucson AZ 280,052 09/28/88 300
Tucson AZ 226,458 09/29/88 300
Calabasas CA 471,858 09/26/85 300
Carmichael CA 369,282 08/22/86 300
Chino CA 634,071 10/06/83 180
Chula Vista CA 347,313 10/30/87 300
Page F-24
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Corona CA 144,856 671,584 None None
El Cajon CA 157,804 731,621 None None
Encinitas CA 320,000 710,729 None None
Escondido CA 276,286 613,638 None None
Folsom CA 281,563 625,363 None None
Mission Viejo CA 353,891 744,367 None None
Moreno Valley CA 304,489 676,214 None None
Oceanside CA 145,568 674,889 None None
Palmdale CA 249,490 554,125 None None
Rancho Cordova CA 276,328 613,733 None None
Rancho Cucamonga CA 471,733 1,047,739 None None
Roseville CA 297,343 660,411 None None
Sacramento CA 290,734 645,732 None None
Santee CA 248,418 551,748 None None
Simi Valley CA 208,585 967,055 None None
Valencia CA 301,295 669,185 None None
Walnut CA 217,365 1,007,753 None None
Aurora CO 141,811 657,497 None None
Aurora CO 287,000 637,440 None None
Aurora CO 301,455 655,610 None None
Broomfield CO 107,000 403,080 None None
Broomfield CO 155,306 344,941 None None
Colorado Springs CO 58,400 271,217 None None
Colorado Springs CO 92,570 241,413 None None
Colorado Springs CO 115,542 535,700 None None
Englewood CO 131,216 608,372 None None
Englewood CO 158,651 735,572 None None
Fort Collins CO 55,200 256,356 None 3,600
Fort Collins CO 117,105 542,950 None None
Fort Collins CO 137,734 638,593 None None
Greeley CO 58,400 270,755 None 227
Littleton CO 161,617 358,956 None None
Littleton CO 287,000 637,435 None None
Littleton CO 299,250 664,642 None None
Longmont CO 115,592 535,931 None None
Louisville CO 58,089 269,313 None None
Page F-25
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Corona CA 144,856 671,584 816,440
El Cajon CA 157,804 731,621 889,425
Encinitas CA 320,000 710,729 1,030,729
Escondido CA 276,286 613,638 889,924
Folsom CA 281,563 625,363 906,926
Mission Viejo CA 353,891 744,367 1,098,258
Moreno Valley CA 304,489 676,214 980,703
Oceanside CA 145,568 674,889 820,457
Palmdale CA 249,490 554,125 803,615
Rancho Cordova CA 276,328 613,733 890,061
Rancho Cucamonga CA 471,733 1,047,739 1,519,472
Roseville CA 297,343 660,411 957,754
Sacramento CA 290,734 645,732 936,466
Santee CA 248,418 551,748 800,166
Simi Valley CA 208,585 967,055 1,175,640
Valencia CA 301,295 669,185 970,480
Walnut CA 217,365 1,007,753 1,225,118
Aurora CO 141,811 657,497 799,308
Aurora CO 287,000 637,440 924,440
Aurora CO 301,455 655,610 957,065
Broomfield CO 107,000 403,080 510,080
Broomfield CO 155,306 344,941 500,247
Colorado Springs CO 58,400 271,217 329,617
Colorado Springs CO 92,570 241,413 333,983
Colorado Springs CO 115,542 535,700 651,242
Englewood CO 131,216 608,372 739,588
Englewood CO 158,651 735,572 894,223
Fort Collins CO 55,200 259,956 315,156
Fort Collins CO 117,105 542,950 660,055
Fort Collins CO 137,734 638,593 776,327
Greeley CO 58,400 270,982 329,382
Littleton CO 161,617 358,956 520,573
Littleton CO 287,000 637,435 924,435
Littleton CO 299,250 664,642 963,892
Longmont CO 115,592 535,931 651,523
Louisville CO 58,089 269,313 327,402
Page F-26
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Corona CA 472,942 12/19/84 300
El Cajon CA 467,518 12/19/85 300
Encinitas CA 312,885 12/29/87 300
Escondido CA 270,140 12/31/87 300
Folsom CA 280,130 10/23/87 300
Mission Viejo CA 214,121 06/24/93 300
Moreno Valley CA 317,491 02/11/87 300
Oceanside CA 431,265 12/23/85 300
Palmdale CA 229,458 09/14/88 300
Rancho Cordova CA 243,510 03/22/89 300
Rancho Cucamonga CA 461,247 12/30/87 300
Roseville CA 295,821 10/21/87 300
Sacramento CA 288,038 10/05/87 300
Santee CA 250,956 07/23/87 300
Simi Valley CA 617,968 12/20/85 300
Valencia CA 282,921 06/23/88 300
Walnut CA 612,578 08/22/86 300
Aurora CO 412,496 03/25/86 300
Aurora CO 280,620 12/31/87 300
Aurora CO 294,948 09/27/89 300
Broomfield CO 403,080 01/12/83 180
Broomfield CO 148,841 03/15/88 300
Colorado Springs CO 271,217 12/22/82 180
Colorado Springs CO 241,413 08/31/83 180
Colorado Springs CO 318,881 12/04/86 300
Englewood CO 362,140 12/05/86 300
Englewood CO 435,583 12/29/86 300
Fort Collins CO 257,076 12/22/82 180
Fort Collins CO 340,631 03/25/86 300
Fort Collins CO 400,636 03/25/86 300
Greeley CO 191,813 11/21/84 300
Littleton CO 158,020 12/10/87 300
Littleton CO 263,956 09/29/88 300
Littleton CO 275,223 09/29/88 300
Longmont CO 336,229 03/25/86 300
Louisville CO 196,018 06/22/84 300
Page F-27
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Parker CO 153,551 341,042 None None
Westminster CO 306,387 695,737 None None
Bradenton FL 160,060 355,501 None None
Clearwater FL 42,223 269,380 None None
Jacksonville FL 38,500 228,481 None None
Jacksonville FL 48,000 243,060 None None
Jacksonville FL 184,800 410,447 None None
Jupiter FL 78,000 360,088 None None
Margate FL 66,686 309,183 None None
Melbourne FL 256,439 549,345 None None
Niceville FL 73,696 341,688 None None
Orlando FL 68,001 313,922 None None
Orlando FL 159,177 353,538 None None
Orlando FL 245,249 544,704 None None
Orlando FL 190,050 422,107 None None
Oviedo FL 166,409 369,598 None None
Panama City FL 69,500 244,314 None 283
Pensacola FL 147,000 326,492 None None
Royal Palm Beach FL 194,193 431,309 None None
Spring Hill FL 146,939 326,356 None None
St. Augustine FL 44,800 213,040 None None
Sunrise FL 69,400 246,671 None None
Sunrise FL 245,000 533,280 None None
Tallahassee FL 66,000 232,010 None 283
Tampa FL 53,385 199,846 None None
Duluth GA 310,000 1,039,972 None None
Douglasville GA 54,000 250,356 None None
Dunwoody GA 318,500 707,399 None None
Ellenwood GA 119,678 275,414 None None
Fayetteville GA 148,400 329,601 None None
Lawrenceville GA 141,449 314,161 None None
Lilburn GA 116,350 539,488 None None
Lithia Springs GA 187,444 363,358 None None
Lithonia GA 239,715 524,459 None None
Marietta GA 231,000 513,061 None None
Marietta GA 273,000 619,076 None None
Page F-28
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Parker CO 153,551 341,042 494,593
Westminster CO 306,387 695,737 1,002,124
Bradenton FL 160,060 355,501 515,561
Clearwater FL 42,223 269,380 311,603
Jacksonville FL 38,500 228,481 266,981
Jacksonville FL 48,000 243,060 291,060
Jacksonville FL 184,800 410,447 595,247
Jupiter FL 78,000 360,088 438,088
Margate FL 66,686 309,183 375,869
Melbourne FL 256,439 549,345 805,784
Niceville FL 73,696 341,688 415,384
Orlando FL 68,001 313,922 381,923
Orlando FL 159,177 353,538 512,715
Orlando FL 245,249 544,704 789,953
Orlando FL 190,050 422,107 612,157
Oviedo FL 166,409 369,598 536,007
Panama City FL 69,500 244,597 314,097
Pensacola FL 147,000 326,492 473,492
Royal Palm Beach FL 194,193 431,309 625,502
Spring Hill FL 146,939 326,356 473,295
St. Augustine FL 44,800 213,040 257,840
Sunrise FL 69,400 246,671 316,071
Sunrise FL 245,000 533,280 778,280
Tallahassee FL 66,000 232,293 298,293
Tampa FL 53,385 199,846 253,231
Duluth GA 310,000 1,039,972 1,349,972
Douglasville GA 54,000 251,976 305,976
Dunwoody GA 318,500 707,399 1,025,899
Ellenwood GA 119,678 275,414 395,092
Fayetteville GA 148,400 329,601 478,001
Lawrenceville GA 141,449 314,161 455,610
Lilburn GA 116,350 539,488 655,838
Lithia Springs GA 187,444 363,358 550,802
Lithonia GA 239,715 524,459 764,174
Marietta GA 231,000 513,061 744,061
Marietta GA 273,000 619,076 892,076
Page F-29
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Parker CO 152,764 10/19/87 300
Westminster CO 289,344 09/27/89 300
Bradenton FL 151,332 05/05/88 300
Clearwater FL 269,380 12/22/81 180
Jacksonville FL 228,481 12/22/81 180
Jacksonville FL 243,060 12/22/81 180
Jacksonville FL 162,853 03/30/89 300
Jupiter FL 235,325 09/11/85 300
Margate FL 183,090 12/16/86 300
Melbourne FL 160,046 04/16/93 300
Niceville FL 203,387 12/03/86 300
Orlando FL 205,154 09/04/85 300
Orlando FL 160,801 07/02/87 300
Orlando FL 239,793 12/10/87 300
Orlando FL 167,479 03/30/89 300
Oviedo FL 163,780 11/20/87 300
Panama City FL 244,314 06/15/82 180
Pensacola FL 129,542 03/28/89 300
Royal Palm Beach FL 176,108 11/15/88 300
Spring Hill FL 144,617 11/24/87 300
St. Augustine FL 213,040 12/22/81 180
Sunrise FL 246,671 06/15/82 180
Sunrise FL 212,817 05/25/89 300
Tallahassee FL 232,222 06/15/82 180
Tampa FL 199,846 12/22/81 180
Duluth GA 8,624 08/25/99 06/17/99 300
Douglasville GA 178,349 10/23/84 300
Dunwoody GA 288,838 11/16/88 300
Ellenwood GA 112,454 11/16/88 300
Fayetteville GA 130,776 03/29/89 300
Lawrenceville GA 131,911 07/07/88 300
Lilburn GA 319,468 12/23/86 300
Lithia Springs GA 140,759 12/28/89 300
Lithonia GA 194,418 08/20/91 300
Marietta GA 221,384 03/18/88 300
Marietta GA 265,329 04/26/88 300
Page F-30
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Marietta GA 148,620 330,090 None None
Marietta GA 292,250 649,095 None None
Marietta GA 295,750 596,299 None None
Marietta GA 301,000 668,529 None None
Martinez GA 141,153 313,504 None None
Smyrna GA 274,750 610,229 None None
Stockbridge GA 168,700 374,688 None None
Stone Mountain GA 65,000 301,357 None None
Stone Mountain GA 316,750 703,512 None None
Valdosta GA 73,561 341,059 None None
Cedar Rapids IA 194,950 427,085 None None
Iowa City IA 186,900 408,910 None None
Johnston IA 186,996 347,278 None None
Addison IL 125,780 583,146 None None
Algonquin IL 241,500 509,629 None None
Aurora IL 468,000 1,259,890 None None
Aurora IL 165,679 398,738 None None
Bartlett IL 120,824 560,166 None None
Bolingbrook IL 60,000 409,024 None None
Carol Stream IL 122,831 586,416 None None
Crystal Lake IL 400,000 1,259,388 None None
Elk Grove VillageIL 126,860 588,175 None None
Elk Grove VillageIL 214,845 477,181 None None
Glendale Heights IL 318,500 707,399 None None
Hoffman Estates IL 318,500 707,399 None None
Hoffman Estates IL 211,082 468,818 None None
Lake in the HillsIL 375,000 1,127,635 None None
Lockport IL 189,477 442,018 None None
Naperville IL 425,000 1,229,493 None None
O'Fallon IL 141,250 313,722 None None
Orland Park IL 218,499 485,296 None None
Oswego IL 380,000 1,165,782 None None
Palatine IL 121,911 565,232 None None
Roselle IL 297,541 561,037 None None
Schaumburg IL 218,798 485,955 None None
Vernon Hills IL 132,523 614,430 None None
Page F-31
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Marietta GA 148,620 330,090 478,710
Marietta GA 292,250 649,095 941,345
Marietta GA 295,750 596,299 892,049
Marietta GA 301,000 668,529 969,529
Martinez GA 141,153 313,504 454,657
Smyrna GA 274,750 610,229 884,979
Stockbridge GA 168,700 374,688 543,388
Stone Mountain GA 65,000 301,357 366,357
Stone Mountain GA 316,750 703,512 1,020,262
Valdosta GA 73,561 341,059 414,620
Cedar Rapids IA 194,950 427,085 622,035
Iowa City IA 186,900 408,910 595,810
Johnston IA 186,996 347,278 534,274
Addison IL 125,780 583,146 708,926
Algonquin IL 241,500 509,629 751,129
Aurora IL 468,000 1,259,890 1,727,890
Aurora IL 165,679 398,738 564,417
Bartlett IL 120,824 560,166 680,990
Bolingbrook IL 60,000 409,024 469,024
Carol Stream IL 122,831 586,416 709,247
Crystal Lake IL 400,000 1,259,388 1,659,388
Elk Grove VillageIL 126,860 588,175 715,035
Elk Grove VillageIL 214,845 477,181 692,026
Glendale Heights IL 318,500 707,399 1,025,899
Hoffman Estates IL 318,500 707,399 1,025,899
Hoffman Estates IL 211,082 468,818 679,900
Lake in the HillsIL 375,000 1,127,635 1,502,635
Lockport IL 189,477 442,018 631,495
Naperville IL 425,000 1,229,493 1,654,493
O'Fallon IL 141,250 313,722 454,972
Orland Park IL 218,499 485,296 703,795
Oswego IL 380,000 1,165,782 1,545,782
Palatine IL 121,911 565,232 687,143
Roselle IL 297,541 561,037 858,578
Schaumburg IL 218,798 485,955 704,753
Vernon Hills IL 132,523 614,430 746,953
Page F-32
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Marietta GA 136,792 09/16/88 300
Marietta GA 263,156 12/02/88 300
Marietta GA 241,753 12/30/88 300
Marietta GA 271,035 12/30/88 300
Martinez GA 138,011 12/31/87 300
Smyrna GA 249,162 11/15/88 300
Stockbridge GA 148,665 03/28/89 300
Stone Mountain GA 199,547 06/19/85 300
Stone Mountain GA 287,251 11/16/88 300
Valdosta GA 203,010 12/03/86 300
Cedar Rapids IA 139,944 09/24/92 300
Iowa City IA 135,985 09/24/92 300
Johnston IA 109,039 08/19/91 300
Addison IL 365,851 03/25/86 300
Algonquin IL 181,901 07/10/90 300
Aurora IL 2,091 10/26/99 06/29/99 300
Aurora IL 161,655 12/21/88 300
Bartlett IL 351,432 03/25/86 300
Bolingbrook IL 409,024 10/18/82 180
Carol Stream IL 367,902 03/25/86 300
Crystal Lake IL 6,266 09/28/99 05/14/99 300
Elk Grove VillageIL 369,006 03/26/86 300
Elk Grove VillageIL 204,515 04/08/88 300
Glendale Heights IL 288,838 11/16/88 300
Hoffman Estates IL 280,673 03/31/89 300
Hoffman Estates IL 173,892 12/08/89 300
Lake in the HillsIL 5,608 09/03/99 05/19/99 300
Lockport IL 197,160 10/29/87 300
Naperville IL 2,040 10/06/99 05/28/99 300
O'Fallon IL 139,931 10/30/87 300
Orland Park IL 216,465 10/28/87 300
Oswego IL 9,669 08/18/99 06/30/99 300
Palatine IL 354,611 03/25/86 300
Roselle IL 227,457 12/30/88 300
Schaumburg IL 213,930 12/17/87 300
Vernon Hills IL 385,476 03/25/86 300
Page F-33
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Westmont IL 124,742 578,330 None None
Carmel IN 217,565 430,742 None None
Fishers IN 212,118 419,958 None None
Highland IN 220,460 436,476 None None
Indianapolis IN 245,000 544,153 None None
Noblesville IN 60,000 278,175 None None
Zionsville IN 127,568 319,770 None None
Lenexa KS 318,500 707,399 None None
Olathe KS 304,500 676,308 None None
Overland Park KS 357,500 1,115,135 None None
Overland Park KS 305,691 707,397 None None
Shawnee KS 315,000 699,629 None None
Shawnee KS 288,246 935,839 None None
Topeka KS 58,000 268,903 None None
Wichita KS 108,569 401,829 None None
Wichita KS 209,890 415,549 None None
Lexington KY 210,427 420,883 None None
Acton MA 315,533 700,813 None None
Marlborough MA 352,765 776,488 None None
Westborough MA 359,412 773,877 None None
Ellicott City MD 219,368 630,839 None None
Frederick MD 203,352 1,017,109 None None
Olney MD 342,500 760,701 None None
Waldorf MD 130,430 604,702 None None
Waldorf MD 237,207 526,844 None None
Canton MI 55,000 378,848 None None
Apple Valley MN 113,523 526,319 None None
Bloomington MN 124,113 575,416 None None
Brooklyn Park MN 118,111 547,587 None None
Brooklyn Park MN 112,823 523,073 None None
Eagan MN 112,127 519,845 None None
Eden Prairie MN 124,286 576,243 None None
Maple Grove MN 111,691 517,822 None None
Maple Grove MN 313,250 660,149 None None
Minnetonka MN 146,847 680,842 None None
Plymouth MN 134,221 622,350 None None
Page F-34
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Westmont IL 124,742 578,330 703,072
Carmel IN 217,565 430,742 648,307
Fishers IN 212,118 419,958 632,076
Highland IN 220,460 436,476 656,936
Indianapolis IN 245,000 544,153 789,153
Noblesville IN 60,000 278,175 338,175
Zionsville IN 127,568 319,770 447,338
Lenexa KS 318,500 707,399 1,025,899
Olathe KS 304,500 676,308 980,808
Overland Park KS 357,500 1,115,135 1,472,635
Overland Park KS 305,691 707,397 1,013,088
Shawnee KS 315,000 699,629 1,014,629
Shawnee KS 288,246 935,839 1,224,085
Topeka KS 58,000 268,903 326,903
Wichita KS 108,569 401,829 510,398
Wichita KS 209,890 415,549 625,439
Lexington KY 210,427 420,883 631,310
Acton MA 315,533 700,813 1,016,346
Marlborough MA 352,765 776,488 1,129,253
Westborough MA 359,412 773,877 1,133,289
Ellicott City MD 219,368 630,839 850,207
Frederick MD 203,352 1,017,109 1,220,461
Olney MD 342,500 760,701 1,103,201
Waldorf MD 130,430 604,702 735,132
Waldorf MD 237,207 526,844 764,051
Canton MI 55,000 378,848 433,848
Apple Valley MN 113,523 526,319 639,842
Bloomington MN 124,113 575,416 699,529
Brooklyn Park MN 118,111 547,587 665,698
Brooklyn Park MN 112,823 523,073 635,896
Eagan MN 112,127 519,845 631,972
Eden Prairie MN 124,286 576,243 700,529
Maple Grove MN 111,691 517,822 629,513
Maple Grove MN 313,250 660,149 973,399
Minnetonka MN 146,847 680,842 827,689
Plymouth MN 134,221 622,350 756,571
Page F-35
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Westmont IL 362,828 03/25/86 300
Carmel IN 145,022 12/27/90 300
Fishers IN 141,392 12/27/90 300
Highland IN 146,952 12/26/90 300
Indianapolis IN 192,504 06/29/90 300
Noblesville IN 189,975 04/30/85 300
Zionsville IN 142,629 10/28/87 300
Lenexa KS 280,673 03/31/89 300
Olathe KS 280,054 09/28/88 300
Overland Park KS 12,943 07/23/99 05/19/99 300
Overland Park KS 292,927 09/28/88 300
Shawnee KS 287,686 10/27/88 300
Shawnee KS 32,614 12/29/98 08/21/98 300
Topeka KS 183,643 04/16/85 300
Wichita KS 221,366 12/16/86 300
Wichita KS 139,907 12/26/90 300
Lexington KY 149,596 08/20/91 300
Acton MA 290,201 09/30/88 300
Marlborough MA 317,046 11/04/88 300
Westborough MA 315,978 11/01/88 300
Ellicott City MD 255,754 12/19/88 300
Frederick MD 59,311 06/30/98 300
Olney MD 334,883 12/18/87 300
Waldorf MD 433,104 09/26/84 300
Waldorf MD 231,930 12/31/87 300
Canton MI 378,848 10/06/82 180
Apple Valley MN 330,199 03/26/86 300
Bloomington MN 361,001 03/27/86 300
Brooklyn Park MN 343,540 03/26/86 300
Brooklyn Park MN 328,162 03/27/86 300
Eagan MN 326,136 03/31/86 300
Eden Prairie MN 361,520 03/27/86 300
Maple Grove MN 324,868 03/26/86 300
Maple Grove MN 236,449 07/11/90 300
Minnetonka MN 405,278 12/12/86 300
Plymouth MN 370,459 12/12/86 300
Page F-36
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
W. Bloomington MN 40,000 468,484 None None
White Bear Lake MN 260,750 579,133 None None
White Bear Lake MN 242,165 537,856 None None
Florissant MO 181,300 402,672 None None
Florissant MO 318,500 707,399 None None
Gladstone MO 294,000 652,987 None None
Lee's Summit MO 313,740 939,331 None None
Lee's Summit MO 330,000 993,751 None None
Lee's Summit MO 239,627 532,220 None None
Liberty MO 65,400 303,211 None None
Manchester MO 287,000 637,435 None None
North Kansas CityMO 307,784 898,137 None None
St. Charles MO 259,000 575,246 None None
Pearl MS 121,801 270,524 None None
Cary NC 75,200 262,973 None 228
Chapel Hill NC 77,000 356,992 None 228
Charlotte NC 27,551 247,000 None 228
Charlotte NC 134,582 268,222 None None
Concord NC 32,441 190,859 None None
Durham NC 220,728 429,380 None None
Durham NC 238,000 471,201 None None
Hendersonville NC 32,748 186,152 None 228
Kernersville NC 162,216 316,300 None None
Morrisville NC 175,700 390,234 None None
Bellevue NE 60,568 280,819 None None
Omaha NE 60,500 280,491 None None
Omaha NE 53,000 245,720 None None
Omaha NE 142,867 317,315 None None
Londonderry NH 335,467 745,082 None None
Clementon NJ 279,851 554,060 None None
Henderson NV 82,000 380,173 None None
Las Vegas NV 201,250 446,983 None None
Sparks NV 244,752 543,605 None None
Beavercreek OH 179,552 398,786 None None
Centerville OH 174,519 387,613 None None
Cincinnati OH 165,910 368,486 None None
Page F-37
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
W. Bloomington MN 40,000 468,484 508,484
White Bear Lake MN 260,750 579,133 839,883
White Bear Lake MN 242,165 537,856 780,021
Florissant MO 181,300 402,672 583,972
Florissant MO 318,500 707,399 1,025,899
Gladstone MO 294,000 652,987 946,987
Lee's Summit MO 313,740 939,331 1,253,071
Lee's Summit MO 330,000 993,751 1,323,751
Lee's Summit MO 239,627 532,220 771,847
Liberty MO 65,400 303,211 368,611
Manchester MO 287,000 637,435 924,435
North Kansas CityMO 307,784 898,137 1,205,921
St. Charles MO 259,000 575,246 834,246
Pearl MS 121,801 270,524 392,325
Cary NC 75,200 263,201 338,401
Chapel Hill NC 77,000 357,220 434,220
Charlotte NC 27,551 247,228 274,779
Charlotte NC 134,582 268,222 402,804
Concord NC 32,441 190,859 223,300
Durham NC 220,728 429,380 650,108
Durham NC 238,000 471,201 709,201
Hendersonville NC 32,748 186,380 219,128
Kernersville NC 162,216 316,300 478,516
Morrisville NC 175,700 390,234 565,934
Bellevue NE 60,568 280,819 341,387
Omaha NE 60,500 280,491 340,991
Omaha NE 53,000 245,720 298,720
Omaha NE 142,867 317,315 460,182
Londonderry NH 335,467 745,082 1,080,549
Clementon NJ 279,851 554,060 833,911
Henderson NV 82,000 380,173 462,173
Las Vegas NV 201,250 446,983 648,233
Sparks NV 244,752 543,605 788,357
Beavercreek OH 179,552 398,786 578,338
Centerville OH 174,519 387,613 562,132
Cincinnati OH 165,910 368,486 534,396
Page F-38
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
W. Bloomington MN 468,484 06/18/82 180
White Bear Lake MN 254,951 12/23/87 300
White Bear Lake MN 187,209 08/30/90 300
Florissant MO 159,767 03/29/89 300
Florissant MO 280,673 03/30/89 300
Gladstone MO 270,397 09/29/88 300
Lee's Summit MO 7,787 09/08/99 06/30/99 300
Lee's Summit MO 11,539 07/26/99 06/29/99 300
Lee's Summit MO 200,922 09/27/89 300
Liberty MO 200,773 06/18/85 300
Manchester MO 280,618 12/22/87 300
North Kansas CityMO 37,271 09/28/99 08/21/98 300
St. Charles MO 253,241 12/23/87 300
Pearl MS 110,605 11/15/88 300
Cary NC 263,007 01/25/84 180
Chapel Hill NC 243,801 04/17/85 300
Charlotte NC 247,000 12/23/81 180
Charlotte NC 109,516 11/16/88 300
Concord NC 190,859 12/23/81 180
Durham NC 169,978 12/29/89 300
Durham NC 147,949 08/20/91 300
Hendersonville NC 186,186 12/23/81 180
Kernersville NC 126,784 12/14/89 300
Morrisville NC 154,832 03/29/89 300
Bellevue NE 166,293 12/16/86 300
Omaha NE 203,070 08/01/84 300
Omaha NE 175,786 10/11/84 300
Omaha NE 139,689 12/09/87 300
Londonderry NH 284,910 08/18/89 300
Clementon NJ 172,397 09/09/91 300
Henderson NV 259,632 04/17/85 300
Las Vegas NV 158,128 06/29/90 300
Sparks NV 237,727 01/29/88 300
Beavercreek OH 182,551 06/30/87 300
Centerville OH 176,301 07/23/87 300
Cincinnati OH 170,843 04/29/87 300
Page F-39
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Dublin OH 84,000 389,446 None None
Englewood OH 74,000 343,083 None None
Forest Park OH 170,778 379,305 None None
Gahanna OH 86,000 398,718 None None
Huber Heights OH 245,000 544,153 None None
Loveland OH 206,136 457,829 None None
Maineville OH 173,105 384,468 None None
Pickerington OH 87,580 406,055 None None
Westerville OH 82,000 380,173 None None
Westerville OH 294,350 646,557 None None
Broken Arrow OK 78,705 220,434 None 279
Midwest City OK 67,800 314,338 None 279
Oklahoma City OK 50,800 214,474 None None
Oklahoma City OK 79,000 366,261 None 279
Yukon OK 61,000 282,812 None None
Beaverton OR 135,148 626,647 None None
Beaverton OR 115,232 534,301 None None
Charleston SC 125,593 278,947 None None
Charleston SC 140,700 312,498 None None
Columbia SC 58,160 269,643 None 1,042
Elgin SC 160,831 313,600 None None
Goose Creek SC 61,635 192,905 None 292
Ladson SC 31,543 177,457 None 292
Lexington SC 55,869 274,742 None 741
Mt. Pleasant SC 40,700 180,400 None None
Summerville SC 44,400 174,500 None None
Sumter SC 56,010 268,903 None 134
Memphis TN 238,263 504,897 None None
Memphis TN 238,000 528,608 None None
Memphis TN 221,501 491,962 None None
Nashville TN 274,298 609,223 None None
Atascocita TX 278,915 1,034,796 None None
Colleyville TX 250,000 1,070,310 None None
Corinth TX 285,000 1,040,521 None None
Flower Mound TX 281,735 1,099,589 None None
Sugarland TX 339,310 1,000,840 None None
Page F-40
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Dublin OH 84,000 389,446 473,446
Englewood OH 74,000 343,083 417,083
Forest Park OH 170,778 379,305 550,083
Gahanna OH 86,000 398,718 484,718
Huber Heights OH 245,000 544,153 789,153
Loveland OH 206,136 457,829 663,965
Maineville OH 173,105 384,468 557,573
Pickerington OH 87,580 406,055 493,635
Westerville OH 82,000 380,173 462,173
Westerville OH 294,350 646,557 940,907
Broken Arrow OK 78,705 220,713 299,418
Midwest City OK 67,800 314,617 382,417
Oklahoma City OK 50,800 214,474 265,274
Oklahoma City OK 79,000 366,540 445,540
Yukon OK 61,000 282,812 343,812
Beaverton OR 135,148 626,647 761,795
Beaverton OR 115,232 534,301 649,533
Charleston SC 125,593 278,947 404,540
Charleston SC 140,700 312,498 453,198
Columbia SC 58,160 270,685 328,845
Elgin SC 160,831 313,600 474,431
Goose Creek SC 61,635 193,197 254,832
Ladson SC 31,543 177,749 209,292
Lexington SC 55,869 275,483 331,352
Mt. Pleasant SC 40,700 180,400 221,100
Summerville SC 44,400 174,500 218,900
Sumter SC 56,010 269,037 325,047
Memphis TN 238,263 504,897 743,160
Memphis TN 238,000 528,608 766,608
Memphis TN 221,501 491,962 713,463
Nashville TN 274,298 609,223 883,521
Atascocita TX 278,915 1,034,796 1,313,711
Colleyville TX 250,000 1,070,310 1,320,310
Corinth TX 285,000 1,040,521 1,325,521
Flower Mound TX 281,735 1,099,589 1,381,324
Sugarland TX 339,310 1,000,840 1,340,150
Page F-41
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Dublin OH 253,041 10/08/85 300
Englewood OH 221,891 10/23/85 300
Forest Park OH 171,231 09/28/87 300
Gahanna OH 256,332 11/26/85 300
Huber Heights OH 187,850 09/27/90 300
Loveland OH 213,609 03/20/87 300
Maineville OH 179,382 03/06/87 300
Pickerington OH 241,700 12/11/86 300
Westerville OH 247,017 10/08/85 300
Westerville OH 228,744 09/26/90 300
Broken Arrow OK 220,503 01/27/83 180
Midwest City OK 206,934 08/14/85 300
Oklahoma City OK 214,474 06/15/82 180
Oklahoma City OK 260,598 11/14/84 300
Yukon OK 192,022 05/02/85 300
Beaverton OR 371,080 12/17/86 300
Beaverton OR 316,397 12/22/86 300
Charleston SC 118,743 05/26/88 300
Charleston SC 123,990 03/28/89 300
Columbia SC 191,851 11/14/84 300
Elgin SC 125,702 12/14/89 300
Goose Creek SC 192,905 12/22/81 180
Ladson SC 177,530 12/22/81 180
Lexington SC 195,479 11/13/84 300
Mt. Pleasant SC 180,400 12/22/81 180
Summerville SC 174,500 12/22/81 180
Sumter SC 178,058 06/18/85 300
Memphis TN 209,072 09/29/88 300
Memphis TN 218,893 09/30/88 300
Memphis TN 171,235 08/31/90 300
Nashville TN 241,720 03/30/89 300
Atascocita TX 12,013 07/19/99 05/14/99 300
Colleyville TX 8,880 08/17/99 05/14/99 300
Corinth TX 15,536 06/04/99 05/28/99 300
Flower Mound TX 23,700 04/23/99 01/19/99 300
Sugarland TX 18,256 05/30/99 01/21/99 300
Page F-42
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Allen TX 177,637 394,538 None None
Arlington TX 82,109 380,677 None None
Arlington TX 70,000 324,538 None None
Arlington TX 238,000 528,604 None None
Arlington TX 241,500 550,559 None None
Arlington TX 195,650 387,355 None None
Austin TX 103,600 230,532 None 75
Austin TX 88,872 222,684 None 75
Austin TX 134,383 623,103 None None
Austin TX 188,144 417,872 None None
Austin TX 236,733 528,608 None None
Austin TX 191,636 425,629 None None
Austin TX 224,878 499,460 None None
Austin TX 238,000 528,604 None None
Austin TX 217,878 483,913 None None
Bedford TX 241,500 550,559 None None
Carrollton TX 277,850 617,113 None None
Cedar Park TX 168,857 375,036 None None
Colleyville TX 68,000 315,266 None None
Converse TX 217,000 481,963 None None
Coppell TX 139,224 645,550 None None
Coppell TX 208,641 463,398 None None
Desoto TX 86,000 398,715 None 2,027
Duncanville TX 93,000 431,172 None None
Euless TX 234,111 519,962 None None
Flower Mound TX 202,773 442,845 None None
Fort Worth TX 85,518 396,495 None None
Fort Worth TX 238,000 528,608 None None
Fort Worth TX 210,007 444,460 None None
Fort Worth TX 216,160 427,962 None None
Garland TX 211,050 468,749 None None
Grand Prairie TX 167,164 371,276 None None
Houston TX 58,000 268,901 None 155
Houston TX 60,000 278,175 None 135
Houston TX 102,000 472,898 None 155
Houston TX 139,125 308,997 None 155
Page F-43
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Allen TX 177,637 394,538 572,175
Arlington TX 82,109 380,677 462,786
Arlington TX 70,000 324,538 394,538
Arlington TX 238,000 528,604 766,604
Arlington TX 241,500 550,559 792,059
Arlington TX 195,650 387,355 583,005
Austin TX 103,600 230,607 334,207
Austin TX 88,872 222,759 311,631
Austin TX 134,383 623,103 757,486
Austin TX 188,144 417,872 606,016
Austin TX 236,733 528,608 765,341
Austin TX 191,636 425,629 617,265
Austin TX 224,878 499,460 724,338
Austin TX 238,000 528,604 766,604
Austin TX 217,878 483,913 701,791
Bedford TX 241,500 550,559 792,059
Carrollton TX 277,850 617,113 894,963
Cedar Park TX 168,857 375,036 543,893
Colleyville TX 68,000 315,266 383,266
Converse TX 217,000 481,963 698,963
Coppell TX 139,224 645,550 784,774
Coppell TX 208,641 463,398 672,039
Desoto TX 86,000 400,742 486,742
Duncanville TX 93,000 431,172 524,172
Euless TX 234,111 519,962 754,073
Flower Mound TX 202,773 442,845 645,618
Fort Worth TX 85,518 396,495 482,013
Fort Worth TX 238,000 528,608 766,608
Fort Worth TX 210,007 444,460 654,467
Fort Worth TX 216,160 427,962 644,122
Garland TX 211,050 468,749 679,799
Grand Prairie TX 167,164 371,276 538,440
Houston TX 58,000 269,056 327,056
Houston TX 60,000 278,310 338,310
Houston TX 102,000 473,053 575,053
Houston TX 139,125 309,152 448,277
Page F-44
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Allen TX 161,088 11/21/88 300
Arlington TX 269,372 12/13/84 300
Arlington TX 220,352 05/08/85 300
Arlington TX 218,890 09/26/88 300
Arlington TX 272,272 09/22/89 300
Arlington TX 128,213 02/07/91 300
Austin TX 230,551 10/29/82 180
Austin TX 222,695 01/12/83 180
Austin TX 368,983 12/23/86 300
Austin TX 177,882 05/11/88 300
Austin TX 218,893 09/27/88 300
Austin TX 172,557 12/22/88 300
Austin TX 201,051 01/03/89 300
Austin TX 208,211 04/06/89 300
Austin TX 187,823 06/22/89 300
Bedford TX 272,272 09/22/89 300
Carrollton TX 271,672 12/11/87 300
Cedar Park TX 153,125 11/21/88 300
Colleyville TX 214,057 05/01/85 300
Converse TX 199,577 09/28/88 300
Coppell TX 382,275 12/17/86 300
Coppell TX 204,002 12/11/87 300
Desoto TX 284,019 10/24/84 300
Duncanville TX 292,753 05/08/85 300
Euless TX 239,547 05/08/87 300
Flower Mound TX 205,317 04/20/87 300
Fort Worth TX 236,010 12/03/86 300
Fort Worth TX 218,893 09/26/88 300
Fort Worth TX 164,994 02/01/90 300
Fort Worth TX 141,654 02/07/91 300
Garland TX 173,868 12/12/89 300
Grand Prairie TX 150,521 12/13/88 300
Houston TX 192,370 10/11/84 300
Houston TX 188,873 05/01/85 300
Houston TX 321,083 05/01/85 300
Houston TX 142,354 05/22/87 300
Page F-45
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Houston TX 139,125 308,997 None 135
Houston TX 141,296 313,824 None None
Houston TX 219,100 486,631 None None
Houston TX 219,100 486,628 None None
Houston TX 149,109 323,314 None None
Houston TX 294,582 919,261 None None
Katy TX 309,898 982,998 None None
Lewisville TX 79,000 366,264 None None
Lewisville TX 192,777 428,121 None None
Lewisville TX 192,218 426,922 None None
Mansfield TX 181,375 402,839 None None
Mesquite TX 85,000 394,079 None 107
Mesquite TX 139,466 326,525 None None
Missouri City TX 221,025 437,593 None None
N. Richland HillsTX 238,000 528,608 None None
Pasadena TX 60,000 278,173 None 155
Plano TX 261,912 581,658 None None
Plano TX 250,514 556,399 None None
Plano TX 259,000 575,246 None None
Round Rock TX 80,525 373,347 None None
Round Rock TX 186,380 413,957 None None
San Antonio TX 130,833 606,596 None None
San Antonio TX 102,512 475,288 None None
San Antonio TX 81,530 378,007 None None
San Antonio TX 139,125 308,997 None None
San Antonio TX 181,412 402,923 None None
San Antonio TX 162,161 360,166 None None
San Antonio TX 234,500 520,831 None None
San Antonio TX 217,000 481,967 None None
San Antonio TX 182,868 406,155 None None
San Antonio TX 220,500 447,108 None None
Southlake TX 228,279 511,750 None None
Sugarland TX 193,800 430,437 None None
The Woodlands TX 193,801 430,440 None None
Watauga TX 165,914 368,502 None None
Layton UT 136,574 269,008 None None
Page F-46
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Houston TX 139,125 309,132 448,257
Houston TX 141,296 313,824 455,120
Houston TX 219,100 486,631 705,731
Houston TX 219,100 486,628 705,728
Houston TX 149,109 323,314 472,423
Houston TX 294,582 919,261 1,213,843
Katy TX 309,898 982,998 1,292,896
Lewisville TX 79,000 366,264 445,264
Lewisville TX 192,777 428,121 620,898
Lewisville TX 192,218 426,922 619,140
Mansfield TX 181,375 402,839 584,214
Mesquite TX 85,000 394,186 479,186
Mesquite TX 139,466 326,525 465,991
Missouri City TX 221,025 437,593 658,618
N. Richland HillsTX 238,000 528,608 766,608
Pasadena TX 60,000 278,328 338,328
Plano TX 261,912 581,658 843,570
Plano TX 250,514 556,399 806,913
Plano TX 259,000 575,246 834,246
Round Rock TX 80,525 373,347 453,872
Round Rock TX 186,380 413,957 600,337
San Antonio TX 130,833 606,596 737,429
San Antonio TX 102,512 475,288 577,800
San Antonio TX 81,530 378,007 459,537
San Antonio TX 139,125 308,997 448,122
San Antonio TX 181,412 402,923 584,335
San Antonio TX 162,161 360,166 522,327
San Antonio TX 234,500 520,831 755,331
San Antonio TX 217,000 481,967 698,967
San Antonio TX 182,868 406,155 589,023
San Antonio TX 220,500 447,108 667,608
Southlake TX 228,279 511,750 740,029
Sugarland TX 193,800 430,437 624,237
The Woodlands TX 193,801 430,440 624,241
Watauga TX 165,914 368,502 534,416
Layton UT 136,574 269,008 405,582
Page F-47
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Houston TX 142,354 05/22/87 300
Houston TX 142,740 07/24/87 300
Houston TX 201,511 09/30/88 300
Houston TX 198,695 11/16/88 300
Houston TX 139,528 06/26/89 300
Houston TX 28,991 01/11/99 08/14/98 300
Katy TX 37,540 11/30/98 08/14/98 300
Lewisville TX 242,526 06/26/85 300
Lewisville TX 201,828 01/07/87 300
Lewisville TX 173,083 12/29/88 300
Mansfield TX 149,421 12/20/89 300
Mesquite TX 280,715 10/24/84 300
Mesquite TX 127,563 10/08/92 300
Missouri City TX 147,329 12/13/90 300
N. Richland HillsTX 218,893 09/26/88 300
Pasadena TX 198,152 10/23/84 300
Plano TX 274,807 01/06/87 300
Plano TX 244,943 12/10/87 300
Plano TX 238,205 09/27/88 300
Round Rock TX 221,085 12/16/86 300
Round Rock TX 163,053 04/19/89 300
San Antonio TX 380,562 03/24/86 300
San Antonio TX 282,913 12/03/86 300
San Antonio TX 225,005 12/11/86 300
San Antonio TX 142,354 05/22/87 300
San Antonio TX 183,264 07/07/87 300
San Antonio TX 163,818 07/07/87 300
San Antonio TX 229,285 12/29/87 300
San Antonio TX 198,185 10/14/88 300
San Antonio TX 164,663 12/06/88 300
San Antonio TX 177,399 03/30/89 300
Southlake TX 168,206 03/10/93 300
Sugarland TX 195,779 07/31/87 300
The Woodlands TX 194,521 08/11/87 300
Watauga TX 167,608 07/07/87 300
Layton UT 107,017 02/01/90 300
Page F-48
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Sandy UT 168,089 373,330 None None
Centreville VA 371,000 824,003 None None
Chesapeake VA 190,050 422,107 None None
Glen Allen VA 74,643 346,060 None None
Portsmouth VA 171,575 381,073 None None
Richmond VA 71,001 327,771 None 322
Richmond VA 269,500 598,567 None None
Virginia Beach VA 69,080 320,270 None 322
Virginia Beach VA 124,988 579,496 None None
Woodbridge VA 358,050 795,239 None None
Everett WA 120,000 540,363 None None
Federal Way WA 150,785 699,101 None None
Federal Way WA 261,943 581,782 None None
Kent WA 128,300 539,141 None None
Kent WA 140,763 678,809 None None
Kirkland WA 301,000 668,534 None None
Puyallup WA 195,552 434,327 None None
Redmond WA 279,830 621,513 None None
Renton WA 111,183 515,490 None None
Appleton WI 196,000 424,038 None None
Brookfield WI 233,100 461,500 None None
Waukesha WI 215,950 427,546 None None
Cheyenne WY 59,856 277,506 None None
Consumer Electronics
- --------------------
Oxford AL 323,085 406,655 None None
Tuscaloosa AL 204,790 585,115 None None
Thousand Oaks CA 2,703,726 6,125,829 None 68
Bradenton FL 174,948 240,928 None None
MaryEsther FL 149,696 363,263 None None
Melbourne FL 269,697 522,414 None None
Merritt Island FL 309,652 482,459 None None
Ocala FL 339,690 543,504 None None
Pensacola FL 419,842 1,899,287 None None
Tallahassee FL 319,807 502,697 None 283
Titusville FL 176,459 579,793 None None
Page F-49
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Sandy UT 168,089 373,330 541,419
Centreville VA 371,000 824,003 1,195,003
Chesapeake VA 190,050 422,107 612,157
Glen Allen VA 74,643 346,060 420,703
Portsmouth VA 171,575 381,073 552,648
Richmond VA 71,001 328,093 399,094
Richmond VA 269,500 598,567 868,067
Virginia Beach VA 69,080 320,592 389,672
Virginia Beach VA 124,988 579,496 704,484
Woodbridge VA 358,050 795,239 1,153,289
Everett WA 120,000 540,363 660,363
Federal Way WA 150,785 699,101 849,886
Federal Way WA 261,943 581,782 843,725
Kent WA 128,300 539,141 667,441
Kent WA 140,763 678,809 819,572
Kirkland WA 301,000 668,534 969,534
Puyallup WA 195,552 434,327 629,879
Redmond WA 279,830 621,513 901,343
Renton WA 111,183 515,490 626,673
Appleton WI 196,000 424,038 620,038
Brookfield WI 233,100 461,500 694,600
Waukesha WI 215,950 427,546 643,496
Cheyenne WY 59,856 277,733 337,589
Consumer Electronics
- --------------------
Oxford AL 323,085 406,655 729,740
Tuscaloosa AL 204,790 585,115 789,905
Thousand Oaks CA 2,703,726 6,125,897 8,829,623
Bradenton FL 174,948 240,928 415,876
MaryEsther FL 149,696 363,263 512,959
Melbourne FL 269,697 522,414 792,111
Merritt Island FL 309,652 482,459 792,111
Ocala FL 339,690 543,504 883,194
Pensacola FL 419,842 1,899,287 2,319,129
Tallahassee FL 319,807 502,980 822,787
Titusville FL 176,459 579,793 756,252
Page F-50
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Sandy UT 136,338 02/01/90 300
Centreville VA 312,724 09/29/89 300
Chesapeake VA 167,479 03/28/89 300
Glen Allen VA 251,876 06/20/84 300
Portsmouth VA 154,494 12/21/88 300
Richmond VA 214,206 09/04/85 300
Richmond VA 237,492 03/28/89 300
Virginia Beach VA 227,875 11/15/84 300
Virginia Beach VA 363,561 03/25/86 300
Woodbridge VA 329,302 09/29/88 300
Everett WA 540,363 11/22/82 180
Federal Way WA 413,987 12/17/86 300
Federal Way WA 237,541 11/21/88 300
Kent WA 539,141 06/03/83 180
Kent WA 401,971 12/17/86 300
Kirkland WA 288,470 03/31/88 300
Puyallup WA 176,083 12/06/88 300
Redmond WA 282,688 07/27/87 300
Renton WA 323,404 03/24/86 300
Appleton WI 152,547 07/10/90 300
Brookfield WI 155,377 12/13/90 300
Waukesha WI 143,946 12/13/90 300
Cheyenne WY 196,595 11/20/84 300
Consumer Electronics
- --------------------
Oxford AL 50,832 11/26/96 300
Tuscaloosa AL 73,139 11/26/96 300
Thousand Oaks CA 806,563 09/09/96 300
Bradenton FL 30,116 11/26/96 300
MaryEsther FL 45,408 11/26/96 300
Melbourne FL 65,302 11/26/96 300
Merritt Island FL 60,307 11/26/96 300
Ocala FL 67,938 11/26/96 300
Pensacola FL 237,411 11/26/96 300
Tallahassee FL 62,837 11/26/96 300
Titusville FL 72,474 11/26/96 300
Page F-51
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Consumer Electronics
- --------------------
Venice FL 259,686 362,562 None None
Rome GA 254,902 486,812 None None
Smyrna GA 1,094,058 3,090,236 None None
Council Bluffs IA 255,217 117,792 None None
Des Moines IA 188,520 367,614 None None
Peoria IL 193,868 387,737 None None
Rockford IL 159,587 618,398 None None
Springfield IL 219,859 630,595 None None
Anderson IN 180,628 653,162 None None
Muncie IN 148,901 645,235 None None
Richmond IN 93,999 193,753 None None
Topeka KS 974,960 3,472,226 None None
Columbus MS 144,908 463,707 None None
Greenville MS 144,588 433,764 None None
Gulfport MS 299,464 502,326 None None
Hattiesburg MS 198,659 457,379 None None
Jackson MS 405,360 656,296 None None
Meridian MS 181,156 515,598 None None
Tupelo MS 121,697 637,691 None None
Vicksburg MS 494,532 174,541 None None
Lakewood NY 144,859 526,301 None None
Defiance OH 97,978 601,863 None None
Kettering OH 229,246 488,393 None None
Bristol TN 344,365 468,719 None None
Clarksville TN 290,775 395,870 None None
Vienna WV 324,797 526,670 None None
Convenience Stores
- ------------------
Fullerton CA 29,170 41,003 2,214 11,934
Manchester CT 118,262 305,510 None None
Vernon CT 179,646 319,372 None None
Westbrook CT 98,247 373,340 None None
Archer FL 296,238 578,145 None None
Gainesville FL 515,834 873,187 None None
Gainesville FL 480,318 600,633 None None
Gainesville FL 347,310 694,859 None None
Page F-52
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Consumer Electronics
- --------------------
Venice FL 259,686 362,562 622,248
Rome GA 254,902 486,812 741,714
Smyrna GA 1,094,058 3,090,236 4,184,294
Council Bluffs IA 255,217 117,792 373,009
Des Moines IA 188,520 367,614 556,134
Peoria IL 193,868 387,737 581,605
Rockford IL 159,587 618,398 777,985
Springfield IL 219,859 630,595 850,454
Anderson IN 180,628 653,162 833,790
Muncie IN 148,901 645,235 794,136
Richmond IN 93,999 193,753 287,752
Topeka KS 974,960 3,472,226 4,447,186
Columbus MS 144,908 463,707 608,615
Greenville MS 144,588 433,764 578,352
Gulfport MS 299,464 502,326 801,790
Hattiesburg MS 198,659 457,379 656,038
Jackson MS 405,360 656,296 1,061,656
Meridian MS 181,156 515,598 696,754
Tupelo MS 121,697 637,691 759,388
Vicksburg MS 494,532 174,541 669,073
Lakewood NY 144,859 526,301 671,160
Defiance OH 97,978 601,863 699,841
Kettering OH 229,246 488,393 717,639
Bristol TN 344,365 468,719 813,084
Clarksville TN 290,775 395,870 686,645
Vienna WV 324,797 526,670 851,467
Convenience Stores
- ------------------
Fullerton CA 29,170 55,151 84,321
Manchester CT 118,262 305,510 423,772
Vernon CT 179,646 319,372 499,018
Westbrook CT 98,247 373,340 471,587
Archer FL 296,238 578,145 874,383
Gainesville FL 515,834 873,187 1,389,021
Gainesville FL 480,318 600,633 1,080,951
Gainesville FL 347,310 694,859 1,042,169
Page F-53
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Consumer Electronics
- --------------------
Venice FL 45,320 11/26/96 300
Rome GA 60,852 11/26/96 300
Smyrna GA 313,464 06/09/97 300
Council Bluffs IA 14,724 11/26/96 300
Des Moines IA 45,952 11/26/96 300
Peoria IL 48,467 11/26/96 300
Rockford IL 77,300 11/26/96 300
Springfield IL 78,824 11/26/96 300
Anderson IN 81,630 11/11/96 300
Muncie IN 80,654 11/26/96 300
Richmond IN 24,219 11/26/96 300
Topeka KS 422,454 12/26/96 300
Columbus MS 57,963 11/26/96 300
Greenville MS 54,221 11/26/96 300
Gulfport MS 62,791 11/26/96 300
Hattiesburg MS 57,172 11/26/96 300
Jackson MS 82,037 11/26/96 300
Meridian MS 64,450 11/26/96 300
Tupelo MS 79,711 11/26/96 300
Vicksburg MS 21,818 11/26/96 300
Lakewood NY 65,788 11/26/96 300
Defiance OH 75,233 11/26/96 300
Kettering OH 61,049 11/26/96 300
Bristol TN 58,590 11/26/96 300
Clarksville TN 49,484 11/26/96 300
Vienna WV 65,834 11/26/96 300
Convenience Stores
- ------------------
Fullerton CA 49,356 11/08/72 234
Manchester CT 58,556 03/03/95 300
Vernon CT 61,213 03/09/95 300
Westbrook CT 71,557 03/09/95 300
Archer FL 14,448 05/07/99 300
Gainesville FL 21,824 05/07/99 300
Gainesville FL 15,010 05/07/99 300
Gainesville FL 17,366 05/07/99 300
Page F-54
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Convenience Stores
- ------------------
Gainesville FL 339,263 658,807 None None
Gainesville FL 351,921 552,557 None None
Gainesville FL 500,032 850,291 None None
Jacksonville Bch FL 522,188 371,885 None None
Orange Park FL 425,820 416,154 None None
Augusta GA 320,000 382,323 None None
Augusta GA 620,000 383,232 None None
Augusta GA 540,000 337,853 None None
Augusta GA 510,000 392,929 None None
Augusta GA 180,000 422,020 None None
Augusta GA 260,000 392,171 None None
Hephzibah GA 580,000 523,535 None None
Martinez GA 450,000 402,777 None None
Dunwoody GA 545,462 724,254 None None
Lithonia GA 386,784 776,436 None None
Mabelton GA 491,069 355,957 None None
Norcross GA 384,162 651,273 None None
Stone Mountain GA 529,383 532,429 None None
Godfrey IL 374,586 733,190 None None
Granite City IL 362,287 737,255 None None
Madison IL 173,812 625,030 None None
New Albany IN 181,459 289,353 None None
New Albany IN 262,465 331,796 None None
Berea KY 252,077 360,815 None None
Elizabethtown KY 286,106 286,106 None None
Henderson KY 225,000 515,000 None None
Lebanon KY 158,052 316,105 None None
Louisville KY 198,926 368,014 None None
Louisville KY 216,849 605,697 None None
Mt. Washington KY 327,245 479,593 None None
Owensboro KY 360,000 590,000 None None
Seekonk MA 298,354 268,518 None None
Flint MI 194,492 476,504 None None
Greensboro NC 700,000 655,000 None None
Cary NC 450,000 825,000 None None
Greenville NC 330,000 515,000 None None
Page F-55
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Convenience Stores
- ------------------
Gainesville FL 339,263 658,807 998,070
Gainesville FL 351,921 552,557 904,478
Gainesville FL 500,032 850,291 1,350,323
Jacksonville Bch FL 522,188 371,885 894,073
Orange Park FL 425,820 416,154 841,974
Augusta GA 320,000 382,323 702,323
Augusta GA 620,000 383,232 1,003,232
Augusta GA 540,000 337,853 877,853
Augusta GA 510,000 392,929 902,929
Augusta GA 180,000 422,020 602,020
Augusta GA 260,000 392,171 652,171
Hephzibah GA 580,000 523,535 1,103,535
Martinez GA 450,000 402,777 852,777
Dunwoody GA 545,462 724,254 1,269,716
Lithonia GA 386,784 776,436 1,163,220
Mabelton GA 491,069 355,957 847,026
Norcross GA 384,162 651,273 1,035,435
Stone Mountain GA 529,383 532,429 1,061,812
Godfrey IL 374,586 733,190 1,107,776
Granite City IL 362,287 737,255 1,099,542
Madison IL 173,812 625,030 798,842
New Albany IN 181,459 289,353 470,812
New Albany IN 262,465 331,796 594,261
Berea KY 252,077 360,815 612,892
Elizabethtown KY 286,106 286,106 572,212
Henderson KY 225,000 515,000 740,000
Lebanon KY 158,052 316,105 474,157
Louisville KY 198,926 368,014 566,940
Louisville KY 216,849 605,697 822,546
Mt. Washington KY 327,245 479,593 806,838
Owensboro KY 360,000 590,000 950,000
Seekonk MA 298,354 268,518 566,872
Flint MI 194,492 476,504 670,996
Greensboro NC 700,000 655,000 1,355,000
Cary NC 450,000 825,000 1,275,000
Greenville NC 330,000 515,000 845,000
Page F-56
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Convenience Stores
- ------------------
Gainesville FL 16,464 05/07/99 300
Gainesville FL 13,808 05/07/99 300
Gainesville FL 21,251 05/07/99 300
Jacksonville Bch FL 9,291 05/13/99 300
Orange Park FL 10,398 05/14/99 300
Augusta GA 7,002 07/22/99 300
Augusta GA 7,017 07/22/99 300
Augusta GA 6,186 07/22/99 300
Augusta GA 7,195 07/22/99 300
Augusta GA 7,730 07/22/99 300
Augusta GA 7,183 07/22/99 300
Hephzibah GA 9,589 07/22/99 300
Martinez GA 7,376 07/22/99 300
Dunwoody GA 73,280 06/27/97 300
Lithonia GA 78,646 06/27/97 300
Mabelton GA 35,946 06/27/97 300
Norcross GA 65,908 06/27/97 300
Stone Mountain GA 53,821 06/27/97 300
Godfrey IL 74,213 06/27/97 300
Granite City IL 74,634 06/25/97 300
Madison IL 63,321 06/27/97 300
New Albany IN 55,459 03/03/95 300
New Albany IN 63,594 03/06/95 300
Berea KY 69,156 03/08/95 300
Elizabethtown KY 54,837 03/03/95 300
Henderson KY 90,125 07/06/95 300
Lebanon KY 60,587 03/03/95 300
Louisville KY 70,536 03/03/95 300
Louisville KY 85,668 06/18/96 09/15/95 300
Mt. Washington KY 59,973 10/28/96 04/09/96 300
Owensboro KY 103,250 08/25/95 300
Seekonk MA 51,466 03/03/95 300
Flint MI 77,035 12/13/95 300
Greensboro NC 5,458 11/16/99 300
Cary NC 144,375 08/25/95 300
Greenville NC 90,125 08/25/95 300
Page F-57
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Convenience Stores
- ------------------
Greenville NC 225,000 405,000 None None
Jacksonville NC 150,000 530,000 None None
Kinston NC 550,000 1,057,833 None None
Kingston NY 257,763 456,042 None None
Atwater OH 118,555 266,748 None None
Columbus OH 147,296 304,411 None None
Columbus OH 273,085 471,693 None None
Cuyahoga Falls OH 297,982 357,579 None None
Galion OH 138,981 327,597 None None
Groveport OH 277,198 445,497 None None
Perrysburg OH 211,678 390,680 None None
Streetsboro OH 402,988 485,031 None None
Tipp City OH 355,009 588,111 None None
Triffin OH 117,017 273,040 None None
Wadsworth OH 266,507 496,917 None None
Tulsa OK 126,545 508,266 None None
Aiken SC 320,000 432,527 None None
Aiken SC 330,000 472,679 None None
Aiken SC 560,000 543,588 None None
Aiken SC 360,000 542,982 None None
Aiken SC 540,000 388,058 None None
Aiken SC 250,000 251,770 None None
Belvedere SC 490,000 463,080 None None
Greenville SC 390,000 462,847 None None
Greenville SC 300,000 402,392 None None
Greenville SC 370,000 432,695 None None
Greenville SC 620,000 483,604 None None
Greenville SC 720,000 534,059 None None
Greenville SC 680,000 423,604 None None
Greer SC 400,000 502,879 None None
Jackson SC 170,000 632,626 None None
Lexington SC 640,000 563,891 None None
Lexington SC 540,000 563,588 None None
Lexington SC 360,000 843,891 None None
Mauldin SC 490,000 412,879 None None
North Augusta SC 400,000 452,777 None None
Page F-58
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Convenience Stores
- ------------------
Greenville NC 225,000 405,000 630,000
Jacksonville NC 150,000 530,000 680,000
Kinston NC 550,000 1,057,833 1,607,833
Kingston NY 257,763 456,042 713,805
Atwater OH 118,555 266,748 385,303
Columbus OH 147,296 304,411 451,707
Columbus OH 273,085 471,693 744,778
Cuyahoga Falls OH 297,982 357,579 655,561
Galion OH 138,981 327,597 466,578
Groveport OH 277,198 445,497 722,695
Perrysburg OH 211,678 390,680 602,358
Streetsboro OH 402,988 485,031 888,019
Tipp City OH 355,009 588,111 943,120
Triffin OH 117,017 273,040 390,057
Wadsworth OH 266,507 496,917 763,424
Tulsa OK 126,545 508,266 634,811
Aiken SC 320,000 432,527 752,527
Aiken SC 330,000 472,679 802,679
Aiken SC 560,000 543,588 1,103,588
Aiken SC 360,000 542,982 902,982
Aiken SC 540,000 388,058 928,058
Aiken SC 250,000 251,770 501,770
Belvedere SC 490,000 463,080 953,080
Greenville SC 390,000 462,847 852,847
Greenville SC 300,000 402,392 702,392
Greenville SC 370,000 432,695 802,695
Greenville SC 620,000 483,604 1,103,604
Greenville SC 720,000 534,059 1,254,059
Greenville SC 680,000 423,604 1,103,604
Greer SC 400,000 502,879 902,879
Jackson SC 170,000 632,626 802,626
Lexington SC 640,000 563,891 1,203,891
Lexington SC 540,000 563,588 1,103,588
Lexington SC 360,000 843,891 1,203,891
Mauldin SC 490,000 412,879 902,879
North Augusta SC 400,000 452,777 852,777
Page F-59
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Convenience Stores
- ------------------
Greenville NC 70,875 08/25/95 300
Jacksonville NC 92,750 08/25/95 300
Kinston NC 92,750 10/01/97 300
Kingston NY 85,888 04/06/95 300
Atwater OH 51,127 03/03/95 300
Columbus OH 58,346 03/03/95 300
Columbus OH 76,257 12/21/95 300
Cuyahoga Falls OH 68,536 03/03/95 300
Galion OH 62,789 03/06/95 300
Groveport OH 72,022 12/21/95 300
Perrysburg OH 47,872 01/10/96 08/25/95 300
Streetsboro OH 37,363 01/27/97 07/24/96 300
Tipp City OH 46,028 01/31/97 05/31/96 300
Triffin OH 52,333 03/07/95 300
Wadsworth OH 45,675 11/26/96 06/28/96 300
Tulsa OK 51,462 06/27/97 300
Aiken SC 7,921 07/22/99 300
Aiken SC 8,657 07/22/99 300
Aiken SC 9,956 07/22/99 300
Aiken SC 9,945 07/22/99 300
Aiken SC 7,105 07/22/99 300
Aiken SC 4,609 07/22/99 300
Belvedere SC 8,481 07/22/99 300
Greenville SC 8,476 07/22/99 300
Greenville SC 7,369 07/22/99 300
Greenville SC 7,924 07/22/99 300
Greenville SC 8,856 07/22/99 300
Greenville SC 9,780 07/22/99 300
Greenville SC 7,756 07/22/99 300
Greer SC 9,212 07/22/99 300
Jackson SC 11,590 07/22/99 300
Lexington SC 10,327 07/22/99 300
Lexington SC 10,322 07/22/99 300
Lexington SC 15,461 07/22/99 300
Mauldin SC 7,562 07/22/99 300
North Augusta SC 8,293 07/22/99 300
Page F-60
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Convenience Stores
- ------------------
North Augusta SC 350,000 352,323 None None
Simpsonville SC 530,000 573,485 None None
Spartanburg SC 470,000 432,879 None None
W. Columbia SC 410,000 693,574 None None
West Aiken SC 400,000 402,665 None None
Columbia SC 150,000 450,000 None None
John's Isle SC 170,000 350,000 None None
Lexington SC 255,000 545,000 None None
Myrtle Beach SC 140,000 590,000 None None
N. Charleston SC 400,000 650,000 None None
Summerville SC 115,000 515,000 None None
La Vergne TN 340,000 650,000 None None
Shelbyville TN 200,000 465,000 None None
Hampton VA 433,985 459,108 None None
Midlothian VA 325,000 302,872 None None
Newport News VA 490,616 205,304 None None
Richmond VA 700,000 400,740 None None
Richmond VA 700,000 440,965 None None
Richmond VA 400,000 250,875 None None
Richmond VA 1,000,000 740 None None
Richmond VA 700,000 100,695 None None
Stafford VA 271,865 601,997 None None
Warrenton VA 515,971 649,125 None None
Yorktown VA 309,435 447,144 None None
Craft and Novelty
- -----------------
Cutler Ridge FL 743,498 657,485 None 820
Stony Brook NY 980,000 1,801,586 None None
Drug Stores
- -----------
Casselberry FL -- 1,664,284 None None
Entertainment
- -------------
Vista CA 2,300,000 22 None None
Dania FL 8,272,080 1,713 None None
Roswell GA 3,383,780 1,126 None None
Page F-61
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Convenience Stores
- ------------------
North Augusta SC 350,000 352,323 702,323
Simpsonville SC 530,000 573,485 1,103,485
Spartanburg SC 470,000 432,879 902,879
W. Columbia SC 410,000 693,574 1,103,574
West Aiken SC 400,000 402,665 802,665
Columbia SC 150,000 450,000 600,000
John's Isle SC 170,000 350,000 520,000
Lexington SC 255,000 545,000 800,000
Myrtle Beach SC 140,000 590,000 730,000
N. Charleston SC 400,000 650,000 1,050,000
Summerville SC 115,000 515,000 630,000
La Vergne TN 340,000 650,000 990,000
Shelbyville TN 200,000 465,000 665,000
Hampton VA 433,985 459,108 893,093
Midlothian VA 325,000 302,872 627,872
Newport News VA 490,616 205,304 695,920
Richmond VA 700,000 400,740 1,100,740
Richmond VA 700,000 440,965 1,140,965
Richmond VA 400,000 250,875 650,875
Richmond VA 1,000,000 740 1,000,740
Richmond VA 700,000 100,695 800,695
Stafford VA 271,865 601,997 873,862
Warrenton VA 515,971 649,125 1,165,096
Yorktown VA 309,435 447,144 756,579
Craft and Novelty
- -----------------
Cutler Ridge FL 743,498 658,305 1,401,803
Stony Brook NY 980,000 1,801,586 2,781,586
Drug Stores
- -----------
Casselberry FL -- 1,664,284 1,664,284
Entertainment
- -------------
Vista CA 2,300,000 22 2,300,022
Dania FL 8,272,080 1,713 8,273,793
Roswell GA 3,383,780 1,126 3,384,906
Page F-62
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Convenience Stores
- ------------------
North Augusta SC 6,452 07/22/99 300
Simpsonville SC 10,506 07/23/99 300
Spartanburg SC 7,929 07/23/99 300
W. Columbia SC 12,706 07/22/99 300
West Aiken SC 7,374 07/22/99 300
Columbia SC 78,750 08/25/95 300
John's Isle SC 61,250 08/25/95 300
Lexington SC 95,375 08/25/95 300
Myrtle Beach SC 103,250 08/25/95 300
N. Charleston SC 113,750 08/25/95 300
Summerville SC 90,125 08/25/95 300
La Vergne TN 113,750 08/25/95 300
Shelbyville TN 81,375 08/25/95 300
Hampton VA 31,298 04/17/98 300
Midlothian VA 28,500 08/08/97 300
Newport News VA 13,966 04/17/98 300
Richmond VA 27,333 04/07/98 300
Richmond VA 30,067 04/17/98 300
Richmond VA 17,083 04/17/98 300
Richmond VA -- 04/17/98 300
Richmond VA 6,833 04/17/98 300
Stafford VA 73,242 12/20/96 300
Warrenton VA 78,977 11/26/96 300
Yorktown VA 30,447 04/17/98 300
Craft and Novelty
- -----------------
Cutler Ridge FL 27,358 12/30/98 300
Stony Brook NY 69,040 12/31/98 300
Drug Stores
- -----------
Casselberry FL 85,773 09/30/98 300
Entertainment
- -------------
Vista CA -- 04/02/99 300
Dania FL -- 05/07/99 300
Roswell GA -- 06/30/99 300
Page F-63
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Entertainment
- -------------
Flanders NJ 2,222,205 890 None None
Brookhaven NY 1,500,000 745 None None
Riverhead NY 3,800,000 744 None None
General Merchandise
- -------------------
Monte Vista CO 47,652 582,159 None None
Groveland FL 101,782 189,258 None None
Garnett KS 59,690 518,121 None None
Caledonia MN 89,723 559,300 None None
Long Prairie MN 88,892 553,997 None None
Paynesville MN 49,483 525,406 None None
Spring Valley MN 69,785 579,238 None None
Warroad MN 70,000 580,000 None None
Mayville ND 59,333 565,562 None None
Bloomfield NM 59,559 616,252 None None
Colorado City TX 92,535 505,276 None None
Grocery
- -------
Boulder CO 426,675 1,199,508 18,000 91,455
Sheboygan WI 1,513,216 4,339,469 None None
Health and Fitness
- ------------------
Diamond Bar CA 3,038,879 4,296,300 None None
Norco CA 1,247,243 2,603,321 None None
Paramount CA 86,400 278,827 None None
Coral Springs FL 891,496 2,798,204 None None
Pembroke Pines FL 1,714,388 357,703 None None
West Kendall FL 3,115,101 2,031,834 None None
Fort Worth TX 1,445,901 2,931,162 None None
Home Furnishings
- ----------------
Cathedral City CA 1,006,923 2,293,077 None 3,600
Danbury CT 630,171 3,621,163 None None
Brandon FL 430,000 1,020,608 None None
Tampa FL 685,000 885,624 None None
Winter Park FL 2,404,598 3,382,402 None 376
Page F-64
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Entertainment
- -------------
Flanders NJ 2,222,205 890 2,223,095
Brookhaven NY 1,500,000 745 1,500,745
Riverhead NY 3,800,000 744 3,800,744
General Merchandise
- -------------------
Monte Vista CO 47,652 582,159 629,811
Groveland FL 101,782 189,258 291,040
Garnett KS 59,690 518,121 577,811
Caledonia MN 89,723 559,300 649,023
Long Prairie MN 88,892 553,997 642,889
Paynesville MN 49,483 525,406 574,889
Spring Valley MN 69,785 579,238 649,023
Warroad MN 70,000 580,000 650,000
Mayville ND 59,333 565,562 624,895
Bloomfield NM 59,559 616,252 675,811
Colorado City TX 92,535 505,276 597,811
Grocery
- -------
Boulder CO 426,675 1,308,963 1,735,638
Sheboygan WI 1,513,216 4,339,469 5,852,685
Health and Fitness
- ------------------
Diamond Bar CA 3,038,879 4,296,300 7,335,179
Norco CA 1,247,243 2,603,321 3,850,564
Paramount CA 86,400 278,827 365,227
Coral Springs FL 891,496 2,798,204 3,689,700
Pembroke Pines FL 1,714,388 357,703 2,072,091
West Kendall FL 3,115,101 2,031,834 5,146,935
Fort Worth TX 1,445,901 2,931,162 4,377,063
Home Furnishings
- ----------------
Cathedral City CA 1,006,923 2,296,677 3,303,600
Danbury CT 630,171 3,621,163 4,251,334
Brandon FL 430,000 1,020,608 1,450,608
Tampa FL 685,000 885,624 1,570,624
Winter Park FL 2,404,598 3,382,778 5,787,376
Page F-65
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Entertainment
- -------------
Flanders NJ -- 06/30/99 300
Brookhaven NY -- 10/01/99 300
Riverhead NY -- 08/24/99 300
General Merchandise
- -------------------
Monte Vista CO 24,223 12/23/98 300
Groveland FL 5,986 03/31/99 300
Garnett KS 21,555 12/23/98 300
Caledonia MN 23,262 12/23/98 300
Long Prairie MN 23,046 12/23/98 300
Paynesville MN 21,855 12/18/98 300
Spring Valley MN 24,092 12/23/98 300
Warroad MN 24,167 12/23/98 300
Mayville ND 23,486 12/23/98 300
Bloomfield NM 25,643 12/23/98 300
Colorado City TX 21,019 12/23/98 300
Grocery
- -------
Boulder CO 866,509 01/05/84 180
Sheboygan WI 64,433 06/03/99 08/24/98 300
Health and Fitness
- ------------------
Diamond Bar CA 35,158 09/25/99 09/29/98 300
Norco CA -- In Process 06/30/99 300
Paramount CA 278,827 11/22/83 180
Coral Springs FL 132,789 11/03/98 03/30/98 300
Pembroke Pines FL -- In Process 11/08/99 300
West Kendall FL -- In Process 06/14/99 300
Fort Worth TX -- In Process 07/01/99 300
Home Furnishings
- ----------------
Cathedral City CA 424,219 05/26/95 300
Danbury CT 330,045 09/30/97 300
Brandon FL 62,900 06/26/98 300
Tampa FL 54,575 06/26/98 300
Winter Park FL 625,744 05/31/95 300
Page F-66
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Home Furnishings
- ----------------
Davenport IA 270,000 930,689 None None
Joilet IL 440,000 910,689 None None
Wichita KS 430,000 740,725 None None
Alexandria LA 400,000 810,608 None None
Monroe LA 450,000 835,608 None None
Shreveport LA 525,000 725,642 None None
Battle Creek MI 485,000 895,689 None None
Eden Prairie MN 500,502 1,055,244 None None
Hattiesburg MS 300,000 660,608 None None
Ridgeland MS 281,867 769,890 None None
Omaha NE 1,956,296 3,949,402 None None
Henderson NV 1,268,655 3,109,995 None None
Staten Island NY 3,190,883 2,569,802 None None
Lancaster OH 250,000 830,689 None None
Altoona PA 455,000 745,694 None None
Erie PA 510,000 900,689 None None
Muncy PA 315,000 835,648 None None
Whitehall PA 515,525 1,146,868 None None
Columbia SC 600,000 900,725 None None
Jackson TN 380,000 750,608 None None
Memphis TN 804,262 1,432,520 None None
Abilene TX 400,000 680,616 None None
Arlington TX 475,069 1,374,167 None None
Cedar Park TX 253,591 827,237 None None
Houston TX 867,767 687,042 None None
Spring TX 1,794,872 1,810,069 None None
Webster TX 283,604 538,002 None None
Eau Claire WI 260,000 820,689 None None
La Crosse WI 372,883 877,812 None None
Home Improvement
- ----------------
Mesa AZ 619,035 867,013 None None
Lawndale CA 667,007 1,238,841 None None
Los Angeles CA 902,494 1,676,204 None None
Los Angeles CA 163,668 304,097 None None
Van Nuys CA 750,293 1,393,545 None None
Page F-67
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Home Furnishings
- ----------------
Davenport IA 270,000 930,689 1,200,689
Joilet IL 440,000 910,689 1,350,689
Wichita KS 430,000 740,725 1,170,725
Alexandria LA 400,000 810,608 1,210,608
Monroe LA 450,000 835,608 1,285,608
Shreveport LA 525,000 725,642 1,250,642
Battle Creek MI 485,000 895,689 1,380,689
Eden Prairie MN 500,502 1,055,244 1,555,746
Hattiesburg MS 300,000 660,608 960,608
Ridgeland MS 281,867 769,890 1,051,757
Omaha NE 1,956,296 3,949,402 5,905,698
Henderson NV 1,268,655 3,109,995 4,378,650
Staten Island NY 3,190,883 2,569,802 5,760,685
Lancaster OH 250,000 830,689 1,080,689
Altoona PA 455,000 745,694 1,200,694
Erie PA 510,000 900,689 1,410,689
Muncy PA 315,000 835,648 1,150,648
Whitehall PA 515,525 1,146,868 1,662,393
Columbia SC 600,000 900,725 1,500,725
Jackson TN 380,000 750,608 1,130,608
Memphis TN 804,262 1,432,520 2,236,782
Abilene TX 400,000 680,616 1,080,616
Arlington TX 475,069 1,374,167 1,849,236
Cedar Park TX 253,591 827,237 1,080,828
Houston TX 867,767 687,042 1,554,809
Spring TX 1,794,872 1,810,069 3,604,941
Webster TX 283,604 538,002 821,606
Eau Claire WI 260,000 820,689 1,080,689
La Crosse WI 372,883 877,812 1,250,695
Home Improvement
- ----------------
Mesa AZ 619,035 867,013 1,486,048
Lawndale CA 667,007 1,238,841 1,905,848
Los Angeles CA 902,494 1,676,204 2,578,698
Los Angeles CA 163,668 304,097 467,765
Van Nuys CA 750,293 1,393,545 2,143,838
Page F-68
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Home Furnishings
- ----------------
Davenport IA 57,350 06/26/98 300
Joilet IL 56,117 06/26/98 300
Wichita KS 45,633 06/26/98 300
Alexandria LA 49,950 06/26/98 300
Monroe LA 51,492 06/26/98 300
Shreveport LA 44,708 06/26/98 300
Battle Creek MI 55,192 06/26/98 300
Eden Prairie MN 36,857 03/04/99 300
Hattiesburg MS 40,700 06/26/98 300
Ridgeland MS 77,840 06/27/97 300
Omaha NE 427,059 04/02/97 300
Henderson NV 283,465 09/18/97 300
Staten Island NY 182,944 03/26/98 300
Lancaster OH 51,183 06/26/98 300
Altoona PA 45,942 06/26/98 300
Erie PA 55,500 06/26/98 300
Muncy PA 51,492 06/26/98 300
Whitehall PA 70,680 06/30/98 300
Columbia SC 55,500 06/26/98 300
Jackson TN 46,250 06/26/98 300
Memphis TN 144,950 06/27/97 300
Abilene TX 41,933 06/12/98 300
Arlington TX 152,967 03/10/97 300
Cedar Park TX 92,088 03/13/97 300
Houston TX 76,264 03/07/97 300
Spring TX 164,530 09/26/97 300
Webster TX 54,417 06/12/97 300
Eau Claire WI 50,567 06/26/98 300
La Crosse WI 54,089 06/26/98 300
Home Improvement
- ----------------
Mesa AZ 30,333 02/24/99 300
Lawndale CA 51,614 12/31/98 300
Los Angeles CA 69,836 12/31/98 300
Los Angeles CA 12,665 12/31/98 300
Van Nuys CA 58,058 12/31/98 300
Page F-69
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Home Improvement
- ----------------
West Covina CA 311,040 577,733 None None
Arvada CO 800,000 115,119 None None
Boca Raton FL 355,000 864,636 None None
Clearwater FL 476,179 725,023 None None
Deerfield Beach FL 475,000 868,890 None None
Jacksonville FL 478,314 618,348 None None
Port Orange FL 500,000 1,209,769 None None
Seminole FL 593,304 767,184 None None
Tampa FL 494,763 767,737 None None
Tampa FL 347,794 905,117 None None
West Palm Beach FL 698,664 1,223,504 None None
West Palm Beach FL 347,651 706,081 None None
Des Moines IA 225,771 682,604 None None
Broadview IL 345,166 641,739 None None
Indianapolis IN 350,000 671,381 None None
Baltimore MD 171,320 318,882 None None
Huntersville NC 530,000 1,018,907 None None
Matthews NC 768,222 843,401 None None
Pineville NC 567,864 840,284 None None
Albuquerque NM 684,036 874,914 None None
Rochester NY 158,168 294,456 None None
Reading PA 201,569 375,056 None None
Pasadena TX 147,535 274,521 None None
Plano TX 363,851 676,249 None None
San Antonio TX 367,890 683,750 None None
San Antonio TX 432,389 816,532 None None
San Antonio TX 323,451 637,991 None None
Riverdale UT 346,861 694,612 None None
Chesapeake VA 144,014 649,869 None 11,754
Office Supplies
- ---------------
Lakewood CA 1,398,387 3,098,607 None None
Riverside CA 1,410,177 1,659,850 None None
Hutchinson KS 269,964 1,704,013 None None
Salina KS 240,423 1,829,837 None None
Helena MT 564,241 1,503,118 None None
Page F-70
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Home Improvement
- ----------------
West Covina CA 311,040 577,733 888,773
Arvada CO 800,000 115,119 915,119
Boca Raton FL 355,000 864,636 1,219,636
Clearwater FL 476,179 725,023 1,201,202
Deerfield Beach FL 475,000 868,890 1,343,890
Jacksonville FL 478,314 618,348 1,096,662
Port Orange FL 500,000 1,209,769 1,709,769
Seminole FL 593,304 767,184 1,360,488
Tampa FL 494,763 767,737 1,262,500
Tampa FL 347,794 905,117 1,252,911
West Palm Beach FL 698,664 1,223,504 1,922,168
West Palm Beach FL 347,651 706,081 1,053,732
Des Moines IA 225,771 682,604 908,375
Broadview IL 345,166 641,739 986,905
Indianapolis IN 350,000 671,381 1,021,381
Baltimore MD 171,320 318,882 490,202
Huntersville NC 530,000 1,018,907 1,548,907
Matthews NC 768,222 843,401 1,611,623
Pineville NC 567,864 840,284 1,408,148
Albuquerque NM 684,036 874,914 1,558,950
Rochester NY 158,168 294,456 452,624
Reading PA 201,569 375,056 576,625
Pasadena TX 147,535 274,521 422,056
Plano TX 363,851 676,249 1,040,100
San Antonio TX 367,890 683,750 1,051,640
San Antonio TX 432,389 816,532 1,248,921
San Antonio TX 323,451 637,991 961,442
Riverdale UT 346,861 694,612 1,041,473
Chesapeake VA 144,014 661,623 805,637
Office Supplies
- ---------------
Lakewood CA 1,398,387 3,098,607 4,496,994
Riverside CA 1,410,177 1,659,850 3,070,027
Hutchinson KS 269,964 1,704,013 1,973,977
Salina KS 240,423 1,829,837 2,070,260
Helena MT 564,241 1,503,118 2,067,359
Page F-71
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Home Improvement
- ----------------
West Covina CA 24,069 12/31/98 300
Arvada CO -- In Process 06/30/99 300
Boca Raton FL 8,958 09/01/99 01/29/99 300
Clearwater FL 30,175 12/31/98 300
Deerfield Beach FL 26,404 02/25/99 01/29/99 300
Jacksonville FL 25,743 12/31/98 300
Port Orange FL 26,234 05/11/99 01/29/99 300
Seminole FL 31,931 12/31/98 300
Tampa FL 31,953 12/31/98 300
Tampa FL 37,678 12/31/98 300
West Palm Beach FL 50,944 12/31/98 300
West Palm Beach FL 29,385 12/31/98 300
Des Moines IA 26,152 02/11/99 300
Broadview IL 26,709 12/31/98 300
Indianapolis IN 16,662 03/29/99 02/10/99 300
Baltimore MD 13,257 12/31/98 300
Huntersville NC 18,648 12/18/98 01/29/99 300
Matthews NC 35,107 12/31/98 300
Pineville NC 34,977 12/31/98 300
Albuquerque NM 36,407 12/31/98 300
Rochester NY 12,239 12/31/98 300
Reading PA 15,598 12/31/98 300
Pasadena TX 11,416 12/31/98 300
Plano TX 28,155 12/31/98 300
San Antonio TX 28,468 12/31/98 300
San Antonio TX 33,985 12/31/98 300
San Antonio TX 26,546 12/31/98 300
Riverdale UT 28,905 12/31/98 300
Chesapeake VA 397,491 12/22/86 300
Office Supplies
- ---------------
Lakewood CA 366,411 12/27/96 300
Riverside CA 151,554 09/05/97 300
Hutchinson KS 172,810 06/25/97 300
Salina KS 185,563 06/20/97 300
Helena MT 152,141 06/06/97 300
Page F-72
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Office Supplies
- ---------------
Asheboro NC 465,557 2,176,416 None None
Westbury NY 3,808,076 2,377,932 None None
New Philadelphia OH 726,636 1,650,672 None None
Pet Supplies and Services
- -------------------------
Duluth GA 254,100 1,121,270 None None
Marrietta GA 350,000 1,069,043 None None
Indianapolis IN 427,000 764,514 None None
Sudbury MA 385,000 1,594,430 None None
Tyngsborough MA 312,204 1,222,522 None None
Matthews NC 610,177 1,394,743 None None
North Plainfield NJ -- 1,038,855 None None
Dickson City PA 659,790 1,880,722 None None
Private Education
- -----------------
Coconut Creek FL 310,111 1,243,682 None None
North Lauderdale FL 1,050,000 2,567,811 None None
Las Vegas NV 1,080,444 3,346,772 None None
Springfield VA 300,000 213,116 None None
Centerville VA 688,917 2,339,597 None None
University Place WA 255,000 718,614 53,612 24,142
Restaurants
- -----------
Siloam Springs AR 190,000 352,808 None None
Douglas AZ 75,000 347,719 None None
Glendale AZ 624,761 895,976 None 76
Tucson AZ 107,393 497,904 None None
Yuma AZ 236,121 541,651 None None
Barstow CA 689,842 690,204 None None
Chino CA 79,984 154,303 None 3,000
Diamond Bar CA 76,117 183,052 None 25,858
Fullerton CA 36,296 51,020 None 14,628
Hemet CA 106,164 199,179 11,922 7
Livermore CA 662,161 823,242 None None
Rancho Cucamonga CA 230,733 481,225 None None
Rancho Cucamonga CA 95,192 441,334 None None
Page F-73
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Office Supplies
- ---------------
Asheboro NC 465,557 2,176,416 2,641,973
Westbury NY 3,808,076 2,377,932 6,186,008
New Philadelphia OH 726,636 1,650,672 2,377,308
Pet Supplies and Services
- -------------------------
Duluth GA 254,100 1,121,270 1,375,370
Marrietta GA 350,000 1,069,043 1,419,043
Indianapolis IN 427,000 764,514 1,191,514
Sudbury MA 385,000 1,594,430 1,979,430
Tyngsborough MA 312,204 1,222,522 1,534,726
Matthews NC 610,177 1,394,743 2,004,920
North Plainfield NJ -- 1,038,855 1,038,855
Dickson City PA 659,790 1,880,722 2,540,512
Private Education
- -----------------
Coconut Creek FL 310,111 1,243,682 1,553,793
North Lauderdale FL 1,050,000 2,567,811 3,617,811
Las Vegas NV 1,080,444 3,346,772 4,427,216
Springfield VA 300,000 213,116 513,116
Centerville VA 688,917 2,339,597 3,028,514
University Place WA 255,000 796,368 1,051,368
Restaurants
- -----------
Siloam Springs AR 190,000 352,808 542,808
Douglas AZ 75,000 347,719 422,719
Glendale AZ 624,761 896,052 1,520,813
Tucson AZ 107,393 497,904 605,297
Yuma AZ 236,121 541,651 777,772
Barstow CA 689,842 690,204 1,380,046
Chino CA 79,984 157,303 237,287
Diamond Bar CA 76,117 208,910 285,027
Fullerton CA 36,296 65,648 101,944
Hemet CA 106,164 211,108 317,272
Livermore CA 662,161 823,242 1,485,403
Rancho Cucamonga CA 230,733 481,225 711,958
Rancho Cucamonga CA 95,192 441,334 536,526
Page F-74
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Office Supplies
- ---------------
Asheboro NC 155,394 03/27/98 300
Westbury NY 216,093 09/29/97 300
New Philadelphia OH 172,836 05/28/97 300
Pet Supplies and Services
- -------------------------
Duluth GA 34,954 01/27/99 09/29/98 300
Marrietta GA 17,105 05/28/99 09/29/98 300
Indianapolis IN -- In Process 01/29/99 300
Sudbury MA -- In Process 09/29/98 300
Tyngsborough MA 75,260 06/12/98 300
Matthews NC 81,207 07/16/98 300
North Plainfield NJ 53,183 09/24/98 300
Dickson City PA 190,056 06/12/97 300
Private Education
- -----------------
Coconut Creek FL 18,529 08/02/99 11/23/98 300
North Lauderdale FL 183,467 03/27/98 300
Las Vegas NV 239,335 02/27/98 300
Springfield VA -- In Process 11/18/99 300
Centerville VA 50,445 05/07/99 09/30/98 300
University Place WA 521,747 11/06/84 300
Restaurants
- -----------
Siloam Springs AR 29,750 11/14/97 300
Douglas AZ 223,545 11/27/85 300
Glendale AZ 135,890 02/19/96 300
Tucson AZ 318,421 01/17/86 300
Yuma AZ 35,172 04/23/98 300
Barstow CA 35,642 09/23/98 300
Chino CA 154,504 06/23/75 300
Diamond Bar CA 181,395 09/25/78 300
Fullerton CA 59,309 11/08/72 234
Hemet CA 191,353 04/15/77 300
Livermore CA 42,505 09/21/98 300
Rancho Cucamonga CA 481,225 04/03/81 180
Rancho Cucamonga CA 282,020 12/20/85 300
Page F-75
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Red Bluff CA 136,740 633,984 None None
Riverside CA 90,000 170,394 None None
Sacramento CA 386,793 417,290 None None
San Dimas CA 240,562 445,521 None None
San Ramon CA 406,000 1,126,930 None None
Colorado Springs CO 152,000 704,736 None None
Colorado Springs CO 313,250 695,730 None None
Montrose CO 217,595 483,284 None None
Sterling CO 95,320 441,928 None None
Westminster CO 338,940 1,571,401 20,000 13,440
Oviedo FL 204,200 659,585 None None
Casselberry FL 403,900 897,075 None None
Green Cove Sprgs FL 86,240 399,828 None None
Jacksonville FL 150,210 693,445 None None
Jacksonville FL 143,299 664,373 None None
Orlando FL 230,000 1,066,339 None None
Orlando FL 209,800 972,679 None None
Orlando FL 339,500 746,333 None None
Orlando FL 600,000 949,489 None None
Palm Bay FL 330,000 556,668 None None
Garden City GA 197,225 438,043 None None
Hinesville GA 89,220 413,644 None None
Hinesville GA 172,611 383,376 None None
Lithonia GA 89,220 413,647 None None
Savannah GA 143,993 345,548 None None
Savannah GA 165,409 367,380 None None
Statesboro GA 201,250 446,983 None None
Stone Mountain GA 215,940 1,001,188 None None
Ankeny IA 100,000 349,218 None None
Boone IA 76,000 386,170 None None
Boise ID 190,894 423,981 None None
Boise ID 161,352 334,041 None None
Nampa ID 74,156 343,820 None None
Rexburg ID 90,760 420,787 None None
Alton IL 225,785 419,315 None None
Dixon IL 230,090 511,036 None None
Page F-76
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Red Bluff CA 136,740 633,984 770,724
Riverside CA 90,000 170,394 260,394
Sacramento CA 386,793 417,290 804,083
San Dimas CA 240,562 445,521 686,083
San Ramon CA 406,000 1,126,930 1,532,930
Colorado Springs CO 152,000 704,736 856,736
Colorado Springs CO 313,250 695,730 1,008,980
Montrose CO 217,595 483,284 700,879
Sterling CO 95,320 441,928 537,248
Westminster CO 338,940 1,604,841 1,943,781
Oviedo FL 204,200 659,585 863,785
Casselberry FL 403,900 897,075 1,300,975
Green Cove Sprgs FL 86,240 399,828 486,068
Jacksonville FL 150,210 693,445 843,655
Jacksonville FL 143,299 664,373 807,672
Orlando FL 230,000 1,066,339 1,296,339
Orlando FL 209,800 972,679 1,182,479
Orlando FL 339,500 746,333 1,085,833
Orlando FL 600,000 949,489 1,549,489
Palm Bay FL 330,000 556,668 886,668
Garden City GA 197,225 438,043 635,268
Hinesville GA 89,220 413,644 502,864
Hinesville GA 172,611 383,376 555,987
Lithonia GA 89,220 413,647 502,867
Savannah GA 143,993 345,548 489,541
Savannah GA 165,409 367,380 532,789
Statesboro GA 201,250 446,983 648,233
Stone Mountain GA 215,940 1,001,188 1,217,128
Ankeny IA 100,000 349,218 449,218
Boone IA 76,000 386,170 462,170
Boise ID 190,894 423,981 614,875
Boise ID 161,352 334,041 495,393
Nampa ID 74,156 343,820 417,976
Rexburg ID 90,760 420,787 511,547
Alton IL 225,785 419,315 645,100
Dixon IL 230,090 511,036 741,126
Page F-77
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Red Bluff CA 375,428 12/18/86 300
Riverside CA 164,892 12/09/76 300
Sacramento CA 24,321 07/29/98 300
San Dimas CA 445,521 03/12/81 180
San Ramon CA 1,126,930 12/08/83 180
Colorado Springs CO 425,622 09/30/86 300
Colorado Springs CO 324,608 03/10/87 300
Montrose CO 212,755 12/17/87 300
Sterling CO 311,353 12/27/84 300
Westminster CO 1,175,748 06/28/84 300
Oveido FL -- 10/27/99 300
Casselberry FL 325,934 12/29/89 300
Green Cove Sprgs FL 281,693 12/19/84 300
Jacksonville FL 453,184 09/13/85 300
Jacksonville FL 426,546 12/13/85 300
Orlando FL 685,539 11/18/85 300
Orlando FL 594,238 08/15/86 300
Orlando FL 324,211 02/03/88 300
Orlando FL 23,532 05/27/99 12/18/98 300
Palm Bay FL 17,441 02/17/99 12/29/98 300
Garden City GA 172,540 04/20/89 300
Hinesville GA 291,424 12/20/84 300
Hinesville GA 168,774 12/22/87 300
Lithonia GA 291,083 01/04/85 300
Savannah GA 152,121 12/22/87 300
Savannah GA 161,732 12/22/87 300
Statesboro GA 167,075 11/14/89 300
Stone Mountain GA 600,739 10/30/86 300
Ankeny IA 349,218 07/28/83 180
Boone IA 386,170 12/27/83 180
Boise ID 180,483 05/17/88 300
Boise ID 137,357 10/07/88 300
Nampa ID 203,601 12/31/86 300
Rexburg ID 270,521 11/25/85 300
Alton IL 172,422 10/18/88 300
Dixon IL 224,957 12/28/87 300
Page F-78
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Salem IL 213,815 474,892 None None
Anderson IN 197,523 438,706 None None
Bedford IN 311,815 692,543 None None
Decatur IN 181,020 385,618 None None
Goshen IN 115,000 533,165 None None
Muncie IN 136,400 632,380 8,000 13,335
Muncie IN 67,156 149,157 None None
New Castle IN 246,192 320,572 None None
Shelbyville IN 128,820 597,263 None None
South Bend IN 133,200 617,545 None 19,211
Westfield IN 213,341 477,300 None None
Derby KS 96,060 445,359 None None
El Dorado KS 87,400 405,206 None None
Great Bend KS 95,800 444,154 None None
Wichita KS 98,000 454,350 None None
Lexington KY 122,200 490,200 None None
Alexandria LA 143,000 662,985 None 15,000
Jennings LA 107,120 496,636 None None
La Plata MD 120,140 557,000 None None
Flint MI 827,853 -- None None
Sturgis MI 210,560 467,659 None None
Albert Lea MN 213,150 473,412 None None
Red Wing MN 248,325 551,541 None None
Roseville MN 281,600 1,305,560 None None
Belton MO 89,328 418,187 None None
Blue Springs MO 111,440 516,665 None None
Carthage MO 85,020 394,175 None None
Chillicothe MO 81,080 375,908 None None
Fulton MO 210,199 466,861 None None
Hannibal MO 266,011 590,822 None None
Hazelwood MO 157,117 725,327 None 12,930
Jackson MO 210,199 466,860 None None
Mt. Vernon MO 160,000 282,586 None None
Nevada MO 222,552 494,296 None None
Ozark MO 140,000 292,482 None None
Sedalia MO 269,798 599,231 None None
Page F-79
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Salem IL 213,815 474,892 688,707
Anderson IN 197,523 438,706 636,229
Bedford IN 311,815 692,543 1,004,358
Decatur IN 181,020 385,618 566,638
Goshen IN 115,000 533,165 648,165
Muncie IN 136,400 653,715 790,115
Muncie IN 67,156 149,157 216,313
New Castle IN 246,192 320,572 566,764
Shelbyville IN 128,820 597,263 726,083
South Bend IN 133,200 636,756 769,956
Westfield IN 213,341 477,300 690,641
Derby KS 96,060 445,359 541,419
El Dorado KS 87,400 405,206 492,606
Great Bend KS 95,800 444,154 539,954
Wichita KS 98,000 454,350 552,350
Lexington KY 122,200 490,200 612,400
Alexandria LA 143,000 677,985 820,985
Jennings LA 107,120 496,636 603,756
La Plata MD 120,140 557,000 677,140
Flint MI 827,853 -- 827,853
Sturgis MI 210,560 467,659 678,219
Albert Lea MN 213,150 473,412 686,562
Red Wing MN 248,325 551,541 799,866
Roseville MN 281,600 1,305,560 1,587,160
Belton MO 89,328 418,187 507,515
Blue Springs MO 111,440 516,665 628,105
Carthage MO 85,020 394,175 479,195
Chillicothe MO 81,080 375,908 456,988
Fulton MO 210,199 466,861 677,060
Hannibal MO 266,011 590,822 856,833
Hazelwood MO 157,117 738,257 895,374
Jackson MO 210,199 466,860 677,059
Mt. Vernon MO 160,000 282,586 442,586
Nevada MO 222,552 494,296 716,848
Ozark MO 140,000 292,482 432,482
Sedalia MO 269,798 599,231 869,029
Page F-80
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Salem IL 211,833 10/30/87 300
Anderson IN 185,478 03/25/88 300
Bedford IN 314,994 07/15/87 300
Decatur IN 179,917 03/31/87 300
Goshen IN 327,807 07/07/86 300
Muncie IN 400,113 03/18/86 300
Muncie IN 64,361 03/30/88 300
New Castle IN 149,443 01/07/87 300
Shelbyville IN 353,682 12/18/86 300
South Bend IN 397,674 04/28/86 300
Westfield IN 175,016 12/21/89 300
Derby KS 288,039 10/29/85 300
El Dorado KS 253,870 04/10/86 300
Great Bend KS 312,919 12/26/84 300
Wichita KS 277,574 08/08/86 300
Lexington KY 291,797 12/03/86 300
Alexandria LA 432,840 01/17/86 300
Jennings LA 321,203 10/17/85 300
La Plata MD 357,610 12/03/85 300
Flint MI -- 04/13/95 300
Sturgis MI 207,241 11/12/87 300
Albert Lea MN 208,424 12/16/87 300
Red Wing MN 242,779 12/30/87 300
Roseville MN 919,807 12/18/84 300
Belton MO 294,627 12/18/84 300
Blue Springs MO 364,007 12/28/84 300
Carthage MO 253,071 12/03/85 300
Chillicothe MO 264,840 12/26/84 300
Fulton MO 212,346 07/30/87 300
Hannibal MO 268,728 07/30/87 300
Hazelwood MO 477,556 08/28/85 300
Jackson MO 212,346 07/30/87 300
Mt. Vernon MO 23,800 11/20/97 300
Nevada MO 224,825 07/30/87 300
Ozark MO 24,650 11/20/97 300
Sedalia MO 234,592 07/31/89 300
Page F-81
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
St. Charles MO 175,413 809,791 None 10,000
St. Charles MO 695,121 1,001,878 None 896
St. Joseph MO 107,648 496,958 None None
Sullivan MO 85,500 396,400 None None
Clinton MS 100,000 337,371 None None
Southaven MS 263,900 582,303 None None
Fayetteville NC 116,240 538,919 None None
Wilkesboro NC 183,050 406,562 None None
Omaha NE 629,592 1,051,244 None 887
Amherst NY 935,355 896,819 None 12
Fulton NY 294,009 653,006 None None
Watertown NY 139,199 645,355 None None
Akron OH 723,347 17 None None
Ashland OH 120,740 559,801 None None
Celina OH 207,060 459,841 None None
Lebanon OH 210,134 466,717 None None
Stow OH 317,546 712,455 None None
Troy OH 130,540 605,238 None None
Wash. Courthouse OH 123,120 570,836 None None
Wilmington OH 119,320 553,217 None None
Broken Arrow OK 245,000 369,002 None None
Norman OK 734,335 -- None None
Oklahoma City OK 759,826 -- None None
Owasso OK 247,450 549,597 None None
Ponca City OK 234,990 521,923 None None
Corvallis OR 172,788 383,766 None None
Hermiston OR 85,560 396,675 None None
Lake Oswego OR 175,899 815,508 None None
Milwaukie OR 179,174 830,689 None None
Salem OR 198,540 440,964 None None
Connellsville PA 264,670 587,843 None None
Waynesburg PA 222,285 493,704 None None
Pierre SD 251,790 559,232 None None
Memphis TN 405,274 1,060,680 None 1,700
Nashville TN 484,975 1,192,627 20,000 31,098
Allen TX 165,000 306,771 None None
Page F-82
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
St. Charles MO 175,413 819,791 995,204
St. Charles MO 695,121 1,002,774 1,697,895
St. Joseph MO 107,648 496,958 604,606
Sullivan MO 85,500 396,400 481,900
Clinton MS 100,000 337,371 437,371
Southaven MS 263,900 582,303 846,203
Fayetteville NC 116,240 538,919 655,159
Wilkesboro NC 183,050 406,562 589,612
Omaha NE 629,592 1,052,131 1,681,723
Amherst NY 935,355 896,831 1,832,186
Fulton NY 294,009 653,006 947,015
Watertown NY 139,199 645,355 784,554
Akron OH 723,347 17 723,364
Ashland OH 120,740 559,801 680,541
Celina OH 207,060 459,841 666,901
Lebanon OH 210,134 466,717 676,851
Stow OH 317,546 712,455 1,030,001
Troy OH 130,540 605,238 735,778
Wash. Courthouse OH 123,120 570,836 693,956
Wilmington OH 119,320 553,217 672,537
Broken Arrow OK 245,000 369,002 614,002
Norman OK 734,335 -- 734,335
Oklahoma City OK 759,826 -- 759,826
Owasso OK 247,450 549,597 797,047
Ponca City OK 234,990 521,923 756,913
Corvallis OR 172,788 383,766 556,554
Hermiston OR 85,560 396,675 482,235
Lake Oswego OR 175,899 815,508 991,407
Milwaukie OR 179,174 830,689 1,009,863
Salem OR 198,540 440,964 639,504
Connellsville PA 264,670 587,843 852,513
Waynesburg PA 222,285 493,704 715,989
Pierre SD 251,790 559,232 811,022
Memphis TN 405,274 1,062,380 1,467,654
Nashville TN 484,975 1,243,725 1,728,700
Allen TX 165,000 306,771 471,771
Page F-83
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
St. Charles MO 534,084 08/28/85 300
St. Charles MO 161,266 12/22/95 03/16/95 300
St. Joseph MO 324,770 09/04/85 300
Sullivan MO 279,275 12/27/84 300
Clinton MS 337,371 07/28/83 180
Southaven MS 268,267 05/11/87 300
Fayetteville NC 379,685 12/20/84 300
Wilkesboro NC 184,920 07/24/87 300
Omaha NE 190,976 06/02/95 02/24/95 300
Amherst NY 146,929 12/21/95 05/31/95 300
Fulton NY 286,606 12/24/87 300
Watertown NY 392,288 08/18/86 300
Akron OH -- 12/22/94 300
Ashland OH 331,497 12/19/86 300
Celina OH 217,254 01/02/87 300
Lebanon OH 212,280 07/31/87 300
Stow OH 312,922 12/31/87 300
Troy OH 360,275 12/05/86 300
Wash. Courthouse OH 338,032 12/19/86 300
Wilmington OH 327,600 12/31/86 300
Broken Arrow OK 29,808 12/10/97 300
Norman OK -- 09/29/95 05/31/95 300
Oklahoma City OK -- 06/05/95 300
Owasso OK 241,950 12/28/87 300
Ponca City OK 229,766 12/30/87 300
Corvallis OR 168,946 12/22/87 300
Hermiston OR 279,469 12/18/84 300
Lake Oswego OR 596,707 05/16/84 300
Milwaukie OR 610,320 05/08/84 300
Salem OR 170,031 05/23/89 300
Connellsville PA 265,653 08/17/87 300
Waynesburg PA 223,110 08/17/87 300
Pierre SD 246,190 12/01/87 300
Memphis TN 189,155 06/30/95 03/17/95 300
Nashville TN 1,227,011 05/20/83 180
Allen TX 5,558 07/09/99 06/07/99 300
Page F-84
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Athens TX 245,245 544,700 None None
Bedford TX 919,303 98,231 None None
Beeville TX 250,490 556,349 None None
Brownwood TX 288,225 640,160 None None
Crockett TX 90,780 420,880 None None
Dallas TX 242,025 479,170 None None
Dallas TX 742,507 -- None None
El Campo TX 98,060 454,631 None None
Ennis TX 173,250 384,793 None None
Fort Worth TX 223,195 492,067 None None
Fort Worth TX 423,281 382,059 None None
Gainesville TX 89,220 413,644 None None
Hewitt TX 120,240 207,216 None None
Hillsboro TX 75,992 352,316 None None
Houston TX 194,994 386,056 None None
Houston TX 184,175 364,636 None None
Killeen TX 262,500 583,014 None 14,398
League City TX 126,822 588,000 None 155
Lufkin TX 105,904 490,998 None None
Mesquite TX 134,940 625,612 None None
Mesquite TX 729,596 120,820 None None
Mexia TX 93,620 434,046 None None
New Braunfels TX 185,500 411,997 None None
Orange TX 93,560 433,768 None None
Plainview TX 125,000 350,767 None None
Port Lavaca TX 244,759 543,619 None None
Porter TX 227,067 333,031 None None
Rowlett TX 126,933 585,986 None None
Santa Fe TX 304,414 623,331 None None
Sealy TX 197,871 391,753 None None
Stafford TX 214,024 423,733 None None
Temple TX 302,505 291,414 None None
Vidor TX 90,618 420,124 None None
Waxahachie TX 326,935 726,137 None None
Cedar City UT 130,000 296,544 None None
Orem UT 516,129 1,004,608 None None
Page F-85
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Athens TX 245,245 544,700 789,945
Bedford TX 919,303 98,231 1,017,534
Beeville TX 250,490 556,349 806,839
Brownwood TX 288,225 640,160 928,385
Crockett TX 90,780 420,880 511,660
Dallas TX 242,025 479,170 721,195
Dallas TX 742,507 -- 742,507
El Campo TX 98,060 454,631 552,691
Ennis TX 173,250 384,793 558,043
Fort Worth TX 223,195 492,067 715,262
Fort Worth TX 423,281 382,059 805,340
Gainesville TX 89,220 413,644 502,864
Hewitt TX 120,240 207,216 327,456
Hillsboro TX 75,992 352,316 428,308
Houston TX 194,994 386,056 581,050
Houston TX 184,175 364,636 548,811
Killeen TX 262,500 597,412 859,912
League City TX 126,822 588,155 714,977
Lufkin TX 105,904 490,998 596,902
Mesquite TX 134,940 625,612 760,552
Mesquite TX 729,596 120,820 850,416
Mexia TX 93,620 434,046 527,666
New Braunfels TX 185,500 411,997 597,497
Orange TX 93,560 433,768 527,328
Plainview TX 125,000 350,767 475,767
Port Lavaca TX 244,759 543,619 788,378
Porter TX 227,067 333,031 560,098
Rowlett TX 126,933 585,986 712,919
Santa Fe TX 304,414 623,331 927,745
Sealy TX 197,871 391,753 589,624
Stafford TX 214,024 423,733 637,757
Temple TX 302,505 291,414 593,919
Vidor TX 90,618 420,124 510,742
Waxahachie TX 326,935 726,137 1,053,072
Cedar City UT 130,000 296,544 426,544
Orem UT 516,129 1,004,608 1,520,737
Page F-86
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Athens TX 239,794 12/01/87 300
Bedford TX 98,231 12/27/94 300
Beeville TX 253,049 07/31/87 300
Brownwood TX 281,707 12/28/87 300
Crockett TX 268,952 12/17/85 300
Dallas TX 153,166 06/25/91 300
Dallas TX -- 04/13/95 300
El Campo TX 292,278 11/25/85 300
Ennis TX 169,398 12/28/87 300
Fort Worth TX 166,640 06/26/91 300
Fort Worth TX 74,502 02/10/95 300
Gainesville TX 291,424 12/18/84 300
Hewitt TX 5,170 06/07/99 300
Hillsboro TX 255,071 08/01/84 300
Houston TX 123,402 06/25/91 300
Houston TX 116,555 06/25/91 300
Killeen TX 272,071 05/29/87 300
League City TX 348,195 12/30/86 300
Lufkin TX 319,025 10/08/85 300
Mesquite TX 392,492 03/20/86 300
Mesquite TX 120,820 12/23/94 300
Mexia TX 277,365 12/18/85 300
New Braunfels TX 192,225 03/26/87 300
Orange TX 278,491 12/10/85 300
Plainview TX 350,767 01/24/84 180
Port Lavaca TX 247,259 07/30/87 300
Porter TX 64,941 02/09/95 300
Rowlett TX 382,953 09/06/85 300
Santa Fe TX 44,360 03/20/98 300
Sealy TX 125,223 06/25/91 300
Stafford TX 135,445 06/26/91 300
Temple TX 56,826 02/09/95 300
Vidor TX 304,160 08/01/84 300
Waxahachie TX 319,608 12/29/87 300
Cedar City UT 296,544 08/04/83 180
Orem UT 162,412 11/17/95 300
Page F-87
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Sandy UT 635,945 884,792 None None
Norfolk VA 251,207 575,250 None 12,983
Virginia Beach VA 314,790 699,161 None 322
Auburn WA 301,595 669,851 None None
Marysville WA 276,273 613,612 None None
Oak Harbor WA 275,940 612,874 None None
Redmond WA 610,334 1,262,104 None None
Spokane WA 479,531 646,719 None None
Tacoma WA 198,857 921,947 None 653
Grafton WI 149,778 332,664 None None
Monroe WI 193,130 428,947 None None
Portage WI 199,605 443,328 None None
Shawano WI 205,730 456,932 None None
Sturgeon Bay WI 214,865 477,221 None None
Oak Hill WV 85,860 398,069 None None
Laramie WY 210,000 466,417 None None
Riverton WY 216,685 481,267 None None
Sheridan WY 117,160 543,184 None None
Shoe Stores
- -----------
Little Rock AR 1,079,232 2,594,956 None None
Maplewood MN 785,023 2,715,629 None None
Houston TX 1,096,376 2,300,690 None None
Midland TX 544,075 1,322,431 None None
Theaters
- --------
Jacksonville FL 4,510,272 9,011,426 None None
Buchanan WI 1,453,414 7,607,254 None None
Video Rental
- ------------
Birmingham AL 392,795 865,115 None None
Southington CT 399,562 1,009,125 None None
Port St. Lucie FL 612,695 701,759 None None
Tampa FL 401,874 933,768 None None
Atlanta GA 652,551 763,360 None None
Brunswick GA 290,369 788,880 None None
Page F-88
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Sandy UT 635,945 884,792 1,520,737
Norfolk VA 251,207 588,233 839,440
Virginia Beach VA 314,790 699,483 1,014,273
Auburn WA 301,595 669,851 971,446
Marysville WA 276,273 613,612 889,885
Oak Harbor WA 275,940 612,874 888,814
Redmond WA 610,334 1,262,104 1,872,438
Spokane WA 479,531 646,719 1,126,250
Tacoma WA 198,857 922,600 1,121,457
Grafton WI 149,778 332,664 482,442
Monroe WI 193,130 428,947 622,077
Portage WI 199,605 443,328 642,933
Shawano WI 205,730 456,932 662,662
Sturgeon Bay WI 214,865 477,221 692,086
Oak Hill WV 85,860 398,069 483,929
Laramie WY 210,000 466,417 676,417
Riverton WY 216,685 481,267 697,952
Sheridan WY 117,160 543,184 660,344
Shoe Stores
- -----------
Little Rock AR 1,079,232 2,594,956 3,674,188
Maplewood MN 785,023 2,715,629 3,500,652
Houston TX 1,096,376 2,300,690 3,397,066
Midland TX 544,075 1,322,431 1,866,506
Theaters
- --------
Jacksonville FL 4,510,272 9,011,426 13,521,698
Buchanan WI 1,453,414 7,607,254 9,060,668
Video Rental
- ------------
Birmingham AL 392,795 865,115 1,257,910
Southington CT 399,562 1,009,125 1,408,687
Port St. Lucie FL 612,695 701,759 1,314,454
Tampa FL 401,874 933,768 1,335,642
Atlanta GA 652,551 763,360 1,415,911
Brunswick GA 290,369 788,880 1,079,249
Page F-89
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Sandy UT 143,041 12/22/95 300
Norfolk VA 262,946 10/15/87 300
Virginia Beach VA 313,915 09/03/87 300
Auburn WA 294,888 12/16/87 300
Marysville WA 277,299 08/27/87 300
Oak Harbor WA 278,757 07/16/87 300
Redmond WA 1,262,104 12/10/82 180
Spokane WA 46,065 03/26/98 300
Tacoma WA 674,587 05/29/84 300
Grafton WI 148,390 10/29/87 300
Monroe WI 188,834 12/17/87 300
Portage WI 195,150 12/23/87 300
Shawano WI 201,141 12/17/87 300
Sturgeon Bay WI 210,087 12/01/87 300
Oak Hill WV 280,452 12/28/84 300
Laramie WY 167,544 03/12/90 300
Riverton WY 211,868 12/01/87 300
Sheridan WY 347,106 12/31/85 300
Shoe Stores
- -----------
Little Rock AR 151,360 07/17/98 300
Maplewood MN 76,927 05/07/99 300
Houston TX 210,139 09/02/97 300
Midland TX 98,675 01/30/98 300
Theaters
- --------
Jacksonville FL 14,943 12/30/99 07/22/99 300
Buchanan WI 139,435 07/22/99 300
Video Rental
- ------------
Birmingham AL 78,797 09/30/97 300
Southington CT 42,037 12/23/98 300
Port St. Lucie FL 26,559 12/09/98 08/24/98 300
Tampa FL 75,798 12/19/97 300
Atlanta GA 31,755 12/04/98 300
Brunswick GA 63,989 12/31/97 300
Page F-90
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Video Rental
- ------------
Norcross GA 431,284 724,037 None None
Plainfield IN 453,645 908,485 None None
Topeka KS 285,802 966,286 None None
Wichita KS 289,714 797,856 None None
Winchester KY 355,474 929,177 None None
Warren MI 356,348 903,351 None None
Centerville OH 601,408 758,192 None None
Dayton OH 401,723 698,872 None None
Forest Park OH 328,187 921,232 None None
Franklin OH 337,572 777,943 None None
Springboro OH 261,916 897,489 None None
Oklahoma City OK 307,658 474,096 None None
Tulsa OK 318,441 1,004,663 None None
Bartlett TN 420,000 612,285 None None
Clarksville TN 499,885 840,869 None None
Columbia TN 466,469 716,723 None None
Hendersonville TN 333,677 938,592 None None
Jackson TN 381,076 857,261 None None
Memphis TN 381,265 900,580 None None
Murfreesboro TN 385,437 782,396 None None
Murfreesboro TN 406,056 886,293 None None
Smyrna TN 302,372 836,214 None None
Austin TX 407,910 885,113 None None
Beaumont TX 293,919 832,154 None None
Hurst TX 373,084 871,163 None None
Lubbock TX 266,805 857,492 None None
Woodway TX 372,487 835,198 None None
Hampton VA 373,499 836,071 None None
Virginia Beach VA 551,588 797,260 None None
Other
- -----
Mesa AZ 271,754 1,259,911 38,949 20,017
Phoenix AZ 322,708 1,496,144 242,472 10,462
Escondido CA -- -- 13,900 None
Fresno CA 428,900 3,434,562 None None
San Diego CA 3,745,000 8,885,351 15,693 20,410
Page F-91
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Video Rental
- ------------
Norcross GA 431,284 724,037 1,155,321
Plainfield IN 453,645 908,485 1,362,130
Topeka KS 285,802 966,286 1,252,088
Wichita KS 289,714 797,856 1,087,570
Winchester KY 355,474 929,177 1,284,651
Warren MI 356,348 903,351 1,259,699
Centerville OH 601,408 758,192 1,359,600
Dayton OH 401,723 698,872 1,100,595
Forest Park OH 328,187 921,232 1,249,419
Franklin OH 337,572 777,943 1,115,515
Springboro OH 261,916 897,489 1,159,405
Oklahoma City OK 307,658 474,096 781,754
Tulsa OK 318,441 1,004,663 1,323,104
Bartlett TN 420,000 612,285 1,032,285
Clarksville TN 499,885 840,869 1,340,754
Columbia TN 466,469 716,723 1,183,192
Hendersonville TN 333,677 938,592 1,272,269
Jackson TN 381,076 857,261 1,238,337
Memphis TN 381,265 900,580 1,281,845
Murfreesboro TN 385,437 782,396 1,167,833
Murfreesboro TN 406,056 886,293 1,292,349
Smyrna TN 302,372 836,214 1,138,586
Austin TX 407,910 885,113 1,293,023
Beaumont TX 293,919 832,154 1,126,073
Hurst TX 373,084 871,163 1,244,247
Lubbock TX 266,805 857,492 1,124,297
Woodway TX 372,487 835,198 1,207,685
Hampton VA 373,499 836,071 1,209,570
Virginia Beach VA 551,588 797,260 1,348,848
Other
- -----
Mesa AZ 271,754 1,318,877 1,590,631
Phoenix AZ 322,708 1,749,078 2,071,786
Escondido CA -- 13,900 13,900
Fresno CA 428,900 3,434,562 3,863,462
San Diego CA 3,745,000 8,921,454 12,666,454
Page F-92
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Video Rental
- ------------
Norcross GA 63,318 09/30/97 300
Plainfield IN 70,716 01/09/98 300
Topeka KS 78,579 12/16/97 300
Wichita KS 35,852 11/10/98 300
Winchester KY 57,238 06/30/98 300
Warren MI 70,343 12/31/97 300
Centerville OH 46,698 06/29/98 300
Dayton OH 43,058 06/26/98 300
Forest Park OH 77,859 11/05/97 300
Franklin OH 63,014 12/30/97 300
Springboro OH 46,305 09/08/98 300
Oklahoma City OK 32,213 04/17/98 300
Tulsa OK 91,613 09/26/97 300
Bartlett TN 15,110 05/12/99 02/26/99 300
Clarksville TN 40,605 09/30/98 300
Columbia TN 65,265 09/26/97 300
Hendersonville TN 76,301 12/05/97 300
Jackson TN 78,160 09/26/97 300
Memphis TN 64,211 03/30/98 300
Murfreesboro TN 24,709 03/31/99 300
Murfreesboro TN 80,799 09/26/97 300
Smyrna TN 76,223 08/29/97 300
Austin TX 71,843 11/20/97 300
Beaumont TX 75,888 09/05/97 300
Hurst TX 50,689 07/28/98 300
Lubbock TX 81,018 08/21/97 300
Woodway TX 67,859 12/12/97 300
Hampton VA 67,868 12/19/97 300
Virginia Beach VA 59,356 02/20/98 300
Other
- -----
Mesa AZ 793,513 06/30/86 300
Phoenix AZ 961,046 06/30/86 300
Escondido CA 162
Fresno CA 3,434,562 10/29/82 180
San Diego CA 5,395,848 03/08/86 03/25/86 300
Page F-93
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Other
- -----
San Diego CA 2,485,160 8,697,822 32,587 14,574
San Diego CA 5,797,411 15,473,497 40,214 19,115
Humble TX 106,000 545,518 10,422 5,990
Plano TX 565,000 6,935,000 None 174,352
Other -- 401,553 None 28,571
----------- ----------- ------- -------
350,517,264 710,782,659 532,276 646,931
=========== =========== ======= =======
Page F-94
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Other
- -----
San Diego CA 2,485,160 8,744,983 11,230,143
San Diego CA 5,797,411 15,532,826 21,330,237
Humble TX 106,000 561,930 667,930
Plano TX 565,000 7,109,352 7,674,352
Other -- 430,124 430,124
----------- ----------- -------------
350,517,264 711,961,866 1,062,479,130
=========== =========== =============
Page F-95
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Other
- -----
San Diego CA 3,967,897 01/23/89 09/19/86 300
San Diego CA 6,600,995 01/20/89 08/05/87 300
Humble TX 433,549 03/25/86 300
Plano TX 1,114,949 05/26/95 300
Other 381,290
-----------
195,386,310
===========
</TABLE>
Page F-96
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Note 1. One thousand seventy-two of the properties are single unit retail
outlets. One grocery property located in Sheboygan, WI and three other
properties located in San Diego, CA are multi-tenant commercial properties.
All properties were acquired on an all cash basis except one; no
encumbrances were outstanding for the periods presented.
Note 2. The aggregate cost for federal income tax purposes is
$998,424,738.
Note 3. Reconciliation of total real estate carrying value for the three
years ended December 31, 1999 are as follows:
<TABLE>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period 889,835,701 699,797,446 564,539,993
Additions during period:
Acquisitions 181,375,766 193,436,163 142,286,618
Equipment -- 14,685 --
Improvements, etc. 198,565 79,790 16,683
Other (leasing costs) 191,391 168,425 36,266
------------- ----------- -----------
Total additions 181,765,722 193,699,063 142,339,567
------------- ----------- -----------
Deductions during period:
Cost of real estate sold 9,109,061 3,520,108 6,917,114
Cost of equipment sold -- 58,000 --
Other (fully amortized
commissions) 13,232 82,700 --
Other (provision for
impairment losses) -- -- 165,000
------------- ----------- -----------
Total deductions 9,122,293 3,660,808 7,082,114
------------- ----------- -----------
Balance at close of period: 1,062,479,130 889,835,701 699,797,446
============= =========== ===========
Note 4. Reconciliation of accumulated depreciation for the three years
ended December 31, 1999 are as follows:
(table continued)
Page F-97
<PAGE>
(continued)
1999 1998 1997
----------- ----------- -----------
Balance at beginning of period: 171,555,267 152,206,136 138,307,408
Additions during period -
provision for depreciation 23,844,275 20,766,430 17,465,979
Deductions during period:
Accumulated depreciation
of real estate and
equipment sold -- 1,334,599 3,567,251
Other (fully amortized
commissions) 13,232 82,700 --
----------- ----------- -----------
Balance at close of period 195,386,310 171,555,267 152,206,136
=========== =========== ===========
</TABLE>
Note 5. In 1997, a provision for impairment loss was made on two vacant
properties in Riverside, CA and Irving, TX which was sold in 1998 and a
restaurant property in McMinnville, OR which was sold in 1997.
Page F-98
EXHIBIT 10.1
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
dated as of December 14, 1999
among
REALTY INCOME CORPORATION
THE BANKS NAMED HEREIN,
THE BANK OF NEW YORK,
as Administrative Agent and as Swing Line Bank,
FIRST UNION NATIONAL BANK,
as Syndication Agent,
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Documentation Agent,
BANK OF MONTREAL,
as Co-Agent
AND
BNY CAPITAL MARKETS, INC.,
as Lead Arranger and as Book Manager
TABLE OF CONTENTS
<TABLE>
Page
------
<S> <C> <C>
ARTICLE I
DEFINITIONS
Section 1.01 Definitions........................................ 6
ARTICLE II
THE LOANS
Section 2.01 The Loans.......................................... 24
Section 2.02 Procedure for Pro Rata Loans....................... 24
Section 2.03 Pro Rata Notes..................................... 26
Section 2.04 Certain Fees....................................... 26
Section 2.05 Cancellation or Reduction of the Commitment........ 27
Section 2.06 Optional Prepayment................................ 27
Section 2.07 Mandatory Prepayment............................... 27
Section 2.08 Procedure for Competitive Loans.................... 28
Section 2.09 Competitive Notes.................................. 32
Section 2.10 Swing Line Advances................................ 32
ARTICLE III
INTEREST, METHOD OF PAYMENT, CONVERSION, ETC.
Section 3.01 Procedure for Interest Rate Determination.......... 35
Section 3.02 Interest on ABR Loans.............................. 35
Section 3.03 Interest on Eurodollar Loans....................... 36
Section 3.04 Interest on Absolute Rate Competitive Loans........ 37
Section 3.05 Conversion/Continuance............................. 37
Section 3.06 Post Default Interest.............................. 37
Section 3.07 Maximum Interest Rate.............................. 38
ARTICLE IV
DISBURSEMENT AND PAYMENT
Section 4.01 Pro Rata Treatment................................. 38
Section 4.02 Method of Payment.................................. 38
Section 4.03 Compensation for Losses............................ 39
Section 4.04 Withholding, Reserves and Additional Costs......... 40
Section 4.05 Unavailability..................................... 45
(table continued next page)
Page 2
<PAGE>
(table continued)
TABLE OF CONTENTS (continued)
Page
------
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties..................... 46
ARTICLE VI
CONDITIONS OF LENDING
Section 6.01 Conditions to the Availability of the Commitment... 53
Section 6.02 Conditions to All Loans............................ 55
ARTICLE VII
COVENANTS
Section 7.01 Affirmative Covenants.............................. 56
Section 7.02 Negative Covenants................................. 61
Section 7.03 Financial Covenants................................ 65
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01 Events of Default.................................. 66
ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE BANKS
Section 9.01 The Agency......................................... 69
Section 9.02 The Administrative Agent's Duties.................. 69
Section 9.03 Sharing of Payment and Expenses.................... 70
Section 9.04 The Administrative Agent's Liabilities............. 70
Section 9.05 The Administrative Agent as a Bank................. 71
Section 9.06 Bank Credit Decision............................... 71
Section 9.07 Indemnification.................................... 72
Section 9.08 Successor Administrative Agent..................... 72
ARTICLE X
CONSENT TO JURISDICTION
Section 10.01 Consent to Jurisdiction............................ 73
(table continued next page)
Page 3
<PAGE>
(table continued
TABLE OF CONTENTS (continued)
Page
------
ARTICLE XI
MISCELLANEOUS
Section 11.01 APPLICABLE LAW..................................... 73
Section 11.02 Set-off............................................ 74
Section 11.03 Expenses........................................... 74
Section 11.04 Amendments......................................... 74
Section 11.05 Cumulative Rights and No Waiver.................... 75
Section 11.06 Notices............................................ 75
Section 11.07 Separability....................................... 76
Section 11.08 Assignments and Participations..................... 76
Section 11.09 WAIVER OF JURY TRIAL............................... 78
Section 11.10 Confidentiality.................................... 78
Section 11.11 Indemnity.......................................... 78
Section 11.12 Extension of Termination Dates; Removal of Banks;
Substitutions of Banks............................. 79
Section 11.13 Knowledge of the Company........................... 81
Section 11.14 Execution in Counterparts.......................... 81
</TABLE>
Page 4
<PAGE>
<TABLE>
EXHIBITS AND SCHEDULES
----------------------
<S> <C>
EXHIBIT A Form of Conversion/Continuance Request
EXHIBIT B Form of Pro Rata Loan Request
EXHIBIT C-1 Form of Competitive Loan Request
EXHIBIT C-2 Form of Notice to Banks
EXHIBIT C-3 Form of Competitive Bid
EXHIBIT C-4 Form of Competitive Bid Accept/Reject
Notice
EXHIBIT D-1 Form of Pro Rata Note
EXHIBIT D-2 Form of Competitive Note
EXHIBIT D-3 Form of Swing Line Note
EXHIBIT E Form of Swing Line Advance Request
EXHIBIT F-1 Form of Opinion of Latham & Watkins
EXHIBIT F-2 Form of Opinion of Michael R. Pfeiffer,
General Counsel of the Company
EXHIBIT G Form of Property Management Exception
Report
EXHIBIT H Form of Real Estate Investment Criteria
EXHIBIT I Subsidiary Guarantee
SCHEDULE 1 Commitments
SCHEDULE 5.01(a) Subsidiaries and Joint Ventures of the
Company
SCHEDULE 5.01(q) ERISA Liabilities
SCHEDULE 5.01(r) Intellectual Property
</TABLE>
Page 5
REVOLVING CREDIT AGREEMENT
--------------------------
REVOLVING CREDIT AGREEMENT, dated as of December 14, 1999 (this
"Agreement"), among Realty Income Corporation, a Maryland corporation
(the "Company"), each of the banks identified on the signature pages
hereof (each, a "Bank" and, collectively, the "Banks") and The Bank of
New York, as Administrative Agent for the Banks (the "Administrative
Agent") and as the Swing Line Bank with respect to Swing Line Advances
(as defined below).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has requested the Banks to lend up to
$200,000,000 to the Company on a revolving basis for the acquisition
of property in the ordinary course of the Company's business,
including related costs and expenses and for the payment of fees and
expenses incurred in connection with this Agreement and up to
$15,000,000 in Swing Line Advances (as defined herein) for the
purposes stated above and for working capital.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions
-----------
(a) TERMS GENERALLY. The definitions ascribed to terms in this
Section 1.01 and elsewhere in this Agreement shall apply equally to
both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes"
and "including" shall be deemed to be followed by the phrase "without
limitation". The words "hereby", "herein", "hereof", "hereunder" and
words of similar import refer to this Agreement as a whole (including
any exhibits and schedules hereto) and not merely to the specific
section, paragraph or clause in which such word appears. All
references herein to Articles, Sections, Exhibits and Schedules shall
be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all
references to "dollars" or "$" shall be deemed references to the
lawful money of the United States of America.
(b) ACCOUNTING TERMS. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in
Page 6
<PAGE>
accordance with GAAP, as in effect from time to time; provided,
however, that, for purposes of determining compliance with any
covenant set forth in Article VII which requires financial
computations, such terms shall be construed in accordance with GAAP as
in effect on the Effective Date applied on a basis consistent with the
construction thereof applied in preparing the Company's audited
financial statements referred to in Section 5.01(h). In the event
there shall occur a change in GAAP which but for the foregoing proviso
would affect the computation used to determine compliance with any
covenant set forth in Article VII which requires financial
computations, the Company and the Banks agree to negotiate in good
faith in an effort to agree upon an amendment to this Agreement that
will permit compliance with such covenant to be determined by
reference to GAAP as so changed while affording the Banks the
protection afforded by such covenant prior to such change (it being
understood, however, that such covenant shall remain in full force and
effect in accordance with its existing terms pending the execution by
the Company and the Banks of any such amendment).
(c) OTHER TERMS. The following terms shall have the meanings
ascribed to them below or in the Sections of this Agreement indicated
below:
"ABR Loans" shall mean Loans which bear interest at a rate based upon
the Base Rate and in the manner set forth in Section 3.02.
"Absolute Rate Competitive Loan" shall mean a Competitive Loan bearing
interest at the Competitive Rate in the manner set forth in Section
3.04.
"Administrative Agent" shall have the meaning given to such term in
the preamble of this Agreement and shall also include any successor
agent hereunder.
"Adverse Environmental Condition" shall mean any of the matters
referred to in clauses (i) or (ii) of the definition of Environmental
Claim.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to
control another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through
ownership of stock, by contract or otherwise.
Page 7
<PAGE>
"Applicable Margin" shall mean the margin set forth in the following
chart applicable to the Pricing Level then in effect:
<TABLE>
Pricing Level Applicable LIBOR Margin
------------- -----------------------
<S> <C>
I 0.875%
II 1.000%
III 1.125%
IV 1.225%
V 1.450%
</TABLE>
"Pricing Level I" shall be applicable for so long as the Company's
Debt Rating is better than or equal to A-/A3; "Pricing Level II" shall
be applicable for so long as the Company's Debt Rating is lower than
A-/A3 but better than or equal to BBB+/Baal; "Pricing Level III" shall
be applicable for so long as the Company's Debt Rating is lower than
BBB+/Baal but better than or equal to BBB/Baa2; "Pricing Level IV"
shall be applicable for so long as the Company's Debt Rating is lower
than BBB/Baa2 but better than or equal to BBB-/Baa3; "Pricing Level V"
shall be applicable for so long as the Company's Debt Rating is lower
than BBB-/Baa3, or if the Company does not have a Debt Rating.
Changes in the applicable Pricing Level shall be effective as of the
first day of the calendar quarter following a change in the Company's
Debt Rating.
"Assignee" has the meaning ascribed to such term in Section 11.08(c).
"Available Commitment" shall mean (a) on any date prior to the
Termination Date, an amount equal to the remainder of (i) the Total
Commitment on such date minus (ii) the aggregate outstanding principal
amount of Loans and Swing Line Advances on such date and (b) on and
after the Termination Date, $0.
"Bank" shall have the meaning given to such term in the preamble of
this Agreement and shall also include any other financial institution
which pursuant to the provisions hereof becomes a party to this
Agreement.
"Base LIBOR" shall mean, with respect to any Eurodollar Loan for any
Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such
Interest Period, as the rate for dollar deposits with a maturity
comparable to such Interest Period. In the event that such rate does
Page 8
<PAGE>
not appear on such Page 3750 (or any successor or substitute page, or
any successor to or substitute for such Service) at such time for any
reason, then "Base LIBOR" with respect to such Eurodollar Loan for
such Interest Period shall be the rate at which dollar deposits of
$5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Base Rate" shall mean a fluctuating interest rate per annum as shall
be in effect from time to time, which rate per annum shall on any day
be equal to the higher of:
(a) the rate of interest publicly announced by the Administrative
Agent from time to time as its prime commercial loan rate in
effect on such day; and
(b) the sum of (i) 1/2 of 1% per annum and (ii) the Federal Funds
Rate.
"Borrowing Date" shall mean the date set forth in each Loan Request as
the date upon which the Company desires to borrow Loans pursuant to
the terms of this Agreement.
"Business Day" shall mean (i) with respect to any ABR Loan or any
payment of the Facility Fee, any day except a Saturday, Sunday or
other day on which commercial banks in New York City or Los Angeles
are authorized by law to close and (ii) with respect to any Eurodollar
Loan, any day on which commercial banks are open for domestic and
international business (including dealings in U.S. dollar deposits) in
London, New York City and Los Angeles.
"Capital Lease" shall mean, with respect to any Person, any obligation
of such Person to pay rent or other amounts under a lease with respect
to any property (whether real, personal or mixed) acquired or leased
by such Person that is required to be accounted for as a liability on
a balance sheet of such Person in accordance with GAAP.
"Capital Lease Obligations" shall mean the obligation of any Person to
pay rent or other amounts under a Capital Lease.
"Change of Control" shall mean any person or group of Persons (within
the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended) who shall become the beneficial owner(s),
directly or indirectly, of capital stock of the Company representing
50% or more of the voting power of the Company or otherwise enabling
such Person or group of Persons to exercise effective control over the
management of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Page 9
<PAGE>
"Commitment" of any Bank shall mean, in the case of each Bank (i)
prior to any such Bank's Termination Date, the amount set forth
opposite such Bank's name under the heading "Commitment" on Schedule 1
hereto, or set forth in the assignment agreement executed by such Bank
if it is not a Bank on the date hereof, as such amount may be adjusted
from time to time pursuant to assignments of such Bank and as such
amount may be reduced from time to time pursuant to Section 2.05 and
(ii) after such Bank's Termination Date, zero.
"Competitive Accept/Reject Notice" has the meaning ascribed to such
term in Section 2.08(d).
"Competitive Bid" means an offer by a Bank to make a Competitive Loan
pursuant to Section 2.08(c).
"Competitive Bid Rate" means, with respect to any Competitive Bid, (i)
in the case of a Eurodollar Competitive Loan, the sum of the
Competitive Margin plus LIBOR, and (ii) in the case of a Absolute Rate
Competitive Loan, the fixed rate of interest at which the Bank making
the Competitive Bid thereby offers to make a Competitive Loan.
"Competitive Loan" has the meaning ascribed to such term in Section
2.01.
"Competitive Loan Request" means a request for Competitive Bids made
pursuant to Section 2.08(b).
"Competitive Margin" means, with respect to any Eurodollar Competitive
Loan for any Interest Period, the margin (expressed as a percentage
rate per annum in the form of a decimal to no more than four decimal
places) to be added to or subtracted from LIBOR, in order to determine
the interest rate applicable to such Loan during such Interest Period,
as specified in the related Competitive Bid and the Competitive
Accept/Reject Notice.
"Competitive Notes" means, collectively, promissory notes of the
Borrower evidencing Competitive Loans, each substantially in the form
of Exhibit D-2.
"Competitive Rate" means, with respect to any Absolute Rate
Competitive Loan, the fixed rate of interest (expressed as a
percentage rate per annum in the form of a decimal to no more than
four decimal places) for such Loan, as specified in the related
Competitive Bid and Competitive Accept/Reject Notice.
"Compliance Date" shall mean each of the date of this Agreement, each
Borrowing Date, each Conversion Date and the date of each delivery by
the Company of a certificate requiring the Company to certify as to
the accuracy of the representations and warranties contained in
Article V.
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<PAGE>
"Consolidated Annualized Base Rent" shall mean, in respect of any
fiscal quarter, (A) the product of (i) the monthly contractual base
rents at the end of such fiscal quarter multiplied by (ii) twelve plus
(B) the previous twelve month's historical percentage rents at such
time, determined on a consolidated basis for the Company and its
Subsidiaries.
"Consolidated Depreciation and Amortization" shall mean, at any date
of determination, "Depreciation and Amortization" or the similar item,
determined on a consolidated basis for the Company and its
Subsidiaries, as shown on the most recent consolidated statement of
income for the Company and its Subsidiaries which has been delivered
to the Administrative Agent pursuant to Section 7.01(a).
"Consolidated Funds from Operations" shall mean, for any period,
Consolidated Net Income, after dividends on preferred stock, excluding
gain or loss from debt restructurings or sales of properties, plus
provision for impairment losses, plus Consolidated Depreciation and
Amortization, and after adjustments for unconsolidated partnerships
and joint ventures, determined on a consolidated basis for the Company
and its Subsidiaries, as shown on the most recent consolidated
statement of cash flow for the Company and its Subsidiaries which has
been delivered to the Administrative Agent pursuant to Section
7.01(a).
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in
accordance with GAAP) of the Company and its Subsidiaries, determined
on a consolidated basis, in accordance with GAAP with respect to all
outstanding Indebtedness of the Company and its Subsidiaries,
including, without limitation, paid-in-kind (PIK) interest and all net
costs under Interest Rate Protection Agreements.
"Consolidated Net Income" shall mean, for any period, "Net Income" or
the similar item, determined on a consolidated basis for the Company
and its Subsidiaries, as shown on the most recent consolidated
statement of income for the Company and its Subsidiaries which has
been delivered to the Administrative Agent pursuant to Section
7.01(a).
"Consolidated Stockholders' Equity" shall mean, for any period, "Total
Stockholders' Equity" or the similar item, determined on a
consolidated basis for the Company and its subsidiaries, as shown on
the most recent consolidated balance sheet for the Company and its
Subsidiaries which has been delivered to the Administrative Agent
pursuant to Section 7.01(a).
"Consolidated Tangible Stockholders' Equity" shall mean Consolidated
Stockholders' Equity less all intangible assets of the Company and its
Subsidiaries. For purposes of the foregoing, "intangible assets"
means goodwill, patents, trade names, trademarks, copyrights,
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<PAGE>
franchises, organization expenses and any other assets that are
properly classified as intangible assets in accordance with GAAP.
"Consolidated Total Assets" shall mean, at any date of determination,
"Total Assets" or the similar item, determined on a consolidated basis
for the Company and its Subsidiaries, as shown on the most recent
consolidated balance sheet for the Company and its Subsidiaries which
has been delivered to the Administrative Agent pursuant to Section
7.01(a).
"Consolidated Total Indebtedness" shall mean total Indebtedness,
determined on a consolidated basis for the Company and its
Subsidiaries, as shown on the most recent consolidated balance sheet
for the Company and its Subsidiaries which has been delivered to the
Administrative Agent pursuant to Section 7.01(a).
"Consolidated Total Liabilities" shall mean, at any date of
determination, "Total Liabilities" or the similar item, determined on
a consolidated basis for the Company and its Subsidiaries, as shown on
the most recent consolidated balance sheet for the Company and its
Subsidiaries which has been delivered to the Administrative Agent
pursuant to Section 7.01(a).
"Conversion/Continuance Date" shall mean the date on which a
conversion of interest rates on outstanding Loans, pursuant to a
Conversion/Continuance Request, shall take effect.
"Conversion/Continuance Request" shall mean a request by the Company
to convert or continue the interest rate on all or portions of
outstanding Loans pursuant to the terms hereof, which shall be
substantially in the form of Exhibit A and shall specify, with respect
to such outstanding Loans, (i) the requested Conversion/Continuance
Date, which shall be not less than three Business Days after the date
of such Conversion/Continuance Request, (ii) the aggregate amount of
the Loans, from and after the Conversion/Continuance Date, which are
to bear interest as ABR Loans or Eurodollar Loans and (iii) if any
Loans are Eurodollar Loans, the term of the Interest Periods therefor,
if any.
"Covered Tax" means any Tax that is not an Excluded Tax.
"Credit Documents" shall mean this Agreement and the Notes.
"Debt Rating" shall mean the highest rating published by at least two
of the three Rating Agencies with respect to the senior unsecured
long-term debt of the Company, provided, that if no two Rating
Agencies have published the same rating with respect to the Company's
senior unsecured debt, the Debt Rating shall be the rating that is at
the middle of the three published ratings.
"Default" shall mean any event or circumstance which, with the giving
of notice or the passage of time, or both, would become an Event of
Default.
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<PAGE>
"Effective Date" shall have the meaning ascribed to such term in
Section 6.01.
"Environmental Claim" shall mean any notice, request for information,
action, claim, order, proceeding, demand or direction (conditional or
otherwise) based on, relating to or arising out of (i) any violation
of any Environmental Law by the Company, any person acting on behalf
of the Company or any subsidiary of the Company, or (ii) any
liabilities under any Environmental Law arising out of or otherwise in
respect of any act, omission, event, condition or circumstance
existing or occurring in connection with the Company and its
Subsidiaries, including without limitation liabilities relating to the
release of hazardous substances (whether on-site or off-site), any
claim by any third party (including, without limitation, tort suits
for personal or bodily injury, tangible or intangible property damage,
damage to the environment, nuisance and injunctive relief), fines,
penalties or restrictions, or the transportation, storage, treatment
or disposal of any Hazardous Substances.
"Environmental Law" means (i) any applicable federal, state, foreign
and local law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, relating to (x) the protection, preservation or
restoration of the environment, (including, without limitation, air,
water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (y) the exposure
to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of Hazardous Substances, in each case as amended and as now
or hereafter in effect. The term Environmental Law includes, without
limitation, the federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the federal Water Pollution Control Act of 1972,
the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the federal Solid Waste
Disposal Act and the federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act and the Federal
Occupational Safety and Health Act of 1970, each as amended and as now
or hereafter in effect (collectively, "Environmental Ordinances"), and
(ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
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<PAGE>
"ERISA Affiliate" shall mean a corporation, partnership or other
entity which is considered one employer with the Company under Section
4001 of ERISA or Section 414 (b), (c), (m) or (o) of the Code.
"Eurodollar Competitive Loan" means a Competitive Loan that bears
interest by reference to LIBOR and in the manner set forth in Section
3.03.
"Eurodollar Loans" means, collectively, Eurodollar Pro Rata Loans and
Eurodollar Competitive Loans.
"Eurodollar Pro Rata Loans" shall mean Pro Rata Loans which bear
interest at a rate based upon Base LIBOR and in the manner set forth
in Section 3.03.
"Eurodollar Reserve Percentage" shall mean for any day, that
percentage, expressed as a decimal, which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement
(including any marginal, supplemental or emergency reserve
requirements) for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion dollars in respect of
eurocurrency funding liabilities. LIBOR shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" shall mean any of the events described in Section
8.01.
"Excluded Asset Sales" shall mean, in respect of each fiscal year, the
sale, lease (not entered into in the ordinary course of business),
transfer or disposal during such year of assets, the aggregate
proceeds of which, in one or more transactions, are less than
$50,000,000.
"Excluded Tax" means, in respect of any Bank, Participant, Assignee or
the Administrative Agent, as the case may be, any of the following
taxes, levies, imposts, duties, deductions, withholdings or charges,
and all liabilities with respect thereto: (i) Taxes imposed on the net
income of a Bank, the Administrative Agent, Participant or Assignee
(including without limitation branch profits taxes, minimum taxes and
taxes computed under alternative methods, at least one of which is
based on net income (collectively referred to as "net income taxes")
by (A) the jurisdiction under the laws of which such Bank, the
Administrative Agent, Participant or Assignee is organized or any
political subdivision thereof, (B) the jurisdiction of such Bank's,
Participant's, Assignee's or the Administrative Agent's applicable
lending office or any political subdivision thereof or (C) any
jurisdiction in which the Bank, the Administrative Agent, Participant
or Assignee is doing business (other than solely as a result of
actions contemplated or required by this Agreement); (ii) any Taxes to
the extent that they are in effect and would apply to a payment to
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<PAGE>
such Bank or the Administrative Agent, as applicable, as of the
Closing Date, or as of the date such Person becomes a Bank, in the
case of any Participant or Assignee pursuant to Section 11.08; (iii)
any Taxes resulting from a failure to take the actions, if any,
required by subsection 4.04(a)(iv); (iv) any Taxes to the extent of
any credit or other Tax benefit which, in the reasonable good faith
judgment of such Bank, Participant, Assignee or the Administrative
Agent, as the case may be, is available to such Bank, Participant,
Assignee or the Administrative Agent, as applicable, as a result
thereof and is allocable to the transactions contemplated by this
Agreement; (v) any Taxes imposed on or measured by the overall net
income of any Bank by the United States of America or any political
subdivision or taxing authority thereof or therein; or (vi) any Taxes
that would not have been imposed but for the failure by the
Administrative Agent or such Bank, Participant or Assignee as
applicable to provide and keep current any certification or other
documentation required to qualify for an exemption from or reduced
rate of any Tax.
"Facility Fee" shall have the meaning ascribed to such term in Section
2.04(a).
"Facility Fee Rate" with respect to any Facility Fee payment shall
mean the facility fee rate set forth in the following chart applicable
to the Pricing Level (determined as set forth under "Applicable
Margin" above) in effect on the date on which such Facility Fee
payment is due:
<TABLE>
Pricing Level Facility Fee
------------- ------------
<S> <C>
I 0.125%
II 0.150%
III 0.175%
IV 0.225%
V 0.300%
</TABLE>
"Federal Funds Rate" for any day shall mean the rate on such day for
Federal Funds as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H. 15 (519), Selected Interest
Rates", or any successor publication, under the heading "Federal Funds
(Effective)". In the event that such rate or such publication is not
published with respect to such day, the Federal Funds Rate on such day
shall be the "Federal Funds/Effective Rate" as posted by the Federal
Reserve Bank of New York for that day in its publication "Composite
Closing Quotations for U.S. Government Securities". The Federal Funds
Rate for Saturdays, Sundays and any other day on which the Federal
Reserve Bank of New York is closed shall be the Federal Funds Rate as
in effect for the next preceding day for which such rates are
published or posted, as the case may be.
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<PAGE>
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entities as may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
"Guarantee" by any person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect
of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including
any obligation of such Person, (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase
property, securities or services for the purpose of assuring the
holder of such Indebtedness of the payment of such Indebtedness, or
(iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of
business.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Substance" means any substance presently or hereafter
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any
Environmental Ordinance, whether by type or by quantity, including any
substance containing any such substance as a component. Hazardous
Substance includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos, asbestos containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
"Indebtedness" of any Person shall mean, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (including all obligations,
contingent or otherwise, of such Person in connection with letter of
credit facilities, bankers' acceptance facilities, Interest Rate
Protection Agreements or other similar facilities including currency
swaps) other than indebtedness to trade creditors and service
providers incurred in the ordinary course of business; (b) all
obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments; (c) all indebtedness created or arising
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<PAGE>
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights
and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property); (d)
all Capital Lease obligations of such Person; (e) that portion of the
Indebtedness of any joint venture of which such Person is a joint
venturer that bears the same proportion to the total Indebtedness of
such joint venture as such Person's equity interest in such joint
venture (however denominated) bears to the total equity of such joint
venture, expressed as a percentage in the form of a decimal to no more
than four decimal places; (f) without duplication of clause (e) above,
all Indebtedness of unconsolidated joint venturers in which such
Person is a joint venturer to the extent recourse may be had to such
Person or its assets; (g) all obligations of such Person in respect of
any "forward equity purchase", or other arrangement, however
characterized, pursuant to which such Person makes a forward purchase
of its own capital stock from a counterparty and which is settled in
such capital stock, and having such other terms as may be agreed, and
having a value, for purposes hereof, equal to its mark-to-market
valuation on any date of determination; (h) all Indebtedness referred
to in clauses (a), (b), (c), (d), (e), (f) or (g) above secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness; (i) all preferred stock issued by
such Person which is redeemable, prior to the full satisfaction of the
Company's obligations under the Credit Documents (including repayment
in full of the Loans and all interest accrued thereon), other than at
the option of such Person, valued at the greater of its voluntary or
involuntary liquidation preference plus accumulated and unpaid
dividends and (j) all Indebtedness of others Guaranteed by such
Person. For purposes of this Agreement, the amount of any
Indebtedness under clauses (c) and (h) shall be the lesser of (x) the
principal amount of such Indebtedness and (y) the value of the
property subject to the Lien referred to therein. For purposes of
this Agreement tenant security deposits shall not be deemed to be
Indebtedness.
"Initial Loan" shall mean the first Loan which is made pursuant to the
terms hereof.
"Interest Period" shall mean each one, two, three or six-month period
selected by the Company in a Pro Rata Loan Request or Competitive Loan
Request, or, if no Eurodollar Loans are then outstanding, at the time
of a Conversion/Continuance Request, or pursuant to Section 3.03
hereof and commencing on the date the relevant loan is made or the
last day of the current Interest Period, as the case may be.
"Interest Rate Protection Agreements" shall mean any interest rate
swap, collar or cap agreement or similar arrangement used by a Person
to fix or cap a floating rate of interest on Indebtedness to a
negotiated maximum rate or amount.
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"Leverage Ratio" shall mean the ratio of Consolidated Total
Indebtedness to Consolidated Tangible Stockholders' Equity.
"Lien" shall mean, with respect to any asset, any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on
such asset.
"LIBOR" shall mean with respect to any Interest Period the rate per
annum determined pursuant to the following formula:
Base LIBOR
---------------------------------
LIBOR = (1-Eurodollar Reserve Percentage)
"Loan Request" shall mean either a Pro Rata Loan Request or a
Competitive Loan Request.
"Loans" shall mean, collectively, Pro Rata Loans and Competitive Loans
outstanding hereunder from time to time but shall not include Swing
Line Advances.
"Material Adverse Change" shall mean a material adverse change in the
business, properties, condition (financial or otherwise) or operations
of the Company and its Subsidiaries, taken as a whole since
December 31, 1998.
"Material Adverse Effect" shall mean (i) any material adverse effect
on the business, properties, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole, from
and after the date of any determination, (ii) any material adverse
effect on the ability of the Company to perform its obligations
hereunder and under the Credit Documents, or (iii) any adverse effect
on the legality, validity, binding effect or enforceability of this
Agreement or the Notes.
"Maturity Date" means, with respect to a Competitive Loan, the date
for repayment of such Competitive Loan, which date shall be not less
than seven days after the Borrowing Date and not more than (i) 180
days after the Borrowing Date, in the case of an Absolute Rate
Competitive Loan, or (ii) six months after the Borrowing Date, in the
case of a Eurodollar Competitive Loan, and in any event shall not be
later than the Termination Date to be in effect on the Borrowing Date.
"Net Cash Proceeds" shall mean (i) when used in respect of any sale or
disposition of assets of the Company or any Subsidiary, the gross cash
proceeds received by the Company or the relevant Subsidiary from such
sale or disposition, less: (x) the costs of sale, including payment
of the outstanding principal amount of, and premium or penalty, if
any, and interest on, any Indebtedness which is paid or required to be
paid as a result of such sale, all legal, accounting, title and
recording tax expenses, commissions and other fees and expenses paid
or to be paid in cash solely as a result of such sale, and all other
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federal, state, local and foreign taxes paid or payable in connection
therewith; (y) the portion of gross cash proceeds from such sale or
disposal which the Company must distribute to its stockholders in
order to avoid the imposition of any income or excise tax with respect
to a taxable gain (if any) associated with such sale or disposition;
and (z) the portion of gross cash proceeds from such sale or disposal
by any Subsidiary which are distributed pro rata to stockholders or
other equity holders of such Subsidiary other than the Company; (ii)
when used with respect to any loss, casualty, fire damage, theft,
destruction or condemnation of any capital asset of the Company or any
Subsidiary, the gross cash proceeds received by the Company or the
relevant Subsidiary under any insurance policy or any award or
compensation received, as the case may be, in each case as a result of
any such loss, casualty, fire damage, theft, destruction or
condemnation, net of all legal, accounting and other fees and expenses
paid or to be paid in cash as a result of such loss, casualty, fire
damage, theft, destruction or condemnation, and all other federal,
state, local and foreign taxes paid or payable in connection
therewith, less the portion of gross cash proceeds from such award or
compensation which the Company must distribute to its stockholders in
order to avoid the imposition of any income or excise tax with respect
to a taxable gain (if any) associated with such award or compensation,
provided that such award or compensation shall not be deemed to be Net
Cash Proceeds if such proceeds have been reinvested in or have been
committed to be reinvested in, or in replacement of, the lost,
damaged, stolen, destroyed or condemned property within twelve months
from the date of such award or compensation, and less the portion of
gross cash proceeds from such award or compensation which are
distributed pro rata to stockholders or other equity holders of such
Subsidiary other than the Company; and (iii) when used in respect of
the issuance, assumption or incurrence of Specified Additional
Indebtedness by the Company or any of its Subsidiaries, the gross cash
proceeds received by the Company or the relevant Subsidiary from such
issuance, assumption or incurrence, less the costs of issuance,
assumption or incurrence. Net Cash Proceeds shall equal $0 if it
would otherwise be a negative number hereunder.
"Notes" means the Pro Rata Notes, the Competitive Notes and the Swing
Line Note.
"Participant" shall have the meaning ascribed to such term in Section
11.08(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" shall mean (i) Liens for taxes not delinquent
or being contested in good faith and by appropriate proceedings and
for which adequate reserves (in accordance with GAAP) are being
maintained, (ii) deposits or pledges to secure obligations under
workers' compensation, social security or similar laws, or under
unemployment insurance, (iii) deposits or pledges to secure bids,
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<PAGE>
tenders, contracts (other than contracts for the payment of money),
leases (other than Capital Leases), statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the
ordinary course of business, (iv) mechanics', workers', materialmen's
or other like Liens arising in the ordinary course of business with
respect to obligations which are not due or which are being contested
in good faith, (v) minor imperfections of title on real estate,
provided such imperfections do not render title unmarketable, (vi) all
other Liens existing on the date of this Agreement and disclosed to
the Banks in writing prior to the date hereof (including in the notes
of the Company's financial statements), (vii) leases or subleases
granted to others in the ordinary course of business of the Company
and its Subsidiaries, (viii) any interest or title of a lessor in the
property subject to any Capital Lease or operating lease, (ix) Liens
arising from filing Uniform Commercial Code financing statements
regarding leases or sub-leases, (x) any attachment or judgment Lien
arising from a judgment or order against the Company or any Subsidiary
that does not give rise to a Default or an Event of Default, provided
that such Lien is not in place for more than sixty days or has been
stayed, (xi) Liens encumbering customary initial deposits and margin
deposits, and other Liens securing Indebtedness under Interest Rate
Protection Agreements that are within the general parameters customary
in the industry and incurred in the ordinary course of business, (xii)
any option, contract or other agreement to sell an asset provided such
sale is otherwise permitted by this Agreement, (xiii) any statutory
right of a lender to which the Company or a Subsidiary may be indebted
to offset against, or appropriate and apply to the payment of, such
Indebtedness any and all balances, credits, deposits, accounts or
monies of the Company or a Subsidiary with or held by such lender,
(xiv) any pledge or deposit of cash or property in conjunction with
obtaining bonds or letters of credit required to engage in
constructing on-site and off-site improvements required by
municipalities or other governmental authorities in the ordinary
course of business of the Company and its Subsidiaries, (xv) Liens in
favor of all of the Banks collectively, and (xvi) purchase money
security interests in personal property, with such encumbrances, in
the aggregate, not to exceed $3,500,000.
"Permitted Subsidiary Indebtedness" shall have the meaning ascribed to
such term in Section 7.02(a).
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county,
city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof).
"Plan" shall mean an employee benefit plan as defined in Section 3(3)
of ERISA which is maintained or contributed to by the Company or an
ERISA Affiliate while such entity is an ERISA Affiliate.
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<PAGE>
"Pro Rata Loan Request" shall mean a request by the Company to borrow
Pro Rata Loans pursuant to the terms hereof, which shall be
substantially in the form of Exhibit B and shall specify, with respect
to such requested Loans, (i) the requested Borrowing Date, (ii) the
aggregate amount of Pro Rata Loans which the Company desires to borrow
on such date, (iii) whether such requested Loans are to bear interest
as ABR Loans or Eurodollar Loans, and (iv) if the requested Loans are
to bear interest as Eurodollar Loans the requested term of the
Interest Period therefor.
"Pro Rata Loans" shall have the meaning ascribed to such term in
Section 2.01.
"Pro Rata Notes" shall mean, collectively, the promissory notes of the
Company evidencing Pro Rata Loans, each substantially in the form of
Exhibit D-1.
"Pro Rata Share" shall mean, with respect to any Bank, the proportion
of such Bank's Commitment to the Total Commitment of all the Banks or,
if the Total Commitment shall have been canceled or reduced to $0 or
expired, the proportion of such Bank's then outstanding Loans to the
aggregate amount of Loans then outstanding.
"Rating Agency" shall mean Moody's Investors Service, Inc., Standard &
Poor's Rating Services, a division of the McGraw Hill Companies, Inc.,
or Duff & Phelps Credit Rating Co.
"Real Estate Development Project" shall mean any real estate
development activity not related to current income-producing
properties, including, without limitation, the development of
undeveloped land.
"Real Estate Investment Criteria" shall mean the Real Estate
Investment Criteria established by the Company's Board of Directors as
amended, restated, supplemented or revised from time to time, the
current version (as of the date hereof) of which are attached hereto
as Exhibit H.
"Reference Amount", with respect to any Bank and Interest Period,
shall mean the amount of that Bank's Eurodollar Loan scheduled to be
outstanding during that Interest Period (i) without taking into
account any reduction in the amount of any Bank's Loan through any
assignment or transfer and (ii) rounded up to the nearest integral
multiple of $1,000,000.
"REIT" shall have the meaning ascribed to such term in Section
5.01(w).
"Required Banks" shall mean at any date Banks having at least 60% of
the Total Commitment, or if the Total Commitment has been canceled or
terminated, holding Notes evidencing at least 60% of the aggregate
unpaid principal amount of the Loans, provided that for purposes of
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this definition, the Commitment of any Bank shall be deemed reduced by
the principal amount of any Pro Rata Loan which such Bank is obligated
to advance pursuant to Section 2.02 hereof but which fails to do so.
"SIC Code" shall mean the Standard Industrial Classification Code,
published by the United States Office of Management and Budget.
"Single-Employer Plan" shall mean any Plan that is a single-employer
plan as defined in Section 4001(a)(15) of ERISA which is subject to
the provisions of Title IV of ERISA.
"Solvent" shall mean, when used with respect to any Person, that:
(a) at the date of determination, the present fair salable value of
such Person's assets is in excess of the total amount of such
Person's liabilities;
(b) at the date of determination, such Person is able to pay its
debts as they become due; and
(c) such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all
businesses in which such Person then is about to engage.
"Specified Additional Indebtedness" of any Person shall mean
Indebtedness which is not outstanding as of the date hereof, excluding
(i) Indebtedness to the Administrative Agent, the Swing Line Bank, or
the Banks hereunder and under the Notes, (ii) Indebtedness incurred in
connection with the payment of any dividend necessary for the Company
to maintain its qualification as a REIT, (iii) up to $10,000,000
principal amount of additional unsecured Indebtedness that matures and
becomes due and payable on a date not more than one year from the date
such Indebtedness was incurred by the Company and (iv) Permitted
Subsidiary Indebtedness.
"Subsidiary" shall mean any Person of which or in which the Company
and its other Subsidiaries own directly or indirectly 50% or more of:
(a) the combined voting power of all classes of stock having
general voting power under ordinary circumstances to elect a
majority of the board of directors of such Person, if it is a
corporation,
(b) the capital interest or profits interest of such Person, if it
is a partnership, joint venture or similar entity, or a
corporation whose capital stock so owned are non-voting, or
(c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization;
provided, however, that "Subsidiary" shall not include any such entity
that the Company does not control. For the purpose of this
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definition, the term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting equity interests, by contract or otherwise.
"Subsidiary Guaranty" shall mean a guaranty of a Subsidiary furnished
pursuant to Section 7.02(e)(vii), in the form of Exhibit I hereto.
"Swing Line Advance" means an advance made by the Swing Line Bank
pursuant to Section 2.10.
"Swing Line Advance Request" shall have the meaning ascribed to such
term in Section 2.10(d) hereof.
"Swing Line Bank" means The Bank of New York, or any successor to the
duties, obligations and rights of The Bank of New York, in its
capacity as the bank making Swing Line Advances hereunder.
"Swing Line Borrowing" means a borrowing consisting of a Swing Line
Advance made by the Swing Line Bank.
"Swing Line Facility" shall have the meaning ascribed to such term in
Section 2.10(a) hereof.
"Swing Line Note" shall mean the promissory note of the Company in the
form of Exhibit D-3.
"Tax" means any present or future tax, levy, impost, duty,
governmental fee, deduction, withholding or charge, and all
liabilities with respect thereto of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed.
"Termination Date" shall mean, with respect to any Bank, the earliest
to occur of (i) December 30, 2002 or such later date as may be agreed
to by such Bank pursuant to Section 11.12, (ii) the date on which the
obligations of the Banks to make loans hereunder shall terminate
pursuant to Section 8.01 or the Commitments shall be reduced to zero
pursuant to Section 2.05, and (iii) the date specified as such Bank's
Termination Date pursuant to Section 11.12, or, if in any case (other
than clause (ii) above) such day is not a Business Day, the next
succeeding Business Day; in all cases, subject to the provisions of
Section 11.12(d).
"Total Commitment" shall mean the aggregate Commitments of all the
Banks.
"Unmatured Surviving Obligations" shall mean, as of any date, any
obligations under this Agreement which are contingent and unliquidated
and not then due and payable on such date and which pursuant to the
provisions of this Agreement survive termination of this Agreement.
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"Wholly owned Subsidiary" shall mean any Subsidiary all the equity
interests of which (other than directors' qualifying shares, if a
corporation) at the time are owned directly or indirectly by the
Company and/or one or more Wholly owned Subsidiaries of the Company.
"Year 2000 Issue" means failure of computer software, hardware and
firmware systems and equipment containing or relying on embedded
computer chips to properly receive, transmit, process, manipulate,
store, retrieve, retransmit, or in any other way utilize data or
information due to the occurrence of the year 2000 or the inclusion of
dates on or after January 1, 2000.
ARTICLE II
THE LOANS
Section 2.01 The Loans.
----------
Prior to the Termination Date, and subject to the terms and conditions
of this Agreement, upon the request of the Company, and upon the
satisfaction by the Company or the waiver by each of the Banks of each
of the conditions precedent contained in Section 6.02, each of the
Banks, severally and not jointly with the other Banks, agrees to make
revolving credit loans (collectively, "Pro Rata Loans") and, to the
extent offered by such Bank and accepted by the Company, competitive
rate loans (collectively, "Competitive Loans" and, together with the
Pro Rata Loans, the "Loans") to the Company from time to time in an
aggregate principal amount at any one time outstanding not to exceed
its Commitment; provided, however, that the sum of (i) aggregate
outstanding Loans and (ii) aggregate outstanding Swing Line Advances
may not exceed the Total Commitment.
Section 2.02 Procedure for Pro Rata Loans.
---------------------------
(a) The Company may borrow Pro Rata Loans by delivering a written Pro
Rata Loan Request to the Administrative Agent on or before 5:00 P.M.,
New York time, one Business Day prior to the requested Borrowing Date
therefor, in the case of ABR Loans, or on the date not less than three
Business Days prior to the requested Borrowing Date therefor, in the
case of Eurodollar Pro Rata Loans. ABR Loans shall be in the minimum
aggregate amount of $1,000,000 or in integral multiples of $100,000 in
excess thereof. Eurodollar Pro Rata Loans shall be in the minimum
aggregate amount of $5,000,000 or in integral multiples of $100,000 in
excess thereof; provided, however, that Eurodollar Pro Rata Loans used
to pay Swing Line Advances may be in a minimum aggregate amount of
$2,500,000 or in integral multiples of $100,000 in excess thereof.
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(b) Upon receipt of any Pro Rata Loan Request from the Company, the
Administrative Agent shall forthwith give notice to each Bank of the
substance thereof. Not later than 2:00 P.M., New York time, on the
Borrowing Date specified in such Pro Rata Loan Request, each Bank
shall make available to the Administrative Agent in immediately
available funds at the office of the Administrative Agent at its
address set forth on the signature pages hereof, such Bank's Pro Rata
Share of the requested Pro Rata Loans.
(c) Upon receipt by the Administrative Agent of funds and
satisfaction by the Company or waiver by each of the Banks of each of
the conditions precedent contained in Section 6.02, the Administrative
Agent shall disburse to the Company on the requested Borrowing Date
the Pro Rata Loans requested in such Pro Rata Loan Request. The
Administrative Agent may, but shall not be required to, advance on
behalf of any Bank such Bank's Pro Rata Share of the Pro Rata Loans on
a Borrowing Date unless such Bank shall have notified the
Administrative Agent prior to such Borrowing Date that it does not
intend to make available its Pro Rata Share of such Loans on such date
(it being understood that no action or inaction by the Administrative
Agent regarding such an advance shall affect the rights of the Company
with respect to any non-performing Bank). If the Administrative Agent
makes such advance, the Administrative Agent shall be entitled to
recover such amount on demand from the Bank on whose behalf such
advance was made, and if such Bank does not pay the Administrative
Agent the amount of such advance on demand, the Company shall promptly
repay such amount to the Administrative Agent. Until such amount is
repaid to the Administrative Agent by such Bank or the Company, such
advance shall be deemed for all purposes to be a Pro Rata Loan made by
the Administrative Agent. The Administrative Agent shall be entitled
to recover from the Bank or the Company, as the case may be, interest
on the amount advanced by it for each day from the Borrowing Date
therefor until repaid to the Administrative Agent, at a rate per annum
equal to (i) in the case of the Bank, the Federal Funds Rate, for the
three-day period beginning on the Borrowing Date, and the applicable
rate on the Pro Rata Loans made on the Borrowing Date for the period
beginning on the fourth day after the Borrowing Date, and (ii) in the
case of the Company, the applicable rate on the Pro Rata Loans made on
the Borrowing Date.
(d) In lieu of delivering the written notice described above, the
Company may give the Administrative Agent telephonic notice of any
request for borrowing by the time required under this Section 2.02;
provided that such telephonic notice shall be confirmed by delivery of
a written notice to the Administrative Agent promptly but in no event
later than 4:00 P.M., New York City time, on the date of such
telephonic notice.
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Section 2.03 Pro Rata Notes.
---------------
The Company's obligation to repay the Pro Rata Loans shall be
evidenced by Pro Rata Notes, one such Pro Rata Note payable to the
order of each Bank. The Pro Rata Note of each Bank shall (i) be in
the principal amount of such Bank's Commitment, (ii) be dated the date
of the initial Loan and (iii) be stated to mature on the Termination
Date as such date may be extended hereunder and bear interest from its
date until maturity on the principal balance (from time to time
outstanding thereunder) payable at the rates and in the manner
provided herein. Each Bank is authorized to indicate upon the grid
attached to its Pro Rata Note all Pro Rata Loans made by it pursuant
to this Agreement, interest elections and payments of principal and
interest thereon. Such notations shall be presumptive as to the
aggregate unpaid principal amount of all Pro Rata Loans made by such
Bank, and interest due thereon, but the failure by any Bank to make
such notations or the inaccuracy or incompleteness of any such
notations shall not affect the obligations of the Company hereunder or
under the Pro Rata Notes.
Section 2.04 Certain Fees.
-------------
(a) The Company shall pay to the Administrative Agent for the
accounts of the Banks a fee (the "Facility Fee") equal to the Facility
Fee Rate per annum (calculated on the basis of a 360-day year for the
actual number of days involved) on the daily average amount of the
Total Commitment, regardless of usage (excluding the amount of any
canceled or reduced portion of the Commitment for which the Facility
Fee was paid in connection with such cancellation or reduction
pursuant to Section 2.05 hereof) during the quarter with respect to
which such Facility Fee is being paid. Such Facility Fee shall be
payable in arrears on the last Business Day of each calendar quarter,
commencing on the first such date after the date hereof, on any date
that the Total Commitment is canceled or reduced pursuant to Section
2.05 (but only with respect to the amount of such cancellation or
reduction) and on the Termination Date.
(b) The Company shall pay to the Administrative Agent for its own
account such fees as have been or may hereinafter be agreed to between
the Administrative Agent and the Company, in the amounts and at the
times agreed upon.
(c) On the Effective Date the Company shall pay to the Administrative
Agent for the account of each of the Banks (other than The Bank of New
York) such fees as have been or may hereinafter be agreed to between
the Administrative Agent and the Company, in the amounts and at the
times agreed upon.
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Section 2.05 Cancellation or Reduction of the Commitment.
--------------------------------------------
The Company shall have the right, upon not less than three Business
Days' written notice to the Administrative Agent and upon payment of
the Facility Fees relating to the amount of the Total Commitment
canceled or reduced which have accrued through the date of such
cancellation or reduction, with respect to the amount of the
cancellation or reduction, to cancel the Total Commitment in full or
to reduce the amount thereof; provided, however, that the Total
Commitment may not be canceled so long as any Loan or Swing Line
Advance remains outstanding; and provided, further, that the amount of
any partial reduction in the Total Commitment shall not exceed the
remainder of (i) the Total Commitment on such date minus (ii) the
aggregate outstanding principal amount of Loans and Swing Line
Advances on such date. Partial reductions of the Total Commitment
shall be in the amount of $5,000,000 or in integral multiples of
$1,000,000 in excess thereof (or, if the aggregate outstanding amount
of Loans is less than $5,000,000, then all of such lesser amount).
All such cancellations or reductions shall be permanent.
Section 2.06 Optional Prepayment.
--------------------
The Company shall have the right, on not less than three Business
Days' written notice to the Administrative Agent in the case of
Eurodollar Pro Rata Loans, and upon such written notice delivered by
11:00 A.M. New York City time the day of the proposed prepayment to
the Administrative Agent in the case of ABR Loans or Swing Line
Advances, to prepay Pro Rata Loans or Swing Line Advances bearing
interest on the same basis and having the same Interest Periods, if
any, in whole or in part, without premium or penalty, in the aggregate
principal amount of $1,000,000 ($100,000 in the case of Swing Line
Advances) or in integral multiples of $100,000 in excess thereof (or,
if the outstanding aggregate amount of such Loan or Swing Line Advance
is less than $1,000,000 or $100,000, respectively, then all of such
lesser amount), together with accrued interest on the principal being
prepaid to the date of prepayment and, in the case of Eurodollar
Loans, the amounts required by Section 4.03. Subject to the terms and
conditions hereof, prepaid Loans may be reborrowed.
Section 2.07 Mandatory Prepayment.
---------------------
(a) If (i) the Company or any Subsidiary shall sell, lease (other
than in the ordinary course of business), assign, transfer or
otherwise dispose of any of its assets other than pursuant to Excluded
Asset Sales, in an exchange that qualifies under Section 1031 of the
Code, or to the extent that the Net Cash Proceeds received therefrom
are reinvested in similar assets within 180 days of such disposition
of such assets, (ii) the Company or a Subsidiary issues, assumes or
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incurs Specified Additional Indebtedness or (iii) the Company sells or
issues equity securities for cash, other than pursuant to the
Company's Stock Incentive Plan, the Company shall prepay outstanding
Pro Rata Loans and Swing Line Advances with the Net Cash Proceeds
therefrom. Notwithstanding the foregoing, if at the time a mandatory
prepayment shall be required to be made hereunder, a mandatory
prepayment shall also be required to be made under any similar
provision of any agreement evidencing Indebtedness permitted by
Section 7.02(a), in an aggregate principal amount not exceeding
$25,000,000, then the Company may apportion such mandatory prepayment
pro rata according to the relative principal amounts outstanding under
such Credit Agreement and under this Agreement, and the amount of such
mandatory prepayment hereunder shall be reduced accordingly. Any such
reduction shall be described in reasonable detail in the officer's
certificate required under this Section 2.07(c).
(b) Application of Prepayments. All prepayments required to be made
pursuant to this Section 2.07 shall be applied in the following order:
first, to compensate the Banks for any amounts required by Section
4.03, in the case that such prepayment shall apply to any Eurodollar
Pro Rata Loans, second, to accrued interest on the principal amount of
Pro Rata Loans being prepaid, third, to the principal of the Pro Rata
Loans then outstanding, if any, fourth, to accrued interest on the
principal amount of Swing Line Advances being prepaid, and fifth, to
the principal of the Swing Line Advances then outstanding, if any;
provided that any prepayments shall be applied in a manner to minimize
the payments, if any, required by the Company pursuant to Section 4.03
with respect to such prepayment; and provided, further, that the
accrued interest on, and the outstanding principal of, Pro Rata Loans
to be prepaid shall be applied to prepayment of ABR Loans and
Eurodollar Pro Rata Loans in proportion to the outstanding aggregate
principal amount of such ABR Loans or Eurodollar Pro Rata Loans,
respectively, relative to that of all Pro Rata Loans.
(c) Officer's Certificate. Promptly upon receipt of any Net Cash
Proceeds, other than pursuant to any Excluded Asset Sales, the Company
shall deliver to the Administrative Agent a certificate signed by the
chief financial officer of the Company, which shall be in form and
substance satisfactory to the Administrative Agent, setting forth the
amount of the gross cash proceeds received and the items deducted
therefrom in reasonable detail in order to confirm the amount of such
Net Cash Proceeds and also setting forth the Company's year-to-date
asset sales.
Section 2.08 Procedure for Competitive Loans.
--------------------------------
(a) Prior to the Termination Date, the Company may request that the
Banks make offers to make Competitive Loans in dollars on the terms
and conditions hereinafter set forth; provided, however, that (i) the
aggregate principal amount of Competitive Loans that may be borrowed
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on any Borrowing Date may not exceed the Available Commitment (after
giving effect to any Loans to be repaid or prepaid on such Borrowing
Date and any other Loans to be made on such Borrowing Date), (ii) the
aggregate amount of Competitive Loans outstanding on any day may not
exceed 50% of the Total Commitment (after giving effect, with respect
to any day, to any Loans being repaid or prepaid on such day and any
other Loans to be made on such day) and (iii) the Company may not
request Competitive Loans before the fifth Business Day after the
Effective Date. Each Bank may, but shall have no obligation to, make
such offers and the Company may, but shall have no obligation to,
accept any such offers, in the manner set forth in this Section 2.08.
(b) The Company may request Competitive Loans under this Section 2.08
by giving a Competitive Loan Request to the Administrative Agent, by
telephone, telex, telecopy or in writing not later than 12:00 Noon,
New York time (if not in writing, to be confirmed in writing in
substantially the form of Exhibit C-1 not later than 2:00 P.M., New
York time, on the same day), on (i) the fourth Business Day prior to
the proposed Borrowing Date, in the case of Eurodollar Competitive
Loans, and (ii) on the Business Day immediately prior to the proposed
Borrowing Date, in the case of Absolute Rate Competitive Loans. The
Administrative Agent shall promptly notify each Bank, by a letter in
substantially the form of Exhibit C-2, of each such Competitive Loan
Request received by it from the Company and of the terms contained
therein.
(c) Each Bank may, if it elects so to do, irrevocably offer to make a
Competitive Loan of the requested type to the Company at a Competitive
Bid Rate or Rates, as specified by such Bank in accordance with the
related Competitive Loan Request, by submitting a Competitive Bid, in
substantially the form of Exhibit C-3 and indicating the maximum and
minimum principal amounts of the Competitive Loan which such Bank
would be willing to make (which amount may, subject to the proviso to
the first sentence of Section 2.08(a), exceed such Bank's Commitment,
but shall be in a principal amount equal to $1,000,000 or in integral
multiples of $100,000 in excess thereof), the Competitive Rate, or
Competitive Margin for the relevant Interest Period, as the case may
be, and any other terms and conditions required by such Bank, not
later than 9:30 A.M., New York time, on (i) the third Business Day
prior to the proposed Borrowing Date, in the case of Eurodollar
Competitive Loans or (ii) the proposed Borrowing Date, in the case of
Absolute Rate Competitive Loans, to the Administrative Agent (which
shall give notice thereof to the Borrower as promptly as practicable
and in no event later than 10:00 A.M., New York time); provided that,
if the Administrative Agent, at such time (if any) as it is a Bank,
shall elect to submit a Competitive Bid, the Administrative Agent
shall communicate the substance of its Competitive Bid to the Company
not later than 15 minutes prior to the applicable deadline specified
above. Banks may submit multiple Competitive Bids. Any Competitive
Bid that does not conform substantially with Exhibit C-3 may be
rejected by the Administrative Agent, after conferring with the
Company, and the Administrative Agent shall notify the Bank that
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submitted such Competitive Bid of such rejection as promptly as
practicable. The Administrative Agent shall (i) disclose the
Competitive Bids received to the Company as promptly as reasonably
practicable after the deadline stated above for the submission of
Competitive Bids, (ii) maintain in confidence all Competitive Bids
until each of them has been disclosed to the Company and (iii) provide
copies of all Competitive Bids (or other written notice containing all
of the terms thereof) to the Company as soon as practicable after
completion of the bidding process described in this Section 2.08.
(d) The Company shall, not later than (i) 12:00 Noon, New York time,
on the third Business Day prior to the proposed Borrowing Date, in the
case of Eurodollar Competitive Loans or (ii) 12:00 Noon, New York
time, on the proposed Borrowing Date, in the case of Absolute Rate
Competitive Loans, either
(i) cancel the Borrowing Request by giving the Administrative
Agent notice to that effect or
(ii) accept one or more Competitive Bids, in its sole discretion,
by giving notice to the Administrative Agent of the
principal amount of each Competitive Loan (which principal
amount shall be equal to or greater than the minimum amount
offered by the relevant Bank and equal to or less than the
maximum amount offered by such Bank for such Competitive
Loan pursuant to Section 2.08(c)), to be made by each Bank,
and reject any remaining Competitive Bids, by giving the
Administrative Agent notice to that effect; provided that
the aggregate principal amount of such offers accepted by
the Company shall be in a principal amount equal to
$1,000,000 or in an integral multiple of $100,000 in excess
thereof, each such notice to be in substantially the form of
Exhibit C-4 (a "Competitive Accept/Reject Notice"); provided
further that
(A) the failure by the Company to give such notice in a
timely fashion shall be deemed to be a rejection of all
the Competitive Bids,
(B) the Company shall not accept a Competitive Bid made at
a Competitive Bid Rate if such Company has rejected a
Competitive Bid made at a lower Competitive Bid Rate,
(C) the aggregate principal amount of the Competitive Bids
accepted by the Company shall not exceed the principal
amount specified in the Competitive Loan Request,
(D) if the Company shall accept Competitive Bids made at a
particular Competitive Bid Rate but shall be restricted
by other conditions hereof from borrowing the principal
amount of Competitive Loans specified in such
Competitive Loan Request in respect of which
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Competitive Bids at such Competitive Bid Rate have been
made or if the Company shall accept Competitive Bids
made at a particular Competitive Bid Rate but the
aggregate amount of Competitive Bids made at such
Competitive Bid Rate shall exceed the amount specified
in the Competitive Loan Request, then the Company shall
accept a pro rata portion of each Competitive Bid made
at such Competitive Bid Rate, aggregating such pro rata
portions of Competitive Loans with respect to which
Competitive Bids at such Competitive Bid Rate have been
received (provided further that if the principal amount
of Competitive Loans to be so allocated is not
sufficient to enable Competitive Loans to be so
allocated to each such Bank in a principal amount equal
to $1,000,000 or in an integral multiple of $100,000 in
excess thereof, the Company shall select the Banks to
be allocated such Competitive Loans in a principal
amount equal to not less than $1,000,000 but may round
up allocations to the next higher integral multiple of
$100,000 if necessary), and
(E) except as provided in clause (D) above, no Competitive
Bid shall be accepted for a Competitive Loan unless
such Competitive Loan is in a principal amount equal to
$5,000,000 or an integral multiple of $1,000,000 in
excess thereof.
(e) If the Company notifies the Administrative Agent that a Borrowing
Notice for Competitive Loans is canceled, the Administrative Agent
shall give prompt notice thereof to the Banks.
(f) If the Company accepts one or more Competitive Bids, the
Administrative Agent shall promptly give notice (i) to each Bank of
the date and aggregate amount of such Competitive Loan(s), the
Competitive Bid Rate therefor and whether or not any Competitive Bid
made by such Bank has been accepted by the Company, and (ii) to each
Bank whose Competitive Bid, or any portion thereof, has been accepted
by the Company, of the principal amount of the Competitive Loan to be
made by such Bank and the date for repayment thereof, together with
the Competitive Rate or Competitive Margin, as applicable, and any
other terms applicable to such Competitive Loan.
(g) Following any acceptance by the Company and notification by the
Administrative Agent pursuant to Section 2.08(f), and upon
satisfaction, or waiver by the Banks, of each of the applicable
conditions precedent contained in Article VI, each such Bank shall
disburse to the Administrative Agent, by 2:00 P.M. on the specified
Borrowing Date, the aggregate principal amount of the Competitive
Loans accepted by the Company, whereupon the Administrative Agent
shall promptly disburse such funds to the Company in funds immediately
available at the Company's office specified in Section 11.06.
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(h) Nothing in this Section 2.08 shall be construed as a right of
first offer in favor of the Banks or to otherwise limit the ability of
the Company to request and accept credit facilities from any Person
(including any Bank).
Section 2.09 Competitive Notes.
------------------
The Company's obligation to repay the Competitive Loans shall be
evidenced by Competitive Notes, one such Competitive Note payable to
the order of each Bank making a Competitive Loan pursuant to Section
2.08. The Competitive Note of each Bank shall (i) be in the principal
amount of 50% of the Total Commitment or, if less, the aggregate
principal amount outstanding under Competitive Loans made by such
Bank, (ii) be dated the date of the initial Competitive Loan made by
such Bank and (iii) be stated to mature on the Maturity Date of any
Competitive Loan made by such Bank (as such date may be extended
hereunder) and bear interest from its date until maturity on the
principal balance (from time to time outstanding thereunder) payable
at the rates and in the manner provided herein. Each Bank is
authorized to indicate upon the grid attached to its Competitive Note
all Competitive Loans made by it pursuant to this Agreement, interest
elections and payments of principal and interest thereon. Such
notations shall be presumptive as to the aggregate unpaid principal
amount of all Competitive Loans made by such Bank, and interest due
thereon, but the failure by any Bank to make such notations or the
inaccuracy or incompleteness of any such notations shall not affect
the obligations of the Company hereunder or under the Competitive
Notes.
Section 2.10 Swing Line Advances.
--------------------
(a) Prior to the Termination Date, and subject to the terms and
conditions of this Agreement, the Swing Line Bank shall make, on the
terms and conditions hereinafter set forth, Swing Line Advances to the
Company from time to time on any Business Day in an aggregate amount
not to exceed at any time outstanding $15,000,000 (the "Swing Line
Facility"); provided, however, that the sum of (i) the aggregate
outstanding Loans plus (ii) the aggregate outstanding Swing Line
Advances, may not exceed the Total Commitment. Each Swing Line
Borrowing shall be in an amount of not less than $100,000 or an
integral multiple of $100,000 in excess thereof. Each Bank other than
the Swing Line Bank shall be deemed to, and hereby agrees to, have
irrevocably and unconditionally purchased from the Swing Line Bank,
simultaneously with such Swing Line Advance, a participation in such
Swing Line Advance in an amount equal to such Bank's Pro Rata Share of
the principal amount thereof.
(b) Interest. Each Swing Line Advance shall bear interest at a rate
agreed upon by the Company and the Swing Line Bank but in no event
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higher than a rate based upon the Base Rate and in the manner set
forth in Section 3.02, as if such Swing Line Advance were an ABR Loan.
Such interest shall be payable in arrears at the end of the applicable
interest period or as otherwise agreed by the Company and the Swing
Line Bank. The interest period for any Swing Line Advance shall not
exceed 30 days.
(c) Swing Line Note. The Company's obligation to repay its Swing
Line Advances shall be evidenced by a Swing Line Note which shall be
(i) payable to the Swing Line Bank, (ii) in the principal amount of
$15,000,000 or, if less, the principal amount of the Company's Swing
Line Advances from time to time outstanding, (iii) dated not later
than the date of the Company's first Swing Line Advance and (iv)
stated to mature with respect to each Swing Line Advance from time to
time outstanding thereunder on the date determined pursuant to this
Section 2.10 but in any event not later than the Termination Date.
The Swing Line Bank is authorized to indicate upon the grid attached
to the Swing Line Note all borrowings thereunder and payments of
principal and interest thereon. Such notations shall be presumptively
correct as to the aggregate unpaid principal amount of the Swing Line
Advance made by the Swing Line Bank, and interest due thereon, but the
failure by the Swing Line Bank to make such notations or the
inaccuracy or incompleteness of any such notations shall not affect
the obligations of the Company hereunder or under the Swing Line Note.
(d) Procedure. Each Swing Line Borrowing shall be made on notice,
given not later than 12:00 P.M., New York time on the date of the
proposed Swing Line Borrowing, by the Company to the Swing Line Bank
and the Administrative Agent. Each such notice of a proposed Swing
Line Borrowing (a "Swing Line Advance Request") shall be by telephone
or telecopier (and if by telecopier, in the form of Exhibit E hereto),
and, if by telephone, confirmed immediately in writing, specifying
therein the requested (i) date of such borrowing, (ii) amount of such
borrowing and (iii) maturity of such borrowing (which maturity shall
be no later than the thirtieth day after the requested date of such
borrowing subject to successive thirty day extensions thereof, at the
Company's option, so long as the total outstanding amount of Swing
Line Advances remains less than or equal to $15,000,000). To the
extent it is required to do so pursuant to Section 2.10(a) above, the
Swing Line Bank will make the amount of the requested Swing Line
Advance available to the Administrative Agent in immediately available
funds, at the office of the Administrative Agent at its address set
forth on the signature pages hereof. After the Administrative Agent's
receipt of such funds and upon satisfaction by the Company, or waiver
by the Administrative Agent of each of the conditions precedent
contained in Article VI applicable thereto, the Administrative Agent
will disburse such funds to the Company.
(e) Repayment. The Company shall repay to the Administrative Agent
for the account of the Swing Line Bank the outstanding principal
amount of each Swing Line Advance made to the Company on the earlier
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of the maturity date specified in the applicable Swing Line Advance
Request (which maturity shall be no later than the thirtieth day after
the requested date of such borrowing subject to successive thirty day
extensions thereof, at the Company's option, so long as the total
outstanding amount of Swing Line Advances remains less than or equal
to $15,000,000) and the Termination Date.
(f) Conversion of Swing Line Advances. Subject to Section 4.03, (i)
if the aggregate outstanding Swing Line Advances shall at any time
exceed $1,000,000 the Company may, at its option, convert such Swing
Line Advances to an ABR Loan and if the aggregate outstanding Swing
Line Advances shall at any time exceed $2,500,000 the Company may, at
its option, convert such Swing Line Advances to a Eurodollar Pro Rata
Loan; (ii) if the aggregate outstanding Swing Line Advances shall at
any time exceed $7,500,000, Swing Line Advances in excess of such
amount shall, on the next date on which interest is payable on any
Swing Line Advance, unless converted at the Company's option pursuant
to clause (i) above, automatically be converted to an ABR Loan; and
(iii) if a Default shall occur and be continuing, the Swing Line Bank
may, at its option, convert such Swing Line Advances to an ABR Loan.
Upon election of any conversion under clause (i), the Company shall
notify the Swing Line Bank in writing of such conversion, whether such
Swing Line Advances shall be ABR Loans or Eurodollar Pro Rata Loans
and the Business Day on which such conversion is to be effective
(which notice in the case of the Eurodollar Pro Rata Loans shall not
be less than three days prior to the requested date for conversion)
and upon any automatic conversion under clause (ii) or election of
conversion under clause (iii), the Swing Line Bank shall immediately
notify the Company in writing of such conversion. On the Business Day
of any conversion described above, such Swing Line Advances shall
constitute an ABR Loan or a Eurodollar Pro Rata Loan and shall bear
interest at the rate of interest then applicable to ABR Loans or
Eurodollar Pro Rata Loans, as the case may be. Upon written demand by
the Swing Line Bank on or before 11:00 A.M., New York time, with a
copy of such demand to the Administrative Agent, whether or not an
Event of Default shall have occurred, each other Bank shall purchase
from the Swing Line Bank, and the Swing Line Bank shall sell to each
such other Bank, such other Bank's Pro Rata Share of such outstanding
Swing Line Advance as of the date of such demand, by making available
to the Administrative Agent for the account of the Swing Line Bank not
later than 2:00 P.M., New York time, in immediately available funds,
an amount equal to the portion of the outstanding principal amount of
such Swing Line Advance to be purchased by such Bank. The Company
hereby agrees to each such sale. Each Bank agrees unconditionally and
absolutely to purchase its Pro Rata Share of an outstanding Swing Line
Advance, whether or not an Event of Default shall have occurred, on
(i) the Business Day on which demand therefor is made by the Swing
Line Bank, provided that notice of such demand is given not later than
1:00 P.M., New York time, on such Business Day or (ii) the first
Business Day next succeeding such demand if notice of such demand is
given after such time. If and to the extent that any Bank shall not
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have so made the amount of such Swing Line Advance available to the
Administrative Agent, such Bank agrees to pay to the Administrative
Agent forthwith on demand such amount together with interest thereon,
for each day from the date of demand by the Swing Line Bank until the
date such amount is paid to the Administrative Agent, at a rate per
annum equal to (i) the Federal Funds Rate, for the three-day period
beginning on the date of such demand, and (ii) the rate of interest
then applicable to ABR Loans or Eurodollar Pro Rata Loans, as the case
may be, for the period beginning on the fourth day after the date of
such demand, changing as and when said rate changes.
ARTICLE III
INTEREST, METHOD OF PAYMENT, CONVERSION, ETC.
Section 3.01 Procedure for Interest Rate Determination.
------------------------------------------
(a) Unless the Company shall request in a Loan Request or in a
Conversion/Continuance Request that Pro Rata Loans (or portions
thereof) bear interest as Eurodollar Pro Rata Loans, the Pro Rata
Loans shall bear interest as ABR Loans.
(b) Competitive Rate Loans shall bear interest as Absolute Rate
Competitive Loans or Eurodollar Competitive Loans as determined in
accordance with Section 2.08.
Section 3.02 Interest on ABR Loans.
----------------------
Each ABR Loan shall bear interest from the date of such ABR Loan until
maturity thereof or until such Loan is repaid or converted, or the
beginning of any relevant Interest Period, as the case may be, payable
in arrears on the last day of each calendar quarter of each year,
commencing with the first such date after the date hereof, and on the
date such ABR Loan is repaid, at a rate per annum (on the basis of a
365- or 366-day year for the actual number of days involved in the
case of ABR Loans which accrue interest based upon the Prime Rate and
on the basis of a 360-day year for the actual number of days involved
in the case of ABR Loans which accrue interest based upon the Federal
Funds Rate) equal to the Base Rate in effect from time to time, which
rate shall change as and when said Base Rate shall change. If an ABR
Loan is outstanding, the Administrative Agent shall notify the Company
of the Base Rate when said Base Rate shall change; provided that the
failure to give notice shall not affect the Company's obligations with
respect to such ABR Loan.
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Section 3.03 Interest on Eurodollar Loans.
-----------------------------
(a) Each Eurodollar Loan shall bear interest from the date of such
Loan until maturity thereof or until such Loan is repaid, payable in
arrears, with respect to Interest Periods of three months or less, on
the last day of such Interest Period, and with respect to Interest
Periods longer than three months, on the day which is three months
after the commencement of such Interest Period and on the last day of
such Interest Period, at a rate per annum (on the basis of a 360-day
year for the actual number of days involved), determined by the
Administrative Agent with respect to each Interest Period with respect
to Eurodollar Loans, equal to the sum of (i) the Applicable Margin, in
the case of Eurodollar Pro Rata Loans or the Competitive Margin, in
the case of Eurodollar Competitive Loans and (ii) LIBOR.
(b) The Interest Period for each Eurodollar Loan shall be selected by
the Company at least three Business Days prior to the beginning of
such Interest Period. If the Company fails to notify the
Administrative Agent of the subsequent Interest Period for an
outstanding Eurodollar Pro Rata Loan at least three Business Days
prior to the last day of the then current Interest Period of such
Eurodollar Pro Rata Loan, then such outstanding Eurodollar Pro Rata
Loan shall become an ABR Loan at the end of such current Interest
Period.
(c) Notwithstanding the foregoing: (i) if any Interest Period for a
Eurodollar Loan would otherwise end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iii) no Interest Period for a Eurodollar Loan may extend beyond the
Termination Date.
(d) Eurodollar Loans shall be made by each Bank from its branch or
affiliate identified as its Eurodollar Lending Office on the signature
page hereto, or such other branch or affiliate as it may hereafter
designate to the Company and the Administrative Agent as its
Eurodollar Lending Office. A Bank shall not change its Eurodollar
Lending Office designation if it, at the time of the making of such
change, increases the amounts that would have been payable by the
Company to such Bank under this Agreement in the absence of such a
change.
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Section 3.04 Interest on Absolute Rate Competitive Loans.
--------------------------------------------
Each Absolute Rate Competitive Loan shall bear interest from the date
of such Loan to (but excluding) its Maturity Date, payable in arrears,
with respect to maturities of three months or less, on its Maturity
Date, and with respect to maturities longer than three months, on the
day which is three months after the making of such loan (and each
three month anniversary thereafter, if any) and on its Maturity Date,
at a rate per annum equal to the applicable Competitive Rate.
Section 3.05 Conversion/Continuance.
-----------------------
(a) The Company may request, by delivery to the Administrative Agent
of a written Conversion/Continuance Request not less than three
Business Days prior to a requested Conversion/Continuance Date, that
all or portions of the outstanding ABR Loans and Eurodollar Pro Rata
Loans, in the aggregate amount of $1,000,000 or in integral multiples
of $100,000 in excess thereof (or, if the aggregate amount of
outstanding Loans is less than $1,000,000, then all such lesser
amount), shall bear interest from and after the Conversion/Continuance
Date as either ABR Loans or Eurodollar Pro Rata Loans.
(b) Upon receipt of any such Conversion/Continuance Request from the
Company, the Administrative Agent shall forthwith give notice to each
Bank of the substance thereof. Effective on such Conversion/
Continuance Date and upon payment by the Company of the amounts, if
any, required by Section 4.03, the Loans or portions thereof as to
which the Conversion/Continuance Request was made shall commence to
accrue interest as set forth in this Article III for the interest rate
selected by the Company.
(c) In lieu of delivering the above-described notice, the Company may
give the Administrative Agent telephonic notice hereunder by the
required time under this Section 3.05; provided that such telephonic
notice shall be confirmed by delivery of a written notice to the
Administrative Agent by no later than 4:00 P.M., New York City time,
the date of such telephonic notice.
Section 3.06 Post Default Interest.
----------------------
Upon the occurrence and during the continuation of an Event of
Default, all Loans, Swing Line Advances and any unpaid installment of
interest shall bear interest at a rate per annum equal to the sum of
(i) 2% and (ii) with respect to ABR Loans and Swing Line Advances, the
rate of interest then applicable to ABR Loans, changing as and when
said rate shall change, with respect to Eurodollar Loans, the rate of
interest applicable to each such Eurodollar Loan, and with respect to
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Absolute Rate Competitive Loans, the Competitive Rate applicable to
such Absolute Rate Competitive Loan. Interest payable pursuant to
this Section 3.06 shall be payable on demand.
Section 3.07 Maximum Interest Rate.
----------------------
(a) Nothing in this Agreement or the Notes shall require the Company
to pay interest at a rate exceeding the maximum rate permitted by
applicable law. Neither this Section nor Section 11.01 is intended to
limit the rate of interest payable for the account of any Bank to the
maximum rate permitted by the laws of the State of New York (or any
other applicable law) if a higher rate is permitted with respect to
such Bank by supervening provisions of U.S. Federal law.
(b) If the amount of interest payable for the account of any Bank on
any interest payment date in respect of the immediately preceding
interest computation period, computed pursuant to this Article III,
would exceed the maximum amount permitted by applicable law to be
charged by such Bank, the amount of interest payable for its account
on such interest payment date shall automatically be reduced to such
maximum permissible amount.
ARTICLE IV
DISBURSEMENT AND PAYMENT
Section 4.01 Pro Rata Treatment.
-------------------
Each payment of the Facility Fee and each reduction of the Total
Commitment shall be apportioned among the Banks in proportion to each
Bank's Pro Rata Share. Except as provided in Section 4.04 or 4.05,
the ABR Loans and Eurodollar Pro Rata Loans or portions thereof as to
which a Conversion/Continuance Request has been made pursuant to
Section 3.05 hereof shall at all times bear interest on the same basis
respectively (i.e., as ABR Loans and Eurodollar Pro Rata Loans) and
the Interest Periods applicable thereto, if any, shall be of the same
duration.
Section 4.02 Method of Payment.
------------------
(a) All payments by the Company hereunder and under the Notes shall
be made without set-off or counterclaim to the Administrative Agent,
for its account or for the account of the Bank or Banks entitled
thereto, as the case may be, in lawful money of the United States and
in immediately available funds at the office of the Administrative
Agent on the date when due.
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(b) Any payment hereunder which falls due on a non-Business Day will
be carried over to the next Business Day (subject to Section 3.03(c)),
and interest at the rate applicable hereunder will continue to run
during such extension of time.
Section 4.03 Compensation for Losses.
------------------------
(a) Compensation. In the event that (i) the Company makes a
prepayment under Section 2.06 on a day other than the last day of the
Interest Period for the amount so prepaid, (ii) a Conversion/
Continuance Date selected pursuant to Section 3.05 falls on a day
other than the last day of the Interest Period for the amount as to
which a conversion is made, (iii) the Company revokes any notice given
under Section 2.02 requesting Eurodollar Loans, (iv) the Loans or
portions thereof are converted into ABR Loans pursuant to Section 4.05
on a day other than the last day of the Interest Period for the
Eurodollar Loans so converted, (v) the Eurodollar Loans shall be
declared to be due and payable prior to the scheduled maturity thereof
pursuant to Section 8.01 or (vi) Swing Line Advances shall be
converted into an ABR Loan on any day other than the maturity date for
such Swing Line Advances, the Company shall pay to each Bank or the
Swing Line Bank, as the case may be, promptly after its demand an
amount which will compensate such Bank or the Swing Line Bank, as the
case may be, for any loss, premium or penalty incurred (other than any
loss, premium or penalty incurred as a consequence of any Tax, which
shall be governed by the provisions of Section 4.04(a)) by such Bank
or the Swing Line Bank, as the case may be, as a result of such
prepayment, conversion, declaration or revocation of notice in respect
of funds deemed (pursuant to the last sentence of this Section
4.03(a)) obtained for the purpose of making or maintaining such Bank's
Eurodollar Loans or the Swing Line Bank's Swing Line Advances, or any
part thereof (it being understood, however, that the foregoing shall
not be construed as covering any amounts paid pursuant to Section
2.10(f) by a Bank to the Swing Line Bank in connection with the
conversion of a Swing Line Loan). Such compensation shall include an
amount equal to the excess, if any, of (i) the amount of interest
which would have accrued on the amount so paid or prepaid, or not
borrowed or converted, for the period from the date of such payment or
prepayment or conversion or failure to borrow to the last day of such
Interest Period or the maturity date of Swing Line Advances (or, in
the case of a failure to borrow, the Interest Period that would have
commenced on the date of such failure to borrow) in each case at the
applicable rate of interest for such Loan provided for herein
(excluding, however, the Applicable Margin included therein) over (ii)
the amount of interest (as reasonably determined by such Bank) which
would have accrued to such Bank on such amount by placing such amount
on deposit for a comparable period with leading banks in the London
interbank market. For purposes of calculating amounts payable by the
Company to the Banks under this Section, each Eurodollar Loan made by
a Bank (and each related reserve, special deposit or similar
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requirement) shall be conclusively deemed to have been funded at Base
LIBOR used in determining LIBOR for such Eurodollar Loan by a matching
deposit or other borrowing in the London interbank deposits market for
a comparable amount and for a comparable period, whether or not such
Eurodollar Loan is in fact so funded.
(b) Certificate, Etc. Each Bank and the Swing Line Bank, if
applicable, shall promptly notify the Company, with a copy to the
Administrative Agent, upon becoming aware that the Company may be
required to make any payment pursuant to this Section 4.03. When
requesting payment pursuant to this Section 4.03, each Bank and the
Swing Line Bank, if applicable, shall provide to the Company, with a
copy to the Administrative Agent, a certificate, signed by an officer
of such Bank or Swing Line Bank, setting forth the amount required to
be paid by the Company to such Bank or Swing Line Bank and the
computations made by such Bank or Swing Line Bank to determine such
amount. In the absence of manifest error, such certificate shall be
conclusive and binding on the Company as to the amount so required to
be paid by the Company to such Bank.
(c) Participants. Subject to Section 11.08(e), each Participant
shall be deemed a "Bank" for the purposes of this Section 4.03.
Section 4.04 Withholding, Reserves and Additional Costs.
--------------------------------------------
(a) Taxes.
(i) Withholding. To the extent permitted by law, all payments
under this Agreement and under the Notes (including
payments of principal and interest) shall be payable to
each Bank free and clear of any and all present and future
Covered Taxes. If any Taxes are required to be withheld
or deducted from any amount payable under this Agreement
or any Note, then (1) the Company shall pay any such Tax
before the date on which penalties attach thereto, and (2)
in the event such Tax is a Covered Tax, the amount payable
under this Agreement or such Note shall be increased to
the amount which, after deduction from such increased
amount of all Covered Taxes required to be withheld or
deducted therefrom, will yield to such Bank the amount
stated to be payable under this Agreement or such Note.
The Company shall execute and deliver to any Bank upon its
request such further instruments as may be necessary or
desirable to give full force and effect to any such
increase, including a new Note of the Company to be issued
in exchange for any Note theretofore issued. The Company
shall also hold each Bank harmless and indemnify it for
any stamp or other taxes with respect to the preparation,
execution, delivery, recording, performance or enforcement
of the Credit Documents (all of which shall be included
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with "Taxes"). If any Covered Taxes are paid by any Bank,
the Company shall, not later than 10 days after demand of
such Bank, reimburse such Bank for such payments, together
with any interest, penalties and expenses incurred in
connection therewith, plus interest thereon at a rate per
annum (based on a 360-day year for the actual number of
days involved) equal to the interest rate then applicable
to ABR Loans, changing as and when such rate shall change,
from the date such payment or payments are made by such
Bank to the date of reimbursement by the Company. The
Company shall deliver to the Administrative Agent
certificates or other valid vouchers for all Taxes or
other charges deducted from or paid with respect to
payments made by the Company hereunder.
(ii) Tax Refund. If the Company determines in good faith that,
(a) acting in the name of a Bank, Participant, Assignee or
the Administrative Agent it is more likely than not to win
a contest involving a Covered Tax, or (b) acting in the
name of the Company, a reasonable basis exists for
contesting a Covered Tax, then the relevant Bank,
Participant, Assignee or the Administrative Agent, as
applicable, shall cooperate with the Company in
challenging such Tax at the Company's expense if requested
by the Company (it being understood and agreed that
neither the Administrative Agent nor any Bank, Participant
or Assignee shall have any obligation to contest, or any
responsibility for contesting any Tax). If any Bank,
Participant, Assignee or the Administrative Agent, as
applicable, receives a refund (whether by way of direct
payment or by offset) of any Covered Tax for which a
payment has been made pursuant to subsection
4.04(a)(i) which, in the reasonable good faith judgment of
such Bank, Participant, Assignee or Administrative Agent,
as the case may be, is allocable to such payment made
under subsection 4.04(a)(i), the amount of such refund
(together with any interest received thereon) shall be
paid to the Company to the extent payment has been made in
full pursuant to subsection 4.04(a)(i).
(iii) U.S. Tax Certificates. Each Bank that is organized under
the laws of any jurisdiction other than the United States
or any state thereof shall deliver to the Administrative
Agent for transmission to the Company, on or prior to the
Closing Date (in the case of each Bank listed on the
signature pages hereof) or on the date (and as a condition
to effectiveness) of an assignment pursuant to which it
becomes a Bank (in the case of each other Bank), and at
such other times as may be necessary in the determination
of the Company or the Administrative Agent (each in the
reasonable exercise of its discretion), such certificates,
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documents or other evidence, properly completed and duly
executed by such Bank (including, without limitation,
Internal Revenue Service Form 1001 or Form 4224 or any
other certificate or statement of exemption required by
Treasury Regulations Section 1.1441-4(a) or Section
1.1441-6(c) or any successor thereto) to establish that
such Bank is not subject to deduction or withholding of
United States federal income tax under Section 1441 or
1442 of the Code or otherwise (or under any comparable
provisions of any successor statute) or is subject to
deduction or withholding at a reduced rate under any
applicable treaty or otherwise with respect to any
Payments to such Bank of principal, interest, fees or
other amounts payable under this Agreement or any of the
Notes. The Company shall not be required to pay any
additional amount to any such Bank under subsection
4.04(a)(i) if such Bank shall have failed to satisfy the
requirements of the immediately preceding sentence;
provided that if such Bank shall have satisfied such
requirements on the Closing Date (in the case of each Bank
listed on the signature pages hereof) or on the date of
the agreement pursuant to which it became a Bank (in the
case of each other Bank), nothing in this subsection
4.04(a)(iii) shall relieve the Company of its obligation
to pay any additional amounts pursuant to subsection
4.04(a)(i) in the event that, as a result of any change in
applicable law, such Bank is no longer properly entitled
to deliver certificates, documents or other evidence at a
subsequent date establishing the fact that such Bank is
not subject to withholding as described in the immediately
preceding sentence.
(iv) Mitigation. Each Bank agrees that, as promptly as
practicable after the officer of such Bank responsible for
administering the Loans under this Agreement becomes aware
of the occurrence of an event or the existence of a
condition that would require the Company to make payments
with respect to such Bank under subsection 4.04(a)(i), it
will, to the extent not inconsistent with such Bank's
internal policies, use reasonable efforts (1) to make,
fund or maintain the Commitments or Loans of such Bank
through another lending office of such Bank, or (2) take
such other reasonable measures, if as a result the
additional amounts that would otherwise be required to be
paid by the Company with respect to such Bank pursuant to
subsection 4.04(a)(i) would be materially reduced and if,
as determined by such Bank in its sole discretion, the
making, funding or maintaining of such Commitments or
Loans through such other lending office or in accordance
with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or
Loans or the interests of such Bank.
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(v) Replacement of Bank. If the Company becomes obligated to
pay additional amounts described in Section 4.04(a) as a
result of any condition described in such section and
payment of such amount is demanded by any Bank, then the
Company may, on ten business days' prior written notice to
the Administrative Agent and such Bank, cause such Bank to
(and such Bank shall) assign all of its rights and
obligations under this Agreement to a Bank or other entity
selected by the Company for a purchase price equal to the
outstanding principal amount of such Bank's Loans and all
accrued interest, fees, and other amounts owing to such
Bank, provided that in no event shall the assigning Bank
be required to pay or surrender to such purchasing Bank or
other entity any of the fees received by such assigning
Bank pursuant to this Agreement. The Company shall remain
obligated to pay to such assigning Bank all additional
amounts described in Section 4.04(a) arising on or prior
to the date of such assignment as a result of any
condition described in such section and demanded by any
Bank.
(b) Additional Costs.
(i) If after the date hereof, any change in any law or
regulation or in the interpretation thereof by any court
or administrative or governmental authority charged with
the administration thereof or the enactment of any law or
regulation shall either (1) impose, modify or deem
applicable any reserve, special deposit or similar
requirement against the Banks' Commitments or the Loans or
Swing Line Advances or (2) impose on any Bank any other
condition regarding this Agreement, its Commitment or the
Loans or Swing Line Advances and the result of any event
referred to in clause (1) or (2) of this clause (b) shall
be to increase the cost (other than an increase in cost as
a consequence of any Tax, which shall be governed by the
provisions of Section 4.04(a)) to any Bank of maintaining
its Commitment or any Loans or Swing Line Advances (which
increase in cost shall be calculated in accordance with
each Bank's reasonable averaging and attribution methods)
by an amount which any such Bank deems to be material,
then, upon receipt by the Company of written notice by
such Bank, the Company shall be obligated to pay to such
Bank within 10 days of any written demand therefor an
amount equal to such increase in cost incurred by such
Bank after the date the Company receives such notice;
provided that in respect of any Loan or Swing Line
Advances such amount shall bear interest, after receipt by
the Company of any such demand until payment in full
thereof, at a rate per annum (based on a 360-day year, for
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the actual number of days involved) equal to the sum of 2%
and the interest rate then applicable to ABR Loans,
changing as and when such rate shall change.
(ii) If any Bank shall have determined that the adoption of any
applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof
(including any such adoption or change made prior to the
date hereof but not effective until after the date
hereof), or compliance by any Bank with any request or
directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on capital for any such Bank
or any corporation controlling such Bank as a consequence
of its obligations under this Agreement to a level below
that which such Bank or such corporation could have
achieved but for such adoption, change or compliance
(taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy),
then upon receipt by the Company of written notice by such
Bank, the Company shall be obligated to pay to such Bank
upon receipt of written demand from such Bank such
additional amount or amounts as will compensate such Bank
for such reduction suffered by such Bank after the date
the Company receives such notice, plus interest thereon at
a rate per annum (based on a 360-day year, for the actual
number of days involved) equal to the interest rate then
applicable to ABR Loans, changing as and when such rate
shall change, from the date of such demand by such Bank to
the date of payment by the Company.
(iii) Mitigation. Each Bank agrees that, as promptly as
practicable after the officer of such Bank responsible for
administering the Loans under this Agreement becomes aware
of the occurrence of an event or the existence of a
condition that would require the Company to make payments
with respect to such Bank under subsection 4.04(b)(i) or
(ii), it will, to the extent not inconsistent with such
Bank's internal policies, use reasonable efforts (1) to
make, fund or maintain the Commitments or Loans of such
Bank through another lending office of such Bank, or (2)
take such other reasonable measures, if as a result the
additional amounts that would otherwise be required to be
paid by the Company with respect to such Bank pursuant to
subsection 4.04(b)(i) or (ii) would be materially reduced
and if, as determined by such Bank in its sole discretion,
the making, funding or maintaining of such Commitments or
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Loans through such other lending office or in accordance
with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitments or
Loans or the interests of such Bank.
(iv) Replacement of Bank. If the Company becomes obligated to
pay additional amounts described in Section 4.04(b)(i) or
(ii) as a result of any condition described in such
section and payment of such amount is demanded by any
Bank, then the Company may, on ten business days' prior
written notice to the Administrative Agent and such Bank,
cause such Bank to (and such Bank shall) assign all of its
rights and obligations under this Agreement to a Bank or
other entity selected by the Company for a purchase price
equal to the outstanding principal amount of such Bank's
Loans and all interest and facility fees accrued to the
date of purchase. The Company shall remain obligated to
pay to such assigning Bank all additional amounts
described in Section 4.04(b) arising on or prior to the
date of such assignment as a result of any condition
described in such section and demanded by any Bank.
(c) Lending Office Designations. Before giving any notice to the
Company pursuant to this Section 4.04, each Bank shall, if possible,
designate a different lending office if such designation will avoid
the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank.
(d) Certificate, Etc. Each Bank shall promptly notify the Company,
with a copy to the Administrative Agent, upon becoming aware that the
Company may be required to make any payment pursuant to this Section
4.04. When requesting payment pursuant to this Section 4.04, each
Bank shall provide to the Company, with a copy to the Administrative
Agent, a certificate, signed by an officer of such Bank, setting forth
the amount required to be paid by the Company to such Bank and the
computations made by such Bank to determine such amount.
Determinations and allocations by such Bank for purposes of this
Section 4.04 shall be conclusive and binding upon the Company,
provided that such determinations and allocations are made on a
reasonable basis and are mathematically accurate.
(e) Participants. Subject to Section 11.08(e), each Participant
shall be deemed a "Bank" for the purposes of this Section 4.04.
Section 4.05 Unavailability.
---------------
If at any time any Bank shall have determined in good faith (which
determination shall be conclusive) that (x) the making or maintenance
of all or any part of such Bank's Eurodollar Loans has been made
impracticable or unlawful because of compliance by such Bank in good
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faith with any law or guideline or any interpretation or
administration thereof by any official body charged with the
interpretation or administration thereof or with any request or
directive of such body (whether or not having the effect of law), or
(y) that LIBOR would not accurately reflect the cost to such Bank of
making, continuing or converting any Eurodollar Loan by reason of such
compliance, or by reason of the unavailability of appropriate
quotations, or by reason of the unavailability of U.S. dollar deposits
in the appropriate amount and maturity in the London Eurodollar
interbank market, then the Administrative Agent, upon notification to
it of such determination by such Bank, shall forthwith advise the
other Banks and the Company thereof. Upon such date as shall be
specified in such notice and until such time as the Administrative
Agent, upon notification to it by such Bank, shall notify the Company
and the other Banks that the circumstances specified by it in such
notice no longer apply, (i) notwithstanding any other provision of
this Agreement, such Eurodollar Loans of such Bank shall automatically
and without requirement of notice by the Company be converted to ABR
Loans and (ii) the obligation of only such Bank to allow borrowing,
elections and renewals of Eurodollar Loans shall be suspended, and, if
the Company shall request in a Loan Request or Conversion/Continuance
Request that such Bank make a Eurodollar Loan, the loan requested to
be made by such Bank shall instead be made as an ABR Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Representations and Warranties.
-------------------------------
As of each Compliance Date, the Company represents and warrants to the
Banks that:
(a) Subsidiaries. At the date hereof, the Company has no
Subsidiaries and is a participant in no joint ventures other than as
listed on Schedule 5.01(a).
(b) Good Standing and Power. The Company is duly organized and
validly existing and in good standing under the laws of the State of
Maryland; and the Company has the power to own its property and to
carry on its business as now being conducted and is duly qualified to
do business and is in good standing in each jurisdiction in which the
character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. Each of the corporate Subsidiaries of
the Company are corporations, each duly organized and validly
existing, under the laws of the jurisdiction of its incorporation;
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each other Subsidiary is an entity duly organized and validly existing
under the laws of the jurisdiction of its organization; and each
Subsidiary has the power to own its property and to carry on its
business as now being conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except
where the failure to be so organized, existing, qualified, or to be in
good standing, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(c) Corporate Authority. The Company has full corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, to make the borrowings contemplated hereby, and to execute
and deliver the Notes and to incur the obligations provided for herein
and therein, all of which have been duly authorized by all proper and
necessary corporate action. No consent or approval of stockholders is
required as a condition to the validity or performance by the Company
of its obligations under this Agreement or the Notes.
(d) Authorizations. All authorizations, consents, approvals,
registrations, notices, exemptions and licenses with or from
Governmental Authorities and other Persons which are necessary for the
borrowing hereunder, the execution and delivery of the Credit
Documents, the performance by the Company of its obligations hereunder
and thereunder have been effected or obtained and are in full force
and effect.
(e) Binding Agreements. This Agreement constitutes, and the Notes,
when executed and delivered pursuant hereto for value received will
constitute, the valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to 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; and the effect of general principles of
equity, regardless of whether enforcement is sought in a proceeding at
law or in equity, and the discretion of the court before which any
proceeding therefor may be brought.
(f) Litigation. There are no proceedings or investigations, so far
as the executive officers of the Company know, pending or threatened
before any court or arbitrator or before or by any Governmental
Authority which (i) in any one case or in the aggregate, if determined
adversely to the interests of the Company or any of its Subsidiaries,
could reasonably be expected to have a Material Adverse Effect, (ii)
relates to any Credit Document or the lending transactions
contemplated hereby and thereby or (iii) seeks to (or is expected to)
rescind, terminate, revoke, cancel, withdraw, suspend, modify or
withhold any material license or permit of the Company or any of the
Subsidiaries.
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(g) No Conflicts. There is no statute, regulation, rule, order or
judgment, and no provision of any material agreement or instrument
binding on the Company or any of its Subsidiaries, or affecting their
respective properties and no provision of the certificate of
incorporation, by-laws, governing partnership agreement or other
organizational document of the Company or any of its Subsidiaries,
which would prohibit, conflict with or in any way prevent the
execution, delivery, or performance of the terms of the Credit
Documents or the incurrence of the obligations provided for herein and
therein, or result in or require the creation or imposition of any
Lien on any of the Company's or its Subsidiaries' properties as a
consequence of the execution, delivery and performance of any Credit
Document or the lending transactions contemplated hereby and thereby.
(h) Financial Condition. (i) (A) The consolidated balance sheet as
of December 31, 1998, together with consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended,
audited by KPMG, LLP, included in the Realty Income Corporation 1998
Year End Report and (B) the consolidated balance sheet as of June 30,
1999, together with the consolidated statements of income and cash
flows for the 6 months then ended certified by the chief financial
officer of the Company, heretofore delivered to the Administrative
Agent, fairly present the financial condition of the Company and its
consolidated Subsidiaries and the results of their operations as of
the dates and for the periods referred to and have been prepared in
accordance with GAAP consistently applied throughout the periods
involved. As of the date hereof, there are no material liabilities,
direct or indirect, fixed or contingent, of the Company and its
Subsidiaries as of the dates of such balance sheet which are not
reflected therein or in the notes thereto. (ii) Since December 31,
1998 there has been no Material Adverse Change.
(i) Taxes. The Company and each of its Subsidiaries has filed or
caused to be filed all tax returns which are required to be filed and
has paid all taxes required to be shown to be due and payable on said
returns or on any assessment made against it or any of its property
and all other taxes, assessments, fees, liabilities, penalties or
other charges imposed on it or any of its property by any Governmental
Authority, except for any taxes not yet delinquent and any taxes,
assessments, fees, liabilities, penalties or other charges which are
being contested in good faith and for which adequate reserves (in
accordance with GAAP) have been established.
(j) Use of Proceeds. The proceeds of the Loans and Swing Line
Advances will be used by the Company for the purposes described in the
Whereas clause hereto.
(k) Margin Regulations. No part of the proceeds of any Loan will be
used to purchase or carry, or to reduce, retire or refinance any
credit incurred to purchase or carry or to extend credit to others for
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the purpose of purchasing or carrying, any "margin stock" as defined
in Regulation U of the Board of Governors of the Federal Reserve
System.
(l) No Material Misstatements. All written information relating to
the Company and its Subsidiaries heretofore delivered by the Company
and its Subsidiaries to the Administrative Agent or any Bank in
connection with the Credit Documents is complete and correct in all
material respects.
(m) Title to Properties; Possession Under Leases. The Company and
its Subsidiaries each have good and marketable title to, or valid
leasehold interests in, all properties and assets reflected on the
consolidated balance sheet of the Company as of June 30, 1999,
referred to in Section 5.01(h), except for such properties and assets
as have been disposed of in the ordinary course of business and except
for minor defects in title that do not, individually or in the
aggregate, materially interfere with the ability of the Company or any
of such Subsidiaries to conduct its business as now conducted. All
such assets and properties are free and clear of all Liens, except
Liens permitted pursuant to this Agreement.
(n) Leases. (i) To the Company's knowledge, no condition exists
which, with the giving of notice or the passage of time, or both,
would permit any lessee to cancel its obligations under any lease to
which the Company or any Subsidiary is a party that would create,
individually or in the aggregate, a Material Adverse Effect; (ii) the
Company has received no notice that any lessee or lessees intend to
cease operations at any leased property or properties prior to the
expiration of the term of the applicable lease (other than temporarily
due to casualty, remodeling, renovation or any similar cause) that
would create, individually or in the aggregate, a Material Adverse
Effect; and (iii) to the Company's knowledge, none of the lessees or
their sublessees, if any, under any of the leases to which the Company
or any Subsidiary is a party to or is the subject of any bankruptcy,
reorganizations, insolvency or similar proceeding that would create,
individually or in the aggregate, a Material Adverse Effect.
(o) Conduct of Business. At the date hereof, the Company and its
Subsidiaries hold all authorizations, consents, approvals,
registrations, franchises, licenses and permits, with or from
Governmental Authorities and other Persons as are required or
necessary for them to own their properties and conduct their business
as now conducted unless and to the extent that any failure to hold
such authorizations, consents, approvals, registrations, franchises,
licenses and permits, individually or in the aggregate, could not have
a Material Adverse Effect.
(p) Compliance with Laws and Charter Documents. Neither the Company
nor any Subsidiary thereof is, or as a result of performing any of its
obligations under the Credit Documents will be, in violation of (a)
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any law, statute, rule, regulation or order of any Governmental
Authority (including Environmental Laws) applicable to it or its
properties or assets, (b) its certificate of incorporation, by-laws,
governing partnership agreement or other organizational document or
(c) judgments or agreements to which it is a party or by which its
assets may be bound unless and to the extent that such violations,
individually or in the aggregate, would not have a Material Adverse
Effect.
(q) ERISA.
(i) Neither the Company nor any ERISA Affiliate has engaged in
a transaction with respect to any Plan which, assuming the
taxable period of such transaction expired as of the
Compliance Date, could subject the Company or any ERISA
Affiliate to a tax or penalty imposed by either Section
4975 of the Code or Section 502(i) of ERISA in an amount
that would have a Material Adverse Effect.
(ii) Except as set forth on Schedule 5.01(q), neither the
Company nor any ERISA Affiliate has incurred any liability
since December 31, 1998, under Title IV of ERISA with
respect to any Single Employer Plan. No Single-Employer
Plan had an accumulated funding deficiency, whether or not
waived, as of the last day of the most recent fiscal year
of such Plan ended prior to the Compliance Date, and each
Plan has complied in all material respects with the
applicable provisions of ERISA and the Code. Neither the
Company nor any ERISA Affiliate is (A) required to give
security to any Single-Employer Plan pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, or (B)
subject to a lien in favor of such a Plan under Section
414(n) of the Code or Section 302(f) of ERISA.
(iii) No liability under Section 4062, 4063, 4064 or 4069 of
ERISA has been or is expected by the Company to be
incurred by the Company or any ERISA Affiliate with
respect to any Single-Employer Plan in an amount that
could have a Material Adverse Effect. Neither the Company
nor any ERISA Affiliate has incurred or expects to incur
any withdrawal liability with respect to any Plan which is
a multiemployer plan in an amount which would have a
Material Adverse Effect.
(iv) Under each Single-Employer Plan, as of the last day of the
most recent plan year ended prior to the Compliance Date,
the actuarially determined present value of all benefit
liabilities (as determined on the basis of the actuarial
assumptions contained in the Plan's most recent actuarial
valuation) did not exceed the fair market value of the
asset of such Plan by an amount that would have a Material
Adverse Effect.
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(v) Insofar as the representations and warranties of the
Company contained in clause (i) above relates to any Plan
which is a multiemployer plan, such representations and
warranties are made to the best knowledge of the Company
and its ERISA Affiliates. As used in this Section, (A)
"accumulated funding deficiency" shall have the meaning
assigned to such term in Section 412 of the Code and
Section 302 of ERISA; (B) "multiemployer plan" and "plan
year" shall have the respective meanings assigned to such
terms in Section 3 of ERISA; (C) "benefit liabilities"
shall have the meaning assigned to such term in Section
4001 of ERISA; (D) "taxable period" shall have the meaning
assigned to such term in Section 4975 of the Code; and (E)
"withdrawal liability" shall have the meaning assigned to
such term in Part 1 of Subtitle E of Title IV of ERISA.
(r) Intellectual Property. The Company and each of its Subsidiaries
owns, or is licensed to use, all trademarks, trade names, patents and
copyrights (the "Intellectual Property") necessary for the conduct of
its business as currently conducted, including, without limitation,
the Intellectual Property listed on Schedule 5.01(r) hereto. To the
knowledge of the Company, no claim has been asserted or is pending by
any Person challenging or questioning the use by the Company or any
Subsidiary of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Company
know of any valid basis for any such claim. To the knowledge of the
Company, the use of such Intellectual Property by the Company and its
Subsidiaries does not infringe on the rights of any Person, nor, to
the knowledge of the Company, are there any uses by other Persons of
such Intellectual Property which infringe on the rights of the Company
and its Subsidiaries.
(s) Not an Investment Company or Public Utility Holding Company.
Neither the Company nor any of its Subsidiaries is or, after giving
effect to the transactions contemplated hereby will be (i) an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended or (ii) subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or any foreign, federal,
state or local statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
(t) Environmental Matters. Except as they would not individually or
in the aggregate have a Material Adverse Effect (i) the businesses as
presently or formerly engaged in by the Company and its Subsidiaries
are and have been conducted in compliance with all applicable
Environmental Laws, including, without limitation, having all permits,
licenses and other approvals and authorizations, during the time the
Company and its Subsidiaries engaged in such businesses, (ii) the
properties presently or formerly owned or operated by the Company and
its Subsidiaries (including, without limitation, soil, groundwater or
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surface water on, under or adjacent to the properties, and buildings
thereon) (the "Properties") do not contain any Hazardous Substance
other than in compliance with applicable Environmental Law (provided,
however, that with respect to Properties formerly owned or operated by
the Company and its Subsidiaries, such representation is limited to
the period the Company owned or operated such Properties), (iii)
neither the Company or any of its Subsidiaries has received any
notices, demand letters or request for information from any Federal,
state, local or foreign governmental entity or any third party
indicating that the Company or any of its Subsidiaries may be in
violation of, or liable under, in any respect, any Environmental Law
in connection with the ownership or operation of the Company's
businesses, (iv) there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened against the Company or any of its
Subsidiaries with respect to the Company or any of its Subsidiaries or
the Properties relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to
be filed, by the Company or any of its Subsidiaries concerning the
release of any Hazardous Substance or the threatened or actual
violation of any Environmental Law on or at the Properties, (vi) no
Hazardous Substance has been disposed of, transferred, released or
transported from any of the Properties during the time such Property
was owned or operated by the Company or any of its Subsidiaries, other
than in compliance with applicable Environmental Law, (vii) there have
been no environmental investigations, studies, audits, tests, reviews
or other analyses conducted by or which are in the possession of the
Company or any of its Subsidiaries relating to the Company or such
Subsidiary or the Properties which have not been delivered to the
Banks prior to the date hereof, (viii) none of the Properties has been
used at any time by the Company or any of its Subsidiaries as a
sanitary landfill or hazardous waste disposal site and (ix) neither
the Company nor any of its Subsidiaries has incurred, and none of the
Properties are presently subject to, any material liabilities (fixed
or contingent) relating to any suit, settlement, court order,
administrative order, judgment or claim asserted or arising under any
Environmental Law.
(u) Solvency. On the date of each Loan and Swing Line Advance
hereunder, and after the payment of all estimated legal, investment
banking, accounting and other fees related hereto, the Company and
each of its Subsidiaries will be Solvent.
(v) Insurance. The properties (other than properties leased to other
Persons) and operations of the Company and its Subsidiaries of a
character usually insured by companies of established reputation
engaged in the same or a similar business similarly situated are
adequately insured, by financially sound and reputable insurers,
against loss or damage of the kinds and in amounts customarily insured
against by such Persons, and the Company and its Subsidiaries carry,
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with such insurers in customary amounts, such other insurance as is
usually carried by companies of established reputation engaged in the
same or a similar business similarly situated.
(w) REIT Status. The Company qualifies, and will elect or has
elected to be treated, as a real estate investment trust under
Sections 856 through 860 of the Code and the rules and regulations
thereunder (a "REIT") beginning with its taxable year ending
December 31, 1993. No fact, event or condition has occurred which
could jeopardize the Company's tax status as a REIT.
(x) Year 2000 Issue. The Company and its Subsidiaries have reviewed
the effect of the Year 2000 Issue on the computer software, hardware
and firmware systems and equipment containing embedded microchips
owned or operated by or for the Company and its Subsidiaries or used
or relied upon in the conduct of their business (including systems and
equipment supplied by others or with which such computer systems of
the Company and its Subsidiaries interface). The costs to the Company
and its Subsidiaries of any reprogramming required as a result of the
Year 2000 Issue to permit the proper functioning of such systems and
equipment and the proper processing of data, and the testing of such
reprogramming, and of the reasonably foreseeable consequences of the
Year 2000 Issue to the Company or any of its Subsidiaries (including
reprogramming errors and the failure of systems or equipment supplied
by others) are not reasonably expected to result in a Default or Event
of Default or to have a Material Adverse Effect.
ARTICLE VI
CONDITIONS OF LENDING
Section 6.01 Conditions to the Availability of the Commitment.
-------------------------------------------------
The obligations of each Bank hereunder are subject to, and the Banks'
Commitment shall not become available until the date (the "Effective
Date") on which, each of the following conditions precedent shall have
been satisfied or waived in writing by each of the Banks, and upon
such satisfaction or waiver each Bank will give a written confirmation
of the same to the Company on request:
(a) Credit Agreement. The Administrative Agent shall have received
this Agreement duly executed and delivered by each of the Banks and
the Company.
(b) Notes. The Administrative Agent on behalf of each Bank shall
have received Pro Rata Notes and Swing Line Notes in the principal
amounts set forth in Sections 2.03 and 2.10(c), duly executed and
delivered by the Company.
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(c) Good Standing Certificates. The Administrative Agent on behalf
of the Banks shall have received from the Company copies of good
standing certificates, dated within five (5) days prior to the date
hereof, confirming the Company's representation as to good standing in
Section 5.01(b).
(d) Secretary's Certificate. The Administrative Agent on behalf of
the Banks shall have received from the Company a certificate from the
Secretary or Assistant Secretary of the Company, dated as of the date
hereof, (i) certifying the incumbency of the officers executing the
Credit Documents and all related documentation, (ii) attaching and
certifying the resolutions of the Board of Directors of the Company
relating to the execution, delivery and performance of this Agreement,
and (iii) attaching and certifying the Certificate of Incorporation
and By-laws of the Company.
(e) Authorizations. The Administrative Agent shall have received
copies of all authorizations, consents, approvals, registrations,
notices, exemptions and licenses with or from Governmental Authorities
and other Persons which are necessary for the borrowing hereunder, the
execution and delivery of the Credit Documents, the performance by the
Company of its obligations hereunder and thereunder.
(f) Opinions of Company Counsel. The Administrative Agent shall have
received the favorable written opinions, dated the date hereof, of
Latham & Watkins, special New York counsel for the Company, in
substantially the form of Exhibit F-1 and of Michael R. Pfeiffer,
General Counsel of the Company, in substantially the form of Exhibit
F-2.
(g) Litigation. There shall not be pending or threatened any action
or proceeding before any court or administrative agency relating to
the lending transactions contemplated by this Agreement or any Note
which, in the judgment of the Administrative Agent or any Bank, could
materially impair the ability of the Company to perform its
obligations hereunder or thereunder.
(h) Other Agreements. The Administrative Agent shall have received
copies of all tax sharing, management and other similar agreements
between the Company and any of its Subsidiaries or Affiliates, which
shall be in form and substance satisfactory to the Administrative
Agent.
(i) Termination of Existing Credit Agreement. The Company shall have
paid (whether with the proceeds of the Initial Loans hereunder or
otherwise) all amounts due by it under the Credit Agreement among the
Company, as Borrower, the Banks named on the signature pages thereof,
the Administrative Agent, as Agent and Swing Line Bank, and BNY
Capital Markets, as Arranger, dated as of November 29, 1994, as
amended and restated as of December 30, 1997, and such Credit
Agreement shall have terminated in accordance with its terms.
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(j) Subsidiary Guaranty. The Administrative Agent shall have
received one or more duly executed Subsidiary Guaranties, to the
extent required by Section 7.02(e).
(k) Fees. The Administrative Agent shall have received from the
Company the fees set forth in Section 2.04 (for the accounts of the
Banks, except as provided in Section 2.04(b)) and fees of
Administrative Agent's counsel which are due and payable on the
Effective Date.
(l) Other Documents. The Administrative Agent shall have received
such other certificates and documents as the Administrative Agent and
the Banks reasonably may require.
Section 6.02 Conditions to All Loans.
------------------------
The obligations of each Bank in connection with each Loan (including
the Initial Loan) and the obligations of the Swing Line Bank in
connection with each Swing Line Advance (including the first Swing
Line Advance) are subject to the conditions precedent that, on the
date of each such Loan and after giving effect thereto, each of the
following conditions precedent shall have been satisfied or waived in
writing by each Bank, and upon such satisfaction or waiver each Bank
will give a written confirmation of the same to the Company on
request:
(a) Requests. For each Loan, the Administrative Agent shall have
received either a Pro Rata Loan Request in substantially the form of
Exhibit B or a Competitive Loan Request in substantially the form of
Exhibit C-1; for each Swing Line Advance, the Administrative Agent and
the Swing Line Bank shall have received a Swing Line Advance Request
in substantially the form of Exhibit E.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing, and the Administrative Agent shall have received
from the Company a certificate to that effect signed by an authorized
officer of the Company.
(c) Representations and Warranties; Covenants. The representations
and warranties contained in Article V (other than representations and
warranties that speak as of a specific date) shall be true and correct
with the same effect as though such representations and warranties had
been made at the time of such Loan or Swing Line Advance, and the
Administrative Agent shall have received from the Company a
certificate to that effect signed by an authorized officer of the
Company.
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ARTICLE VII
COVENANTS
Section 7.01 Affirmative Covenants.
----------------------
Until the Termination Date, and thereafter until payment in full of
the Notes and performance of all other obligations of the Company
hereunder (other than Unmatured Surviving Obligations), the Company
will:
(a) Financial Statements; Compliance Certificates. Furnish to the
Administrative Agent and to each Bank:
(i) as soon as available, but in no event more than 60 days
following the end of each fiscal quarter, copies of all
consolidated quarterly balance sheets, income statements
and other financial statements and reports of the Company
and its Subsidiaries, prepared in a format and in scope
consistent with the financial statements and reports of
the Company referenced in Section 5.01(h);
(ii) as soon as available, but in no event more than 105 days
following the end of each fiscal year, a copy of the
annual consolidated audit report and financial statements
relating to the Company and its Subsidiaries, certified by
KPMG LLP, one of the other major nationally recognized
accounting firms or another independent certified public
accountant reasonably satisfactory to the Administrative
Agent, prepared in a format and in scope consistent with
the December 31, 1998 financial statements and reports of
the Company referenced in Section 5.01(h);
(iii) as soon as available, but in no event later than 105 days
following the end of each fiscal year, an annual forecast
for the then-current fiscal year, prepared in a manner and
in the form of the forecast provided on the date of this
Agreement or in such other form as is reasonably
acceptable to the Administrative Agent and the Required
Banks together with an annual rent roll dated the most-
recent December 31;
(iv) together with each of the financial statements delivered
pursuant to clauses (i) and (ii) of this Section 7.01(a),
a certificate of the Chief Financial Officer of the
Company stating whether as of the dates of such financial
statements any event or circumstance exists which
constitutes a Default or Event of Default and, if so,
stating the facts with respect thereto, together with
calculations, where applicable, which establish in
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reasonable detail the Company's (and where applicable,
each of the Company's Subsidiaries') compliance with the
provisions of this Agreement;
(v) promptly upon receipt thereof, copies of any reports and
management letters submitted to the Company or any of its
Subsidiaries or their accountants in connection with any
annual or interim audit of the books of the Company or its
Subsidiaries, together with the responses thereto, if any;
and
(vi) such additional information, reports or statements as the
Administrative Agent and the Banks from time to time may
reasonably request including but not limited to the
quarterly furnishing to the Administrative Agent of the
most recent Property Management Exception Report in a form
substantially similar to Exhibit G hereto, a list of the
Company's current property portfolio and a list of the
Company's past quarter's acquisitions on an acquisition
cost basis, an appraised value basis (to the extent
available) and a projected annual rent basis.
(b) Notification of Defaults and Adverse Developments. Notify the
Administrative Agent (i) promptly, and in any event not later than
five Business Days after the discovery by any officer of the Company
of the occurrence of any Default or Event of Default; (ii) promptly,
and in any event not later than five Business Days after the discovery
by any officer of the Company of the occurrence of a Material Adverse
Change; (iii) promptly, and in any event not later than ten Business
Days after the discovery by any officer of the Company of any
litigation or proceedings that are (to the knowledge of any executive
officer of the Company) instituted or threatened against the Company
or its Subsidiaries or any of their respective assets that (a) could
reasonably be expected to have a Material Adverse Effect or (b) seeks
to (or is expected to) rescind, terminate, revoke, cancel, withdraw,
suspend, modify or withhold any material license or permit of the
Company or any of the Subsidiaries; (iv) promptly, and in any event
not later than five Business Days after the discovery by any officer
of the Company of the occurrence of each and every event which would
be an Event of Default (or an event which with the giving of notice or
lapse of time or both would be an Event of Default) under any
Indebtedness of the Company or any of its Subsidiaries in a principal
amount in excess of $5,000,000, such notice to include the names and
addresses of the holders of such Indebtedness and the amount thereof
and (v) promptly, and in any event not later than five days after the
end of each calendar quarter in which the Company receives notice of a
change in the rating published by any of the Rating Agencies with
respect to the Company's senior unsecured debt, notice of such change
in rating. Upon receipt of any such notice of Default or adverse
development, the Administrative Agent shall forthwith give notice to
each Bank of the details thereof.
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(c) Notice of ERISA Events. Within 10 days after the Company or any
ERISA Affiliate knows that any of the events described in the
succeeding two sentences have occurred, the Company shall furnish to
the Administrative Agent a statement signed by a senior officer of the
Company describing such event in reasonable detail and the action, if
any, proposed to be taken with respect thereto. The events referred
to in the preceding sentence are, with respect to any Single Employer
Plan: (i) any reportable event described in Section 4043 of ERISA,
other than a reportable event for which the 30-day notice requirement
has been waived by the PBGC; (ii) the provision to any affected party
as such term is defined in Section 4001 of ERISA of a notice of intent
to terminate the Plan; (iii) the adoption of or amendment to the Plan
if, after giving effect to such amendment, the Plan is a plan
described in Section 4021(b) of ERISA; (iv) receipt of notice of an
application by the PBGC to institute proceedings to terminate the Plan
pursuant to Section 4042 of ERISA; (v) withdrawal from or termination
of the Plan during a plan year for which the Company or any ERISA
Affiliate is or would be subject to liability under Sections 4063 or
4064 of ERISA; (vi) cessation of operations by the Company or any
ERISA Affiliate at a facility under the circumstances described in
Section 4062(e) of ERISA; (vii) adoption of an amendment to the Plan
which would require security to be given to the Plan pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; and (viii)
failure by the Company or any ERISA Affiliate to make any payment to
the Plan which would give rise to a lien in favor of the Plan under
Section 414(n) of the Code or 302(f) of ERISA. Such events shall also
include receipt of notice of withdrawal liability pursuant to Section
4202 of ERISA with respect to a Plan that is a multi-employer plan.
(d) Other Reports, Notices and Materials. Furnish to the
Administrative Agent (i) as soon as available copies of reports,
notices and other materials sent to the Company or any of its
Subsidiaries from any Governmental Authority, including the Securities
and Exchange Commission, the Internal Revenue Service and PBGC and
(ii) within 90 days of adoption by the Company's board of directors,
copies of any revisions, supplements, amendments or restatements to
the Real Estate Investment Criteria.
(e) Environmental Matters. (i) Comply, and cause its Subsidiaries to
comply, in all material respects, with all applicable Environmental
Laws, (ii) notify the Administrative Agent promptly after receiving
notice or becoming aware of any order, notice, claim or proceeding
under any Environmental Laws, other than those that are clearly not
material, and (iii) promptly forward to Administrative Agent a copy of
any Environmental Claim, order, notice, permit, application, or any
other communication or report received by Company or any of its
Subsidiaries in connection with any such matters as they may affect
such premises, if material.
(f) Taxes. Pay and discharge, and cause each of its Subsidiaries to
pay and discharge, all taxes, assessments and governmental charges
upon it, its income and its properties prior to the date on which
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penalties attach thereto, unless and to the extent that (i) such
taxes, assessments and governmental charges shall be contested in good
faith and by appropriate proceedings by the Company or such
Subsidiary, as the case may be, (ii) adequate reserves (in accordance
with GAAP) are maintained by the Company or such Subsidiary, as the
case may be, with respect thereto, and (iii) any failure to pay and
discharge such taxes, assessments and governmental charges could not
have a Material Adverse Effect.
(g) Insurance. Maintain, and cause each of its Subsidiaries to
maintain, insurance with responsible insurance companies against such
risks, on such properties and in such amounts as is customarily
maintained by similar businesses; and file and cause each of its
Subsidiaries to file with the Administrative Agent upon its request or
the request of any Bank a detailed list of the insurance companies,
the amounts and rates of the insurance, the dates of the expiration
thereof and the properties and risks covered thereby.
(h) Corporate Existence. Except as permitted by Section 7.02(c),
maintain, and cause each of its Subsidiaries to maintain, its
existence in good standing and qualify and remain qualified to do
business in each jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its
business is such that the failure to maintain such existence or to
qualify could reasonably be expected to have a Material Adverse
Effect.
(i) Authorizations. Obtain, make and keep in full force and effect
all material authorizations from and registrations with Governmental
Authorities.
(j) Maintenance of Records. Maintain, and cause each of its
Subsidiaries to maintain, complete and accurate books and records in
which full and correct entries in conformity with GAAP shall be made
of all dealings and transactions in its respective business and
activities.
(k) Inspection. Permit, and cause each of its Subsidiaries to
permit, the Administrative Agent and the Banks to have one or more of
their officers and employees, or any other Person designated by the
Administrative Agent or the Banks, visit and inspect any of the
properties of the Company and its Subsidiaries (upon reasonable
request and notice and in accordance with the agreement, if any,
relating to any such property) and to examine the minute books, books
of account and other records of the Company and its Subsidiaries and
make copies thereof or extracts therefrom, and discuss its affairs,
finances and accounts with its officers and, at the request of the
Administrative Agent or the Banks, with the Company's independent
accountants, during normal business hours and at such other reasonable
times and as often as the Administrative Agent or the Banks reasonably
may desire.
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(l) Conduct of Business. (i) Engage in as its principal business
investing in real estate in the United States, (ii) preserve, renew
and keep in full force and effect all its material contracts, (iii)
preserve, renew and maintain in full force and effect all its
franchises and licenses material to the normal conduct of its business
as now conducted, and (iv) comply with all of the terms of all
instruments which evidence, secure or govern the Indebtedness of the
Company and its Subsidiaries and all material laws, rules and
regulations of all Governmental Authorities.
(m) Maintenance of Property, Etc. With only such exceptions that
individually or in the aggregate would not have a Material Adverse
Effect, (i) Maintain, keep and preserve and cause each of its
Subsidiaries to maintain, keep and preserve all of its properties in
good repair, working order and condition and from time to time make
all necessary and proper repairs, renewals, replacements, and
improvements thereto (provided that in the properties subject to sale
agreements, to the extent permitted by Section 7.02(c)(iii),
compliance with the terms of such agreement shall be deemed to
constitute compliance with this Section 7.01(m)(i)), and (ii)
maintain, preserve and protect and cause each of its Subsidiaries to
maintain, preserve and protect all franchises, licenses, copyrights,
patents and trademarks material to its business, so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times.
(n) Insurance on Leased Properties. Use its, and cause its
Subsidiaries to use their, commercially reasonable best efforts to
ensure that each lessee of a property owned in whole or in part,
directly or indirectly, by the Company or any Subsidiary, and each
mortgagor of a property on which the Company or any Subsidiary holds a
mortgage, has, and until the Termination Date will keep, in place
adequate insurance which names the Company or such Subsidiary as a
loss payee. For the purposes of the preceding sentence "adequate
insurance" shall mean insurance, with financially sound and reputable
insurers in such amounts and insuring against such risks as are
customarily maintained by similar businesses.
(o) Further Assurances. The Company agrees to do all acts and
things, as may be required by law or as, in the reasonable judgement
of the Administrative Agent, may be necessary or advisable to carry
out the intent and purpose of this Agreement.
(p) Year 2000. Take all necessary action to complete in all material
respects by December 31, 1999, the reprogramming of computer software,
hardware and firmware systems and equipment containing embedded
microchips owned or operated by or for the Company and its
Subsidiaries or used or relied upon in the conduct of their business
(including systems and equipment supplied by others or with which such
systems of the Company or any of its Subsidiaries interface) required
as a result of the Year 2000 Issue to permit the proper functioning of
such computer systems and other equipment and the testing of such
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systems and equipment, as so reprogrammed. At the request of the
Administrative Agent, the Company shall provide, and shall cause each
of its Subsidiaries to provide, to the Administrative Agent, such
information as may reasonably be requested relating to its compliance
with the preceding sentence.
Section 7.02 Negative Covenants.
-------------------
Until the Termination Date, and thereafter until payment in full of
the Notes and performance of all other obligations of the Company
hereunder (other than Unmatured Surviving Obligations), the Company
will not:
(a) Indebtedness. Create, incur or assume any Indebtedness, except
(i) Indebtedness to the Administrative Agent and the Banks hereunder
and under the Notes, (ii) Indebtedness incurred to pay dividends
enabling the Company to maintain its status as a REIT, (iii)
Indebtedness incurred to purchase Interest Rate Protection Agreements
and (iv) Indebtedness that would otherwise be permitted under the
Credit Documents, provided that, in each of the aforementioned cases,
(A) such Indebtedness is unsecured, (B) the maturity of such
Indebtedness (including all scheduled payments of principal) is later
than the Termination Date (C) such Indebtedness ranks pari passu or
subordinate to the Notes and (D) after giving effect to the incurrence
of such Indebtedness, the Company's and its Subsidiaries interest
coverage ratio on a consolidated basis referred to in Section 7.03(c)
herein for the most recent four-quarter period ending on the ending
date of the Company's last fiscal quarter would have been greater than
2.00:1.00; provided, that the limitations contained in the foregoing
clauses (A) and (B) shall not apply to Indebtedness having an
aggregate principal amount at any time less than 5% of Consolidated
Total Assets. The Company shall not permit any Subsidiary to create,
incur, assume or suffer to exist any Indebtedness except Indebtedness
which does not exceed, at any time, 5.0% of Consolidated Total Assets
("Permitted Subsidiary Indebtedness"), provided that if such Permitted
Subsidiary Indebtedness is secured, (x) the principal amount thereof
shall be applied towards (and shall accordingly limit) the amount of
secured Indebtedness which the Company is permitted to incur pursuant
to the first sentence of this Section 7.02(a), and (y) such secured
Indebtedness shall in addition be permitted by Section 7.02(b).
(b) Mortgages and Pledges. Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Lien of any kind upon or in any of its property or
assets, whether now owned or hereafter acquired, except that this
Section 7.02(b) shall not apply (i) to Permitted Encumbrances and (ii)
to other Liens securing Indebtedness permitted by Section 7.02(a), if
immediately after giving effect to the incurrence of such Indebtedness
and the application of the proceeds therefrom on a pro forma basis,
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the aggregate principal amount of all such Indebtedness of the Company
and its Subsidiaries on a consolidated basis determined in accordance
with GAAP is not greater than 5% of Consolidated Total Assets.
(c) Merger, Acquisition or Sales of Assets. (i) Acquire, or permit
any of its Subsidiaries to acquire, all or any substantial portion of
the assets of any Person other than (a) the acquisition of property in
the ordinary course of the Company's business; or (b) the acquisition
of the equity interests of an entity for the purpose of controlling
the property of that entity in the ordinary course of the Company's
business, provided that the aggregate purchase price paid by the
Company in all transactions under this clause (b) and clause (ii)(b)
below shall not exceed 10% of Consolidated Total Assets as of June 30,
1999; (ii) enter into any merger or consolidation, or permit any
Subsidiary to do so, other than (a) a merger or consolidation of a
Wholly Owned Subsidiary with one or more other Wholly Owned
Subsidiaries or into the Company, (b) a merger or consolidation of a
Subsidiary or the Company with an entity for the purpose of
controlling the property of that entity in the ordinary course of the
Company's business, provided that the aggregate purchase price paid by
the Company in all transactions under this clause (b) and clause
(i)(b) above shall not exceed 10% of Consolidated Total Assets as of
June 30, 1999, or (c) a merger of the Company into another corporation
primarily for the purpose of changing the jurisdiction of
incorporation of the Company, provided that the surviving entity shall
assume all obligations of the Company hereunder; or (iii) sell, lease
or otherwise dispose of any assets of the Company or any of the
Subsidiaries other than in the ordinary course of the Company's
business for the fair market value thereof.
(d) Negative Pledge. Grant any Person a negative pledge on any
assets of the Company or of the Subsidiaries, except as may be
provided in (i) any Permitted Subsidiary Indebtedness and (ii)
Indebtedness permitted by Section 7.02(a) having an aggregate
principal amount not exceeding $25,000,000.
(e) Loans and Investments. Purchase or acquire the obligations or
stock of, or any other interest in, or make loans, advances or capital
contributions to, or form any joint ventures or partnerships with, any
Person, or permit any Subsidiary so to do, except (i) investments in
real estate which satisfy each of the Real Estate Investment Criteria,
as determined by the Board of Directors from time to time, (ii)
securities issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of
America is pledged in support thereof) having maturites of not more
than twelve months from the date of acquisition, (iii) U.S. dollar
denominated time deposits, certificates of deposit and bankers'
acceptances of (x) any Bank, (y) any domestic commercial bank of
recognized standing having capital and surplus in excess of
$500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's
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Corporation, a division of the McGraw Hill Companies, Inc., ("S&P") is
at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof
(any such bank, an "Approved Bank"), in each case with maturities of
not more than twelve months from the date of acquisition, (iv)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (ii) above
entered into with any bank meeting the qualifications specified in
clause (iii) above, (v) commercial paper issued by any Bank or
Approved Bank or by the parent company of any Bank or Approved Bank
and commercial paper issued by, or guaranteed by, any industrial or
financial company or by any agency of the Federal Government with a
short-term commercial paper rating of at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's
(any such company, an "Approved Company"), or guaranteed by any
industrial company with a long-term unsecured debt rating of at least
A or A2, or the equivalent of each thereof, from S&P or Moody's, as
the case may be, and in each case maturing within twelve months after
the date of acquisition, (vi) investments in money market funds
substantially all of whose assets are comprised of securities of the
type described in clauses (ii) through (v) above, (vii) capital
contributions to a Subsidiary by the Company or a Subsidiary of the
purchase price for acquisitions by such Subsidiary of properties that
the Company would be allowed to acquire directly under this Agreement,
provided that a Subsidiary Guaranty of the Company's payment
obligations under this Agreement, in the form attached hereto as
Exhibit I, shall remain in full force and effect; (viii) capital
contributions after taking account of any distributions to the
Company, including intercompany loans and advances, to any Subsidiary
that has not provided a Subsidiary Guaranty, provided that such
capital contributions shall not exceed $50,000,000 at any time and
(ix) shares of the Company's common stock; provided, that the Company
shall not spend more than $25,000,000 in the aggregate during the term
of this Agreement in acquiring such shares.
(f) Real Estate Development. Purchase or acquire, or agree (pursuant
to a binding agreement) to purchase or acquire, the obligations or
stock of, or any other interest in, or make loans, advances or capital
contributions to, or form any joint ventures or partnerships with, or
make any other expenditures with respect to, any Real Estate
Development Project, if, in the aggregate, the total project costs
required to be made in connection with all such purchases,
acquisitions, loans, advances, capital contributions or expenditures
would be greater than $100,000,000, at any one time, or permit any
Subsidiary so to do.
(g) Dividends and Purchase of Stock. Declare any dividends (other
than dividends payable in capital stock of the Company) on any shares
of any class of its capital stock, or apply any of its property or
assets to the purchase, redemption or other retirement of, or set
apart any sum for the payment of any dividends on, or for the
purchase, redemption or other retirement of, or make any other
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distribution by reduction of capital or otherwise in respect of, any
shares of any class of capital stock of the Company, or permit any
Subsidiary which is not a Wholly Owned Subsidiary so to do, or permit
any Subsidiary to purchase or acquire any shares of any class of
capital stock of the Company; provided, however, that so long as an
Event of Default pursuant to Section 8.01(a) has not occurred and is
not continuing, the Company may, and may permit its Subsidiaries to,
pay dividends and other distributions with respect to capital stock,
except that this Section 7.02(g) shall not apply to the Company's
expenditure of up to $25,000,000 in the aggregate during the term of
this Agreement for the purchases of its own common stock.
(h) Stock of Subsidiaries. Issue, sell or otherwise dispose of any
shares of capital stock of any Subsidiary (except in connection with
(A) a merger or consolidation of a Wholly Owned Subsidiary permitted
by Section 7.02(c) or with the dissolution of any Subsidiary
(provided, that such dissolution shall not be for the purpose of
avoiding the provisions of this Section 7.02(h)), (B) investments in
Subsidiaries permitted by Section 7.02(e), or (C) the issuance and
sale to Persons other than the Company of an amount not greater than
10% of the outstanding shares of such capital stock in connection with
the formation and capitalization of the Subsidiary described in
Section 7.02(e)(viii), or permit any Subsidiary to issue any
additional shares of its capital stock except to its existing
stockholders.
(i) Terms of Indebtedness. Unless otherwise expressly permitted by
this Agreement, amend or modify, or permit to be amended or modified
the terms of any Company or Subsidiary Indebtedness for borrowed money
or any documents relating thereto in a manner which would (i) increase
the principal amount of such Indebtedness, (ii) increase the interest
borne by such Indebtedness, (iii) shorten the maturity of such
Indebtedness or (iv) elevate, in relation to the Loans and Swing Line
Advances, the ranking in terms of payment of such Indebtedness,
without prior written consent of the Administrative Agent.
(j) Certain Amendments. Amend or modify (i) the Company's
certificate of incorporation, (ii) the Real Estate Investment Criteria
to a material degree or (iii) without the approval of the independent
members of the Company's board of directors, any tax sharing,
management or other similar agreement between or among the Company and
any of its Subsidiaries.
(k) Transactions with Affiliates. Enter into any transactions,
including without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate, or
permit any Subsidiary so to do, except in the ordinary course of and
pursuant to the reasonable requirements of its business and upon the
approval of a majority of the disinterested members of the board of
directors or a committee of such disinterested members.
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(l) Mortgage Financings. Enter into any mortgage financings, as a
borrower thereunder, except that this Section 7.02(l) shall not apply
to mortgage financings involving a Lien on any real estate assets of
the Company or a Subsidiary to the extent permitted by Section
7.02(b).
(m) Significant Properties. Without the prior written consent of the
Required Banks (which consent shall not be unreasonably withheld, and
which consent the Banks and the Administrative Agent shall use their
best efforts to grant or deny within 10 Business Days of receipt by
the Administrative Agent of the Company's written request therefor,
provided that the failure to grant, deny or explain the inability to
make a determination about such consent for 20 Business Days after the
Administrative Agent's receipt of the Company's request shall be
deemed to constitute a grant of such consent), purchase or acquire an
interest in (i) multi-tenant office buildings, (ii) hotels, motels,
bowling alleys or mobile home parks or (iii) any individual lot of
property the price of which exceeds $25,000,000 or two contiguous lots
occupied by more than one tenant, the price of which exceeds
$50,000,000.
(n) Industry and Tenant Concentration. (i) Permit, at any time, its
tenants conducting business in any one industry (determined by the SIC
Code) to comprise more than 25% of total Consolidated Annualized Base
Rent (measured on a quarterly basis and detailed on the compliance
certificate issued in accordance with Section 6.02(c)), provided that
in the case of the child care industry, the Company shall not permit,
at any time, its tenants conducting business in the child care
industry to comprise more than 30% of total Consolidated Annualized
Base Rent (measured at the end of each fiscal quarter and detailed on
the compliance certificate issued in accordance with Section 6.02(c))
or (ii) permit, at any time, any one of its tenants to comprise more
than 15% of total Consolidated Annualized Base Rent (measured at the
end of each fiscal quarter and detailed on the compliance certificate
issued in accordance with Section 6.02(c)), provided that in the case
of Children's World Learning Centers, the Company shall not permit, at
any time, Children's World Learning Centers to comprise more than 20%
of total Consolidated Annualized Base Rent (measured at the end of
each fiscal quarter and detailed on the compliance certificate issued
in accordance with Section 6.02(c)).
Section 7.03 Financial Covenants.
--------------------
Until the Termination Date, and thereafter until payment in full of
the Notes and performance of all other obligations of the Company
hereunder (other than Unmatured Surviving Obligations),
(a) Tangible Stockholders' Equity. The Company will maintain
Consolidated Tangible Stockholders' Equity of not less than the sum of
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(i) $400,000,000 plus (ii) 75% of the sum of the net proceeds received
by the Company after December 31, 1999 from any offering of its equity
securities.
(b) Leverage Ratio. The Company will maintain, as measured at the
end of each fiscal quarter, a Leverage Ratio of not more than
1.00:1.00.
(c) Interest Coverage Ratio. The Company will not permit the ratio
of (i) the sum of Consolidated Funds from Operations and Consolidated
Interest Expense to (ii) Consolidated Interest Expense for the four
quarter period ending on the last day of each fiscal quarter to be
less than 2.00:1.00.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01 Events of Default.
------------------
If one or more of the following events (each, an "Event of Default")
shall occur:
(a) Default shall be made in the payment of any installment of
principal of any Loan or Swing Line Advance when due and payable,
whether at maturity, by notice of intention to prepay or otherwise; or
default shall be made in the payment of any installment of interest
upon any Loan or Swing Line Advance when due and payable, and such
default shall have continued for five days; or
(b) Default shall be made in the payment of the Facility Fee or any
other fee or amount payable hereunder when due and payable and such
default shall have continued for five days; or
(c) Default shall be made in the due observance or performance of any
term, covenant, or agreement contained in Section 7.01(j) or in
Section 7.03; or
(d) Default shall be made in the due observance or performance of any
other term, covenant or agreement contained in this Agreement, and
such default shall have continued unremedied for a period of 30 days
after any officer of the Company becomes aware, or should have become
aware, of such default; or
(e) Any representation or warranty made or deemed made by the Company
herein or any statement or representation made in any certificate or
report delivered by or on behalf of the Company in connection herewith
or in connection with any Note shall prove to have been false or
misleading in any material respect when made; or
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(f) Any obligation (other than its obligation hereunder) of the
Company or any of its Subsidiaries for the payment of Indebtedness in
excess of $1,000,000 is not paid when due or within any grace period
for the payment therefor or becomes or is declared to be due and
payable prior to the expressed maturity thereof, or there shall have
occurred an event which, with the giving of notice or lapse of time,
or both, would cause any such obligation to become, or allow any such
obligation to be declared to be, due and payable; or
(g) An involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any applicable Federal or State bankruptcy, insolvency, reorganization
or similar law now or hereafter in effect or seeking the appointment
of a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed, or an order or decree approving or ordering any of the
foregoing shall be entered and continued unstayed and in effect, in
any such event, for a period of 60 days; or
(h) The commencement by the Company or any of its Subsidiaries of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by any of them to the entry of a decree or order for
relief in respect of the Company or any of its Subsidiaries in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against any of them, or the filing by any of them of a petition or
answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by any of them to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Company or any of its Subsidiaries or any
substantial part of their respective property, or the making by any of
them of an assignment for the benefit of creditors, or the admission
by any of them in writing of inability to pay their debts generally as
they become due, or the taking of corporate action by the Company or
any of its Subsidiaries in furtherance of any such action; or
(i) One or more judgments against the Company or any of its
Subsidiaries or attachments against its property, which in the
aggregate exceed $1,000,000, or the operation or result of which could
be to interfere materially and adversely with the conduct of the
business of the Company or any of its Subsidiaries, remain unpaid,
unstayed on appeal, undischarged, unbonded, or undismissed for a
period of 30 days; or
(j) With respect to any Single-Employer Plan, any of the following
shall occur: (A) the provision to any affected party as such term is
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defined in Section 4001 of ERISA of a notice of intent to terminate
the Plan, the adoption of an amendment to the Plan if, after giving
effect thereto, the Plan is a plan described in Section 4021(b) of
ERISA, receipt of notice of an application by the PBGC to institute
proceedings to terminate the Plan pursuant to Section 4042 of ERISA,
or any reportable event described in Section 4043 of ERISA (other than
a reportable event for which the 30-day notice requirement has been
waived by the PBGC); in each case, if the amount of unfunded benefit
liabilities, as such term is defined in Section 4001(a)(18) of ERISA,
of the Plan as of the date such event occurs is more than $5,000,000,
(B) the Company or any ERISA Affiliate incurs liability under Sections
4062(e), 4063 or 4064 of ERISA in an amount in excess of $5,000,000,
(C) an amendment is adopted to the Plan which would require security
to be given to the Plan pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA in an amount in excess of $5,000,000, (D) the
Company or any ERISA Affiliate fails to make a payment to the Plan
which would give rise to a lien in favor of the Plan under Section
412(n) of the Code or Section 302(f) of ERISA in an amount in excess
of $5,000,000, or (E) any Person shall engage in any non-exempt
"prohibited transaction" (as defined in Section 406 or 407 of ERISA or
Section 4975 of the Code) involving any Plan, in an amount in excess
of $5,000,000; or
(k) With respect to any Plan that is a multi-employer plan within the
meaning of Section 4001(a)(3) of ERISA, any of the following shall
occur: (A) the Company or any ERISA Affiliate shall be in "default"
as defined in Section 4219(c)(5) of ERISA with respect to payments in
excess of $5,000,000 owing to such Plan as a result of the Company's
or such ERISA Affiliate's complete or partial withdrawal from such
Plan within the meaning of Sections 4203 and 4205 of ERISA,
respectively, or (B) the Company or any ERISA Affiliate shall be
delinquent in making contributions to such Plan in accordance with
Section 515 of ERISA in an amount in excess of $5,000,000.
(l) Any court or governmental or regulatory authority shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which
prohibits, enjoins or otherwise restricts in a manner that would have
a Material Adverse Effect on any of the lending transactions
contemplated under the Credit Documents; or
(m) The Company shall fail to maintain its status as a "real estate
investment trust", as such term is defined in the Code;
(n) There shall occur a Change of Control; or
(o) Thomas A. Lewis is terminated or resigns and is not replaced,
within the twelve-month period following such termination or
resignation, with a person having qualifications reasonably acceptable
to Required Lenders;
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then (i) upon the happening of any of the foregoing Events of Default,
the obligation of the Banks to make any further Loans or the
obligation of the Swing Line Bank to make any further Swing Line
Advances under this Agreement shall terminate upon declaration to that
effect delivered by the Administrative Agent or the Required Banks to
the Company and (ii) upon the happening of any of the foregoing Events
of Default which shall be continuing, the Notes and the Swing Line
Advances shall become and be immediately due and payable upon
declaration to that effect delivered by the Administrative Agent or
the Required Banks to the Company; provided that upon the happening of
any event specified in Section 8.01(g) or (h), the Notes and Swing
Line Advances shall become immediately due and payable and the
obligation of the Banks to make any further Loans and the obligation
of the Swing Line Bank and the other Banks to make any further Swing
Line Advances hereunder shall terminate without declaration or other
notice to the Company. The Company expressly waives any presentment,
demand, protest or other notice of any kind.
ARTICLE IX
THE ADMINISTRATIVE AGENT AND THE BANKS
Section 9.01 The Agency.
-----------
Each Bank appoints The Bank of New York as its Administrative Agent
hereunder and irrevocably authorizes the Administrative Agent to take
such action on its behalf and to exercise such powers hereunder as are
specifically delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental hereto,
and the Administrative Agent hereby accepts such appointment subject
to the terms hereof. The relationship between the Administrative
Agent and the Banks shall be that of agent and principal only and
nothing herein shall be construed to constitute the Administrative
Agent a trustee for any Bank nor to impose on the Administrative Agent
duties or obligations other than those expressly provided for herein.
Section 9.02 The Administrative Agent's Duties.
----------------------------------
The Administrative Agent shall promptly forward to each Bank copies,
or notify each Bank as to the contents, of all notices and other
communications received from the Company pursuant to the terms of this
Agreement and the Notes and, in the event that the Company fails to
pay when due the principal of or interest on any Loan, the
Administrative Agent shall promptly give notice thereof to the Banks.
As to any other matter not expressly provided for herein or therein,
the Administrative Agent shall have no duty to act or refrain from
acting with respect to the Company, except upon the instructions of
the Required Banks. The Administrative Agent shall not be bound by
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any waiver, amendment, supplement, or modification of this Agreement
or any Note which affects its duties hereunder and thereunder, unless
it shall have given its prior written consent thereto. The
Administrative Agent shall have no duty to ascertain or inquire as to
the performance or observance of any of the terms, conditions,
covenants or agreements binding on the Company pursuant to this
Agreement or any Note nor shall it be deemed to have knowledge of the
occurrence of any Default or Event of Default (other than a failure of
the Company to pay when due the principal or interest on any Loan),
unless it shall have received written notice from the Company or a
Bank specifying such Default or Event of Default and stating that such
notice is a "Notice of Default".
Section 9.03 Sharing of Payment and Expenses.
--------------------------------
All funds for the account of the Banks received by the Administrative
Agent in respect of payments made by the Company pursuant to, or from
any Person on account of, this Agreement or any Note shall be
distributed forthwith by the Administrative Agent among the Banks, in
like currency and funds as received, ratably in proportion to their
respective interests therein. In the event that any Bank shall
receive from the Company or any other source any payment of, on
account of, or for or under this Agreement or any Note (whether
received pursuant to the exercise of any right of set-off, banker's
lien, realization upon any security held for or appropriated to such
obligation or otherwise as permitted by law) other than in proportion
to its Pro Rata Share, then such Bank shall purchase from each other
Bank so much of its interest in obligations of the Company as shall be
necessary in order that each Bank shall share such payment with each
of the other Banks in proportion to each Bank's Pro Rata Share;
provided that no Bank shall purchase any interest of any Bank that
does not, to the extent that it may lawfully do so, set-off against
the balance of any deposit accounts maintained with it the obligations
due to it under this Agreement. In the event that any purchasing Bank
shall be required to return any excess payment received by it, the
purchase shall be rescinded and the purchase price restored to the
extent of such return, but without interest.
Section 9.04 The Administrative Agent's Liabilities.
---------------------------------------
Each of the Banks and the Company agrees that (i) neither the
Administrative Agent in such capacity nor any of its officers or
employees shall be liable for any action taken or omitted to be taken
by any of them hereunder except for its or their own gross negligence
or willful misconduct, (ii) neither the Administrative Agent in such
capacity nor any of its officers or employees shall be liable for any
action taken or omitted to be taken by any of them in good faith in
reliance upon the advice of counsel, independent public accountants or
other experts selected by the Administrative Agent, and (iii) the
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Administrative Agent in such capacity shall be entitled to rely upon
any notice, consent, certificate, statement or other document
(including any telegram, cable, telex, facsimile or telephone
transmission) believed by it to be genuine and correct and to have
been signed and/or sent by the proper Persons.
Section 9.05 The Administrative Agent as a Bank.
-----------------------------------
The Administrative Agent shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it
were not the Administrative Agent, and the terms "Bank" or "Banks",
unless the context otherwise indicated, include the Administrative
Agent in its individual capacity. The Administrative Agent may,
without any liability to account, maintain deposits or credit balances
for, invest in, lend money to and generally engage in any kind of
banking business with the Company or any Subsidiary or affiliate of
the Company as if it were any other Bank and without any duty to
account therefor to the other Banks.
Section 9.06 Bank Credit Decision.
---------------------
Neither the Administrative Agent nor any of its officers or employees
has any responsibility for, gives any guaranty in respect of, nor
makes any representation to the Banks as to, (i) the condition,
financial or otherwise, of the Company or any Subsidiary thereof or
the truth of any representation or warranty given or made herein or in
any other Credit Document, or in connection herewith or therewith or
(ii) the validity, execution, sufficiency, effectiveness,
construction, adequacy, enforceability or value of this Agreement or
any other Credit Document or any other document or instrument related
hereto or thereto. Except as specifically provided herein and in the
other Credit Documents to which the Administrative Agent is a party,
the Administrative Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any
credit or other information with respect to the operations, business,
property, condition or creditworthiness of the Company or any of its
Subsidiaries, whether such information comes into the Administrative
Agent's possession on or before the date hereof or at any time
thereafter. Each Bank acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Bank,
based on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will independently and
without reliance upon the Administrative Agent or any other Bank,
based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement or any Note.
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Section 9.07 Indemnification.
----------------
Each Bank agrees (which agreement shall survive payment of the Loans
and the Notes) to indemnify the Administrative Agent, to the extent
not reimbursed by the Company, ratably in accordance with its
respective Commitment, from and against any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against
the Administrative Agent in any way relating to or arising out of this
Agreement or any other Credit Document, or any action taken or omitted
to be taken by the Administrative Agent hereunder or thereunder;
provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or willful misconduct of the Administrative Agent or
any of its officers or employees. Without limiting the foregoing,
each Bank agrees to reimburse the Administrative Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including
counsel fees) incurred by the Administrative Agent in such capacity in
connection with the preparation, execution or enforcement of, or legal
advice in respect of rights or responsibilities under, this Agreement
or any Note or any amendments or supplements hereto or thereto, to the
extent that the Administrative Agent is not reimbursed for such
expenses by the Company.
Section 9.08 Successor Administrative Agent.
-------------------------------
The Administrative Agent may resign at any time by giving written
notice thereof to the Banks and the Company, and the Administrative
Agent may be removed at any time by the Required Banks by giving
written notice thereof to the Administrative Agent, the other Banks
and the Company at least ten Business Days prior to the effective date
of such removal. Upon any such resignation or removal, the Required
Banks shall have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have been so
appointed by the Required Banks and shall have accepted such
appointment within 30 days after the resigning Administrative Agent's
giving of notice of resignation, or the Required Banks' giving notice
of removal, as the case may be, the resigning Administrative Agent
may, on behalf of the Banks, appoint a successor Administrative Agent,
which shall be a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined
capital and surplus of at least $250,000,000. Any successor
Administrative Agent appointed pursuant to this Section 9.08 shall be
a Bank hereunder. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent,
such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of
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the resigned or removed Administrative Agent, and the resigned or
removed Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this
Article IX shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.
ARTICLE X
CONSENT TO JURISDICTION
Section 10.01 Consent to Jurisdiction.
------------------------
The Company hereby irrevocably submits to the non-exclusive
jurisdiction of the State and Federal courts located in The City of
New York for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and each Note. The
Company hereby irrevocably appoints CT Corporation System, with
offices on the date hereof at 111 Eighth Avenue, New York, New York
10011, as its authorized agent on whom process may be served in any
action which may be instituted against it by the Administrative Agent
or the Banks in any state or federal court in the Borough of
Manhattan, The City of New York, arising out of or relating to any
Loan or this Agreement and each Note. Service of process upon such
authorized agent and written notice of such service to the Company
shall be deemed in every respect effective service of process upon the
Company, and the Company hereby irrevocably consents to the
jurisdiction of any such court in any such action and to the laying of
venue in the Borough of Manhattan, The City of New York. The Company
hereby irrevocably waives any objection to the laying of the venue of
any such suit, action or proceeding brought in the aforesaid courts
and hereby irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum. Notwithstanding the foregoing, nothing herein
shall in any way affect the right of the Administrative Agent or any
Bank to bring any action arising out of or relating to the Loans or
this Agreement and each Note in any competent court elsewhere having
jurisdiction over the Company or its property.
ARTICLE XI
MISCELLANEOUS
Section 11.01 APPLICABLE LAW.
---------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAW OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
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Section 11.02 Set-off.
--------
Each Bank is authorized to set off and apply any and all deposits at
any time held by such Bank against obligations of the Company under
the Credit Documents.
Section 11.03 Expenses.
---------
The Company agrees to pay (i) all reasonable out-of-pocket expenses of
the Administrative Agent (including, without limitation, all
reasonable fees and expenses of Winthrop, Stimson, Putnam & Roberts,
as counsel to the Administrative Agent) in connection with the
preparation of this Agreement and the other Credit Documents and any
amendments, supplements or modifications hereto or thereto, (ii) all
reasonable out-of-pocket expenses incurred by the Administrative
Agent, the Swing Line Bank and any Bank, including fees and expenses
of counsel, in connection with the enforcement of, and the protection
of their rights under, any provisions of this Agreement, the Notes or
any amendment or supplement hereto or thereto, whether or not any loan
is made hereunder, and (iii) all reasonable out-of-pocket expenses of
the Administrative Agent, including reasonable fees and disbursements
of counsel, in connection with the syndication of the Loans. The
Company shall pay any transfer taxes, documentary taxes, assessments
or charges made by any Governmental Authority by reason of the
execution and delivery of this Agreement or the Notes incurred up to
and including the date of this Agreement.
Section 11.04 Amendments.
-----------
Any provision of this Agreement or the Notes may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed
by (A) in the case of amendments or waivers relating to Section
7.03(a), (b) or (c), Banks having at least 66 2/3% of the Total
Commitment or, if the Total Commitment has been cancelled or
terminated, holding Notes evidencing at least 66 2/3% of the aggregate
unpaid principal amount of the Loans and (B) in all other cases, the
Company and the Required Banks (and, if the rights or duties of the
Administrative Agent or the Swing Line Bank are affected thereby, by
the Administrative Agent and the Swing Line Bank, respectively);
provided that no such amendment, waiver or modification shall, unless
signed by all the Banks, (i) increase or decrease the Commitment of
any Bank, subject any Bank to any additional obligation or change the
several nature of the obligations of each Bank, (ii) reduce the
principal of or rate of interest on any Loan (other than interest
payable pursuant to Section 3.06) or any fees hereunder, (iii) except
as otherwise provided in Section 11.12, postpone the date fixed for
any payment of principal of or interest on any Loan or any fees
hereunder or for any reduction or termination of any Commitment, (iv)
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except as otherwise may result from actions taken in accordance with
Section 11.12, change the percentage of any of the Commitments or of
the aggregate unpaid principal amount of the Notes or Swing Line
Advances, or the number of Banks, which shall be required for the
Banks or any of them to take any action under this Section or any
other provision of this Agreement, or (v) amend or waive the
provisions of Article IV or of this Section 11.04.
Section 11.05 Cumulative Rights and No Waiver.
--------------------------------
Each and every right granted to the Administrative Agent, the Swing
Line Bank and the Banks hereunder or under any other document
delivered hereunder or in connection herewith, or allowed them by law
or equity, shall be cumulative and may be exercised from time to time.
No failure on the part of the Administrative Agent, the Swing Line
Bank or any Bank to exercise, and no delay in exercising, any right
will operate as a waiver thereof, nor will any single or partial
exercise by the Administrative Agent, the Swing Line Bank or any Bank
of any right preclude any other or future exercise thereof or the
exercise of any other right.
Section 11.06 Notices.
--------
Any communication, demand or notice to be given hereunder or with
respect to the Notes will be duly given when delivered in writing or
by telecopy to a party at its address as indicated below, except that
notices from the Company pursuant to Section 2.02 will not be
effective until received by the Administrative Agent.
A communication, demand or notice given pursuant to this Section 11.06
shall be addressed:
If to the Company, at
220 West Crest Street
Escondido, California 92025-1707
Telecopy: (760) 741-8674
Attention: Legal Department
If to the Administrative Agent or the Swing Line Bank, at its address
as indicated on the signature pages hereof, with a copy to:
BNY Capital Markets, Inc.
One Wall Street
New York, New York 10286
Telecopy: (212) 635-6365
Attention: Agency Function Administration
Kalyani Bose
If to any Bank, at its address as indicated on the signature pages
hereof.
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Unless otherwise provided to the contrary herein, any notice which is
required to be given in writing pursuant to the terms of this
Agreement may be given by telex, telecopy or facsimile transmission.
Section 11.07 Separability.
-------------
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect under any
law, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired thereby.
Section 11.08 Assignments and Participations.
-------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
the Company, the Swing Line Bank and the Banks and their respective
successors and assigns, except that the Company may not assign any of
its rights hereunder without the prior written consent of the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant
by a Bank of a participating interest to a Participant, whether or not
upon notice to the Company and the Administrative Agent, such Bank
shall remain responsible for the performance of its obligations
hereunder, and the Company and the Administrative Agent shall continue
to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement
pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and
responsibility to enforce the obligations of the Company hereunder
including the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in
clauses (i) through (v), inclusive, of Section 11.04 without the
consent of the Participant. Subject to Section 11.08(e), the Company
agrees that each Participant shall be entitled to the benefits of
Sections 4.03, 4.04 and 11.04 with respect to its participating
interest. An assignment or other transfer which is not permitted by
clause (c) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance
with this clause (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or (except insofar as such
assignment relates to Competitive Loans) a proportionate part of all,
of its rights and obligations under this Agreement and the Notes, and
such Assignee shall assume such rights and obligations, pursuant to an
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instrument executed by such Assignee and such transferor Bank, with
(and subject to) the signed consents of the Company and the
Administrative Agent and the Swing Line Bank (which consents shall not
be unreasonably withheld or delayed); provided, however, any such
assignment shall be in the minimum aggregate amount of $10,000,000;
provided, further, that the foregoing consent requirement shall not be
applicable in the case of, and this subsection (c) shall not restrict,
an assignment of all, or (except insofar as such assignment relates to
Competitive Loans) a proportionate part of all, of its rights and
obligations under this Agreement and the Notes by any Bank to an
Affiliate of such Bank or a pledge and assignment of all, or (except
insofar as such assignment relates to Competitive Loans) a
proportionate part of all, of its rights and obligations under this
Agreement and the Notes to a Federal Reserve Bank as collateral; and
provided, further, that no consent of the Company shall be required if
an Event of Default has occurred and is continuing. Upon (i)
execution and delivery of such an instrument, (ii) payment by such
Assignee to such transferor Bank of an amount equal to the purchase
price agreed between such transferor Bank and such Assignee and (iii)
payment by the transferee Bank or transferor Bank to the
Administrative Agent of an administrative fee in the amount of $3,500
(except that no such fee shall be payable in connection with a
transfer or pledge to an Affiliate of a Bank or to a Federal Reserve
Bank referred to in the proviso above), such Assignee shall be a Bank
party to this Agreement and shall have all the rights and obligations
of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank (and the Company as to the
transferor Bank) shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party
shall be required. Upon the consummation of any assignment pursuant
to this subsection (c), the transferor Bank, the Administrative Agent
and the Company shall make appropriate arrangements so that, if
required, new Notes are issued to the Assignee.
(d) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 4.03 or
4.04 than such Bank would have been entitled to receive with respect
to the rights transferred, unless such transfer is made (i) with the
Company's prior written consent, (ii) in the circumstances referred to
in the third proviso to the first sentence of the preceding paragraph
(c) or (iii) by reason of the provisions of Section 4.04 requiring
such Bank to designate a different lending office under certain
circumstances or at a time when the circumstances giving rise to such
payment did not exist.
(e) No Participant of any Bank shall be entitled to receive any
greater payment under Section 4.03, Section 4.04 or Section 11.04 than
such Bank would have been entitled to receive if it had not granted a
participation to such Participant.
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Section 11.09 WAIVER OF JURY TRIAL.
---------------------
THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH OF THE BANKS HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY CLAIM
(WHETHER SOUNDING IN CONTRACT, TORT, APPLICABLE LAW OR OTHERWISE)
ARISING OUT OF OR IN ANY WAY RELATING TO (AND WHENEVER ARISING) THIS
AGREEMENT, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 11.10 Confidentiality.
----------------
Except as may be required to enforce the rights and duties established
hereunder, the parties hereto shall preserve in a confidential manner
all information received from the other pursuant to this Agreement,
the Notes and the transactions contemplated hereunder and thereunder,
and shall not disclose such information except to those persons with
which a confidential relationship is maintained (including regulators,
legal counsel, accountants, or designated agents), or where required
by law. Nothing in this paragraph shall prevent the filing of this
Agreement with the Securities and Exchange Commission.
Section 11.11 Indemnity.
----------
The Company agrees to indemnify the Administrative Agent, the
Arranger, the Swing Line Bank and each of the Banks and their
respective directors, officers, employees and agents (each such person
being called an "Indemnitee") against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages and liabilities of
any party other than the Company and related expenses, including
reasonable counsel fees and expenses incurred by or asserted against
any Indemnitee arising out of, in any way connected with, or as a
result of (i) the execution or delivery of this Agreement or any Note
or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto or thereto of their respective
obligations hereunder or thereunder or the consummation of the
transactions and the other transactions contemplated hereby or
thereby, (ii) the use of the proceeds of the Loans or (iii) any claim,
litigation, investigation or proceeding relating to any of the
foregoing, whether or not any Indemnitee is a party thereto and
notwithstanding that any claim, proceeding, investigation or
litigation relating to any such losses, claims, damages, liabilities
or expenses is or was brought by a stockholder, creditor, employee or
officer of the Company; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of any
Indemnitee or from the breach by any Indemnitee of its obligations
hereunder or with respect to claims or actions solely between or among
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the Banks relating to this Agreement or the transactions contemplated
hereby and provided further, that such Indemnity shall not apply to
any loss, claim, damage, or liability or related expense incurred as a
consequence of any additional costs (as contemplated by Section
4.04(b)) or any Tax, which shall be governed by the provisions of
Section 4.04(b) and (a), respectively.
The provisions of this Section 11.11 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the reduction or cancellation of
the Commitment, the invalidity or unenforceability of any term or
provision of this Agreement or any Note, or any investigation made by
or on behalf of the Banks. All amounts due under this Section 11.11
shall be payable in immediately available funds upon written demand
therefor.
Section 11.12 Extension of Termination Dates; Removal of Banks;
Substitutions of Banks.
-------------------------------------------------
(a) (i) No earlier than the first anniversary of the Effective
Date and no later than 120 days prior to the scheduled
Termination Date, the Company may, at its option, request
all the Banks then party to this Agreement to extend their
scheduled Termination Dates by one calendar year by means
of a letter, addressed to each such Bank and the
Administrative Agent. If such a request is accepted and
the Termination Date is extended pursuant to subsection
11.12(a)(ii), the Company may, at its option, no earlier
than the date one year after the first request for
extension and no later than 120 days prior to the
rescheduled Termination Date, make one further request
that all the Banks then party to this Agreement to extend
their scheduled Termination Dates by one additional year
in the same manner, subject to the provisions of
subsection 11.12(a)(ii); provided that in no event shall
the Termination Date be extended to a date which is later
than the fifth anniversary of the Effective Date.
(ii) Each Bank electing (in its sole discretion) so to extend
its scheduled Termination Date shall execute and deliver
within forty-five (45) days following such request
counterparts of such letter to the Company and the
Administrative Agent, whereupon (unless Banks with an
aggregate percentage of the Total Commitment in excess of
33 1/3% decline to extend their respective scheduled
Termination Dates, in which event the Administrative Agent
shall notify all the Banks thereof), such Bank's scheduled
Termination Date shall be extended to the anniversary date
of the year immediately succeeding such Bank's then-
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current scheduled Termination Date. If no such election
is received within such forty-five day period from any
Bank, such Bank shall be deemed to have elected not to
extend its scheduled Termination Date.
(b) With respect to any Bank which has declined to extend such Bank's
scheduled Termination Date and if Banks with an aggregate percentage
of the Total Commitment in excess of 33 1/3% have not declined to
extend their respective Termination Dates, the Company may in its
discretion, upon not less than 30 days' prior written notice to the
Administrative Agent and each Bank, remove such Bank as a party
hereto. Each such notice shall specify the date of such removal
(which shall be a Business Day), which shall thereupon become the
scheduled Termination Date for such Bank.
(c) In the event that any Bank does not extend its scheduled
Termination Date pursuant to subsection (a) above or is the subject of
a notice of removal pursuant to subsection (b) above, then, at any
time prior to the Termination Date for such Bank (a "Terminating
Bank"), the Company may, at its option, arrange to have one or more
other financial institutions acceptable to the Administrative Agent
(which may be a Bank or Banks and each of which shall herein be called
a "Successor Bank") succeed to all or a percentage of the Terminating
Bank's outstanding Loans, if any, and rights under this Agreement and
assume all or a like percentage (as the case may be) of such
Terminating Bank's Commitment and other obligations hereunder, as if
(i) in the case of any Bank electing not to extend its scheduled
Termination Date pursuant to subsection (a) above, such Successor Bank
had extended its scheduled Termination Date pursuant to such
subsection (a) and (ii) in the case of any Bank that is the subject of
a notice of removal pursuant to subsection (b) above, no such notice
of removal had been given by the Company. Such succession and
assumption shall be effected by means of one or more agreements
supplemental to this Agreement among the Terminating Bank, the
Successor Bank, the Company and the Administrative Agent. On and as
of the effective date of each such supplemental agreement, each
Successor Bank party thereto shall be and become a Bank for all
purposes of this Agreement and to the same extent as any other Bank
hereunder and shall be bound by and entitled to the benefits of this
Agreement in the same manner as any other Bank.
(d) On the originally scheduled Termination Date for any Terminating
Bank, such Terminating Bank's Commitment shall terminate and, except
to the extent assigned pursuant to subsection (c) above, the Company
shall pay in full all of such Terminating Bank's Loans and all other
amounts payable to such Bank hereunder, including any amounts payable
pursuant to Section 4.03 on account of such payment.
(e) To the extent that all or a portion of any Terminating Bank's
obligations are not assumed pursuant to subsection (c) above, the
Total Commitment shall be reduced on the applicable Termination Date
and each Bank's percentage of the reduced Total Commitment shall be
revised pro rata to reflect such Terminating Bank's absence.
Page 80
<PAGE>
Section 11.13 Knowledge of the Company.
-------------------------
As used in this Agreement, knowledge of the Company shall mean to the
best of any executive officer's knowledge, after a reasonable
investigation.
Section 11.14 Execution in Counterparts.
--------------------------
This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
REALTY INCOME CORPORATION
By:
--------------------------------
Name: Michael R. Pfeiffer
Title: Senior Vice President,
General Counsel
THE BANK OF NEW YORK,
as Administrative Agent for the Banks
By:
--------------------------------
Name: Elizabeth Ying
Title: Vice President
Address for Notices:
One Wall Street
18th Floor
New York, NY 10286
Attn: Kalyani Bose
Agency Function Administration
Fax: (212) 635-6365
With a copy to:
The Bank of New York
10990 Wilshire Boulevard
Suite 1125
Los Angeles, CA 90024
Attn: Elizabeth Ying
Vice President
Fax: (310) 996-8667
Page 81
THE BANK OF NEW YORK,
as a Bank and as the Swing Line Bank
By:
--------------------------------
Name: Elizabeth Ying
Title: Vice President
Address for Notices:
One Wall Street
18th Floor
New York, NY 10286
Attn: Kalyani Bose
Agency Function Administration
Fax: (212) 635-6365
With a copy to:
The Bank of New York
10990 Wilshire Boulevard
Suite 1125
Los Angeles, CA 90024
Attn: Elizabeth Ying
Vice President
Fax: (310) 996-8667
Eurodollar Lending Office:
One Wall Street
18th Floor
New York, NY 10286
Attn: Kalyani Bose
Agency Function Administration
Fax: (212) 635-6365
Page 82
FIRST UNION NATIONAL BANK
By:
--------------------------------
Name:
Title:
Address for Notices:
First Union Capital Markets
One First Union Center
Charlotte, NC 28288
Attn: Joy Auten
Fax: (704) 383-7989
Eurodollar Lending Office:
First Union Capital Markets
One First Union Center
Charlotte, NC 28288
Attn: Joy Auten
Fax: (704) 383-7989
Page 83
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By:
--------------------------------
Name:
Title:
Address for Notices:
Disbursement Administrator
Disbursement & Operations Center
2120 East Park Place #100
El Secundo, CA 90245
Attn: Carla Tittle
Fax: (310) 615-1014
Eurodollar Lending Office:
Disbursement Administrator
Disbursement & Operations Center
2120 East Park Place #100
El Secundo, CA 90245
Attn: Carla Tittle
Fax: (310) 615-1014
Page 84
BANK OF MONTREAL
By:
--------------------------------
Name:
Title:
Address for Notices:
Client Services
115 South LaSalle St., 12 West
Chicago, IL 60603
Attn: Josie Nichols
Fax: (312) 750-6061
Eurodollar Lending Office:
115 South LaSalle St., 12 West
Chicago, IL 60603
Attn: Josie Nichols
Fax: (312) 750-6061
Page 85
AMSOUTH BANK
By:
--------------------------------
Name:
Title:
Address for Notices:
Commercial Real Estate
1900 5th Avenue North
Birmingham, AL 35203
Attn: Crystal Cassels
Fax: (205) 326-4075
Eurodollar Lending Office:
1900 5th Avenue North
Birmingham, AL 35203
Attn: Crystal Cassels
Fax: (205) 326-4075
Page 86
SANWA BANK CALIFORNIA, as a Bank
By:
--------------------------------
Name:
Title:
Address for Notices:
Sanwa Bank California
601 South Figueroa St.,
8th Floor
Los Angeles, CA 90017
Attn: Yolanda Banuelos
Fax : (213) 896-7090
Eurodollar Lending Office:
Sanwa Bank California
601 South Figueroa St.,
8th Floor
Los Angeles, CA 90017
Attn: Yolanda Banuelos
Fax: (213) 896-7090
Page 87
CITIZENS BANK OF RHODE ISLAND
By:
--------------------------------
Name:
Title:
Address for Notices:
One Citizens Plaza, CC-4
Providence, RI 02903-1339
Attn: Benita Petres
Syndication
Administration Manger
Fax: (401) 282-4485
Eurodollar Lending Office:
One Citizens Plaza, CC-4
Providence, RI 02903-1339
Attn: Craig Schermerhorn
Vice President
Fax: (401) 282-4485
Page 88
Schedule 1
COMMITMENTS
BANK COMMITMENT
- ---- ----------
The Bank of New York (Administrative Agent) $40,000,000
First Union National Bank (Syndication Agent) $35,000,000
Wells Fargo Bank, N.A. (Documentation Agent) $35,000,000
Bank of Montreal (Co-Agent) $25,000,000
AmSouth Bank $22,500,000
Sanwa Bank California $22,500,000
Citizens Bank of Rhode Island $20,000,000
-----------
Total - All Banks $200,000,000
Page 89
<PAGE>
EXHIBIT A
FORM OF CONVERSION/CONTINUANCE REQUEST
--------------------------------------
[Dated as provided
in Section 3.05]
The Bank of New York
One Wall Street, 18th Floor
New York, New York 10286
Attn: Kalyani Bose
Realty Income Corporation (the "Company") hereby gives notice of its
intention to [convert/continue] [$ Principal Amount] [the
entire outstanding amount] of its [ABR Loans] [Eurodollar Pro Rata
Loans] with an Interest Period of days and ending on
, ] [to/as] [ABR Loans] [Eurodollar Pro Rata Loans],
pursuant to the Revolving Credit Agreement, dated as of December ,
1999, among the Company, the Banks and The Bank of New York, as
Administrative Agent and as Swing Line Bank (as amended, supplemented
or otherwise modified from time to time, the "Agreement"), such
[conversion/continuance to be effective as of , ].
[The Interest Period for the Eurodollar Pro Rata Loans shall be
days, with a Scheduled Maturity on .]
Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings specified in the Agreement.
REALTY INCOME CORPORATION
By:
-------------------------------
Name:
Title:
Page 90
<PAGE>
EXHIBIT B
FORM OF PRO RATA LOAN REQUEST
-----------------------------
[Dated as provided
in Section 2.02]
The Bank of New York
One Wall Street, 18th Floor
New York, New York 10286
Attn: Kalyani Bose
Realty Income Corporation (the "Company") hereby gives notice of its
intention to borrow $ of Loans on , pursuant
to the Revolving Credit Agreement, dated as of December , 1999,
among the Company, the Banks and The Bank of New York, as
Administrative Agent and as Swing Line Bank (as amended, supplemented
or otherwise modified from time to time, the "Agreement"). [The
Company hereby requests that such Loan constitute a Eurodollar Pro
Rata Loans with a scheduled maturity of 20 and an Interest
Period of days.]
The Company hereby confirms that the amounts of Loans outstanding on
the date hereof is as follows:
Total Commitment............................ $200,000
Outstanding Pro Rata Loans.................. $
Outstanding Competitive Loans............... $
Availability................................ $
The Company also hereby confirms that each of the representations and
warranties (other than the representations and warranties that speak
as of a specific date) contained in Article V of the Agreement is true
and correct on the date hereof and, after giving effect to this
borrowing, will be true and correct on the proposed borrowing date as
though such representation or warranty had originally been made on
such dates. No Default or Event of Default has occurred and is
continuing, nor will any such event occur as a result of this
borrowing.
Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings specified in the Agreement.
REALTY INCOME CORPORATION
By:
-------------------------------
Name:
Title:
Page 91
<PAGE>
EXHIBIT C-1
Form of Competitive Loan Request
--------------------------------
[Date]
The Bank of New York, as Administrative Agent
One Wall Street
New York, New York 10286
Attention: Kalyani Bose
Agency Function Administration
Re: Request for Competitive Bids
----------------------------
Reference is made to the Revolving Credit Agreement, dated as of
December , 1999, (as amended, modified or supplemented from time
to time, the "Credit Agreement"), among Realty Income Corporation (the
"Company"), the banks from time to time parties thereto and The Bank
of New York, as Administrative Agent and as Swing Line Bank.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the Credit Agreement.
The Company hereby gives you notice, pursuant to Section 2.08 of the
Credit Agreement, that it requests the Lenders to make offers to make
Competitive Loans under the Credit Agreement, and in that connection
sets forth below the terms on which such Competitive Loans are
requested to be made:
(A) Borrowing Date (1)
---------------------------
(B) Principal Amount
of Competitive Loan (2)
---------------------------
(C) Maturity Date (3)
---------------------------
(D) Interest rate basis [Absolute Rate][Eurodollar]
---------------------------
(E) Interest Period, if any (4)
---------------------------
Very truly yours,
REALTY INCOME CORPORATION
By:
---------------------------
Title:
Page 92
<PAGE>
[FN]
(1) Must be a Business Day.
(2) Must be a principal amount equal to $1,000,000 or in integral
multiples of $100,000 in excess thereof.
(3) At least seven days after the Borrowing Date and not more than
(i) 180 days after the Borrowing Date, in the case of Absolute
Rate Competitive Loans, or (ii) six months after the Borrowing
Date, in the case of Eurodollar Competitive Loans.
(4) One, two, three or six months with respect to Eurodollar
Competitive Loans. Not applicable to Absolute Rate Competitive
Loans.
</FN>
Page 93
EXHIBIT C-2
Form of Notice to Banks
-----------------------
[Date]
[Name of Bank]
[Address]
Attention:
Re: Notice of a Request for Competitive Bids
----------------------------------------
Reference is made to the Revolving Credit Agreement, dated as of
December , 1999 (as amended, modified or supplemented from time to
time, the "Credit Agreement"), among Realty Income Corporation (the
"Company"), the banks from time to time parties thereto and The Bank
of New York, as Administrative Agent and as Swing Line Bank.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Company delivered to the Agent a Competitive Loan Request on ,
, pursuant to Section 2.08 of the Credit Agreement, and in that
connection you are invited to submit a Bid to make a Competitive Loan
to the Company by [TIME], on , . Your Bid must comply with
Section 2.08 of the Credit Agreement and the terms set forth below on
which the Competitive Loan Request was made:
(A) Proposed Borrowing Date
--------------------------
(B) Principal amount of Competitive Loan
--------------------------
(C) Interest rate basis [Absolute Rate][Eurodollar]
---------------------------
(E) Interest Period and the last day thereof
---------------------
Very truly yours,
THE BANK OF NEW YORK,
as Agent
By:
------------------------------
Title:
Page 94
<PAGE>
EXHIBIT C-3
Form of Competitive Bid
-----------------------
[Date]
The Bank of New York, as Agent
One Wall Street
New York, New York 10286
Attention: Kalyani Bose
Agency Function Administration
Re: Competitive Bid
---------------
Reference is made to the Revolving Credit Agreement, dated as of
December , 1999 (as amended, modified or supplemented from time to
time, the "Credit Agreement"), among Realty Income Corporation (the
"Company"), the lenders from time to time parties thereto and The Bank
of New York, as Administrative Agent and as Swing Line Bank.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
[NAME OF BANK] hereby submits a Competitive Bid to make an [Absolute
Rate] [Eurodollar] Competitive Loan pursuant to Section 2.08 of the
Credit Agreement, in response to the Borrowing Request made by the
Company on , , and in that connection sets forth below
the terms on which such Competitive Bid is made:
(A) Principal Amount (1)
--------------------------
(B) Competitive Bid
--------------------------
(C) Competitive Bid
[Rate][Margin] (2)
--------------------------
The undersigned hereby confirms that it will, subject only to the
conditions set forth in the Credit Agreement, extend credit to the
Borrower upon acceptance by the Borrower of this Competitive Bid in
accordance with Section 2.08 of the Credit Agreement.
Very truly yours,
[NAME OF BANK]
By:
--------------------------
Title:
Page 95
<PAGE>
[FN]
(1) Principal amount must be at least $1,000,000, or an integral
multiple of $100,000 in excess thereof, and not greater than the
requested Competitive Loan. Multiple bids may be accepted by the
Agent.
(2) In the case of Absolute Rate Competitive Loans, %; in the
case of Eurodollar Competitive Loans, a margin (+/- % over
LIBOR.
</FN>
Page 96
<PAGE>
EXHIBIT C-4
Form of Competitive Bid Accept/Reject Notice
--------------------------------------------
[Date]
The Bank of New York, as Agent
One Wall Street
New York, New York 10286
Attention: Kalyani Bose
Agency Function Administration
Re: Competitive Bid Acceptance/Reject Letter
----------------------------------------
Realty Income Corporation (the "Company") refers to the Revolving
Credit Agreement, dated as of December , 1999 (as amended,
modified or supplemented or extended from time to time, the "Credit
Agreement"), among the Company, the banks from time to time parties
thereto (the "Banks") and The Bank of New York, as Administrative
Agent and as Swing Line Bank.
In accordance with Section 2.08 of the Credit Agreement, we have
received a summary of bids in connection with our Competitive Loan
Request, dated , , and in accordance with Section 2.08
of the Credit Agreement, we hereby accept the following Competitive
Bids for Competitive Loans to be made on , , with a Maturity
Date of , :
Competitive
Principal Amount Rate Margin Bank
- ---------------- ----------- ----
%/+/-. %
We hereby reject the following Competitive Bids:
Competitive
Principal Amount Rate Margin Bank
- ---------------- ----------- ----
%/+/-. %
Very truly yours,
REALTY INCOME CORPORATION
By:
----------------------------
Title:
Page 97
<PAGE>
EXHIBIT D-1
FORM OF PRO RATA NOTE
---------------------
$ December , 1999
Realty Income Corporation, a Maryland corporation (the
"Company"), for value received, hereby promises to pay on the
Termination Date to the order of (the "Bank"), at the
office of The Bank of New York, as Administrative Agent, at One Wall
Street, New York, New York 10286, in lawful money of the United
States, the principal sum of $ or if less, the aggregate
unpaid principal amount of all Pro Rata Loans made by the Bank to the
Company pursuant to that certain Revolving Credit Agreement, dated as
of December , 1999 (as amended, supplemented or otherwise modified
from time to time, the "Agreement") among the Company, each of the
banks party thereto, and The Bank of New York, as Administrative Agent
and as Swing Line Bank.
This Note shall bear interest, and such interest shall be
payable, as set forth in the Agreement for ABR Loans and Eurodollar
Pro Rata Loans. Upon the occurrence and during the continuation of an
Event of Default, this Note shall bear interest at the default rate
pursuant to Section 3.06 of the Agreement.
Except as otherwise provided in the Agreement, with respect to
Eurodollar Pro Rata Loans, if interest or principal on the Loan
evidenced by this Note becomes due and payable on a day which is not a
Business Day, then the maturity thereof shall be extended to the next
succeeding Business Day, and interest shall be payable thereon at the
rate herein specified during such extension.
Page 98
This Note is one of the Pro Rata Notes referred to in the Agreement,
and is subject to prepayment in whole or in part and its maturity is
subject to acceleration upon the terms provided in the Agreement.
Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings specified in the Agreement.
Presentment, demand, protest, notice of dishonor, notice of
intent to accelerate and other notice of any kind are hereby waived by
the undersigned.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
All Pro Rata Loans made by the Bank to the Company pursuant to
the Agreement and all payments of principal hereof and interest
thereon may be indicated by the Bank upon the grid attached hereto
which is a part of this Note. Such notations shall be presumptive as
to the aggregate unpaid principal amount of and interest on all Pro
Rata Loans made by the Bank pursuant to the Agreement.
REALTY INCOME CORPORATION
By:
-------------------------------
Name:
Title:
Page 99
Loan and Payments of Principal and Interest
-------------------------------------------
<TABLE>
Name
Interest Interest of
Method Period Amount Amount Person
Amount (ABR or if Euro- of Unpaid of Making
of Euro- dollar Principal Principal Interest Nota-
Date Loan dollar Loan Paid Balance Paid tion
- ---- ------ ------ -------- --------- --------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Page 100
EXHIBIT D-2
FORM OF COMPETITIVE NOTE
------------------------
$[ ] [ DATE ]
Realty Income Corporation, a Maryland corporation (the "Company"),
for value received, hereby promises to pay on to the
order of (the "Bank"), at the office of The Bank of New
York, as Agent, at One Wall Street, New York, New York 10286, in
lawful money of the United States, the principal sum of $[ ] or
if less, the aggregate unpaid principal amount of all Competitive
Loans made by the Bank to the Company pursuant to that certain
Revolving Credit Agreement, dated as of December , 1999 (as
amended, supplemented or otherwise modified from time to time, the
"Agreement") among the Company, each of the banks party thereto, and
The Bank of New York, as Administrative Agent and as Swing Line Bank.
This Note shall bear interest, and such interest shall be payable,
as set forth in the Agreement for Absolute Rate Competitive Loans and
Eurodollar Competitive Loans. Upon the occurrence and during the
continuation of an Event of Default, this Note shall bear interest at
the default rate pursuant to Section 3.06 of the Agreement.
Except as otherwise provided in the Agreement, with respect to
Eurodollar Competitive Loans, if interest or principal on the Loan
evidenced by this Note becomes due and payable on a day which is not a
Business Day, the maturity thereof shall be extended to the next
succeeding Business Day, and interest shall be payable thereon at the
rate herein specified during such extension.
Page 101
<PAGE>
This Note is one of the Competitive Notes referred to in the
Agreement, and is subject to prepayment in whole or in part and its
maturity is subject to acceleration upon the terms provided in the
Agreement. Unless otherwise defined herein, capitalized terms used
herein shall have the respective meanings specified in the Agreement.
Presentment, demand, protest, notice of dishonor, notice of intent
to accelerate and other notice of any kind are hereby waived by the
undersigned.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
All Competitive Loans made by the Bank to the Company pursuant to
the Agreement and all payments of principal hereof and interest
thereon may be indicated by the Bank upon the grid attached hereto
which is a part of this Note. Such notations shall be presumptive as
to the aggregate unpaid principal amount of and interest on all
Competitive Loans made by the Bank pursuant to the Agreement.
REALTY INCOME CORPORATION
By:
------------------------------
Name:
Title:
Page 102
Loan and Payments of Principal and Interest
-------------------------------------------
<TABLE>
Name
Interest Interest of
Method Period Amount Amount Person
Amount (ABR or if Euro- of Unpaid of Making
of Euro- dollar Principal Principal Interest Nota-
Date Loan dollar Loan Paid Balance Paid tion
- ---- ------ ------ -------- --------- --------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Page 103
<PAGE>
EXHIBIT D-3
FORM OF SWING LINE NOTE
-----------------------
$15,000,000 [Date]
Realty Income Corporation, a Maryland corporation (the "Company"),
for value received, hereby promises to pay to the order of The Bank of
New York (the "Bank"), on the maturity date thereof, the principal
amount of each Swing Line Advance made by the Bank pursuant to that
certain Revolving Credit Agreement, dated as of December , 1999 (as
amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Company, each of the banks party
thereto, and The Bank of New York, as Administrative Agent and as
Swing Line Bank.
The Company also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until
maturity (whether by acceleration or otherwise) and, after maturity,
until paid, at the rate or rates per annum, on the date or dates and
in the manner specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States of America in immediately available funds
to the Swing Line Bank, in the manner specified in the Credit
Agreement.
This Note is the Swing Line Note referred to in the Credit
Agreement, which among other things, contains provisions for the
acceleration of the maturity hereof upon the happening of certain
events and for the amendment or waiver of certain provisions of the
Credit Agreement, all upon the terms and conditions therein specified.
Page 104
<PAGE>
Unless otherwise defined herein, capitalized terms used herein have
the respective meanings specified in the Credit Agreement.
Presentment, demand, protest, notice of dishonor, notice of intent
to accelerate and other notice of any kind are hereby waived by the
undersigned.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
The Bank is authorized to indicate upon the grid attached to this
Note all borrowings hereunder and payments of principal and interest
hereon. Such notations shall be presumptive as to the aggregate
unpaid principal amount of and interest on all Swing Line Advances
made by the Bank pursuant to the Agreement.
REALTY INCOME CORPORATION
By:
------------------------------
Name:
Title:
Page 105
<TABLE>
- ----------------------------------------------------------------------
SWING LINE ADVANCES AND PRINCIPAL PAYMENTS
- ----------------------------------------------------------------------
Amount of Amount of
Line Advances Principal
Made Repaid
Swing Line Interest Swing Line
Date Advance Maturity Rate Advance
- ---- ------------- -------- -------- ----------
<S> <C> <C> <C> <C>
(table continued next page)
Page 106
(table continued)
Amount of Unpaid
Principal Balance
Swing Line
Advance Total Notation Made by
- ----------------- ----- ----------------
<S> <C> <C>
</TABLE>
Page 107
<PAGE>
EXHIBIT E
FORM OF SWING LINE ADVANCE REQUEST
----------------------------------
[Dated as provided
in Section 2.10]
The Bank of New York
One Wall Street, 18th Floor
New York, New York 10286
Attn: Kalyani Bose
Realty Income Corporation (the "Company") hereby gives notice of its
intention to borrow $ in a Swing Line Advance on ,
pursuant to the Revolving Credit Agreement, dated as of
December , 1999, among the Company, the Banks listed on the
signature pages thereto and The Bank of New York, as Administrative
Agent and as Swing Line Bank (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement").
The Company hereby confirms that the amounts of Loans and Swing Line
Advances outstanding on the date hereof are as follows:
Total Commitment....................... $200,000,000
Outstanding Loans...................... $
Commitment Availability................ $
Swing Line Facility.................... $15,000,000
Outstanding Swing Line Advances........ $
Swing Line Availability................ $
The Company also hereby confirms that each of the representations and
warranties (other than the representations and warranties that speak
as of a specific date) contained in Article V of the Agreement is true
and correct on the date hereof and, after giving effect to this
borrowing, will be true and correct on the proposed borrowing date as
though such representation or warranty had originally been made on
such dates. No Default or Event of Default has occurred and is
continuing, nor will any such event occur as a result of this
borrowing.
Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings specified in the Agreement.
REALTY INCOME CORPORATION
By:
------------------------------
Name:
Title:
Page 108
<PAGE>
December , 1999
EXHIBIT F-I
FORM OF OPINION OF LATHAM & WATKINS
-----------------------------------
The Bank of New York,
as Agent for the Banks
One Wall Street, Twenty-Second Floor
New York, New York 10286
The Banks Signatory to the Credit
Agreement Referred to Below
Re: Revolving Credit Agreement, dated as of December ,
1999, among Realty Income Corporation, the Banks named
therein and The Bank of New York, as Administrative
Agent and as Swing Line Bank
------------------------------------------------------
Ladies/Gentlemen:
We have acted as special counsel for Realty Income Corporation, a
Maryland corporation (the "Company"), in connection with the Revolving
Credit Agreement (the "Credit Agreement") dated as of December ,
1999, among the Company, each of the banks identified on the signature
pages thereof (the "Banks") and The Bank of New York, as
Administrative Agent for the Banks and as Swing Line Bank (the
"Administrative Agent"). This opinion is rendered to you pursuant to
Section 6.01(f) of the Credit Agreement. Capitalized terms defined in
the Credit Agreement are used herein as therein defined.
In our capacity as such counsel, we have examined such matters of fact
and questions of law as we have considered appropriate for purposes of
rendering the opinions expressed below. We have examined among other
things, the following:
(a) The Credit Agreement;
(b) The Subsidiary Guaranty (the "Subsidiary Guaranty"), dated as
of December , 1999 by and (the "Guarantors");
(c) The following promissory notes of the Company dated
December , 1999 (collectively, the "Notes", and together
with the Credit Agreement, and the Subsidiary Guaranty, the
"Loan Documents"): (i) note in the original principal amount
of $40,000,000 payable to The Bank of New York; (ii) note in
the original principal amount of $35,000,000 payable to
First Union National Bank; (iii) note in the original
principal amount of $35,000,000 payable to Wells Fargo Bank,
Page 109
<PAGE>
National Association; (iv) note in the original principal
amount of $25,000,000 payable to Bank of Montreal; (v) note
in the original principal amount of $22,500,000 payable to
AmSouth Bank; (vi) note in the original principal amount of
$22,500,000 payable to Sanwa Bank California; and (vii) note
in the original principal amount of $20,000,000 payable to
Citizens Bank of Rhode Island;
(d) The Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of the Company; and
(e) Such other documents and agreements as we deem necessary for
purposes of rendering the opinions expressed below.
In our examination, we have assumed the genuineness of all signatures
(other than those of officers of the Company on the Loan Documents as
to which we have relied on a certificate of incumbency), 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.
We have been furnished with, and with your consent have relied upon,
certificates of officers of the Company with respect to certain
factual matters. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed
necessary.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States and the internal laws of the
State of New York, as applicable, 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 other local agencies within any state.
Our opinions set forth in paragraph 1 below are based upon our
consideration of only those statutes, rules and regulations which, in
our experience, are normally applicable to bank credit transactions.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
1. None of the execution and delivery of the Loan Documents by
the Company, the borrowing of the funds pursuant to the Loan
Documents by the Company and the payment of the indebtedness
of the Company evidenced by the Notes: (a) violate any federal
or New York statute, rule, or regulation applicable to the
Company (including, without limitation, Regulations T, U, or X
of the Board of Governors of the Federal Reserve System), or
(b) require any consents, approvals, authorizations,
registrations, declarations, or filings by the Company under
any applicable federal or New York statute, rule or
regulation.
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2. Each of the Loan Documents has been duly executed and
delivered by the Company or the Guarantors, as the case may
be, and constitutes a legally valid and binding obligation of
the Company or the Guarantors, as the case may be, enforceable
against the Company or the Guarantors, as the case may be, in
accordance with its terms.
3. The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended from
time to time.
The opinions set forth in paragraph 2 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors;
(b) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at
law, and the discretion of the court before which any
proceeding therefor may be brought;
(c) 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;
(d) the unenforceability of any provision requiring the payment
of attorney's fees, except to the extent that a court
determines such fees to be reasonable; and
(e) we express no opinion with respect to the enforceability of
Section 10.01 of the Credit Agreement by a federal court.
To the extent that the obligations of the Company may be dependent
upon such matters, we assume for purposes of this opinion that: all
parties to the Loan Documents other than the Company are duly
incorporated, validly existing and in good standing under the laws of
their respective jurisdictions of incorporation; all parties to the
Loan Documents other than the Company have the requisite corporate
power and authority to execute and deliver the Loan Documents and to
perform their respective obligations under the Loan Documents to which
they are a party; and the Loan Documents to which such parties other
than the Company are a party have been duly authorized, executed and
delivered by such parties and constitute their legally valid and
binding obligations, enforceable against them in accordance with their
terms. We express no opinion as to compliance by any parties to the
Loan Documents with any state or federal laws or regulations
applicable to the subject transactions because of the nature of their
business.
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This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted
to or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.
Very truly yours,
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December , 1999
EXHIBIT F-2
FORM OF OPINION OF MICHAEL R. PFEIFFER, ESQ.
--------------------------------------------
The Bank of New York,
as Agent for the Banks
One Wall Street
22nd Floor
New York, New York 10286
The Banks Signatory to the Credit
Agreement Referred to Below
Re: Revolving Credit Agreement, dated as of December ,
1999, among Realty Income Corporation, the Banks listed
on the signature pages thereto and The Bank of New York,
as Administrative Agent and as Swing Line Bank
--------------------------------------------------------
Ladies/Gentlemen:
I am general counsel of Realty Income Corporation, a Maryland
corporation (the "Company"). This opinion is rendered to you pursuant
to Section 6.01(f) of the Revolving Credit Agreement (the "Credit
Agreement"), dated as of December , 1999, among the Company, each
of the banks identified on the signature pages thereof (the "Banks")
and The Bank of New York, as Administrative Agent for the Banks and as
Swing Line Bank (the "Administrative Agent"). Capitalized terms
defined in the Credit Agreement are used herein as therein defined.
In my capacity as general counsel, I have examined such matters of
fact and questions of law as I have considered appropriate for
purposes of rendering the opinions expressed below, except where a
statement is qualified as to knowledge or awareness, in which case I
have made no or limited inquiry as specified below. I have examined,
among other things, the following:
(a) The Credit Agreement;
(b) The following promissory notes of the Company dated ,
1999 (collectively, the "Notes", and together with the Credit
Agreement and the Subsidiary Guaranty, the "Loan Documents"):
(i) note in the original principal amount of $40,000,000
payable to The Bank of New York; (ii) note in the original
principal amount of $35,000,000 payable to First Union
National Bank; (iii) note in the original principal amount of
$35,000,000 payable to Wells Fargo Bank, National
Association; (iv) note in the original principal amount of
$25,000,000 payable to Bank of Montreal; (v) note in the
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original principal amount of $ 22,500,000 payable to AmSouth
Bank; (vi) note in the original principal amount of
$22,500,000 payable to Sanwa Bank California; and (vii) note
in the original principal amount of $ 20,000,000 payable to
Citizens Bank of Rhode Island;
(c) The Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of the Company; and
(d) Such other documents and agreements as I deem necessary for
purposes of rendering the opinions expressed below.
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of the Company on the Loan Documents),
the authenticity of all documents submitted to me as originals, and
the conformity to authentic original documents of all documents
submitted to me as copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of the Company with respect to certain
factual matters. In addition, I have obtained and relied upon such
certificates and assurances from public officials as I have deemed
necessary.
I am opining herein as to the effect on the subject transaction only
of the federal laws of the United States and the internal laws of the
State of California, as applicable, and I 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 other local agencies within any state.
Whenever a statement herein is qualified by "to the best of my
knowledge" or a similar phrase, it is intended to indicate that I do
not have current actual knowledge of the inaccuracy of such statement.
Except as otherwise expressly indicated, I have not undertaken any
independent investigation to determine the accuracy of any such
statement, and no inference that I have any knowledge of any matters
pertaining to such statement should be drawn from my representation of
the Company.
Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:
1. Based solely on certificates from public officials, I confirm
that the Company is qualified to do business in the states in
which the Company owns properties.
2. To the best of my knowledge, there are no proceedings or
investigations pending or threatened before any court or
arbitrator or before or by any governmental authority which
would have a material adverse effect on the legality,
validity, binding effect or enforceability of any Loan
Document.
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3. The Company has the corporate power and authority to execute,
deliver and perform the terms and provisions of each Loan
Document to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each such Loan Document.
This opinion is delivered by me as general counsel for the Company to
you and is solely for your benefit in connection with the transactions
covered hereby. This opinion may not be relied upon by you for any
other purpose, or furnished to, quoted to or relied upon by any other
person, firm or corporation for any purpose, without my prior written
consent,
Very truly yours,
Page 115
EXHIBIT H
REAL ESTATE INVESTMENT CRITERIA
The Investment Committee is authorized, without prior Board of
Director approval, to approve real estate investments which meet all
of the following criteria:
1. The Purchase Price for each property shall not exceed $10,000,000.
2. The investment must consist of a fee interest in real property.
3. If the real property is unimproved at the time of acquisition,
there must be an agreement to complete specified improvements an
the property by a date certain.
4. Prior to, or concurrent with the acquisition, the property must be
net-leased to a tenant approved by the Company's Investment
Committee.
5. The real estate investment may not cause (i) the total investment
with that tenant to exceed $25 million, or (ii) the amount of
annualized rental revenue to be derived by the Company from a
tenant to exceed 5% of the Company's previous 12 months' rental
revenues.
6. The real estate investment may not cause the mount of annualized
rental revenue to be derived by the Company from any one industry
to exceed 25% of the Company's previous 12 months' rental
revenues.
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EXHIBIT I
FORM OF SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY, dated as of December , 1999, is made by
each entity that is identified on Schedule A hereto or that hereafter
executes and delivers a Subsidiary Joinder in the form of Exhibit A
attached hereto pursuant to the Credit Agreement described herein
(each such entity, a "Guarantor") in favor of the lenders (the
"Lenders") from time to time party to the Credit Agreement (as defined
below), and The Bank of New York ("BNY"), as administrative agent (BNY
and any successor thereto in such capacity, "Administrative Agent")
for the Lenders and in favor of all other present and future Holders
of any of the Guaranteed Obligations described herein.
RECITALS
A. The Lenders and Administrative Agent have entered into that
certain Revolving Credit Agreement, dated as of December , 1999
(as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among Realty Income Corporation, a
Maryland corporation ("Borrower"), the Administrative Agent and
the Lenders.
B. Each Guarantor is a Subsidiary of Borrower and expects to derive
substantial direct and indirect benefit from the transactions
contemplated by the Credit Agreement.
C. It is a condition precedent to the making of Loans by the Lenders
under the Credit Agreement that each Guarantor shall have
guaranteed payment of each and all debts, liabilities and
obligations of Borrower under the Credit Agreement and the Notes
(collectively, the "Obligations"), on the terms set forth herein.
D. Borrower has agreed, in the Credit Agreement, to cause certain
Subsidiaries of Borrower to become party to this Guaranty, as a
Guarantor hereunder, by executing and delivering a Subsidiary
Joinder in the form of Exhibit A hereto.
NOW, THEREFORE, in consideration of the foregoing and in order to
induce the Lenders to make Loans under the Credit Agreement, each
Guarantor hereby agrees as follows:
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 General Definitions. Except as otherwise specifically
provided herein, the terms which are defined in Article I of the
Credit Agreement shall have the same meanings when used in this
Guaranty and the provisions of Section 1.01 of the Credit Agreement
shall apply to this Guaranty.
SECTION 1.2 Certain Defined Terms. As used in this Guaranty, the
following terms shall have the following meanings:
"Bankruptcy Code" means Title 11 of the United States Code, as from
time to time amended.
"Disallowed Post-Commencement Interest and Expenses" means interest
computed at the rate provided in the Credit Agreement and claims for
reimbursements, costs, expenses or indemnities under the terms of the
Credit Agreement accruing or claimed at any time after commencement of
any Insolvency or Liquidation Proceeding, if the claim for such
interest, reimbursement, cost, expense or indemnity is not allowable,
allowed or enforceable against Borrower in such Insolvency or
Liquidation Proceeding.
"Guaranty" means this Subsidiary Guaranty, dated as of December ,
1999, made by the Guarantors for the benefit of the Lenders,
Administrative Agent and other Holders of Guaranteed Obligations.
"Guaranty Taxes" is defined in Section 3.8(a).
"Holder" means, in respect of any Guaranteed Obligation, the Person
entitled to enforce payment thereof and specifically includes the
Administrative Agent and the Lenders.
"Insolvency or Liquidation Proceeding" means any (i) any case under
the Bankruptcy Code, any other insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding, relative to Borrower or to any of its
creditors, as such, or to a substantial part of any of its assets, or
(ii) any proceeding for the liquidation, dissolution or other winding
up of Borrower, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (iii) any assignment for the
benefit of creditors or any other marshaling of assets and liabilities
of Borrower.
"Subordinated Liabilities" is defined in Section 2.8(a).
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ARTICLE II
GUARANTY AND RELATED PROVISIONS
SECTION 2.1 Guaranty. Each Guarantor hereby unconditionally:
(a) guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of (i) all Obligations
now outstanding or hereafter arising under or in connection with
the Credit Agreement or the Notes, whether for principal,
interest, fees, taxes, additional compensation, expense
reimbursements, indemnification or otherwise, and (ii) each other
debt, liability or obligation of Borrower now outstanding or
hereafter arising under any of the Credit Agreement and the Notes
(such Obligations, liabilities and other debts, liabilities and
obligations, collectively, the "Guaranteed Obligations"), and
(b) agrees to pay on demand (i) all Disallowed Post-Commencement
Interest and Expenses, to the Person entitled to payment thereof
if the claim therefor had been allowed in any Insolvency or
Liquidation Proceeding and (ii) all costs and expenses
(including, without limitation, reasonable attorneys' fees and
legal expenses) incurred by any Holder of Guaranteed Obligations
in enforcing this Guaranty; provided, however, that the amount of
each Guarantor's payment obligations hereunder shall not exceed
an aggregate amount equal to such Guarantor's stockholders' or
partners' equity, as the case may be.
SECTION 2.2 Acceleration of Payment. If the Notes become immediately
due and payable pursuant to Section 8.01 of the Credit Agreement, then
all liability of each Guarantor under this Guaranty in respect of any
Guaranteed Obligation that is not then due and payable shall thereupon
become and be immediately due and payable, without notice or demand.
SECTION 2.3 Guaranty Absolute and Unconditional. Each Guarantor
guarantees that the Guaranteed Obligations will be paid in accordance
with the terms of the Credit Agreement and the Notes, regardless of
any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights and claims of
any Holder of Guaranteed Obligations against Borrower with respect
thereto and even if any such rights or claims are modified, reduced or
discharged in an Insolvency or Liquidation Proceeding or otherwise.
The obligations of each Guarantor under this Guaranty are independent
of the Guaranteed Obligations, and a separate action or actions may be
brought and prosecuted against each Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against
Borrower or whether Borrower is joined in any such action or actions.
The liability of each Guarantor under this Guaranty shall be absolute
and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement or any Note or any other
agreement or instrument relating thereto; (ii) any change in the time,
manner or place of payment of, or in any other term of, all or any of
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the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Credit Agreement or any Note, including,
without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to Borrower or
otherwise; (iii) any taking, exchange, release or non-perfection of
any collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations; (iv) any manner of application of collateral,
or proceeds thereof, to all or any of the Guaranteed Obligations, or
any manner of sale or other disposition of any collateral for all or
any of the Guaranteed Obligations or any other assets of Borrower; (v)
any change, restructuring or termination of the corporate structure or
existence of Borrower; or (vi) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, a
surety or guarantor.
SECTION 2.4 Guaranty Irrevocable and Continuing. This Guaranty is an
irrevocable and continuing offer and agreement guaranteeing payment of
any and all Guaranteed Obligations and shall extend to all Guaranteed
Obligations now outstanding or created or incurred at any future time,
whether or not created or incurred pursuant to any agreement presently
in effect or hereafter made, until all obligations of the Lenders to
extend credit to Borrower have expired or been terminated, and all
Guaranteed Obligations have been fully, finally and indefeasibly paid.
To the extent any contingent Obligation survives the expiration or
termination of the Credit Agreement and the repayment of the Loans,
each Guarantor's liability under this Guaranty shall likewise survive.
This Guaranty may be released only in writing.
SECTION 2.5 Reinstatement. If at any time any payment on any
Guaranteed Obligation is set aside, avoided or rescinded or must
otherwise be restored or returned, this Guaranty and the liability of
each Guarantor under this Guaranty shall remain in full force and
effect and, if previously released or terminated, shall be
automatically and fully reinstated, without any necessity for any act,
consent or agreement of any Guarantor, as fully as if such payment had
never been made and as fully as if any such release or termination had
never become effective.
SECTION 2.6 Waiver. Each Guarantor hereby waives and agrees not to
assert or take advantage of:
(a) Marshaling. Any right to require any Holder of Guaranteed
Obligations to proceed against or, exhaust its recourse against
Borrower or any other Subsidiary Guarantor or any other Person
liable for any of the Guaranteed Obligations or against any
collateral for any of the Guaranteed Obligations or against any
other Person or property, before demanding and enforcing payment
of the Guaranteed Obligations from any Guarantor under this
Guaranty;
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(b) Other Defenses. Any defense that may arise by reason of (i) the
incapacity, lack of authority, death or disability of Borrower or
any other Person; (ii) the revocation or repudiation of any of
the Credit Agreement or the Notes by Borrower or any other
Person; (iii) the unenforceability in whole or in part of the
Credit Agreement or the Notes or any other instrument, document
or agreement; (iv) the failure of any Holder of Guaranteed
Obligations to file or enforce a claim against any Person liable
for any of the Guaranteed Obligations or in any Liquidation or
Insolvency Proceeding; or (v) any borrowing or grant of a
security interest under Section 364 of the Bankruptcy Code;
(c) Notices. Presentment, demand for payment, protest, notice of
discharge, notice of acceptance of this Guaranty, notice of the
incurrence of, or any default in respect of, any debt, liability
or obligation guaranteed hereunder, and all other indulgences and
notices of every type or nature, including, without limitation
and to the maximum extent permitted by law, notice of the
disposition of any collateral for any of the Guaranteed
Obligations;
(d) Election of Remedies. Any defense based upon an election of
remedies (including, if available, an election to proceed by non-
judicial foreclosure) or any other act or omission of any Holder
of Guaranteed Obligations or any other Person which destroys or
otherwise impairs any right that any Guarantor might otherwise
have for subrogation, recourse, reimbursement, indemnity,
exoneration, contribution or otherwise. against Borrower or any
other Person;
(e) Collateral. Any defense based upon any taking, modification or
release of any collateral or guaranties for the Guaranteed
Obligations, or any failure to create or perfect or ensure the
priority or enforceability of any security interest in any
collateral for any of the Guaranteed Obligations or any act or
omission related thereto;
(f) Offsets. Any right to recoup from or offset against any of the
Guaranteed Obligations any claim that may be held or asserted by
or available to (i) Borrower or any other Guarantor or any other
Person liable for any of the Guaranteed Obligations against any
Holder of Guaranteed Obligations or (ii) any Guarantor against
Borrower, any other Guarantor, any other Holder of Guaranteed
Obligations or any other Person; or
(g) Defenses of Others. Any other claim, right or defense
(including, by way of illustration and without limitation, such
matters as failure or insufficiency of consideration, statute of
limitations, breach of contract, tortious conduct, accord and
satisfaction, and discharge by agreement, conduct or in a
Liquidation or Insolvency Proceeding), except the defense of
payment, that may be held or asserted by or available to (i)
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Borrower or any other Guarantor or any other Person liable for
any of the Guaranteed Obligations against any Holder of
Guaranteed Obligations or (ii) any Guarantor against Borrower,
any other Guarantor, any other Holder of Guaranteed Obligations
or any other Person.
SECTION 2.7 Subrogation. Each Guarantor hereby represents, warrants
and agrees, in respect of any and all present and future rights of
subrogation, recourse, reimbursement, indemnity, exoneration,
contribution and other claims that such Guarantor at any time may have
against Borrower, any other Guarantor or any other Person liable for
the payment of any of the Guaranteed Obligations (including, without
limitation, the owner of any interest in collateral for any of the
Guaranteed Obligations) as a result of or in connection with this
Guaranty or any payment hereunder, that:
(a) No Agreement. Such Guarantor has not entered into, and agrees
that it will not enter into, any agreement providing, directly or
indirectly, for any such right or claim against Borrower or,
except as set forth in Section 2.10, against any other Subsidiary
of Borrower, and each such agreement now existing or hereafter
entered into (except Section 2.10) is and shall be void;
(b) Release. Such Guarantor forever waives and releases, and agrees
never to sue upon, any such right or claim against Borrower and,
except as set forth in Section 2. 10, against any other
Subsidiary of Borrower, whether or not the Guaranteed Obligations
have been paid in full;
(c) Capital Contribution. Each payment made by such Guarantor under
this Guaranty shall be a contribution to the capital of Borrower,
and no such payment shall give rise to any claim (as that term is
defined in the Bankruptcy Code) in favor of such Guarantor
against Borrower;
(d) Subordination of Contribution Rights. Each Guarantor reserves,
as against each other Guarantor, its right of contribution under
Section 2.10 but agrees that all such contribution rights shall
be included among the Subordinated Liabilities; and
(e) Deferral of Other Rights and Claims. Until all obligations of
the Lenders to extend credit to Borrower have expired or been
terminated and all the Guaranteed Obligations have been paid in
full, such Guarantor will not demand, sue for, accept or receive
any payment or transfer on account of any such right or claim
from any Person (other than Borrower and its Subsidiaries) liable
for the payment of any of the Guaranteed Obligations.
SECTION 2.8 Subordination Provisions.
(a) Subordination. Any and all present and future debts, liabilities
and obligations of every type and description (whether for money
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borrowed, on intercompany accounts, for provision of goods or
services, under tax sharing or contribution agreements or on
account of any other transaction, agreement, occurrence or event
and whether absolute or contingent, direct or indirect, matured
or uninatured, liquidated or unliquidated, created directly or
acquired from another, or sole, joint, several or joint and
several) of Borrower now outstanding or hereafter incurred or
owed to any Guarantor (the "Subordinated Liabilities") shall be,
and hereby are, subordinated to full and final payment of the
Guaranteed Obligations.
(b) Prohibited Payments. No Guarantor will demand, sue for, accept
or receive, or cause or permit any other Person to make, any
payment on or transfer of property on account of any Subordinated
Liabilities except to the extent payment is permitted at the time
under Section 7.02 of the Credit Agreement.
(c) No Liens or Transfers. No Guarantor. will demand, accept or hold
any Lien upon any real or personal property of Borrower as
security for any of the Subordinated Liabilities and agrees that
any such Lien shall be void.
(d) Insolvency Proceedings. In any Insolvency or Liquidation
Proceeding, the Holders of Guaranteed Obligations shall be
entitled to receive payment in full of all amounts due or to
become due on or in respect of the Guaranteed Obligations, or
provision shall be made for such payment in money or money's
worth, before any Guarantor is entitled to receive any payment or
distribution of any kind or character, whether in cash, property
or securities, on account of any of the Subordinated Liabilities,
and to that end the Holders of Guaranteed Obligations shall be
entitled to receive, for application to the payment thereof, all
payments and distributions of any kind or character, whether in
cash, property or securities (including any such payment or
distribution which may be payable or deliverable by reason of the
payment of any other debt or liability of Borrower being
subordinated to the payment of the Subordinated Liabilities),
which may be payable or deliverable in respect of the
Subordinated Liabilities in any such Insolvency or Liquidation
Proceeding.
(e) Disallowed Post-Commencement Interest and Expenses. If in any
Insolvency or Liquidation Proceeding (i) any payment or
distribution of any kind or character, whether in cash, property
or securities (including any such payment or distribution which
may be payable or deliverable by reason of the payment of any
other debt or liability of Borrower being subordinated to the
payment of the Subordinated Liabilities) is payable or
deliverable in respect of the Subordinated Liabilities, and (ii)
the Holders of Guaranteed Obligations are not otherwise entitled
to receive such payment or distribution pursuant to Section
2.8(d), and (iii) any amount remains unpaid to any Holder of
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Guaranteed Obligations on account of any Disallowed Post-
Commencement Interest and Expenses, then the Holders of
Guaranteed Obligations shall be entitled to receive payment of
all such unpaid Disallowed Post-Commencement Interest and
Expenses from and out of any and all such payments and
distributions in respect of the Subordinated Liabilities.
(f) Held in Trust. If any payment, transfer or distribution is made
to any Guarantor upon any Subordinated Liabilities that is not
permitted to be made under this Section 2.8 or that the Holders
of Guaranteed Obligations are not entitled to receive under this
Section 2.8, such Guarantor shall receive and hold the same in
trust, as trustee for the benefit of the Holders of Guaranteed
Obligations, and shall forthwith transfer and deliver the same to
Agent, in precisely the form received (except for any required
endorsement), for application to the payment of Guaranteed
Obligations or any unpaid Disallowed Post-Commencement Interest
and Expenses.
(g) Claims in Bankruptcy. Each Guarantor will file all claims
against Borrower in any Liquidation or Insolvency Proceeding in
which the filing of claims is required or permitted by law upon
any of the Subordinated Liabilities and will assign to Agent, for
the benefit of the Holders of Guaranteed Obligations, all rights
of such Guarantor thereunder. If any Guarantor does not file any
such claim at least 30 days prior to any applicable claims bar
date, Agent is hereby authorized (but shall not be obligated), as
attorney-in-fact for such Guarantor with full power of
substitution, either to file such claim or proof thereof in the
name of such Guarantor or, at Agent's option, to assign the claim
and cause the claim or proof thereof to be filed by an agent or
nominee. Agent and its agents and nominees shall have the sole
right, but no obligation, to accept or reject any plan proposed
in such Insolvency or Liquidation Proceeding and to cast any
votes and to take any other action with respect to all claims
upon any of the Subordinated Liabilities.
(h) Subordination Effective and not Impaired. This Section 2.8 shall
remain effective for so long as this Guaranty is continuing and
thereafter for so long as any Guaranteed Obligation is
outstanding. Each Guarantor's obligations under this Section 2.8
(i) shall be absolute and unconditional as set forth in Section
2.3, irrevocable and continuing as set forth in Section 2.4,
subject to reinstatement as set forth in Section 2.5, and not be
affected or impaired by any of the matters waived in Section 2.6,
(ii) shall be subject to the provisions of Article V of the
Credit Agreement, and (iii) shall otherwise be as equally
enduring and free from defenses as such Guarantor's liability
under this Guaranty.
SECTION 2.9 Fraudulent Transfer Limitation. If, in any action to
enforce this Guaranty or any proceeding to allow or adjudicate a claim
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under this Guaranty, a court of competent jurisdiction determines that
enforcement of this Guaranty against any Guarantor for the full amount
of the Guaranteed Obligations is not lawful under, or would be subject
to avoidance under, Section 548 of the Bankruptcy Code or any
applicable provision of comparable state law, the liability of such
Guarantor under this Guaranty shall be limited to the maximum amount
lawful and not subject to avoidance under such law.
SECTION 2.10 Contribution among Guarantors. The Guarantors desire to
allocate among themselves, in a fair and equitable manner, their
rights of contribution from each other when any payment is made by one
of the Guarantors under this Guaranty. Accordingly, if any payment is
made by a Guarantor under this Guaranty (a "Funding Guarantor") that
exceeds its Fair Share, the Funding Guarantor shall be entitled to a
contribution from each other Guarantor in the amount of such other
Guarantor's Fair Share Shortfall, so that all such contributions shall
cause each Guarantor's Aggregate Payments to equal its Fair Share.
For these purposes:
(a) "Fair Share" means, with respect to a Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Amount of such Guarantor to (y) the aggregate
Adjusted Maximum Amounts of all Guarantors, multiplied by (ii)
the aggregate amount paid on or before such date by all Funding
Guarantors under this Guaranty.
(b) "Fair Share Shortfall" means, with respect to a Guarantor as of
any date of determination, the excess, if any, of the Fair Share
of such Guarantor over the Aggregate Payments of such Guarantor.
(c) "Adjusted Maximum Amount" means, with respect to a Guarantor as
of any date of determination, the maximum aggregate amount of the
liability of such Guarantor under this Guaranty, limited to the
extent required under Section 2.9 (except that, for purposes
solely of this calculation, any assets or liabilities arising by
virtue of any rights to or obligations of contribution under this
Section 2.10 shall not be counted as assets or liabilities of
such Guarantor).
(d) "Aggregate Payments" means, with respect to a Guarantor as of any
date of determination, the aggregate net amount of all payments
made on or before such date by such Guarantor under this Guaranty
(including, without limitation, under this Section 2. 10).
The amounts payable as contributions hereunder shall be determined as
of the date on which the related payment or distribution is made by
the Funding Guarantor. The allocation and right of contribution among
the Guarantors set forth in this Section 2.10 shall not be construed
to limit in any way the liability of any Guarantor under this Guaranty
to the Holders of the Guaranteed Obligations.
Page 125
<PAGE>
SECTION 2.11 Joint and Several Obligation. This Guaranty and all
liabilities of each Guarantor hereunder shall be the joint and several
obligation of each Guarantor and may be freely enforced against each
Guarantor, for the full amount of the Guaranteed Obligations (subject
to Section 2.9), without regard to whether enforcement is sought or
available against any other Guarantor.
ARTICLE III
MISCELLANEOUS PROVISIONS
SECTION 3.1 Condition of Borrower. Each Guarantor is fully aware of
the financial condition of Borrower and is executing and delivering
this Guaranty based solely upon such Guarantor's own independent
investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement by any Holder of
Guaranteed Obligations. Each Guarantor represents and warrants that
it is in a position to obtain, and each Guarantor hereby assumes full
responsibility for obtaining, any additional information concerning
the financial condition of Borrower and any other matter pertinent
hereto as such Guarantor may desire, and such Guarantor is not relying
upon or expecting any Holder of Guaranteed Obligations to furnish to
such Guarantor any information now or hereafter in the possession of
any Holder of Guaranteed Obligations concerning the same or any other
matter. By executing this Guaranty, each Guarantor knowingly accepts
the full range of risks encompassed within a contract of this type,
which risks each Guarantor acknowledges. No Guarantor shall have the
right to require any Holder of Guaranteed Obligations to obtain or
disclose any information with respect to the Guaranteed Obligations,
the financial condition or prospects of Borrower, the ability of
Borrower to pay or perform the Guaranteed Obligations, the existence,
perfection, priority or enforceability of any collateral security for
any or all of the Guaranteed Obligations, the existence or
enforceability of any other guaranties of all or any part of the
Guaranteed Obligations, any action or non-action on the part of any
Holder of Guaranteed Obligations, Borrower, or any other Person, or
any other event, occurrence, condition or circumstance whatsoever.
SECTION 3.2 Amendments.
(a) Amendment to Guaranty. No amendment or waiver of any provision
of this Guaranty, and no consent to any departure by any
Guarantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Banks, and
then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given,
except that no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders, (i) limit the liability of
any Guarantor hereunder, (ii) postpone any date fixed for payment
hereunder, or (iii) change the number of Lenders required to take
any action hereunder.
Page 126
<PAGE>
(b) Amendment or Modification of the Notes. The Notes may be
amended, modified or supplemented in accordance with their terms
without notice to or consent or agreement by any Guarantor,
including, without limitation, so as to (i) alter, compromise,
modify, accelerate, extend, renew, refinance or change the time
or manner for making of advances, provision of other financial
accommodations, or the payment or performance of all or any
portion of the Guaranteed Obligations, (ii) increase or reduce
the rate of interest or amount of principal payable on the Notes,
(iii) release or discharge Borrower or any other Person as to all
or any portion of the Guaranteed Obligations, or (iv) release,
substitute or add any one or more guarantors or endorsers, accept
additional or substituted security for payment or performance of
the Guaranteed Obligations, or release or subordinate any
security therefor.
SECTION 3.3 Notices. All notices and other communications provided
for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied or delivered; if to any Guarantor, at c/o
Realty Income Corporation, 220 West Crest Street, Escondido, CA 92025-
1707, Attention: Michael Pfeiffer, Esq., with a copy to: Michael J.
Brody Esq., Latham & Watkins, 633 West Fifth Street, Suite 4000, Los
Angeles, CA 90071-2007, if to Administrative Agent, at The Bank of New
York, One Wall Street, 18th Floor, New York, NY 10286, Attention:
Kalyani Bose -- Agency Function Administration; and if to any Lender,
at its address specified in the Credit Agreement, or, as to any party,
at such other address as shall be designated by such party in a
written notice to each other party. All such notices and other
communications shall, when mailed or telecopied be effective when
deposited in the mails or telecopied respectively.
SECTION 3.4 Right of Set-off. If any request is made or consent is
given by the Required Banks pursuant to Section 8.01 of the Credit
Agreement for a declaration by the Administrative Agent that the Notes
are immediately due and payable, or if the Notes become immediately
due and payable pursuant to Section 8.01 of the Credit Agreement, each
Lender shall have the right at any time and from time to time
thereafter, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other liability at any time
owing by such Lender to or for the credit or the account of any
Guarantor against any and all liability of such Guarantor under this
Guaranty, whether or not such Lender shall have made any demand under
this Guaranty and even though such liability may then be contingent
and unmatured. Each Lender agrees promptly to notify the affected
Guarantor after any such set-off and application made by such Lender,
but the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this
Section 3.4 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Lender may
have.
Page 127
<PAGE>
SECTION 3.5 Successors and Assigns. This Guaranty is binding upon
and enforceable against each Guarantor, its successors and assigns,
and shall inure to the benefit of, and be enforceable by, each Holder
of any of the Guaranteed Obligations and such Holder's heirs,
representatives, successors and assigns.
SECTION 3.6 No Inquiry. Each Holder of Guaranteed Obligations may
rely, without further inquiry, on the power and authority of each
Guarantor, Borrower and each of its Subsidiaries and on the authority
of all officers, directors and agents acting or purporting to act on
their behalf.
SECTION 3.7 Bankruptcy. So long as any Commitments or Guaranteed
Obligation are outstanding, no Guarantor will, without the prior
written consent of Agent and the Required Banks, commence or join with
any other Person in commencing any Insolvency or Liquidation
Proceeding against Borrower or any of its Subsidiaries.
SECTION 3.8 No Waiver; Remedies. No failure on the part of any
Holder of Guaranteed Obligations to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, and
any single or partial exercise of any right hereunder shall not
preclude any other or further exercise of any other right or of the
same right as to any other matter or on a subsequent occasion.
SECTION 3.9 Remedies Cumulative. All rights, powers and remedies of
each Holder of Guaranteed Obligations under this Guaranty, under any
other agreement now or at any time hereafter in effect between any
such Holder and each and all of the Guarantors (whether relating to
the Guaranteed Obligations or otherwise) or now or hereafter existing
at law or in equity or by statute or otherwise, shall be cumulative
and concurrent and not alternative and each such right, power and
remedy may be exercised independently of, and in addition to, each
other such right, power or remedy.
SECTION 3.10 Severally Enforceable. This Guaranty may be enforced
severally and successively by any one or more of the Holders of
Guaranteed Obligations in one or more actions, whether independent,
concurrent, joint, successive or otherwise. The claims, rights and
remedies of any Holder of Guaranteed Obligations (i) may not be
modified or waived by any other Holder, except as set forth in Section
3.2(a), and (ii) shall not be reduced, discharged, affected or
impaired by any deed, act or omission, whether or not wrongful, of any
other Holder.
SECTION 3.11 Counterparts. This Guaranty may be executed in
counterparts, and each such counterpart for all purposes shall be
deemed an original and all such counterparts together shall constitute
but one and the same agreement.
SECTION 3.12 Severability. If any provision hereof or the
application thereof in any particular circumstance is held to be
Page 128
<PAGE>
unlawful or unenforceable in any respect, all other provisions hereof
and such provision in all other applications shall nevertheless remain
effective and enforceable to the maximum extent lawful.
SECTION 3.13 Integration. This Guaranty is intended as an integrated
and final expression of the entire agreement of such Guarantor with
respect to the subject matter hereof. No representation,
understanding, promise or condition concerning the subject matter
hereof shall be binding upon any Holder of Guaranteed Obligations
unless expressed herein or therein, and no course of prior dealing or
usage of trade, and no parol or extrinsic evidence of any nature,
shall be admissible to supplement, modify or vary any of the terms
hereof. Acceptance of or acquiescence in a course of performance
rendered under this Guaranty or any other dealings between any
Guarantor and any Holder of Guaranteed Obligations shall not be
relevant to determine the meaning of this Guaranty even though the
accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
SECTION 3.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH PARTY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS MAY BE MADE BY ANY MEANS PERMITTED BY
NEW YORK LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF OR RELATED TO THIS GUARANTY, THE NOTES OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND AGREES THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY.
SECTION 3.15 Acceptance and Notice. Each Guarantor acknowledges
acceptance hereof and reliance hereon by each Holder of any of the
Guaranteed Obligations and waives, irrevocably and forever, all notice
thereof.
Page 129
<PAGE>
IN WITNESS WHEREOF, the Guarantors have caused this Subsidiary
Guaranty to be duly executed and delivered by an officer of each
Guarantor thereunto duly authorized as of the date first above
written.
THE GUARANTORS:
----------------------------------
By: Realty Income Corporation
Its: General Partner
By:
-----------------------------
Michael R. Pfeiffer
Vice President, General Counsel
Page 130
Schedule A to Subsidiary Guaranty
Guarantors
----------
Page 131
Exhibit A to Subsidiary Guaranty
FORM OF SUBSIDIARY JOINDER
This Subsidiary Joinder is entered into by , a
corporation (the "Company"), as of .
WHEREAS, the sole stockholder of the Company (the "Sole
Stockholder") has entered into the Revolving Credit Agreement, dated
as of December , 1999, among Realty Income Corporation, as Borrower,
each of the banks identified on the signature pages thereof and The
Bank of New York, as Administrative Agent for the Banks and as Swing
Line Bank (the "Credit Agreement") which requires that each of the
Subsidiaries of the Sole Stockholder enter into a subsidiary guaranty
(the "Subsidiary Guaranty", attached hereto as Exhibit A) to and for
the benefit of the lenders party to the Credit Agreement;
WHEREAS, as a precondition to any transfer of certain properties
owned by the Sole Stockholder, any of its Subsidiaries (as defined in
the Credit Agreement), or any combination thereof (the "Properties"),
to any other Subsidiary, that such transferee Subsidiary execute and
deliver a subsidiary joinder (the "Subsidiary Joinder") with respect
to the Subsidiary Guaranty to and for the benefit of the lenders party
to the Credit Agreement;
WHEREAS, the Company owns a % limited partnership interest in
the limited partnership that owns such Properties; and
WHEREAS, the Company is a Subsidiary of the [Sole Stockholder] of
the Company, as defined in the Credit Agreement;
NOW, THEREFORE, the Company hereby agrees to join with the
Subsidiaries party to the Subsidiary Guaranty and agrees further to be
bound by the terms and conditions of the Subsidiary Guaranty as though
the Company had originally been a party to it.
IN WITNESS WHEREOF, the undersigned has executed this Subsidiary
Joinder as of the date first written above.
[SUBSIDIARY NAME]
-----------------------------------
By:
------------------------------
Its:
------------------------------
Page 132
Exhibit A to Subsidiary Joinder
Subsidiary Guaranty
-------------------
Page 133
Schedule 5.01 (a)
-----------------
Subsidiaries and Joint Ventures of the Company
----------------------------------------------
Page 134
Schedule 5.01(q)
ERISA Liabilities
Page 135
Schedule 5.01(r)
Intellectual Property
---------------------
Page 136
EXHIBIT 10.2
EXECUTION COPY
AMENDMENT NO. 1
dated as of January 21, 2000
to and under the
REVOLVING CREDIT AGREEMENT
dated as of December 14, 1999
REALTY INCOME CORPORATION, a Maryland corporation, the BANKS listed on
the signature pages hereof, BNY CAPITAL MARKETS, INC., as Lead
Arranger and as Book Manager, FIRST UNION NATIONAL BANK, as
Syndication Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Documentation Agent, BANK OF MONTREAL, as Co-Agent, and THE BANK OF
NEW YORK, as Administrative Agent and as Swing Line Bank, agree as
follows:
1. Credit Agreement. Reference is made to the Credit Agreement,
dated as of December 14, 1999, among Realty Income Corporation,
as Borrower, the Banks listed on the signature pages thereof, BNY
Capital Markets, Inc., as Lead Arranger and as Book Manager,
First Union National Bank, as Syndication Agent, Wells Fargo
Bank, National Association, as Documentation Agent, and The Bank
of New York, as Administrative Agent and as Swing Line Bank (the
"Credit Agreement"). Terms used in this Amendment No. 1 (this
"Amendment") that are defined in the Credit Agreement and are not
otherwise defined herein are used herein with the meanings
therein ascribed to them.
2. Amendments to Section 7.02(e) ("Loans and Investments") of the
Credit Agreement. Upon and after the Effective Date (as defined
below), clause (ix) of Section 7.02(e) of the Credit Agreement
shall be amended by (A) adding the following phrase after the
words "common stock" appearing therein: ", preferred stock or its
8.25% Monthly Income Senior Notes due 2008", and (B) adding the
words "or such Senior Notes" at the end thereof.
3. Amendment to Section 7.02(g) ("Dividends and Purchase of Stock")
of the Credit Agreement. Upon and after the Effective Date (as
defined below), Section 7.02(g) of the Credit Agreement shall be
amended by adding the following phrase after the words "common
stock" appearing therein: "or preferred stock".
Page 1
<PAGE>
4. Representations and Warranties. In order to induce the Banks to
agree to amend the Credit Agreement, the Borrower makes the
following representations and warranties which shall survive the
execution and delivery of this Amendment:
(a) No Default has occurred and is continuing; and
(b) Each of the representations and warranties set forth in
Article 5 of the Credit Agreement are true and correct as
though such representations and warranties were made at and
as of the Effective Date (as defined in Section 5 hereof)
except to the extent that any such representations or
warranties are made as of a specified date or with respect
to a specified period of time, in which case such
representations and warranties shall be made as of such
specified date or with respect to such specified period.
Each of the representations and warranties made under the
Credit Agreement (including those made herein) shall survive
to the extent provided therein and not be waived by the
execution and delivery of this Amendment.
5. Amendment Effective Date. The amendment to the Credit Agreement
effected pursuant to Sections 2 and 3 hereof shall become
effective as of the date (the "Effective Date") first referenced
above on the date on which the Administrative Agent shall have
received this Amendment, duly executed by each of the Borrower
and the Required Banks.
6. Payment of Expenses. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by the Administrative
Agent in connection with the preparation, execution and delivery
of this Amendment and any other documents or instruments which
may be delivered in connection herewith, including, without
limitation, the reasonable fees and expenses of Winthrop,
Stimson, Putnam & Roberts.
7. Counterparts. This Amendment may be executed in counterparts and
by different parties hereto in separate counterparts each of
which, when so executed and delivered, shall be deemed to be an
original and all of which, when taken together, shall constitute
one and the same instrument.
8. Ratification. The Credit Agreement, as amended by this
Amendment, is and shall continue to be in full force and effect
and is hereby in all respects confirmed, approved and ratified.
9. Governing Law. The rights and duties of the parties under this
Amendment shall, pursuant to New York General Obligations Law
Section 5-1401, be governed by the law of the State of New York.
10. Reference to Agreement. From and after the Amendment Effective
Date, each reference in the Credit Agreement to "this Agreement,"
Page 2
<PAGE>
"hereof," "hereunder" or words of like import, and all references
to the Credit Agreement in any and all agreements, instruments,
documents, notes, certificates and other writings of every kind
and nature, shall be deemed to mean the Credit Agreement as
modified and amended by this Amendment.
[Remainder of page intentionally left blank.]
Page 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective authorized officers
as of the date first above written.
REALTY INCOME CORPORATION,
as Borrower
By:
---------------------------------
Name: Michael R. Pfeiffer
Title: Senior Vice President,
General Counsel
THE BANK OF NEW YORK,
as Administrative Agent for the
Banks, as a Bank and as the Swing
Line Lender
By:
---------------------------------
Name: Elizabeth Ying
Title: Vice President
FIRST UNION NATIONAL BANK,
as a Bank
By:
---------------------------------
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Bank
By:
---------------------------------
Name:
Title:
Page 4
BANK OF MONTREAL,
as a Bank
By:
---------------------------------
Name:
Title:
AMSOUTH BANK,
as a Bank
By:
---------------------------------
Name:
Title:
SANWA BANK CALIFORNIA,
as a Bank
By:
---------------------------------
Name:
Title:
CITIZENS BANK OF RHODE ISLAND,
as a Bank
By:
---------------------------------
Name:
Title:
Page 5
<PAGE>
EXECUTION COPY
AMENDMENT NO. 1
Dated as of January 21, 2000
to and under the
REVOLVING CREDIT AGREEMENT
Dated as of December 14, 1999
Among
REALTY INCOME CORPORATION,
as Borrower,
THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF,
THE BANK OF NEW YORK,
as Administrative Agent and as Swing Line Bank
FIRST UNION NATIONAL BANK,
as Syndication Agent,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Documentation Agent,
BANK OF MONTREAL,
as Co-Agent,
and
BNY CAPITAL MARKETS, INC.
as Lead Arranger and as Book Manager,
Page 6
EXHIBIT 10.3
=====================================================================
REVOLVING CREDIT AGREEMENT
dated as of February 1, 2000
among
REALTY INCOME CORPORATION,
THE BANKS NAMED HEREIN,
and
BANK OF MONTREAL,
as Agent
=====================================================================
<PAGE>
<TABLE>
TABLE OF CONTENTS
Section Heading Page
- ---------------------------------------------------------------------
<S> <C> <C>
ARTICLE I DEFINITIONS.................................... 4
Section 1.01 Definitions.................................... 4
ARTICLE II THE LOANS...................................... 20
Section 2.01 The Loans...................................... 20
Section 2.02 Procedure for Pro Rata Loans................... 20
Section 2.03 Pro Rata Notes................................. 21
Section 2.04 Certain Fees................................... 22
Section 2.05 Cancellation or Reduction of the Commitment.... 22
Section 2.06 Optional Prepayment............................ 22
Section 2.07 Mandatory Prepayment........................... 23
ARTICLE III INTEREST, METHOD OF PAYMENT, CONVERSION, ETC... 24
Section 3.01 Procedure for Interest Rate Determination...... 24
Section 3.02 Interest on ABR Loans.......................... 24
Section 3.03 Interest on Eurodollar Loans................... 24
Section 3.04 Conversion/Continuance......................... 25
Section 3.05 Post Default Interest.......................... 25
Section 3.06 Maximum Interest Rate.......................... 26
ARTICLE IV DISBURSEMENT AND PAYMENT....................... 26
Section 4.01 Pro Rata Treatment............................. 26
Section 4.02 Method of Payment.............................. 26
Section 4.03 Compensation for Losses........................ 26
Section 4.04 Withholding, Reserves and Additional Costs..... 27
Section 4.05 Unavailability................................. 32
ARTICLE V REPRESENTATIONS AND WARRANTIES................. 33
Section 5.01 Representations and Warranties................. 33
ARTICLE VI CONDITIONS OF LENDING.......................... 40
Section 6.01 Conditions to the Availability of the
Commitment................................... 40
Section 6.02 Conditions to All Loans........................ 41
ARTICLE VII COVENANTS...................................... 42
Section 7.01 Affirmative Covenants.......................... 42
Section 7.02 Negative Covenants............................. 47
Section 7.03 Financial Covenants............................ 51
ARTICLE VIII EVENTS OF DEFAULT.............................. 52
Section 8.01 Events of Default.............................. 52
(table continued next page)
Page 2
<PAGE>
(table continued
Section Heading Page
- ---------------------------------------------------------------------
ARTICLE IX THE AGENT AND THE BANKS........................ 55
Section 9.01 The Agency..................................... 55
Section 9.02 The Agent's Duties............................. 55
Section 9.03 Sharing of Payment and Expenses................ 55
Section 9.04 The Agent's Liabilities........................ 56
Section 9.05 The Agent as a Bank............................ 56
Section 9.06 Bank Credit Decision........................... 56
Section 9.07 Indemnification................................ 57
Section 9.08 Successor Agent................................ 57
ARTICLE X CONSENT TO JURISDICTION........................ 58
Section 10.01 Consent to Jurisdiction........................ 58
ARTICLE XI MISCELLANEOUS.................................. 58
Section 11.01 Applicable Law................................. 58
Section 11.02 Set-off........................................ 58
Section 11.03 Expenses....................................... 59
Section 11.04 Amendments..................................... 59
Section 11.05 Cumulative Rights and No Waiver................ 59
Section 11.06 Notices........................................ 60
Section 11.07 Separability................................... 60
Section 11.08 Assignments and Participations................. 60
Section 11.09 Waiver of Jury Trial........................... 62
Section 11.10 Confidentiality................................ 62
Section 11.11 Indemnity...................................... 62
Section 11.12 Extension of Termination Dates; Removal of
Banks; Substitutions of Banks................ 63
Section 11.13 Knowledge of the Company....................... 65
Section 11.14 Execution in Counterparts...................... 65
EXHIBIT A Form of Conversion/Continuance Request......... 67
EXHIBIT B Form of Pro Rata Loan Request.................. 68
EXHIBIT C-1 Form of Pro Rata Note.......................... 69
EXHIBIT D-1 Form of Opinion of Latham & Watkins............ 72
EXHIBIT D-2 Form of Opinion of Michael R. Pfeiffer, Esq.... 75
EXHIBIT E Form of Property Management Exception Report... 78
EXHIBIT F Real Estate Investment Criteria................ 79
EXHIBIT G Form of Subsidiary Guaranty.................... 80
SCHEDULE 1 Commitments.................................... 96
SCHEDULE 5.01(A) Subsidiaries and Joint Venture of the Company.. 97
SCHEDULE 5.01(Q) ERISA Liabilities.............................. 98
SCHEDULE 5.01(R) Intellectual Property.......................... 99
</TABLE>
Page 3
REVOLVING CREDIT AGREEMENT
Revolving Credit Agreement, dated as of February 1, 2000 (this
"Agreement"), among Realty Income Corporation, a Maryland corporation
(the "Company"), each of the banks identified on the signature pages
hereof (each, a "Bank" and, collectively, the "Banks") and Bank of
Montreal, as Agent for the Banks (the "Agent").
W I T N E S S E T H:
Whereas, the Company has requested the Banks to lend up to $25,000,000
to the Company on a revolving basis for the acquisition of property in
the ordinary course of the Company's business, and for making capital
contributions (whether by loan or otherwise) to a Subsidiary for
purposes of the acquisition of property of such Subsidiary, or for
other business purposes of such Subsidiary, including related costs
and expenses and for the payment of fees and expenses incurred in
connection with this Agreement.
Now, Therefore, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) Terms Generally. The definitions
ascribed to terms in this Section 1.01 and elsewhere in this Agreement
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
"include", "includes" and "including" shall be deemed to be followed
by the phrase "without limitation". The words "hereby", "herein",
"hereof", "hereunder" and words of similar import refer to this
Agreement as a whole (including any exhibits and schedules hereto) and
not merely to the specific section, paragraph or clause in which such
word appears. All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided herein, all
references to "dollars" or "$" shall be deemed references to the
lawful money of the United States of America.
(b) Accounting Terms. Except as otherwise expressly provided herein,
all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided,
however, that, for purposes of determining compliance with any
covenant set forth in Article VII which requires financial
computations, such terms shall be construed in accordance with GAAP as
in effect on the Effective Date applied on a basis consistent with the
construction thereof applied in preparing the Company's audited
financial statements referred to in Section 5.01(h). In the event
Page 4
<PAGE>
there shall occur a change in GAAP which but for the foregoing proviso
would affect the computation used to determine compliance with any
covenant set forth in Article VII which requires financial
computations, the Company and the Banks agree to negotiate in good
faith in an effort to agree upon an amendment to this Agreement that
will permit compliance with such covenant to be determined by
reference to GAAP as so changed while affording the Banks the
protection afforded by such covenant prior to such change (it being
understood, however, that such covenant shall remain in full force and
effect in accordance with its existing terms pending the execution by
the Company and the Banks of any such amendment).
(c) Other Terms. The following terms shall have the meanings
ascribed to them below or in the Sections of this Agreement indicated
below:
"ABR Loans" shall mean Loans which bear interest at a rate based upon
the Base Rate and in the manner set forth in Section 3.02.
"Agent" shall have the meaning given to such term in the preamble of
this Agreement and shall also include any successor agent hereunder.
"Adverse Environmental Condition" shall mean any of the matters
referred to in clauses (i) or (ii) of the definition of Environmental
Claim.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to
control another Person if such first Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through
ownership of stock, by contract or otherwise.
"Applicable Margin" shall mean the margin set forth in the following
chart applicable to the Pricing Level then in effect:
<TABLE>
Pricing Level Applicable LIBOR Margin
------------- -----------------------
<S> <C>
I 0.875%
II 1.000%
III 1.125%
IV 1.225%
V 1.450%
</TABLE>
"Pricing Level I" shall be applicable for so long as the Company's
Debt Rating is better than or equal to A-/A3; "Pricing Level II" shall
be applicable for so long as the Company's Debt Rating is lower than
A-/A3 but better than or equal to BBB+/Baal; "Pricing Level III" shall
Page 5
<PAGE>
be applicable for so long as the Company's Debt Rating is lower than
BBB+/Baal but better than or equal to BBB/Baa2; "Pricing Level IV"
shall be applicable for so long as the Company's Debt Rating is
lower than BBB/Baa2 but better than or equal to BBB-/Baa3; "Pricing
Level V" shall be applicable for so long as the Company's Debt Rating
is lower than BBB-/Baa3, or if the Company does not have a Debt
Rating. Changes in the applicable Pricing Level shall be effective as
of the first day of the calendar quarter following a change in the
Company's Debt Rating.
"Assignee" has the meaning ascribed to such term in Section 11.08(c).
"Available Commitment" shall mean (a) on any date prior to the
Termination Date, an amount equal to the remainder of (i) the Total
Commitment on such date minus (ii) the aggregate outstanding principal
amount of Loans on such date and (b) on and after the Termination
Date, $0.
"Bank" shall have the meaning given to such term in the preamble of
this Agreement and shall also include any other financial institution
which pursuant to the provisions hereof becomes a party to this
Agreement.
"Base LIBOR" shall mean, with respect to any Eurodollar Loan for any
Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service,
as determined by the Agent from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as
the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate does not appear on such
Page 3750 (or any successor or substitute page, or any successor to or
substitute for such Service) at such time for any reason, then "Base
LIBOR" with respect to such Eurodollar Loan for such Interest Period
shall be the rate at which dollar deposits of $5,000,000 and for a
maturity comparable to such Interest Period are offered by the
principal London office of the Agent in immediately available funds in
the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Base Rate" shall mean a fluctuating interest rate per annum as shall
be in effect from time to time, which rate per annum shall on any day
be equal to the higher of:
(a) the rate of interest publicly announced by the Agent from
time to time as its prime commercial loan rate in effect on
such day; and
(b) the sum of (i) 1/2 of 1% per annum and (ii) the Federal
Funds Rate.
Page 6
<PAGE>
"Borrowing Date" shall mean the date set forth in each Loan Request as
the date upon which the Company desires to borrow Loans pursuant to
the terms of this Agreement.
"Business Day" shall mean (i) with respect to any ABR Loan or any
payment of the Facility Fee, any day except a Saturday, Sunday or
other day on which commercial banks in Chicago are authorized by law
to close and (ii) with respect to any Eurodollar Loan, any day on
which commercial banks are open for domestic and international
business (including dealings in U.S. dollar deposits) in London and
Chicago.
"Capital Lease" shall mean, with respect to any Person, any obligation
of such Person to pay rent or other amounts under a lease with respect
to any property (whether real, personal or mixed) acquired or leased
by such Person that is required to be accounted for as a liability on
a balance sheet of such Person in accordance with GAAP.
"Capital Lease Obligations" shall mean the obligation of any Person to
pay rent or other amounts under a Capital Lease.
"Change of Control" shall mean any person or group of Persons (within
the meaning of Section 13(d) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended) who shall become the beneficial owner(s),
directly or indirectly, of capital stock of the Company representing
50% or more of the voting power of the Company or otherwise enabling
such Person or group of Persons to exercise effective control over the
management of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" of any Bank shall mean, in the case of each Bank (i)
prior to any such Bank's Termination Date, the amount set forth
opposite such Bank's name under the heading "Commitment" on Schedule 1
hereto, or set forth in the assignment agreement executed by such Bank
if it is not a Bank on the date hereof, as such amount may be adjusted
from time to time pursuant to assignments of such Bank and as such
amount may be reduced from time to time pursuant to Section 2.05 and
(ii) after such Bank's Termination Date, zero.
"Compliance Date" shall mean each of the date of this Agreement, each
Borrowing Date, each Conversion Date and the date of each delivery by
the Company of a certificate requiring the Company to certify as to
the accuracy of the representations and warranties contained in
Article V.
"Consolidated Annualized Base Rent" shall mean, in respect of any
fiscal quarter, (A) the product of (i) the monthly contractual base
rents at the end of such fiscal quarter multiplied by (ii) twelve plus
(B) the previous twelve month's historical percentage rents at such
time, determined on a consolidated basis for the Company and its
Subsidiaries.
Page 7
<PAGE>
"Consolidated Depreciation and Amortization" shall mean, at any date
of determination, "Depreciation and Amortization" or the similar item,
determined on a consolidated basis for the Company and its
Subsidiaries, as shown on the most recent consolidated statement of
income for the Company and its Subsidiaries which has been delivered
to the Agent pursuant to Section 7.01(a).
"Consolidated Funds from Operations" shall mean, for any period,
Consolidated Net Income, after dividends on preferred stock, excluding
gain or loss from debt restructurings or sales of properties plus
provision for impairment losses, plus Consolidated Depreciation and
Amortization, and after adjustments for unconsolidated partnerships
and joint ventures, determined on a consolidated basis for the Company
and its Subsidiaries, as shown on the most recent consolidated
statement of cash flow for the Company and its Subsidiaries which has
been delivered to the Agent pursuant to Section 7.01(a).
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to Capital Leases in
accordance with GAAP) of the Company and its Subsidiaries, determined
on a consolidated basis, in accordance with GAAP with respect to all
outstanding Indebtedness of the Company and its Subsidiaries,
including, without limitation, paid-in-kind (PIK) interest and all net
costs under Interest Rate Protection Agreements.
"Consolidated Net Income" shall mean, for any period, "Net Income" or
the similar item, determined on a consolidated basis for the Company
and its Subsidiaries, as shown on the most recent consolidated
statement of income for the Company and its Subsidiaries which has
been delivered to the Agent pursuant to Section 7.01(a).
"Consolidated Stockholders' Equity" shall mean, for any period, "Total
Stockholders' Equity" or the similar item, determined on a
consolidated basis for the Company and its subsidiaries, as shown on
the most recent consolidated balance sheet for the Company and its
Subsidiaries which has been delivered to the Agent pursuant to Section
7.01(a).
"Consolidated Tangible Stockholders' Equity" shall mean Consolidated
Stockholders' Equity less all intangible assets of the Company and its
Subsidiaries. For purposes of the foregoing, "intangible assets"
means goodwill, patents, trade names, trademarks, copyrights,
franchises, organization expenses and any other assets that are
properly classified as intangible assets in accordance with GAAP.
"Consolidated Total Assets" shall mean, at any date of determination,
"Total Assets" or the similar item, determined on a consolidated basis
for the Company and its Subsidiaries, as shown on the most recent
consolidated balance sheet for the Company and its Subsidiaries which
has been delivered to the Agent pursuant to Section 7.01(a).
Page 8
<PAGE>
"Consolidated Total Indebtedness" shall mean total Indebtedness,
determined on a consolidated basis for the Company and its
Subsidiaries, as shown on the most recent consolidated balance sheet
for the Company and its Subsidiaries which has been delivered to the
Agent pursuant to Section 7.01(a).
"Consolidated Total Liabilities" shall mean, at any date of
determination, "Total Liabilities" or the similar item, determined on
a consolidated basis for the Company and its Subsidiaries, as shown on
the most recent consolidated balance sheet for the Company and its
Subsidiaries which has been delivered to the Agent pursuant to Section
7.01(a).
"Conversion/Continuance Date" shall mean the date on which a
conversion of interest rates on outstanding Loans, pursuant to a
Conversion/Continuance Request, shall take effect.
"Conversion/Continuance Request" shall mean a request by the Company
to convert or continue the interest rate on all or portions of
outstanding Loans pursuant to the terms hereof, which shall be
substantially in the form of Exhibit A and shall specify, with respect
to such outstanding Loans, (i) the requested Conversion/Continuance
Date, which shall be not less than three Business Days after the date
of such Conversion/Continuance Request, (ii) the aggregate amount of
the Loans, from and after the Conversion/Continuance Date, which are
to bear interest as ABR Loans or Eurodollar Loans and (iii) if any
Loans are Eurodollar Loans, the term of the Interest Periods therefor,
if any.
"Covered Tax" means any Tax that is not an Excluded Tax.
"Credit Documents" shall mean this Agreement and the Notes.
"Debt Rating" shall mean the highest rating published by at least two
of the three Rating Agencies with respect to the senior unsecured
long-term debt of the Company, provided, that if no two Rating
Agencies have published the same rating with respect to the Company's
senior unsecured debt, the Debt Rating shall be the rating that is at
the middle of the three published ratings.
"Default" shall mean any event or circumstance which, with the giving
of notice or the passage of time, or both, would become an Event of
Default.
"Effective Date" shall have the meaning ascribed to such term in
Section 6.01.
"Environmental Claim" shall mean any notice, request for information,
action, claim, order, proceeding, demand or direction (conditional or
otherwise) based on, relating to or arising out of (i) any violation
of any Environmental Law by the Company, any person acting on behalf
of the Company or any subsidiary of the Company, or (ii) any
Page 9
<PAGE>
liabilities under any Environmental Law arising out of or otherwise in
respect of any act, omission, event, condition or circumstance
existing or occurring in connection with the Company and its
Subsidiaries, including without limitation liabilities relating to the
release of hazardous substances (whether on-site or off-site), any
claim by any third party (including, without limitation, tort suits
for personal or bodily injury, tangible or intangible property damage,
damage to the environment, nuisance and injunctive relief), fines,
penalties or restrictions, or the transportation, storage, treatment
or disposal of any Hazardous Substances.
"Environmental Law" means (i) any applicable federal, state, foreign
and local law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, relating to (x) the protection, preservation or
restoration of the environment, (including, without limitation, air,
water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (y) the exposure
to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or
disposal of Hazardous Substances, in each case as amended and as now
or hereafter in effect. The term Environmental Law includes, without
limitation, the federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the federal Water Pollution Control Act of 1972,
the federal Clean Air Act, the federal Clean Water Act, the federal
Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the federal Solid Waste
Disposal Act and the federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act and the Federal
Occupational Safety and Health Act of 1970, each as amended and as now
or hereafter in effect (collectively, "Environmental Ordinances"), and
(ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" shall mean a corporation, partnership or other
entity which is considered one employer with the Company under Section
4001 of ERISA or Section 414 (b), (c), (m) or (o) of the Code.
"Eurodollar Loans" means, collectively, Eurodollar Pro Rata Loans.
"Eurodollar Pro Rata Loans" shall mean Pro Rata Loans which bear
interest at a rate based upon Base LIBOR and in the manner set forth
in Section 3.03.
Page 10
<PAGE>
"Eurodollar Reserve Percentage" shall mean for any day, that
percentage, expressed as a decimal, which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement
(including any marginal, supplemental or emergency reserve
requirements) for a member bank of the Federal Reserve System in
Chicago with deposits exceeding one billion dollars in respect of
eurocurrency funding liabilities. LIBOR shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" shall mean any of the events described in Section
8.01.
"Excluded Asset Sales" shall mean, in respect of each fiscal year, the
sale, lease (not entered into in the ordinary course of business),
transfer or disposal during such year of assets, the aggregate
proceeds of which, in one or more transactions, are less than
$50,000,000.
"Excluded Tax" means, in respect of any Bank, Participant, Assignee or
the Agent, as the case may be, any of the following taxes, levies,
imposts, duties, deductions, withholdings or charges, and all
liabilities with respect thereto: (i) Taxes imposed on the net income
of a Bank, the Agent, Participant or Assignee (including without
limitation branch profits taxes, minimum taxes and taxes computed
under alternative methods, at least one of which is based on net
income (collectively referred to as "net income taxes") by (A) the
jurisdiction under the laws of which such Bank, the Agent, Participant
or Assignee is organized or any political subdivision thereof, (B) the
jurisdiction of such Bank's, Participant's, Assignee's or the Agent's
applicable lending office or any political subdivision thereof or (C)
any jurisdiction in which the Bank, the Agent, Participant or Assignee
is doing business (other than solely as a result of actions
contemplated or required by this Agreement); (ii) any Taxes to the
extent that they are in effect and would apply to a payment to such
Bank or the Agent, as applicable, as of the Closing Date, or as of the
date such Person becomes a Bank, in the case of any Participant or
Assignee pursuant to Section 11.08; (iii) any Taxes resulting from a
failure to take the actions, if any, required by subsection
4.04(a)(iv); (iv) any Taxes to the extent of any credit or other Tax
benefit which, in the reasonable good faith judgment of such Bank,
Participant, Assignee or the Agent, as the case may be, is available
to such Bank, Participant, Assignee or the Agent, as applicable, as a
result thereof and is allocable to the transactions contemplated by
this Agreement; (v) any Taxes imposed on or measured by the overall
net income of any Bank by the United States of America or any
political subdivision or taxing authority thereof or therein; or (vi)
any Taxes that would not have been imposed but for the failure by the
Agent or such Bank, Participant or Assignee as applicable to provide
and keep current any certification or other documentation required to
qualify for an exemption from or reduced rate of any Tax.
Page 11
<PAGE>
"Facility Fee" shall have the meaning ascribed to such term in Section
2.04(a).
"Facility Fee Rate" with respect to any Facility Fee payment shall
mean the facility fee rate set forth in the following chart applicable
to the Pricing Level (determined as set forth under "Applicable
Margin" above) in effect on the date on which such Facility Fee
payment is due:
<TABLE>
Pricing Level Facility Fee
------------- ------------
<S> <C>
I 0.125%
II 0.150%
III 0.175%
IV 0.225%
V 0.300%
</TABLE>
"Federal Funds Rate" for any day shall mean the rate on such day for
Federal Funds as published by the Board of Governors of the Federal
Reserve System in "Statistical Release H.15(519), Selected Interest
Rates", or any successor publication, under the heading "Federal Funds
(Effective)". In the event that such rate or such publication is not
published with respect to such day the Federal Funds Rate on such day
shall be the "Federal Funds/Effective Rate" as posted by the Federal
Reserve Bank of Chicago for that day in its publication "Composite
Closing Quotations for U.S. Government Securities". The Federal Funds
Rate for Saturdays, Sundays and any other day on which the Federal
Reserve Bank of Chicago is closed shall be the Federal Funds Rate as
in effect for the next preceding day for which such rates are
published or posted, as the case may be.
"GAAP" shall mean generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entities as may be
approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
"Guarantee" by any person shall mean any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect
of guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including
any obligation of such Person, (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Indebtedness, (ii) to purchase
property, securities or services for the purpose of assuring the
holder of such Indebtedness of the payment of such Indebtedness, or
(iii) to maintain working capital, equity capital or other financial
Page 12
<PAGE>
statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of
business.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Hazardous Substance" means any substance presently or hereafter
listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any
Environmental Ordinance, whether by type or by quantity, including any
substance containing any such substance as a component. Hazardous
Substance includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos, asbestos containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
"Indebtedness" of any Person shall mean, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (including all obligations,
contingent or otherwise, of such Person in connection with letter of
credit facilities, bankers' acceptance facilities, Interest Rate
Protection Agreements or other similar facilities including currency
swaps) other than indebtedness to trade creditors and service
providers incurred in the ordinary course of business; (b) all
obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments; (c) all indebtedness created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights
and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property); (d)
all Capital Lease obligations of such Person; (e) that portion of the
Indebtedness of any joint venture of which such Person is a joint
venturer that bears the same proportion to the total Indebtedness of
such joint venture as such Person's equity interest in such joint
venture (however denominated) bears to the total equity of such joint
venture, expressed as a percentage in the form of a decimal to no more
than four decimal places; (f) without duplication of clause (e) above,
all Indebtedness of unconsolidated joint venturers in which such
Person is a joint venturer to the extent recourse may be had to such
Person or its assets; (g) all obligations of such Person in respect of
any "forward equity purchase", or other arrangement, however
characterized, pursuant to which such Person makes a forward purchase
of its own capital stock from a counterparty and which is settled in
such capital stock, and having such other terms as may be agreed, and
having a value, for purposes hereof, equal to its mark-to-market
Page 13
<PAGE>
valuation on any date of determination; (h) all Indebtedness referred
to in clauses (a), (b), (c), (d), (e), (f) or (g) above secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness; (i) all preferred stock issued by
such Person which is redeemable, prior to the full satisfaction of the
Company's obligations under the Credit Documents (including repayment
in full of the Loans and all interest accrued thereon), other than at
the option of such Person, valued at the greater of its voluntary or
involuntary liquidation preference plus accumulated and unpaid
dividends and (j) all Indebtedness of others Guaranteed by such
Person. For purposes of this Agreement, the amount of any
Indebtedness under clauses (c) and (h) shall be the lesser of (x) the
principal amount of such Indebtedness and (y) the value of the
property subject to the Lien referred to therein. For purposes of
this Agreement tenant security deposits shall not be deemed to be
Indebtedness.
"Initial Loan" shall mean the first Loan which is made pursuant to the
terms hereof.
"Interest Period" shall mean each one, two, three or six-month period
selected by the Company in a Pro Rata Loan Request, or, if no
Eurodollar Loans are then outstanding, at the time of a
Conversion/Continuance Request, or pursuant to Section 3.03 hereof and
commencing on the date the relevant loan is made or the last day of
the current Interest Period, as the case may be.
"Interest Rate Protection Agreements" shall mean any interest rate
swap, collar or cap agreement or similar arrangement used by a Person
to fix or cap a floating rate of interest on Indebtedness to a
negotiated maximum rate or amount.
"Leverage Ratio" shall mean the ratio of Consolidated Total
Indebtedness to Consolidated Tangible Stockholders' Equity.
"Lien" shall mean, with respect to any asset, any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on
such asset.
"LIBOR" shall mean with respect to any Interest Period the rate per
annum determined pursuant to the following formula:
Base LIBOR
---------------------------------------------
LIBOR = (1 - Eurodollar Reserve Percentage)
"Loan Request" shall mean either a Pro Rata Loan Request.
"Loans" shall mean, collectively, Pro Rata Loans outstanding hereunder
from time to time.
Page 14
<PAGE>
"Material Adverse Change" shall mean a material adverse change in the
business, properties, condition (financial or otherwise) or operations
of the Company and its Subsidiaries, taken as a whole since
December 31, 1998.
"Material Adverse Effect" shall mean (i) any material adverse effect
on the business, properties, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole, from
and after the date of any determination, (ii) any material adverse
effect on the ability of the Company to perform its obligations
hereunder and under the Credit Documents, or (iii) any adverse effect
on the legality, validity, binding effect or enforceability of this
Agreement or the Notes.
"Net Cash Proceeds" shall mean (i) when used in respect of any sale or
disposition of assets of the Company or any Subsidiary, the gross cash
proceeds received by the Company, or the relevant Subsidiary from such
sale or disposition, less: (x) the costs of sale, including payment
of the outstanding principal amount of, and premium or penalty, if
any, and interest on any Indebtedness which is paid or required to be
paid as a result of such sale, all legal, accounting, title and
recording tax expenses, commissions and other fees and expenses paid
or to be paid in cash solely as a result of such sale, and all other
federal, state, local and foreign taxes paid or payable in connection
therewith; (y) the portion of gross cash proceeds from such sale or
disposal which the Company must distribute to its stockholders in
order to avoid the imposition of any income or excise tax with respect
to a taxable gain (if any) associated with such sale or disposition;
and (z) the portion of gross cash proceeds from such sale or disposal
by any Subsidiary which are distributed pro rata to stockholders or
other equity holders of such Subsidiary other than the Company, (ii)
when used with respect to any loss, casualty, fire damage, theft,
destruction or condemnation of any capital asset of the Company or any
Subsidiary, the gross cash proceeds received by the Company or the
relevant Subsidiary under any insurance policy or any award or
compensation received, as the case may be, in each case as a result of
any such loss, casualty, fire damage, theft, destruction or
condemnation, net of all legal, accounting and other fees and expenses
paid or to be paid in cash as a result of such loss, casualty, fire
damage, theft, destruction or condemnation, and all other federal,
state, local and foreign taxes paid or payable in connection
therewith, less the portion of gross cash proceeds from such award or
compensation which the Company must distribute to its stockholders in
order to avoid the imposition of any income or excise tax with respect
to a taxable gain (if any) associated with such award or compensation,
provided that such award or compensation shall not be deemed to be Net
Cash Proceeds if such proceeds have been reinvested in or have been
committed to be reinvested in, or in replacement of, the lost,
damaged, stolen, destroyed or condemned property within twelve months
from the date of such award or compensation, and less the portion of
gross cash proceeds from such award or compensation which are
distributed pro rata to stockholders or other equity holders of such
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<PAGE>
Subsidiary other than the Company; and (iii) when used in respect of
the issuance, assumption or incurrence of Specified Additional
Indebtedness by the Company or any of its Subsidiaries, the gross cash
proceeds received by the Company or the relevant Subsidiary from such
issuance, assumption or incurrence less the costs of issuance,
assumption or incurrence. Net Cash Proceeds shall equal $0 if it
would otherwise be a negative number hereunder.
"Notes" means the Pro Rata Notes.
"Participant" shall have the meaning ascribed to such term in Section
11.08(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" shall mean (i) Liens for taxes not delinquent
or being contested in good faith and by appropriate proceedings and
for which adequate reserves (in accordance with GAAP) are being
maintained, (ii) deposits or pledges to secure obligations under
workers' compensation, social security or similar laws, or under
unemployment insurance, (iii) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money),
leases (other than Capital Leases), statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the
ordinary course of business, (iv) mechanics', workers', materialmen's
or other like Liens arising in the ordinary course of business with
respect to obligations which are not due or which are being contested
in good faith, (v) minor imperfections of title on real estate,
provided such imperfections do not render title unmarketable, (vi) all
other Liens existing on the date of this Agreement and disclosed to
the Bank in writing prior to the date hereof (including in the notes
of the Company's financial statements), (vii) leases or subleases
granted to others in the ordinary course of business of the Company
and its Subsidiaries, (viii) any interest or title of a lessor in the
property subject to any Capital Lease or operating lease, (ix) Liens
arising from filing Uniform Commercial Code financing statements
regarding leases or sub-leases, (x) any attachment or judgment Lien
arising from a judgment or order against the Company or any Subsidiary
that does not give rise to a Default or an Event of Default, provided
that such Lien is not in place for more than sixty days or has been
stayed, (xi) Liens encumbering customary initial deposits and margin
deposits, and other Liens securing Indebtedness under Interest Rate
Protection Agreements that are within the general parameters customary
in the industry and incurred in the ordinary course of business, (xii)
any option, contract or other agreement to sell an asset provided such
sale is otherwise permitted by this Agreement, (xiii) any statutory
right of a lender to which the Company or a Subsidiary may be indebted
to offset against, or appropriate and apply to the payment of, such
Indebtedness any and all balances, credits, deposits, accounts or
monies of the Company or a Subsidiary with or held by such lender,
(xiv) any pledge or deposit of cash or property in conjunction with
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obtaining bonds or letters of credit required to engage in
constructing on-site and off-site improvements required by
municipalities or other governmental authorities in the ordinary
course of business of the Company and its Subsidiaries, (xv) Liens in
favor of all of the Banks collectively, and (xvi) purchase money
security interests in personal property, with such encumbrances, in
the aggregate, not to exceed $3,500,000.
"Permitted Subsidiary Indebtedness" shall have the meaning ascribed to
such term in Section 7.02(a).
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit
corporation, entity or government (whether Federal, state, county,
city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof).
"Plan" shall mean an employee benefit plan as defined in Section 3(3)
of ERISA which is maintained or contributed to by the Company or an
ERISA Affiliate while such entity is an ERISA Affiliate.
"Pro Rata Loan Request" shall mean a request by the Company to borrow
Pro Rata Loans pursuant to the terms hereof, which shall be
substantially in the form of Exhibit B and shall specify, with respect
to such requested Loans, (i) the requested Borrowing Date, (ii) the
aggregate amount of Pro Rata Loans which the Company desires to borrow
on such date, (iii) whether such requested Loans are to bear interest
as ABR Loans or Eurodollar Loans, and (iv) if the requested Loans are
to bear interest as Eurodollar Loans the requested term of the
Interest Period therefor.
"Pro Rata Loans" shall have the meaning ascribed to such term in
Section 2.01.
"Pro Rata Notes" shall mean, collectively, the promissory notes of the
Company evidencing Pro Rata Loans, each substantially in the form of
Exhibit C-1.
"Pro Rata Share" shall mean, with respect to any Bank, the proportion
of such Bank's Commitment to the Total Commitment of all the Banks or,
if the Total Commitment shall have been canceled or reduced to $0 or
expired, the proportion of such Bank's then outstanding Loans to the
aggregate amount of Loans then outstanding.
"Rating Agency" shall mean Moody's Investors Service, Inc., Standard &
Poor's Rating Services, a division of the McGraw Hill Companies, Inc.,
or Duff & Phelps Credit Rating Co.
"Real Estate Development Project" shall mean any real estate
development activity not related to current income-producing
properties, including, without limitation, the development of
undeveloped land.
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"Real Estate Investment Criteria" shall mean the Real Estate
Investment Criteria established by the Company's Board of Directors as
amended, restated, supplemented or revised from time to time, the
current version (as of the date hereof) of which are attached hereto
as Exhibit F.
"Reference Amount", with respect to any Bank and Interest Period,
shall mean the amount of that Bank's Eurodollar Loan scheduled to be
outstanding during that Interest Period (i) without taking into
account any reduction in the amount of any Bank's Loan through any
assignment or transfer and (ii) rounded up to the nearest integral
multiple of $1,000,000.
"REIT" shall have the meaning ascribed to such term in Section
5.01(w).
"Required Banks" shall mean at any date Banks having at least 60% of
the Total Commitment or, if the Total Commitment has been canceled or
terminated, holding Notes evidencing at least 60% of the aggregate
unpaid principal amount of the Loans provided that for purposes of
this definition, the Commitment of any Bank shall be deemed reduced by
the principal amount of any Pro Rata Loan which such Bank is obligated
to advance pursuant to Section 2.02 hereof but which fails to do so.
"SIC Code" shall mean the Standard Industrial Classification Code,
published by the United States Office of Management and Budget.
"Single-Employer Plan" shall mean any Plan that is a single-employer
plan as defined in Section 4001(a)(15) of ERISA which is subject to
the provisions of Title IV of ERISA.
"Solvent" shall mean, when used with respect to any Person, that:
(a) at the date of determination, the present fair salable value
of such Person's assets is in excess of the total amount of
such Person's liabilities;
(b) at the date of determination, such Person is able to pay its
debts as they become due; and
(c) such Person does not have unreasonably small capital to carry
on such Person's business as theretofore operated and all
businesses in which such Person then is about to engage.
"Specified Additional Indebtedness" of any Person shall mean
Indebtedness which is not outstanding as of the date hereof, excluding
(i) Indebtedness to the Agent, or the Banks hereunder and under the
Notes, (ii) Indebtedness incurred in connection with the payment of
any dividend necessary for the Company to maintain its qualification
as a REIT, (iii) up to $10,000,000 principal amount of additional
unsecured Indebtedness that matures and becomes due and payable on a
date not more than one year from the date such Indebtedness was
incurred by the Company and (iv) Permitted Subsidiary Indebtedness.
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"Subsidiary" shall mean any Person of which or in which the Company
and its other Subsidiaries own directly or indirectly 50% or more of:
(a) the combined voting power of all classes of stock having
general voting power under ordinary circumstances to elect a
majority of the board of directors of such Person, if it is a
corporation,
(b) the capital interest or profits interest of such Person, if it
is a partnership, joint venture or similar entity, or a
corporation whose capital stock so owned are non-voting, or
(c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization;
provided, however, that "Subsidiary" shall not include any such entity
that the Company does not control. For the purpose of this
definition, the term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting equity interests, by contract or otherwise.
"Subsidiary Guaranty" shall mean a guaranty of a Subsidiary furnished
pursuant to Section 7.02(e)(vii), in the form of Exhibit G hereto.
"Tax" means any present or future tax, levy, impost, duty,
governmental fee, deduction, withholding or charge, and all
liabilities with respect thereto of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed.
"Termination Date" shall mean, with respect to any Bank, the earliest
to occur of (i) February 1,2003 or such later date as may be agreed to
by such Bank pursuant to Section 11.12, (ii) the date on which the
obligations of the Banks to make loans hereunder shall terminate
pursuant to Section 8.01 or the Commitments shall be reduced to zero
pursuant to Section 2.05, and (iii) the date specified as such Bank's
Termination Date pursuant to Section 11.12, or, if in any case (other
than clause (ii) above) such day is not a Business Day, the next
succeeding Business Day; in all cases, subject to the provisions of
Section 11.12(d).
"Total Commitment" shall mean the aggregate Commitments of all the
Banks.
"Unmatured Surviving Obligations" shall mean, as of any date, any
obligations under this Agreement which are contingent and unliquidated
and not then due and payable on such date and which pursuant to the
provisions of this Agreement survive termination of this Agreement.
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"Unsecured Revolver" shall mean the revolving credit made available to
the Company under that certain Credit Agreement dated as of
December 14, 1999 by and among the Company, the Agent, The Bank of New
York, First Union National Bank, Wells Fargo Bank, National
Association, BNY Capital Markets, Inc. and the other banks party
thereto.
"Wholly owned Subsidiary" shall mean any Subsidiary all the equity
interests of which (other than directors' qualifying shares, if a
corporation) at the time are owned directly or indirectly by the
Company and/or one or more Wholly owned Subsidiaries of the Company.
"Year 2000 Issue" means failure of computer software, hardware and
firmware systems and equipment containing or relying on embedded
computer chips to properly receive, transmit, process, manipulate,
store, retrieve, retransmit, or in any other way utilize data or
information due to the occurrence of the year 2000 or the inclusion of
dates on or after January 1, 2000.
ARTICLE II
THE LOANS
Section 2.01. The Loans. Prior to the Termination Date, and subject
to the terms and conditions of this Agreement, upon the request of the
Company, and upon the satisfaction by the Company or the waiver by
each of the Banks of each of the conditions precedent contained in
Section 6.02, each of the Banks, severally and not jointly with the
other Banks, agrees to make revolving credit loans (collectively, "Pro
Rata Loans") to the Company from time to time in an aggregate
principal amount at any one time outstanding not to exceed its
Commitment; provided, however, that the aggregate outstanding Loans
may not exceed the Total Commitment.
Section 2.02. Procedure for Pro Rata Loans. (a) The Company may
borrow Pro Rata Loans by delivering a written Pro Rata Loan Request to
the Agent on or before 5:00 P.M., Chicago time, one Business Day prior
to the requested Borrowing Date therefor, in the case of ABR Loans, or
on the date not less than three Business Days prior to the requested
Borrowing Date therefor, in the case of Eurodollar Pro Rata Loans.
ABR Loans shall be in the minimum aggregate amount of $1,000,000 or in
integral multiples of $100,000 in excess thereof. Eurodollar Pro Rata
Loans shall be in the minimum aggregate amount of $5,000,000 or in
integral multiples of $50,000 in excess thereof.
(b) Upon receipt of any Pro Rata Loan Request from the Company, the
Agent shall forthwith give notice to each Bank of the substance
thereof. Not later than 2:00 P.M., Chicago time, on the Borrowing
Date specified in such Pro Rata Loan Request, each Bank shall make
available to the Agent in immediately available funds at the office of
the Agent at its address set forth on the signature pages hereof, such
Bank's Pro Rata Share of the requested Pro Rata Loans.
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(c) Upon receipt by the Agent of funds and satisfaction by the
Company or waiver by each of the Banks of each of the conditions
precedent contained in Section 6.02, the Agent shall disburse to the
Company on the requested Borrowing Date the Pro Rata Loans requested
in such Pro Rata Loan Request. The Agent may, but shall not be
required to, advance on behalf of any Bank such Bank's Pro Rata Share
of the Pro Rata Loans on a Borrowing Date unless such Bank shall have
notified the Agent prior to such Borrowing Date that it does not
intend to make available its Pro Rata Share of such Loans on such date
(it being understood that no action or inaction by the Agent regarding
such an advance shall affect the rights of the Company with respect to
any non-performing Bank). If the Agent makes such advance, the Agent
shall be entitled to recover such amount on demand from the Bank on
whose behalf such advance was made, and if such Bank does not pay the
Agent the amount of such advance on demand, the Company shall promptly
repay such amount to the Agent. Until such amount is repaid to the
Agent by such Bank or the Company, such advance shall be deemed for
all purposes to be a Pro Rata Loan made by the Agent. The Agent shall
be entitled to recover from the Bank or the Company, as the case may
be, interest on the amount advanced by it for each day from the
Borrowing Date therefor until repaid to the Agent, at a rate per annum
equal to (i) in the case of the Bank, the Federal Funds Rate, for the
three-day period beginning on the Borrowing Date, and the applicable
rate on the Pro Rata Loans made on the Borrowing Date for the period
beginning on the fourth day after the Borrowing Date, and (ii) in the
case of the Company, the applicable rate on the Pro Rata Loans made on
the Borrowing Date.
(d) In lieu of delivering the written notice described above, the
Company may give the Agent telephonic notice of any request for
borrowing by the time required under this Section 2.02; provided that
such telephonic notice shall be confirmed by delivery of a written
notice to the Agent promptly but in no event later than 3:00 P.M.,
Chicago time, on the date of such telephonic notice.
Section 2.03. Pro Rata Notes. The Company's obligation to repay the
Pro Rata Loans shall be evidenced by Pro Rata Notes, one such Pro Rata
Note payable to the order of each Bank. The Pro Rata Note of each
Bank shall (i) be in the principal amount of such Bank's Commitment,
(ii) be dated the date of the initial Loan and (iii) be stated to
mature on the Termination Date as such date may be extended hereunder
and bear interest from its date until maturity on the principal
balance (from time to time outstanding thereunder) payable at the
rates and in the manner provided herein. Each Bank is authorized to
indicate upon the grid attached to its Pro Rata Note all Pro Rata
Loans made by it pursuant to this Agreement, interest elections and
payments of principal and interest thereon. Such notations shall be
presumptive as to the aggregate unpaid principal amount of all Pro
Rata Loans made by such Bank, and interest due thereon, but the
failure by any Bank to make such notations or the inaccuracy or
incompleteness of any such notations shall not affect the obligations
of the Company hereunder or under the Pro Rata Notes.
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Section 2.04. Certain Fees. (a) The Company shall pay to the Agent a
fee (the "Facility Fee") equal to the Facility Fee Rate per annum
(calculated on the basis of a 360-day year for the actual number of
days involved) on the daily average amount of the Total Commitment,
regardless of usage (excluding the amount of any canceled or reduced
portion of the Commitment for which the Facility Fee was paid in
connection with such cancellation or reduction pursuant to Section
2.05 hereof) during the quarter with respect to which such Facility
Fee is being paid. Such Facility Fee shall be payable in arrears on
the last Business Day of each calendar quarter, commencing on the
first such date after the date hereof, on any date that the Total
Commitment is canceled or reduced pursuant to Section 2.05 (but only
with respect to the amount of such cancellation or reduction) and on
the Termination Date.
(b) The Company shall pay to the Agent for its own account such fees
as have been or may hereinafter be agreed to between the Agent and the
Company, in the amounts and at the times agreed upon.
(c) On the Effective Date the Company shall pay to the Agent for the
account of each of the Banks such fees as have been or may hereinafter
be agreed to between the Agent and the Company, in the amounts and at
the times agreed upon.
Section 2.05. Cancellation or Reduction of the Commitment. The
Company shall have the right, upon not less than three Business Days'
written notice to the Agent and upon payment of the Facility Fees
relating to the amount of the Total Commitment canceled or reduced
which have accrued through the date of such cancellation or reduction,
with respect to the amount of the cancellation or reduction, to cancel
the Total Commitment in full or to reduce the amount thereof;
provided, however, that the Total Commitment may not be canceled so
long as any Loan remains outstanding; and provided, further, that the
amount of any partial reduction in the Total Commitment shall not
exceed the remainder of (i) the Total Commitment on such date minus
(ii) the aggregate outstanding principal amount of Loans on such date.
Partial reductions of the Total Commitment shall be in the amount of
$5,000,000 or in integral multiples of $1,000,000 in excess thereof
(or, if the aggregate outstanding amount of Loans is less than
$5,000,000, then all of such lesser amount). All such cancellations
or reductions shall be permanent.
Section 2.06. Optional Prepayment. The Company shall have the right,
on not less than three Business Days' written notice to the Agent in
the case of Eurodollar Pro Rata Loans, and upon such written notice
delivered by 10:00 A.M. Chicago time the day of the proposed
prepayment to the Agent in the case of ABR Loans, to prepay Pro Rata
Loans bearing interest on the same basis and having the same Interest
Periods, if any, in whole or in part, without premium or penalty, in
the aggregate principal amount of $1,000,000 or in integral multiples
of $100,000 in excess thereof (or, if the outstanding aggregate amount
of such Loan is less than $1,000,000 then all of such lesser amount),
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together with accrued interest on the principal being prepaid to the
date of prepayment and, in the case of Eurodollar Loans, the amounts
required by Section 4.03. Subject to the terms and conditions hereof,
prepaid Loans may be reborrowed.
Section 2.07. Mandatory Prepayment. (a) If (i) the Company or any
Subsidiary shall sell, lease (other than in the ordinary course of
business), assign, transfer or otherwise dispose of any of its assets,
other than pursuant to Excluded Asset Sales, in an exchange that
qualifies under Section 1031 of the Code, or to the extent that the
Net Cash Proceeds received therefrom are reinvested in similar assets
within 180 days of such disposition of such assets, (ii) the Company
or a Subsidiary issues, assumes or incurs Specified Additional
Indebtedness or (iii) the Company sells or issues equity securities
for cash, other than pursuant to the Company's Stock Incentive Plan,
the Company shall prepay outstanding Pro Rata Loans with the Net Cash
Proceeds therefrom. Notwithstanding the foregoing, if at the time a
mandatory prepayment shall be required to be made hereunder, a
mandatory prepayment shall also be required to be made under any
similar provision of any agreement evidencing Indebtedness permitted
by Section 7.02(a), then the Company may apportion such mandatory
prepayment pro rata according to the relative principal amounts
outstanding under such Credit Agreement and under this Agreement, and
the amount of such mandatory prepayment hereunder shall be reduced
accordingly. Any such reduction shall be described in reasonable
detail in the officer's certificate required under this Section
2.07(c).
(b) Application of Prepayments. All prepayments required to be made
pursuant to this Section 2.07 shall be applied in the following order:
first, to compensate the Banks for any amounts required by Section
4.03, in the case that such prepayment shall apply to any Eurodollar
Pro Rata Loans, second, to accrued interest on the principal amount of
Pro Rata Loans being prepaid, and third, to the principal of the Pro
Rata Loans then outstanding, if any; provided that any prepayments
shall be applied in a manner to minimize the payments, if any,
required by the Company pursuant to Section 4.03 with respect to such
prepayment; and provided, further, that the accrued interest on, and
the outstanding principal of, Pro Rata Loans to be prepaid shall be
applied to prepayment of ABR Loans and Eurodollar Pro Rata Loans in
proportion to the outstanding aggregate principal amount of such ABR
Loans or Eurodollar Pro Rata Loans, respectively, relative to that of
all Pro Rata Loans.
(c) Officer's Certificate. Promptly upon receipt of any Net Cash
Proceeds, other than pursuant to any Excluded Asset Sales, the Company
shall deliver to the Agent a certificate signed by the chief financial
officer of the Company, which shall be in form and substance
satisfactory to the Agent, setting forth the amount of the gross cash
proceeds received and the items deducted therefrom in reasonable
detail in order to confirm the amount of such Net Cash Proceeds and
also setting forth the Company's year-to-date asset sales.
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ARTICLE III
INTEREST, METHOD OF PAYMENT, CONVERSION, ETC.
Section 3.01. Procedure for Interest Rate Determination. Unless the
Company shall request in a Loan Request or in a Conversion/
Continuance Request that Pro Rata Loans (or portions thereof) bear
interest as Eurodollar Pro Rata Loans, the Pro Rata Loans shall bear
interest as ABR Loans.
Section 3.02. Interest on ABR Loans. Each ABR Loan shall bear
interest from the date of such ABR Loan until maturity thereof or
until such Loan is repaid or converted, or the beginning of any
relevant Interest Period, as the case may be, payable in arrears on
the last day of each calendar quarter of each year, commencing with
the first such date after the date hereof, and on the date such ABR
Loan is repaid, at a rate per annum (on the basis of a 365- or 366-day
year for the actual number of days involved in the case of ABR Loans
which accrue interest based upon the Prime Rate and on the basis of a
360-day year for the actual number of days involved in the case of ABR
Loans which accrue interest based upon the Federal Funds Rate) equal
to the Base Rate in effect from time to time, which rate shall change
as and when said Base Rate shall change. If an ABR Loan is
outstanding, the Agent shall notify the Company of the Base Rate when
said Base Rate shall change; provided that the failure to give notice
shall not affect the Company's obligations with respect to such ABR
Loan.
Section 3.03. Interest on Eurodollar Loans. (a) Each Eurodollar Loan
shall bear interest from the date of such Loan until maturity thereof
or until such Loan is repaid, payable in arrears, with respect to
Interest Periods of three months or less, on the last day of such
Interest Period, and with respect to Interest Periods longer than
three months, on the day which is three months after the commencement
of such Interest Period and on the last day of such Interest Period,
at a rate per annum (on the basis of a 360-day year for the actual
number of days involved), determined by the Agent with respect to each
Interest Period with respect to Eurodollar Loans, equal to the sum of
(i) the Applicable Margin, in the case of Eurodollar Pro Rata Loans
and (ii) LIBOR.
(b) The Interest Period for each Eurodollar Loan shall be selected by
the Company at least three Business Days prior to the beginning of
such Interest Period. If the Company fails to notify the Agent of the
subsequent Interest Period for an outstanding Eurodollar Pro Rata Loan
at least three Business Days prior to the last day of the then current
Interest Period of such Eurodollar Pro Rata Loan, then such
outstanding Eurodollar Pro Rata Loan shall become an ABR Loan at the
end of such current Interest Period.
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(c) Notwithstanding the foregoing: (i) if any Interest Period for a
Eurodollar Loan would otherwise end on a day which is not a Business
Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iii) no Interest Period for a Eurodollar Loan may extend beyond the
Termination Date.
(d) Eurodollar Loans shall be made by each Bank from its branch or
affiliate identified as its Eurodollar Lending Office on the signature
page hereto, or such other branch or affiliate as it may hereafter
designate to the Company and the Agent as its Eurodollar Lending
Office. A Bank shall not change its Eurodollar Lending Office
designation if it, at the time of the making of such change, increases
the amounts that would have been payable by the Company to such Bank
under this Agreement in the absence of such a change.
Section 3.04. Conversion/Continuance. (a) The Company may request,
by delivery to the Agent of a written Conversion/Continuance Request
not less than three Business Days prior to a requested Conversion/
Continuance Date, that all or portions of the outstanding ABR Loans
and Eurodollar Pro Rata Loans, in the aggregate amount of $1,000,000
or in integral multiples of $100,000 in excess thereof (or, if the
aggregate amount of outstanding Loans is less than $1,000,000, then
all such lesser amount), shall bear interest from and after the
Conversion/Continuance Date as either ABR Loans or Eurodollar Pro Rata
Loans.
(b) Upon receipt of any such Conversion/Continuance Request from the
Company, the Agent shall forthwith give notice to each Bank of the
substance thereof. Effective on such Conversion/Continuance Date and
upon payment by the Company of the amounts, if any, required by
Section 4.03, the Loans or portions thereof as to which the
Conversion/Continuance Request was made shall commence to accrue
interest as set forth in this Article III for the interest rate
selected by the Company.
(c) In lieu of delivering the above-described notice, the Company may
give the Agent telephonic notice hereunder by the required time under
this Section 3.05; provided that such telephonic notice shall be
confirmed by delivery of a written notice to the Agent by no later
than 3:00 P.M., Chicago time, the date of such telephonic notice.
Section 3.05. Post Default Interest. Upon the occurrence and during
the continuation of an Event of Default, all Loans and any unpaid
installment of interest shall bear interest at a rate per annum equal
to the sum of (i) 2% and (ii) with respect to ABR Loans, the rate of
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interest then applicable to ABR Loans, changing as and when said rate
shall change, with respect to Eurodollar Loans, the rate of interest
applicable to each such Eurodollar Loan. Interest payable pursuant to
this Section 3.06 shall be payable on demand.
Section 3.06. Maximum Interest Rate. (a) Nothing in this Agreement
or the Notes shall require the Company to pay interest at a rate
exceeding the maximum rate permitted by applicable law. Neither this
Section nor Section 11.01 is intended to limit the rate of interest
payable for the account of any Bank to the maximum rate permitted by
the laws of the State of New York (or any other applicable law) if a
higher rate is permitted with respect to such Bank by supervening
provisions of U.S. Federal law.
(b) If the amount of interest payable for the account of any Bank on
any interest payment date in respect of the immediately preceding
interest computation period, computed pursuant to this Article III,
would exceed the maximum amount permitted by applicable law to be
charged by such Bank, the amount of interest payable for its account
on such interest payment date shall automatically be reduced to such
maximum permissible amount.
ARTICLE IV
DISBURSEMENT AND PAYMENT
Section 4.01. Pro Rata Treatment. Each payment of the Facility Fee
and each reduction of the Total Commitment shall be apportioned among
the Banks in proportion to each Bank's Pro Rata Share. Except as
provided in Section 4.04 or 4.05, the ABR Loans and Eurodollar Pro
Rata Loans or portions thereof as to which a Conversion/Continuance
Request has been made pursuant to Section 3.05 hereof shall at all
times bear interest on the same basis respectively (i.e., as ABR Loans
and Eurodollar Pro Rata Loans) and the Interest Periods applicable
thereto, if any, shall be of the same duration.
Section 4.02. Method of Payment. (a) All payments by the Company
hereunder and under the Notes shall be made without set-off or
counterclaim to the Agent, for its account or for the account of the
Bank or Banks entitled thereto, as the case may be, in lawful money of
the United States and in immediately available funds at the office of
the Agent on the date when due.
(b) Any payment hereunder which falls due on a non-Business Day will
be carried over to the next Business Day (subject to Section 3.03(c)),
and interest at the rate applicable hereunder will continue to run
during such extension of time.
Section 4.03. Compensation for Losses. (a) Compensation. In the
event that (i) the Company makes a prepayment under Section 2.06 on a
day other than the last day of the Interest Period for the amount so
prepaid, (ii) a Conversion/Continuance Date selected pursuant to
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Section 3.05 falls on a day other than the last day of the Interest
Period for the amount as to which a conversion is made, (iii) the
Company revokes any notice given under Section 2.02 requesting
Eurodollar Loans, (iv) the Loans or portions thereof are converted
into ABR Loans pursuant to Section 4.05 on a day other than the last
day of the Interest Period for the Eurodollar Loans so converted or
(v) the Eurodollar Loans shall be declared to be due and payable prior
to the scheduled maturity thereof pursuant to Section 8.01. Such
compensation shall include an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the amount so
paid or prepaid, or not borrowed or converted, for the period from the
date of such payment or prepayment or conversion or failure to borrow
to the last day of such Interest Period (or, in the case of a failure
to borrow, the Interest Period that would have commenced on the date
of such failure to borrow) in each case at the applicable rate of
interest for such Loan provided for herein (excluding, however, the
Applicable Margin included therein) over (ii) the amount of interest
(as reasonably determined by such Bank) which would have accrued to
such Bank on such amount by placing such amount on deposit for a
comparable period with leading banks in the London interbank market.
For purposes of calculating amounts payable by the Company to the
Banks under this Section, each Eurodollar Loan made by a Bank (and
each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at Base LIBOR used in
determining LIBOR for such Eurodollar Loan by a matching deposit or
other borrowing in the London interbank deposits market for a
comparable amount and for a comparable period, whether or not such
Eurodollar Loan is in fact so funded.
(b) Certificate, Etc. Each Bank shall promptly notify the Company,
with a copy to the Agent, upon becoming aware that the Company may be
required to make any payment pursuant to this Section 4.03. When
requesting payment pursuant to this Section 4.03, each Bank shall
provide to the Company, with a copy to the Agent, a certificate,
signed by an officer of such Bank, setting forth the amount required
to be paid by the Company to such Bank and the computations made by
such Bank to determine such amount. In the absence of manifest error,
such certificate shall be conclusive and binding on the Company as to
the amount so required to be paid by the Company to such Bank.
(c) Participants. Subject to Section 11.08(e), each Participant
shall be deemed a "Bank" for the purposes of this Section 4.03.
Section 4.04. Withholding, Reserves and Additional Costs. (a) Taxes.
(i) Withholding. To the extent permitted by law, all payments
under this Agreement and under the Notes (including payments
of principal and interest) shall be payable to each Bank
free and clear of any and all present and future Covered
Taxes. If any Taxes are required to be withheld or deducted
from any amount payable under this Agreement or any Note,
then (1) the Company shall pay any such Tax before the date
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on which penalties attach thereto, and (2) in the event such
Tax is a Covered Tax, the amount payable under this
Agreement or such Note shall be increased to the amount
which, after deduction from such increased amount of all
Covered Taxes required to be withheld or deducted therefrom,
will yield to such Bank the amount stated to be payable
under this Agreement or such Note. The Company shall
execute and deliver to any Bank upon its request such
further instruments as may be necessary or desirable to give
full force and effect to any such increase, including a new
Note of the Company to be issued in exchange for any Note
theretofore issued. The Company shall also hold each Bank
harmless and indemnify it for any stamp or other taxes with
respect to the preparation, execution, delivery, recording,
performance or enforcement of the Credit Documents (all of
which shall be included with "Taxes"). If any Covered Taxes
are paid by any Bank, the Company shall, not later than 10
days after demand of such Bank, reimburse such Bank for such
payments, together with any interest, penalties and expenses
incurred in connection therewith, plus interest thereon at a
rate per annum (based on a 360-day year for the actual
number of days involved) equal to the interest rate then
applicable to ABR Loans, changing as and when such rate
shall change, from the date such payment or payments are
made by such Bank to the date of reimbursement by the
Company. The Company shall deliver to the Agent
certificates or other valid vouchers for all Taxes or other
charges deducted from or paid with respect to payments made
by the Company hereunder.
(ii) Tax Refund. If the Company determines in good faith that,
(a) acting in the name of a Bank, Participant, Assignee or
the Agent it is more likely than not to win a contest
involving a Covered Tax, or (b) acting in the name of the
Company, a reasonable basis exists for contesting a Covered
Tax, then the relevant Bank, Participant, Assignee or the
Agent, as applicable, shall cooperate with the Company in
challenging such Tax at the Company's expense if requested
by the Company (it being understood and agreed that neither
the Agent nor any Bank, Participant or Assignee shall have
any obligation to contest, or any responsibility for
contesting any Tax). If any Bank, Participant, Assignee or
the Agent, as applicable, receives a refund (whether by way
of direct payment or by offset) of any Covered Tax for which
a payment has been made pursuant to subsection 4.04(a)(i)
which, in the reasonable good faith judgment of such Bank,
Participant, Assignee or Agent, as the case may be, is
allocable to such payment made under subsection 4.04(a)(i),
the amount of such refund (together with any interest
received thereon) shall be paid to the Company to the extent
payment has been made in full pursuant to subsection 4.04(a)
(i).
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(iii) U.S. Tax Certificates. Each Bank that is organized under
the laws of any jurisdiction other than the United States or
any state thereof shall deliver to the Agent for
transmission to the Company, on or prior to the Closing Date
(in the case of each Bank listed on the signature pages
hereof) or on the date (and as a condition to effectiveness)
of an assignment pursuant to which it becomes a Bank (in the
case of each other Bank), and at such other times as may be
necessary in the determination of the Company or the Agent
(each in the reasonable exercise of its discretion), such
certificates, documents or other evidence, properly
completed and duly executed by such Bank (including, without
limitation, Internal Revenue Service Form 1001 or Form 4224
or any other certificate or statement of exemption required
by Treasury Regulations Section 1.1441-4(a) or Section
1.1441-6(c) or any successor thereto) to establish that such
Bank is not subject to deduction or withholding of United
States federal income tax under Section 1441 or 1442 of the
Code or otherwise (or under any comparable provisions of any
successor statute) or is subject to deduction or withholding
at a reduced rate under any applicable treaty or otherwise
with respect to any Payments to such Bank of principal,
interest, fees or other amounts payable under this Agreement
or any of the Notes. The Company shall not be required to
pay any additional amount to any such Bank under subsection
4.04(a)(i) if such Bank shall have failed to satisfy the
requirements of the immediately preceding sentence; provided
that if such Bank shall have satisfied such requirements on
the Closing Date (in the case of each Bank listed on the
signature pages hereof) or on the date of the agreement
pursuant to which it became a Bank (in the case of each
other Bank), nothing in this subsection 4.04(a)(iii) shall
relieve the Company of its obligation to pay any additional
amounts pursuant to subsection 4.04(a)(i) in the event that,
as a result of any change in applicable law, such Bank is no
longer properly entitled to deliver certificates, documents
or other evidence at a subsequent date establishing the fact
that such Bank is not subject to withholding as described in
the immediately preceding sentence.
(iv) Mitigation. Each Bank agrees that, as promptly as
practicable after the officer of such Bank responsible for
administering the Loans under this Agreement becomes aware
of the occurrence of an event or the existence of a
condition that would require the Company to make payments
with respect to such Bank under subsection 4.04(a)(i), it
will, to the extent not inconsistent with such Bank's
internal policies, use reasonable efforts (1) to make, fund
or maintain the Commitments or Loans of such Bank through
another lending office of such Bank, or (2) take such other
reasonable measures, if as a result the additional amounts
that would otherwise be required to be paid by the Company
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with respect to such Bank pursuant to subsection 4.04(a)(i)
would be materially reduced and if, as determined by such
Bank in its sole discretion, the making, funding or
maintaining of such Commitments or Loans through such other
lending office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely
affect such Commitments or Loans or the interests of such
Bank.
(v) Replacement of Bank. If the Company becomes obligated to
pay additional amounts described in Section 4.04(a) as a
result of any condition described in such Section and
payment of such amount is demanded by any Bank, then the
Company may, on ten business days' prior written notice to
the Agent and such Bank, cause such Bank to (and such Bank
shall) assign all of its rights and obligations under this
Agreement to a Bank or other entity selected by the Company
for a purchase price equal to the outstanding principal
amount of such Bank's Loans and all accrued interest, fees,
and other amounts owing to such Bank provided that in no
event shall the assigning Bank be required to pay or
surrender to such purchasing Bank or other entity any of the
fees received by such assigning Bank pursuant to this
Agreement. The Company shall remain obligated to pay to
such assigning Bank all additional amounts described in
Section 4.04(a) arising on or prior to the date of such
assignment as a result of any condition described in such
Section and demanded by any Bank.
(b) Additional Costs.
(i) If after the date hereof, any change in any law or
regulation or in the interpretation thereof by any court or
administrative or governmental authority charged with the
administration thereof or the enactment of any law or
regulation shall either (1) impose, modify or deem
applicable any reserve, special deposit or similar
requirement against the Banks' Commitments or the Loans or
(2) impose on any Bank any other condition regarding this
Agreement, its Commitment or the Loans and the result of any
event referred to in clause (1) or (2) of this clause
(b) shall be to increase the cost (other than an increase in
cost as a consequence of any Tax, which shall be governed by
the provisions of Section 4.04(a)) to any Bank of
maintaining its Commitment or any Loans (which increase in
cost shall be calculated in accordance with each Bank's
reasonable averaging and attribution methods) by an amount
which any such Bank deems to be material, then, upon receipt
by the Company of written notice by such Bank, the Company
shall be obligated to pay to such Bank within 10 days of any
written demand therefor an amount equal to such increase in
cost incurred by such Bank after the date the Company
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receives such notice; provided that in respect of any Loan
such amount shall bear interest, after receipt by the
Company of any such demand until payment in full thereof, at
a rate per annum (based on a 360-day year, for the actual
number of days involved) equal to the sum of 2% and the
interest rate then applicable to ABR Loans, changing as and
when such rate shall change.
(ii) If any Bank shall have determined that the adoption of any
applicable law, rule, regulation or guideline regarding
capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof
(including any such adoption or change made prior to the
date hereof but not effective until after the date hereof),
or compliance by any Bank with any request or directive
regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of
return on capital for any such Bank or any corporation
controlling such Bank as a consequence of its obligations
under this Agreement to a level below that which such Bank
or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration
such Bank's or such corporation's policies with respect to
capital adequacy), then upon receipt by the Company of
written notice by such Bank, the Company shall be obligated
to pay to such Bank upon receipt of written demand from such
Bank such additional amount or amounts as will compensate
such Bank for such reduction suffered by such Bank after the
date the Company receives such notice, plus interest thereon
at a rate per annum (based on a 360-day year, for the actual
number of days involved) equal to the interest rate then
applicable to ABR Loans, changing as and when such rate
shall change, from the date of such demand by such Bank to
the date of payment by the Company.
(iii) Mitigation. Each Bank agrees that, as promptly as
practicable after the officer of such Bank responsible for
the Loans under this Agreement becomes aware of the
occurrence of an event or the existence of a condition that
would require the Company to make payments with respect to
such Bank under subsection 4.04(b)(i) or (ii), it will, to
the extent not inconsistent with such Bank's internal
policies, use reasonable efforts (1) to make, fund or
maintain the Commitments or Loans of such Bank through
another lending office of such Bank, or (2) take such other
reasonable measures, if as a result the additional amounts
that would otherwise be required to be paid by the Company
with respect to such Bank pursuant to subsection 4.04(b)(i)
or (ii) would be materially reduced and if, as determined by
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such Bank in its sole discretion, the making, funding or
maintaining of such Commitments or Loans through such other
lending office or in accordance with such other measures, as
the case may be, would not otherwise materially adversely
affect such Commitments or Loans or the interests of such
Bank.
(iv) Replacement of Bank. If the Company becomes obligated to
pay additional amounts described in Section 4.04(b)(i) or
(ii) as a result of any condition described in such Section
and payment of such amount is demanded by any Bank, then the
Company may, on ten business days' prior written notice to
the Agent and such Bank, cause such Bank to (and such Bank
shall) assign all of its rights and obligations under this
Agreement to a Bank or other entity selected by the Company
for a purchase price equal to the outstanding principal
amount of such Bank's Loans and all interest and facility
fees accrued to the date of purchase. The Company shall
remain obligated to pay to such assigning Bank all
additional amounts described in Section 4.04(b) arising on
or prior to the date of such assignment as a result of any
condition described in such Section and demanded by any
Bank.
(c) Lending Office Designations. Before giving any notice to the
Company pursuant to this Section 4.04, each Bank shall, if possible,
designate a different lending office if such designation will avoid
the need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank.
(d) Certificate, Etc. Each Bank shall promptly notify the Company,
with a copy to the Agent, upon becoming aware that the Company may be
required to make any payment pursuant to this Section 4.04. When
requesting payment pursuant to this Section 4.04, each Bank shall
provide to the Company, with a copy to the Agent, a certificate,
signed by an officer of such Bank, setting forth the amount required
to be paid by the Company to such Bank and the computations made by
such Bank to determine such amount. Determinations and allocations by
such Bank for purposes of this Section 4.04 shall be conclusive and
binding upon the Company, provided that such determinations and
allocations are made on a reasonable basis and are mathematically
accurate.
(e) Participants. Subject to Section 11.08(e), each Participant
shall be deemed a "Bank" for the purposes of this Section 4.04.
Section 4.05. Unavailability. If at any time any Bank shall have
determined in good faith (which determination shall be conclusive)
that (x) the making or maintenance of all or any part of such Bank's
Eurodollar Loans has been made impracticable or unlawful because of
compliance by such Bank in good faith with any law or guideline or any
interpretation or administration thereof by any official body charged
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with the interpretation or administration thereof or with any request
or directive of such body (whether or not having the effect of law),
or (y) that LIBOR would not accurately reflect the cost to such Bank
of making, continuing or converting any Eurodollar Loan by reason of
such compliance, or by reason of the unavailability of appropriate
quotations, or by reason of the unavailability of U.S. dollar deposits
in the appropriate amount and maturity in the London Eurodollar
interbank market, then the Agent, upon notification to it of such
determination by such Bank, shall forthwith advise the other Banks and
the Company thereof. Upon such date as shall be specified in such
notice and until such time as the Agent, upon notification to it by
such Bank, shall notify the Company and the other Banks that the
circumstances specified by it in such notice no longer apply, (i)
notwithstanding any other provision of this Agreement, such Eurodollar
Loans of such Bank shall automatically and without requirement of
notice by the Company be converted to ABR Loans and (ii) the
obligation of only such Bank to allow borrowing, elections and
renewals of Eurodollar Loans shall be suspended, and, if the Company
shall request in a Loan Request or Conversion/Continuance Request that
such Bank make a Eurodollar Loan, the loan requested to be made by
such Bank shall instead be made as an ABR Loan.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Representations and Warranties. As of each Compliance
Date, the Company represents and warrants to the Banks that:
(a) Subsidiaries. At the date hereof, the Company has no
Subsidiaries and is a participant in no joint ventures other than as
listed on Schedule 5.01(a).
(b) Good Standing and Power. The Company is duly organized and
validly existing and in good standing under the laws of the State of
Maryland; and the Company has the power to own its property and to
carry on its business as now being conducted and is duly qualified to
do business and is in good standing in each jurisdiction in which the
character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good standing,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect. Each of the corporate Subsidiaries of
the Company are corporations, each duly organized and validly
existing, under the laws of the jurisdiction of its incorporation;
each other Subsidiary is an entity duly organized and validly existing
under the laws of the jurisdiction of its organization; and each
Subsidiary has the power to own its property and to carry on its
business as now being conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except
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where the failure to be so organized, existing, qualified, or to be in
good standing, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(c) Corporate Authority. The Company has full corporate power and
authority to execute, deliver and perform its obligations under this
Agreement, to make the borrowings contemplated hereby, and to execute
and deliver the Notes and to incur the obligations provided for herein
and therein, all of which have been duly authorized by all proper and
necessary corporate action. No consent or approval of stockholders is
required as a condition to the validity or performance by the Company
of its obligations under this Agreement or the Notes.
(d) Authorizations. All authorizations, consents, approvals,
registrations, notices, exemptions and licenses with or from
Governmental Authorities and other Persons which are necessary for the
borrowing hereunder, the execution and delivery of the Credit
Documents, the performance by the Company of its obligations hereunder
and thereunder have been effected or obtained and are in full force
and effect.
(e) Binding Agreements. This Agreement constitutes, and the Notes,
when executed and delivered pursuant hereto for value received will
constitute, the valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to 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; and the effect of general principles of
equity, regardless of whether enforcement is sought in a proceeding at
law or in equity, and the discretion of the court before which any
proceeding therefor may be brought.
(f) Litigation. There are no proceedings or investigations, so far
as the executive officers of the Company know, pending or threatened
before any court or arbitrator or before or by any Governmental
Authority which (i) in any one case or in the aggregate, if determined
adversely to the interests of the Company or any of its Subsidiaries,
could reasonably be expected to have a Material Adverse Effect, (ii)
relates to any Credit Document or the lending transactions
contemplated hereby and thereby or (iii) seeks to (or is expected to)
rescind, terminate, revoke, cancel, withdraw, suspend, modify or
withhold any material license or permit of the Company or any of the
Subsidiaries.
(g) No Conflicts. There is no statute, regulation, rule, order or
judgment, and no provision of any material agreement or instrument
binding on the Company or any of its Subsidiaries, or affecting their
respective properties and no provision of the certificate of
incorporation, by-laws, governing partnership agreement or other
organizational document of the Company or any of its Subsidiaries,
which would prohibit, conflict with or in any way prevent the
execution, delivery, or performance of the terms of the Credit
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Documents or the incurrence of the obligations provided for herein and
therein, or result in or require the creation or imposition of any
Lien on any of the Company's or its Subsidiaries' properties as a
consequence of the execution, delivery and performance of any Credit
Document or the lending transactions contemplated hereby and thereby.
(h) Financial Condition. (i)(A) The consolidated balance sheet as of
December 31, 1998, together with consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended,
audited by KPMG, LLP, included in the Realty Income Corporation 1998
Year End Report and (B) the consolidated balance sheet as of June 30,
1999, together with the consolidated statements of income and cash
flows for the 6 months then ended certified by the chief financial
officer of the Company, heretofore delivered to the Agent, fairly
present the financial condition of the Company and its consolidated
Subsidiaries and the results of their operations as of the dates and
for the periods referred to and have been prepared in accordance with
GAAP consistently applied throughout the periods involved. As of the
date hereof, there are no material liabilities, direct or indirect,
fixed or contingent, of the Company and its Subsidiaries as of the
dates of such balance sheet which are not reflected therein or in the
notes thereto; (ii) since December 31, 1998 there has been no Material
Adverse Change.
(i) Taxes. The Company and each of its Subsidiaries has filed or
caused to be filed all tax returns which are required to be filed and
has paid all taxes required to be shown to be due and payable on said
returns or on any assessment made against it or any of its property
and all other taxes, assessments, fees, liabilities, penalties or
other charges imposed on it or any of its property by any Governmental
Authority, except for any taxes not yet delinquent and any taxes,
assessments, fees, liabilities, penalties or other charges which are
being contested in good faith and for which adequate reserves (in
accordance with GAAP) have been established.
(j) Use of Proceeds. The proceeds of the Loans will be used by the
Company for the purposes described in the Whereas clause hereto.
(k) Margin Regulations. No part of the proceeds of any Loan will be
used to purchase or carry, or to reduce, retire or refinance any
credit incurred to purchase or carry or extend credit to others for
the purpose of purchasing or carrying, any "margin stock" as defined
in Regulation U of the Board of Governors of the Federal Reserve
System.
(l) No Material Misstatements. All written information relating to
the Company and its Subsidiaries heretofore delivered by the Company
and its Subsidiaries to the Agent or any Bank in connection with the
Credit Documents is complete and correct in all material respects.
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(m) Title to Properties; Possession Under Leases. The Company and
its Subsidiaries each have good and marketable title to, or valid
leasehold interests in, all properties and assets reflected on the
consolidated balance sheet of the Company as of June 30, 1999,
referred to in Section 5.01(h), except for such properties and assets
as have been disposed of in the ordinary course of business and except
for minor defects in title that do not, individually or in the
aggregate, materially interfere with the ability of the Company or any
of such Subsidiaries to conduct its business as now conducted. All
such assets and properties are free and clear of all Liens, except
Liens permitted pursuant to this Agreement.
(n) Leases. (i) To the Company's knowledge, no condition exists
which, with the giving of notice or the passage of time, or both,
would permit any lessee to cancel its obligations under any lease to
which the Company or any Subsidiary is a party that would create,
individually or in the aggregate, a Material Adverse Effect; (ii) the
Company has received no notice that any lessee or lessees intend to
cease operations at any leased property or properties prior to the
expiration of the term of the applicable lease (other than temporarily
due to casualty, remodeling, renovation or any similar cause) that
would create, individually or in the aggregate, a Material Adverse
Effect; and (iii) to the Company's knowledge, none of the lessees or
their sublessees, if any, under any of the leases to which the Company
or any Subsidiary is a party to or is the subject of any bankruptcy,
reorganizations, insolvency or similar proceeding that would create,
individually or in the aggregate, a Material Adverse Effect.
(o) Conduct of Business. At the date hereof, the Company and its
Subsidiaries hold all authorizations, consents, approvals,
registrations, franchises, licenses and permits, with or from
Governmental Authorities and other Persons as are required or
necessary for them to own their properties and conduct their business
as now conducted unless and to the extent that any failure to hold
such authorizations, consents, approvals, registrations, franchises,
licenses and permits, individually or in the aggregate, could not have
a Material Adverse Effect.
(p) Compliance with Laws and Charter Documents. Neither the Company
nor any Subsidiary thereof is, or as a result of performing any of its
obligations under the Credit Documents will be, in violation of (a)
any law, statute, rule, regulation or order of any Governmental
Authority (including Environmental Laws) applicable to it or its
properties or assets, (b) its certificate of incorporation, by-laws,
governing partnership agreement or other organizational document or
(c) judgments or agreements to which it is a party or by which its
assets may be bound unless and to the extent that such violations,
individually or in the aggregate, would not have a Material Adverse
Effect.
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(q) ERISA. (i) Neither the Company nor any ERISA Affiliate has
engaged in a transaction with respect to any Plan which, assuming the
taxable period of such transaction expired as of the Compliance Date,
could subject the Company or any ERISA Affiliate to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA
in an amount that would have a Material Adverse Effect.
(ii) Except as set forth on Schedule 5.01(q), neither the Company
nor any ERISA Affiliate has incurred any liability since
December 31, 1998, under Title IV of ERISA with respect to
any Single Employer Plan. No Single-Employer Plan had an
accumulated funding deficiency, whether or not waived, as of
the last day of the most recent fiscal year of such Plan
ended prior to the Compliance Date, and each Plan has
complied in all material respects with the applicable
provisions of ERISA and the Code. Neither the Company nor
any ERISA Affiliate is (A) required to give security to any
Single-Employer Plan pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA, or (B) subject to a lien in
favor of such a Plan under Section 414(n) of the Code or
Section 302(f) of ERISA.
(iii) No liability under Section 4062, 4063, 4064 or 4069 of ERISA
has been or is expected by the Company to be incurred by the
Company or any ERISA Affiliate with respect to any Single-
Employer Plan in an amount that could have a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred or expects to incur any withdrawal liability
with respect to any Plan which is a multiemployer plan in an
amount which would have a Material Adverse Effect.
(iv) Under each Single-Employer Plan, as of the last day of the
most recent plan year ended prior to the Compliance Date,
the actuarially determined present value of all benefit
liabilities (as determined on the basis of the actuarial
assumptions contained in the Plan's most recent actuarial
valuation) did not exceed the fair market value of the asset
of such Plan by an amount that would have a Material Adverse
Effect.
(v) Insofar as the representations and warranties of the Company
contained in clause (i) above relates to any Plan which is a
multiemployer plan, such representations and warranties are
made to the best knowledge of the Company and its ERISA
Affiliates. As used in this Section, (A) "accumulated
funding deficiency" shall have the meaning assigned to such
term in Section 412 of the Code and Section 302 of ERISA;
(B) "multiemployer plan" and "plan year" shall have the
respective meanings assigned to such terms in Section 3 of
ERISA; (C) "benefit liabilities" shall have the meaning
assigned to such term in Section 4001 of ERISA; (D) "taxable
period" shall have the meaning assigned to such term in
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Section 4975 of the Code; and (E) "withdrawal liability"
shall have the meaning assigned to such term in Part 1 of
Subtitle E of Title IV of ERISA.
(r) Intellectual Property. The Company and each of its Subsidiaries
owns, or is licensed to use, all trademarks, trade names, patents and
copyrights (the "Intellectual Property") necessary for the conduct of
its business as currently conducted, including, without limitation,
the Intellectual Property listed on Schedule 5.01(r) hereto. To the
knowledge of the Company, no claim has been asserted or is pending by
any Person challenging or questioning the use by the Company or any
Subsidiary of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Company
know of any valid basis for any such claim. To the knowledge of the
Company, the use of such Intellectual Property by the Company and its
Subsidiaries does not infringe on the rights of any Person, nor, to
the knowledge of the Company, are there any uses by other Persons of
such Intellectual Property which infringe on the rights of the Company
and its Subsidiaries.
(s) Not an Investment Company or Public Utility Holding Company.
Neither the Company nor any of its Subsidiaries is or, after giving
effect to the transactions contemplated hereby will be (i) an
"investment company" or a company "controlled" by an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended or (ii) subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or any foreign, federal,
state or local statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
(t) Environmental Matters. Except as they would not individually or
in the aggregate have a Material Adverse Effect (i) the businesses as
presently or formerly engaged in by the Company and its Subsidiaries
are and have been conducted in compliance with all applicable
Environmental Laws, including, without limitation, having all permits,
licenses and other approvals and authorizations, during the time the
Company and its Subsidiaries engaged in such businesses, (ii) the
properties presently or formerly owned or operated by the Company and
its Subsidiaries (including, without limitation, soil, groundwater or
surface water on, under or adjacent to the properties, and buildings
thereon) (the "Properties") do not contain any Hazardous Substance
other than in compliance with applicable Environmental Law (provided,
however, that with respect to Properties formerly owned or operated by
the Company and its Subsidiaries, such representation is limited to
the period the Company owned or operated such Properties), (iii)
neither the Company or any of its Subsidiaries has received any
notices, demand letters or request for information from any Federal,
state, local or foreign governmental entity or any third party
indicating that the Company or any of its Subsidiaries may be in
violation of, or liable under, in any respect, any Environmental Law
in connection with the ownership or operation of the Company's
businesses, (iv) there are no civil, criminal or administrative
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actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened against the Company or any of its
Subsidiaries with respect to the Company or any of its Subsidiaries or
the Properties relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or are required to
be filed, by the Company or any of its Subsidiaries concerning the
release of any Hazardous Substance or the threatened or actual
violation of any Environmental Law on or at the Properties, (vi) no
Hazardous Substance has been disposed of, transferred, released or
transported from any of the Properties during the time such Property
was owned or operated by the Company or any of its Subsidiaries, other
than in compliance with applicable Environmental Law, (vii) there have
been no environmental investigations, studies, audits, tests, reviews
or other analyses conducted by or which are in the possession of the
Company or any of its Subsidiaries relating to the Company or such
Subsidiary or the Properties which have not been delivered to the
Banks prior to the date hereof, (viii) none of the Properties has been
used at any time by the Company or any of its Subsidiaries as a
sanitary landfill or hazardous waste disposal site and (ix) neither
the Company nor any of its Subsidiaries has incurred, and none of the
Properties are presently subject to, any material liabilities (fixed
or contingent) relating to any suit, settlement, court order,
administrative order, judgment or claim asserted or arising under any
Environmental Law.
(u) Solvency. On the date of each Loan hereunder, and after the
payment of all estimated legal, investment banking, accounting and
other fees related hereto, the Company and each of its Subsidiaries
will be Solvent.
(v) Insurance. The properties (other than properties leased to other
Persons) and operations of the Company and its Subsidiaries of a
character usually insured by companies of established reputation
engaged in the same or a similar business similarly situated are
adequately insured, by financially sound and reputable insurers,
against loss or damage of the kinds and in amounts customarily insured
against by such Persons, and the Company and its Subsidiaries carry,
with such insurers in customary amounts, such other insurance as is
usually carried by companies of established reputation engaged in the
same or a similar business similarly situated.
(w) REIT Status. The Company qualifies, and will elect or has
elected to be treated, as a real estate investment trust under
Sections 856 through 860 of the Code and the rules and regulations
thereunder (a "REIT") beginning with its taxable year ending
December 31, 1993. No fact, event or condition has occurred which
could jeopardize the Company's tax status as a REIT.
(x) Year 2000 Issue. The Company and its Subsidiaries have reviewed
the effect of the Year 2000 Issue on the computer software, hardware
and firmware systems and equipment containing embedded microchips
owned or operated by or for the Company and its Subsidiaries or used
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or relied upon in the conduct of their business (including systems and
equipment supplied by others or with which such computer systems of
the Company and its Subsidiaries interface). The costs to the Company
and its Subsidiaries of any reprogramming required as a result of the
Year 2000 Issue to permit the proper functioning of such systems and
equipment and the proper processing of data, and the testing of such
reprogramming, and of the reasonably foreseeable consequences of the
Year 2000 Issue to the Company or any of its Subsidiaries (including
reprogramming errors and the failure of systems or equipment supplied
by others) are not reasonably expected to result in a Default or Event
of Default or to have a Material Adverse Effect.
ARTICLE VI
CONDITIONS OF LENDING
Section 6.01. Conditions to the Availability of the Commitment. The
obligations of each Bank hereunder are subject to, and the Banks'
Commitment shall not become available until the date (the "Effective
Date") on which, each of the following conditions precedent shall have
been satisfied or waived in writing by each of the Banks, and upon
such satisfaction or waiver each Bank will give a written confirmation
of the same to the Company on request:
(a) Credit Agreement. The Agent shall have received this Agreement
duly executed and delivered by each of the Banks and the Company.
(b) Notes. The Agent on behalf of each Bank shall have received Pro
Rata Notes in the principal amounts set forth in Sections 2.03, duly
executed and delivered by the Company.
(c) Good Standing Certificates. The Agent on behalf of the Banks
shall have received from the Company copies of good standing
certificates, dated within five (5) days prior to the date hereof,
confirming the Company's representation as to good standing in
Section 5.01(b).
(d) Secretary's Certificate. The Agent on behalf of the Banks shall
have received from the Company a certificate from the Secretary or
Assistant Secretary of the Company, dated as of the date hereof, (i)
certifying the incumbency of the officers executing the Credit
Documents and all related documentation, (ii) attaching and certifying
the resolutions of the Board of Directors of the Company relating to
the execution, delivery and performance of this Agreement, and (iii)
attaching and certifying the Certificate of Incorporation and By-laws
of the Company.
(e) Authorizations. The Agent shall have received copies of all
authorizations, consents, approvals, registrations, notices,
exemptions and licenses with or from Governmental Authorities and
other Persons which are necessary for the borrowing hereunder, the
execution and delivery of the Credit Documents, the performance by the
Company of its obligations hereunder and thereunder.
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(f) Opinions of Company Counsel. The Agent shall have received the
favorable written opinions, dated the date hereof, of Latham &
Watkins, special New York counsel for the Company, in substantially
the form of Exhibit D-1 and of Michael R. Pfeiffer, General Counsel of
the Company, in substantially the form of Exhibit D-2.
(g) Litigation. There shall not be pending or threatened any action
or proceeding before any court or administrative agency relating to
the lending transactions contemplated by this Agreement or any Note
which, in the judgment of the Agent or any Bank, could materially
impair the ability of the Company to perform its obligations hereunder
or thereunder.
(h) Other Agreements. The Agent shall have received copies of all
tax sharing, management and other similar agreements between the
Company and any of its Subsidiaries or Affiliates, which shall be in
form and substance satisfactory to the Agent.
(i) Subsidiary Guaranty. One or more duly executed Subsidiary
Guaranties, to the extent required by Section 7.02(e).
(j) Fees. The Agent shall have received from the Company the fees
set forth in Section 2.04 and fees of Agent's counsel which are due
and payable on the Effective Date.
(k) Other Documents. The Agent shall have received such other
certificates and documents as the Agent and the Banks reasonably may
require.
Section 6.02. Conditions to All Loans. The obligations of each Bank
in connection with each Loan (including the Initial Loan) are subject
to the conditions precedent that, on the date of each such Loan and
after giving effect thereto, each of the following conditions
precedent shall have been satisfied or waived in writing by each Bank,
and upon such satisfaction or waiver each Bank will give a written
confirmation of the same to the Company on request:
(a) Requests. For each Loan, the Agent shall have received a Pro Rata
Loan Request in substantially the form of Exhibit B.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing, and the Agent shall have received from the Company
a certificate to that effect signed by an authorized officer of the
Company.
(c) Representations and Warranties; Covenants. The representations
and warranties contained in Article V (other than representations and
warranties that speak as of a specific date) shall be true and correct
with the same effect as though such representations and warranties had
been made at the time of such Loan, and the Agent shall have received
from the Company a certificate to that effect signed by an authorized
officer of the Company.
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ARTICLE VII
COVENANTS
Section 7.01. Affirmative Covenants. Until the Termination Date, and
thereafter until payment in full of the Notes and performance of all
other obligations of the Company hereunder (other than Unmatured
Surviving Obligations), the Company will:
(a) Financial Statements; Compliance Certificates. Furnish to the
Agent and to each Bank:
(i) as soon as available, but in no event more than 60 days
following the end of each fiscal quarter, copies of all
consolidated quarterly balance sheets, income statements and
other financial statements and reports of the Company and
its Subsidiaries, prepared in a format and in scope
consistent with the financial statements and reports of the
Company referenced in Section 5.01(h);
(ii) as soon as available, but in no event more than 105 days
following the end of each fiscal year, a copy of the annual
consolidated audit report and financial statements relating
to the Company and its Subsidiaries, certified by KPMG, LLP,
one of the other major nationally recognized accounting
firms or another independent certified public accountant
reasonably satisfactory to the Agent, prepared in a format
and in scope consistent with the December 31, 1998 financial
statements and reports of the Company referenced in Section
5.01(h);
(iii) as soon as available, but in no event later than 105 days
following the end of each fiscal year, an annual forecast
for the then-current fiscal year, prepared in a manner and
in the form of the forecast provided on the date of this
Agreement or in such other form as is reasonably acceptable
to the Agent and the Required Banks together with an annual
rent roll dated the most-recent December 31;
(iv) together with each of the financial statements delivered
pursuant to clauses (i) and (ii) of this Section 7.01(a), a
certificate of the Chief Financial Officer of the Company
stating whether as of the last dates of such financial
statements any event or circumstance exists which
constitutes a Default or Event of Default and, if so,
stating the facts with respect thereto, together with
calculations, where applicable, which establish in
reasonable detail the Company's (and where applicable, each
of the Company's Subsidiaries') compliance with the
provisions of this Agreement;
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(v) promptly upon receipt thereof, copies of any reports and
management letters submitted to the Company or any of its
Subsidiaries or their accountants in connection with any
annual or interim audit of the books of the Company or its
Subsidiaries, together with the responses thereto, if any;
and
(vi) such additional information, reports or statements as the
Agent and the Banks from time to time may reasonably request
including but not limited to the quarterly furnishing to the
Agent of the most recent Property Management Exception
Report in a form substantially similar to Exhibit E hereto,
a list of the Company's current property portfolio and a
list of the Company's past quarter's acquisitions on an
acquisition cost basis, an appraised value basis (to the
extent available) and a projected annual rent basis.
(b) Notification of Defaults and Adverse Developments. Notify the
Agent (i) promptly, and in any event not later than five Business Days
after the discovery by any officer of the Company of the occurrence of
any Default or Event of Default; (ii) promptly, and in any event not
later than five Business Days after the discovery by any officer of
the Company of the occurrence of a Material Adverse Change; (iii)
promptly, and in any event not later than ten Business Days after the
discovery by any officer of the Company of any litigation or
proceedings that are (to the knowledge of any executive officer of the
Company) instituted or threatened against the Company or its
Subsidiaries or any of their respective assets that (a) could
reasonably be expected to have a Material Adverse Effect or (b) seeks
to (or is expected to) rescind, terminate, revoke, cancel, withdraw,
suspend, modify or withhold any material license or permit of the
Company or any of the Subsidiaries; (iv) promptly, and in any event
not later than five Business Days after the discovery by any officer
of the Company of the occurrence of each and every event which would
be an Event of Default (or an event which with the giving of notice or
lapse of time or both would be an Event of Default) under any
Indebtedness of the Company or any of its Subsidiaries in a principal
amount in excess of $5,000,000, such notice to include the names and
addresses of the holders of such Indebtedness and the amount thereof
and (v) promptly, and in any event not later than five days after the
end of each calendar quarter in which the Company receives notice of a
change in the rating published by any of the Rating Agencies with
respect to the Company's senior unsecured debt, notice of such change
in rating. Upon receipt of any such notice of Default or adverse
development, the Agent shall forthwith give notice to each Bank of the
details thereof.
(c) Notice of ERISA Events. Within 10 days after the Company or any
ERISA Affiliate knows that any of the events described in the
succeeding two sentences have occurred, the Company shall furnish to
the Agent a statement signed by a senior officer of the Company
describing such event in reasonable detail and the action, if any,
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proposed to be taken with respect thereto. The events referred to in
the preceding sentence are, with respect to any Single Employer Plan:
(i) any reportable event described in Section 4043 of ERISA, other
than a reportable event for which the 30-day notice requirement has
been waived by the PBGC; (ii) the provision to any affected party as
such term is defined in Section 4001 of ERISA of a notice of intent to
terminate the Plan; (iii) the adoption of or amendment to the Plan if,
after giving effect to such amendment, the Plan is a plan described in
Section 4021(b) of ERISA; (iv) receipt of notice of an application by
the PBGC to institute proceedings to terminate the Plan pursuant to
Section 4042 of ERISA; (v) withdrawal from or termination of the Plan
during a plan year for which the Company or any ERISA Affiliate is or
would be subject to liability under Sections 4063 or 4064 of ERISA;
(vi) cessation of operations by the Company or any ERISA Affiliate at
a facility under the circumstances described in Section 4062(e) of
ERISA; (vii) adoption of an amendment to the Plan which would require
security to be given to the Plan pursuant to Section 401(a)(29) of the
Code or Section 307 of ERISA; and (viii) failure by the Company or any
ERISA Affiliate to make any payment to the Plan which would give rise
to a lien in favor of the Plan under Section 414(n) of the Code or
302(f) of ERISA. Such events shall also include receipt of notice of
withdrawal liability pursuant to Section 4202 of ERISA with respect to
a Plan that is a multiemployer plan.
(d) Other Reports, Notices and Materials. Furnish to the Agent (i)
as soon as available copies of reports, notices and other materials
sent to the Company or any of its Subsidiaries from any Governmental
Authority, including the Securities and Exchange Commission, the
Internal Revenue Service and PBGC and (ii) within 90 days of adoption
by the Company's board of directors, copies of any revisions,
supplements, amendments or restatements to the Real Estate Investment
Criteria.
(e) Environmental Matters. (i) Comply, and cause its Subsidiaries to
comply, in all material respects, with all applicable Environmental
Laws, (ii) notify the Agent promptly after receiving notice or
becoming aware of any order, notice, claim or proceeding under any
Environmental Laws, other than those that are clearly not material,
and (iii) promptly forward to Agent a copy of any Environmental Claim,
order, notice, permit, application, or any other communication or
report received by Company or any of its Subsidiaries in connection
with any such matters as they may affect such premises, if material.
(f) Taxes. Pay and discharge, and cause each of its Subsidiaries to
pay and discharge, all taxes, assessments and governmental charges
upon it, its income and its properties prior to the date on which
penalties attach thereto, unless and to the extent that (i) such
taxes, assessments and governmental charges shall be contested in good
faith and by appropriate proceedings by the Company or such
Subsidiary, as the case may be, (ii) adequate reserves (in accordance
with GAAP) are maintained by the Company or such Subsidiary, as the
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case may be, with respect thereto, and (iii) any failure to pay and
discharge such taxes, assessments and governmental charges could not
have a Material Adverse Effect.
(g) Insurance. Maintain, and cause each of its Subsidiaries to
maintain, insurance with responsible insurance companies against such
risks, on such properties and in such amounts as is customarily
maintained by similar businesses; and file and cause each of its
Subsidiaries to file with the Agent upon its request or the request of
any Bank a detailed list of the insurance companies, the amounts and
rates of the insurance, the dates of the expiration thereof and the
properties and risks covered thereby.
(h) Corporate Existence. Except as permitted by Section 7.02(c),
maintain, and cause each of its Subsidiaries to maintain, its
existence in good standing and qualify and remain qualified to do
business in each jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its
business is such that the failure to maintain such existence or to
qualify could reasonably be expected to have a Material Adverse
Effect.
(i) Authorizations. Obtain, make and keep in full force and effect
all material authorizations from and registrations with Governmental
Authorities.
(j) Maintenance of Records. Maintain, and cause each of its
Subsidiaries to maintain, complete and accurate books and records in
which full and correct entries in conformity with GAAP shall be made
of all dealings and transactions in its respective business and
activities.
(k) Inspection. Permit, and cause each of its Subsidiaries to
permit, the Agent and the Banks to have one or more of their officers
and employees, or any other Person designated by the Agent or the
Banks, visit and inspect any of the properties of the Company and its
Subsidiaries (upon reasonable request and notice and in accordance
with the agreement, if any, relating to any such property) and to
examine the minute books, books of account and other records of the
Company and its Subsidiaries and make copies thereof or extracts
therefrom, and discuss its affairs, finances and accounts with its
officers and, at the request of the Agent or the Banks, with the
Company's independent accountants, during normal business hours and at
such other reasonable times and as often as the Agent or the Banks
reasonably may desire.
(l) Conduct of Business. (i) Engage in as its principal business
investing in real estate in the United States, (ii) preserve, renew
and keep in full force and effect all its material contracts, (iii)
preserve, renew and maintain in full force and effect all its
franchises and licenses material to the normal conduct of its business
as now conducted, and (iv) comply with all of the terms of all
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instruments which evidence, secure or govern the Indebtedness of the
Company and its Subsidiaries and all material laws, rules and
regulations of all Governmental Authorities.
(m) Maintenance of Property, Etc. With only such exceptions that
individually or in the aggregate would not have a Material Adverse
Effect (i) maintain, keep and preserve and cause each of its
Subsidiaries to maintain, keep and preserve all of its properties in
good repair, working order and condition and from time to time make
all necessary and proper repairs, renewals, replacements, and
improvements thereto (provided that in the properties subject to sale
agreements, to the extent permitted by Section 7.02(c)(iii),
compliance with the terms of such agreement shall be deemed to
constitute compliance with this Section 7.01(m)(i)), and (ii)
maintain, preserve and protect and cause each of its Subsidiaries to
maintain, preserve and protect all franchises, licenses, copyrights,
patents and trademarks material to its business, so that the business
carried on in connection therewith may be properly and advantageously
conducted at all times.
(n) Insurance on Leased Properties. Use its, and cause its
Subsidiaries to use their, commercially reasonable best efforts to
ensure that each lessee of a property owned in whole or in part,
directly or indirectly, by the Company or any Subsidiary, and each
mortgagor of a property on which the Company or any Subsidiary holds a
mortgage, has, and until the Termination Date will keep, in place
adequate insurance which names the Company or such Subsidiary as a
loss payee. For the purposes of the preceding sentence "adequate
insurance" shall mean insurance, with financially sound and reputable
insurers in such amounts and insuring against such risks as are
customarily maintained by similar businesses.
(o) Further Assurances. The Company agrees to do all acts and
things, as may be required by law or as, in the reasonable judgement
of the Agent, may be necessary or advisable to carry out the intent
and purpose of this Agreement.
(p) Year 2000. Take all necessary action to complete in all material
respects by December 31, 1999, the reprogramming of computer software,
hardware and firmware systems and equipment containing embedded
microchips owned or operated by or for the Company and its
Subsidiaries or used or relied upon in the conduct of their business
(including systems and equipment supplied by others or with which such
systems of the Company or any of its Subsidiaries interface) required
as a result of the Year 2000 Issue to permit the proper functioning of
such computer systems and other equipment and the testing of such
systems and equipment, as so reprogrammed. At the request of the
Agent, the Company shall provide, and shall cause each of its
Subsidiaries to provide, to the Agent, such information as may
reasonably be requested relating to its compliance with the preceding
sentence.
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Section 7.02. Negative Covenants. Until the Termination Date, and
thereafter until payment in full of the Notes and performance of all
other obligations of the Company hereunder (other than Unmatured
Surviving Obligations), the Company will not:
(a) Indebtedness. Create, incur or assume any Indebtedness, except
(i) Indebtedness to the Agent and the Banks hereunder and under the
Notes, (ii) Indebtedness incurred to pay dividends enabling the
Company to maintain its status as a REIT, (iii) Indebtedness incurred
to purchase Interest Rate Protection Agreements, (iv) Indebtedness
that would otherwise be permitted under the Credit Documents and (v)
Indebtedness incurred under the Unsecured Revolver, provided that, in
each of the aforementioned cases (other than (v)), (A) such
Indebtedness is unsecured (B) the maturity of such Indebtedness
(including all scheduled payments of principal) is later than the
Termination Date (C) such Indebtedness ranks pari passu or subordinate
to the Notes and (D) after giving effect to the incurrence of such
Indebtedness, the Company's and its Subsidiaries interest coverage
ratio on a consolidated basis referred to in Section 7.03(c) herein
for the most recent four-quarter period ending on the ending date of
the Company's last fiscal quarter would have been greater than
2.00:1.00; provided, that the limitations contained in the foregoing
clauses (A) and (B) shall not apply to Indebtedness having an
aggregate principal amount at any time less than 5% of Consolidated
Total Assets. The Company shall not permit any Subsidiary to create,
incur, assume or suffer to exist any Indebtedness except Indebtedness
which does not exceed, at any time, 5.0% of Consolidated Total Assets
("Permitted Subsidiary Indebtedness"), provided that if such Permitted
Subsidiary Indebtedness is secured, (x) the principal amount thereof
shall be applied towards (and shall accordingly limit) the amount of
secured Indebtedness which the Company is permitted to incur pursuant
to the first sentence of this Section 7.02(a), and (y) such secured
Indebtedness shall in addition be permitted by Section 7.02(b).
(b) Mortgages and Pledges. Create, incur, assume or suffer to exist,
or permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Lien of any kind upon or in any of its property or
assets, whether now owned or hereafter acquired, except that this
Section 7.02(b) shall not apply (i) to Permitted Encumbrances and (ii)
to other Liens securing Indebtedness permitted by Section 7.02(a), if
immediately after giving effect to the incurrence of such Indebtedness
and the application of the proceeds therefrom on a pro forma basis,
the aggregate principal amount of all such Indebtedness of the Company
and its Subsidiaries on a consolidated basis determined in accordance
with GAAP is not greater than 5% of Consolidated Total Assets.
(c) Merger, Acquisition or Sales of Assets. (i) Acquire, or permit
any of its Subsidiaries to acquire, all or any substantial portion of
the assets of any Person other than (a) the acquisition of property in
the ordinary course of the Company's business; or (b) the acquisition
of the equity interests of an entity for the purpose of controlling
the property of that entity in the ordinary course of the Company's
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business, provided that the aggregate purchase price paid by the
Company in all transactions under this clause (b) and clause (ii)(b)
below shall not exceed 10% of Consolidated Total Assets as of June 30,
1999; (ii) enter into any merger or consolidation, or permit any
Subsidiary to do so, other than (a) a merger or consolidation of a
Wholly Owned Subsidiary with one or more other Wholly Owned
Subsidiaries or into the Company, (b) a merger or consolidation of a
Subsidiary or the Company with an entity for the purpose of
controlling the property of that entity in the ordinary course of the
Company's business, provided that the aggregate purchase price paid by
the Company in all transactions under this clause (b) and clause
(i)(b) above shall not exceed 10% of Consolidated Total Assets as of
June 30, 1999, or (c) a merger of the Company into another corporation
primarily for the purpose of changing the jurisdiction of
incorporation of the Company, provided that the surviving entity shall
assume all obligations of the Company hereunder; or (iii) sell, lease
or otherwise dispose of any assets of the Company or any of the
Subsidiaries other than in the ordinary course of the Company's
business for the fair market value thereof.
(d) Negative Pledge. Grant any Person a negative pledge on any
assets of the Company or of the Subsidiaries, except as may be
provided in (i) any Permitted Subsidiary Indebtedness, (ii)
Indebtedness under the Unsecured Revolver and (iii) other Indebtedness
permitted by Section 7.02(a) having an aggregate principal amount not
exceeding $25,000,000.
(e) Loans and Investments. Purchase or acquire the obligations or
stock of, or any other interest in, or make loans, advances or capital
contributions to, or form any joint ventures or partnerships with, any
Person, or permit any Subsidiary so to do, except (i) investments in
real estate which satisfy each of the Real Estate Investment Criteria,
as determined by the Board of Directors from time to time, (ii)
securities issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of
America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (iii) U.S. dollar
denominated time deposits, certificates of deposit and bankers'
acceptances of (x) any Bank, (y) any domestic commercial bank of
recognized standing having capital and surplus in excess of
$500,000,000 or (z) any bank (or the parent company of such bank)
whose short-term commercial paper rating from Standard & Poor's
Corporation, a division of the McGraw Hill Companies, Inc., ("S&P") is
at least A-1 or the equivalent thereof or from Moody's Investors
Service, Inc. ("Moody's") is at least P-1 or the equivalent thereof
(any such bank, an "Approved Bank"), in each case with maturities of
not more than twelve months from the date of acquisition, (iv)
repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (ii) above
entered into with any bank meeting the qualifications specified in
clause (iii) above, (v) commercial paper issued by any Bank or
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Approved Bank or by the parent company of any Bank or Approved Bank
and commercial paper issued by, or guaranteed by, any industrial or
financial company or by any agency of the Federal Government with a
short-term commercial paper rating of at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's
(any such company, an "Approved Company"), or guaranteed by any
industrial company with a long-term unsecured debt rating of at least
A or A2, or the equivalent of each thereof, from S&P or Moody's, as
the case may be, and in each case maturing within twelve months after
the date of acquisition, (vi) investments in money market funds
substantially all of whose assets are comprised of securities of the
type described in clauses (ii) through (v) above, (vii) capital
contributions to a Subsidiary by the Company or a Subsidiary of the
purchase price for acquisitions by such Subsidiary of properties that
the Company would be allowed to acquire directly under this Agreement,
provided that a Subsidiary Guaranty of the Company's payment
obligations under this Agreement, in the form attached hereto as
Exhibit G, shall remain in full force and effect; (viii) capital
contributions after taking account of any distributions to the
Company, including intercompany loans and advances, to any Subsidiary
that has not provided a Subsidiary Guaranty, provided that such
capital contributions shall not exceed $50,000,000 at any time and
(ix) shares of the Company's common stock, preferred stock or its
8.25% Monthly Income Senior Notes due 2008; provided, that the Company
shall not spend more than $25,000,000 in the aggregate during the term
of this Agreement in acquiring such shares or such Senior Notes.
(f) Real Estate Development. Purchase or acquire, or agree (pursuant
to a binding agreement) to purchase or acquire, the obligations or
stock of, or any other interest in, or make loans, advances or capital
contributions to, or form any joint ventures or partnerships with, or
make any other expenditures with respect to, any Real Estate
Development Project, if, in the aggregate, the total project costs
required to be made in connection with all such purchases,
acquisitions, loans, advances, capital contributions or expenditures
would be greater than $100,000,000, at any one time, or permit any
Subsidiary so to do.
(g) Dividends and Purchase of Stock. Declare any dividends (other
than dividends payable in capital stock of the Company) on any shares
of any class of its capital stock, or apply any of its property or
assets to the purchase, redemption or other retirement of, or set
apart any sum for the payment of any dividends on, or for the
purchase, redemption or other retirement of, or make any other
distribution by reduction of capital or otherwise in respect of, any
shares of any class of capital stock of the Company, or permit any
Subsidiary which is not a Wholly Owned Subsidiary so to do, or permit
any Subsidiary to purchase or acquire any shares of any class of
capital stock of the Company; provided, however, that so long as an
Event of Default pursuant to Section 8.01(a) has not occurred and is
not continuing, the Company may, and may permit its Subsidiaries to,
pay dividends and other distributions with respect to capital stock,
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except that this Section 7.02(g) shall not apply to the Company's
expenditure of up to $25,000,000 in the aggregate during the term of
this Agreement for the purchases of its own common stock or preferred
stock.
(h) Stock of Subsidiaries. Issue, sell or otherwise dispose of any
shares of capital stock of any Subsidiary (except in connection with
(A) a merger or consolidation of a Wholly Owned Subsidiary permitted
by Section 7.02(c) or with the dissolution of any Subsidiary)
provided, that such dissolution shall not be for the purpose of
avoiding the provisions of this Section 7.02(h)), (B) investments in
Subsidiaries permitted by Section 7.02(e), or (C) the issuance and
sale to Persons other than the Company of an amount not greater than
10% of the outstanding shares of such capital stock in connection with
the formation and capitalization of the Subsidiary described in
Section 7.02(e)(viii), or permit any Subsidiary to issue any
additional shares of its capital stock except to its existing
stockholders.
(i) Terms of Indebtedness. Unless otherwise expressly permitted by
this Agreement and other than with respect to the Unsecured Revolver,
amend or modify, or permit to be amended or modified the terms of any
Company or Subsidiary Indebtedness for borrowed money or any documents
relating thereto in a manner which would (i) increase the principal
amount of such Indebtedness, (ii) increase the interest borne by such
Indebtedness, (iii) shorten the maturity of such Indebtedness or (iv)
elevate, in relation to the Loans, the ranking in terms of payment of
such Indebtedness, without prior written consent of the Agent.
(j) Certain Amendments. Amend or modify (i) the Company's
certificate of incorporation, (ii) the Real Estate Investment Criteria
to a material degree or (iii) without the approval of the independent
members of the Company's board of directors, any tax sharing,
management or other similar agreement between or among the Company and
any of its Subsidiaries.
(k) Transactions with Affiliates. Enter into any transactions,
including without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate, or
permit any Subsidiary so to do, except in the ordinary course of and
pursuant to the reasonable requirements of its business and upon the
approval of a majority of the disinterested members of the board of
directors or a committee of such disinterested members.
(l) Mortgage Financings. Enter into any mortgage financings, as a
borrower thereunder, except that this Section 7.02(l) shall not apply
to mortgage financings involving a Lien on any real estate assets of
the Company or a Subsidiary to the extent permitted by Section
7.02(b).
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(m) Significant Properties. Without the prior written consent of the
Required Banks (which consent shall not be unreasonably withheld, and
which consent the Banks and the Agent shall use their best efforts to
grant or deny within 10 Business Days of receipt by the Agent of the
Company's written request therefor, provided that the failure to
grant, deny or explain the inability to make a determination about
such consent for 20 Business Days after the Agent's receipt of the
Company's request shall be deemed to constitute a grant of such
consent), purchase or acquire an interest in (i) multi-tenant office
buildings, (ii) hotels, motels, bowling alleys or mobile home parks or
(iii) any individual lot of property the price of which exceeds
$25,000,000 or two contiguous lots occupied by more than one tenant,
the price of which exceeds $50,000,000.
(n) Industry and Tenant Concentration. (i) Permit, at any time, its
tenants conducting business in any one industry (determined by the SIC
Code) to comprise more than 25% of total Consolidated Annualized Base
Rent (measured on a quarterly basis and detailed on the compliance
certificate issued in accordance with Section 6.02(c)), provided that
in the case of the child care industry, the Company shall not permit,
at any time, its tenants conducting business in the child care
industry to comprise more than 30% of total Consolidated Annualized
Base Rent (measured at the end of each fiscal quarter and detailed on
the compliance certificate issued in accordance with Section 6.02(c))
or (ii) permit, at any time, any one of its tenants to comprise more
than 15% of total Consolidated Annualized Base Rent (measured at the
end of each fiscal quarter and detailed on the compliance certificate
issued in accordance with Section 6.02(c)), provided that in the case
of Children's World Learning Centers, the Company shall not permit, at
any time, Children's World Learning Centers to comprise more than 20%
of total Consolidated Annualized Base Rent (measured at the end of
each fiscal quarter and detailed on the compliance certificate issued
in accordance with Section 6.02(c)).
Section 7.03. Financial Covenants. Until the Termination Date, and
thereafter until payment in full of the Notes and performance of all
other obligations of the Company hereunder (other than Unmatured
Surviving Obligations),
(a) Tangible Stockholders' Equity. The Company will maintain
Consolidated Tangible Stockholders' Equity of not less than the sum of
(i) $400,000,000 plus (ii) 75% of the sum of the net proceeds received
by the Company after December 31, 1999 from any offering of its equity
securities.
(b) Leverage Ratio. The Company will maintain, as measured at the
end of each fiscal quarter, a Leverage Ratio of not more than
1.00:1.00.
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(c) Interest Coverage Ratio. The Company will not permit the ratio
of (i) the sum of Consolidated Funds from Operations and Consolidated
Interest Expense to (ii) Consolidated Interest Expense for the four
quarter period ending on the last day of each fiscal quarter to be
less than 2.00:1.00.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default. If one or more of the following
events (each, an "Event of Default") shall occur:
(a) Default shall be made in the payment of any installment of
principal of any Loan when due and payable, whether at maturity, by
notice of intention to prepay or otherwise; or default shall be made
in the payment of any installment of interest upon any Loan when due
and payable, and such default shall have continued for five days; or
(b) Default shall be made in the payment of the Facility Fee or any
other fee or amount payable hereunder when due and payable and such
default shall have continued for five days; or
(c) Default shall be made in the due observance or performance of any
term, covenant, or agreement contained in Section 7.01(j) or in
Section 7.03; or
(d) Default shall be made in the due observance or performance of any
other term, covenant or agreement contained in this Agreement, and
such default shall have continued unremedied for a period of 30 days
after any officer of the Company becomes aware, or should have become
aware, of such default; or
(e) Any representation or warranty made or deemed made by the Company
herein or any statement or representation made in any certificate or
report delivered by or on behalf of the Company in connection herewith
or in connection with any Note shall prove to have been false or
misleading in any material respect when made; or
(f) Any obligation (other than its obligation hereunder) of the
Company or any of its Subsidiaries for the payment of Indebtedness in
excess of $1,000,000 is not paid when due or within any grace period
for the payment therefor or becomes or is declared to be due and
payable prior to the expressed maturity thereof, or there shall have
occurred an event which, with the giving of notice or lapse of time,
or both, would cause any such obligation to become, or allow any such
obligation to be declared to be, due and payable; or
(g) An involuntary case or other proceeding shall be commenced
against the Company or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
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any applicable Federal or State bankruptcy, insolvency, reorganization
or similar law now or hereafter in effect or seeking the appointment
of a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed, or an order or decree approving or ordering any of the
foregoing shall be entered and continued unstayed and in effect, in
any such event, for a period of 60 days; or
(h) The commencement by the Company or any of its Subsidiaries of a
voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by any of them to the entry of a decree or order for
relief in respect of the Company or any of its Subsidiaries in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against any of them, or the filing by any of them of a petition or
answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by any of them to the
filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator
or similar official of the Company or any of its Subsidiaries or any
substantial part of their respective property, or the making by any of
them of an assignment for the benefit of creditors, or the admission
by any of them in writing of inability to pay their debts generally as
they become due, or the taking of corporate action by the Company or
any of its Subsidiaries in furtherance of any such action; or
(i) One or more judgments against the Company or any of its
Subsidiaries or attachments against its property, which in the
aggregate exceed $1,000,000, or the operation or result of which could
be to interfere materially and adversely with the conduct of the
business of the Company or any of its Subsidiaries, remain unpaid,
unstayed on appeal, undischarged, unbonded, or undismissed for a
period of 30 days; or
(j) With respect to any Single-Employer Plan, any of the following
shall occur: (A) the provision to any affected party as such term is
defined in Section 4001 of ERISA of a notice of intent to terminate
the Plan, the adoption of an amendment to the Plan if, after giving
effect thereto, the Plan is a plan described in Section 4021(b) of
ERISA, receipt of notice of an application by the PBGC to institute
proceedings to terminate the Plan pursuant to Section 4042 of ERISA,
or any reportable event described in Section 4043 of ERISA (other than
a reportable event for which the 30-day notice requirement has been
waived by the PBGC); in each case, if the amount of unfunded benefit
liabilities, as such term is defined in Section 4001(a)(18) of ERISA,
of the Plan as of the date such event occurs is more than $5,000,000,
(B) the Company or any ERISA Affiliate incurs liability under Sections
4062(e), 4063 or 4064 of ERISA in an amount in excess of $5,000,000,
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(C) an amendment is adopted to the Plan which would require security
to be given to the Plan pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA in an amount in excess of $5,000,000, (D) the
Company or any ERISA Affiliate fails to make a payment to the Plan
which would give rise to a lien in favor of the Plan under Section
412(n) of the Code or Section 302(f) of ERISA in an amount in excess
of $5,000,000, or (E) any Person shall engage in any non-exempt
"prohibited transaction" (as defined in Section 406 or 407 of ERISA or
Section 4975 of the Code) involving any Plan, in an amount in excess
of $5,000,000; or
(k) With respect to any Plan that is a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA, any of the following shall
occur: (A) the Company or any ERISA Affiliate shall be in "default"
as defined in Section 4219(c)(5) of ERISA with respect to payments in
excess of $5,000,000 owing to such Plan as a result of the Company's
or such ERISA Affiliate's complete or partial withdrawal from such
Plan within the meaning of Sections 4203 and 4205 of ERISA,
respectively, or (B) the Company or any ERISA Affiliate shall be
delinquent in making contributions to such Plan in accordance with
Section 515 of ERISA in an amount in excess of $5,000,000.
(l) Any court or governmental or regulatory authority shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and which
prohibits, enjoins or otherwise restricts in a manner that would have
a Material Adverse Effect on any of the lending transactions
contemplated under the Credit Documents; or
(m) The Company shall fail to maintain its status as a "real estate
investment trust", as such term is defined in the Code;
(n) There shall occur a Change of Control;
(o) Thomas A. Lewis is terminated or resigns and is not replaced,
within the twelve-month period following such termination or
resignation, with a person having qualifications reasonably acceptable
to Required Lenders; or
(p) There shall occur an Event of Default under the Unsecured
Revolver.
then (i) upon the happening of any of the foregoing Events of Default,
the obligation of the Banks to make any further Loans or the
obligation of the Swing Line Bank to make any further Swing Line
Advances under this Agreement shall terminate upon declaration to that
effect delivered by the Agent or the Required Banks to the Company and
(ii) upon the happening of any of the foregoing Events of Default
which shall be continuing, the Notes shall become and be immediately
due and payable upon declaration to that effect delivered by the Agent
or the Required Banks to the Company; provided that upon the happening
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of any event specified in Section 8.01(g) or (h), the Notes shall
become immediately due and payable and the obligation of the Banks to
make any further Loans hereunder shall terminate without declaration
or other notice to the Company. The Company expressly waives any
presentment, demand, protest or other notice of any kind.
ARTICLE IX
THE AGENT AND THE BANKS
Section 9.01. The Agency. (a) Each Bank appoints Bank of Montreal as
its Agent hereunder and irrevocably authorizes the Agent to take such
action on its behalf and to exercise such powers hereunder as are
specifically delegated to the Agent by the terms hereof, together with
such powers as are reasonably incidental hereto, and the Agent hereby
accepts such appointment subject to the terms hereof. The
relationship between the Agent and the Banks shall be that of agent
and principal only and nothing herein shall be construed to constitute
the Agent a trustee for any Bank nor to impose on the Agent duties or
obligations other than those expressly provided for herein.
Section 9.02. The Agent's Duties. The Agent shall promptly forward
to each Bank copies, or notify each Bank as to the contents, of all
notices and other communications received from the Company pursuant to
the terms of this Agreement and the Notes and, in the event that the
Company fails to pay when due the principal of or interest on any
Loan, the Agent shall promptly give notice thereof to the Banks. As
to any other matter not expressly provided for herein or therein, the
Agent shall have no duty to act or refrain from acting with respect to
the Company, except upon the instructions of the Required Banks. The
Agent shall not be bound by any waiver, amendment, supplement, or
modification of this Agreement or any Note which affects its duties
hereunder and thereunder, unless it shall have given its prior written
consent thereto. The Agent shall have no duty to ascertain or inquire
as to the performance or observance of any of the terms, conditions,
covenants or agreements binding on the Company pursuant to this
Agreement or any Note nor shall it be deemed to have knowledge of the
occurrence of any Default or Event of Default (other than a failure of
the Company to pay when due the principal or interest on any Loan),
unless it shall have received written notice from the Company or a
Bank specifying such Default or Event of Default and stating that such
notice is a "Notice of Default".
Section 9.03. Sharing of Payment and Expenses. All funds for the
account of the Banks received by the Agent in respect of payments made
by the Company pursuant to, or from any Person on account of, this
Agreement or any Note shall be distributed forthwith by the Agent
among the Banks, in like currency and funds as received, ratably in
proportion to their respective interests therein. In the event that
any Bank shall receive from the Company or any other source any
payment of, on account of, or for or under this Agreement or any Note
(whether received pursuant to the exercise of any right of set-off,
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banker's lien, realization upon any security held for or appropriated
to such obligation or otherwise as permitted by law) other than in
proportion to its Pro Rata Share, then such Bank shall purchase from
each other Bank so much of its interest in obligations of the Company
as shall be necessary in order that each Bank shall share such payment
with each of the other Banks in proportion to each Bank's Pro Rata
Share; provided that no Bank shall purchase any interest of any Bank
that does not, to the extent that it may lawfully do so, set-off
against the balance of any deposit accounts maintained with it the
obligations due to it under this Agreement. In the event that any
purchasing Bank shall be required to return any excess payment
received by it, the purchase shall be rescinded and the purchase price
restored to the extent of such return, but without interest.
Section 9.04. The Agent's Liabilities. Each of the Banks and the
Company agrees that (i) neither the Agent in such capacity nor any of
its officers or employees shall be liable for any action taken or
omitted to be taken by any of them hereunder except for its or their
own gross negligence or willful misconduct, (ii) neither the Agent in
such capacity nor any of its officers or employees shall be liable for
any action taken or omitted to be taken by any of them in good faith
in reliance upon the advice of counsel, independent public accountants
or other experts selected by the Agent, and (iii) the Agent in such
capacity shall be entitled to rely upon any notice, consent,
certificate, statement or other document (including any telegram,
cable, telex, facsimile or telephone transmission) believed by it to
be genuine and correct and to have been signed and/or sent by the
proper Persons.
Section 9.05. The Agent as a Bank. The Agent shall have the same
rights and powers hereunder as any other Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" or "Banks",
unless the context otherwise indicated, include the Agent in its
individual capacity. The Agent may, without any liability to account,
maintain deposits or credit balances for, invest in, lend money to and
generally engage in any kind of banking business with the Company or
any Subsidiary or affiliate of the Company as if it were any other
Bank and without any duty to account therefor to the other Banks.
Section 9.06. Bank Credit Decision. Neither the Agent nor any of its
officers or employees has any responsibility for, gives any guaranty
in respect of, nor makes any representation to the Banks as to, (i)
the condition, financial or otherwise, of the Company or any
Subsidiary thereof or the truth of any representation or warranty
given or made herein or in any other Credit Document, or in connection
herewith or therewith or (ii) the validity, execution, sufficiency,
effectiveness, construction, adequacy, enforceability or value of this
Agreement or any other Credit Document or any other document or
instrument related hereto or thereto. Except as specifically provided
herein and in the other Credit Documents to which the Agent is a
party, the Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Bank with any
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credit or other information with respect to the operations, business,
property, condition or creditworthiness of the Company or any of its
Subsidiaries, whether such information comes into the Agent's
possession on or before the date hereof or at any time thereafter.
Each Bank acknowledges that it has, independently and without reliance
upon the Agent or any other Bank, based on such documents and
information as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement. Each Bank also
acknowledges that it will independently and without reliance upon the
Agent or any other Bank, based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement or any
Note.
Section 9.07. Indemnification. Each Bank agrees (which agreement
shall survive payment of the Loans and the Notes) to indemnify the
Agent, to the extent not reimbursed by the Company, ratably in
accordance with its respective Commitment, from and against any and
all liabilities, obligations, losses, claims, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of
this Agreement or any other Credit Document, or any action taken or
omitted to be taken by the Agent hereunder or thereunder; provided
that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the gross negligence
or willful misconduct of the Agent or any of its officers or
employees. Without limiting the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by the Agent
in such capacity in connection with the preparation, execution or
enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement or any Note or any amendments
or supplements hereto or thereto, to the extent that the Agent is not
reimbursed for such expenses by the Company.
Section 9.08. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company, and the
Agent may be removed at any time by the Required Banks by giving
written notice thereof to the Agent, the other Banks and the Company
at least ten Business Days prior to the effective date of such
removal. Upon any such resignation or removal, the Required Banks
shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Banks and shall
have accepted such appointment within 30 days after the resigning
Agent's giving of notice of resignation, or the Required Banks' giving
notice of removal, as the case may be, the resigning Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and
surplus of at least $250,000,000. Any successor Agent appointed
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pursuant to this Section 9.08 shall be a Bank hereunder. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigned or
removed Agent, and the resigned or removed Agent shall be discharged
from its duties and obligations under this Agreement. After any
Agent's resignation hereunder as Agent, the provisions of this Article
IX shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
ARTICLE X
CONSENT TO JURISDICTION
Section 10.01. Consent to Jurisdiction. The Company hereby
irrevocably submits to the non-exclusive jurisdiction of the State and
Federal courts located in The City of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of
this Agreement and each Note. The Company hereby irrevocably appoints
CT Corporation System, with offices on the date hereof at 111 Eighth
Avenue, New York, New York 10011, as its authorized agent on whom
process may be served in any action which may be instituted against it
by the Agent or the Banks in any state or federal court in the Borough
of Manhattan, The City of New York, arising out of or relating to any
Loan or this Agreement and each Note. Service of process upon such
authorized agent and written notice of such service to the Company
shall be deemed in every respect effective service of process upon the
Company, and the Company hereby irrevocably consents to the
jurisdiction of any such court in any such action and to the laying of
venue in the Borough of Manhattan, The City of New York. The Company
hereby irrevocably waives any objection to the laying of the venue of
any such suit, action or proceeding brought in the aforesaid courts
and hereby irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum. Notwithstanding the foregoing, nothing herein
shall in any way affect the right of the Agent or any Bank to bring
any action arising out of or relating to the Loans or this Agreement
and each Note in any competent court elsewhere having jurisdiction
over the Company or its property.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Applicable Law. This Agreement shall be governed by
and construed in accordance with the internal law of the State of New
York, United States of America.
Section 11.02. Set-off. Each Bank is authorized to set off and apply
any and all deposits at any time held by such Bank against obligations
of the Company under the Credit Documents.
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Section 11.03. Expenses. The Company agrees to pay (i) all
reasonable out-of-pocket expenses of the Agent (including, without
limitation, all reasonable fees and expenses of Chapman and Cutler, as
counsel to the Agent) in connection with the preparation of this
Agreement and the other Credit Documents and any amendments,
supplements or modifications hereto or thereto, (ii) all reasonable
out-of-pocket expenses incurred by the Agent and any Bank, including
fees and expenses of counsel, in connection with the enforcement of,
and the protection of their rights under, any provisions of this
Agreement, the Notes or any amendment or supplement hereto or thereto,
whether or not any loan is made hereunder, and (iii) all reasonable
out-of-pocket expenses of the Agent, including reasonable fees and
disbursements of counsel, in connection with the syndication of the
Loans. The Company shall pay any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Authority by reason of
the execution and delivery of this Agreement or the Notes incurred up
to and including the date of this Agreement.
Section 11.04. Amendments. Any provision of this Agreement or the
Notes may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by (A) in the case of amendments or
waivers relating to Section 7.03(a), (b) or (c), Banks having at least
66 2/3% of the Total Commitment or, if the Total Commitment has been
cancelled or terminated, holding Notes evidencing at least
66 2/3% of the aggregate unpaid principal amount of the Loans and (B)
in all other cases, the Company and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent);
provided that no such amendment, waiver or modification shall, unless
signed by all the Banks, (i) increase or decrease the Commitment of
any Bank, subject any Bank to any additional obligation or change the
several nature of the obligations of each Bank, (ii) reduce the
principal of or rate of interest on any Loan (other than interest
payable pursuant to Section 3.06) or any fees hereunder, (iii) except
as otherwise provided in Section 11.12, postpone the date fixed for
any payment of principal of or interest on any Loan or any fees
hereunder or for any reduction or termination of any Commitment, (iv)
except as otherwise may result from actions taken in accordance with
Section 11.12, change the percentage of any of the Commitments or of
the aggregate unpaid principal amount of the Notes, or the number of
Banks, which shall be required for the Banks or any of them to take
any action under this Section or any other provision of this
Agreement, or (v) amend or waive the provisions of Article IV or of
this Section 11.04.
Section 11.05. Cumulative Rights and No Waiver. Each and every right
granted to the Agent and the Banks hereunder or under any other
document delivered hereunder or in connection herewith, or allowed
them by law or equity, shall be cumulative and may be exercised from
time to time. No failure on the part of the Agent or any Bank to
exercise, and no delay in exercising, any right will operate as a
waiver thereof, nor will any single or partial exercise by the Agent
or any Bank of any right preclude any other or future exercise thereof
or the exercise of any other right.
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Section 11.06. Notices. Any communication, demand or notice to be
given hereunder or with respect to the Notes will be duly given when
delivered in writing or by telecopy to a party at its address as
indicated below, except that notices from the Company pursuant to
Section 2.02 will not be effective until received by the Agent.
A communication, demand or notice given pursuant to this Section 11.06
shall be addressed:
If to the Company, at
220 West Crest Street
Escondido, California 92025-1707
Telecopy: (760) 741-8674
Attention: Legal Department
If to the Agent, at its address as indicated on the signature pages
hereof, with a copy to:
Chapman and Cutler
111 West Monroe
Chicago, Illinois 60603
Telecopy: (312) 701-2361
Attention: James R. Theiss
If to any Bank, at its address as indicated on the signature pages
hereof.
Unless otherwise provided to the contrary herein, any notice which is
required to be given in writing pursuant to the terms of this
Agreement may be given by telex, telecopy or facsimile transmission.
Section 11.07. Separability. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions contained herein shall not
in any way be affected or impaired thereby.
Section 11.08. Assignments and Participations. (a) This Agreement
shall be binding upon and inure to the benefit of the Company and the
Banks and their respective successors and assigns, except that the
Company may not assign any of its rights hereunder without the prior
written consent of the Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant
by a Bank of a participating interest to a Participant, whether or not
upon notice to the Company and the Agent, such Bank shall remain
responsible for the performance of its obligations hereunder, and the
Company and the Agent shall continue to deal solely and directly with
such Bank in connection with such Bank's rights and obligations under
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this Agreement. Any agreement pursuant to which any Bank may grant
such a participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of
the Company hereunder including the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this Agreement
described in clauses (i) through (v), inclusive, of Section 11.04
without the consent of the Participant. Subject to Section 11.08(e),
the Company agrees that each Participant shall be entitled to the
benefits of Sections 4.03, 4.04 and 11.04 with respect to its
participating interest. An assignment or other transfer which is not
permitted by clause (c) below shall be given effect for purposes of
this Agreement only to the extent of a participating interest granted
in accordance with this clause (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement and the Notes, and
such Assignee shall assume such rights and obligations, pursuant to an
instrument executed by such Assignee and such transferor Bank, with
(and subject to) the signed consents of the Company and the Agent
(which consents shall not be unreasonably withheld or delayed);
provided, however, any such assignment shall be in the minimum
aggregate amount of $10,000,000; provided, further, that the foregoing
consent requirement shall not be applicable in the case of, and this
subsection (c) shall not restrict, an assignment of all, or a
proportionate part of all, of its rights and obligations under this
Agreement and the Notes by any Bank to an Affiliate of such Bank or a
pledge and assignment of all, or a proportionate part of all, of its
rights and obligations under this Agreement and the Notes to a Federal
Reserve Bank as collateral; and provided, further, that no consent of
the Company shall be required if an Event of Default has occurred and
is continuing. Upon (i) execution and delivery of such an instrument,
(ii) payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and
such Assignee and (iii) payment by the transferee Bank or transferor
Bank to the Agent of an administrative fee in the amount of $3,500
(except that no such fee shall be payable in connection with a
transfer or pledge to an Affiliate of a Bank or to a Federal Reserve
Bank referred to in the proviso above), such Assignee shall be a Bank
party to this Agreement and shall have all the rights and obligations
of a Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank (and the Company as to the
transferor Bank) shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party
shall be required. Upon the consummation of any assignment pursuant
to this subsection (c), the transferor Bank, the Agent and the Company
shall make appropriate arrangements so that, if required, new Notes
are issued to the Assignee.
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(d) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 4.03 or
4.04 than such Bank would have been entitled to receive with respect
to the rights transferred, unless such transfer is made (i) with the
Company's prior written consent, (ii) in the circumstances referred to
in the third proviso to the first sentence of the preceding paragraph
(c) or (iii) by reason of the provisions of Section 4.04 requiring
such Bank to designate a different lending office under certain
circumstances or at a time when the circum-stances giving rise to such
payment did not exist.
(e) No Participant of any Bank shall be entitled to receive any
greater payment under Section 4.03, Section 4.04 or Section 11.04 than
such Bank would have been entitled to receive if it had not granted a
participation to such Participant.
Section 11.09. Waiver of Jury Trial. The Company, the Agent and each
of the Banks hereby waive trial by jury in any judicial proceeding
involving any claim (whether sounding in contract, tort, applicable
law or otherwise) arising out of or in any way relating to (and
whenever arising) this Agreement, the Notes or the transactions
contemplated hereby.
Section 11.10. Confidentiality. Except as may be required to enforce
the rights and duties established hereunder, the parties hereto shall
preserve in a confidential manner all information received from the
other pursuant to this Agreement, the Notes and the transactions
contemplated hereunder and thereunder, and shall not disclose such
information except to those persons with which a confidential
relationship is maintained (including regulators, legal counsel,
accountants, or designated agents), or where required by law. Nothing
in this paragraph shall prevent the filing of this Agreement with the
Securities and Exchange Commission.
Section 11.11. Indemnity. The Company agrees to indemnify the Agent,
the Arranger and each of the Banks and their respective directors,
officers, employees and agents (each such person being called an
"Indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages and liabilities of any party other
than the Company and related expenses, including reasonable counsel
fees and expenses incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any Note or any agreement
or instrument contemplated hereby or thereby, the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the transactions and the other
transactions contemplated hereby or thereby, (ii) the use of the
proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto and notwithstanding that any claim,
proceeding, investigation or litigation relating to any such losses,
claims, damages, liabilities or expenses is or was brought by a
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<PAGE>
stockholder, creditor, employee or officer of the Company; provided
that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related
expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of any Indemnitee or from the breach by any
Indemnitee of its obligations hereunder or with respect to claims or
actions solely between or among the Banks relating to this Agreement
or the transactions contemplated hereby and provided further, that
such Indemnity shall not apply to any loss, claim, damage, or
liability or related expense incurred as a consequence of any
additional costs (as contemplated by Section 4.04(b)) or any Tax,
which shall be governed by the provisions of Section 4.04(b) and (a),
respectively.
The provisions of this Section 11.11 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the reduction or cancellation of
the Commitment, the invalidity or unenforceability of any term or
provision of this Agreement or any Note, or any investigation made by
or on behalf of the Banks. All amounts due under this Section 11.11
shall be payable in immediately available funds upon written demand
therefor.
Section 11.12. Extension of Termination Dates; Removal of Banks;
Substitutions of Banks.
(a)
(i) No earlier than the first anniversary of the Effective Date
and no later than 120 days prior to the scheduled
Termination Date, the Company may, at its option, request
all the Banks then party to this Agreement to extend their
scheduled Termination Dates by one calendar year by means of
a letter, addressed to each such Bank and the Agent. If
such a request is accepted and the Termination Date is
extended pursuant to subsection 11.12(a)(ii), the Company
may, at its option, no earlier than the date one year after
the first request for extension and no later than 120 days
prior to the rescheduled Termination Date, make one further
request that all the Banks then party to this Agreement to
extend their scheduled Termination Dates by one additional
year in the same manner, subject to the provisions of
subsection 11.12(a)(ii); provided that in no event shall the
Termination Date be extended to a date which is later than
the fifth anniversary of the Effective Date.
(ii) Each Bank electing (in its sole discretion) so to extend its
scheduled Termination Date shall execute and deliver within
forty-five (45) days following such request counterparts of
such letter to the Company and the Agent, whereupon, such
Bank's scheduled Termination Date shall be extended to the
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anniversary date of the year immediately succeeding such
Bank's then-current scheduled Termination Date. If no such
election is received within such forty-five day period from
any Bank, such Bank shall be deemed to have elected not to
extend its scheduled Termination Date.
(b) With respect to any Bank which has declined to extend such Bank's
scheduled Termination Date and if Banks with an aggregate percentage
of the Total Commitment in excess of 33 1/3% have not declined to
extend their respective Termination Dates, the Company may in its
discretion, upon not less than 30 days' prior written notice to the
Agent and each Bank, remove such Bank as a party hereto. Each such
notice shall specify the date of such removal (which shall be a
Business Day), which shall thereupon become the scheduled Termination
Date for such Bank.
(c) In the event that any Bank does not extend its scheduled
Termination Date pursuant to subsection (a) above or is the subject of
a notice of removal pursuant to subsection (b) above, then, at any
time prior to the Termination Date for such Bank (a "Terminating
Bank"), the Company may, at its option, arrange to have one or more
other financial institutions acceptable to the Agent (which may be a
Bank or Banks and each of which shall herein be called a "Successor
Bank") succeed to all or a percentage of the Terminating Bank's
outstanding Loans, if any, and rights under this Agreement and assume
all or a like percentage (as the case may be) of such Terminating
Bank's Commitment and other obligations hereunder, as if (i) in the
case of any Bank electing not to extend its scheduled Termination Date
pursuant to subsection (a) above, such Successor Bank had extended its
scheduled Termination Date pursuant to such subsection (a) and (ii) in
the case of any Bank that is the subject of a notice of removal
pursuant to subsection (b) above, no such notice of removal had been
given by the Company. Such succession and assumption shall be
effected by means of one or more agreements supplemental to this
Agreement among the Terminating Bank, the Successor Bank, the Company
and the Agent. On and as of the effective date of each such
supplemental agreement, each Successor Bank party thereto shall be and
become a Bank for all purposes of this Agreement and to the same
extent as any other Bank hereunder and shall be bound by and entitled
to the benefits of this Agreement in the same manner as any other
Bank.
(d) On the originally scheduled Termination Date for any Terminating
Bank, such Terminating Bank's Commitment shall terminate and, except
to the extent assigned pursuant to subsection (c) above, the Company
shall pay in full all of such Terminating Bank's Loans and all other
amounts payable to such Bank hereunder, including any amounts payable
pursuant to Section 4.03 on account of such payment.
(e) To the extent that all or a portion of any Terminating Bank's
obligations are not assumed pursuant to subsection (c) above, the
Total Commitment shall be reduced on the applicable Termination Date
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and each Bank's percentage of the reduced Total Commitment shall be
revised pro rata to reflect such Terminating Bank's absence.
Section 11.13. Knowledge of the Company. As used in this Agreement,
knowledge of the Company shall mean to the best of any executive
officer's knowledge, after a reasonable investigation.
Section 11.14. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by the different parties
hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument.
Page 65
<PAGE>
In Witness Whereof, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
Realty Income Corporation
By:
------------------------------
Name: Michael R. Pfeiffer
Title: Senior Vice President,
General Counsel
Bank of Montreal,
as Agent for the Banks
By:
------------------------------
Name:
----------------------
Title:
----------------------
Address for Notices:
Client Services
115 South LaSalle Street, 12 West
Chicago, Illinois 60603
Attn: Josie Nichols
Fax: (312) 750-6061
Eurodollar Lending Office:
115 South LaSalle St., 12 West
Chicago, IL 60603
Attn: Josie Nichols
Fax: (312) 750-6061
Page 66
<PAGE>
Exhibit A
FORM OF CONVERSION/CONTINUANCE REQUEST
[Dated as provided
in Section 3.05]
Bank of Montreal
115 South LaSalle Street, 12 West
Chicago, Illinois 60603
Attn: Josie Nichols
Realty Income Corporation (the "Company") hereby gives notice of its
intention to [convert/continue] [$ Principal Amount] [the
entire outstanding amount] of its [ABR Loans] [Eurodollar Pro Rata
Loans] with an Interest Period of days and ending on ,
] [to/as] [ABR Loans] [Eurodollar Pro Rata Loans], pursuant to
the Revolving Credit Agreement, dated as of February 1, 2000, among
the Company, the Banks and Bank of Montreal, as Agent (as amended,
supplemented or otherwise modified from time to time, the
"Agreement"), such [conversion/continuance to be effective as of
, ]. [The Interest Period for the Eurodollar Pro Rata
Loans shall be days, with a Scheduled Maturity on .]
Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings specified in the Agreement.
Realty Income Corporation
By:
------------------------------
Name:
Title:
Page 67
Exhibit B
FORM OF PRO RATA LOAN REQUEST
[Dated as provided
in Section 2.02]
Bank of Montreal
115 South LaSalle Street, 12 West
Chicago, Illinois 60603
Attn: Josie Nichols
Realty Income Corporation (the "Company") hereby gives notice of its
intention to borrow $ of Loans on ,
pursuant to the Revolving Credit Agreement, dated as of February 1,
2000, among the Company, the Banks and Bank of Montreal, as Agent (as
amended, supplemented or otherwise modified from time to time, the
"Agreement"). [The Company hereby requests that such Loan constitute
a Eurodollar Pro Rata Loans with a scheduled maturity of 20
and an Interest Period of days.]
The Company hereby confirms that the amounts of Loans outstanding on
the date hereof is as follows:
Total Commitment $25,000,000
Outstanding Pro Rata Loans $
Outstanding Competitive Loans $
Availability $
The Company also hereby confirms that each of the representations and
warranties (other than the representations and warranties that speak
as of a specific date) contained in Article V of the Agreement is true
and correct on the date hereof and, after giving effect to this
borrowing, will be true and correct on the proposed borrowing date as
though such representation or warranty had originally been made on
such dates. No Default or Event of Default has occurred and is
continuing, nor will any such event occur as a result of this
borrowing.
Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings specified in the Agreement.
Realty Income Corporation
By:
------------------------------
Name:
Title:
Page 68
<PAGE>
Exhibit C-1
FORM OF PRO RATA NOTE
$ February 1, 2000
Realty Income Corporation, a Maryland corporation (the "Company"),
for value received, hereby promises to pay on the Termination Date to
the order of (the "Bank"), at the office of Bank of
Montreal, as Agent, at 115 South LaSalle Street, 12 West, Chicago,
Illinois 60603, in lawful money of the United States, the principal
sum of $ or if less, the aggregate unpaid principal amount of
all Pro Rata Loans made by the Bank to the Company pursuant to that
certain Revolving Credit Agreement, dated as of February 1, 2000 (as
amended, supplemented or otherwise modified from time to time, the
"Agreement") among the Company, each of the banks party thereto, and
Bank of Montreal, as Agent.
This Note shall bear interest, and such interest shall be payable,
as set forth in the Agreement for ABR Loans and Eurodollar Pro Rata
Loans. Upon the occurrence and during the continuation of an Event of
Default, this Note shall bear interest at the default rate pursuant to
Section 3.06 of the Agreement.
Except as otherwise provided in the Agreement, with respect to
Eurodollar Pro Rata Loans, if interest or principal on the Loan
evidenced by this Note becomes due and payable on a day which is not a
Business Day, then the maturity thereof shall be extended to the next
succeeding Business Day, and interest shall be payable thereon at the
rate herein specified during such extension.
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<PAGE>
This Note is one of the Pro Rata Notes referred to in the
Agreement, and is subject to prepayment in whole or in part and its
maturity is subject to acceleration upon the terms provided in the
Agreement. Unless otherwise defined herein, capitalized terms used
herein shall have the respective meanings specified in the Agreement.
Presentment, demand, protest, notice of dishonor, notice of intent
to accelerate and other notice of any kind are hereby waived by the
undersigned.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
All Pro Rata Loans made by the Bank to the Company pursuant to the
Agreement and all payments of principal hereof and interest thereon
may be indicated by the Bank upon the grid attached hereto which is a
part of this Note. Such notations shall be presumptive as to the
aggregate unpaid principal amount of and interest on all Pro Rata
Loans made by the Bank pursuant to the Agreement.
Realty Income Corporation
By:
------------------------------
Name:
Title:
Page 70
Loan and Payments of Principal and Interest
-------------------------------------------
<TABLE>
Name
Interest Interest of
Method Period Amount Amount Person
Amount (ABR or if Euro- of Unpaid of Making
of Euro- dollar Principal Principal Interest Nota-
Date Loan dollar Loan Paid Balance Paid tion
- ---- ------ ------ -------- --------- --------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Page 71
February 1, 2000
EXHIBIT D-1
FORM OF OPINION OF LATHAM & WATKINS
Bank of Montreal, as Agent
for the Banks
115 South LaSalle Street, 12 West
Chicago, Illinois 60603
The Banks Signatory to the Credit
Agreement Referred to Below
Re: Revolving Credit Agreement, dated as of February 1, 2000, among
Realty Income Corporation, the Banks named therein and Bank of
Montreal, as Agent
Ladies/Gentlemen:
We have acted as special counsel for Realty Income Corporation, a
Maryland corporation (the "Company"), in connection with the Revolving
Credit Agreement (the "Credit Agreement") dated as of February 1,
2000, among the Company, each of the banks identified on the signature
pages thereof (the "Banks") and Bank of Montreal, as Agent for the
Banks (the "Agent"). This opinion is rendered to you pursuant to
Section 6.01(f) of the Credit Agreement. Capitalized terms defined in
the Credit Agreement are used herein as therein defined.
In our capacity as such counsel, we have examined such matters of fact
and questions of law as we have considered appropriate for purposes of
rendering the opinions expressed below. We have examined among other
things, the following:
(a) The Credit Agreement;
(b) The following promissory notes of the Company dated
February 1, 2000 (collectively, the "Notes", and together
with the Credit Agreement, the "Loan Documents"): (i) note
in the original principal amount of $ payable to
Bank of Montreal; (ii) note in the original principal amount
of $ payable to ; [and ( ) note
in the original principal amount of payable to ;]
(c) The Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of the Company; and
(d) Such other documents and agreements as we deem necessary for
purposes of rendering the opinions expressed below.
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<PAGE>
In our examination, we have assumed the genuineness of all signatures
(other than those of officers of the Company on the Loan Documents as
to which we have relied on a certificate of incumbency), 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.
We have been furnished with, and with your consent have relied upon,
certificates of officers of the Company with respect to certain
factual matters. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have deemed
necessary.
We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States and the internal laws of the
State of New York, as applicable, 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 other local agencies within any state.
Our opinions set forth in paragraph 1 below are based upon our
consideration of only those statutes, rules and regulations which, in
our experience, are normally applicable to bank credit transactions.
Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof:
1. None of the execution and delivery of the Loan Documents by the
Company, the borrowing of the funds pursuant to the Loan Documents
by the Company and the payment of the indebtedness of the Company
evidenced by the Notes: (a) violate any federal or New York
statute, rule, or regulation applicable to the Company (including,
without limitation, Regulations T, U, or X of the Board of
Governors of the Federal Reserve System), or (b) require any
consents, approvals, authorizations, registrations, declarations,
or filings by the Company under any applicable federal or New York
statute, rule or regulation.
2. Each of the Loan Documents has been duly executed and delivered by
the Company and constitutes a legally valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms.
3. The Company is not an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended from time to
time.
The opinions set forth in paragraph 2 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors;
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<PAGE>
(b) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at
law, and the discretion of the court before which any
proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law or
court decisions of provisions providing for the indemnifi-
cation of or contribution to a party with respect to a
liability where such indemnification or contribution is
contrary to public policy;
(d) the unenforceability of any provision requiring the payment
of attorney's fees, except to the extent that a court
determines such fees to be reasonable; and
(e) we express no opinion with respect to the enforceability of
Section 10.01 of the Credit Agreement by a federal court.
To the extent that the obligations of the Company may be dependent
upon such matters, we assume for purposes of this opinion that: all
parties to the Loan Documents are duly incorporated, validly existing
and in good standing under the laws of their respective jurisdictions
of incorporation; all parties to the Loan Documents have the requisite
corporate power and authority to execute and deliver the Loan
Documents and to perform their respective obligations under the Loan
Documents to which they are a party; and the Loan Documents to which
such parties are a party have been duly authorized, executed and
delivered by such parties and constitute their legally valid and
binding obligations, enforceable against them in accordance with their
terms. We express no opinion as to compliance by any parties to the
Loan Documents with any state or federal laws or regulations
applicable to the subject transactions because of the nature of their
business.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions covered hereby. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted
to or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.
Very truly yours,
Page 74
February 1, 2000
EXHIBIT D-2
FORM OF OPINION OF MICHAEL R. PFEIFFER, ESQ.
Bank of Montreal, as Agent
for the Banks
115 South LaSalle Street, 12 West
Chicago, Illinois 60603
The Banks Signatory to the Credit
Agreement Referred to Below
Re: Revolving Credit Agreement, dated as of February 1, 2000, among
Realty Income Corporation, the Banks listed on the signature
pages thereto and Bank of Montreal, as Agent
Ladies/Gentlemen:
I am general counsel of Realty Income Corporation, a Maryland
corporation (the "Company"). This opinion is rendered to you pursuant
to Section 6.01(f) of the Revolving Credit Agreement (the "Credit
Agreement"), dated as of February 1, 2000, among the Company, each of
the banks identified on the signature pages thereof (the "Banks") and
Bank of Montreal, as Agent for the Banks (the "Agent"). Capitalized
terms defined in the Credit Agreement are used herein as therein
defined.
In my capacity as general counsel, I have examined such matters of
fact and questions of law as I have considered appropriate for
purposes of rendering the opinions expressed below, except where a
statement is qualified as to knowledge or awareness, in which case I
have made no or limited inquiry as specified below. I have examined,
among other things, the following:
(a) The Credit Agreement;
(b) The following promissory notes of the Company dated
February 1, 2000 (collectively, the "Notes", and together
with the Credit Agreement, the "Loan Documents"): (i) note in
the original principal amount of $ payable to
Bank of Montreal; (ii) note in the original principal amount
of $ payable to [[and] ( ) note in
the original principal amount of $ payable to
];
(c) The Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws of the Company; and
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<PAGE>
(d) Such other documents and agreements as I deem necessary for
purposes of rendering the opinions expressed below.
In my examination, I have assumed the genuineness of all signatures
(other than those of officers of the Company on the Loan Documents),
the authenticity of all documents submitted to me as originals, and
the conformity to authentic original documents of all documents
submitted to me as copies.
I have been furnished with, and with your consent have relied upon,
certificates of officers of the Company with respect to certain
factual matters. In addition, I have obtained and relied upon such
certificates and assurances from public officials as I have deemed
necessary.
I am opining herein as to the effect on the subject transaction only
of the federal laws of the United States and the internal laws of the
State of California, as applicable, and I 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 other local agencies within any state.
Whenever a statement herein is qualified by "to the best of my
knowledge" or a similar phrase, it is intended to indicate that I do
not have current actual knowledge of the inaccuracy of such statement.
Except as otherwise expressly indicated, I have not undertaken any
independent investigation to determine the accuracy of any such
statement, and no inference that I have any knowledge of any matters
pertaining to such statement should be drawn from my representation of
the Company.
Subject to the foregoing and the other matters set forth herein, it is
my opinion that, as of the date hereof:
1. Based solely on certificates from public officials, I confirm that
the Company is qualified to do business in the states in which the
Company owns properties.
2. To the best of my knowledge, there are no proceedings or
investigations pending or threatened before any court or
arbitrator or before or by any governmental authority which would
have a material adverse effect on the legality, validity, binding
effect or enforceability of any Loan Document.
3. The Company has the corporate power and authority to execute,
deliver and perform the terms and provisions of each Loan Document
to which it is party and has taken all necessary corporate action
to authorize the execution, delivery and performance by it of each
such Loan Document.
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<PAGE>
This opinion is delivered by me as general counsel for the Company to
you and is solely for your benefit in connection with the transactions
covered hereby. This opinion may not be relied upon by you for any
other purpose, or furnished to, quoted to or relied upon by any other
person, firm or corporation for any purpose, without my prior written
consent,
Very truly yours,
Page 77
Exhibit E
PROPERTY MANAGEMENT EXCEPTION REPORT
Page 78
<PAGE>
Exhibit F
REAL ESTATE INVESTMENT CRITERIA
The Investment Committee is authorized, without prior Board of
Director approval, to approve real estate investments which meet all
of the following criteria:
1. The Purchase Price for each property shall not exceed $10,000,000.
2. The investment must consist of a fee interest in real property.
3. If the real property is unimproved at the time of acquisition,
there must be an agreement to complete specified improvements on
the property by a date certain.
4. Prior to, or concurrent with the acquisition, the property must be
net-leased to a tenant approved by the Company's Investment
Committee.
5. The real estate investment may not cause (i) the total investment
with that tenant to exceed $25 million, or (ii) the amount of
annualized rental revenue to be derived by the Company from a
tenant to exceed 5% of the Company's previous 12 months' rental
revenues.
6. The real estate investment may not cause the amount of annualized
rental revenue to be derived by the Company from any one industry
to exceed 25% of the Company's previous 12 months' rental
revenues.
Page 79
Exhibit G
FORM OF SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY, dated as of February 1, 2000, is made by
each entity that is identified on Schedule A hereto or that hereafter
executes and delivers a Subsidiary Joinder in the form of Exhibit A
attached hereto pursuant to the Credit Agreement described herein
(each such entity, a "Guarantor") in favor of the lenders (the
"Lenders") from time to time party to the Credit Agreement (as defined
below), and Bank of Montreal ("BMO"), as agent (BMO and any successor
thereto in such capacity, "Agent") for the Lenders and in favor of all
other present and future Holders of any of the Guaranteed Obligations
described herein.
R E C I T A L S
A. The Lenders and Agent have entered into that certain Revolving
Credit Agreement, dated as of February 1, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement"), among Realty Income Corporation, a Maryland
corporation ("Borrower"), the Agent and the Lenders.
B. Each Guarantor is a Subsidiary of Borrower and expects to derive
substantial direct and indirect benefit from the transactions
contemplated by the Credit Agreement.
C. It is a condition precedent to the making of Loans by the Lenders
under the Credit Agreement that each Guarantor shall have
guaranteed payment of each and all debts, liabilities and
obligations of Borrower under the Credit Agreement and the Notes
(collectively, the "Obligations"), on the terms set forth herein.
D. Borrower has agreed, in the Credit Agreement, to cause certain
Subsidiaries of Borrower to become party to this Guaranty, as a
Guarantor hereunder, by executing and delivering a Subsidiary
Joinder in the form of Exhibit A hereto.
NOW, THEREFORE, in consideration of the foregoing and in order to
induce the Lenders to make Loans under the Credit Agreement, each
Guarantor hereby agrees as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. General Definitions. Except as otherwise specifically
provided herein, the terms which are defined in Article I of the
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Credit Agreement shall have the same meanings when used in this
Guaranty and the provisions of Section 1.01 of the Credit Agreement
shall apply to this Guaranty.
Section 1.2 Certain Defined Terms. As used in this Guaranty, the
following terms shall have the following meanings:
"Bankruptcy Code" means Title 11 of the United States Code, as from
time to time amended.
"Disallowed Post-Commencement Interest and Expenses" means interest
computed at the rate provided in the Credit Agreement and claims for
reimbursements, costs, expenses or indemnities under the terms of the
Credit Agreement accruing or claimed at any time after commencement of
any Insolvency or Liquidation Proceeding, if the claim for such
interest, reimbursement, cost, expense or indemnity is not allowable,
allowed or enforceable against Borrower in such Insolvency or
Liquidation Proceeding.
"Guaranty" means this Subsidiary Guaranty, dated as of February 1,
2000, made by the Guarantors for the benefit of the Lenders, Agent and
other Holders of Guaranteed Obligations.
"Guaranty Taxes" is defined in Section 3.8(a).
"Holder" means, in respect of any Guaranteed Obligation, the Person
entitled to enforce payment thereof and specifically includes the
Agent and the Lenders.
"Insolvency or Liquidation Proceeding" means any (i) any case under
the Bankruptcy Code, any other insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding, relative to Borrower or to any of its
creditors, as such, or to a substantial part of any of its assets, or
(ii) any proceeding for the liquidation, dissolution or other winding
up of Borrower, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, or (iii) any assignment for the
benefit of creditors or any other marshaling of assets and liabilities
of Borrower.
"Subordinated Liabilities" is defined in Section 2.8(a).
ARTICLE II
GUARANTY AND RELATED PROVISIONS
Section 2.1. Guaranty. Each Guarantor hereby unconditionally:
(a) guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of (i) all Obligations now
outstanding or hereafter arising under or in connection with the
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Credit Agreement or the Notes, whether for principal, interest, fees,
taxes, additional compensation, expense reimbursements,
indemnification or otherwise, and (ii) each other debt, liability or
obligation of Borrower now outstanding or hereafter arising under any
of the Credit Agreement and the Notes (such Obligations, liabilities
and other debts, liabilities and obligations, collectively, the
"Guaranteed Obligations"), and
(b) agrees to pay on demand (i) all Disallowed Post-Commencement
Interest and Expenses, to the Person entitled to payment thereof if
the claim therefor had been allowed in any Insolvency or Liquidation
Proceeding and (ii) all costs and expenses (including, without
limitation, reasonable attorneys' fees and legal expenses) incurred by
any Holder of Guaranteed Obligations in enforcing this Guaranty;
provided, however, that the amount of each Guarantor's payment
obligations hereunder shall not exceed an aggregate amount equal to
such Guarantor's stockholders' or partners' equity, as the case may
be.
Section 2.2. Acceleration of Payment. If the Notes become
immediately due and payable pursuant to Section 8.01 of the Credit
Agreement, then all liability of each Guarantor under this Guaranty in
respect of any Guaranteed Obligation that is not then due and payable
shall thereupon become and be immediately due and payable, without
notice or demand.
Section 2.3. Guaranty Absolute and Unconditional. Each Guarantor
guarantees that the Guaranteed Obligations will be paid in accordance
with the terms of the Credit Agreement and the Notes, regardless of
any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights and claims of
any Holder of Guaranteed Obligations against Borrower with respect
thereto and even if any such rights or claims are modified, reduced or
discharged in an Insolvency or Liquidation Proceeding or otherwise.
The obligations of each Guarantor under this Guaranty are independent
of the Guaranteed Obligations, and a separate action or actions may be
brought and prosecuted against each Guarantor to enforce this
Guaranty, irrespective of whether any action is brought against
Borrower or whether Borrower is joined in any such action or actions.
The liability of each Guarantor under this Guaranty shall be absolute
and unconditional irrespective of (i) any lack of validity or
enforceability of the Credit Agreement or any Note or any other
agreement or instrument relating thereto; (ii) any change in the time,
manner or place of payment of, or in any other term of, all or any of
the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from the Credit Agreement or any Note, including,
without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to Borrower or
otherwise; (iii) any taking, exchange, release or non-perfection of
any collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations; (iv) any manner of application of collateral,
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or proceeds thereof, to all or any of the Guaranteed Obligations, or
any manner of sale or other disposition of any collateral for all or
any of the Guaranteed Obligations or any other assets of Borrower; (v)
any change, restructuring or termination of the corporate structure or
existence of Borrower; or (vi) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, a
surety or guarantor.
Section 2.4. Guaranty Irrevocable and Continuing. This Guaranty is
an irrevocable and continuing offer and agreement guaranteeing payment
of any and all Guaranteed Obligations and shall extend to all
Guaranteed Obligations now outstanding or created or incurred at any
future time, whether or not created or incurred pursuant to any
agreement presently in effect or hereafter made, until all obligations
of the Lenders to extend credit to Borrower have expired or been
terminated, and all Guaranteed Obligations have been fully, finally
and indefeasibly paid. To the extent any contingent Obligation
survives the expiration or termination of the Credit Agreement and the
repayment of the Loans, each Guarantor's liability under this Guaranty
shall likewise survive. This Guaranty may be released only in
writing.
Section 2.5. Reinstatement. If at any time any payment on any
Guaranteed Obligation is set aside, avoided or rescinded or must
otherwise be restored or returned, this Guaranty and the liability of
each Guarantor under this Guaranty shall remain in full force and
effect and, if previously released or terminated, shall be
automatically and fully reinstated, without any necessity for any act,
consent or agreement of any Guarantor, as fully as if such payment had
never been made and as fully as if any such release or termination had
never become effective.
Section 2.6. Waiver. Each Guarantor hereby waives and agrees not to
assert or take advantage of:
(a) Marshaling. Any right to require any Holder of Guaranteed
Obligations to proceed against or, exhaust its recourse against
Borrower or any other Subsidiary Guarantor or any other Person liable
for any of the Guaranteed Obligations or against any collateral for
any of the Guaranteed Obligations or against any other Person or
property, before demanding and enforcing payment of the Guaranteed
Obligations from any Guarantor under this Guaranty;
(b) Other Defenses. Any defense that may arise by reason of (i) the
incapacity, lack of authority, death or disability of Borrower or any
other Person; (ii) the revocation or repudiation of any of the Credit
Agreement or the Notes by Borrower or any other Person; (iii) the
unenforceability in whole or in part of the Credit Agreement or the
Notes or any other instrument, document or agreement; (iv) the failure
of any Holder of Guaranteed Obligations to file or enforce a claim
against any Person liable for any of the Guaranteed Obligations or in
any Liquidation or Insolvency Proceeding; or (v) any borrowing or
grant of a security interest under Section 364 of the Bankruptcy Code;
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(c) Notices. Presentment, demand for payment, protest, notice of
discharge, notice of acceptance of this Guaranty, notice of the
incurrence of, or any default in respect of, any debt, liability or
obligation guaranteed hereunder, and all other indulgences and notices
of every type or nature, including, without limitation and to the
maximum extent permitted by law, notice of the disposition of any
collateral for any of the Guaranteed Obligations;
(d) Election of Remedies. Any defense based upon an election of
remedies (including, if available, an election to proceed by non-
judicial foreclosure) or any other act or omission of any Holder of
Guaranteed Obligations or any other Person which destroys or otherwise
impairs any right that any Guarantor might otherwise have for
subrogation, recourse, reimbursement, indemnity, exoneration,
contribution or otherwise. against Borrower or any other Person;
(e) Collateral. Any defense based upon any taking, modification or
release of any collateral or guaranties for the Guaranteed
Obligations, or any failure to create or perfect or ensure the
priority or enforceability of any security interest in any collateral
for any of the Guaranteed Obligations or any act or omission related
thereto;
(f) Offsets. Any right to recoup from or offset against any of the
Guaranteed Obligations any claim that may be held or asserted by or
available to (i) Borrower or any other Guarantor or any other Person
liable for any of the Guaranteed Obligations against any Holder of
Guaranteed Obligations or (ii) any Guarantor against Borrower, any
other Guarantor, any other Holder of Guaranteed Obligations or any
other Person; or
(g) Defenses of Others. Any other claim, right or defense
(including, by way of illustration and without limitation, such
matters as failure or insufficiency of consideration, statute of
limitations, breach of contract, tortious conduct, accord and
satisfaction, and discharge by agreement, conduct or in a Liquidation
or Insolvency Proceeding), except the defense of payment, that may be
held or asserted by or available to (i) Borrower or any other
Guarantor or any other Person liable for any of the Guaranteed
Obligations against any Holder of Guaranteed Obligations or (ii) any
Guarantor against Borrower, any other Guarantor, any other Holder of
Guaranteed Obligations or any other Person.
Section 2.7. Subrogation. Each Guarantor hereby represents, warrants
and agrees, in respect of any and all present and future rights of
subrogation, recourse, reimbursement, indemnity, exoneration,
contribution and other claims that such Guarantor at any time may have
against Borrower, any other Guarantor or any other Person liable for
the payment of any of the Guaranteed Obligations (including, without
limitation, the owner of any interest in collateral for any of the
Guaranteed Obligations) as a result of or in connection with this
Guaranty or any payment hereunder, that:
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(a) No Agreement. Such Guarantor has not entered into, and agrees
that it will not enter into, any agreement providing, directly or
indirectly, for any such right or claim against Borrower or, except as
set forth in Section 2.10, against any other Subsidiary of Borrower,
and each such agreement now existing or hereafter entered into (except
Section 2.10) is and shall be void;
(b) Release. Such Guarantor forever waives and releases, and agrees
never to sue upon, any such right or claim against Borrower and,
except as set forth in Section 2.10, against any other Subsidiary of
Borrower, whether or not the Guaranteed Obligations have been paid in
full;
(c) Capital Contribution. Each payment made by such Guarantor under
this Guaranty shall be a contribution to the capital of Borrower, and
no such payment shall give rise to any claim (as that term is defined
in the Bankruptcy Code) in favor of such Guarantor against Borrower;
(d) Subordination of Contribution Rights. Each Guarantor reserves,
as against each other Guarantor, its right of contribution under
Section 2.10 but agrees that all such contribution rights shall be
included among the Subordinated Liabilities; and
(e) Deferral of Other Rights and Claims. Until all obligations of
the Lenders to extend credit to Borrower have expired or been
terminated and all the Guaranteed Obligations have been paid in full,
such Guarantor will not demand, sue for, accept or receive any payment
or transfer on account of any such right or claim from any Person
(other than Borrower and its Subsidiaries) liable for the payment of
any of the Guaranteed Obligations.
Section 2.8. Subordination Provisions. (a) Subordination. Any and
all present and future debts, liabilities and obligations of every
type and description (whether for money borrowed, on intercompany
accounts, for provision of goods or services, under tax sharing or
contribution agreements or on account of any other transaction,
agreement, occurrence or event and whether absolute or contingent,
direct or indirect, matured or unmatured, liquidated or unliquidated,
created directly or acquired from another, or sole, joint, several or
joint and several) of Borrower now outstanding or hereafter incurred
or owed to any Guarantor (the "Subordinated Liabilities") shall be,
and hereby are, subordinated to full and final payment of the
Guaranteed Obligations.
(b) Prohibited Payments. No Guarantor will demand, sue for, accept
or receive, or cause or permit any other Person to make, any payment
on or transfer of property on account of any Subordinated Liabilities
except to the extent payment is permitted at the time under Section
7.02 of the Credit Agreement.
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(c) No Liens or Transfers. No Guarantor will demand, accept or hold
any Lien upon any real or personal property of Borrower as security
for any of the Subordinated Liabilities and agrees that any such Lien
shall be void.
(d) Insolvency Proceedings. In any Insolvency or Liquidation
Proceeding, the Holders of Guaranteed Obligations shall be entitled to
receive payment in full of all amounts due or to become due on or in
respect of the Guaranteed Obligations, or provision shall be made for
such payment in money or money's worth, before any Guarantor is
entitled to receive any payment or distribution of any kind or
character, whether in cash, property or securities, on account of any
of the Subordinated Liabilities, and to that end the Holders of
Guaranteed Obligations shall be entitled to receive, for application
to the payment thereof, all payments and distributions of any kind or
character, whether in cash, property or securities (including any such
payment or distribution which may be payable or deliverable by reason
of the payment of any other debt or liability of Borrower being
subordinated to the payment of the Subordinated Liabilities), which
may be payable or deliverable in respect of the Subordinated
Liabilities in any such Insolvency or Liquidation Proceeding.
(e) Disallowed Post-Commencement Interest and Expenses. If in any
Insolvency or Liquidation Proceeding (i) any payment or distribution
of any kind or character, whether in cash, property or securities
(including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other debt or liability of
Borrower being subordinated to the payment of the Subordinated
Liabilities) is payable or deliverable in respect of the Subordinated
Liabilities, and (ii) the Holders of Guaranteed Obligations are not
otherwise entitled to receive such payment or distribution pursuant to
Section 2.8(d), and (iii) any amount remains unpaid to any Holder of
Guaranteed Obligations on account of any Disallowed Post-Commencement
Interest and Expenses, then the Holders of Guaranteed Obligations
shall be entitled to receive payment of all such unpaid Disallowed
Post-Commencement Interest and Expenses from and out of any and all
such payments and distributions in respect of the Subordinated
Liabilities.
(f) Held in Trust. If any payment, transfer or distribution is made
to any Guarantor upon any Subordinated Liabilities that is not
permitted to be made under this Section 2.8 or that the Holders of
Guaranteed Obligations are not entitled to receive under this Section
2.8, such Guarantor shall receive and hold the same in trust, as
trustee for the benefit of the Holders of Guaranteed Obligations, and
shall forthwith transfer and deliver the same to Agent, in precisely
the form received (except for any required endorsement), for
application to the payment of Guaranteed Obligations or any unpaid
Disallowed Post-Commencement Interest and Expenses.
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(g) Claims in Bankruptcy. Each Guarantor will file all claims
against Borrower in any Liquidation or Insolvency Proceeding in which
the filing of claims is required or permitted by law upon any of the
Subordinated Liabilities and will assign to Agent, for the benefit of
the Holders of Guaranteed Obligations, all rights of such Guarantor
thereunder. If any Guarantor does not file any such claim at least 30
days prior to any applicable claims bar date, Agent is hereby
authorized (but shall not be obligated), as attorney-in-fact for such
Guarantor with full power of substitution, either to file such claim
or proof thereof in the name of such Guarantor or, at Agent's option,
to assign the claim and cause the claim or proof thereof to be filed
by an agent or nominee. Agent and its agents and nominees shall have
the sole right, but no obligation, to accept or reject any plan
proposed in such Insolvency or Liquidation Proceeding and to cast any
votes and to take any other action with respect to all claims upon any
of the Subordinated Liabilities.
(h) Subordination Effective and Not Impaired. This Section 2.8 shall
remain effective for so long as this Guaranty is continuing and
thereafter for so long as any Guaranteed Obligation is outstanding.
Each Guarantor's obligations under this Section 2.8 (i) shall be
absolute and unconditional as set forth in Section 2.3, irrevocable
and continuing as set forth in Section 2.4, subject to reinstatement
as set forth in Section 2.5, and not be affected or impaired by any of
the matters waived in Section 2.6, (ii) shall be subject to the
provisions of Article V of the Credit Agreement, and (iii) shall
otherwise be as equally enduring and free from defenses as such
Guarantor's liability under this Guaranty.
Section 2.9. Fraudulent Transfer Limitation. If, in any action to
enforce this Guaranty or any proceeding to allow or adjudicate a claim
under this Guaranty, a court of competent jurisdiction determines that
enforcement of this Guaranty against any Guarantor for the full amount
of the Guaranteed Obligations is not lawful under, or would be subject
to avoidance under, Section 548 of the Bankruptcy Code or any
applicable provision of comparable state law, the liability of such
Guarantor under this Guaranty shall be limited to the maximum amount
lawful and not subject to avoidance under such law.
Section 2.10. Contribution among Guarantors. The Guarantors desire
to allocate among themselves, in a fair and equitable manner, their
rights of contribution from each other when any payment is made by one
of the Guarantors under this Guaranty. Accordingly, if any payment is
made by a Guarantor under this Guaranty (a "Funding Guarantor") that
exceeds its Fair Share, the Funding Guarantor shall be entitled to a
contribution from each other Guarantor in the amount of such other
Guarantor's Fair Share Shortfall, so that all such contributions shall
cause each Guarantor's Aggregate Payments to equal its Fair Share.
For these purposes:
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(a) "Fair Share" means, with respect to a Guarantor as of any
date of determination, an amount equal to (i) the ratio of
(x) the Adjusted Maximum Amount of such Guarantor to (y) the
aggregate Adjusted Maximum Amounts of all Guarantors,
multiplied by (ii) the aggregate amount paid on or before
such date by all Funding Guarantors under this Guaranty.
(b) "Fair Share Shortfall" means, with respect to a Guarantor as
of any date of determination, the excess, if any, of the Fair
Share of such Guarantor over the Aggregate Payments of such
Guarantor.
(c) "Adjusted Maximum Amount" means, with respect to a Guarantor
as of any date of determination, the maximum aggregate amount
of the liability of such Guarantor under this Guaranty,
limited to the extent required under Section 2.9 (except
that, for purposes solely of this calculation, any assets or
liabilities arising by virtue of any rights to or obligations
of contribution under this Section 2.10 shall not be counted
as assets or liabilities of such Guarantor).
(d) "Aggregate Payments" means, with respect to a Guarantor as of
any date of determination, the aggregate net amount of all
payments made on or before such date by such Guarantor under
this Guaranty (including, without limitation, under this
Section 2.10).
The amounts payable as contributions hereunder shall be determined as
of the date on which the related payment or distribution is made by
the Funding Guarantor. The allocation and right of contribution among
the Guarantors set forth in this Section 2.10 shall not be construed
to limit in any way the liability of any Guarantor under this Guaranty
to the Holders of the Guaranteed Obligations.
Section 2.11. Joint and Several Obligation. This Guaranty and all
liabilities of each Guarantor hereunder shall be the joint and several
obligation of each Guarantor and may be freely enforced against each
Guarantor, for the full amount of the Guaranteed Obligations (subject
to Section 2.9), without regard to whether enforcement is sought or
available against any other Guarantor.
ARTICLE III
MISCELLANEOUS PROVISIONS
Section 3.1. Condition of Borrower. Each Guarantor is fully aware of
the financial condition of Borrower and is executing and delivering
this Guaranty based solely upon such Guarantor's own independent
investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement by any Holder of
Guaranteed Obligations. Each Guarantor represents and warrants that
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it is in a position to obtain, and each Guarantor hereby assumes full
responsibility for obtaining, any additional information concerning
the financial condition of Borrower and any other matter pertinent
hereto as such Guarantor may desire, and such Guarantor is not relying
upon or expecting any Holder of Guaranteed Obligations to furnish to
such Guarantor any information now or hereafter in the possession of
any Holder of Guaranteed Obligations concerning the same or any other
matter. By executing this Guaranty, each Guarantor knowingly accepts
the full range of risks encompassed within a contract of this type,
which risks each Guarantor acknowledges. No Guarantor shall have the
right to require any Holder of Guaranteed Obligations to obtain or
disclose any information with respect to the Guaranteed Obligations,
the financial condition or prospects of Borrower, the ability of
Borrower to pay or perform the Guaranteed Obligations, the existence,
perfection, priority or enforceability of any collateral security for
any or all of the Guaranteed Obligations, the existence or
enforceability of any other guaranties of all or any part of the
Guaranteed Obligations, any action or non-action on the part of any
Holder of Guaranteed Obligations, Borrower, or any other Person, or
any other event, occurrence, condition or circumstance whatsoever.
Section 3.2. Amendments. (a) Amendment to Guaranty. No amendment or
waiver of any provision of this Guaranty, and no consent to any
departure by any Guarantor herefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Banks,
and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given, except
that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, (i) limit the liability of any Guarantor
hereunder, (ii) postpone any date fixed for payment hereunder, or
(iii) change the number of Lenders required to take any action
hereunder.
(b) Amendment or Modification of the Notes. The Notes may be
amended, modified or supplemented in accordance with their terms
without notice to or consent or agreement by any Guarantor, including,
without limitation, so as to (i) alter, compromise, modify,
accelerate, extend, renew, refinance or change the time or manner for
making of advances, provision of other financial accommodations, or
the payment or performance of all or any portion of the Guaranteed
Obligations, (ii) increase or reduce the rate of interest or amount of
principal payable on the Notes, (iii) release or discharge Borrower or
any other Person as to all or any portion of the Guaranteed
Obligations, or (iv) release, substitute or add any one or more
guarantors or endorsers, accept additional or substituted security for
payment or performance of the Guaranteed Obligations, or release or
subordinate any security therefor.
Section 3.3. Notices. All notices and other communications provided
for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied or delivered; if to any Guarantor, at c/o
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Realty Income Corporation, 220 West Crest Street, Escondido, CA 92025-
1707, Attention: Michael Pfeiffer, Esq., with a copy to: Michael J.
Brody Esq., Latham & Watkins, 633 West Fifth Street, Suite 4000, Los
Angeles, CA 90071-2007, if to Agent, at Bank of Montreal, 115 South
LaSalle Street, 12 West, Chicago, Illinois 60603, Attention: Josie
Nichols; and if to any Lender, at its address specified in the Credit
Agreement, or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. All
such notices and other communications shall, when mailed or telecopied
be effective when deposited in the mails or telecopied respectively.
Section 3.4. Right of Set-off. If any request is made or consent is
given by the Required Banks pursuant to Section 8.01 of the Credit
Agreement for a declaration by the Agent that the Notes are
immediately due and payable, or if the Notes become immediately due
and payable pursuant to Section 8.01 of the Credit Agreement, each
Lender shall have the right at any time and from time to time
thereafter, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other liability at any time
owing by such Lender to or for the credit or the account of any
Guarantor against any and all liability of such Guarantor under this
Guaranty, whether or not such Lender shall have made any demand under
this Guaranty and even though such liability may then be contingent
and unmatured. Each Lender agrees promptly to notify the affected
Guarantor after any such set-off and application made by such Lender,
but the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under this
Section 3.4 are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which such Lender may
have.
Section 3.5. Successors and Assigns. This Guaranty is binding upon
and enforceable against each Guarantor, its successors and assigns,
and shall inure to the benefit of, and be enforceable by, each Holder
of any of the Guaranteed Obligations and such Holder's heirs,
representatives, successors and assigns.
Section 3.6. No Inquiry. Each Holder of Guaranteed Obligations may
rely, without further inquiry, on the power and authority of each
Guarantor, Borrower and each of its Subsidiaries and on the authority
of all officers, directors and agents acting or purporting to act on
their behalf.
Section 3.7. Bankruptcy. So long as any Commitments or Guaranteed
Obligation are outstanding, no Guarantor will, without the prior
written consent of Agent and the Required Banks, commence or join with
any other Person in commencing any Insolvency or Liquidation
Proceeding against Borrower or any of its Subsidiaries.
Section 3.8. No Waiver; Remedies. No failure on the part of any
Holder of Guaranteed Obligations to exercise, and no delay in
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exercising, any right hereunder shall operate as a waiver thereof, and
any single or partial exercise of any right hereunder shall not
preclude any other or further exercise of any other right or of the
same right as to any other matter or on a subsequent occasion.
Section 3.9. Remedies Cumulative. All rights, powers and remedies of
each Holder of Guaranteed Obligations under this Guaranty, under any
other agreement now or at any time hereafter in effect between any
such Holder and each and all of the Guarantors (whether relating to
the Guaranteed Obligations or otherwise) or now or hereafter existing
at law or in equity or by statute or otherwise, shall be cumulative
and concurrent and not alternative and each such right, power and
remedy may be exercised independently of, and in addition to, each
other such right, power or remedy.
Section 3.10. Severally Enforceable. This Guaranty may be enforced
severally and successively by any one or more of the Holders of
Guaranteed Obligations in one or more actions, whether independent,
concurrent, joint, successive or otherwise. The claims, rights and
remedies of any Holder of Guaranteed Obligations (i) may not be
modified or waived by any other Holder, except as set forth in Section
3.2(a), and (ii) shall not be reduced, discharged, affected or
impaired by any deed, act or omission, whether or not wrongful, of any
other Holder.
Section 3.11. Counterparts. This Guaranty may be executed in
counterparts, and each such counterpart for all purposes shall be
deemed an original and all such counterparts together shall constitute
but one and the same agreement.
Section 3.12. Severability. If any provision hereof or the
application thereof in any particular circumstance is held to be
unlawful or unenforceable in any respect, all other provisions hereof
and such provision in all other applications shall nevertheless remain
effective and enforceable to the maximum extent lawful.
Section 3.13. Integration. This Guaranty is intended as an
integrated and final expression of the entire agreement of such
Guarantor with respect to the subject matter hereof. No
representation, understanding, promise or condition concerning the
subject matter hereof shall be binding upon any Holder of Guaranteed
Obligations unless expressed herein or therein, and no course of prior
dealing or usage of trade, and no parol or extrinsic evidence of any
nature, shall be admissible to supplement, modify or vary any of the
terms hereof. Acceptance of or acquiescence in a course of
performance rendered under this Guaranty or any other dealings between
any Guarantor and any Holder of Guaranteed Obligations shall not be
relevant to determine the meaning of this Guaranty even though the
accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
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SECTION 3.14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THOSE COURTS. EACH PARTY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS MAY BE MADE BY ANY MEANS
PERMITTED BY NEW YORK LAW.
(c) WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS GUARANTY, THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE, AND AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
Section 3.15. Acceptance and Notice. Each Guarantor acknowledges
acceptance hereof and reliance hereon by each Holder of any of the
Guaranteed Obligations and waives, irrevocably and forever, all notice
thereof.
IN WITNESS WHEREOF, the Guarantors have caused this Subsidiary
Guaranty to be duly executed and delivered by an officer of each
Guarantor thereunto duly authorized as of the date first above
written.
THE GUARANTORS:
By: Realty Income Corporation
Its: General Partner
By:
------------------------------
Michael R. Pfeiffer
Executive Vice President,
General Counsel
Page 92
Schedule A to Subsidiary Guaranty
GUARANTORS
Page 93
Exhibit A to Subsidiary Guaranty
FORM OF SUBSIDIARY JOINDER
This Subsidiary Joinder is entered into by , a
corporation (the "Company"), as of .
WHEREAS, the sole stockholder of the Company (the "Sole Stockholder")
has entered into the Revolving Credit Agreement, dated as of
February 1, 2000, among Realty Income Corporation, as Borrower, each
of the banks identified on the signature pages thereof and Bank of
Montreal, as Agent for the Banks (the "Credit Agreement") which
requires that each of the Subsidiaries of the Sole Stockholder enter
into a subsidiary guaranty (the "Subsidiary Guaranty", attached hereto
as Exhibit A) to and for the benefit of the lenders party to the
Credit Agreement;
WHEREAS, as a precondition to any transfer of certain properties owned
by the Sole Stockholder, any of its Subsidiaries (as defined in the
Credit Agreement), or any combination thereof (the "Properties"), to
any other Subsidiary, that such transferee Subsidiary execute and
deliver a subsidiary joinder (the "Subsidiary Joinder") with respect
to the Subsidiary Guaranty to and for the benefit of the lenders party
to the Credit Agreement;
WHEREAS, the Company owns a % limited partnership interest in the
limited partnership that owns such Properties; and
WHEREAS, the Company is a Subsidiary of the [Sole Stockholder] of the
Company, as defined in the Credit Agreement;
NOW, THEREFORE, the Company hereby agrees to join with the
Subsidiaries party to the Subsidiary Guaranty and agrees further to be
bound by the terms and conditions of the Subsidiary Guaranty as though
the Company had originally been a party to it.
IN WITNESS WHEREOF, the undersigned has executed this Subsidiary
Joinder as of the date first written above.
[Subsidiary Name]
----------------------------------
By:
-----------------------------
Its:
-----------------------------
Page 94
Exhibit A to Subsidiary Joinder
SUBSIDIARY GUARANTY
Page 95
Schedule 1
COMMITMENTS
BANK COMMITMENT
Bank of Montreal (Agent) $25,000,000
Total - All Banks $25,000,000
Page 96
SCHEDULE 5.01(A)
SUBSIDIARIES AND JOINT VENTURES OF THE COMPANY
Page 97
SCHEDULE 5.01(Q)
ERISA LIABILITIES
Page 98
SCHEDULE 5.01(R)
INTELLECTUAL PROPERTY
Page 99
Exhibit 12.1
REALTY INCOME CORPORATION
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(dollars in thousands)
<TABLE>
Years ended December 31,
-----------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income $46,241 $41,304 $34,770 $32,223 $25,600
------- ------- ------- ------- -------
Fixed Charges:
Interest 23,267 13,044 7,800 1,987 2,186
Amortization of fees 1,106 679 426 380 456
Interest capitalized 1,644 660 168 150 217
------- ------- ------- ------- -------
Fixed charges 26,117 14,383 8,394 2,517 2,859
------- ------- ------- ------- -------
Net income before
fixed charges 70,714 55,027 42,996 34,590 28,242
Divided by fixed
charges 26,117 14,383 8,394 2,517 2,859
------- ------- ------- ------- -------
Ratio of earnings to
fixed charges 2.7 3.8 5.1 13.7 9.9
======= ======= ======= ======= =======
Ratio of earnings to
combined fixed
charges and
preferred stock
dividends 2.3 3.8 5.1 13.7 9.9
======= ======= ======= ======= =======
Preferred stock
dividend 5,229 -- -- -- --
</TABLE>
Page 1
Exhibit 21.1
============
Subsidiaries of the Company as of January 1, 2000
- -------------------------------------------------
Realty Income Texas Properties, L.P.
a Delaware limited partnership
Realty Income Texas Properties, Inc.
a Delaware corporation
Crest Net Lease, Inc.
a Delaware corporation
Page 1
EXHIBIT 23.1
Consent of Independent Auditors
The Board of Directors
Realty Income Corporation:
We consent to incorporation by reference in Registration Statement
No. 333-80821 on Form S-3 of Realty Income Corporation and to incorporation
by reference in Registration Statement No. 33-95708 on Form S-8 of Realty
Income Corporation, of our report relating to the consolidated balance
sheets of Realty Income Corporation as of December 31, 1999 and 1998, and
the related consolidated statements of income, stockholders' equity and
cash flows for each of the years in the three-year period ended
December 31, 1999, and the related Schedule III. Such report is dated
January 25, 2000, except as to note 18A, which is as of February 1, 2000,
and appears in the December 31, 1999, annual report on Form 10-K of Realty
Income Corporation.
/s/ KPMG LLP
------------
KPMG LLP
San Diego, California
March 20, 2000
Page 1
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
This Schedule contains summary financial information extracted from
the registrant's Balance Sheet as of December 31, 1999 and Income
Statement for the twelve months ended December 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER>1
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 773,000
<SECURITIES> 0
<RECEIVABLES> 3,407,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> <F1> 0
<PP&E> 1,062,479,000
<DEPRECIATION> (195,386,000)
<TOTAL-ASSETS> 905,404,000
<CURRENT-LIABILITIES> <F1> 0
<BONDS> 349,200,000
<COMMON> 26,822,000
0
4,140,000
<OTHER-SE> 503,869,000
<TOTAL-LIABILITY-AND-EQUITY> 905,404,000
<SALES> 0
<TOTAL-REVENUES> 104,510,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 34,742,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,473,000
<INCOME-PRETAX> 46,596,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 46,596,000
<DISCONTINUED> 0
<EXTRAORDINARY> (355,000)
<CHANGES> 0
<NET-INCOME> 46,241,000
<EPS-BASIC> 1.53
<EPS-DILUTED> 1.53
<FN>
Current assets and current liabilities are not applicable to
the Company under current industry standards.
</FN>
</TABLE>
