Exhibit 1.1
REALTY INCOME CORPORATION
(a Maryland Corporation)
$100,000,000
5 7/8% Senior Debentures due 2035
PURCHASE AGREEMENT
March 8, 2005
REALTY INCOME CORPORATION
(a Maryland corporation)
$100,000,000
5 7/8% Senior Debentures due 2035
PURCHASE AGREEMENT
March
8, 2005
BANC OF AMERICA SECURITIES LLC
CITIGROUP GLOBAL MARKETS INC.
As Representatives of the several Underwriters
c/o Banc of America Securities LLC
Hearst Tower
214 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
Realty Income Corporation, a Maryland corporation (the
“Company”), confirms its agreement with the underwriters named in
Schedule A hereto (the “Underwriters” which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Banc of America Securities LLC (“BAS”) and Citigroup Global Markets Inc. (“Citigroup”)
are acting as representatives (BAS and Citigroup, in such capacity, the “Representatives”),
with respect to the sale by the Company and the purchase by the Underwriters,
acting severally and not jointly, of $100,000,000 aggregate principal amount of
the Company’s 5 7/8% Senior Debentures due 2035 (the “Securities”). The Securities are to be issued pursuant to
an indenture dated as of October 28, 1998 (the “Indenture”) between the Company
and The Bank of New York, as trustee (the “Trustee”).
The Company understands that the Underwriters propose
to make a public offering of the Securities as soon as the Representatives deem
advisable after this Agreement has been executed and delivered.
The Company has
filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (No. 333-113032) and
Amendment No. 1 thereto (as so amended, the “Current Registration
Statement”) for the registration of shares of its common stock, par value $1.00
per share (the “Common Stock”), shares of its preferred stock, par value $1.00
per share (the “Preferred Stock”), and its debt securities (including the
Securities) under the Securities Act of 1933, as amended (the “1933 Act”),
including the related preliminary prospectus or prospectuses. Promptly after execution and delivery of this
Agreement, the Company will either (i) prepare and file a prospectus
supplement and, if required by Rule 424(b) (as defined below), a
prospectus in accordance with the provisions of Rule 415 (“Rule 415”)
of
the rules and regulations of the Commission under the
1933 Act (the “1933 Act Regulations”) and paragraph (b) of Rule 424 (“Rule 424(b)”)
of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 (“Rule 434”) of the 1933 Act Regulations, prepare and
file a term sheet (a “Term Sheet”) in accordance with the provisions of
Rule 434 and Rule 424(b). The
information included in such Term Sheet that was omitted from the Current
Registration Statement at the time it became effective but that is deemed to be
part of the Current Registration Statement at the time the Term Sheet is filed
with the Commission pursuant to paragraph (d) of Rule 434 is referred
to as “Rule 434 Information.” Each
prospectus, together with any related prospectus supplement, relating to the
Securities used before the Current Registration Statement became effective, and
each prospectus, together with the related prospectus supplement, relating to
the Securities that omitted the Rule 434 Information or that was captioned
“Subject to Completion” that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called, together with the
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, a “preliminary prospectus.” The Current Registration Statement, including
the exhibits thereto, schedules, if any, and documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the
1933 Act, at the time it became effective, including, if applicable, the
Rule 434 Information, is hereinafter called the “Registration Statement.” Any registration statement filed pursuant to
Rule 462(b) of the 1933 Act Regulations is herein referred to as the “Rule 462(b)
Registration Statement,” and after such filing the term “Registration Statement”
shall include the Rule 462(b) Registration Statement. The prospectus dated March 23, 2004 (the “Base
Prospectus”) and the final prospectus supplement relating to the offering of
the Securities, including the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, in the form
first furnished to the Underwriters for use in connection with the offering of
the Securities, are herein called, collectively, the “Prospectus.” If Rule 434 is relied on, the term “Prospectus”
shall refer to the Base Prospectus, the preliminary prospectus supplement
relating to the Securities and the Term Sheet and all documents incorporated by
reference therein pursuant to Item 12 of Form S-3, and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include any copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”).
All references in
this Agreement to financial statements and schedules and other information
which is “described,” “disclosed,” “contained,” “included” or “stated” in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
or deemed to be incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be; and all references
in this Agreement to amendments or supplements to the Registration Statement,
any preliminary prospectus or the Prospectus shall be deemed to mean and
include the filing of any document under the Securities Exchange Act of 1934,
as amended (the “1934 Act”), which is incorporated or deemed to be incorporated
by reference in the Registration Statement, such preliminary prospectus or the
Prospectus, as the case may be.
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All references in this Agreement to properties or
improvements “owned by” or “of” the Company or any of its subsidiaries shall be
deemed to mean and include all properties and improvements which are leased by
the Company or any of its subsidiaries, as lessee.
SECTION 1
.
Representations
and Warranties
.
(a)
Representations and Warranties by the Company.
The Company represents and
warrants to each Underwriter as of the date hereof and as of the Closing Time
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i)
Compliance with Registration Requirements
. The Company meets the requirements for use of
Form S-3 under the 1933 Act.
The Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or, to the knowledge of
the Company, are threatened by the Commission, and any request on the part of
the Commission for additional information has been complied with. The Indenture has been duly qualified under
the Trust Indenture Act of 1939, as amended (the “1939 Act”), and the Trustee
has duly filed with the Commission a Statement of Eligibility on Form T-1 as an
exhibit to the Registration Statement or pursuant to Section 305(b)(2) of the
1939 Act.
At the respective times the Registration Statement,
any Rule 462(b) Registration Statement and any post-effective amendments
thereto became effective, at the date hereof and at the Closing Time, the
Registration Statement, any Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all material
respects with the applicable requirements of the 1933 Act, the 1933 Act
Regulations, the 1939 Act, and the rules and regulations of the Commission
under the 1939 Act (the “1939 Act Regulations”), and did not and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and, at the date hereof and at the Closing Time, neither the
Prospectus nor any amendments or supplements thereto contained or will contain
any untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided
,
however
, that
the representations and warranties in this paragraph shall not apply to
statements in or omissions from the Registration Statement or Prospectus made
in reliance upon and in conformity with information furnished to the Company in
writing by any Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus.
Each preliminary
prospectus and Prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 under the 1933 Act, complied when so filed in all material
respects with the 1933 Act and the 1933 Act Regulations and, if applicable,
each preliminary prospectus and the Prospectus delivered to the Underwriters
for use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission
3
pursuant to EDGAR, except
to the extent permitted by Regulation S-T of the Commission.
(ii)
Incorporated Documents
. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at
the time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the 1934 Act and
the rules and regulations of the Commission thereunder (the “1934 Act
Regulations”), and, when read together with the other information in the
Prospectus, at the date hereof and at the Closing Time, did not and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(iii)
Independent Accountants
. The accountants who certified the financial
statements and supporting schedules included in the Registration Statement are
independent public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iv)
Financial Statements
. The consolidated financial statements of the
Company included in the Registration Statement and the Prospectus, together
with the related schedule and notes, present fairly the financial position of
the Company and its subsidiaries at the dates indicated and the consolidated
statements of income, stockholders’ equity and cash flows of the Company and
its subsidiaries for the periods specified; said consolidated financial
statements have been prepared in conformity with generally accepted accounting
principles (“GAAP”) applied on a consistent basis throughout the periods
involved. The supporting schedules
included in the Registration Statement present fairly in accordance with GAAP
the information required to be stated therein.
The selected financial data, if any, and summary financial information,
if any, included in the Prospectus present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. The Company’s ratios of earnings to fixed
charges and, if applicable, ratios of earnings to combined fixed charges and
preferred stock dividends (actual and, if any, pro forma) included in the
Prospectus have been calculated in compliance with Item 503(d) of Regulation S-K
of the Commission.
(v)
No
Material Adverse Change in Business
.
Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as otherwise stated therein,
(A) there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise (a “Material Adverse
Effect”), whether or not arising in the ordinary course of business,
(B) there have been no transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as
one enterprise, and (C) except for regular monthly distributions on the
Common Stock in amounts per share that are consistent with past practice and
regular monthly dividends on the Company’s 7.375% Monthly Income Class D
Cumulative Redeemable Preferred Stock, par value $1.00 per share (the “Class D
4
Preferred Stock”), there has been no dividend or
distribution of any kind declared, paid or made by the Company on any class of
its stock.
(vi)
Good Standing of the Company
. The Company is a corporation duly organized
and validly existing under the laws of the State of Maryland and is in good
standing with the State Department of Assessments and Taxation of Maryland and
has corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus and to enter into and
perform its obligations under this Agreement, the Indenture and the Securities;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii)
Good
Standing of Subsidiaries
. The only
subsidiaries of the Company are Realty Income Texas Properties, L.P., a
Delaware limited partnership, Realty Income Texas Properties, Inc., a
Delaware corporation, Crest Net Lease, Inc., a Delaware corporation,
CrestNet 1, LLC, a Delaware limited liability company (“CrestNet 1”),
RI GA 1, LLC, a Delaware limited liability company (“RIGA1”),
RI TN 1, LLC, a Delaware limited liability company (“RITN1”),
RI TN 2 LLC, a Delaware limited liability company (“RITN2”),
RI CS1, LLC, a Delaware limited liability company (“RICS1”),
RI CS2, LLC, a Delaware limited liability company (“RICS2”), and
Realty Income Pennsylvania Properties Trust, a Maryland business trust (“Realty
Income Pennsylvania”), and the Company does not hold any equity interest in any
corporation, limited liability company, partnership, business trust, joint
venture or entity other than such subsidiaries.
The limited liability companies named in the preceding sentence are hereinafter
called the “LLC Subsidiaries.” Each
subsidiary of the Company has been duly organized and is validly existing as a
partnership, limited liability company, business trust or corporation, as the
case may be, in good standing under the laws of the state of its organization
and has power and authority as a partnership, limited liability company,
business trust or corporation, as the case may be, to own, lease and operate
its properties and to conduct its business as described in the Prospectus; each
such subsidiary is duly qualified as a foreign partnership, limited liability
company, business trust or corporation, as the case may be, to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding partnership interests, limited liability company interests,
business trust interests and shares of capital stock, as the case may be, of
each such subsidiary have been duly authorized (if applicable) and validly
issued and are fully paid and are non-assessable (except to the extent that the
general partners of subsidiaries which are partnerships may be liable for the
obligations of such partnerships) and are owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding partnership
interests, limited liability company interests, business trust interests or
shares of capital stock, as the case may be, of such subsidiaries were issued
in violation of preemptive or other similar rights
5
arising by operation of law, under the partnership
agreement, declaration of trust or trust agreement, limited liability company
agreement (or other similar agreement) or charter or bylaws, as the case may
be, of any such subsidiary or under any agreement or instrument to which the
Company or any such subsidiary is a party.
(viii)
Capitalization
. The authorized stock of the Company and the
issued and outstanding stock of the Company are as set forth in the line items “Preferred
Stock and paid in capital” and “Common Stock and paid in capital” set forth in
the consolidated balance sheets contained in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2004 (except for subsequent
issuances, if any, pursuant to employee benefit plans referred to in the
Prospectus or pursuant to the exercise of options referred to in the
Prospectus).
(ix)
Authorization of Agreement
. This Agreement has been duly authorized,
executed and delivered by the Company.
(x)
Authorization of Capital Stock
. The shares of issued and outstanding Common
Stock and Class D Preferred Stock have been duly authorized and validly issued
and are fully paid and non-assessable; none of the outstanding shares of
Common Stock or Class D Preferred Stock was issued in violation of
preemptive or other similar rights arising by operation of law, under the
charter or bylaws of the Company, under any agreement or instrument to which
the Company or any of its subsidiaries is a party or otherwise, and the Company’s
authorized but unissued Class A Junior Participating Preferred Stock, par value
$1.00 per share (the “Class A Preferred Stock”), the Common Stock, the Class D Preferred
Stock and the Rights Agreement dated as of June 25, 1998 (the “Rights
Agreement”) between the Company and The Bank of New York conform to all
statements relating thereto contained or incorporated by reference in the
Prospectus and such statements conform to the rights set forth in the
instruments defining the same.
(xi)
Absence
of Defaults and Conflicts
. Neither
the Company nor any of its subsidiaries is in violation of its charter or
bylaws, its partnership agreement, declaration of trust or trust agreement, or
limited liability company agreement (or other similar agreement), as the case
may be, or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which any of them may be bound or to which any of the respective
properties or assets of the Company or any subsidiary is subject (collectively,
“Agreements and Instruments”), except for such defaults that would not have a
Material Adverse Effect; and the execution, delivery and performance of this
Agreement, the Indenture and the Securities and the consummation of the
transactions contemplated herein and therein (including the issuance and sale
of the Securities and the use of the proceeds from the sale of the Securities
as described in the Prospectus under the caption “Use of Proceeds”) and
compliance by the Company with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge
6
or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to, any Agreement or Instrument, except for
such conflicts, breaches or defaults or liens, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect, nor
will such action result in any violation of the provisions of the charter or
bylaws of the Company or any applicable law, rule, regulation, or governmental
or court judgment, order, writ or decree.
As used herein, a “Repayment Event” means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any subsidiary of the Company or any of its subsidiaries.
(xii)
Absence of Labor Dispute
. No labor dispute with the employees of the
Company or any subsidiary of the Company exists or, to the best knowledge of
the Company, is imminent; and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any subsidiary’s
tenants, which, in either case, could reasonably be expected, individually or
in the aggregate, to result in a Material Adverse Effect.
(xiii)
Absence of Proceedings
. The Company has not received any notice of
any action, suit, proceeding, inquiry or investigation before or by any court
or governmental agency or body, domestic or foreign, and, to the best
knowledge of the Company, there is no such proceeding now pending or
threatened, against or affecting the Company or any of its subsidiaries, which
is required to be disclosed in the Registration Statement (other than as
disclosed therein), or which could reasonably be expected to result in a
Material Adverse Effect, or which could reasonably be expected to materially
and adversely affect the consummation of this Agreement or the performance by
the Company of its obligations under this Agreement, the Indenture or the
Securities; and the aggregate of all pending legal or governmental proceedings
to which the Company or any subsidiary is a party or of which any of their
respective property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(xiv)
Accuracy of Exhibits
. There are no contracts or documents which are
required to be described in the Registration Statement, the Prospectus or the
documents incorporated by reference therein or to be filed as exhibits thereto
which have not been so described and/or filed as required.
(xv)
Possession
of Intellectual Property
. The
Company and its subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names or other intellectual property (collectively, “Intellectual
Property”) necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual
7
Property invalid or inadequate to protect the interest
of the Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xvi)
Absence of Further Requirements
. No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the performance
by the Company of its obligations under this Agreement, the Indenture or the
Securities, in connection with the offering, issuance or sale of the Securities
hereunder or the consummation of the other transactions contemplated by this
Agreement, the Indenture or the Securities, except such as have been already
made or obtained under the 1933 Act, the 1933 Act Regulations, the 1939 Act or
the 1939 Act Regulations or as may be required under state securities laws.
(xvii)
Possession of Licenses and Permits
. The Company and its subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
them and the Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so to
possess or comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect would not,
singly or in the aggregate, have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(xviii)
Investment Company Act
. The Company is not, and upon the issuance and
sale of the Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus under “Use of Proceeds” will
not be, an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended (the “1940 Act”).
(xix)
Partnership
Agreements
. Each of the partnership
agreements, declarations of trust or trust agreements, limited liability
company agreements (or other similar agreements) and, if applicable, joint
venture agreements to which the Company or any of its subsidiaries is a party
has been duly authorized, executed and delivered by the Company or the relevant
subsidiary, as the case may be, and constitutes the valid and binding agreement
of the Company or such subsidiary, as the case may be, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
(A) the effect of bankruptcy, insolvency or other similar laws now or
hereafter in effect relating to or affecting creditors’ rights generally or
(B) the effect of general principles of equity, and the execution,
delivery and performance of such agreements did not, at the time of execution
and delivery, and does not constitute a breach of or default under the charter
or
8
bylaws, partnership agreement, declaration of trust or
trust agreement, or limited liability company agreement (or other similar
agreement), as the case may be, of the Company or any of its subsidiaries or
any of the Agreements and Instruments or any law, administrative regulation or
administrative or court order or decree.
(xx)
Properties
. Except as otherwise disclosed in the
Prospectus: (i) the Company and its subsidiaries have good and marketable
title (either in fee simple or pursuant to a valid leasehold interest) to all
properties and assets described in the Prospectus as being owned or leased, as
the case may be, by them and to all properties reflected in the Company’s most
recent consolidated financial statements included in the Prospectus, and
neither the Company nor any of its subsidiaries has received notice of any
claim that has been or may be asserted by anyone adverse to the rights of the
Company or any subsidiary with respect to any such properties or assets (or any
such lease) or affecting or questioning the rights of the Company or any such
subsidiary to the continued ownership, lease, possession or occupancy of such
property or assets, except for such claims that would not, singly or in the
aggregate, have a Material Adverse Effect; (ii) all liens, charges,
encumbrances, claims or restrictions on or affecting the properties and assets
of the Company or any of its subsidiaries which are required to be disclosed in
the Registration Statement or the Prospectus are disclosed therein, and all
such liens, charges, encumbrances, claims or restrictions which are not
disclosed in the Prospectus could not reasonably be expected, singly or in the aggregate,
to have a Material Adverse Effect; (iii) no person or entity, including,
without limitation, any tenant under any of the leases pursuant to which the
Company or any of its subsidiaries leases (as lessor) any of its properties
(whether directly or indirectly through other partnerships, limited liability
companies, business trusts, joint ventures or otherwise) has an option or right
of first refusal or any other right to purchase any of such properties, except
for such options, rights of first refusal or other rights to purchase which,
individually or in the aggregate, are not material with respect to the Company
and its subsidiaries considered as one enterprise; (iv) to the Company’s
best knowledge, each of the properties of the Company or any of its subsidiaries
has access to public rights of way, either directly or through insured
easements, except where the failure to have such access would not, singly or in
the aggregate, have a Material Adverse Effect; (v) to the Company’s best
knowledge, each of the properties of the Company or any of its subsidiaries is
served by all public utilities necessary for the current operations on such
property in sufficient quantities for such operations, except where the failure
to have such public utilities would not, singly or in the aggregate, have a
Material Adverse Effect; (vi) to the best knowledge of the Company, each
of the properties of the Company or any of its subsidiaries complies with all
applicable codes and zoning and subdivision laws and regulations, except for
such failures to comply which would not, either individually or in the
aggregate, have a Material Adverse Effect; (vii) all of the leases under
which the Company or any of its subsidiaries holds or uses any real property or
improvements or any equipment relating to such real property or improvements
are in full force and effect, except where the failure to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse Effect,
and neither the Company nor any of its subsidiaries is in default in the
payment of any amounts due under any such leases or in any other default
thereunder and the Company knows of no event which, with the passage of time or
the giving of notice or both, would constitute a default under any such
9
lease, except such defaults that would not, individually
or in the aggregate, have a Material Adverse Effect; (viii) to the best
knowledge of the Company, there is no pending or threatened condemnation,
zoning change, or other proceeding or action that could in any manner affect
the size of, use of, improvements on, construction on or access to the
properties of the Company or any of its subsidiaries, except such proceedings
or actions that, either singly or in the aggregate, would not have a Material
Adverse Effect; and (ix) neither the Company nor any of its subsidiaries
nor any lessee of any of the real property or improvements of the Company or
any of its subsidiaries is in default in the payment of any amounts due or in
any other default under any of the leases pursuant to which the Company or any
of its subsidiaries leases (as lessor) any of its real property or improvements
(whether directly or indirectly through partnerships, limited liability companies,
joint ventures or otherwise), and the Company knows of no event which, with the
passage of time or the giving of notice or both, would constitute such a
default under any of such leases, except such defaults as would not,
individually or in the aggregate, have a Material Adverse Effect.
(xxi)
Insurance
. With such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect, the Company
and its subsidiaries have title insurance on all real property and improvements
described in the Prospectus as being owned or leased under a ground lease, as
the case may be, by them and to all real property and improvements reflected in
the Company’s most recent consolidated financial statements included in the
Prospectus in an amount at least equal to the original cost of acquisition and
the Company and its subsidiaries are entitled to all benefits of the insured
thereunder, and each such property is insured by extended coverage hazard and
casualty insurance in amounts and on such terms as are customarily carried by
lessors of properties similar to those owned by the Company and its
subsidiaries (in the markets in which the Company’s and subsidiaries’
respective properties are located), and the Company and its subsidiaries carry
comprehensive general liability insurance and such other insurance as is
customarily carried by lessors of properties similar to those owned by the
Company and its subsidiaries in amounts and on such terms as are customarily
carried by lessors of properties similar to those owned by the Company and its
subsidiaries (in the markets in which the Company’s and its subsidiaries’
respective properties are located) and the Company or one of its subsidiaries
is named as an additional insured on all policies required under the leases for
such properties.
(xxii)
Environmental
Matters
. Except as otherwise
disclosed in the Prospectus: (i) all real property and improvements owned
or leased by the Company or any of its subsidiaries, including, without
limitation, the Environment (as defined below) associated with such real
property and improvements, is free of any Contaminant (as defined below),
except such Contaminants which, individually or in the aggregate, would not
have a Material Adverse Effect; (ii) neither the Company, nor any of its
subsidiaries has caused or suffered to exist or occur any Release (as defined
below) of any Contaminant into the Environment or any other condition that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or could result in any violation of any Environmental
Laws (as defined below) or constitute a health, safety or environmental
hazard to any person or property except for such violations or hazards that
could not reasonably be expected to have a Material Adverse Effect;
(iii) neither the
10
Company nor any of its subsidiaries is aware of any
notice from any governmental body claiming any violation of any Environmental
Laws or requiring or calling attention to the need for any work, repairs,
construction, alterations, removal or remedial action or installation on or in
connection with such real property or improvements, whether in connection with
the presence of asbestos-containing materials in such properties or
otherwise, except for such violations, work, repairs, construction,
alterations, removal or remedial actions or installations as would not,
individually or in the aggregate, have a Material Adverse Effect; (iv) any
such work, repairs, construction, alterations, removal or remedial action or
installation, if required, would not result in the incurrence of liabilities,
which, individually or in the aggregate, would have a Material Adverse Effect;
(v) neither the Company nor any of its subsidiaries has caused or suffered
to exist or occur any condition on any of the properties or improvements of the
Company or any of its subsidiaries that could give rise to the imposition of
any Lien (as defined below) under any Environmental Laws, except such Liens
which, individually or in the aggregate, would not have a Material Adverse
Effect; and (vi) to the Company’s best knowledge, no real property or
improvements owned or leased by the Company or any of its subsidiaries is being
used or has been used for manufacturing or for any other operations that
involve or involved the use, handling, transportation, storage, treatment or
disposal of any Contaminant, where such operations require or required permits
or are or were otherwise regulated pursuant to the Environmental Laws and where
such permits have not been or were not obtained or such regulations are not
being or were not complied with, except in all instances where any failure to
obtain a permit or comply with any regulation could not reasonably be expected,
singly or in the aggregate, to have a Material Adverse Effect. “Contaminant” means any pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, asbestos or asbestos-containing
materials, PCBs, lead, pesticides or radioactive materials or any constituent
of any such substance or waste, including any such substance identified or
regulated under any Environmental Law. “Environmental
Laws” means the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601
et seq.
,
the Resource Conservation and Recovery Act, 42 U.S.C. 6901,
et seq.
, the Clean Air Act, 42 U.S.C. 7401,
et seq.
, the Clean Water Act, 33 U.S.C. 1251,
et seq.
, the Toxic Substances Control Act, 15 U.S.C.
2601,
et seq.
, the Occupational Safety
and Health Act, 29 U.S.C. 651,
et seq.
,
and all other federal, state and local laws, ordinances, regulations, rules,
orders, decisions, permits, and the like, which are directed at the protection
of human health or the Environment. “Lien”
means, with respect to any asset, any mortgage, deed of trust, lien, pledge,
encumbrance, charge or security interest in or on such asset. “Environment” means any surface water,
drinking water, ground water, land surface, subsurface strata, river sediment,
buildings, structures, and ambient, workplace and indoor air. “Release” means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, emanating or disposing of any Contaminant into the
Environment, including, without limitation, the abandonment or discard of
barrels, containers, tanks or other receptacles containing or previously
containing any Contaminant or any release, emission or discharge as those terms
are defined or used in any Environmental Law.
(xxiii)
Qualification
as a Real Estate Investment Trust
.
The Company was and is organized in conformity with the requirements for
qualification and taxation as a “real
11
estate investment trust” under the Internal Revenue
Code of 1986, as amended (the “Code”); the Company at all times has met and
continues to meet all the requirements of the Code for qualification and
taxation as a “real estate investment trust”; the Company’s method of operation
will enable it to meet the requirements for qualification and taxation as a “real
estate investment trust” under the Code; and the Company is qualified as a “real
estate investment trust” under the Code and will be so qualified for the
taxable year in which sales of the Securities occur.
(xxiv)
Registration Rights
. There are no persons with registration or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the 1933
Act, or included in the offering contemplated hereby.
(xxv)
Tax Treatment of Certain Entities
. Each of R.I.C. Trade Center, Ltd., Empire
Business Center, Ltd., and Silverton Business Center, Ltd., each a California
limited partnership (the “Sub-Limited Partnerships”), was, from the time of the
Consolidation (as defined herein) through and including the time of its merger
into the Company, treated as a partnership (rather than as an association
taxable as a corporation) for federal income tax purposes and from the time of
the Consolidation through and including the time of its merger into the Company
no Sub-Limited Partnership was ever treated as a publicly traded partnership
taxable as a corporation for federal income tax purposes. The Company’s ownership interests in two
properties held through tenancies in common with unrelated third parties (which
are the only properties which, since the Consolidation, have been held in
tenancies in common with unrelated third parties) have not been, since the
Consolidation, and will not be (or, in the case of properties which have been
sold, were not until the time of the sale of such properties), treated as
ownership interests in associations taxable as corporations for federal income
tax purposes or treated as ownership interests in publicly traded partnerships
taxable as corporations for federal income tax purposes. Realty Income Texas Properties, L.P., a
Delaware limited partnership, is not and has never been treated as an
association taxable as a corporation for federal income tax purposes and is not
and has never been treated as a publicly traded partnership taxable as a
corporation for federal income tax purposes.
Realty Income Texas Properties, Inc., a Delaware corporation, is
and has been at all times treated as a “qualified REIT subsidiary” within the
meaning of Section 856(i) of the Code and is not required to be qualified
as a foreign corporation in the State of Texas.
Each of the LLC Subsidiaries and Realty Income Pennsylvania has
been 100% owned by the Company at all times since their respective formation
dates
and has not elected to be taxed as a
corporation for tax purposes. As used
herein, the term “Consolidation” means the merger of 25 limited partnerships
and RIC Properties Ltd., a California limited partnership, into the Company on
August 15, 1994.
(xxvi)
Indenture
. The Indenture has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors’ rights
generally or by general equitable principles; and the Indenture has been
qualified under the 1939 Act.
12
(xxvii)
Securities
. The Securities have been duly authorized by
the Company and, at the Closing Time, will have been duly executed by the Company
and, when authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor specified in this
Agreement, (A) will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors’ rights
generally or by general equitable principles, and (B) will be in the form
contemplated by, and entitled to the benefits of, the Indenture.
(xxviii)
Description of Indenture and Securities
. The Securities and the Indenture will conform
in all material respects to the respective statements relating thereto
contained in the Prospectus and the Indenture is in the form, and the
Securities will be in substantially the form, filed or incorporated by
reference, as the case may be, as exhibits to the Registration Statement.
(xxix)
Ranking of Securities
. The Securities will rank on a parity with all
unsecured indebtedness of the Company (other than subordinated indebtedness of
the Company) that is outstanding on the date hereof or that may be incurred
hereafter, and senior to all subordinated indebtedness of the Company that is
outstanding on the date hereof or that may be incurred hereafter.
(b)
Officer’s Certificates.
Any
certificate signed by any officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed a representation
and warranty by the Company to each Underwriter as to the matters covered
thereby.
SECTION 2
.
Sale
and Delivery to the Underwriters; Closing
.
(a)
Securities.
On the
basis of the representations and warranties herein contained and subject to the
terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, severally and not jointly, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at the price set forth in
Schedule B, the aggregate principal amount of Securities set forth in
Schedule A opposite the name of such Underwriter, plus any additional
principal amount of Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof.
(b)
Payment.
Payment of
the purchase price for, and delivery of certificates for, the Securities shall
be made at the office of Latham & Watkins LLP, 650 Town Center
Drive, 20th Floor, Costa Mesa, California 92626-1925, or at such other place as
shall be agreed upon by the Representatives and the Company, at 6:00 A.M.
(California time) on March 11, 2005 (unless postponed in accordance with the
provisions of Section 10) or such other time not later than ten business
days after such date as shall be agreed upon by the Representatives and the
Company (such time and date of payment and delivery being herein called “Closing
Time”).
Payment shall be
made to the Company by wire transfer of immediately available funds to an
account at a bank designated by the Company, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by
13
them. It is
understood that each Underwriter has authorized the Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Securities, which it has agreed to purchase. BAS, individually and not as a Representative
of the Underwriters, may (but shall not be obligated to) make payment of the
purchase price for the Securities to be purchased by any Underwriter whose
payment therefor has not been received by the Closing Time, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(c)
Denominations; Registration.
Certificates
for the Securities shall be in such denominations and registered in such names
as the Representatives may request in writing at least one full business day
before the Closing Time. The
certificates for the Securities will be made available for examination and
packaging by the Representatives in The City of New York not later than
2:00 P.M. (New York City time) on the business day prior to the Closing
Time.
SECTION 3
.
Covenants
of the Company
. The Company covenants
with each Underwriter as follows:
(a)
Compliance with Securities
Regulations and Commission Requests.
The
Company, subject to Section 3(b), will notify the Representatives
immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement or any Rule 462(b)
Registration Statement shall become effective or any supplement to the
Prospectus, any Term Sheet or any amended Prospectus shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any Rule 462(b) Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly
effect the filings necessary pursuant to Rule 424(b) and, if applicable,
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus supplement, prospectus or term sheet transmitted for filing
under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus supplement,
prospectus or term sheet, as the case may be.
The Company will make every reasonable effort to prevent the issuance of
any stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
(b)
Filing of Amendments.
The
Company will give the Representatives notice of its intention to file or
prepare any amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision to
either the prospectus included in the Registration Statement at the time it
became effective or to the Prospectus, whether pursuant to the 1933 Act, the
1934 Act or otherwise, will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object.
14
(c)
Rule 434.
If the Company uses Rule 434,
it will comply with the requirements of such Rule.
(d)
Delivery of Registration
Statement.
The Company has
furnished or will deliver to the Representatives and counsel for the
Underwriters, without charge, as many signed and conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) as
the Representatives and counsel for the Underwriters may reasonably
request. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, if any, except to the extent permitted by
Regulation S-T.
(e)
Delivery of
Prospectuses.
The Company has
delivered to each Underwriter, without charge, as many copies of each
preliminary prospectus, if any, as such Underwriter reasonably requested, and
the Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will furnish
to each Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and
any amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, if any, except to the extent permitted by
Regulation S-T.
(f)
Continued Compliance with Securities Laws.
The Company will comply with the
1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the
Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is
necessary, in the opinion of counsel for the Underwriters or for the Company,
to amend the Registration Statement or amend or supplement the Prospectus in
order that the Prospectus will not include any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, or if it shall be necessary, in the opinion of
any such counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements of the
1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or
supplement as may be necessary to correct such statement or omission or to make
the Registration Statement or the Prospectus comply with such requirements, and
the Company will furnish to the
15
Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request.
(g)
Blue Sky
Qualifications.
The Company
will use its best efforts, in cooperation with the Underwriters, to qualify the
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the Representatives may
designate and to maintain such qualifications in effect for a period of not
less than one year from the date hereof;
provided
,
however
, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and reports as
may be required by the laws of such jurisdiction to continue such qualification
in effect for a period of not less than one year from the date hereof.
(h)
Rule 158.
The Company will timely file such
reports pursuant to the 1934 Act as are necessary in order to make generally
available to its security holders as soon as practicable an earnings statement
for the purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(i)
Use of Proceeds.
The Company will use the net
proceeds received by it from the sale of the Securities in the manner specified
in the Prospectus under “Use of Proceeds.”
(j)
Reporting
Requirements.
The Company,
during the period when the Prospectus is required to be delivered under the
1933 Act or the 1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by the
1934 Act and the 1934 Act Regulations.
(k)
Restriction on Sale of
Securities.
During the period beginning on the date of
this Agreement through and including the 90
th
day after the date of
this Agreement, the Company will not, without the prior written consent of the
Representatives, directly or indirectly, offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, any debt securities of the Company or any securities convertible
into or exercisable or exchangeable for any debt securities of the Company
(except for the Securities sold to the Underwriters pursuant to this Agreement)
or file any registration statement under the 1933 Act with respect to any of
the foregoing.
SECTION 4
.
Payment
of Expenses
.
(a)
Expenses.
The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(i) the word processing, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the printing and delivery to the Underwriters of
this Agreement, and such other documents as may be required in connection with
the offering, purchase, sale,
16
issuance
or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any transfer taxes or other duties payable upon the sale of the Securities to
the Underwriters, (iv) the fees and disbursements of the Company’s
counsel, accountants and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section 3(g)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (vi) the
printing and delivery to the Underwriters of copies of each preliminary
prospectus, any Term Sheet and the Prospectus and any amendments or supplements
thereto, (vii) the preparation, printing and delivery to the Underwriters
of copies of the Blue Sky Survey and any supplement thereto, (viii) the
fees and expenses of any transfer agent or registrar for the Securities,
(ix) if required, the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters (such fees and disbursements not
to exceed $10,000) in connection with, the review, if any, by the National
Association of Securities Dealers, Inc. (the “NASD”) of the terms of the
sale of the Securities, (x) the fees and expenses of the Trustee, including, if
required, the fees and disbursements of counsel for the Trustee in connection
with the Indenture and the Securities, (xi) any fees payable to securities
rating agencies in connection with the rating of the Securities, and (xii) the
fees and expenses of the depositary in connection with the holding of the
Securities in book-entry form.
(b)
Termination of Agreement.
If
this Agreement is terminated by the Representatives in accordance with the
provisions of Section 5 or Section 9(a)(i) or 9(a)(v) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
SECTION 5
.
Conditions
of Underwriters’ Obligations
. The
obligations of the several Underwriters hereunder are subject to the accuracy
of the representations and warranties of the Company contained in
Section 1 hereof and in certificates of any officer of the Company or any
subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder,
and to the following further conditions:
(a)
Effectiveness of
Registration Statement.
The
Registration Statement shall be effective at the time of execution and delivery
of this Agreement and any Rule 462(b) Registration Statement shall have
become effective not later than 5:30 P.M. on the date hereof, and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. The Prospectus
shall have been filed with the Commission in accordance with Rule 424(b)
and, if the Company has elected to rely upon Rule 434, a Term Sheet shall
have been filed with the Commission in accordance with Rule 434 and
Rule 424(b).
(b)
Opinions of Counsel for Company.
At Closing Time, (i) the Representatives shall have
received the favorable opinions, dated as of Closing Time, of Latham &
Watkins LLP, counsel for the Company, Michael R. Pfeiffer, Executive Vice
17
President, General Counsel and Secretary of the
Company, and Venable LLP, special Maryland counsel to the Company, each in
form and substance satisfactory to counsel for the Underwriters, to the effect
set forth in Exhibits A, B and C hereto, respectively, and to such further
effect as counsel to the Underwriters may reasonably request pursuant to
Section 5(g); and (ii) if such special Maryland counsel shall deliver
a Separate Opinion (as defined in the last paragraph of Exhibit C hereto),
the Representatives shall have received such Separate Opinion, which shall
comply with the requirements of the last paragraph of Exhibit C.
(c)
Opinion of Counsel for the
Underwriters.
At Closing
Time, the Representatives shall have received the favorable opinion, dated as
of Closing Time, of Sidley Austin Brown & Wood LLP, counsel for the Underwriters, with respect to this
Agreement, the Indenture, the Securities, the Registration Statement and the
Prospectus and such other matters as you may reasonably request. In giving such opinion such counsel may rely,
as to all matters arising under or governed by the laws of the State of
Maryland, upon the opinion of Venable LLP delivered pursuant to
Section 5(b) and, as to all matters governed by the laws of other jurisdictions
(other than the law of the State of New York and the federal law of the United
States) upon the opinions of counsel satisfactory to the Representatives.
(d)
Officers’
Certificate.
At Closing Time,
there shall not have been, since the date hereof or since the respective dates
as of which information is given in the Prospectus, any material adverse change
in the condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the Chairman or the
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and
warranties in Section 1 hereof are true and correct with the same force
and effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied under this Agreement at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued and no
proceedings for that purpose have been initiated or, to the best of their
knowledge, threatened by the Commission.
(e)
Accountant’s Comfort Letter.
(i) At the time of the execution of this
Agreement, the Representatives shall have received from KPMG LLP a letter,
dated such date, in form and substance satisfactory to the Representatives,
together with signed or reproduced copies of such letter for each of the
Underwriters, containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus; and (ii) at the Closing Time
the Representatives shall have received from KPMG LLP a letter, dated as
of Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to clause (i) of this subsection (e) of
this Section, except that the specified date referred to therein shall be a
date not more than three business days prior to Closing Time.
18
(f)
Rating Requirement
. At the date of this Agreement and at the
Closing Time, the Securities shall be rated at least “Baa2” by Moody’s Investor’s
Service Inc. (“Moody’s”), “BBB” by Standard & Poor’s (“S&P”)
and “BBB” by Fitch, Inc. (“Fitch”), and the Company shall have delivered to the
Representatives a letter, dated the Closing Time, from each such rating agency,
or other evidence satisfactory to the Representatives, confirming that the
Securities have such ratings.
(g)
Additional Documents.
At the Closing Time, counsel for
the Underwriters shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(h)
Termination of
Agreement.
If any condition
specified in this Section shall not have been fulfilled when and as
required to be fulfilled, this Agreement may be terminated by the
Representatives by notice to the Company at any time at or prior to Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 6 and 7
shall survive any such termination and remain in full force and effect.
SECTION 6
.
Indemnification
.
(a)
Indemnification of Underwriters.
The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 434 Information,
if applicable, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue statement
of a material fact included in any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
(ii) against
any and all loss, liability, claim, damage and expense whatsoever, as incurred,
to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
19
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by the
Representatives), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided
,
however
, that
this indemnity agreement shall not apply to any loss, liability, claim, damage
or expense to the extent arising out of any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Underwriter through
the Representatives expressly for use in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); and
provided
further
that this indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter, or
any person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any such amendments
or supplements thereto, but excluding documents incorporated or deemed to be incorporated
by reference therein) was not sent or given by or on behalf of such Underwriter
to such person, if such is required by law, at or prior to the written
confirmation of the sale of such Securities to such person and if the
Prospectus (as so amended or supplemented, if applicable) would have corrected
the defect giving rise to such loss, liability, claim, damage or expense,
except that this proviso shall not be applicable if such defect shall have been
corrected in a document which is incorporated or deemed to be incorporated by
reference in the Prospectus.
(b)
Indemnification of Company, Directors and Officers.
Each Underwriter severally agrees to indemnify
and hold harmless the Company, its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 434 Information, if applicable, or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through the Representatives expressly for
use in the Registration Statement (or any amendment thereto) or such
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(c)
Actions against Parties;
Notification.
Each
indemnified party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement. In
the case of parties indemnified pursuant to Section 6(a) above, counsel to
the indemnified parties shall be selected by the Representatives, and, in the
case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying
20
party
may participate at its own expense in the defense of any such action;
provided
,
however
, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 or Section 7 hereof
(whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(d)
Settlement without Consent if Failure to Reimburse.
If at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel, such indemnifying party agrees that it shall
be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 45 days
prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
SECTION 7
.
Contribution
. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided
by clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations.
The relative
benefits received by the Company on the one hand and the Underwriters on the
other hand in connection with the offering of the Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the total underwriting
discount received by the Underwriters, in each case as set forth on the cover
of the Prospectus (or, if Rule 434 is used, the corresponding location on
the Term Sheet)
21
bear to the aggregate initial public offering price of
the Securities as set forth on such cover (or corresponding location on the
Term Sheet, as the case may be).
The relative fault of the Company on the one hand and
the Underwriters on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7,
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
any such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if
any, who controls any Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each person,
if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company. The
Underwriters’ respective obligations to contribute pursuant to this Section 7
are several in proportion to the aggregate principal amount of Securities set
forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8
.
Representations,
Warranties and Agreements to Survive Delivery
. All representations, warranties and
agreements contained in this Agreement and in certificates of officers of the
Company submitted pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter
or any controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Underwriters.
22
SECTION 9
.
Termination
of Agreement
.
(a)
Termination; General.
The
Representatives may terminate this Agreement, by notice to the Company, at any
time at or prior to Closing Time (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial
markets in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or crisis or
any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Representatives,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of
the Company has been suspended or limited by the Commission, the New York Stock
Exchange or the Nasdaq National Market, or if trading generally on the American
Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market
has been suspended or limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental
authority, or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, (iv) if
a banking moratorium has been declared by either Federal, California or New
York authorities, or (v) if since the date of this Agreement, there has occurred
a downgrading in the rating assigned to the Securities, any class or series of
Preferred Stock or any of the Company’s other debt securities by any nationally
recognized securities rating agency, or any such securities rating agency has
publicly announced that it has under surveillance or review, with possible
negative implications or without indicating the direction of the possible
change, its rating of the Securities, any class or series of Preferred Stock or
any of the Company’s other debt securities.
(b)
Liabilities.
If this
Agreement is terminated pursuant to this Section, such termination shall be
without liability of any party to any other party except as provided in
Section 4 hereof, and provided further that Sections 6 and 7 shall survive
such termination and remain in full force and effect.
SECTION 10
.
Default
by One or More of the Underwriters
.
If one or more of the Underwriters shall fail at the Closing Time to
purchase the Securities which it or they are obligated to purchase under this
Agreement at such time (the “Defaulted Securities”), the Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the aggregate principal amount of
the Defaulted Securities does not exceed 10% of the aggregate principal amount
of the Securities set forth on Schedule A hereto, each of the non-defaulting
Underwriters shall be obligated, severally and not
23
jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder bear to
the underwriting obligations of all non-defaulting Underwriters, or
(b) if the aggregate principal amount of
the Defaulted Securities exceeds 10% of the aggregate principal amount of the
Securities set forth on Schedule A hereto, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve
any defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result
in a termination of this Agreement, either the Representatives or the Company
shall have the right to postpone the Closing Time, for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. As used herein, the term “Underwriter”
includes any person substituted for an Underwriter under this Section 10.
SECTION 11
.
Notices
. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to them c/o Banc of America Securities LLC, 40
West 57
th
Street, NY1-040-27-01, New York, New York 10019, Attention
of High Grade Transaction Management/Legal; and notices to the Company shall be
directed to it at Realty Income Corporation, 220 West Crest Street,
Escondido, California 92025-1725, attention of Legal Department.
SECTION 12
.
Parties
. This Agreement shall inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Company and their respective
successors and the controlling persons and officers and directors referred to
in Sections 6 and 7 and their heirs and legal representatives, any legal
or equitable right, remedy or claim under or in respect of this Agreement or
any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the sole
and exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm
or corporation. No purchaser of
Securities from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13.
GOVERNING
LAW AND TIME
. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. EXCEPT AS OTHERWISE SET FORTH HEREIN,
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14
.
Effect
of Headings and Table of Contents
.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
[Signature Page Follows]
24
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement between the Underwriters and the Company in
accordance with its terms.
|
Very truly yours,
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REALTY INCOME CORPORATION
|
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By:
|
/s/ Michael. R. Pfeiffer
|
|
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Michael R.
Pfeiffer
|
|
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Executive Vice
President,
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General Counsel
and Secretary
|
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CONFIRMED AND ACCEPTED,
|
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as of the date first above written:
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BANC OF AMERICA SECURITIES LLC
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CITIGROUP GLOBAL MARKETS INC.
|
|
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By:
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BANC OF AMERICA SECURITIES LLC
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By:
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/s/ Peter J. Carbone
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Authorized Signatory
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For themselves and as
Representatives of the
Underwriters named in Schedule A
hereto.
|
SCHEDULE A
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Name of Underwriter
|
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Principal
Amount of
Securities
|
|
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Banc of America
Securities LLC
|
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$
|
37,500,000
|
|
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Citigroup Global
Markets Inc.
|
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37,500,000
|
|
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Credit Suisse
First Boston LLC
|
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5,000,000
|
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Merrill Lynch,
Pierce, Fenner & Smith Incorporated
|
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5,000,000
|
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Wachovia Capital
Markets, LLC
|
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5,000,000
|
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A.G. Edwards
& Sons, Inc.
|
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2,000,000
|
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BNY Capital
Markets, Inc.
|
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2,000,000
|
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Harris Nesbitt
Corp.
|
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2,000,000
|
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Piper Jaffray
& Co.
|
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2,000,000
|
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Wells Fargo
Securities, LLC
|
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2,000,000
|
|
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Total
|
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$
|
100,000,000
|
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Sch A-1
SCHEDULE B
Price Schedule
1. The
initial public offering price for the Securities shall be 98.296% of the
principal amount thereof, plus accrued interest from March 11, 2005 if
settlement occurs after that date.
2. Underwriting discounts and
commissions for the Securities shall be 0.875% of the principal amount
thereof. Accordingly, the purchase price
to be paid for the Securities by the several Underwriters shall be 97.421% of
the principal amount thereof.
Sch B-1
Exhibit 4.2
PRINCIPAL AMOUNT
$100,000,000
REGISTERED NO.: R-1
CUSIP NO.: 756109 AG 9
ISIN NO.: US756109AG90
REALTY INCOME CORPORATION
5 7/8% SENIOR DEBENTURES
DUE 2035
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING
SET FORTH IN THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND, UNLESS AND UNTIL IT IS EXCHANGED FOR SECURITIES IN DEFINITIVE
FORM AS AFORESAID, MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ITS
NOMINEE TO A SUCCESSOR DEPOSITARY OR ITS NOMINEE.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”), 55 WATER STREET, NEW
YORK, NEW YORK TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SUCH SECURITY ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Realty Income
Corporation, a Maryland corporation (the “Company,” which term shall include
any successor under the Indenture hereinafter referred to), for value received,
hereby promises to pay to Cede & Co., or registered assigns, the principal
sum of One Hundred Million Dollars on March 15, 2035, and to pay interest
thereon from March 11, 2005, or from the most recent date to which interest has
been paid or duly provided for, semi-annually in arrears on March 15 and September
15 of each year (the “Interest Payment Dates”), commencing September 15, 2005,
at the rate of 5 7/8% per annum, until the entire principal amount hereof is
paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Debenture (or one or
more Predecessor Securities) is registered in the Security Register applicable
to the Debentures at the close of business on March 1 or September 1 (the “Regular
Record Dates”), as the case may be, immediately preceding the applicable
Interest Payment Date regardless of whether the Regular Record Date is a
Business Day. Any such interest not so punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may either be paid to the Person in whose name this Debenture (or one or
more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of Debentures of this
series not less than 10 days prior to such Special Record Date, or may be paid
at any time in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully
provided
in the Indenture. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. If any principal
of or premium, if any, or interest on any of the Debentures is not paid when
due, then such overdue principal and, to the extent permitted by law, such
overdue premium or interest, as the case may be, shall bear interest, until
paid or until such payment is duly provided for, at the rate of 5 7/8% per
annum.
Payments of principal, premium, if any,
and interest in respect of this Debenture will be made by the Company in
Dollars. If this Debenture is a Global Security, all payments of principal, premium,
if any, and interest in respect of this Debenture will be made by wire transfer
of immediately available funds to an account maintained by the payee located in
the United States. If this Debenture is not a Global Security (a “Certificated Debenture”),
payments of interest on this Debenture may, at the Company’s option, be made by
mailing a check to the address of the Person entitled thereto as such address
appears in the Security Register for the Debentures or by wire transfer to an
account maintained by the payee located inside the United States, all on the
terms set forth in the Indenture; provided, however, that a Holder of $5
million or more in aggregate principal amount of Certificated Debentures will
be entitled to receive payments of interest due on any Interest Payment Date by
wire transfer of immediately available funds to an account maintained by such
Holder in the United States so long as such Holder has given appropriate wire
transfer instructions to the Trustee or a Paying Agent for the Debentures at
least 15 calendar days prior to the applicable Interest Payment Date. Any such
wire transfer instruction will remain in effect until revoked by such Holder or
until such Person ceases to be a Holder of $5 million or more in aggregate
principal amount of Certificated Debentures.
Payments of principal of and premium, if any, and
interest on Certificated Debentures that are due and payable on the Final
Maturity Date, any Redemption Date or any other date on which principal of such
Debentures is due and payable will be made by wire transfer of immediately
available funds to accounts maintained by the Holders thereof in the United
States, so long as such Holders have given appropriate wire transfer
instructions to the Trustee or a Paying Agent for the Debentures, against
surrender of such Debentures to the Trustee or a Paying Agent for the Debentures;
provided that installments of interest on Certificated Debentures that are due
and payable on any Interest Payment Date falling on or prior to such Final Maturity
Date, Redemption Date or other date on which principal of such Debentures is
payable will be paid in the manner described in the preceding paragraph to the
Persons who were the Holders of such Debentures (or one or more Predecessor
Securities) registered as such at the close of business on the relevant Regular
Record Dates according to their terms and the provisions of the Indenture.
This Debenture is
one of a duly authorized issue of Securities of the Company (herein called the “Debentures”),
issued as a series of Securities under an indenture dated as of October 28,
1998 (herein called, together with all indentures supplemental thereto, the “Indenture”),
between the Company and The Bank of New York, as trustee (the “Trustee,” which
term includes any successor trustee under the Indenture with respect to the Debentures),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties
and immunities thereunder of the Company, the Trustee and the Holders of the Debentures
and of the terms upon which the Debentures are, and are to be, authenticated
and delivered. This Debenture is one of the duly authorized series designated
as the “5 7/8% Senior Debentures due 2035,” limited (subject to exceptions
provided in the Indenture and subject to the right of the Company to reopen
such series for the issuance of additional Securities of such series on the
terms and subject to the conditions specified in the Indenture) in aggregate
principal amount to $100,000,000. All terms used in this Debenture which are
defined in the Indenture and not defined herein shall have the meanings
assigned to them in the Indenture.
The Debentures may be redeemed at any time at the
option of the Company, in whole at any time or from time to time in part, at a
Redemption Price equal to the greater of:
(a) 100% of the principal amount of the Debentures to
be redeemed, and
(b) the sum of the
present values of the remaining scheduled payments of principal of and interest
on the Debentures to be redeemed (exclusive of interest accrued to the
applicable Redemption Date) discounted to such Redemption Date on a semiannual
basis, assuming a 360-day year consisting of twelve 30-day months, at the
Treasury Rate plus 25 basis points,
plus
, in the case of both clauses (a) and (b)
above, accrued and unpaid interest on the principal amount of the Debentures
being redeemed to such Redemption Date. Notwithstanding the foregoing,
installments of interest on Debentures whose Stated Maturity is on or prior to
the relevant Redemption Date will be payable to the Holders of such Debentures
(or one or more Predecessor Securities) registered as such at the close of
business on the relevant Regular Record Dates according to their terms and the
provisions of the Indenture.
Notice of any redemption by the Company will be mailed
at least 30 days but not more than 60 days before the applicable Redemption
Date to each Holder of Debentures to be redeemed.
The Indenture contains provisions for defeasance at
any time of (a) the entire indebtedness of the Company on the Debentures and
(b) certain restrictive covenants and the related defaults and Events of
Default applicable to the Company, in each case, upon compliance by the Company
with certain conditions set forth in the Indenture, which provisions apply to
this Debenture.
In addition to the covenants of the Company contained
in the Indenture, the Company makes the following covenants with respect to,
and for the benefit of the Holders of, the Debentures:
Limitation on Incurrence of Total Debt
.
The Company will not, and will not permit any
Subsidiary to, incur any Debt, other than Intercompany Debt, if, immediately
after giving effect to the incurrence of such additional Debt and the
application of the proceeds therefrom on a pro forma basis, the aggregate
principal amount of all outstanding Debt of the Company and its Subsidiaries on
a consolidated basis determined in accordance with GAAP is greater than 60% of
the sum of (i) the Company’s Total Assets as of the end of the latest fiscal
quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report
on Form 10-Q, as the case may be, most recently filed with the Commission (or,
if such filing is not required under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), with the Trustee) prior to the incurrence of such
additional Debt and (ii) the increase, if any, in Total Assets from the end of
such quarter including, without limitation, any increase in Total Assets caused
by the application of the proceeds of such additional Debt (such increase
together with the Company’s Total Assets is referred to as the “Adjusted Total
Assets”).
Limitation on Incurrence of Secured Debt.
The Company will not, and will not
permit any Subsidiary to, incur any Secured Debt, other than Intercompany Debt,
if, immediately after giving effect to the incurrence of such additional
Secured Debt and the application of the proceeds therefrom on a pro forma
basis, the aggregate principal amount of all outstanding Secured Debt of the
Company and its Subsidiaries on a consolidated basis determined in accordance
with GAAP is greater than 40% of the Company’s Adjusted Total Assets.
Debt Service Coverage.
The Company will not, and will not permit any
Subsidiary to, incur any Debt, other than Intercompany Debt, if the ratio of
Consolidated Income Available for Debt Service to the Annual Debt Service
Charge for the period consisting of the four consecutive fiscal
quarters most recently ended prior to the date on
which such additional Debt is to be incurred is less than 1.5 to 1.0, on a pro
forma basis after giving effect to the incurrence of such Debt and the
application of the proceeds therefrom, and calculated on the assumption that (i)
such Debt and any other Debt incurred by the Company or any of its Subsidiaries
since the first day of such four-quarter period and the application of the
proceeds therefrom (including to refinance other Debt since the first day of
such four-quarter period) had occurred on the first day of such period, (ii)
the repayment or retirement of any other Debt of the Company or any of its
Subsidiaries since the first day of such four-quarter period had occurred on
the first day of such period (except that, in making such computation, the
amount of Debt under any revolving credit facility, line of credit or similar
facility shall be computed based upon the average daily balance of such Debt
during such period), and (iii) in the case of any acquisition or disposition by
the Company or any Subsidiary of any asset or group of assets since the first
day of such four-quarter period, including, without limitation, by merger,
stock purchase or sale, or asset purchase or sale, such acquisition or
disposition had occurred on the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation. If the Debt giving rise to the need to make the
foregoing calculation or any other Debt incurred after the first day of the
relevant four-quarter period bears interest at a floating rate then, for
purposes of calculating the Annual Debt Service Charge, the interest rate on
such Debt shall be computed on a pro forma basis as if the average interest rate
which would have been in effect during the entire such four-quarter period had
been the applicable rate for the entire such period.
Maintenance of Total Unencumbered Assets
.
The Company will maintain at all times Total
Unencumbered Assets of not less than 150% of the aggregate outstanding
principal amount of the Unsecured Debt of the Company and its Subsidiaries,
computed on a consolidated basis in accordance with GAAP.
Certain Definitions
.
As used herein, the following terms will have the
meanings set forth below:
“Annual Debt Service Charge”
as of any date means the amount which is
expensed in any 12-month period for interest on Debt of the Company and its
Subsidiaries.
“Business Day”
means any day, other than a Saturday or a Sunday, that is not a day on which banking institutions in
The City of New York are authorized or required by law, regulation or executive
order to close.
“
Comparable Treasury Issue
” means, with
respect to any Redemption Date for the Debentures, the United States Treasury
security selected by the Independent Investment Banker as having a maturity
comparable to the remaining term of the Debentures to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Debentures to be redeemed.
“
Comparable Treasury Price
” means, with
respect to any Redemption Date for the Debentures:
(a) the average of four Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or
(b) if the Trustee obtains fewer than
four but more than one such Reference Treasury Dealer Quotations for such
Redemption Date, the average of all such quotations, or
(c) if the Trustee
obtains only one such Reference Treasury Dealer Quotation for such Redemption
Date, that Reference Treasury Dealer Quotation.
“Consolidated Income Available for Debt Service”
for any period means Consolidated Net
Income plus, without duplication, amounts which have been deducted in
determining Consolidated Net Income during such period for
(i) Consolidated Interest Expense, (ii) provisions for taxes of the
Company and its Subsidiaries based on income, (iii) amortization (other
than amortization of debt discount) and depreciation, (iv) provisions for
losses from sales or joint ventures, (v) provisions for impairment losses,
(vi) increases in deferred taxes and other non-cash charges, (vii) charges
resulting from a change in accounting principles, and (viii) charges for
early extinguishment of debt, and less, without duplication, amounts which have
been added in determining Consolidated Net Income during such period for (a)
provisions for gains from sales or joint ventures, and (b) decreases in
deferred taxes and other non-cash items.
“Consolidated Interest Expense”
for any period, and without duplication,
means all interest (including the interest component of rentals on capitalized
leases, letter of credit fees, commitment fees and other like financial
charges) and all amortization of debt discount on all Debt (including, without
limitation, payment-in-kind, zero coupon and other like securities) but
excluding legal fees, title insurance charges, other out-of-pocket fees and
expenses incurred in connection with the issuance of Debt and the amortization
of any such debt issuance costs that are capitalized, all determined for the
Company and its Subsidiaries on a consolidated basis in accordance with GAAP.
“Consolidated Net Income”
for any period means the amount of
consolidated net income (or loss) of the Company and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
“Debt”
means any indebtedness of the Company or any Subsidiary,
whether or not contingent, in respect of (i) money borrowed or evidenced by
bonds, notes, debentures or similar instruments, (ii) indebtedness secured by
any mortgage, pledge, lien, charge, encumbrance, trust deed, deed of trust,
deed to secure debt, security agreement or any security interest existing on
property owned by the Company or any Subsidiary, (iii) letters of credit or
amounts representing the balance deferred and unpaid of the purchase price of
any property except any such balance that constitutes an accrued expense or
trade payable or (iv) any lease of property by the Company or any Subsidiary as
lessee that is reflected on the Company’s consolidated balance sheet as a
capitalized lease in accordance with GAAP, in the case of items of indebtedness
under (i) through (iii) above to the extent that any such items (other than
letters of credit) would appear as liabilities on the Company’s consolidated
balance sheet in accordance with GAAP, and also includes, to the extent not
otherwise included, any obligation of the Company or any Subsidiary to be
liable for, or to pay, as obligor, guarantor or otherwise (other than for
purposes of collection in the ordinary course of business), indebtedness of
another Person (other than the Company or any Subsidiary) of the type referred
to in (i), (ii), (iii) or (iv) above (it being understood that Debt shall be
deemed to be incurred by the Company or any Subsidiary whenever the Company or
such Subsidiary shall create, assume, guarantee or otherwise become liable in
respect thereof).
“Executive Group”
means, collectively, those individuals holding the
offices of Chairman, Vice-Chairman, Chief Executive Officer, President, Chief
Operating Officer or any Vice President of the Company.
“
Final Maturity Date
” means March 15, 2035.
“
Independent Investment Banker
” means, with
respect to any Redemption Date for the Debentures, Banc of America Securities
LLC and its successors or Citigroup Global Markets Inc. and its successors
(whichever shall be appointed by the Trustee after consultation with the
Company) or, if both such firms or the respective successors, if any, to such
firms, as the case may be, are unwilling or unable to select the Comparable
Treasury Issue, an independent investment banking institution of national
standing appointed by the Trustee after consultation with the Company.
“Intercompany Debt”
means indebtedness owed by the Company or any
Subsidiary solely to the Company or any Subsidiary.
“
Reference
Treasury Dealer
” means with respect to any Redemption Date for the Debentures,
Banc of America Securities LLC and Citigroup Global Markets Inc. and their
respective successors (provided, however, that if any such firm or any such
successor, as the case may be, ceases to be a primary U.S. Government securities
dealer in The City of New York (a “Primary Treasury Dealer”), the Trustee,
after consultation with the Company, shall substitute therefor another Primary
Treasury Dealer) and two other Primary Treasury Dealers selected by the Trustee
after consultation with the Company.
“
Reference Treasury Dealer Quotations
”
means, with respect to each Reference Treasury Dealer and any Redemption Date
for the Debentures, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
Business Day preceding such Redemption Date.
“Secured Debt”
means Debt secured by any mortgage, lien, charge,
encumbrance, trust deed, deed of trust, deed to secure debt, security
agreement, pledge, conditional sale or other title retention agreement,
capitalized lease, or other security interest or agreement granting or conveying
security title to or a security interest in real property or other tangible
assets.
“Subsidiary”
means (i) any corporation, partnership,
joint venture, limited liability company or other entity the majority of the
shares, if any, of the non-voting capital stock or other equivalent ownership
interests of which (except directors’ qualifying shares) are at the time
directly or indirectly owned by the Company, and the majority of the shares of
the voting capital stock or other equivalent ownership interests of which
(except for directors’ qualifying shares) are at the time directly or
indirectly owned by the Company, any other Subsidiary or Subsidiaries, and/or
one or more individuals of the Executive Group (or, in the event of death or
disability of any of such individuals, his/her respective legal
representative(s), or such individuals’ successors in office as an officer of
the Company), and (ii) any other entity the accounts of which are
consolidated with the accounts of the Company. This definition shall apply only
for purposes of the covenants set forth above under the captions “Limitation on
Incurrence of Total Debt,” “Limitation on Incurrence of Secured Debt,” “Debt
Service Coverage,” and “Maintenance of Total Unencumbered Assets,” the other
definitions set forth herein under this caption “Certain Definitions,” and,
insofar as Section 801 of the Indenture is applicable to the Debentures, the
term “Subsidiary,” as used in Section 801(2) of the Indenture, shall have the
meaning set forth in this definition (instead of the meaning set forth in
Section 101 of the Indenture).
“Treasury
Rate”
means, with
respect to any Redemption Date for the Debentures:
(a) the
yield, under the heading that represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated “H.15(519)” or any successor publication which is published weekly
by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to
constant maturity under the caption “Treasury Constant Maturities,” for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Final Maturity Date of the Debentures,
yields for the two published maturities most closely corresponding to the
Comparable Treasury Issue shall be determined and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month), or
(b) if
such release (or any successor release) is not published during the week
preceding the calculation date or does not contain such yields, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.
The Treasury Rate shall be calculated on the third
Business Day preceding the applicable Redemption Date.
“Total Assets”
as of any date means the sum of (i) Undepreciated
Real Estate Assets and (ii) all other assets of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP (but
excluding accounts receivable and intangibles).
“Total Unencumbered Assets”
as of any date means Total Assets minus
the value of any properties of the Company and its Subsidiaries that are
encumbered by any mortgage, charge, pledge, lien, security interest, trust
deed, deed of trust, deed to secure debt, security agreement, or other
encumbrance of any kind (other than those relating to Intercompany Debt),
including the value of any stock of any Subsidiary that is so encumbered
determined on a consolidated basis in accordance with GAAP. For purposes of
this definition, the value of each property shall be equal to the purchase
price or cost of each such property and the value of any stock subject to any
encumbrance shall be determined by reference to the value of the properties
owned by the issuer of such stock as aforesaid.
“Undepreciated Real Estate Assets”
as of any date means the amount of real
estate assets of the Company and its Subsidiaries on such date, before
depreciation and amortization, determined on a consolidated basis in accordance
with GAAP.
“Unsecured Debt”
means Debt of the Company or any Subsidiary that is
not Secured Debt.
If an Event of Default with respect to the Debentures
shall occur and be continuing, the principal of the Debentures may be declared
due and payable in the manner and with the effect provided in the Indenture.
As provided in and
subject to the provisions of the Indenture, the Holder of this Debenture shall
not have the right to institute any proceeding with respect to the Indenture or
for the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the Trustee written
notice of a continuing Event of Default with respect to the
Debentures, the Holders of not less than 25% in principal
amount of the Debentures at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity and the Trustee
shall not have received from the Holders of a majority in principal amount of
the Debentures at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for 60 days
after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Debenture for the
enforcement of any payment of principal of, or premium, if any, or interest on,
this Debenture on or after the respective due dates therefor.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Debentures
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of not less than a majority in aggregate principal amount of the
Outstanding Debentures. The Indenture also contains provisions permitting the
Holders of not less than a majority in principal amount of the Debentures at
the time Outstanding, on behalf of the Holders of all Debentures, to waive
compliance by the Company with certain provisions of the Indenture. Furthermore,
provisions in the Indenture permit the Holders of not less than a majority of
the aggregate principal amount of the Outstanding Debentures to waive, in
certain circumstances, on behalf of all Holders of the Debentures, certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Debenture shall be conclusive and binding upon such
Holder and upon all future Holders of this Debenture and of any Debenture
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Debenture.
No reference herein to the Indenture and no provision
of this Debenture or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
premium, if any, and interest on, this Debenture at the times, places and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Debenture is registrable in
the Security Register, upon surrender of this Debenture for registration of
transfer at the office or agency of the Company in any Place of Payment for the
Debentures, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar for the
Debentures duly executed by, the Holder hereof or his or her attorney duly
authorized in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount will be issued to the
designated transferee or transferees.
As provided in the Indenture and subject to certain
limitations therein set forth, Debentures of this series are exchangeable for a
like aggregate principal amount of Debentures of this series of different
authorized denominations, as requested by the Holder surrendering the same.
The Debentures of this series are issuable only in
registered form without interest coupons in denominations of $1,000 and any
integral multiple thereof. No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Prior to due
presentment of this Debenture for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Debenture is registered as the owner hereof for all purposes,
whether or not this Debenture be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
No recourse shall be had for the payment of the
principal of, or premium, if any, or the interest on this Debenture, or for any
claim based hereon, or otherwise in respect hereof, or based on or in respect
of the Indenture or any indenture supplemental thereto, against any past,
present or future stockholder, employee, officer or director, as such, of the
Company or of any successor, either directly or through the Company or any
successor, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
THE INDENTURE AND THE DEBENTURES, INCLUDING THIS DEBENTURE,
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Debentures as a convenience to the Holders
of the Debentures. No representation is made as to the correctness or accuracy
of such CUSIP numbers as printed on the Debentures, and reliance may be placed
only on the other identification numbers printed hereon.
Unless the certificate of authentication hereon has
been executed by the Trustee by manual signature of one of its authorized
signatories, this Debenture shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
The headings
included in this Debenture are for convenience only and shall not affect the
construction hereof.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
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REALTY INCOME CORPORATION
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By:
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Thomas A. Lewis
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Vice Chairman of the Board and
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Chief Executive Officer
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Attest:
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By:
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Michael R. Pfeiffer
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Executive Vice President, General Counsel
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and Secretary
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TRUSTEE’S CERTIFICATE OF AUTHENTICATION:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
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THE BANK OF NEW YORK, as Trustee
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By:
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Authorized
Signatory
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Dated: March 11, 2005
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ASSIGNMENT FORM
FOR VALUE RECEIVED, the
undersigned hereby
sells
, assigns and transfers to
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
(Please Print or
Typewrite Name and Address
including
Zip Code of Assignee)
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the within Debenture of REALTY INCOME CORPORATION,
and
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hereby does irrevocably constitute and appoint
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Attorney to transfer said Debenture on the books of the within-named
Company with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name
as it appears on the first page of the within Debenture in every particular,
without alteration or enlargement or any change whatever.
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Signature Guaranty
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(Signature must be guaranteed by
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a participant in a signature
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guarantee medallion program)
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Exhibit 5.1
March 11, 2005
Realty Income Corporation
220 West Crest Street
Escondido, California 92025
Re:
Registration
Statement on Form S-3
Registration No. 333-113032
Ladies and Gentlemen:
We have served as Maryland counsel to Realty Income Corporation, a
Maryland corporation (the “Company”), in connection with certain matters of
Maryland law arising out of the Company’s registration statement on Form S-3
(No. 333-113032), and all amendments
thereto (the “Registration Statement”), previously declared effective by the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended (the “1933 Act”), relating to the proposed public offering
of securities of the Company that may be offered and sold by the Company from
time to time as set forth in the prospectus dated March 23, 2004 which
forms a part of the Registration Statement (the “Base Prospectus”). This opinion is rendered in connection with
the sale and issuance of up to $100,000,000 of the Company’s 5
7
/
8
%
Senior Debentures due 2035 (the “Securities”), as described in a prospectus
supplement dated March 8, 2005 (the “Prospectus Supplement” and, together
with the Base Prospectus, the “Prospectus”).
Capitalized terms used but not defined herein shall have the meanings
given to them in the Registration Statement.
In connection with our representation of the Company, and as a basis
for the opinion hereinafter set forth, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the following
documents (hereinafter collectively referred to as the “Documents”):
1.
The
Registration Statement and the related form of Prospectus in the form in which
it was transmitted to the Commission, under the 1933 Act;
2.
The
charter of the Company (the “Charter”), certified as of a recent date by the
State Department of Assessments and Taxation of Maryland (the “SDAT”);
3.
The
Bylaws of the Company (the “Bylaws”), certified as of the date hereof by an
officer of the Company;
4.
Resolutions
adopted by the Board of Directors of the Company, relating to, among other
matters, (i) the sale, issuance and registration of the Securities, (ii) the
execution, delivery and performance of the Purchase Agreement and the Indenture
(as defined herein) and (iii) the execution and delivery of the Global Debenture
(as defined herein), certified as of the date hereof by an officer of the
Company;
5.
A
certificate of the SDAT as to the good standing of the Company, dated as of a
recent date;
6.
A
certificate executed by an officer of the Company, dated as of the date hereof;
7.
A
copy of the executed Purchase Agreement, dated March 8, 2005 (the “Purchase
Agreement”), by and among
Banc of
America Securities LLC and Citigroup Global Markets Inc., acting for themselves
and as representatives of the underwriters named in Schedule A thereto,
and the Company, certified as of the date hereof by an officer of the Company;
8.
The
Indenture, dated October 28, 1998 (the “Indenture”), between the Company
and The Bank of New York, as Trustee (the “Trustee”), certified as of the date
hereof by an officer of the Company;
9.
A
copy of the executed certificate evidencing the Securities (the “Global Debenture”),
certified as of the date hereof by an officer of the Company;
10.
Copies
of executed Officers’ Certificates relating to the Securities, pursuant to
Sections 201, 301 and 303 of the Indenture and the Company Order relating to
the Securities pursuant to Section 303 of the Indenture, each certified as
of the date hereof by an officer of the Company;
11.
The
Company’s Current Report on Form 8-K (the “8-K”); and
12.
Such
other documents and matters as we have deemed necessary or appropriate to
express the opinion set forth in this letter, subject to the assumptions,
limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed the
following:
2
1.
Each individual executing any of the Documents, whether on
behalf of such individual or another person, is legally competent to do so.
2.
Each individual executing any of the Documents on behalf of
a party (other than the Company) is duly authorized to do so.
3.
Each of the parties (other than the Company) executing any
of the Documents has duly and validly executed and delivered each of the
Documents to which such party is a signatory, and such party’s obligations set
forth therein are legal, valid and binding and are enforceable in accordance
with all stated terms
4.
All Documents submitted to us as originals are
authentic. The form and content of all
Documents submitted to us as unexecuted drafts do not differ in any respect
relevant to this opinion from the form and content of such Documents as
executed and delivered. All Documents
submitted to us as certified or photostatic copies conform to the original
documents. All signatures on all such
Documents are genuine. All public
records reviewed or relied upon by us or on our behalf are true and
complete. All representations,
warranties, statements and information contained in the Documents are true and
complete. There has been no oral or
written modification of or amendment to any of the Documents, and there has
been no waiver of any provision of any of the Documents, by action or omission
of the parties or otherwise.
Based upon the foregoing, and subject to the assumptions, limitations
and qualifications stated herein, it is our opinion that:
1.
The Company is a corporation duly incorporated and existing
under and by virtue of the laws of the State of Maryland and is in good
standing with the SDAT.
2.
The
Securities have been duly authorized by all necessary corporate action on the
part of the Company, and the Global Debenture evidencing the Securities has
been duly executed by the Company and, when duly authenticated by the Trustee
in the manner provided in the Indenture and delivered against payment of the
purchase price therefor specified in the Purchase Agreement, the Securities
will be duly and validly issued by the Company.
The foregoing opinion is limited to the substantive laws of the State
of Maryland and we do not express any opinion herein concerning any other
law. We express no opinion as to the
applicability or effect of any federal or state securities laws, including the
securities laws of the State of Maryland, or as to federal or state laws
regarding fraudulent transfers. To the
3
extent that any matter as to which our opinion is expressed herein
would be governed by any jurisdiction other than the State of Maryland, we do
not express any opinion on such matter.
We assume no obligation to supplement this opinion if any applicable
law changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for your submission to the
Commission as an exhibit to the 8-K and incorporation by reference into the
Registration Statement and, accordingly, may not be relied upon by, quoted in
any manner to, or delivered to any other person or entity (other than Latham
& Watkins, counsel to the Company, in connection with its opinion of even
date herewith) without, in each instance, our prior written consent.
We hereby consent to the filing of this opinion as an exhibit to the
8-K and to the use of the name of our firm therein. In giving this consent, we do not admit that
we are within the category of persons whose consent is required by Section 7
of the 1933 Act.
Very truly yours,
VENABLE LLP
