EXHIBIT 1.1
REALTY INCOME CORPORATION
(a Maryland corporation)
751,174 Shares of Common Stock
(Par Value $1.00 Per Share)
UNDERWRITING AGREEMENT
Dated: February 18, 1998
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Realty Income Corporation, a Maryland corporation (the
"Company"), confirms its agreement with ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
("you" or the "Underwriter") with respect to the sale by the
Company and the purchase by you of 751,174 shares of Common
Stock, par value $1.00 per share, of the Company ("Common Stock")
The aforesaid 751,174 shares of Common Stock purchased by you are
hereinafter called, the "Securities."
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-
3 (No. 333-34311) (the "Registration Statement") covering the
registration of, among other things, the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), in each case
including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus supplement,
and 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 Registration Statement at the time it became
effective but that is deemed to be part of such registration
statement at the time the Term Sheet is filed with the Commission
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information." The prospectus, together with the related
prospectus supplement, relating to the Securities used before the
Registration Statement became effective, and the prospectus,
together with any 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 Registration
Statement as amended and including the exhibits thereto,
schedules, if any, and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, at
the time it became effective, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the
"Rule 462(b) Registration Statement," and the Registration
Statement and any Rule 462(b) Registration Statement are herein
referred to collectively as the "Registration Statement." The
final Form of Prospectus Supplement, including the prospectus
dated October 1, 1997 and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, in
the forms first furnished to you for use in connection with the
offering of the Securities is herein called the "Prospectus".
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 ("▇▇▇▇▇").
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 any
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, any
preliminary prospectus or any Prospectus, as the case may be; and
all references in this Agreement to amendments or supplements to
the Registration Statement, any preliminary prospectus or any
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 such Prospectus, as the case may be.
All references in this Agreement to properties or improvements
"owned by" or "of" the Company or any of its subsidiaries shall
be deemed to mean and include all properties and improvements
which are leased by the Company or any of its subsidiaries, as
lessee.
As used in this Agreement, the term "Consolidation" means
the merger of 25 limited partnerships (the "Partnerships") and
RIC Properties Ltd., a California limited partnership ("RIC
Properties"), into the Company on August 15, 1994; "Merger" means
the merger of R.I.C. Advisor, Inc., a California corporation (the
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"Advisor"), into the Company on August 17, 1995; and
"Reincorporation" means the reincorporation of the Company in the
State of Maryland, which was effectuated by merging Realty Income
Corporation, a Delaware corporation, into the Company (formally
known as Realty Income of Maryland, Inc., which changed its name
to Realty Income Corporation), with the Company as the surviving
corporation of such merger.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties by the Company. The
Company represents and warrants to you as of the date hereof and
as of the Closing Time referred to in Section 2(b) hereof, and
agrees with you, as follows:
(i) Compliance with Registration Requirements. The
Company meets the requirements for use of Form S-3 under the
1933 Act. Each of the Registration Statement and any Rule
462(b) Registration Statement has become effective under the
1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration
Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are threatened
by the Commission, and any request on the part of the
Commission for additional information has been complied
with.
At the respective times the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective, at the date hereof and
at the Closing Time, the Registration Statement, any Rule
462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material
respects with the applicable requirements of the 1933 Act
and the 1933 Act Regulations and 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 you
expressly for use in the Registration Statement or
Prospectus.
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Each preliminary prospectus and the Prospectus filed as
part of the Registration Statement or any Rule 462(b)
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 you for use in connection with this offering
was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇ except
to the extent permitted by Regulation S-T.
(ii) Incorporated Documents. The documents
incorporated or deemed to be incorporated by reference in
the Registration Statement and the Prospectus, at the time
they were or hereafter are filed with the Commission,
complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations
of the Commission thereunder (the "1934 Act Regulations"),
and, when read together with the other information in the
Prospectuses, 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 Statements 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 Prospectuses, 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 Prospectuses 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
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fixed charges (actual and, if any, pro forma) included in
the Prospectus have been calculated in compliance with
Item 503(d) of Regulation S-K of the Commission.
(v) No Material Adverse Change in Business. Since
the respective dates as of which information is given in the
Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect"), whether or not
arising in the ordinary course of business, (B) there have
been no transactions entered into by the Company or any of
its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and
its 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, there have been no dividend or distribution of any
kind declared, paid or made by the Company on any class of
its stock.
(vi) Good Standing of the Company. The Company is a
corporation duly organized and validly existing under the
laws of the State of Maryland and is in good standing with
the State Department of Assessments and Taxation of Maryland
and has corporate power and authority to own, lease and
operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. The only
subsidiaries of the Company are Realty Income Texas
Properties, L.P., a Delaware limited partnership, and Realty
Income Texas Properties, Inc., a Delaware corporation, and
the Company does not hold any equity interest in any
corporation, limited liability company, partnership, joint
venture or equity other than such subsidiaries. Each
subsidiary of the Company has been duly organized and is
validly existing as a partnership or corporation, as the
case may be, in good standing under the laws of the state of
its organization and has power and authority as a
partnership or corporation, as the case may be, to own,
lease and operate its properties and to conduct its business
as described in the Prospectus; each such subsidiary is duly
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qualified as a foreign partnership or corporation, as the
case may be, to transact business and is in good standing in
each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of
property of the conduct of business, except where the
failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise
disclosed in the Registration Statement, all of the issued
and outstanding partnership interests and shares of capital
stock, as the case may be, of each such subsidiary have been
duly authorized (if applicable) and validly issued and are
fully paid and are non-assessable (except to the extent that
the general partners of subsidiaries which are partnerships
may be liable for the obligations of such partnerships) and
are owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding
partnership interests or shares of capital stock, as the
case may be, of such subsidiaries were issued in violation
of preemptive or other similar rights arising by operation
of law, under the partnership agreement or charter or
bylaws, as the case may be, of any such subsidiary or under
any agreement or instrument to which the Company or any such
subsidiary is a party.
(viii) Capitalization. The authorized stock of the
Company is as set forth in "Description of Common Stock" and
"Description of Preferred Stock" in the Prospectus and the
issued and outstanding stock of the Company is as set forth
in the Company's Form 10-Q for the quarter ended
September 30, 1997 (except for subsequent issuances, if any,
pursuant to this Agreement, 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 and Description of Securities.
The shares of issued and outstanding Common Stock have been
duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of Common
Stock was issued in violation of the 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. The Securities to be purchased
from the Company by you have been duly authorized for
issuance and sale to the you pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this
Agreement, against payment of the consideration set forth
herein, will be validly issued, fully paid and non-
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assessable; the Common Stock conforms to all statements
relating thereto contained or incorporated by reference in
the Prospectus and such description conforms to the rights
set forth in the instruments defining the same; and the
issuance of the Securities is not subject to preemptive or
other similar rights arising by operation of law, under the
charter and bylaws of the Company, under any agreement or
instrument to which the Company or any of its subsidiaries
is a party or otherwise.
(xi) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its
charter or bylaws or its partnership agreement, as the case
may be, or in default in the performance or observance of
any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or
instrument to which the Company or any of its subsidiaries
is a party or by which any of them may be bound, or to which
any of the respective properties or assets of the Company or
any 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 and the consummation of the
transactions contemplated herein (including the use of the
proceeds from the sale of the Securities to repay borrowings
under the Amended and Restated Revolving Credit Agreement
dated as of November 29, 1994 and amended and restated as of
December 30, 1997, among the Company, the banks named
therein and The Bank of New York, as Agent and Swing Line
Bank and BNY Capital Markets Inc., as Arranger (the
"Acquisition Credit Agreement"), as described in the
Prospectus under the caption "Use of Proceeds" but excluding
any use of proceeds to fund any property acquisitions or for
other general corporate purposes for which specific
corporate authorization may be required) and compliance by
the Company with its obligations hereunder and thereunder
have been duly authorized by all necessary corporate action
and do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant
to, any Agreement or Instrument, except for such conflicts,
breaches or defaults or liens, charges or encumbrances that,
individually or in the aggregate, would not have a Material
Adverse Effect, nor will such action result in any violation
of the provisions of the charter or bylaws of the Company or
any applicable law, rule, regulation, or governmental or
court judgment, order, writ or decree. As used herein, a
"Repayment Event" means any event or condition which gives
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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 hereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in
the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably
be expected to result in a Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts
or documents which are required to be described in the
Registration Statement, the Prospectus or the documents
incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as
required.
(xv) Possession of Intellectual Property. The
Company and its subsidiaries own or possess, or can acquire
on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual
property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any
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notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if
the subject of any 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, in connection with the offering, issuance or
sale of the Securities under this Agreement or the
consummation of the other transactions contemplated by this
Agreement, except such as have been already made or obtained
under the 1933 Act or the 1933 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
contemplated in this Agreement and the application of the
net proceeds therefrom as described in the Prospectus will
not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended (the "1940
Act").
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(xix) Partnership Agreements. Each of the partnership
and, if applicable, joint venture agreements to which the
Company or any of its subsidiaries is a party has been duly
authorized, executed and delivered by the Company or the
relevant subsidiary, as the case may be, and constitutes
the valid and binding agreement of the Company or such
subsidiary, as the case may be, enforceable in accordance
with its terms, except as the enforcement thereof may be
limited by (A) the effect of bankruptcy, insolvency or
other similar laws now or hereafter in effect relating to
or affecting creditors' rights generally or (B) the effect
of general principles of equity, and the execution, delivery
and performance of such agreements did not, at the time of
execution and delivery, and does not constitute a breach of
or default under the charter or bylaws or partnership
agreement, as the case may be, of the Company or any of its
subsidiaries or any of the Agreements and Instruments or any
law, administrative regulation or administrative or court
order or decree.
(xx) Properties. Except as otherwise disclosed in
the Prospectus: (i) the Company and its subsidiaries have
good and marketable title (either in fee simple or pursuant
to a valid leasehold interest) to all properties and assets
described in the Prospectus as being owned or leased, as the
case may be, by them and to all properties reflected in the
Company's most recent consolidated financial statements
included in the Prospectus, and neither the Company nor any
of its subsidiaries has received notice of any claim that
has been or may be asserted by anyone adverse to the rights
of the Company or any subsidiary with respect to any such
properties or assets (or any such lease) or affecting or
questioning the rights of the Company or any such subsidiary
to the continued ownership, lease, possession or occupancy
of such property or assets, except for such claims that
would not, singly or in the aggregate, have a Material
Adverse Effect; (ii) all liens, charges, encumbrances,
claims or restrictions on or affecting the properties and
assets of the Company or any of its subsidiaries which are
required to be disclosed in the Registration Statement or
the Prospectus are disclosed therein, and all such liens,
charges, encumbrances, claims or restrictions which are not
disclosed in the Prospectus could not reasonably be
expected, singly or in the aggregate, to have a Material
Adverse Effect; (iii) no person or entity, including,
without limitation, any tenant under any of the leases
pursuant to which the Company or any of its subsidiaries
leases (as lessor) any of its properties (whether directly
or indirectly through other partnerships, joint ventures or
otherwise) has an option or right of first refusal or any
other right to purchase any of such properties, except for
such options, rights of first refusal or other rights to
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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 lease or in any other default
thereunder and the Company knows of no event which, with the
passage of time or the giving of notice or both, would
constitute a default under any such lease, except such
defaults that would not, individually or in the aggregate,
have a Material Adverse Effect; (viii) to the best
knowledge of the Company, there is no pending or threatened
condemnation, zoning change, or other proceeding or action
that could in any manner affect the size of, use of,
improvements on, construction on or access to the properties
of the Company or any of its subsidiaries, except such
proceedings or actions that, either singly or in the
aggregate, would not have a Material Adverse Effect; and
(ix) neither the Company nor any of its subsidiaries nor any
lessee of any of the real property or improvements of the
Company or any of its subsidiaries is in default in the
payment of any amounts due or in any other default under any
of the leases pursuant to which the Company or any of its
subsidiaries leases (as lessor) any of its real property or
improvements (whether directly or indirectly through
partnerships, joint ventures or otherwise), and the Company
knows of no event which, with the passage of time or the
giving of notice or both, would constitute such a default
under any of such leases, except such defaults as would not,
individually or in the aggregate, have a Material Adverse
Effect.
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(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 its subsidiaries'
respective properties are located), and the Company and its
subsidiaries carry comprehensive general liability insurance
and other insurance as is customarily carried by lessors of
properties similar to those owned by the Company and its
subsidiaries in amounts and on such terms as are customarily
carried by lessors of properties similar to those owned by
the Company and its subsidiaries (in the markets in which
the Company's and its subsidiaries' respective properties
are located) and the Company or one of its subsidiaries is
named as an additional insured on all policies required
under the leases for such properties.
(xxii) Environmental Matters. Except as otherwise
disclosed in the Prospectus: (i) all real property and
improvements owned or leased by the Company or any of its
subsidiaries, including, without limitation, the Environment
(as defined below) associated with such real property and
improvements, is free of any Contaminant (as defined below),
except such Contaminants which, individually or in the
aggregate, would not have a Material Adverse Effect;
(ii) neither the Company, nor any of its subsidiaries nor
any Partnership has caused or suffered to exist or occur any
Release (as defined below) of any Contaminant into the
Environment or any other condition that, individually or in
the aggregate, could reasonably be expected to have a
Material Adverse Effect or could result in any violation of
any Environmental Laws (as defined below) or constitute a
health, safety or environmental hazard to any person or
property except for such violations or hazards that could
not reasonably be expected to have a Material Adverse
Effect; (iii) neither the Company nor any of its
subsidiaries is aware of any notice from any governmental
body claiming any violation of any Environmental Laws or
requiring or calling attention to the need for any work,
repairs, construction, alterations, removal or remedial
action or installation on or in connection with such real
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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 in 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 (iv) 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, 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
Page 13
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 Environment Law.
(xxiii) Qualification as a Real Estate Investment
Trust. The Company was and is organized in conformity with
the requirements for qualification and taxation as a "real
estate investment trust" under the Internal Revenue Code of
1986, as amended (the "Code"); the Company at all times has
met and continues to meet all the requirements of the Code
for qualification and taxation as a "real estate investment
trust"; the Company's method of operation will enable it to
meet the requirements for qualification and taxation as a
"real estate investment trust" under the Code; and the
Company is qualified as a "real estate investment trust"
under the Code and will be so qualified for the taxable year
in which sales of the Securities occur.
(xxiv) Registration Rights. There are no persons
with registration or other similar rights to have any
securities registered pursuant to the Registration Statement
or otherwise registered by the Company under the 1933 Act or
included in the offering contemplated hereby, except for
rights arising under the Registration Rights Agreement dated
as of April 28, 1995 (the "RRA") among the Company and
certain former shareholders of the Advisory party thereto
(the "Shareholders"). The names of the Shareholders and
each other person, if any, who holds any Registrable
Securities (as defined in the RRA) are set forth in
Schedule B hereto. Each of the Shareholders has received a
letter from you regarding your belief that inclusion of the
Shareholders' Registrable Securities would interfere with
the successful completion of the Shares to be distributed
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 through and including the time of
its merger into the Company, treated as a partnership
(rather than as an association taxable as a corporation) for
federal income tax purposes. The Company's ownership
interests in three properties held through tenancies in
common with unrelated third parties (which are the only
properties which, since the Consolidation, have been held in
Page 14
tenancies in common with unrelated third parties) have not
been, since the Consolidation, and will not be treated as
ownership interests in associations taxable as corporations
for federal income tax purposes. Realty Income Texas
Properties, L.P., a Delaware limited partnership, is not and
has never been treated as an association taxable as a
corporation for federal income tax purposes. Realty Income
Texas Properties, Inc., a Delaware corporation, is and has
been at all times treated as a "qualified REIT subsidiary"
within the meaning of Section 856(i) of the Code.
(xxvi) Reincorporation. The Reincorporation
(a) qualified as a reorganization under Section 368(a)(1)(F)
of the Code or (b) was a non-event for federal income tax
purposes, and no gain or loss was or will be recognized by
the Company for federal income tax purposes as a result of
the Reincorporation.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITER; CLOSING.
(a) Initial 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 you and you, agree to purchase from the Company, at the
price set forth in Schedule A, ___________ Securities.
(b) Payment. Payment of the purchase price for, and
delivery of certificates for, the Securities shall be made at the
office of ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, or at such other place as shall be agreed upon by you
and the Company, at 10:00 A.M. (St. Louis time) on the third
(fourth, if the pricing occurs after 4:30 P.M. New York City
time, on any given day) business day after the date hereof, or
such other time not later than ten business days after such date
as shall be agreed upon by you 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 you for your account of
certificates for the Securities to be purchased by you.
(c) Denominations; Registration. Certificates for the
Securities, shall be in such denominations and registered in such
names as you 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 you 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.
Page 15
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with each U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and
Commission Requests. The Company, subject to Section 3(b),
will notify you 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
each 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 you
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 the Prospectus, whether pursuant to the 1933
Act, the 1934 Act or otherwise, will furnish you 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 you or your
counsel shall object.
(c) Rule 434. If the Company uses Rule 434, it will
comply with the requirements of such Rule.
(d) Delivery of Registration Statements. The
Company has furnished or will deliver to you and your
counsel, without charge, as many signed and conformed copies
Page 16
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 you and your counsel may reasonably request. If
applicable, the copies of the Registration Statement and
each amendment thereto furnished to you will be identical to
the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, if any, except to the extent
permitted by Regulation S-T.
(e) Delivery of Prospectuses. The Company has
delivered to you, without charge, as many copies of each
preliminary prospectus as you 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 you, 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 you may reasonably request. If
applicable, the Prospectus and any amendments or supplements
thereto furnished to you will be identical to the
electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, 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 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 your
counsel or counsel 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
Page 17
Prospectus comply with such requirements, and the Company
will furnish to you such number of copies of such amendment
or supplement as you may reasonably request.
(g) Blue Sky Qualifications. The Company will use
its best efforts, in cooperation with you to qualify the
Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of
the United States as you may designate and to maintain such
qualifications in effect for a period of not less than one
year from the date hereof; provided, however, that the
Company shall not be obligated to file any general consent
to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the
Securities have been so qualified, the Company will file
such statements and reports as may be required by the laws
of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the date
hereof.
(h) Rule 158. The Company will timely file such
reports pursuant to the 1934 Act as are necessary in order
to make generally available to its security holders as soon
as practicable an earning statement for the purposes of, and
to provide the benefits contemplated by, the last paragraph
of Section 11(a) of the 1933 Act.
(i) Use of Proceeds. The Company will use the net
proceeds received by it from the sale of the Securities in
the manner specified in the Prospectus under "Use of
Proceeds."
(j) Listing. The Company will use its best efforts
to effect the listing of the Securities on the New York
Stock Exchange.
(k) 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.
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
Page 18
exhibits) as originally filed and of each amendment thereto,
(ii) the preparation, issuance and delivery of the certificates
for the Securities to you, including any transfer taxes or other
duties payable upon the sale of the Securities to you (iii) the
fees and disbursements of the Company's counsel, accountants and
other advisors, (iv) 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 your counsel in connection therewith and in
connection with the preparation of the Blue Sky Survey and any
supplement thereto, (v) the printing and delivery to you of
copies of each preliminary prospectus, any Term Sheets and of the
Prospectus and any amendments or supplements thereto, (vi) the
preparation, printing and delivery to you of copies of the Blue
Sky Survey and any supplement thereto, (vii) the fees and
expenses of any transfer agent or registrar for the Securities,
(viii) if required, the filing fees incident to, and the
reasonable fees and disbursements of counsel to the 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 and (ix) the fees and expenses incurred in
connection with the listing of the Securities on the New York
Stock Exchange.
(b) Termination of Agreement. If this Agreement is
terminated by you in accordance with the provisions of Section 5
or Section 9(a)(i) or 9(a)(v) hereof, the Company shall reimburse
you for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of your counsel for.
SECTION 5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS.
Your obligations hereunder are subject to the accuracy of
the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company delivered pursuant to the
provisions hereof, the performance by the Company of its
covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement The
Registration Statement, including any Rule 462(b)
Registration Statement, has become effective not later than
5:30 P.M. on the date hereof and at Closing Time no stop
order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement shall
have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request
on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction
of counsel to the U.S. Underwriters. If required by the
Page 19
1933 Act or the 1933 Act Regulations, the Prospectus shall
have been filed with the Commission in accordance with Rule
424(b) and, if the Company has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission
in accordance with Rule 434 and Rule 424(b).
(b) Opinions of Counsel for Company. At Closing
Time, you shall have received the favorable opinions, dated
as of Closing Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President, General
Counsel and Secretary of the Company, and ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, special Maryland counsel to the
Company, each in form and substance satisfactory to counsel
for the U.S. Underwriters, to the effect set forth in
Exhibit A, B and C hereto, respectively, and to such further
effect as your counsel may reasonably request pursuant to
Section 5(j).
(c) Opinion of Your Counsel. At Closing Time, you
shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, your counsel, with
respect to the matters as you may reasonably require. 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Ingersoll delivered pursuant to Section 5(b) and, as to all
matters governed by the laws of other jurisdictions (other
than the law of the State of New York and the federal law of
the United States), upon the opinions of counsel
satisfactory to you. Such counsel may also state that,
insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of
officers of the Company and its subsidiaries and
certificates of public officials.
(d) Officers' Certificate. At Closing Time, there
shall not have been, since the date hereof or since the
respective dates as of which information is given in the
Prospectuses, 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 you 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 of the
Underwriting Agreement 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
Page 20
performed or satisfied at or prior to Closing Time, and
(iv) no stop order suspending the effectiveness of either 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 our
knowledge, threatened by the Commission.
(e) Accountant's Comfort Letter. At the time of the
execution of this Agreement, you shall have received from
KPMG Peat Marwick LLP a letter dated such date, in form and
substance satisfactory to you 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.
(f) Bring-down Comfort Letter. At Closing Time, you
shall have received from KPMG Peat Marwick LLP a letter,
dated as of Closing Time, to the effect that they reaffirm
the statements made in the letter furnished pursuant to
subsection (e) of this Section, except that the specified
date referred to shall be a date not more than three
business days prior to Closing Time.
(g) Approval of Listing. At the Closing Time, the
Securities shall have been approved for listing on the New
York Stock Exchange, subject only to official notice of
issuance.
(h) Additional Documents. At Closing Time, your
counsel 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
you and your counsel.
(i) 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 you by notice to the Company at any time at or
prior to Closing Time, as the case may be, 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.
Page 21
SECTION 6. INDEMNIFICATION.
(a) Indemnification of The Underwriters. The Company
agrees to indemnify and hold harmless you and each person, if
any, who controls you 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 any Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation,
or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission, provided
that (subject to Section 6(d) below) any such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel
chosen by you), 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 you
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
Page 22
shall not inure to your benefit from whom the person asserting
any such losses, liabilities, claims, damages or expenses
purchased Securities, or any person controlling you, 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 you or on your
behalf 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.
You agree 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 any Prospectus (or
any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by
you expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or 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 you, and,
in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by
the Company. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however,
that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be
Page 23
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 Underwriter on the other hand
from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company on the one hand and of
the Underwriter on the other hand in connection with the
Page 24
statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company on the one
hand and the Underwriter on the other hand in connection with the
offering of the Securities pursuant to this Agreement shall be
deemed to be in the same respective proportions as the total net
proceeds from the offering of the Securities pursuant to this
Agreement (before deducting expenses) received by the Company and
the total underwriting discount received by the Underwriter, in
each case as set forth on the cover of the Prospectus (or, if
Rule 434 is used, the corresponding location on the Term Sheet),
bear to the aggregate initial public offering price of the
Securities as set forth on such cover (or corresponding location
on the Term Sheet, as the case may be).
The relative fault of the Company on the one hand and the
Underwriter on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the
Company or by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Underwriter
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, you shall
not be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by
you and distributed to the public were offered to the public
exceeds the amount of any damages which you have 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 ▇▇▇▇ ▇▇▇) shall be entitled to
Page 25
contribution from any person who was not guilty of such
fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who
controls you 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 you, and each director of the Company, each
officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY.
All representations, warranties and agreements contained in
this Agreement or in certificates of officers of the Company
submitted pursuant hereto shall remain operative and in full
force and effect, regardless of any investigation made by you or
on your behalf or by or on behalf of a controlling person, or by
or on behalf of the Company, and shall survive delivery of the
Securities to you.
SECTION 9. TERMINATION OF AGREEMENT.
(a) Termination; General. You 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 your judgment, impracticable to market the
Securities or to enforce contracts for the sale of the
Securities, or (iii) if trading in any securities of the Company
has been suspended or limited by the Commission, the New York
Stock Exchange or the NASDAQ National Market, or if trading
generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ National Market has been suspended or
limited, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission,
the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) if a banking moratorium has been
Page 26
declared by either Federal, California or New York authorities,
or (v) if since the date of this Agreement, there has occurred a
downgrading in the rating assigned to the Securities or any of
the Company's other debt securities by any nationally recognized
securities rating agency, or such securities rating agency has
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of the Securities or
any of the Company's other debt securities.
(b) Liabilities. If this Agreement is terminated pursuant
to this Section, such termination shall be without liability of
any party to any other party except as provided in Section 4
hereof, and provided further that Sections 6 and 7 shall survive
such termination and remain in full force and effect,
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices
to the Underwriter shall be directed to ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
Attention: Syndicate, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇; and
notices to the Company shall be directed to it at Realty Income
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-
1707, Attention: Legal Department.
SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding
upon the Underwriter and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or
corporation, other than the Underwriter and the Company and their
respective successors and the controlling persons and officers
and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive
benefit of the Underwriter and the Company and their respective
successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of
Securities from the Underwriter shall be deemed to be a successor
by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri applicable to
Agreements made and to be performed in said State.
Page 27
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement between the
Underwriter and the Company in accordance with its terms.
Very truly yours,
REALTY INCOME CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President and Chief Operating Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Authorized Signatory
Page 28
SCHEDULE A
Price Schedule
1. The initial public offering price per share for the
Securities shall be $25.2950.
SCHEDULE A-1
Page 29
SCHEDULE B
Persons and Entities who hold Registrable Securities:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Family Trust dated June 19, 1981
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
SCHEDULE B-1
Page 30
EXHIBIT A
Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
to Be Delivered Pursuant to Section 5(b)
(i) Based solely on certificates from public officials, the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in the State of California.
(ii) None of the outstanding shares of stock of the Company
was issued in violation of preemptive rights or other similar
rights arising under any agreement or instrument to which the
Company or any of its subsidiaries is a party known to such
counsel.
(iii) The issuance of the Securities is not subject to
preemptive or other similar rights arising under any agreement or
instrument to which the Company or any of its subsidiaries is a
party known to such counsel.
(iv) Each of the Registration Statement and any Rule 462(b)
Registration Statement has been declared effective under the 1933
Act; to the best of our knowledge and information, any required
filing of the Prospectus pursuant to Rule 424(b) has been made in
the manner and within the time period required by Rule 424(b);
and, to the best of our knowledge and information, no stop order
suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933
Act or proceedings therefor initiated or threatened by the
Commission.
(v) Each of the Registration Statement and any Rule 462(b)
Registration Statement (in each case including the Rule 434
Information, as applicable), the Prospectus, and each amendment
or supplement to any of the foregoing (in each case excluding the
documents incorporated or deemed to be incorporated by reference
therein and the financial statements, supporting schedules and
other financial data included or incorporated by reference
therein and excluding any Statement of Eligibility on Form T-1 (a
"Form T-1"), as to which no opinion need be rendered), as of
their respective effective or issue dates (and, if the Company
has relied upon Rule 434, each of the Registration Statement and
any Rule 462(b) Registration Statement at the time the Term Sheet
was filed with the Commission), complied as to form in all
material respects with the applicable requirements of the 1933
Act and the 1933 Act Regulations.
(vi) The documents incorporated or deemed to be incorporated
by reference in the Prospectus (other then the financial
statements, supporting schedules and other financial data
therein, as to which no opinion need be rendered), when they were
filed with the Commission, complied as to form in all material
Page A-31
respects with the applicable requirements of the 1934 Act and the
1934 Act Regulations.
(vii) To the extent that it constitutes matters of law,
summaries of legal matters or legal conclusions, (i) the
information in the Base Prospectus under "Certain Federal Income
Tax Considerations" has been reviewed by you and was, as of
October 1, 1997, correct in all material respects, (ii) the
information in the Prospectus Supplement under "Certain U.S.
Federal Income Tax Considerations to Holders of Common Stock" has
been reviewed by you and is, as of the date hereof, correct in
all material respects, and (iii) the information in the Company's
annual report on Form 10-K for the fiscal year ended December 31,
1996 (the "1996 10-K") under "Business Other Items Taxation of
the Company" and "Business Other Items Effect of Distribution
Requirements" has been reviewed by you and was, as of the filing
date of the 1996 10-K, correct in all material respects.
(viii) No authorization, approval, consent or order of any
federal or California state governmental authority or agency
(other than under the 1933 Act and the 1933 Act Regulations,
which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which no
opinion need be rendered) is required in connection with the due
authorization, execution or delivery of the Underwriting
Agreement or for the offering, issuance or sale of the
Securities.
(ix) The execution, delivery and performance of the
Underwriting Agreement by the Company (including the issuance and
sale of the Securities to the Underwriter and the use of the
proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") will not, whether
with or without the giving of notice or lapse of time or both,
constitute a breach or violation of, or default or Repayment
Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, the Acquisition Credit
Agreement or the Indenture dated as of May 6, 1997, as amended,
between the Company and The Bank of New York, as trustee, nor
will such action result in any violation of any applicable
provision of any federal or State of California law, statute,
administrative regulation or administrative or court decree
applicable to the Company.
(x) The Company is not an "investment company" or, to the
best of our knowledge and information, an entity "controlled" by
an "investment company," as any such terms are defined in the
▇▇▇▇ ▇▇▇.
(xi) Commencing with the Company's taxable year ended
December 31, 1994, the Company has been organized in conformity
Page A-32
with the requirements for qualification and taxation as a real
estate investment trust under the Code and its proposed method of
operation will enable the Company to meet the requirements for
qualification and taxation as a real estate investment trust
under the Code.
(xii) Realty Income Texas Properties, L.P., a Delaware
limited partnership, is not and has never been treated as an
association taxable as a corporation for federal income tax
purposes. Realty Income Texas Properties, Inc., a Delaware
corporation, is and has, at all times during its existence, been
treated as a "qualified REIT subsidiary" within the meaning of
Section 856(i) of the Code.
Although we are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
Prospectus and have not made any independent judgment, check or
verification thereof (except with respect to the opinion set
forth in paragraphs (vii), (xi) and (xii) hereof), we have,
however, participated in conferences with certain officers and
other representatives of the Company, representatives of KPMG
Peat Marwick LLP and your representatives at which the
Registration Statement, any Rule 462(b) Registration Statement
and the Prospectus (including, in each case, the documents
incorporated or deemed to be incorporated by reference therein)
and related matters were discussed, and in the course of such
conferences (relying in connection with questions of materiality
on representations of factual matters of officers and other
representatives of the Company), nothing has come to our
attention which has led us to believe that the Registration
Statement or any Rule 462(b) Registration Statement or any
amendment thereto (except for the financial statements,
supporting schedules and other financial data included therein
and any Form T-1, as to which we express no belief), as of the
time such registration statement or any post-effective or other
amendment thereto became effective, contained an untrue statement
of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus or any amendment or
supplement thereto (except for the financial statements,
supporting schedules and other financial data included therein,
as to which such counsel express no belief), as of February [18],
1998 or as of the Closing Time, contained or contains an untrue
statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may rely insofar as
such opinion involves factual matters, to the extent they deem
proper, on certificates of responsible officers of the Company
Page A-33
and public officials. Such opinion shall not state that it is to
be governed or qualified by, or that it is otherwise subject to,
any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord
of the ABA Section of Business Law (1991).
The matters set forth in (vii), (xi) and (xii) above may be
covered in one or more separate legal opinions, which may be
subject to such assumptions, limitations and qualifications as
shall be satisfactory to counsel for the Underwriter. In
particular, the opinions set forth in paragraphs (vii), (xi) and
(xii) above (the "Tax Opinions") may be conditioned upon certain
representations made by the Company as to factual matters through
a certificate of an officer of the Company (the "Officer's
Certificate"). In addition, the Tax Opinions may be based upon
the factual representations of the Company concerning its
business and properties as set forth in the Registration
Statement and Prospectus. The Tax Opinions may state that they
relate only to the federal income tax laws of the United States
and such counsel need not express any opinion with respect to the
applicability thereto, or the effect thereon, of other federal
laws, the laws of any other jurisdiction or as to any matters of
municipal law or the laws of any other local agencies within any
state. The Tax Opinions may state that they are based on various
statutory provisions, regulations promulgated thereunder and
interpretations thereof by the Internal Revenue Service and the
courts having jurisdiction over such matters, all of which are
subject to change either prospectively or retroactively, and that
any variation or difference in the facts from those set forth in
the Registration Statement, the Prospectus or the Officer's
Certificate may affect the conclusions stated therein. Moreover,
the Tax Opinions may state that the Company's qualification and
taxation as a real estate investment trust depends upon the
Company's ability to meet (through actual annual operating
results, distribution levels and diversity of stock ownership)
the various qualification tests imposed under the Code, the
results of which have not been and will not be reviewed by such
counsel, and, accordingly, no assurance can be given that the
actual results of the Company's operation for any one taxable
year will satisfy such requirements.
Page A-34
EXHIBIT B
Form of Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
to Be delivered Pursuant to Section 5(b)
(i) The Company is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing
would not have a Material Adverse Effect.
(ii) The only subsidiaries of the Company are Realty Income
Texas Properties, L.P., a Delaware limited partnership and Realty
Income Texas Properties, Inc., a Delaware corporation. Each of
Realty Income Texas Properties, L.P. and Realty Income Texas
Properties, Inc. has been duly organized and is validly existing
as a partnership or corporation, as the case may be, in good
standing under the laws of the State of Delaware, has power and
authority as a partnership or corporation, as the case may be, to
own, lease and operate its properties and to conduct its business
as described in the Registration Statement and each such
subsidiary is duly qualified as a foreign partnership or
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
failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; and all of the issued and
outstanding partnership interests and shares of capital stock, as
the case may be, of each of Realty Income Texas Properties, L.P.
and Realty Income Texas Properties, Inc. have been duly
authorized (if applicable) and validly issued, are fully paid and
non-assessable (except to the extent that the general partners of
Realty Income Texas Properties, L.P. may be liable for the
obligations of such partnership) and, to the best of my knowledge
and information, are owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
(iii) The information in the Company's annual report on
Form 10-K for the fiscal year ended December 31, 1996 under
"Business Other Items Environmental Matters," to the extent that
it constitutes matters of law, summaries of legal ▇▇▇▇▇▇,
instruments or agreements or legal proceedings, or legal
conclusions, has been reviewed by me and is correct in all
material respects.
(iv) To the best of my knowledge and information, there is
not pending or threatened any action, suite, proceeding, inquiry
or investigation to which the Company or any subsidiary is a
party, or to which the property of the Company or any subsidiary
Page B-35
is subject before or brought by any court or governmental agency
or authority, which could reasonably be expected to result in a
Material Adverse Effect, or which could reasonably be expected to
materially and adversely affect the properties or assets thereof
or the consummation of the Underwriting Agreement or the
performance by the Company of its obligations under the
Underwriting Agreement.
(v) All descriptions in the Prospectus of leases, contracts
and other documents to which the Company or any subsidiary is a
party are accurate in all material respects.
(vi) To the best of my knowledge and information, there are
no franchises, contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described in
the Registration Statement or to be filed as exhibits thereto
other than those described therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(vii) To the best of my knowledge and information, neither
the Company nor any of its subsidiaries is in violation of its
charter or bylaws or its partnership agreement, as applicable,
and no default by the Company or any of its subsidiaries exists
in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described referred to in the
Registration Statement or the Prospectus or filed or incorporated
by reference as an exhibit to the Registration Statement.
(viii) The execution, delivery and performance of the
Underwriting Agreement (including the issuance and sale of the
Securities to the Underwriter and the use of the proceeds from
the sale of the Securities as described in the Prospectus under
the caption "Use of Proceeds") and compliance by the Company with
its obligations under the Underwriting Agreement will not,
whether with or without the giving of notice of lapse of time or
both, constitute a breach or violation of, or default or
Repayment Event under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any contract,
indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to me, to
which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, except for such breaches, violations or defaults or
liens, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect nor will such
action result in any violation of the provisions of the charter
or bylaws of the Company or the partnership agreement or charter
Page B-36
or bylaws, as the case may be, of any of its subsidiaries, or, to
the best of my knowledge and information, any applicable
provision of any law, statute or administrative regulation of the
State of California, or, to the best of my knowledge and
information, any judgment, order, writ or decree of any
government instrumentality or court, domestic or foreign,
applicable to the Company or any of its subsidiaries or any of
their respective properties, assets or operations.
In rendering such opinion, such counsel may rely as to
matters of fact (but not as to legal conclusions), to the extent
he deems proper, on certificates of responsible officers of the
Company and public officials. Such opinion shall not state that
it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the
Legal Opinion Accord of the ABA Section of Business Law (1991).
Page B-37
EXHIBIT C
Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Ingersoll & ▇▇▇▇▇▇▇
to Be delivered pursuant to Section 5(b)
(i) The Company has been duly incorporated and is validly
existing under the laws of the State of Maryland and is in good
standing with the State Department of Assessments and Taxation of
Maryland.
(ii) The Company has corporate power to own, lease and
operate its properties and to conduct its business substantially
as described under the heading "The Company" in the Prospectus
and to enter into and perform its obligations under the
Underwriting Agreement.
(iii) The numbers of authorized, issued and outstanding
shares of stock of the Company are as set forth in the line items
"Preferred Stock" and "Common Stock" under the caption
"Capitalization" in the Prospectus (except for subsequent
issuances, if any, pursuant to the Underwriting Agreement or
pursuant to employee benefit plans or the exercise of options
referred to in the Prospectus); the shares of issued and
outstanding Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding shares of stock of the Company was issued in
violation of preemptive rights arising under the Maryland General
Corporation laws or under the charter or bylaws of the Company.
(iv) The Securities have been duly authorized by all
necessary corporate action on the part of the Company for
issuance and sale to the Underwriter pursuant to the Underwriting
Agreement and, when issued and delivered by the Company pursuant
to the Underwriting Agreement against payment of the
consideration set forth therein, will be validly issued, fully
paid and non-assessable.
(v) The issuance of the Securities is not subject to
preemptive or other similar rights arising under the Maryland
General Corporation laws or under the charter or bylaws of the
Company.
(vi) The Underwriting Agreement has been duly authorized by
the Company and has been duly executed and delivered by the
Company.
(vii) The form of certificate used to represent the Common
Stock complies in all material respects with the applicable
requirements of the Maryland General Corporation law and the
charter and bylaws of the Company.
Page C-38
(viii) The information in the Prospectus under "Description of
Common Stock," "Description of Preferred Stock" and "Restrictions
on Ownership and Transfers of Capital Stock" and in the Company's
proxy statement dated March 28, 1997 under "Proposal 1
Reincorporation of the Company in Maryland and Related Changes to
Rights of Stockholders Comparison of Rights of Stockholders of
the Company and Stockholders of the Maryland Company," in each
case to the extent that it constitutes matters of Maryland law,
summaries of Maryland legal matters, summaries of certain
provisions of the Company's charter or bylaws or other
instruments or agreements governed by Maryland law, or legal
conclusions with respect to matters of Maryland law, has been
reviewed by them and is correct in all material respects.
(ix) No authorization, approval, consent or order of any
Maryland state government authority or agency (other than as may
be required under Maryland securities or blue sky laws, as to
which no opinion need be rendered) is required in connection with
the due authorization, execution or delivery of the Underwriting
Agreement or for the offering, issuance or sale of the
Securities.
(x) The execution, delivery and performance of the
Underwriting Agreement by the Company (including the issuance and
sale of the Securities to the Underwriter and the use of the
proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") will not result
in any violation of the provisions of the charter or bylaws of
the Company or, so far as is known to such counsel, any
applicable provision of any Maryland law, statute, administrative
regulation or administrative or court decree applicable to the
Company.
In rendering such opinion, such counsel shall state that
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, in rendering their opinion pursuant to the
Underwriting Agreement, may rely upon such opinion of special
Maryland counsel as to all matters arising under or governed by
the laws of the State of Maryland. In addition, in rendering
such opinion, such counsel may rely insofar as such opinion
involves factual matters, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials. Such opinion shall not state that it is to be
governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord
of the ABA Section of Business Law (1991).
Page C-39