PURCHASE AGREEMENT October 23, 1998 Table of Contents

Exhibit 1.1

Purchase Agreement, dated October 23, 1998, between ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇.▇. ▇▇▇▇▇▇▇ & Sons,
Inc., PaineWebber Incorporated, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation, EVEREN Securities, Inc., Sutro & Co.
Incorporated and Wheat First Securities, Inc. (as Representatives
of the several Underwriters named on Schedule A thereto), and the
Company.

$100,000,000

REALTY INCOME CORPORATION

8 1/4% Notes due 2008

PURCHASE AGREEMENT

October 23, 1998

Table of Contents

Page
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PURCHASE AGREEMENT 1
SECTION 1. Representations and Warranties.............................. 3
(a) Representations and Warranties by the Company......... 3
(i) Compliance with Registration Requirements... 3
(ii) Incorporated Documents...................... 4
(iii) Independent Accountants..................... 4
(iv) Financial Statements........................ 4
(v) No Material Adverse Change in Business...... 5
(vi) Good Standing of the Company................ 5
(vii) Good Standing of Subsidiaries............... 5
(viii) Capitalization.............................. 6
(ix) Authorization of Agreement.................. 6
(x) Authorization of Common Stock............... 6
(xi) Absence of Defaults and Conflicts........... 6
(xii) Absence of Labor Dispute.................... 7
(xiii) Absence of Proceedings...................... 7
(xiv) Accuracy of Exhibits........................ 7
(xv) Possession of Intellectual Property......... 7
(xvi) Absence of Further Requirements............. 8
(xvii) Possession of Licenses and Permits.......... 8
(xviii) Investment Company Act...................... 8
(xix) Partnership Agreements...................... 8
(xx) Properties.................................. 9
(xxi) Insurance................................... 10
(xxii) Environmental Matters....................... 10
(xxiii) Qualification as a Real Estate Investment Tr 11
(xxiv) Registration Rights......................... 12
(xxv) Tax Treatment of Certain Entities........... 12
(xxvi) Indenture................................... 12
(xxvii) Securities.................................. 12
(xxviii) Description of Indenture and Securities..... 13
(xxix) Ranking of Securities....................... 13
(xxx) Reincorporation............................. 13
(xxxi) Prior Registration Statement................ 13
(b) Officer's Certificates................................ 13
SECTION 2. Sale and Delivery to Underwriters; Closing.................. 13
(a) Initial Securities.................................... 13
(b) Option Securities..................................... 13
(c) Payment............................................... 14
(d) Denominations; Registration........................... 14
SECTION 3. Covenants of the Company.................................... 14

(a) Compliance with Securities Regulations and Commission
Requests............................................. 14
(b) Filing of Amendments................................... 15
(c) Rule 434............................................... 15
(d) Delivery of Registration Statements.................... 15
(e) Delivery of Prospectuses............................... 15
(f) Continued Compliance with Securities Laws.............. 16
(g) Blue Sky Qualifications................................ 16
(h) Rule 158............................................... 16
(i) Use of Proceeds........................................ 17
(j) Reporting Requirements................................. 17
(k) Listing................................................ 17
(l) Restriction on Sale of Securities...................... 17
SECTION 4. Payment of Expenses......................................... 17
(a) Expenses............................................... 17
(b) Termination of Agreement............................... 18
SECTION 5. Conditions of Underwriters' Obligations..................... 18
(a) Effectiveness of Registration Statement................ 18
(b) Opinions of Counsel for Company........................ 18
(c) Opinion of Counsel for Underwriters.................... 18
(d) Officers' Certificate.................................. 19
(e) Accountant's Comfort Letter............................ 19
(f) Bring-down Comfort Letter.............................. 19
(g) Rating Requirement..................................... 19
(h) Letter Regarding Compliance with the Acquisition Credit
Agreement............................................. 19
(i) Approval of Listing.................................... 20
(j) Additional Documents................................... 20
(k) Conditions to Purchase of Option Securities............ 20
(l) Termination of Agreement............................... 21
SECTION 6. Indemnification............................................. 21
(a) Indemnification of Underwriters........................ 21
(b) Indemnification of Company, Dires and
Officers............................................. 22
(c) Actions against Parties; Notification.................. 22
(d) Settlement without Consent if Failure to Reimburse..... 23
SECTION 7. Contribution................................................ 23
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery.................................................. 24
SECTION 9. Termination of Agreement.................................... 24
(a) Termination; General................................... 24
(b) Liabilities............................................ 25
SECTION 10. Default by One or More of the Underwriters................. 25
SECTION 11. Notices.................................................... 26
SECTION 12. Parties.................................................... 26
SECTION 13. GOVERNING LAW AND TIME..................................... 26
SECTION 14. Effect of Headings and Table of Contents................... 26

$100,000,000

REALTY INCOME CORPORATION
(a Maryland corporation)

8 1/4% Monthly Income Senior Notes due 2008

PURCHASE AGREEMENT

October 23, 1998

▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
PaineWebber Incorporated
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation
EVEREN Securities, Inc.
Sutro & Co. Incorporated
Wheat First Securities, Inc.
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇

Ladies and Gentlemen:

Realty Income Corporation, a Maryland corporation (the
"Company"), confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other
underwriters named in Schedule A hereto (collectively, the "Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇ & Sons,
Inc., PaineWebber Incorporated, ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities
Corporation, EVEREN Securities, Inc., Sutro & Co. Incorporated and Wheat
First Securities, Inc. are acting as representatives (in such capacity, the
"Representatives"), with respect to the sale by the Company and the purchase
by the Underwriters, acting severally and not jointly, of the respective
principal amounts set forth in said Schedule A of $100,000,000 aggregate
principal amount of the Company's 8 1/4% Monthly Income Senior Notes due 2008
(the "Notes"), and with respect to the grant by the Company to the
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of $15,000,000 aggregate
principal amount of Notes to cover over-allotments, if any. The aforesaid
$100,000,000 aggregate principal amount of Notes (the "Initial Securities")
to be purchased by the Underwriters and all or any part of the $15,000,000
aggregate principal amount of Notes subject to the option described

in Section 2(b) hereof (the "Option Securities") are hereinafter called,
collectively, the "Securities." The Securities are to be issued pursuant to
an indenture dated as of October 28, 1998 (the "Indenture") between the
Company and The Bank of New York, as trustee (the "Trustee").

The Company understands that the Underwriters propose to make
a public offering of the Securities as soon as the Representatives deem
advisable after this Agreement has been executed and delivered.

The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-34311) and Amendment No. 1 thereto covering the registration of, among
other things, the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), in each case including the related preliminary prospectus
or prospectuses. Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus supplement and, if
required by Rule 424(b) (as defined below), a prospectus in accordance with
the provisions of Rule 415 ("Rule 415") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b)
of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the
Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance
with the provisions of Rule 434 and Rule 424(b). The information included in
such Term Sheet that was omitted from such registration statement at the time
it became effective but that is deemed to be part of such registration
statement at the time the Term Sheet is filed with the Commission pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each
prospectus, together with any related prospectus supplement, relating to the
Securities used before such registration statement became effective, and each
prospectus, together with the related prospectus supplement, relating to the
Securities that omitted the Rule 434 Information or that was captioned
"Subject to Completion" that was used after such effectiveness and prior to
the execution and delivery of this Agreement, is herein called, together with
the documents incorporated by reference therein pursuant to Item 12 of Form
S-3 under the 1933 Act, a "preliminary prospectus." Such registration
statement, as amended and including the exhibits thereto, schedules, if any,
and the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act, at the time it became effective and including,
if applicable, the Rule 434 Information, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the
1933 Act Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The prospectus dated October
1, 1997 and the final prospectus supplement relating to the offering of the
Securities, including the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, in the form first
furnished to the Underwriters for use in connection with the offering of the
Securities are herein called, collectively, the "Prospectus." If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary prospectus
supplement dated October 16, 1998, together with the prospectus dated October
1, 1997 and the Term Sheet and all documents incorporated by reference
therein pursuant to Item 12 of Form S-3, and all references in this Agreement
to the date of the Prospectus shall mean the date of the Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary

prospectus, the Prospectus or any Term Sheet or any amendment or supplement
to any of the foregoing shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").

All references in this Agreement to financial statements and
schedules and other information which is "described," "disclosed,"
"contained," "included" or "stated" in the Registration Statement, any
preliminary prospectus or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements and
schedules and other information which is incorporated or deemed to be
incorporated by reference in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), which is incorporated or deemed to be incorporated
by reference in the Registration Statement, such preliminary prospectus or
the Prospectus, as the case may be.

All references in this Agreement to properties or improvements
"owned by" or "of" the Company or any of its subsidiaries shall be deemed to
mean and include all properties and improvements which are leased by the
Company or any of its subsidiaries, as lessee.

As used in this Agreement, the term "Consolidation" means the
merger of 25 limited partnerships (the "Partnerships") and RIC Properties
Ltd., a California limited partnership ("RIC Properties"), into the Company
on August 15, 1994; "Merger" means the merger of R.I.C. Advisor, Inc., a
California corporation (the "Advisor"), into the Company on August 17, 1995;
and "Reincorporation" means the reincorporation of the Company in the State
of Maryland, which was effectuated by merging the Company into Realty Income
of Maryland, Inc., a Maryland corporation (the "Maryland Corporation") which
subsequently changed its name to Realty Income Corporation, with the Maryland
Corporation as the surviving corporation of such merger.

SECTION 1. REPRESENTATIONS AND WARRANTIES.

(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company
represents and warrAnts to each Underwriter as of the date hereof and as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
Underwriter, as follows:

(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company
meets the requirements for use of Form S-3 under the 1933 Act. Each of
the Registration Statement and any Rule 462(b) Registration Statement
has become effective under the 1933 Act and no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are threatened by the Commission, and any
request on the part of the Commission for additional information has
been complied with. The Indenture has been duly qualified under

the Trust Indenture Act of 1939, as amended (the "1939 Act"), and the
Trustee has duly filed with the Commission a Statement of Eligibility
on Form T-1 as part of the Registration Statement.

At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective, at the date hereof and at the Closing Time (and, if any Option
Securities are purchased, at each Date of Delivery), the Registration
Statement, any Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the applicable requirements of the 1933 Act and the 1933 Act Regulations and
the 1939 Act and the rules and regulations of the Commission under the 1939
Act (the "1939 Act Regulations"), and did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and, at the date hereof and at the Closing Time (and, if any Option
Securities are purchased, at each Date of Delivery), neither the Prospectus
nor any amendments or supplements thereto contained or will contain any
untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the representations and warranties in this paragraph shall not
apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished
to the Company in writing by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly
for use in the Registration Statement or Prospectus.

Each preliminary prospectus and Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act and the 1933 Act Regulations
and, if applicable, each preliminary prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was identical to
the electronically transmitted copies thereof filed with the Commission
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 Prospectus, at the date
hereof and at the Closing Time (and, if any Option Securities are
purchased, at each Date of Delivery), did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.

(iii) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.

(iv) FINANCIAL STATEMENTS. The consolidated financial
statements of the Company included in the Registration Statement and
the Prospectus, together with the related schedule and notes, present
fairly the financial position of the Company and its subsidiaries at
the dates indicated and the consolidated statements of income,
stockholders' equity and cash flows of the Company and its subsidiaries
for the periods specified; said consolidated financial statements have
been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules included in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial
data, if any, and summary financial information, if any, included in
the Prospectus present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement. The Company's
ratios of earnings to fixed charges (actual and, if any, pro forma)
included in the Prospectus have been calculated in compliance with Item
503(d) of Regulation S-K of the Commission.

(v) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect"), whether or not arising in the
ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular monthly distributions on the
Common Stock, par value $1.00 per share, of the Company (the "Common
Stock") in amounts per share that are consistent with past practice,
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its stock.

(vi) GOOD STANDING OF THE COMPANY. The Company is a corporation
duly organized and validly existing under the laws of the State of
Maryland and is in good standing with the State Department of
Assessments and Taxation of Maryland and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required,
whether by reason

of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would
not result in a Material Adverse Effect.

(vii) GOOD STANDING OF SUBSIDIARIES. The only subsidiaries of
the Company are Realty Income Texas Properties, L.P., a Delaware
limited partnership, and Realty Income Texas Properties, Inc., a
Delaware corporation, and the Company does not hold any equity interest
in any corporation, limited liability company, partnership, joint
venture or entity other than such subsidiaries. Each subsidiary of the
Company has been duly organized and is validly existing as a
partnership or corporation, as the case may be, in good standing under
the laws of the state of its organization and has power and authority
as a partnership or corporation, as the case may be, to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; each such subsidiary is duly qualified as a foreign
partnership or corporation, as the case may be, to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding partnership
interests and shares of capital stock, as the case may be, of each such
subsidiary have been duly authorized (if applicable) and validly issued
and are fully paid and are non-assessable (except to the extent that
the general partners of subsidiaries which are partnerships may be
liable for the obligations of such partnerships) and are owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding partnership interests or shares of
capital stock, as the case may be, of such subsidiaries were issued in
violation of preemptive or other similar rights arising by operation of
law, under the partnership agreement or charter or bylaws, as the case
may be, of any such subsidiary or under any agreement or instrument to
which the Company or any such subsidiary is a party.

(viii) CAPITALIZATION. The authorized stock of the Company and
the issued and outstanding stock of the Company are as set forth in the
line items "Preferred Stock" and "Common Stock" under the caption
"Capitalization" in the Prospectus (except for subsequent issuances, if
any, pursuant to employee benefit plans referred to in the Prospectus
or pursuant to the exercise of options referred to in the Prospectus
and the retirement of 20,279 shares of common stock on August 14, 1998).

(ix) AUTHORIZATION OF AGREEMENT. This Agreement has been duly
authorized, executed and delivered by the Company.

(x) AUTHORIZATION OF COMMON STOCK. The shares of issued and
outstanding Common Stock have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
Common Stock was issued in violation of 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.

(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, the Indenture and the Securities and the
consummation of the transactions contemplated herein and therein
(including the use of the proceeds from the sale of the Securities to
repay borrowings under the Amended and Restated Revolving Credit
Agreement dated as of December 30, 1997 among the Company, the banks
named therein and The Bank of New York, as agent and swing line bank and
BNY Capital Markets, Inc., as arranger (the "Acquisition Credit
Agreement"), as described in the Prospectus under the caption "Use of
Proceeds" but excluding any use of proceeds for other general corporate
purposes for which specific corporate authorization may be required) and
compliance by the Company with its obligations hereunder and thereunder
have been duly authorized by all necessary corporate action and do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any subsidiary pursuant to, any Agreement or
Instrument, except for such conflicts, breaches or defaults or liens,
charges or encumbrances that, individually or in the aggregate, would not
have a Material Adverse Effect, nor will such action result in any
violation of the provisions of the charter or bylaws of the Company or
any applicable law, rule, regulation, or governmental or court judgment,
order, writ or decree. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any subsidiary of the
Company or any of its subsidiaries.

(xii) ABSENCE OF LABOR DISPUTE. No labor dispute with the
employees of the Company or any subsidiary of the Company exists or, to
the best knowledge of the Company, is imminent; and the Company is not
aware of any existing or imminent labor disturbance by the employees of
any of its or any subsidiary's tenants, which, in either case, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.

(xiii) ABSENCE OF PROCEEDINGS. The Company has not received any
notice of any action, suit, proceeding, inquiry or investigation before
or by any court or governmental agency or body, domestic or foreign, and,
to the best knowledge of the Company, there is no such proceeding now
pending or threatened, against or affecting the Company or any of its
subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which could reasonably be
expected to result in a Material Adverse Effect, or which could
reasonably be expected to materially and adversely affect the
consummation of this Agreement or the performance by the Company of its
obligations under this Agreement, the Indenture or the Securities; the
aggregate of all pending legal or governmental proceedings to which the
Company or any subsidiary is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a Material
Adverse Effect.

(xiv) ACCURACY OF EXHIBITS. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.

(xv) POSSESSION OF INTELLECTUAL PROPERTY. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.

(xvi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or

decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations under this
Agreement, the Indenture or the Securities, in connection with the
offering, issuance or sale of the Securities hereunder or the
consummation of the other transactions contemplated by this Agreement,
the Indenture or the Securities, except such as have been already made or
obtained under the 1933 Act, the 1933 Act Regulations, the 1939 Act and
the 1939 Act Regulations or as may be required under state securities
laws.

(xvii) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them and the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure so
to possess or comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not, singly or in the aggregate, have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.

(xviii) INVESTMENT COMPANY ACT. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act").

(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 purchase which, individually or in the
aggregate, are not material with respect to the Company and its
subsidiaries considered as one enterprise; (iv) to the Company's best
knowledge, each of the properties of the Company or any of its
subsidiaries has access to public rights of way, either directly or
through insured easements, except where the failure to have such access
would not, singly or in the aggregate, have a Material Adverse Effect;
(v) to the Company's best knowledge, each of the properties of the
Company or any of its subsidiaries is served by all public utilities
necessary for the current operations on such property in sufficient
quantities for such operations, except where the failure to have such
public utilities would not, singly or in the aggregate, have a Material
Adverse Effect; (vi) to the best knowledge of the Company, each of the
properties of the Company or any of its subsidiaries complies with all
applicable codes and zoning and subdivision laws and regulations, except
for such failures to comply which would not, either individually or in
the aggregate, have a Material Adverse Effect; (vii) all of the leases
under which the Company or any of its subsidiaries holds or uses any real
property or improvements or any equipment relating to such real property
or improvements are in full force and effect, except where the failure to
be in full force and effect would not, singly or in the aggregate, have a
Material Adverse Effect, and neither the Company nor any of its
subsidiaries is in default in the payment of any amounts due under any
such leases or in any other default thereunder and the Company knows of
no event which, with the passage of time or the giving of notice or both,
would constitute a default under any such lease,

except such defaults that would not, individually or in the aggregate,
have a Material Adverse Effect; (viii) to the best knowledge of the
Company, there is no pending or threatened condemnation, zoning change,
or other proceeding or action that could in any manner affect the size
of, use of, improvements on, construction on or access to the properties
of the Company or any of its subsidiaries, except such proceedings or
actions that, either singly or in the aggregate, would not have a
Material Adverse Effect; and (ix) neither the Company nor any of its
subsidiaries nor any lessee of any of the real property or improvements
of the Company or any of its subsidiaries is in default in the payment of
any amounts due or in any other default under any of the leases pursuant
to which the Company or any of its subsidiaries leases (as lessor) any of
its real property or improvements (whether directly or indirectly through
partnerships, joint ventures or otherwise), and the Company knows of no
event which, with the passage of time or the giving of notice or both,
would constitute such a default under any of such leases, except such
defaults as would not, individually or in the aggregate, have a Material
Adverse Effect.

(xxi) INSURANCE. With such exceptions as would not,
individually or in the aggregate, have a Material Adverse Effect, the
Company and its subsidiaries have title insurance on all real property
and improvements described in the Prospectus as being owned or leased
under a ground lease, as the case may be, by them and to all real
property and improvements reflected in the Company's most recent
consolidated financial statements included in the Prospectus in an amount
at least equal to the original cost of acquisition and the Company and
its subsidiaries are entitled to all benefits of the insured thereunder,
and each such property is insured by extended coverage hazard and
casualty insurance in amounts and on such terms as are customarily
carried by lessors of properties similar to those owned by the Company
and its subsidiaries (in the markets in which the Company's and
subsidiaries' respective properties are located), and the Company and its
subsidiaries carry comprehensive general liability insurance and such
other insurance as is customarily carried by lessors of properties
similar to those owned by the Company and its subsidiaries in amounts and
on such terms as are customarily carried by lessors of properties similar
to those owned by the Company and its subsidiaries (in the markets in
which the Company's and its subsidiaries' respective properties are
located) and the Company or one of its subsidiaries is named as an
additional insured on all policies required under the leases for such
properties.

(xxii) ENVIRONMENTAL MATTERS. Except as otherwise disclosed in
the Prospectus: (i) all real property and improvements owned or leased
by the Company or any of its subsidiaries, including, without limitation,
the Environment (as defined below) associated with such real property and
improvements, is free of any Contaminant (as defined below), except such
Contaminants which, individually or in the aggregate, would not have a
Material Adverse Effect; (ii) neither the Company, nor any of its
subsidiaries nor any

Partnership has caused or suffered to exist or occur any Release (as
defined below) of any Contaminant into the Environment or any other
condition that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or could result in any
violation of any Environmental Laws (as defined below) or constitute a
health, safety or environmental hazard to any person or property except
for such violations or hazards that could not reasonably be expected to
have a Material Adverse Effect; (iii) neither the Company nor any of its
subsidiaries is aware of any notice from any governmental body claiming
any violation of any Environmental Laws or requiring or calling attention
to the need for any work, repairs, construction, alterations, removal or
remedial action or installation on or in connection with such real
property or improvements, whether in connection with the presences of
asbestos-containing materials in such properties or otherwise, except for
such violations, work, repairs, construction, alterations, removal or
remedial actions or installations as would not, individually or in the
aggregate, have a Material Adverse Effect; (iv) any such work, repairs,
construction, alterations, removal or remedial action or installation, if
required, would not result in the incurrence of liabilities, which,
individually or in the aggregate, would have a Material Adverse Effect;
(v) neither the Company nor any of its subsidiaries has caused or
suffered to exist or occur any condition on any of the properties or
improvements of the Company or any of its subsidiaries that could give
rise to the imposition of any Lien (as defined below) under any
Environmental Laws, except such Liens which, individually or in the
aggregate, would not have a Material Adverse Effect; and (vi) to the
Company's best knowledge, no real property or improvements owned or
leased by the Company or any of its subsidiaries is being used or has
been used for manufacturing or for any other operations that involve or
involved the use, handling, transportation, storage, treatment or
disposal of any Contaminant, where such operations require or required
permits or are or were otherwise regulated pursuant to the Environmental
Laws and where such permits have not been or were not obtained or such
regulations are not being or were not complied with, except in all
instances where any failure to obtain a permit or comply with any
regulation could not reasonably be expected, singly or in the aggregate,
to have a Material Adverse Effect. "Contaminant" means any pollutant,
hazardous substance, toxic substance, hazardous waste, special waste,
petroleum or petroleum-derived substance or waste, asbestos or
asbestos-containing materials, PCBs, lead, pesticides or radioactive
materials or any constituent of any such substance or waste, including
any such substance identified or regulated under any Environmental Law.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. 9601 ET SEQ., the Resource
Conservation and Recovery Act, 42 U.S.C. 6901, ET SEQ., the Clean Air
Act, 42 U.S.C. 7401, ET SEQ., the Clean Water Act, 33 U.S.C. 1251, ET
SEQ., the Toxic Substances Control Act, 15 U.S.C. 2601, ET SEQ., the
Occupational Safety and Health Act, 29 U.S.C. 651, ET SEQ., and all other
federal, state and local laws, ordinances, regulations, rules, orders,
decisions, permits, and the like, which are directed at the protection of
human health or the Environment.

"Lien" means, with respect to any asset, any mortgage, deed of trust,
lien, pledge, encumbrance, charge or security interest in or on such
asset. "Environment" means any surface water, drinking water, ground
water, land surface, subsurface strata, river sediment, buildings,
structures, and ambient, workplace and indoor air. "Release" means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, emanating or disposing of any
Contaminant into the Environment, including, without limitation, the
abandonment or discard of barrels, containers, tanks or other receptacles
containing or previously containing any Contaminant or any release,
emission or discharge as those terms are defined or used in any
Environmental Law.

(xxiii) QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST. The
Company was and is organized in conformity with the requirements for
qualification and taxation as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended (the "Code"); the Company at
all times has met and continues to meet all the requirements of the Code
for qualification and taxation as a "real estate investment trust"; the
Company's method of operation will enable it to meet the requirements for
qualification and taxation as a "real estate investment trust" under the
Code; and the Company is qualified as a "real estate investment trust"
under the Code and will be so qualified for the taxable year in which
sales of the Securities occur.

(xxiv) REGISTRATION RIGHTS. There are no persons with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act, or included in the offering contemplated
hereby.

(xxv) TAX TREATMENT OF CERTAIN ENTITIES. Each of R.I.C. Trade
Center, Ltd., Empire Business Center, Ltd., and Silverton Business
Center, Ltd., each a California limited partnership (the "Sub-Limited
Partnerships"), was, from the time of the Consolidation through and
including the time of its merger into the Company, treated as a
partnership (rather than as an association taxable as a corporation) for
federal income tax purposes. The Company's ownership interests in three
properties held through tenancies in common with unrelated third parties
(which are the only properties which, since the Consolidation, have been
held in tenancies in common with unrelated third parties) have not been,
since the Consolidation, and will not be treated as ownership interests
in associations taxable as corporations for federal income tax purposes.
Realty Income Texas Properties, L.P., a Delaware limited partnership, is
not and has never been treated as an association taxable as a corporation
for federal income tax purposes. Realty Income Texas Properties, Inc., a
Delaware corporation, is and has been at all times treated as a
"qualified REIT subsidiary" within the meaning of Section 856(i) of the
Code.

(xxvi) INDENTURE. The Indenture has been duly authorized by the
Company and duly qualified under the 1939 Act and, at the Closing Time
(and, if any Option Securities are purchased, at each Date of Delivery),
will have been duly executed and delivered by the Company and will
constitute a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditor's rights generally or by general equitable principles.

(xxvii) SECURITIES. The Securities have been duly authorized
and, at the Closing Time (and, if any Option Securities are purchased, at
each Date of Delivery), will have been duly executed by the Company and,
when authenticated in the manner provided for in the Indenture and
delivered against payment of the purchase price therefor specified in
this Agreement, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally or by general equitable
principles, and will be entitled to the benefits of the Indenture.

(xxviii) DESCRIPTION OF INDENTURE AND SECURITIES. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and
will be in substantially the respective forms filed or incorporated by
reference, as the case may be, as exhibits to the Registration Statement.

(xxix) RANKING OF SECURITIES. The Securities rank and will rank
on a parity with all unsecured indebtedness of the Company (other than
subordinated indebtedness of the Company) that is outstanding on the date
hereof or that may be incurred hereafter, and senior to all subordinated
indebtedness of the Company that is outstanding on the date hereof or
that may be incurred hereafter.

(xxx) 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.

(xxxi) PRIOR REGISTRATION STATEMENT. All of the securities
previously registered by the Company under its registration statement on
Form S-3 (No. 33-95374), as amended, have been issued and sold.

(b) OFFICER'S CERTIFICATES. Any certificate signed by any officer
of the Company and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby.

SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; 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 each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price set forth in Schedule B, the aggregate
principal amount of Initial Securities set forth in Schedule A opposite the
name of such Underwriter, plus any additional principal amount of Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.

(b) OPTION SECURITIES. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
$15,000,000 aggregate principal amount of Notes at the price set forth in
Schedule B. The option hereby granted may be exercised through and including
the 30th day after the date hereof and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may
be made in connection with the offering and distribution of the Initial
Securities upon notice by the Representatives to the Company setting forth
the number of Option Securities as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option Securities. Any such time and date of delivery (a "Date of Delivery")
shall be determined by the Representatives, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior
to the Closing Time. If the option is exercised as to all or any portion of
the Option Securities, each of the Underwriters, acting severally and not
jointly, will purchase that proportion of the total aggregate principal
amount of Option Securities then being purchased which the aggregate
principal amount of Initial Securities set forth in Schedule A opposite the
name of such Underwriter bears to the aggregate principal amount of all of
the Initial Securities, subject in each case to such adjustments as the
Representatives in their discretion shall make.

(c) PAYMENT. Payment of the purchase price for, and delivery of
certificates for, the Securities shall be made at the office of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, or at such other place as shall be agreed upon by the
Representatives and the Company, at 6:00 A.M. (California time) on the third
(fourth, if the pricing occurs after 4:30 P.M. New York City time, on any
given day) business day after the date hereof (unless postponed in accordance
with the provisions of Section 10), or such other time not later than ten
business days after such date as shall be agreed upon by the Representatives
and the Company (such time and date of payment and delivery being herein
called "Closing Time").

In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price
for, and delivery of certificates for, such Option Securities shall be made
at the above-mentioned offices, or at such other place as shall be agreed
upon by the Representatives and the Company, on each Date of Delivery as
specified in the notice from the Representatives to the Company.

Payment shall be made to the Company by wire transfer of
immediately available funds to an account at a bank designated by the
Company, against delivery to the Representatives for the respective accounts
of the Underwriters of certificates for the Securities to be purchased by
them. It is understood that each Underwriter has authorized the
Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
individually and not as representative of the Underwriters, may (but shall
not be obligated to) make payment of the purchase price for the Initial
Securities and the Option Securities, if any, to be purchased by any
Underwriter whose payment therefor has not been received by the Closing Time
or the relevant Date of Delivery, as the case may be, but such payment shall
not relieve such Underwriter from its obligations hereunder.

(d) DENOMINATIONS; REGISTRATION. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations
and registered in such names as the Representatives may request in writing at
least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities
and the Option Securities, if any, will be made available for examination and
packaging by the Representatives in The City of New York not later than 2:00
P.M. (New York City time) on the business day prior to the Closing Time or
the relevant Date of Delivery, as the case may be.

SECTION 3. COVENANTS OF THE COMPANY. The Company covenants
with each Underwriter as follows:

(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will notify the Representatives
immediately, and confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement or any Rule 462(b)
Registration Statement shall become effective or any supplement to the
Prospectus, any Term Sheet or any amended Prospectus shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission for any amendment to the Registration
Statement or any Rule 462(b) Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus, or of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule
424(b) and, if applicable, will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus supplement, prospectus
or term sheet transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will
promptly file such prospectus supplement, prospectus or term sheet, as
the case may be. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued,
to obtain the lifting thereof at the earliest possible moment.

(b) FILING OF AMENDMENTS. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or
to the Prospectus, whether pursuant to the 1933 Act, the 1934 Act or
otherwise, will furnish the Representatives with copies of any such
documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to
which the Representatives or counsel for the Underwriters shall object.

(d) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Representatives and counsel for the Underwriters,
without charge, as many signed and conformed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) as the
Representatives and counsel for the Underwriters may reasonably request.
If applicable, the copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, if any, except to the extent permitted by Regulation
S-T.

(e) DELIVERY OF PROSPECTUSES. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus
as such Underwriter reasonably requested, and the Company hereby consents
to the use of such copies for purposes permitted by the 1933 Act. The
Company will furnish to each Underwriter, without charge, during the period
when the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. If applicable,
the Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, if any, except to the
extent permitted by Regulation S-T.

(f) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and in the Prospectus.
If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur
or condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that
the Prospectus will not include any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances

existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of any such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectus in order
to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company
will furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.

(g) BLUE SKY QUALIFICATIONS. The Company will use its best efforts,
in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Representatives may
designate and to maintain such qualifications in effect for a period of not
less than one year from the date hereof; PROVIDED, HOWEVER, that the
Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. In each jurisdiction in which the Securities
have been so qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
date hereof.

(h) RULE 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
security holders as soon as practicable an earning statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.

(i) USE OF PROCEEDS. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds."

(j) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant
to the 1934 Act within the time periods required by the 1934 Act and the
1934 Act Regulations.

(k) LISTING. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange (the "NYSE").

(l) RESTRICTION ON SALE OF SECURITIES. During a period of 90 days
from the date of this Agreement, the Company will not, without the prior
written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any Securities or
substantially similar securities of the Company or any securities
convertible into, or exercisable or

exchangeable for, any of the foregoing, or file any registration statement
under the 1933 Act with respect to any of the foregoing, or (ii) enter into
any swap or any other agreement or transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of
any Securities or substantially similar securities of the Company, whether
any such swap, agreement or transaction described in clause (i) or (ii)
above is to be settled by delivery of Securities, other securities, in cash
or otherwise, other than the Securities sold to the Underwriters pursuant
to this Agreement.

SECTION 4. PAYMENT OF EXPENSES

(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the word
processing, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the printing and delivery to the Underwriters of this
Agreement, the Indenture, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters,
including any transfer taxes or other duties payable upon the sale of the
Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(g) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheet and the Prospectus and any amendments
or supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) if required, the filing fees incident to, and the reasonable
fees and disbursements of counsel to the Underwriters (such fees and
disbursements not to exceed $10,000) in connection with, the review, if any,
by the National Association of Securities Dealers, Inc. (the "NASD") of the
terms of the sale of the Securities, (x) the fees and expenses of the
Trustee, including, if required, the fees and disbursements of counsel for
the Trustee in connection with the Indenture and the Securities, (xi) any
fees payable in connection with the rating of the Securities or in connection
with any listing of the Securities on a securities exchange and (xii) and the
fees and expenses of any depositary in connection with holding the Securities
in book-entry form.

(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or
Section 9(a)(i) or 9(a)(v) hereof, the Company shall reimburse the Underwriters
for all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.

SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
obligations of the several Underwriters hereunder are subject to the accuracy
of the representations and warranties of the Company contained in Section 1
hereof or in certificates of any officer of the Company or any subsidiary of
the Company delivered pursuant to the provisions hereof, to the performance
by the

Company of its covenants and other obligations hereunder, and to the
following further conditions:

(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective not later than 5:30 P.M. on the date hereof and at Closing Time
(and, if any Option Securities are purchased, at the relevant Date of
Delivery) no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement shall have been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriters. If required by the 1933 Act or the 1933 Act
Regulations, the Prospectus shall have been filed with the Commission in
accordance with Rule 424(b) and, if the Company has elected to rely upon
Rule 434, a Term Sheet shall have been filed with the Commission in
accordance with Rule 434 and Rule 424(b).

(b) OPINIONS OF COUNSEL FOR COMPANY. At Closing Time, the
Representatives 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
Underwriters, to the effect set forth in Exhibits A, B and C hereto,
respectively, and to such further effect as counsel to the Underwriters may
reasonably request pursuant to Section 5(i).

(c) OPINION OF COUNSEL FOR UNDERWRITERS. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of
Closing Time, of ▇▇▇▇▇ & Wood LLP, counsel for the Underwriters, with
respect to the matters set forth in clauses (iii), (iv), (xiv), (xv)and the
antepenultimate paragraph of Exhibit A and clauses (iii), (vii) and (viii)
of Exhibit C. In giving such opinion such counsel may rely, as to all
matters arising under or governed by the laws of the State of Maryland,
upon the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ delivered pursuant to
Section 5(b) and, as to all matters governed by the laws of other
jurisdictions (other than the law of the State of New York and the federal
law of the United States) upon the opinions of counsel satisfactory to you.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and
certificates of public officials.

(d) OFFICERS' CERTIFICATE. At Closing Time there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the Representatives shall have received a certificate of the Chairman or
the President of the Company and of the chief financial or chief accounting
officer of the Company,

dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Section
1 hereof are true and correct with the same force and effect as though
expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued and no proceedings for that
purpose have been initiated or, to the best of their knowledge, threatened
by the Commission.

(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of
this Agreement, the Representatives shall have received from KPMG Peat
Marwick LLP a letter dated such date, in form and substance satisfactory to
the Representatives, together with signed or reproduced copies of such
letter for each of the other Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements, and
certain financial information contained in the Registration Statement and
the Prospectus.

(f) BRING-DOWN COMFORT LETTER. At Closing Time the Representatives
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) RATING REQUIREMENT. At the date of this Agreement and at the
Closing Time, the Securities shall be rated at least Baa3 by Moody's
Investor's Service Inc., BBB- by Standard & Poor's Corporation and BBB by
Duff & ▇▇▇▇▇▇, and the Company shall have delivered to the Representatives
a letter, dated the Closing Time, from each such rating agency, or other
evidence satisfactory to the Representatives, confirming that the
Securities have such ratings.

(h) LETTER REGARDING COMPLIANCE WITH THE ACQUISITION CREDIT
AGREEMENT. Prior to the date of this Agreement, the Representatives shall
have received a letter, executed by Agent (as defined in the Acquisition
Credit Agreement) to the effect that the Agent has reviewed the preliminary
prospectus relating to the Securities or the Prospectus and has determined
that the agreements and covenants entered into the connection with the
Securities and the Indenture are no more restrictive on the Company than
the agreements and covenants in the Acquisition Credit Agreement.

(i) 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.

(j) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery counsel for the Underwriters shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any

of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.

(k) CONDITIONS TO PURCHASE OF OPTION SECURITIES. In the event that
the Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the Option Securities, the representations
and warranties of the Company contained herein and the statements in any
certificates furnished by the Company hereunder shall be true and correct
as of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:

(i) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the Chairman or President of the Company and of the chief
financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(d)
hereof remains true and correct as of such Date of Delivery.

(ii) OPINIONS OF COUNSEL FOR COMPANY. The favorable opinions
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
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the respective opinions required by Section 5(b)
hereof.

(iii) OPINION OF COUNSEL FOR UNDERWRITERS. The favorable
opinion of ▇▇▇▇▇ & Wood LLP, counsel for the Underwriters, dated such
Date of Delivery, relating to the Option Securities to be purchased on
such Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(c) hereof.

(iv) BRING-DOWN COMFORT LETTER. A letter from KPMG Peat
Marwick LLP, in form and substance satisfactory to the Representatives
and dated such Date of Delivery, substantially in the same form and
substance as the letter furnished to the Representatives pursuant to
Section 5(f) hereof, except that the specified date referred to shall
be a date not more than three business days prior to such Date of
Delivery.

(l) TERMINATION OF AGREEMENT. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of Option
Securities on a Date of Delivery which occurs after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery,
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.

SECTION 6. INDEMNIFICATION.

(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:

(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 434 Information,
if applicable, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged
untrue statement of a material fact included in any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto), or the omission
or alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;

(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Company; and

(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;

PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto); and
PROVIDED FURTHER that this indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, liabilities, claims, damages or
expenses purchased Securities, or any person controlling such Underwriter, if
a copy of the

Prospectus (as then amended or supplemented if the Company shall have
furnished any such amendments or supplements thereto, but excluding documents
incorporated or deemed to be incorporated by reference therein) was not sent
or given by or on behalf of such Underwriter to such person, if such is
required by law, at or prior to the written confirmation of the sale of such
Securities to such person and if the Prospectus (as so amended or
supplemented, if applicable) would have corrected the defect giving rise to
such loss, liability, claim, damage or expense, except that this proviso
shall not be applicable if such defect shall have been corrected in a
document which is incorporated or deemed to be incorporated by reference in
the Prospectus.

(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each Underwriter
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).

(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; PROVIDED,
HOWEVER, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation,

investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.

(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 45 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.

SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.

The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus (or, if Rule 434 is used, the
corresponding location on the Term Sheet) bear to the aggregate initial public
offering price of the Securities as set forth on such cover (or corresponding
location on the Term Sheet, as the case may be).

The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.

The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation

which does not take account of the equitable considerations referred to above
in this Section 7. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.

Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number of Securities set forth opposite their respective names
in Schedule A hereto and not joint.

SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
in certificates of officers of the Company submitted pursuant hereto shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any Underwriter or controlling person, or by or on
behalf of the Company, and shall survive delivery of the Securities to the
Underwriters.

SECTION 9. TERMINATION OF AGREEMENT.

(a) TERMINATION; GENERAL. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(and, if any Option Securities are purchased, at any time at or prior to the
relevant Date of Delivery, with respect to the obligation of the Underwriters
to purchase such Option Securities) (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity

or crisis or any change or development involving a prospective change in
national or international political, financial or economic conditions, in each
case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable 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 declared by either Federal, California or
New York authorities, or (v) if since the date of this Agreement, there has
occurred a downgrading in the rating assigned to the Securities or any of the
Company's other debt securities by any nationally recognized securities rating
agency, or such securities rating agency has publicly announced that it has
under surveillance or review, with possible negative implications or without
indicating the direction of the possible change, its rating of the Securities
or any of the Company's other debt securities.

(b) LIABILITIES. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
6 and 7 shall survive such termination and remain in full force and effect.

SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, within
24 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:

(a) if the aggregate principal amount of the Defaulted Securities
not exceed 10% of the aggregate principal amount of the Securities,
of the non-defaulting Underwriters shall be obligated, severally and
ointly, to purchase the full amount thereof in the proportions that
respective underwriting obligations hereunder bear to the
writing obligations of all non-defaulting Underwriters, or

(b) if the aggregate principal amount of the Defaulted Securities
ds 10% of the aggregate principal amount of the Securities to be
ased hereunder on such date, this Agreement or, with respect to any
of Delivery which occurs after the Closing Time, the obligations of
nderwriters to purchase and of the Company to sell the Option
ities to be purchased and sold on such Date of Delivery shall
nate without liability on the part of any non-defaulting Underwriter.

No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.

In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligations of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representatives or the Company shall have the
right to postpone the Closing Time or the relevant Date of Delivery, as the case
may be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.

SECTION 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ▇▇▇▇ ▇.
▇▇▇▇▇▇; and notices to the Company shall be directed to it at Realty Income
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention
of Legal Department.

SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters
and the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from any Underwriter shall be deemed to
be a successor by reason merely of such purchase.

SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. EXCEPT AS OTHERWISE SET
FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 14. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.

Very truly yours,

REALTY INCOME CORPORATION

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------

▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
President and Chief Operating Officer

CONFIRMED AND ACCEPTED,
as of the date first above written:

▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
PAINEWEBBER INCORPORATED
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
EVEREN SECURITIES, INC.
SUTRO & CO. INCORPORATED
WHEAT FIRST SECURITIES, INC.

By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED

By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Authorized Signatory

For themselves and as Representatives of the
Underwriters named in Schedule A hereto.

SCHEDULE A

Name of Underwriter Aggregate
--------------------- Principal
Amount of
Securities
------------

▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated . . . . . . . . . . . . . . . . . . $ 23,500,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. . . . . . . . . . . . . . . . . . . 22,250,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . 22,250,000
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation . . . . . 5,000,000
EVEREN Securities, Inc. . . . . . . . . . . . . . . . . . . . 5,000,000
Sutro & Co. Incorporated . . . . . . . . . . . . . . . . . . 5,000,000
Wheat First Securities, Inc. . . . . . . . . . . . . . . . . 5,000,000
ABN AMRO Incorporated . . . . . . . . . . . . . . . . . . . . 1,000,000
BT Alex. ▇▇▇▇▇ Incorporated . . . . . . . . . . . . . . . . . 1,000,000
Bear, ▇▇▇▇▇▇▇ & Co. Inc. . . . . . . . . . . . . . . . . . . 1,000,000
CIBC ▇▇▇▇▇▇▇▇▇▇▇ Corp. . . . . . . . . . . . . . . . . . . . 1,000,000
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . 1,000,000
Fleet Securities, Inc. . . . . . . . . . . . . . . . . . . . 1,000,000
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated. . . . . . . . . . . . . 1,000,000
OLDE Discount Corporation . . . . . . . . . . . . . . . . . . 1,000,000
▇▇▇▇▇ ▇▇▇▇▇▇▇ Inc. . . . . . . . . . . . . . . . . . . . . . 1,000,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. . . . . . . . . . . . . . . 1,000,000
▇▇ ▇▇▇▇▇ Securities Corporation . . . . . . . . . . . . . . . 1,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Incorporated . . . . . . . . . . . . . . . . . 1,000,000
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000
------------
------------

Sch A - 1

SCHEDULE B

PRICE SCHEDULE

1. The initial public offering price for the Securities shall
be 100% of the principal amount thereof, plus accrued interest from October 28,
1998.

2. The underwriting discount for the Securities shall be 3.5%
of the principal amount thereof. Accordingly, the purchase price to be paid
for the Securities by the several Underwriters shall be 96.5% of the principal
amount thereof.

Sch B-1

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, to the best of our knowledge and information, in violation of preemptive
rights or other similar rights arising under any agreement or instrument to
which the Company or any of its subsidiaries is a party.

(iii) Each of the Registration Statement and any Rule 462(b)
Registration Statement has been declared effective under the 1933 Act; to the
best of our knowledge and information, the Prospectus has been filed pursuant to
Rule 424(b) under the 1933 Act in the manner and within the time period required
by Rule 424(b); and, to the best of our knowledge and information, no stop order
suspending the effectiveness of either the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission.

(iv) Each of the Registration Statement, any Rule 462(b) Registration
Statement and the Prospectus (in each case excluding the documents incorporated
or deemed to be incorporated by reference therein and the financial statements,
supporting schedules and other financial data included or incorporated by
reference therein and excluding any Statement of Eligibility on Form T-1 (a
"Form T-1"), as to which no opinion need be rendered), as of their respective
effective or issue dates, complied as to form in all material respects with the
applicable requirements of the 1933 Act and the 1933 Act Regulations.

(v) The documents incorporated or deemed to be incorporated by
reference in the Prospectus (other than the financial statements, supporting
schedules and other financial data therein, as to which no opinion need be
rendered), when they were filed with the Commission, complied as to form in all
material respects with the applicable requirements of the 1934 Act and the 1934
Act Regulations.

(vi) The information in the Prospectus under "Certain Federal Income
Tax Considerations" and the information in the Company's 1997 Form 10-K under
"Business--Other Items--Taxation of the Company" and "Business--Other
Items--Effect of Distribution Requirements," in each case to the extent that it
constitutes matters of law, summaries of legal matters or legal conclusions, has
been reviewed by us and is correct in all material respects.

(vii) No authorization, approval, consent or order of any federal, New
York or California state governmental authority or agency (other than under the
1933 Act, the 1933

A-1

Act Regulations, the 1939 Act and 1939 Act Regulations, which
have been obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we express no opinion) is required in
connection with the due authorization, execution or delivery of the Purchase
Agreement, the Indenture or the Securities or for the offering, issuance or sale
of the Securities;

(viii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities by the Company (including the
issuance and sale of the Securities as described in the Prospectus under the
caption "Use of Proceeds") will not, whether with or without the giving of
notice or lapse of time or both, constitute a breach or violation of, or default
or Repayment Event under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, the Acquisition Credit Agreement or the Indenture
dated as of May 6, 1997 between the Company and the Bank of New York, as
trustee, nor to the best of our knowledge and information, any applicable
provision of any federal or State of California law, statute, administrative
regulation or administrative or court decree applicable to the Company.

(ix) The Company is not an "investment company" as such term is
defined in the 1940 Act.

(x) Commencing with the Company's taxable year ended December 31,
1994, the Company has been organized in conformity with the requirements for
qualification and taxation as a real estate investment trust under the Code and
its proposed method of operation will enable the Company to meet the
requirements for qualification and taxation as a real estate investment trust
under the Code.

(xi) Realty Income Texas Properties, L.P., a Delaware limited
partnership, is not and has never been treated as an association taxable as a
corporation for federal income tax purposes. Realty Income Texas Properties,
Inc., a Delaware corporation, is and has, at all times during its existence,
been treated as a "qualified REIT subsidiary" within the meaning of Section
856(i) of the Code.

(xii) Assuming the due authorization, execution and delivery of the
Indenture by the Company under the laws of the State of Maryland and the due
authorization, execution and delivery of the Indenture by the Trustee, the
Indenture constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles.

(xiii) Assuming the due authorization and execution of the Securities by
the Company under the laws of the State of Maryland, the Securities, when
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and delivered against payment of the purchase price therefor specified in the
Purchase Agreement, the Securities will constitute valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms
and

A-2

will be entitled to the benefits of the Indenture, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditor's rights generally or by
general equitable principles, and will be entitled to the benefits of the
Indenture.

(xiv) The Indenture has been qualified under the 1939 Act.

(xv) The Securities and the Indenture conform in all material respects
to the descriptions thereof contained in the Prospectus.

Although we are not passing upon, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and have not made any independent
judgment, check or verification thereof (except with respect to the opinion set
forth in paragraphs (vi), (x), (xi), and (xv) hereof), we have, however,
participated in conferences with certain officers and other representatives of
the Company, representatives of KPMG 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 any amendments or supplements to any
of the foregoing and related matters were discussed, and in the course of such
conferences (relying in connection with questions of materiality on
representations of factual matters of officers and other representatives of the
Company), nothing has come to our attention which has led us to believe that the
Registration Statement, any Rule 462(b) Registration Statement or any amendment
thereto (except for the financial statements, supporting schedules and other
financial data included therein and any Form T-1, as to which we express no
belief), as of the time the Registration Statement, any such Rule 462(b)
Registration Statement or any such post-effective or other amendment thereto
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus or any amendment or
supplement thereto (except for the financial statements, supporting schedules
and other financial data included therein, as to which we express no belief), as
of October 23, 1998 or as of the Closing Time (or, if applicable, as of the
relevant Date of Delivery), contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

In rendering such opinion, such counsel may rely insofar as such opinion
involves factual matters, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).

Such opinion shall state that, insofar as it concerns the Indenture and the
Securities, such counsel has assumed that the Indenture and the Securities are
governed by the laws of the State of California.

A-3

The matters set forth in (vi), (x) and (xi) above may be covered in one or
more separate legal opinions, which may be subject to such assumptions,
limitations and qualifications as shall be satisfactory to counsel for the
Underwriters. In particular, the opinions set forth in paragraphs (vi), (x) and
(xi) above (the "Tax Opinions") may be conditioned upon certain representations
made by the Company as to factual matters through a certificate of an officer of
the Company (the "Officer's Certificate"). In addition, the Tax Opinions may be
based upon the factual representations of the Company concerning its business
and properties as set forth in the Registration Statement and Prospectus. The
Tax Opinions may state that they relate only to the federal income tax laws of
the United States and such counsel need not express any opinion with respect to
the applicability thereto, or the effect thereon, of other federal laws, the
laws of any state or other jurisdiction or as to any matters of municipal law or
the laws of any other local agencies within any state. The Tax Opinions may
state that they are based on various statutory provisions, regulations
promulgated thereunder and interpretations thereof by the Internal Revenue
Service and the courts having jurisdiction over such matters, all of which are
subject to change either prospectively or retroactively, that any such change
may affect the conclusions stated therein, and that any variation or difference
in the facts from those set forth in the Registration Statement, the Prospectus
or the Officer's Certificate may affect the conclusions stated therein.
Moreover, the Tax Opinions may state that the Company's qualification and
taxation as a real estate investment trust depends upon the Company's ability to
meet (through actual annual operating results, distribution levels and diversity
of stock ownership) the various qualification tests imposed under the Code, the
results of which have not been and will not be reviewed by such counsel, and,
accordingly, no assurance can be given that the actual results of the Company's
operation for any one taxable year will satisfy such requirements.

A-4

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, 1997 under "Business--Other
Items--Environmental Liabilities," to the extent that it constitutes matters of
law, summaries of legal matters, instruments or agreements or legal proceedings,
or legal conclusions, has been reviewed by me and is correct in all material
respects.

(iv) To the best of my knowledge and information, there is not pending
or threatened any action, suit, proceeding, inquiry or investigation to which
the Company or any subsidiary is a party, or to which the property of the
Company or any subsidiary is subject, before or brought by any court or
governmental agency or authority, which could reasonably be expected to result
in a Material Adverse Effect, or which could reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the Purchase Agreement or the performance by the Company of its
obligations under the Purchase Agreement, the Indenture or the Securities.

B-1

(v) All descriptions in the Prospectus of leases, contracts and other
documents to which the Company or any subsidiary is a party are accurate in all
material respects.

(vi) To the best of my knowledge and information, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described in the Registration Statement or to
be filed as exhibits thereto other than those described therein or filed or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.

(vii) To the best of my knowledge and information, neither the
Company nor any of its subsidiaries is in violation of its charter or bylaws or
its partnership agreement, as applicable, and no default by the Company or any
of its subsidiaries exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.

(viii) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities by the Company (including the
issuance and sale of the Securities to the Underwriters and the use of the
proceeds from the sale of the Securities as described in the Prospectus under
the caption "Use of Proceeds") and compliance by the Company with its
obligations under the Purchase Agreement, the Indenture and the Securities will
not, whether with or without the giving of notice or lapse of time or both,
constitute a breach or violation of, or default or Repayment Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, known to me, to which the Company or
any of its subsidiaries is a party or by which it or any of them may be bound or
to which any of the property or assets of the Company or any of its subsidiaries
is subject, except for such breaches, violations or defaults or liens, charges
or encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect, nor will such action result in any violation of the
provisions of the charter or bylaws of the Company or the partnership agreement
or charter or bylaws, as the case may be, of any of its subsidiaries, or, to the
best of my knowledge and information, any applicable provision of any law,
statute or administrative regulation of the State of California, or, to the best
of my knowledge and information, any judgment, order, writ or decree of any
government instrumentality or court, domestic or foreign, applicable to the
Company or any of its subsidiaries or any of their respective properties, assets
or operations.

In rendering such opinion, such counsel may rely as to matters of fact (but
not as to legal conclusions), to the extent he deems proper, on certificates of
responsible officers of the Company and public officials. Such opinion shall
not state that it is to be governed or qualified by, or that it is otherwise
subject to, any treatise, written policy or other document relating to legal
opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).

B-2

Exhibit C

FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
TO BE DELIVERED PURSUANT TO SECTION 5(b)

(i) The Company has been duly incorporated and is validly existing
under the laws of the State of Maryland and is in good standing with the State
Department of Assessments and Taxation of Maryland. The Company has the
corporate power to own, lease and operate its current properties and to conduct
its business as described in the Prospectus and to enter into and perform its
obligations under the Purchase Agreement, the Indenture and the Securities.

(ii) The authorized, issued and outstanding stock of the Company is as
set forth in the line items "Preferred Stock" and "Common Stock" under the
caption "Capitalization" in the Prospectus (except for subsequent issuances
pursuant to employee benefit plans or the exercise of options referred to in the
Prospectus and retirement by the Company of 20,279 shares of common stock on
August 14, 1998). The shares of issued and outstanding Common Stock (the
"Outstanding Shares") have been duly authorized and validly issued and are fully
paid and non-assessable and none of the Outstanding Shares was issued in
violation of preemptive rights arising under the Maryland General Corporation
Law (the "MGCL"), the charter or bylaws of the Company.

(iii) The Purchase Agreement and the Indenture have been duly
authorized, executed and delivered by the Company.

(iv) No authorization, approval, consent or order of any Maryland
state government authority or agency (other than as may be required under
Maryland securities or blue sky laws) is required in connection with the due
authorization, execution or delivery of the Purchase Agreement, the Indenture
and the Securities or for the offering, issuance or sale of the Securities;

(v) The execution, delivery and performance of the Purchase
Agreement, the Indenture and the Securities by the Company (including the
issuance and sale of the Securities to the Underwriters and the use of the
proceeds from the sale of the Securities as described in the Prospectus under
the caption "Use of Proceeds") do not result in any violation of the provisions
of the charter or bylaws or, so far as is known to such counsel, any applicable
provision of any Maryland law, statute, administrative regulation or
administrative or court decree applicable to the Company.

(vi) The Securities have been duly authorized and executed by the
Company and, when duly authenticated by the Trustee in the manner provided in
the Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee) and delivered against payment of the purchase price
therefor specified in the Purchase Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditor's

rights generally or by general equitable principles, and will be entitled to
the benefits of the Indenture.

In rendering such opinion, such counsel shall state that each of ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇ LLP, in rendering their opinions pursuant to the
Purchase Agreement, may rely upon such opinion of special Maryland counsel as to
all matters arising under or governed by the laws of the State of Maryland. In
addition, in rendering such opinion, such counsel may rely insofar as such
opinion involves factual matters, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).

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