REALTY INCOME CORPORATION (a Maryland Corporation) 4,000,000 Shares of 7.375% Monthly Income Class D Cumulative Redeemable Preferred Stock (Par Value $1.00 Per Share) (Liquidation Preference $25.00 Per Share) PURCHASE AGREEMENT May 6, 2004 Table of Contents

EX-1.1 2 a04-6307_1ex1d1.htm EX-1.1

Exhibit 1.1

REALTY INCOME CORPORATION
(a Maryland Corporation)

4,000,000 Shares of
7.375% Monthly Income Class D Cumulative Redeemable Preferred Stock

(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Share)

PURCHASE AGREEMENT

May 6, 2004

Table of Contents

SECTION 1.	REPRESENTATIONS AND WARRANTIES

SECTION 2.	SALE AND DELIVERY TO UNDERWRITERS; CLOSING

SECTION 3.	COVENANTS OF THE COMPANY

SECTION 4.	PAYMENT OF EXPENSES

SECTION 5.	CONDITIONS OF UNDERWRITERS’ OBLIGATIONS

SECTION 6.	INDEMNIFICATION

SECTION 7.	CONTRIBUTION

SECTION 8.	REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY

SECTION 9.	TERMINATION OF AGREEMENT

SECTION 10.	DEFAULT BY ONE OR MORE OF THE UNDERWRITERS

SECTION 11.	NOTICES

SECTION 12.	PARTIES

SECTION 13.	GOVERNING LAW AND TIME

SECTION 14.	EFFECT OF HEADINGS AND TABLE OF CONTENTS

Schedule A - List of Underwriters
Schedule B - Price Schedule
Exhibit A - Form of Opinion of Latham & Watkins LLP
Exhibit B - Form of Opinion of Michael R. Pfeiffer
Exhibit C - Form of Opinion of Venable LLP

REALTY INCOME CORPORATION
(a Maryland corporation)

4,000,000 Shares of
7.375% Monthly Income Class D Cumulative Redeemable Preferred Stock

(Par Value $1.00 Per Share)
(Liquidation Preference $25.00 Per Share)

PURCHASE AGREEMENT

May 6, 2004

Citigroup Global Markets Inc.
Merrill Lynch, Pierce, Fenner & Smith

Incorporated

Wachovia Capital Markets, LLC
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013

Ladies and Gentlemen:

Realty Income Corporation, a Maryland corporation (the “Company”), confirms its agreement with the Underwriters named in Schedule A hereto (the “Underwriters” which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Citigroup Global Markets Inc. (“Citigroup”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and Wachovia Capital Markets, LLC (“Wachovia”) are acting as representatives (Citigroup, Merrill Lynch and Wachovia, in such capacities, are hereafter called the “Representatives”), with respect to the sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of shares of the 7.375% Monthly Income Class D Cumulative Redeemable Preferred Stock, par value $1.00 per share, of the Company (the “Class D Preferred Stock”), set forth in said Schedule A 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 200,000 additional shares of Class D Preferred Stock to cover over-allotments, if any. The aforesaid 4,000,000 shares of Class D Preferred Stock (the “Initial Securities”) to be purchased by the Underwriters and all or any part of the 200,000 shares of Class D Preferred Stock subject to the option described in Section 2(b) hereof (the “Option Securities”) are hereinafter called, collectively, the “Securities.” The terms of the Securities will be set forth in articles supplementary (the “Articles Supplementary”) to be filed by the Company with the State Department of Assessments and Taxation of Maryland (the “SDAT”).

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. 333-102073) and Amendment No. 1 thereto (the “Prior Registration Statement”) covering the registration of shares of its common stock, par value $1.00 per share (the “Common Stock”), shares of its preferred stock, par value $1.00 per share (the “Preferred Stock”), and its debt securities under the Securities Act of 1933, as amended (the “1933 Act”), in each case including the related preliminary prospectus or prospectuses. The Company has also filed with the Commission a registration statement on Form S-3 (No. 333-113032) and Amendment No. 1 thereto for the registration under the 1933 Act of shares of its Common Stock, shares of its Preferred Stock and its debt securities, in each case including the related preliminary prospectus or prospectuses, which registration statement constitutes Post-Effective Amendment No. 1 to the Prior Registration Statement (the “Current Registration Statement”). Promptly after execution and delivery of this Agreement, the Company will either (i) prepare and file a prospectus supplement and, if required by Rule 424(b) (as defined below), a prospectus in accordance with the provisions of Rule 415 (“Rule 415”) of the rules and regulations of the Commission under the 1933 Act (the “1933 Act Regulations”) and paragraph (b) of Rule 424 (“Rule 424(b)”) of the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule 434 (“Rule 434”) of the 1933 Act Regulations, prepare and file a term sheet (a “Term Sheet”) in accordance with the provisions of Rule 434 and Rule 424(b). The information included in such Term Sheet that was omitted from the Current Registration Statement at the time it became effective but that is deemed to be part of the Current Registration Statement at the time the Term Sheet is filed with the Commission pursuant to paragraph (d) of Rule 434 is referred to as “Rule 434 Information.” Each prospectus, together with any related prospectus supplement, relating to the Securities used before the Current Registration Statement became effective, and each prospectus, together with the related prospectus supplement, relating to the Securities that omitted the Rule 434 Information or that was captioned “Subject to Completion” that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called, together with the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, a “preliminary prospectus.” The Prior Registration Statement, as amended and including the exhibits thereto, schedules, if any, and documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became effective, and the Current 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 that it became effective, in each case including, if applicable, the Rule 434 Information, are hereinafter called, collectively, the “Registration Statements” and, individually, a “Registration Statement.” Any registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the “Rule 462(b) Registration Statement,” and after such filing the term “Registration Statement” shall include the Rule 462(b) Registration Statement. The prospectus dated March 23, 2004 (the “Base Prospectus”) and the final prospectus supplement relating to the offering of the Securities, including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the form first furnished to the Underwriters for use in connection with the offering of the Securities are herein called, collectively, the “Prospectus.” If Rule 434 is relied on, the term “Prospectus” shall refer to the Base Prospectus, the preliminary prospectus supplement relating to the Securities and the Term Sheet and all documents incorporated by reference therein pursuant to Item 12 of Form S-3, and all references in this Agreement to the date of the Prospectus shall mean the date of the Term

Sheet. For purposes of this Agreement, all references to any Registration Statement, any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or supplement to any of the foregoing shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”).

All references in this Agreement to financial statements and schedules and other information which is “described,” “disclosed,” “contained,” “included” or “stated” in any 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 such Registration Statement, such preliminary prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to any 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 such 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.

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, 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 Statements and any Rule 462(b) Registration Statement has become effective under the 1933 Act and no stop order suspending the effectiveness of any Registration Statement or any Rule 462(b) Registration Statement has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are threatened by the Commission, and any request on the part of the Commission for additional information has been complied with.

At the respective times the Registration Statements, 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 Statements, 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 Trust Indenture Act of 1939, as amended (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 any Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through the Representatives expressly for use in such Registration Statement or Prospectus.

Each preliminary prospectus and Prospectus filed as part of any 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 EDGAR, except to the extent permitted by Regulation S-T of the Commission.

(ii) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Registration Statements 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 Statements are independent public accountants as required by the 1933 Act and the 1933 Act Regulations.

(iv) Financial Statements. The consolidated financial statements of the Company included in the Registration Statements 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 Statements 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 Statements. The Company’s ratios of earnings to fixed charges and, if applicable, ratios of earnings to combined fixed charges and preferred stock dividends (actual and, if any, pro forma) included in the Prospectus have been calculated in compliance with Item 503(d) of Regulation S-K of the Commission.

(v) No Material Adverse Change in Business. Since the respective dates as of which information is given in the Registration Statements and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise (a “Material Adverse Effect”), whether or not arising in the ordinary course of business, (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise, and (C) except for regular monthly distributions on the Common Stock in amounts per share that are consistent with past practice and regular quarterly or monthly, as the case may be, dividends on the Company’s 9 3/8% Class B Cumulative Redeemable Preferred Stock, par value $1.00 per share (the “Class B Preferred Stock”), and the Company’s 9 1/2% Class C Cumulative Redeemable Preferred Stock, par value $1.00 per share (the “Class C Preferred Stock”), there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its stock.

(vi) Good Standing of the Company. The Company is a corporation duly organized and validly existing under the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of Maryland and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under this Agreement and the Articles Supplementary; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect.

(vii) Good Standing of Subsidiaries. The only subsidiaries of the Company are Realty Income Texas Properties, L.P., a Delaware limited partnership, Realty Income Texas Properties, Inc., a Delaware corporation, Crest Net Lease, Inc., a Delaware corporation, CrestNet 1, LLC, a Delaware limited liability company (“CrestNet 1”), RI GA 1, LLC, a Delaware limited liability company (“RIGA1”), RI TN 1, LLC, a Delaware limited liability company (“RITN1”), RI TN 2 LLC, a Delaware limited liability company (“RITN2”), RI CS1, LLC, a Delaware limited liability company (“RICS1”) and RI CS2, LLC, a Delaware limited liability company (“RICS2”), and the Company does not hold any equity interest in any corporation, limited liability company, partnership, joint venture or entity other than such subsidiaries. The limited liability companies named in the preceding sentence are hereinafter called the “LLC Subsidiaries.” Each subsidiary of the Company has been duly organized and is validly existing as a partnership, limited liability company or corporation, as the case may be, in

good standing under the laws of the state of its organization and has power and authority as a partnership, limited liability company or corporation, as the case may be, to own, lease and operate its properties and to conduct its business as described in the Prospectus; each such subsidiary is duly qualified as a foreign partnership, limited liability company 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 Statements, all of the issued and outstanding partnership interests, limited liability company interests and shares of capital stock, as the case may be, of each such subsidiary have been duly authorized (if applicable) and validly issued and are fully paid and are non-assessable (except to the extent that the general partners of subsidiaries which are partnerships may be liable for the obligations of such partnerships) and are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding partnership interests, limited liability company interests 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, limited liability company agreement (or similar agreement) or charter or bylaws, as the case may be, of any such subsidiary or under any agreement or instrument to which the Company or any such subsidiary is a party.

(viii) Capitalization. The authorized stock of the Company and the issued and outstanding stock of the Company are as set forth in the line items “Preferred Stock and paid in capital,” “Class A Junior Participating Preferred Stock,” “9.375% Class B Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share),” “9.50% Class C Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share),” “7.375% Monthly Income Class D Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share),” and “Common Stock and paid in capital” under the caption “Capitalization” in the Prospectus (except for subsequent issuances, if any, pursuant to this Agreement, pursuant to employee benefit plans referred to in the Prospectus or pursuant to the exercise of options referred to in the Prospectus and except for the redemption of all of the outstanding shares of Class B Preferred Stock after the date of this Agreement as contemplated by the Prospectus).

(ix) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company.

(x) Authorization of Capital Stock. The shares of issued and outstanding Common Stock, Class B Preferred Stock and Class C Preferred Stock have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of Common Stock, Class B Preferred Stock or Class C Preferred Stock was issued in violation of preemptive or other similar rights arising by operation of law, under the charter or bylaws of the Company, under any agreement or instrument to which the Company or any of its subsidiaries is a party or otherwise, and the Company’s authorized but unissued Class A Junior Participating Preferred Stock, par value $1.00 per share (the “Class A Preferred Stock”), the Common Stock, the Class B Preferred Stock,

the Class C Preferred Stock and the Rights Agreement dated as of June 25, 1998 (the “Rights Agreement”) between the Company and The Bank of New York conform to all statements relating thereto contained or incorporated by reference in the Prospectus and such statements conform to the rights set forth in the instruments defining the same.

(xi) Absence of Defaults and Conflicts. Neither the Company nor any of its subsidiaries is in violation of its charter or bylaws, its partnership agreement or its limited liability company agreement (or other similar agreement), as the case may be, or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them may be bound or to which any of the respective properties or assets of the Company or any subsidiary is subject (collectively, “Agreements and Instruments”), except for such defaults that would not have a Material Adverse Effect; and the execution, delivery and performance of this Agreement and the Articles Supplementary and the consummation of the transactions contemplated herein and therein (including the use of the proceeds from the sale of the Securities as described in the Prospectus under the caption “Use of Proceeds”) and compliance by the Company with its obligations hereunder and thereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge 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 Statements (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 Securities or the Articles Supplementary; 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 Statements, 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 Statements, the Prospectus or the documents incorporated by reference therein or to be filed as exhibits thereto which have not been so described and/or filed as required.

(xv) Possession of Intellectual Property. The Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, “Intellectual Property”) necessary to carry on the business now operated by them, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual 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 Securities or the Articles Supplementary in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the other transactions contemplated by this Agreement or the Articles Supplementary, except such as have been already made or obtained under the 1933 Act or the 1933 Act Regulations or as may be required under state securities laws and except for the filing with, and acceptance for record by, the SDAT of the Articles Supplementary.

(xvii) Possession of Licenses and Permits. The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them and the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to possess or comply would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force

and effect would not, singly or in the aggregate, have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect.

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

(xix) Partnership Agreements. Each of the partnership agreements, limited liability company agreements (or other similar agreements) and, if applicable, joint venture agreements to which the Company or any of its subsidiaries is a party has been duly authorized, executed and delivered by the Company or the relevant subsidiary, as the case may be, and constitutes the valid and binding agreement of the Company or such subsidiary, as the case may be, enforceable in accordance with its terms, except as the enforcement thereof may be limited by (A) the effect of bankruptcy, insolvency or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally or (B) the effect of general principles of equity, and the execution, delivery and performance of such agreements did not, at the time of execution and delivery, and does not constitute a breach of or default under the charter or bylaws, partnership agreement or limited liability agreement (or other similar agreement), as the case may be, of the Company or any of its subsidiaries or any of the Agreements and Instruments or any law, administrative regulation or administrative or court order or decree.

(xx) Properties. Except as otherwise disclosed in the Prospectus: (i) the Company and its subsidiaries have good and marketable title (either in fee simple or pursuant to a valid leasehold interest) to all properties and assets described in the Prospectus as being owned or leased, as the case may be, by them and to all properties reflected in the Company’s most recent consolidated financial statements included in the Prospectus, and neither the Company nor any of its subsidiaries has received notice of any claim that has been or may be asserted by anyone adverse to the rights of the Company or any subsidiary with respect to any such properties or assets (or any such lease) or affecting or questioning the rights of the Company or any such subsidiary to the continued ownership, lease, possession or occupancy of such property or assets, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect; (ii) all liens, charges, encumbrances, claims or restrictions on or affecting the properties and assets of the Company or any of its subsidiaries which are required to be disclosed in the Registration Statements or the Prospectus are disclosed therein, and all such liens, charges, encumbrances, claims or restrictions which are not disclosed in the Prospectus could not reasonably be expected, singly or in the aggregate, to have a Material Adverse Effect; (iii) no person or entity, including, without limitation, any tenant under any of the leases pursuant to which the Company or any of its subsidiaries leases (as lessor) any of its properties (whether directly or indirectly through other partnerships, limited liability companies, 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, limited liability companies, joint ventures or otherwise), and the Company knows of no event which, with the passage of time or the giving of notice or both, would constitute such a default under any of such leases, except such defaults as would not, individually or in the aggregate, have a Material Adverse Effect.

(xxi) Insurance. With such exceptions as would not, individually or in the aggregate, have a Material Adverse Effect, the Company and its subsidiaries have title insurance on all real property and improvements described in the Prospectus as being owned or leased under a ground lease, as the case may be, by them and to all real property and improvements reflected in the Company’s most recent consolidated financial statements included in the Prospectus in an amount at least equal to the original cost of acquisition and the Company and its subsidiaries are entitled to all benefits of the insured thereunder, and each such property is insured by extended coverage hazard and casualty insurance in amounts and on such terms as are customarily carried by lessors of

properties similar to those owned by the Company and its subsidiaries (in the markets in which the Company’s and subsidiaries’ respective properties are located), and the Company and its subsidiaries carry comprehensive general liability insurance and such other insurance as is customarily carried by lessors of properties similar to those owned by the Company and its subsidiaries in amounts and on such terms as are customarily carried by lessors of properties similar to those owned by the Company and its subsidiaries (in the markets in which the Company’s and its subsidiaries’ respective properties are located) and the Company or one of its subsidiaries is named as an additional insured on all policies required under the leases for such properties.

(xxii) Environmental Matters. Except as otherwise disclosed in the Prospectus: (i) all real property and improvements owned or leased by the Company or any of its subsidiaries, including, without limitation, the Environment (as defined below) associated with such real property and improvements, is free of any Contaminant (as defined below), except such Contaminants which, individually or in the aggregate, would not have a Material Adverse Effect; (ii) neither the Company, nor any of its subsidiaries has caused or suffered to exist or occur any Release (as defined below) of any Contaminant into the Environment or any other condition that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or could result in any violation of any Environmental Laws (as defined below) or constitute a health, safety or environmental hazard to any person or property except for such violations or hazards that could not reasonably be expected to have a Material Adverse Effect; (iii) neither the Company nor any of its subsidiaries is aware of any notice from any governmental body claiming any violation of any Environmental Laws or requiring or calling attention to the need for any work, repairs, construction, alterations, removal or remedial action or installation on or in connection with such real property or improvements, whether in connection with the presence of asbestos-containing materials in such properties or otherwise, except for such violations, work, repairs, construction, alterations, removal or remedial actions or installations as would not, individually or in the aggregate, have a Material Adverse Effect; (iv) any such work, repairs, construction, alterations, removal or remedial action or installation, if required, would not result in the incurrence of liabilities, which, individually or in the aggregate, would have a Material Adverse Effect; (v) neither the Company nor any of its subsidiaries has caused or suffered to exist or occur any condition on any of the properties or improvements of the Company or any of its subsidiaries that could give rise to the imposition of any Lien (as defined below) under any Environmental Laws, except such Liens which, individually or in the aggregate, would not have a Material Adverse Effect; and (vi) to the Company’s best knowledge, no real property or improvements owned or leased by the Company or any of its subsidiaries is being used or has been used for manufacturing or for any other operations that involve or involved the use, handling, transportation, storage, treatment or disposal of any Contaminant, where such operations require or required permits or are or were otherwise regulated pursuant to the Environmental Laws and where such permits have not been or were not obtained or such regulations are not being or were not complied with, except in all instances where any failure to obtain a permit or comply with any regulation could not reasonably be expected, singly or in the aggregate, to have a Material Adverse Effect. “Contaminant” means any pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos or

asbestos-containing materials, PCBs, lead, pesticides or radioactive materials or any constituent of any such substance or waste, including any such substance identified or regulated under any Environmental Law. “Environmental Laws” means the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq., the Clean Air Act, 42 U.S.C. 7401, et seq., the Clean Water Act, 33 U.S.C. 1251, et seq., the Toxic Substances Control Act, 15 U.S.C. 2601, et seq., the Occupational Safety and Health Act, 29 U.S.C. 651, et seq., and all other federal, state and local laws, ordinances, regulations, rules, orders, decisions, permits, and the like, which are directed at the protection of human health or the Environment. “Lien” means, with respect to any asset, any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset. “Environment” means any surface water, drinking water, ground water, land surface, subsurface strata, river sediment, buildings, structures, and ambient, workplace and indoor air. “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, emanating or disposing of any Contaminant into the Environment, including, without limitation, the abandonment or discard of barrels, containers, tanks or other receptacles containing or previously containing any Contaminant or any release, emission or discharge as those terms are defined or used in any Environmental Law.

(xxiii) Qualification as a Real Estate Investment Trust. The Company was and is organized in conformity with the requirements for qualification and taxation as a “real 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 Statements or otherwise registered by the Company under the 1933 Act, or included in the offering contemplated hereby.

(xxv) Tax Treatment of Certain Entities. Each of R.I.C. Trade Center, Ltd., Empire Business Center, Ltd., and Silverton Business Center, Ltd., each a California limited partnership (the “Sub-Limited Partnerships”), was, from the time of the Consolidation (as defined herein) through and including the time of its merger into the Company, treated as a partnership (rather than as an association taxable as a corporation) for federal income tax purposes and from the time of the Consolidation through and including the time of its merger into the Company no Sub-Limited Partnership was ever treated as a publicly traded partnership taxable as a corporation for federal income tax purposes. The Company’s ownership interests in two properties held through tenancies in common with unrelated third parties (which are the only properties which, since the Consolidation, have been held in tenancies in common with unrelated third parties) have not been, since the Consolidation, and will not be (or, in the case of properties which have been sold, were

not until the time of the sale of such properties), treated as ownership interests in associations taxable as corporations for federal income tax purposes or treated as ownership interests in publicly traded partnerships taxable as corporations for federal income tax purposes. Realty Income Texas Properties, L.P., a Delaware limited partnership, is not and has never been treated as an association taxable as a corporation for federal income tax purposes and is not and has never been treated as a publicly traded partnership taxable as a corporation for federal income tax purposes. Realty Income Texas Properties, Inc., a Delaware corporation, is and has been at all times treated as a “qualified REIT subsidiary” within the meaning of Section 856(i) of the Code and is not required to be qualified as a foreign corporation in the State of Texas. Each of the LLC Subsidiaries has been 100% owned by the Company at all times since their respective formation dates and has not elected to be taxed as a corporation for tax purposes. As used herein, the term “Consolidation” means the merger of 25 limited partnerships and RIC Properties Ltd., a California limited partnership, into the Company on August 15, 1994.

(xxvi) Securities. The Securities have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the purchase price therefor specified in this Agreement, will be validly issued, fully paid and non-assessable; the Securities and the Articles Supplementary conform and will conform to the statements relating thereto contained in the Prospectus and such statements conform and will conform to the rights set forth in the instruments defining the same; and the issuance of the Securities is not subject to preemptive or other similar rights arising by operation of law, under the charter or bylaws of the Company, under any agreement or instrument to which the Company or any of its subsidiaries is a party or otherwise.

(xxvii) Ranking of Securities. The Securities will rank, with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution, and winding up of the Company, senior to the Common Stock and the Class A Preferred Stock and on a parity with the Class B Preferred Stock and the Class C Preferred Stock.

(xxviii) Articles Supplementary. The Articles Supplementary will have been duly filed with, and accepted for record by, the SDAT prior to the Closing Time.

(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 number of Initial Securities set forth in Schedule A opposite the name of such Underwriter, plus any

additional number of Initial 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 200,000 shares of Class D Preferred Stock at the price set forth in Schedule B. The option hereby granted may be exercised through and including the 30^th 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 number of Option Securities then being purchased which the aggregate number of Initial Securities set forth in Schedule A opposite the name of such Underwriter bears to the aggregate number of all of the Initial Securities, subject in each case to such adjustments as the Representatives in their discretion shall make to eliminate any sales or purchases of fractional shares.

(c) Payment. Payment of the purchase price for, and delivery of certificates for, the Initial Securities shall be made at the office of Latham & Watkins LLP, 650 Town Center Drive, 20th Floor, Costa Mesa, California ###-###-####, 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. Citigroup, individually and not as a 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 any 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 any 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 any 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 any Registration Statement (including any filing under Rule 462(b)), any Term Sheet or any amendment, supplement or revision to either the prospectus included in any 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.

(c) Rule 434. If the Company uses Rule 434, it will comply with the requirements of such Rule.

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

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

(f) Continued Compliance with Securities Laws. The Company will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a prospectus is required by the 1933 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to amend any 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 any 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 such 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 earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act.

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

(j) Listing. The Company will use its best efforts to effect the listing of the Securities in the New York Stock Exchange.

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

(l) Restriction on Sale of Securities. During the period beginning on the date of this Agreement through and including the Closing Time, the Company will not, without the prior written consent of Citigroup, directly or indirectly, (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 Class D Preferred Stock, any other shares of Preferred Stock, any securities of the Company substantially similar to the Class D Preferred Stock or any depositary shares or depositary receipts representing or evidencing any of the foregoing 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 Class D Preferred Stock, Preferred Stock or other securities, depositary shares or depositary receipts referred to in clause (i) above, whether any such swap, agreement or transaction described in clause (i) or (ii) above is to be settled by delivery of Class D Preferred Stock, other securities, in cash or otherwise, other than the Securities to be sold hereunder.

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 Statements (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the printing and delivery to the Underwriters of this Agreement, and such other documents as may be required in connection with the offering, purchase, sale, 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, and (x) any fees payable in connection with the rating of the Securities and the fees and expenses incurred in connection with the listing of the Securities on the New York Stock Exchange (the “NYSE”).

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

SECTION 5. Conditions of Underwriters’ Obligations. The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company contained in Section 1 hereof and in certificates of any officer of the Company or any subsidiary of the Company delivered pursuant to the provisions hereof, to the performance by the Company of its covenants and other obligations hereunder, and to the following further conditions:

(a) Effectiveness of Registration Statements. The Registration Statements shall be effective at the time of execution and delivery of this Agreement and any Rule 462(b) Registration Statement shall have become effective not later than 5:30 P.M. on the date hereof, and at Closing Time (and, if any Option Securities are purchased, at the relevant Date of Delivery) no stop order suspending the effectiveness of any Registration Statement or any Rule 462(b) Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Underwriters. The Prospectus shall have been filed with the Commission in accordance with Rule 424(b)

and, if the Company has elected to rely upon Rule 434, a Term Sheet shall have been filed with the Commission in accordance with Rule 434 and Rule 424(b).

(b) Opinions of Counsel for Company. At Closing Time, (i) the Representatives shall have received the favorable opinions, dated as of Closing Time, of Latham & Watkins LLP, counsel for the Company, Michael R. Pfeiffer, Executive Vice President, General Counsel and Secretary of the Company, and Venable LLP, special Maryland counsel to the Company, each in form and substance satisfactory to counsel for the Underwriters, to the effect set forth in Exhibits A, B and C hereto, respectively, and to such further effect as counsel to the Underwriters may reasonably request pursuant to Section 5(j); and (ii) if such special Maryland counsel shall deliver a Separate Opinion (as defined in the last paragraph of Exhibit C hereto), the Representatives shall have received such Separate Opinion, which shall comply with the requirements of the last paragraph of Exhibit C.

(c) Opinion of Counsel for Underwriters. At Closing Time, the Representatives shall have received the favorable opinion, dated as of Closing Time, of Sidley Austin Brown & Wood LLP, counsel for the Underwriters, with respect to this Agreement, the Securities, the Registration Statements and the Prospectus and such other matters as you may reasonably request. In giving such opinion such counsel may rely, as to all matters arising under or governed by the laws of the State of Maryland, upon the opinion of Venable LLP delivered pursuant to Section 5(b) and, as to all matters governed by the laws of other jurisdictions (other than the law of the State of New York and the federal law of the United States) upon the opinions of counsel satisfactory to the Representatives.

(d) Officers’ Certificate. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representatives shall have received a certificate of the Chairman or the President of the Company and of the chief financial or chief accounting officer of the Company, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1 hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied under this Agreement at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of any Registration Statement or any Rule 462(b) Registration Statement has been issued and no proceedings for that purpose have been initiated or, to the best of their knowledge, threatened by the Commission.

(e) Accountant’s Comfort Letter. (i) At the time of the execution of this Agreement, the Representatives shall have received from KPMG LLP a letter, dated such date, in form and substance satisfactory to the Representatives, together with signed or reproduced copies of such letter for each of the Underwriters, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to

underwriters with respect to the financial statements and certain financial information contained in the Registration Statements and the Prospectus; and (ii) at the Closing Time the Representatives shall have received from KPMG LLP a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to clause (i) of this subsection (e) of this Section, except that the specified date referred to therein shall be a date not more than three business days prior to Closing Time and except that the letter delivered at the Closing Time shall also contain statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to financial statements and certain financial information contained in any Quarterly Report on Form 10-Q and any Current Report on Form 8-K filed by the Company with the Commission on or prior to the Closing Time and not covered in the letter delivered pursuant to clause (i) of this subsection (e) of this Section (provided that the letter delivered at the Closing Time need not cover any information in the Form 8-K that is “furnished” rather than “filed” with the Commission).

(f) Approval of Listing. At the Closing Time, the Securities shall have been approved for listing on the NYSE, subject only to official notice of issuance.

(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. (“Moody’s”), “BBB-” by Standard & Poor’s (“S&P”) and “BBB-” by Fitch, Inc. (“Fitch”), and the Company shall have delivered to the Representatives a letter, dated the Closing Time, from each such rating agency, or other evidence satisfactory to the Representatives, confirming that the Securities have such ratings.

(h) Articles Supplementary. At the Closing Time, the Representatives shall have received evidence, in form and substance satisfactory to them, that the Articles Supplementary shall have been duly filed with, and accepted for record by, SDAT.

(i) 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 Latham & Watkins LLP, counsel for the Company, Michael R. Pfeiffer, Executive Vice President, General Counsel and Secretary of the Company, and Venable LLP, special Maryland counsel to the Company, each in form and substance satisfactory to counsel for the Underwriters, 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, and including, if applicable, the Separate Opinion of such Special Maryland Counsel which shall comply with the requirements of the last paragraph of Exhibit C.

(iii) Opinion of Counsel for Underwriters. The favorable opinion of Sidley Austin Brown & 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 LLP, in form and substance satisfactory to the Representatives and dated such Date of Delivery, to the effect that they reaffirm the statements made in the letter furnished pursuant to Section 5(e)(i) hereof, except that the specified date referred to shall be a date not more than three business days prior to such Date of Delivery and except that the letter delivered on such Date of Delivery shall also contain 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 any Quarterly Report on Form 10-Q and any Current Report on Form 8-K filed by the Company with the Commission on or prior to such Date of Delivery and not covered in the letter delivered pursuant to Section 5(e)(i) or (ii) above (provided that the letter delivered on such Date of Delivery need not cover any information in a Form 8-K that is “furnished” rather than “filed” with the Commission).

(v) Approval of Listing. At such Date of Delivery, the Option Securities shall have been approved for listing on the NYSE.

(vi) Rating Requirement. At such Date of Delivery, the Securities shall have been rated at least “Baa3” by Moody’s, at least “BBB-” by S&P and at least “BBB-” by Fitch.

(j) Additional Documents. At the 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) 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 any 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 Citigroup), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use in any Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and provided further that this indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any such amendments or

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

(b) Indemnification of Company, Directors and Officers. Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed any 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 such Registration Statement (or any amendment thereto), including the Rule 434 Information, if applicable, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use in such 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 Citigroup, 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 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls 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 any 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 Initial Securities set forth opposite their respective names in Schedule A hereto and not joint.

SECTION 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement and in certificates of officers of the Company submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or 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 to be purchased on a Date of Delivery which occurs after the Closing Time, the Representatives may terminate the obligations of the several Underwriters to purchase such Option Securities, by notice to the Company, at any time on or prior to such Date of Delivery) (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 Citigroup, impracticable or inadvisable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or limited by the Commission, the New York

Stock Exchange or the Nasdaq National Market, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq National Market has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities Dealers, Inc. or any other governmental authority, or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, 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, any other class or series of Preferred Stock or any of the Company’s debt securities by any nationally recognized securities rating agency, or any such securities rating agency has publicly announced that it has under surveillance or review, with possible negative implications or without indicating the direction of the possible change, its rating of the Securities, any other class or series of Preferred Stock or any of the Company’s debt securities.

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

SECTION 10. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at the Closing Time or a Date of Delivery to purchase the Securities which it or they are obligated to purchase under this Agreement at such time (the “Defaulted Securities”), Citigroup 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, Citigroup shall not have completed such arrangements within such 24-hour period, then:

(a) if the number of Defaulted Securities does not exceed 10% of the total number of Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or

(b) if the number of Defaulted Securities exceeds 10% of the total number of Securities to be purchased on such date, this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligations of the Underwriters to purchase and of the Company to sell the Option Securities to be purchased and sold on such Date of Delivery shall terminate without liability on the part of any non-defaulting Underwriter.

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

In the event of any such default which does not result in a termination of this Agreement 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 Citigroup 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 Statements or Prospectus or in any other documents or arrangements. As used herein, the term “Underwriter” includes any person substituted for an Underwriter under this Section 10.

SECTION 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to them c/o Citigroup Global Markets Inc., 388 Greenwich Street, New York, New York 10013, attention of General Counsel; and notices to the Company shall be directed to it at Realty Income Corporation, 220 West Crest Street, Escondido, California 92025-1725, attention of Legal Department.

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

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

SECTION 14. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

[Signature Page Follows]

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/ Michael R. Pfeiffer
		Michael R. Pfeiffer Executive Vice President, General Counsel and Secretary

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

CITIGROUP GLOBAL MARKETS INC.

MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

WACHOVIA CAPITAL MARKETS, LLC

By: CITIGROUP GLOBAL MARKETS INC.

By:	/s/ Gregory Wright
	Name: Gregory Wright
	Title: Managing Director

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

SCHEDULE A

Name of Underwriter		Number of Initial Securities
Citigroup Global Markets Inc.		815,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated		815,000
Wachovia Capital Markets, LLC		815,000
Credit Suisse First Boston LLC		460,000
A.G. Edwards & Sons, Inc.		280,000
Raymond James & Associates, Inc.		280,000
RBC Dain Rauscher Inc.		280,000
BB&T Capital Markets, a division of Scott & Stringfellow, Inc.		60,000
Crowell, Weeden & Co.		60,000
Ferris, Baker Watts, Incorporated		60,000
Piper Jaffray & Co.		60,000
Wells Fargo Securities, LLC		15,000
Total:		4,000,000

Sch A-1

SCHEDULE B

Price Schedule

1. The initial public offering price per share for the Securities shall be $25.00 (the “Public Offering Price”), plus accrued and unpaid dividends, if any, from May 27, 2004.

2. The purchase price per share for the Securities to be paid by the several Underwriters shall be $24.2125 (being an amount equal to the Public Offering Price set forth above less $0.7875 per share), plus, solely in the case of any Option Securities which are purchased on a Date of Delivery after the Closing Time, an amount equal to accrued and unpaid dividends on such Option Securities to but excluding such Date of Delivery unless such Date of Delivery is after a record date for the Class D Preferred Stock and on or prior to the corresponding dividend payment date, in which case no additional amount will be payable by the Underwriters in respect of accrued and unpaid dividends on such Option Securities.

Sch B-1

Exhibit A

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

1. Based solely on certificates from public officials, the Company is qualified to do business in, and is in good standing under, the laws of the State of California.

2. Each of Realty Income Texas Properties, Inc. and Crest Net Lease, Inc. is a corporation organized under the laws of the State of Delaware. Based solely on certificates from public officials, each of Realty Income Texas Properties, Inc. and Crest Net Lease, Inc. is validly existing as a corporation and is in good standing under the laws of the State of Delaware. Each of Realty Income Texas Properties, Inc. and Crest Net Lease, Inc. has the power and authority as a corporation to own, lease and operate its properties and to conduct its business as described in the Registration Statements and the documents incorporated or deemed to be incorporated by reference therein (the “Incorporated Documents”); Crest Net Lease, Inc. is, based solely on certificates from public officials, qualified to do business in and is in good standing in the State of California; and all of the issued and outstanding shares of capital stock of Realty Income Texas Properties, Inc. and Crest Net Lease Inc. have been duly authorized and validly issued, are fully paid and non-assessable and, to the best of our knowledge and except as disclosed in the Registration Statements and the Incorporated Documents, are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.

3. Realty Income Texas Properties, L.P. (the “Partnership”) is a limited partnership organized under the laws of the State of Delaware. Based solely on certificates from public officials, the Partnership is validly existing as a limited partnership and is in good standing under the laws of the State of Delaware. The Partnership has the power and authority as a limited partnership to own, lease and operate its properties and to conduct its business as described in the Registration Statements and the Incorporated Documents and is, based solely on certificates from public officials, qualified to do business in and is in good standing in the State of Texas. All of the issued and outstanding partnership interests of the Partnership represent valid general or limited partnership interests in the Partnership, as to which the limited partner (but not the general partner, which may be liable for the obligations of the Partnership), as a limited partner, assuming that the limited partner does not participate in the control of the business of the Partnership, has no liability in excess of its obligation to make its contributions to the Partnership under Sections 3.1 and 3.2 of that certain Limited Partnership Agreement of Realty Income Texas Properties, L.P. dated as of December 13, 1995 (the “Partnership Agreement”), its obligation to make other payments provided for in the Partnership Agreement, and its share of the Partnership’s assets and undistributed profits (subject to the obligation of a limited partner to repay funds wrongfully distributed to it), and to the best of our knowledge, the sole general partner interest in the Partnership is owned by the Company and the sole limited partner interest in the Partnership is owned by a wholly-owned corporate subsidiary of the Company, in each case free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.

4. Each of CrestNet 1, LLC (“CrestNet 1”), RI GA 1, LLC (“RIGA1”), RI TN 1, LLC (“RITN1”), RI TN 2, LLC (“RITN2”), RI CS1, LLC (“RICS1”), and RI CS2, LLC (“RICS2”) (collectively, the “LLC Subsidiaries”) is a limited liability company organized under the laws of the State of Delaware. Based solely on certificates from public officials, each of the LLC Subsidiaries is validly existing as a limited liability company and is in good standing under the laws of the State of Delaware. Each of the LLC Subsidiaries has the power and authority as a limited liability company to own, lease and operate its properties and to conduct its business as described in the Registration Statements and the Incorporated Documents; each of CrestNet 1, RITN1 and RITN2 is, based solely on certificates from public officials, qualified to do business in and is in good standing in the State of Tennessee; RICS1 is, based solely on certificates from public officials, qualified to do business in and is in good standing in the State of Louisiana; and to the best of our knowledge, all of the issued and outstanding limited liability company interests of each of the LLC Subsidiaries are owned by the Company directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.

5. The issuance of the Securities is not subject, to the best of our knowledge, to preemptive or other similar rights arising under any agreement or instrument to which the Company or any of its subsidiaries is a party.

6. None of the outstanding shares of Common Stock or preferred stock of the Company was issued, to the best of our knowledge, 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.

7. The Registration Statements and any Rule 462(b) Registration Statement have become effective under the 1933 Act. With your consent, based solely on a telephonic confirmation by a member of the Staff of the Commission on the business day immediately preceding the date of this opinion, no stop order suspending the effectiveness of any Registration Statement or any Rule 462(b) Registration Statement has been issued under the 1933 Act and no proceedings therefor have been initiated by the Commission. To the best of our knowledge, 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) under the 1933 Act.

8. The Registration Statements, any amendments thereto and any Rule 462(b) Registration Statement, as of the date each was declared effective, and the Prospectus and any amendments or supplements thereto, as of their respective issue dates, complied as to form in all material respects with the requirements for registration statements on Form S-3 and related prospectuses under the 1933 Act and the 1933 Act Regulations, it being understood, however, that we express no opinion with respect to Regulation S-T, any Statement of Eligibility on Form T-1 (a “Form T-1”) or the financial statements, schedules or other financial data included in, incorporated by reference in, or omitted from any Registration Statement or any amendment thereto, any Rule 462(b) Registration Statement or the Prospectus or any amendment or supplement thereto.

9. The Incorporated Documents, when they were filed with the Commission, complied as to form in all material respects with the applicable requirements of the 1934 Act and

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the 1934 Act Regulations; it being understood, however, that we express no opinion with respect to Regulation S-T or the financial statements, schedules, and other financial data included in, or omitted from, the Incorporated Documents.

10. The information in the Prospectus dated March 23, 2004 under the caption “United States Federal Income Tax Considerations Related to our REIT Election,” as supplemented by the information in the Prospectus Supplement dated May 6, 2004 under the caption “Supplemental Federal Income Tax Considerations” and the information in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 under “Business-Other Items-Taxation of the Company” and “Business-Other Items-Effect of Distribution Requirements,” and under any other captions that the Representatives reasonably may request, insofar as that information purports to describe or summarize certain provisions of the agreements, statutes or regulations referred to therein, are accurate descriptions or summaries in all material respects.

11. No authorization, approval, consent or order of any court or governmental authority or agency is required under any federal or California state statute, rule or regulation (other than under the 1933 Act and the 1933 Act Regulations, which have been obtained, or as may be required under the securities or blue sky laws of the various states, as to which we express no opinion) in connection with the due authorization, execution or delivery of the Purchase Agreement, or for the offering, issuance or sale of the Securities;

12. The execution, delivery and performance on or prior to the date hereof of the Purchase Agreement and the Articles Supplementary 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 and 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 Credit Agreement, dated as of October 28, 2002, by and among the Company, the banks named therein, Bank of America, N.A., as a co-Syndication Agent, Wachovia Bank, National Association, as a co-Syndication Agent, The Bank of New York (“BONY”), as Documentation Agent, and Wells Fargo Bank, National Association, as Administrative Agent, as amended and supplemented by the First Amendment to Credit Agreement dated July 16, 2003, the Accession Agreement dated October 16, 2003 and the Accession Agreement dated March 18, 2004 (as so amended and supplemented, the “Acquisition Credit Agreement”), the indenture dated as of May 6, 1997 between the Company and BONY, as trustee, as amended (the “1997 Indenture”), the indenture dated as of October 28, 1998 between the Company and BONY, as trustee (the “1998 Indenture”), or any securities outstanding under the 1997 Indenture or the 1998 Indenture, nor to the best of our knowledge, any applicable provision of any federal or State of California law, statute, administrative regulation or administrative or court decree applicable to the Company.

13. The Company is not, and after giving effect to the sale of the Securities in accordance with the Purchase Agreement and the application of the net proceeds therefrom as described in the Prospectus under the caption “Use of Proceeds,” will not be an “investment company” within the meaning of the 1940 Act, as amended.

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14. 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 Internal Revenue Code of 1986, as amended (the “Code”), and its proposed method of operation will enable the Company to continue to meet the requirements for qualification and taxation as a real estate investment trust under the Code.

In addition, Latham & Watkins LLP will provide a letter addressed to the Underwriters, dated as of the Closing Time and each Date of Delivery, if any, and in form and substance satisfactory to counsel for the Underwriters, to the effect that no facts have come to their attention that have caused them to believe that any Registration Statement or any amendment thereto or any Rule 462(b) Registration Statement, in each case together with the Incorporated Documents, at the time it was declared effective or as of the time (if subsequent to the time of such effectiveness) that the Company’s most recent Annual Report on Form 10-K was filed with the Commission, 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, in each case together with the Incorporated Documents, as of the date of the Base Prospectus, as of the date of the Prospectus Supplement dated May 6, 2004, as of the date of any such amendment or supplement or as of the date of such opinion, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; it being understood that such counsel shall express no belief with respect to (A) the financial statements, schedules or other financial data included or incorporated by reference in, or omitted from, the Registration Statements or any amendment thereto, any Rule 462(b) Registration Statements, the Prospectus or any amendment or supplement thereto or the Incorporated Documents or (B) any Form T-1.

In rendering such opinions, 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 Articles Supplementary, such counsel has assumed that the Articles Supplementary are governed by the laws of the State of California.

The matters set forth in paragraph 10 hereof (with respect to the information in the Prospectus under the captions “United States Federal Income Tax Considerations Related to our REIT Election” and “Supplemental Federal Income Tax Considerations”) and paragraph 14 above (collectively, the “Tax Opinions”) 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 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 rendering the Tax Opinions, Latham & Watkins LLP may assume the accuracy of an opinion of Venable LLP, special Maryland counsel to the Company, with respect to the enforceability of the stock ownership limits sets forth in the Company’s charter, so long as such opinion of special Maryland counsel (i) is dated the same date as such opinion of Latham & Watkins LLP, (ii) is addressed to the Representatives and the

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Underwriters or contains a statement to the effect that the Representatives and the Underwriters may rely upon such opinion as if it were addressed to them and (iii) is otherwise in form and substance satisfactory to counsel for the Underwriters, and a copy of such opinion of special Maryland counsel is delivered to the Representatives together with such opinion of Latham & Watkins LLP. 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 Statements 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 Statements, 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 the various qualification tests imposed under the Code, including through actual annual operating results, asset diversification, distribution levels and diversity of stock ownership, 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.

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Exhibit B

FORM OF OPINION OF MICHAEL R. PFEIFFER
TO BE DELIVERED PURSUANT TO SECTION 5(b)

1. 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.

2. Realty Income Texas Properties, L.P. is not required to qualify as a foreign partnership to transact business in any jurisdiction other than the State of Texas and is not required to be in good standing in any jurisdiction other than the States of Delaware and Texas; Realty Income Texas Properties, Inc. is not required to qualify as a foreign corporation to transact business in any jurisdiction and is not required to be in good standing in any jurisdiction other than the State of Delaware; Crest Net Lease, Inc. 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 to so qualify or be in good standing would not result in a Material Adverse Effect; each of CrestNet 1, RIGA1, RITN1, RITN2, RICS1 and RICS2 is duly qualified as a foreign limited liability company 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 to so qualify or be in good standing would not result in a Material Adverse Effect; and none of the LLC Subsidiaries is required to be in good standing in any jurisdiction other than the State of Delaware.

3. The information in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 under “Business-Other Items-Environmental Liabilities” and “Legal Proceedings,” 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.

4. 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 Securities or the Articles Supplementary.

5. 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.

6. 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

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described in the Registration Statements 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.

7. To the best of my knowledge and information, neither the Company nor any of its subsidiaries is in violation of its charter or bylaws, its partnership agreement or its limited liability company agreement (or other similar 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 any Registration Statement or the Prospectus or filed or incorporated by reference as an exhibit to any Registration Statement.

8. The execution, delivery and performance of the Purchase Agreement and the Articles Supplementary 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 and the Articles Supplementary 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, limited liability company agreement (or other similar 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). Such opinion shall state that, insofar as it concerns the Articles Supplementary, such counsel has assumed that the Articles Supplementary are governed by the laws of the State of California.

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Exhibit C

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

1. The Company has been duly incorporated and is validly existing under and by virtue of the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of Maryland (the “SDAT”). The Company has the corporate power to own, lease and operate its current properties and to conduct its business as described in its most recent Annual Report on Form 10-K under the caption “Item 1.-Business-The Company,” filed with the Commission and to enter into and perform its obligations under the Purchase Agreement and the Articles Supplementary.

2. The authorized, issued and outstanding stock of the Company is as set forth in the line items “Preferred Stock and paid in capital,” “Class A Junior Participating Preferred Stock,” “9.375% Class B Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share),” “9.50% Class C Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share),” and “Common Stock and paid in capital” under the caption “Capitalization” in the Prospectus (except for subsequent issuances pursuant to the Purchase Agreement and except for subsequent issuances or forfeitures of Common Stock pursuant to employee benefit plans or the exercise of options referred to in the Prospectus or the documents incorporated or deemed to be incorporated by reference therein and, if applicable, except for the redemption of all of the outstanding shares of Class B Preferred Stock after the date of this Agreement as contemplated by the Prospectus). The shares of the Company’s issued and outstanding Common Stock and Preferred Stock, par value $1.00 per share (collectively, the “Outstanding Shares”), have been duly authorized and validly issued and are fully paid and non-assessable and none of the Outstanding Shares was issued in violation of preemptive rights arising under the Maryland General Corporation Law (the “MGCL”) or the charter or bylaws of the Company.

3. The issuance and sale of the Securities to the Underwriters pursuant to the Purchase Agreement have been duly authorized by all necessary corporate action on the part of the Company and, when issued and delivered by the Company pursuant to the Purchase Agreement against payment of the purchase price therefor specified in the Purchase Agreement, the Securities will be validly issued, fully paid and non-assessable.

4. The preferences, rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption of the Securities are as set forth in the Articles Supplementary and none of such provisions is prohibited by the laws of the State of Maryland or conflicts with the Company’s charter or bylaws.

5. The issuance of the Securities is not subject to preemptive rights arising under the MGCL or the charter or bylaws of the Company.

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6. The execution and delivery of the Purchase Agreement have been duly authorized by the Company. The Purchase Agreement has been duly executed and, so far as is known to us, delivered by the Company.

7. The form of certificate used to represent the Securities complies in all material respects with the applicable requirements of the MGCL and the charter and bylaws of the Company.

8. We have reviewed the information in the Prospectus under the captions “Prospectus Supplement Summary-The Offering,” “Description of Class D Preferred Stock,” “Description of Common Stock,” “General Description of Preferred Stock,” “Restrictions on Ownership and Transfers of Stock” and “Stockholder Rights Plan” and the information in the Company’s Forms 8-A filed on June 26, 1998, May 25, 1999 and July 30, 1999, and, in each case to the extent that such information constitutes summaries of matters of Maryland law or summaries of certain provisions of the Company’s charter (including, without limitation, the Articles Supplementary and the articles supplementary relating to the Class B Preferred Stock and the Class C Preferred Stock) or bylaws, the Rights Agreement, the Securities, or other instruments or agreements governed by Maryland law, such information is correct in all material respects.

9. 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 or the Articles Supplementary or for the offering, issuance or sale of the Securities, except for the filing of the Articles Supplementary with, and acceptance thereof for record by, the SDAT (which filing has been made with and accepted for record by the SDAT in accordance with the MGCL).

10. The execution, delivery and performance of the Purchase Agreement 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 the execution and filing of the Articles Supplementary by the Company do not result in any violation of the provisions of the charter or bylaws of the Company or, so far as is known to us, any applicable provision of any Maryland law, statute, administrative regulation or administrative or court decree applicable to the Company.

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

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Agreement), relies upon a separate opinion (the “Separate Opinion”) of such special Maryland counsel, such Separate Opinion of special Maryland counsel shall also be addressed to the Representatives and the Underwriters or shall contain a statement to the effect the Representatives and the Underwriters may rely upon such opinion as if it were addressed to them and shall also comply with the other applicable requirements set forth in the last paragraph of Exhibit A to the Purchase Agreement.

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