Document:

China Information Technology, Inc.: Exhibit 4.1 - Filed by newsfilecorp.com

Exhibit 4.1

EQUITY TRANSFER AGREEMENT 

THIS EQUITY TRANSFER AGREEMENT (the “Agreement”)
is entered into by and among the following parties on September 16, 2014: 

	(1) 	
      IASPEC GEO INFORMATION TECHNOLOGY CO., LTD, a
      company organized in the People’s Republic of China, whose address is 2F,
      Block R2A, Gaoxin 7th Road, Nanshan District, Shenzhen,
      Guangdong 518000 (“Transferee”);

	 	 
	(2) 	
      CHINA INFORMATION TECHNOLOGY, INC., a company
      incorporated in the British Virgin Islands, whose address is 21st Floor,
      Everbright Bank Building, Zhuzilin, Futian District, Shenzhen, Guangdong
      518040 (“CNIT”);

	 	 
	(3) 	
      SHENZHEN YUNCHAO SOFTWARE INTERNET CO. LTD., a
      company organized in the People’s Republic of China, whose address is
      1702, Zhongyang Xigu Bldg., Binhe Ave., Futian District, Shenzhen,
      Guangdong 518000 (“Transferor”).

The Transferor, the Transferee and CNIT above shall be
individually referred to as a “Party” and collectively referred to as the
“Parties.” 

RECITALS 

WHEREAS, CNIT is a company incorporated in the British
Virgin Islands with its ordinary shares, par value $0.01 per share (“Ordinary
Shares”) being listed on the NASDAQ Global Select Market; 

WHEREAS, Information Security Technology (China) Co.,
Ltd. is a wholly foreign owned enterprise organized and existing under the laws
of the People’s Republic of China (“IST”), and whose all equity ownership
is indirectly owned by CNIT; 

WHEREAS, pursuant to certain contractual arrangements
between IST and the Transferee, CNIT, through IST, maintains substantial control
over the daily operations and financial affairs of the Transferee; 

WHEREAS, Shenzhen Biznest Internet Software Co. Ltd. is
a limited liability company organized and existing under the laws of the
People’s Republic of China, and all of its equity ownership is owned by the
Transferor (“Target”); and 

WHEREAS, Transferee desires to purchase from Transferor
and Transferor agrees to transfer to Transferee 100% of its equity ownership of
Target. Upon completion of the transactions contemplated by this Agreement,
Target will be wholly owned by Transferee. 

NOW, THEREFORE, in consideration of the covenants,
promises and representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows: 

ARTICLE I     DEFINITIONS 

1.1     Unless otherwise defined in this Agreement, the following
terms shall have the meanings indicated as follow: 

“Business Day” means any day except Saturday, Sunday and
any day which is a federal legal holiday or a day on which banking institutions
in the State of New York or Shenzhen, China are authorized or required by law or
other governmental action to close. 

“Closing Date” means the date on which the Parties have
completed the modification registration of Target with the competent
administration for industry and commerce to reflect the transactions
contemplated by this Agreement. 

“Governmental Authority” means any nation or government
or any federation, province or state or any other political subdivision thereof;
any entity, authority or body exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including
any government authority, agency, department, board, commission or
instrumentality of the People’s Republic of China or any other country, or any
political subdivision thereof, any court, tribunal or arbitrator, and any
self-regulatory organization. 

“Governmental Order” means any applicable order, ruling,
decision, verdict, decree, writ, subpoena, mandate, precept, command, directive,
consent, approval, award, judgment, injunction or other similar determination or
finding by, before or under the supervision of any Governmental Authority. 

“Laws” means any and all provisions of any constitution,
treaty, statute, law, regulation, ordinance, code, rule, rule of common law,
governmental approval, concession, grant, franchise, license, agreement,
directive, requirement, or other governmental restriction or any similar form of
decision of, or determination by, or any interpretation or administration of any
of the foregoing by, any Governmental Authority, in each case as amended, and
any and all Governmental Order. 

“Lien” means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset, and any conditional sale or voting agreement or proxy, including any
agreement to give any of the foregoing. 

“RMB” means the legal currency of the People’s Republic
of China. 

ARTICLE II     EQUITY TRANSFER 

2.1     Equity Transfer. Subject to the terms and conditions
set forth in this Agreement, Transferor will sell, transfer and deliver all of
the equity ownership of Target to Transferee. After such transfer, Transferee
will own 100% equity interests in Target, free and clear of any Lien, in
exchange for the Transaction Consideration (as defined below). 

2.2     Target Books and Records. On or prior to the Closing
Date, Target shall deliver all corporate official seals and other books and
records of Target to Transferee, which delivery shall be confirmed by both
Target and Transferee in writing. Such confirmation document shall constitute an
exhibit to this Agreement after it is signed by a duly authorized representative
of each Party and its respective corporate seal has been fixed to such document.

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2.3     Profit and Loss. Any profit and loss earned or
incurred prior to the Closing Date shall be retained by Transferor. 

ARTICLE III     TRANSACTION CONSIDERATION
AND PAYMENT 

3.1     Transaction Consideration. The “Transaction
Consideration” shall be RMB 92,128,000 (approximately $15,000,000). The
Transferee shall pay the Transaction Consideration to Transferor as follows:

(a)     Subject to Section 3.2 hereof, certain amount of
unregistered Ordinary Shares of CNIT with a value equal to RMB 46,064,000
(approximately $7,500,000). (“CNIT Shares”); and 

(b)     RMB 46,064,000 (approximately $7,500,000) as immediately
available funds (“Cash Consideration”). 

3.2     Issuance of CNIT Shares. 

(a)     CNIT shall issue and deliver 1,543,455 CNIT Shares to
Transferor or its designees within 180 days following the date hereof,
calculated as follows: 

Total Share Value/20 Day Average Price, where 

“Total Share Value” means RMB 46,064,000 (approximately
$7,500,000), with a value equal to 50% equity interest in Target; and 

“20 Day Average Price” means $4.859, representing the
volume-weighted average closing price of Ordinary Shares traded on the NASDAQ
Global Select Market for twenty consecutive trading days prior to the date
hereof. 

3.3     Cash Consideration. Transferee agrees to pay Cash
Consideration by wire transfer to the account designated in writing by
Transferor within 180 days following the date hereof. 

ARTICLE IV     REPRESENTATIONS AND
WARRANTIES 

4.1     Representations and Warranties of Transferor.
Transferor makes the following representations and warranties as of the date
hereof and as of the Closing Date to Transferee and CNIT: 

(a)     Corporate Existence and Power; Authorization.
Transferor is a company duly organized, validly existing and in good standing
under the laws of the People’s Republic of China. The execution, delivery and
performance by Transferor of this Agreement and the consummation by Transferor
of the transactions contemplated by this Agreement within the corporate powers
of Transferor and have been duly authorized by all necessary corporate action on
the part of Transferor. This Agreement has been duly executed and delivered by
Transferor and constitutes a valid and legally binding obligation of Transferor,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or
by other equitable principles of general application. 

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(b)     Ownership of Target. All of the equity interests in
Target are legally owned by Transferor, free and clear of all Liens. 

(c)     Disclosures. Transferor has provided Transferee and
CNIT with all material information regarding Transferor and Target. All
disclosures provided to Transferee and CNIT regarding Transferor and Target, or
their respective businesses and the transactions contemplated hereunder, are
true and correct in all material aspects and do not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. 

(d)     Compliance. Transferor agrees to comply with and
fulfil any and all of its obligations and covenants hereunder. 

(e)     Unregistered Shares. Transferor understands that (i)
the CNIT Shares have not been and will not be registered under the US Securities
Act of 1933 (“Securities Act”) or any state securities laws, by reason of
their issuance by CNIT in a transaction exempt from the registration
requirements thereof and (ii) the CNIT Shares may not be sold unless such
disposition is registered under the Securities Act and applicable state
securities laws or is exempt from registration thereunder. 

(f)     Investment Intent. Transferor is acquiring the CNIT
Shares issuable to it under this Agreement as principal for its own account and
not with a view to or for distributing or reselling such securities or any part
thereof, without prejudice, however, to Transferor’s right at all times to sell
or otherwise dispose of all or any part of such securities in compliance with
applicable US federal and state securities laws. Transferor is acquiring the
securities hereunder in the ordinary course of its business. Transferor does not
have any agreement or understanding, directly or indirectly, with any person to
distribute any of the CNIT Shares. 

(g)     Investor Status. Transferor is not a registered
broker-dealer under Section 15 of the US Securities Exchange Act of 1944.
Transferor has such experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in the CNIT Shares.
Transferor acknowledges that an investment in the CNIT Shares is speculative and
involves a high degree of risk. 

(h)     General Solicitation. Transferor is not purchasing
the CNIT Shares as a result of any advertisement, article, notice, meeting, or
other communication regarding the CNIT Shares published in any newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar or any other general solicitation or general advertisement. 

(i)     Access to Information. Transferor acknowledges that
it has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of CNIT concerning
the terms and conditions of the offering of the CNIT Shares and the merits and
risks of investing in the CNIT Shares; (ii) access to information about CNIT and
its subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that CNIT possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to the investment. 

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(j)     Reliance on Exemptions. Transferor understands that
the CNIT Shares are being offered and sold to it in reliance upon specific
exemptions from the registration requirements of US federal and state securities
laws and that CNIT is relying upon the truth and accuracy of, and Transferor’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Transferor set forth herein in order to determine the
availability of such exemptions and the eligibility of Transferor to acquire the
CNIT Shares. All of the information which Transferor has provided to CNIT is
true, correct and complete as of the date hereof, and if there should be any
change in such information prior to the Closing Date, Transferor will
immediately provide CNIT with such information. 

(k)     Regulation S. Transferor (i) acknowledges that the
certificate(s) representing or evidencing the CNIT Shares contain a customary
restrictive legend restricting the offer, sale or transfer of any CNIT Shares
except in accordance with the provisions of Regulation S under the Securities
Act (“Regulation S”), pursuant to registration under the Securities Act,
or pursuant to an available exemption from registration, (ii) agrees that all
offers and sales by Transferor of the CNIT Shares shall be made pursuant to an
effective registration statement under the Securities Act or pursuant to an
exemption from, or a transaction not subject to the registration requirements
of, the Securities Act, (iii) represents that the offer to purchase the CNIT
Shares was made to Transferor outside of the United States, and Transferor was,
at the time of the offer and will be, at the time of the sale and is now,
outside the United States, (iv) has not engaged in or directed any unsolicited
offers to purchase the CNIT Shares in the United States, (v) is neither a U.S.
Person nor a Distributor (as such terms are defined in Rule 902(k) and 902(d),
respectively, of Regulation S), (vi) has purchased the CNIT Shares for its own
account and not for the account or benefit of any U.S. Person (as such term is
defined in Rule 902(k) of Regulation S), (vii) is the sole beneficial owner of
the CNIT Shares and has not pre-arranged any sale with an investor in the United
States, and (ix) is familiar with and understands the terms and conditions and
requirements contained in Regulation S, specifically, without limitation,
Transferor understands that the statutory basis for the exemption claimed for
the sale of the CNIT Shares would not be present if the sale, although in
technical compliance with Regulation S, is part of a plan or scheme to evade the
registration provisions of the Securities Act. 

4.2     Representations and Warranties of Transferee and
CNIT. Each of Transferee and CNIT makes the following representations and
warranties as of the date hereof and as of the Closing Date to Transferor: 

(a)     Corporate Existence and Power; Authorization. Each
of Transferee and CNIT is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The execution, delivery and performance by each of Transferee and
CNIT of this Agreement and the consummation by each of Transferee and CINT of
the transactions contemplated by this Agreement are within the corporate powers
of each of Transferee and CNIT and have been duly authorized by all necessary
corporate action on the part of each of Transferee and CNIT. This Agreement has
been duly executed and delivered by each of Transferee and CNIT and constitutes
a valid and legally binding obligation of each of Transferee and CNIT,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application. 

5 

(b)     Compliance. Each of Transferee and CNIT agrees to
comply with and fulfil any and all of its obligations and covenants hereunder.

Each Party acknowledges and agrees that any Party whose
representations and warranties contain any untrue statement of a material fact
(with or without fault) or omit to state a material fact that causes damages to
another Party shall be responsible to provide an adequate remedy to the
non-breaching Party. 

ARTICLE V     COVENANTS OF PARTIES
PENDING THE CLOSING 

5.1     Covenants of Transferor. From the date hereof
through the Closing Date, 

(a)     Transferor will not, and will cause Target not to, do or
cause to be done any of activities that may have adverse effect on the interests
and value of assets of Transferee and CNIT; 

(b)     Transferor will cause Target to conduct its business in the
ordinary course and use commercially reasonable efforts to preserve
substantially intact its business organization, keep available the services of
its present officers and employees, and preserve in all material respects its
present business relationships and goodwill; 

(c)     Transferor will, and will cause Target to, provide each of
the employees of Target who, as of the date hereof, remains in the active
employment of the Target (the “Target Employees”) with a base salary or
base wages, as applicable, incentive compensation opportunities, employee
benefits (including retirement, severance and welfare benefits) and benefit
plans and programs that are no less favorable in the aggregate than those
provided to such Target Employee by Target immediately prior to the date hereof.

Notwithstanding anything to the contrary herein, nothing
contained in this Section 5.1(c), whether express or implied, will be construed
to require the continuation of the employment of any particular Target Employee
after the Closing Date. 

(d)     Transferor will not, and will cause Target not to transfer,
gift or otherwise dispose of any business, property or assets of Target to a
third party; and 

(e)     Transferor will, and will cause Target to, obtain prior
written consent of CNIT and Transferee before either Transferor or Target takes
any material corporate action related to the business, property or assets of
Target. 

5.2     Covenants of Transferee and CNIT. From the date
hereof through the Closing Date, 

(a)     each of Transferee and CNIT will conduct its respective
business in the ordinary course and use commercially reasonable efforts to
preserve substantially intact its business organization, maintain its books and
records in good order, keep available the services of its present officers and
employees, and preserve in all material respects its present business
relationships and goodwill; 

(b)     each of Transferee and CNIT will comply with laws and
regulations relevant to its assets, properties or business; and 

6 

(c)     each of Transferee and CNIT will promptly notify Transferor
of the occurrence of any fact or circumstance which constitutes or results, or
might reasonably be expected to constitute or result, in a material adverse
effect on the transactions contemplated by this Agreement. 

5.3     Covenants of Transferee and Transferor. 

Within ten Business Days following the date hereof, Transferee
and Transferor shall file the modification registration of Target with the
competent administration for industry and commerce. 

5.4     Confidentiality. Each of the Parties agrees to keep
confidential all material non-public information provided to it in connection
with this Agreement and the transactions contemplated hereunder by the other
Party that is designated by the provider thereof as confidential, except to the
extent that such information can be shown to have been (a) in the public domain
through no fault of such Party, or (b) later lawfully acquired by the Party to
which it was furnished from other sources, which source is not a representative
of the other Party. Subject to the immediately preceding sentence, none of the
Parties nor any of their respective affiliates, directors, officers, employees
or agents will disclose the terms of the transactions contemplated hereunder at
any time, currently, or on or after the Closing Date, regardless of whether the
closing of the transactions contemplated hereunder takes place, unless compelled
to disclose by judicial or administrative process or by other requirements of
law or by the rules and regulations of, or pursuant to any agreement of a stock
exchange or trading system. The receiving Party may use the confidential
information only for the transactions contemplated hereunder. If necessary, each
Party may disclose the information obtained from other Parties to its employees,
agents, attorneys, accountants and professional advisors, in which instance such
persons and any employees or agents of such party will be advised of the
confidential nature of the terms of the transaction and will themselves be
required by such party to keep such information confidential. In the case that
the transactions contemplated hereunder are not consummated by the Outside Date
(as defined below), upon the requests of the disclosing Party, the receiving
Party shall return all originals, copies, reproductions and summaries of such
confidential information. 

ARTICLE VI     CONDITIONS 

6.1     Conditions to the Obligations of the Parties. The
obligations of all of the Parties to consummate the transactions contemplated by
this Agreement are subject to the satisfaction of all the following conditions,
unless otherwise waived by only with the written consent of the Party against
whom such waiver is sought: 

(a)     This Agreement and the transactions contemplated by this
Agreement have been approved by the Board of Directors of each of Transferor,
Target, Transferee and CNIT. 

(b)     If required by applicable Law to consummate the
transactions contemplated hereunder, the shareholders’ approval from each of the
Parties shall have been obtained. 

(c)     CNIT has taken all necessary measures to ensure that the
issuance of CNIT Shares in compliance with applicable rules and regulations
of US Securities and Exchange Commission and NASDAQ Stock Market. 

7 

(d)     The modification registration of Target with the competent
administration for industry and commerce has been accepted and completed. 

6.2     Further Action. After the date of this Agreement,
each of the Parties will cooperate with the others and use all commercially
reasonable efforts to take or cause to be taken all actions, and do or cause to
be done all things, necessary, proper or advisable under this Agreement to
satisfy the conditions set forth under Section 6.1. None of the Parties shall
take or cause to be taken any action to impede or prevent the satisfaction of
such conditions. 

ARTICLE VII     FORCE MAJEURE 

7.1     Force Majeure. If any Party is rendered unable,
wholly or in part by Force Majeure, to carry out its obligations under this
Agreement, such Party shall give to the other Party, prompt written notice of
the Force Majeure. Within 15 days after the occurrence of the Force Majeure
event, the affected Party shall provide detailed information of the Force
Majeure event with supporting documents issued by a notarization institute
located at the area where the Force Majeure event occurred. Parties shall then
discuss on whether to amend or terminate this Agreement. 

7.2     No Liability. Neither Party to this Agreement shall
be liable to the other Party for any delay in performing or failure to perform
any of its obligations due to events of Force Majeure. 

ARTICLE VIII     BREACH OF CONTRACT

8.1     Breach of Contract. Subject to Article 7, if any
Party breaches any of its representations, warranties or covenants under this
Agreement, or fails to perform any of its obligations under this Agreement
timely and appropriately, such breach or failure shall constitute a breach under
this Agreement and the breaching Party shall be liable for any damages caused by
such breach in accordance with applicable laws. 

8.2     Liabilities for Breach of Contract. The Party that
does not breach this Agreement shall have the right to require the breaching
Party to rectify or take remedial actions promptly after such breach, and if the
breaching Party fails to rectify its breaching activities within the agreed
period, the non-breaching Party has the right to require the breaching party to
compensate all the losses caused to the non-breaching Party, including but not
limited to, accounting expenses, financial advisor fees and legal fees in
connection with the transactions contemplated by this Agreement. 

ARTICLE IX     GOVERNING LAW AND
SETTLEMENT OF DISPUTES 

9.1     Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the laws of the
People’s Republic of China. 

9.2     Dispute Settlement. Any dispute arising out of or
relating to this Agreement shall be settled by friendly negotiation and discussion. If no
agreement is reached through friendly negotiation and discussion, the Parties
agree to irrevocably submit such dispute to Shenzhen Court of International
Arbitration for arbitration in accordance with its rules then in effect. The
award of the arbitral tribunal shall be final and binding upon the parties
thereto. 

8 

9.3     Continuous Performance. During the course of the
arbitral tribunal’s adjudication of the dispute, this Agreement shall continue
to be performed except with respect to the part in dispute and under
adjudication. 

ARTICLE X     MISCELLANEOUS 

10.1     Amendment, Supplement and Termination. This
Agreement may not be amended, altered or modified except by a subsequent written
document signed by all Parties. Any supplement to this Agreement shall be made
by the Parties in writing. The supplements duly executed by each Party shall be
deemed as an integral part of this Agreement. In case of any inconsistency or
conflict between this Agreement and the supplement, the supplement shall
prevail. This Agreement may be terminated prior to the Closing Date by written
agreement of the Parties. If required, such amendment or termination shall be
submitted to relevant government authorities for approval. 

10.2     Outside Closing Date. In the event that the closing
of the transactions contemplated hereunder has not occurred by a date which is
365 calendar days after the date hereof (“Outside Date”), this Agreement
shall be terminated automatically. 

10.3     Expenses. Except as otherwise expressly set forth
herein, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereunder, including but not limited to, financial
advisor fees, legal fees and taxes, will be paid by the party incurring such
cost or expense. 

10.4     Notice. Any notice required or permitted pursuant
to this Agreement shall be given in writing and will be deemed given: (a) if
delivered personally on the date of delivery; (b) if by facsimile, on the date
that transmission is confirmed electronically; (c) if by mail, five Business
Days following the mailing date. 

10.5     Further Assurance. Each Party will execute and
deliver such documents and take such action, as may reasonably be considered
within the scope of such Party’s obligations hereunder, necessary to effectuate
the transactions contemplated by this Agreement. 

10.6     Languages and Copies. This Agreement is written in
both Chinese and English with the same legal effect, and in the event of any
discrepancies between them, the Chinese version shall prevail. This Agreement is
executed in five copies; each Party holds one copy and the remaining copies
shall be filed with relevant government authorities. Each copy has the same
legal effect. 

10.7     No Waiver. No failure or delay on the part of any
Party in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. 

10.8     Severability. A determination by a court or other
legal authority that any
provision that is not of the essence of this Agreement is legally invalid will not affect the validity or enforceability of any other provision hereof. The Parties will cooperate in good faith to substitute (or cause such court or other legal
authority to substitute) for any provision so held to be invalid a valid provision, as alike in substance to such invalid provision as is lawful. 

9 

10.9     Entire Agreement.  This Agreement together with all schedules and exhibits hereto, constitute the entire agreement among the Parties and supersedes all prior agreements and understandings (oral or written) with respect to the subject
matter hereof, and no Party shall be liable or bound to any other Party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein. 

[Signature Page Follows]

 

10 

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 

	 	TRANSFEREE: 
	 	   
	 	iASPEC Geo Information Technology Co.,
      Ltd. 
	 	   
	 	By: /s/ Jianhuai Lin 
	 	Name: Jianghuai Lin 
	 	Title: President 
	 	   
	 	    
	 	TRANSFEROR: 
	   	   
	 	Shenzhen Yunchao Software Internet Co.
      Ltd. 
	 	   
	 	By: /s/ Dongwei Gao 
	 	Name: Dongwei Gao 
	 	Title: Executive Director 
	 	    
	 	   
	 	CNIT 
	 	   
	 	China Information Technology, Inc.

	 	   
	 	By: /s/ Jianghuai Lin 
	 	Name: Jianghuai Lin 
	 	Title: Chief Executive OfficerExhibit 4.2

 

	
PRINCIPAL AMOUNT
    
	
 
    	
$
    

 

REGISTERED NO.: R-

 

CUSIP NO.: 756109AR5

ISIN NO.: US756109AR55

 

REALTY INCOME CORPORATION

4.125% NOTES DUE 2026

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING SET FORTH IN THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND, UNLESS AND UNTIL IT IS EXCHANGED FOR SECURITIES IN DEFINITIVE FORM AS AFORESAID, MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ITS NOMINEE TO A SUCCESSOR DEPOSITARY OR ITS NOMINEE.

 

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (“DTC”), 55 WATER STREET, NEW YORK, NEW YORK TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SUCH SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

Realty Income Corporation, a Maryland corporation (the “Company,” which term shall include any successor under the Indenture hereinafter referred to), for value received, hereby promises to pay to                    , or registered assigns, the principal sum of                                                       Dollars on October 15, 2026, and to pay interest thereon from and including September 23, 2014, or from the most recent date to which interest has been paid or duly provided for, semi-annually in arrears on April 15 and October 15 of each year (the “Interest Payment Dates”), commencing April 15, 2015, at the rate of 4.125% per annum, until the entire principal amount hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (as defined below) (or one or more Predecessor Securities) is registered in the Security Register applicable to the Notes at the close of business on April 1 or October 1 (the “Regular Record Dates”), as the case may be, immediately preceding the applicable Interest Payment Date regardless of whether the Regular Record Date is a Business Day. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date, and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If any principal of or premium, if any, or interest on any of the Notes is not paid when due, then such overdue principal and, to the extent permitted by law, such overdue premium or interest, as the case may be, shall bear interest, until paid or until such payment is duly provided for, at the rate of 4.125% per annum.

 

Payments of principal, premium, if any, and interest in respect of this Note will be made by the Company in Dollars. If this Note is a Global Security, all payments of principal, premium, if any, and interest in respect of this Note will be made by wire transfer of immediately available funds to an account maintained by the payee located in the United States. If this Note is not a Global Security (a “Certificated Note”), payments of interest

 

 

on this Note may, at the Company’s option, be made by mailing a check to the address of the Person entitled thereto as such address appears in the Security Register for the Notes or by wire transfer to an account maintained by the payee located inside the United States, all on the terms set forth in the Indenture; provided, however, that a Holder of $5 million or more in aggregate principal amount of Certificated Notes will be entitled to receive payments of interest due on any Interest Payment Date by wire transfer of immediately available funds to an account maintained by such Holder in the United States so long as such Holder has given appropriate wire transfer instructions to the Trustee or a Paying Agent for the Notes at least 15 calendar days prior to the applicable Interest Payment Date. Any such wire transfer instruction will remain in effect until revoked by such Holder or until such Person ceases to be a Holder of $5 million or more in aggregate principal amount of Certificated Notes.

 

Payments of principal of and premium, if any, and interest on Certificated Notes that are due and payable on the Final Maturity Date (as defined below), any Redemption Date or any other date on which principal of such Notes is due and payable will be made by wire transfer of immediately available funds to accounts maintained by the Holders thereof in the United States, so long as such Holders have given appropriate wire transfer instructions to the Trustee or a Paying Agent for the Notes, against surrender of such Notes to the Trustee or a Paying Agent for the Notes; provided that installments of interest on Certificated Notes that are due and payable on any Interest Payment Date falling on or prior to such Final Maturity Date, Redemption Date or other date on which principal of such Notes is payable will be paid in the manner described in the preceding paragraph to the Persons who were the Holders of such Notes (or one or more Predecessor Securities) registered as such at the close of business on the relevant Regular Record Dates according to their terms and the provisions of the Indenture.

 

This Note is one of a duly authorized issue of Securities of the Company (herein called the “Notes”), issued as a series of Securities under an indenture dated as of October 28, 1998 (herein called, together with all indentures supplemental thereto, the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A. (successor trustee to The Bank of New York), as trustee (the “Trustee,” which term includes any successor trustee under the Indenture with respect to the Notes), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the duly authorized series designated as the “4.125% Notes due 2026.” All terms used in this Note which are defined in the Indenture and not defined herein shall have the meanings assigned to them in the Indenture.

 

Prior to July 15, 2026, the Notes may be redeemed at any time in whole or from time to time in part at the option of the Company at a Redemption Price equal to the greater of:

 

(a) 100% of the principal amount of the Notes to be redeemed, and

 

(b) the sum of the present values of the remaining scheduled payments of principal of and interest on the Notes to be redeemed (exclusive of interest accrued to the applicable Redemption Date) discounted to such Redemption Date on a semiannual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate plus 25 basis points,

 

plus, in the case of both clauses (a) and (b) above, accrued and unpaid interest on the principal amount of the Notes being redeemed to such Redemption Date.

 

On and after July 15, 2026, the Notes may be redeemed at any time in whole or from time to time in part at the option of the Company at a Redemption Price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest on the principal amount of the Notes being redeemed to the applicable Redemption Date.

 

Notwithstanding the foregoing, installments of interest on Notes whose Stated Maturity is on or prior to a Redemption Date will be payable to the Holders of such Notes (or one or more Predecessor Securities) registered as such at the close of business on the relevant Regular Record Dates according to their terms and the provisions of the Indenture.

 

2

 

Notice of any redemption by the Company will be mailed at least 30 days but not more than 60 days before the applicable Redemption Date to each Holder of Notes to be redeemed.

 

The Indenture contains provisions for defeasance at any time of (a) the entire indebtedness of the Company on the Notes and (b) certain restrictive covenants and the related defaults and Events of Default applicable to the Company, in each case, upon compliance by the Company with certain conditions set forth in the Indenture, which provisions apply to this Note.

 

In addition to the covenants of the Company contained in the Indenture, the Company makes the following covenants with respect to, and for the benefit of the Holders of, the Notes:

 

Limitation on Incurrence of Total Debt. The Company will not, and will not permit any Subsidiary to, incur any Debt, other than Intercompany Debt, if, immediately after giving effect to the incurrence of such additional Debt and the application of the proceeds therefrom on a pro forma basis, the aggregate principal amount of all outstanding Debt of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater than 60% of the sum of (i) the Company’s Total Assets as of the end of the latest fiscal quarter covered in the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Commission (or, if such filing is not required under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the Trustee) prior to the incurrence of such additional Debt and (ii) the increase, if any, in Total Assets from the end of such quarter including, without limitation, any increase in Total Assets caused by the application of the proceeds of such additional Debt (such increase together with the Company’s Total Assets are referred to as the “Adjusted Total Assets”).

 

Limitation on Incurrence of Secured Debt. The Company will not, and will not permit any Subsidiary to, incur any Secured Debt, other than Intercompany Debt, if, immediately after giving effect to the incurrence of such additional Secured Debt and the application of the proceeds therefrom on a pro forma basis, the aggregate principal amount of all outstanding Secured Debt of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater than 40% of the Company’s Adjusted Total Assets.

 

Debt Service Coverage. The Company will not, and will not permit any Subsidiary to, incur any Debt, other than Intercompany Debt, if the ratio of Consolidated Income Available for Debt Service to the Annual Debt Service Charge for the period consisting of the four consecutive fiscal quarters most recently ended prior to the date on which such additional Debt is to be incurred is less than 1.5 to 1.0, on a pro forma basis after giving effect to the incurrence of such Debt and the application of the proceeds therefrom, and calculated on the assumption that (i) such Debt and any other Debt incurred by the Company or any of its Subsidiaries since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other Debt since the first day of such four-quarter period) had occurred on the first day of such period, (ii) the repayment or retirement of any other Debt of the Company or any of its Subsidiaries since the first day of such four-quarter period had occurred on the first day of such period (except that, in making such computation, the amount of Debt under any revolving credit facility, line of credit or similar facility shall be computed based upon the average daily balance of such Debt during such period), and (iii) in the case of any acquisition or disposition by the Company or any Subsidiary of any asset or group of assets since the first day of such four-quarter period, including, without limitation, by merger, stock purchase or sale, or asset purchase or sale, such acquisition or disposition had occurred on the first day of such period with the appropriate adjustments with respect to such acquisition or disposition being included in such pro forma calculation. If the Debt giving rise to the need to make the foregoing calculation or any other Debt incurred after the first day of the relevant four-quarter period bears interest at a floating rate then, for purposes of calculating the Annual Debt Service Charge, the interest rate on such Debt shall be computed on a pro forma basis as if the average interest rate which would have been in effect during the entire such four-quarter period had been the applicable rate for the entire such period.

 

Maintenance of Total Unencumbered Assets. The Company will maintain at all times Total Unencumbered Assets of not less than 150% of the aggregate outstanding principal amount of the Unsecured Debt of the Company and its Subsidiaries, computed on a consolidated basis in accordance with GAAP.

 

3

 

Certain Definitions. As used herein, the following terms have the meanings set forth below:

 

“Annual Debt Service Charge” as of any date means the amount which is expensed in any 12-month period for interest on Debt of the Company and its Subsidiaries.

 

“Comparable Treasury Issue” means, with respect to any Redemption Date for the Notes, the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes to be redeemed.

 

“Comparable Treasury Price” means, with respect to any Redemption Date for the Notes:

 

(a)                                 if the Company obtains four or five Reference Treasury Dealer Quotations for such Redemption Date, the average of such Reference Treasury Dealer Quotations after excluding the highest and lowest such Reference Treasury Dealer Quotations, or

 

(b)                                 if the Company obtains fewer than four but more than one such Reference Treasury Dealer Quotations for such Redemption Date, the average of all such Reference Treasury Dealer Quotations, or

 

(c)                                  if the Company obtains only one such Reference Treasury Dealer Quotation for such Redemption Date, that Reference Treasury Dealer Quotation.

 

“Consolidated Income Available for Debt Service” for any period means Consolidated Net Income plus, without duplication, amounts which have been deducted in determining Consolidated Net Income during such period for (i) Consolidated Interest Expense, (ii) provisions for taxes of the Company and its Subsidiaries based on income, (iii) amortization (other than amortization of debt discount) and depreciation, (iv) provisions for losses from sales or joint ventures, (v) provisions for impairment losses, (vi) increases in deferred taxes and other non-cash charges, (vii) charges resulting from a change in accounting principles, and (viii) charges for early extinguishment of debt, and less, without duplication, amounts which have been added in determining Consolidated Net Income during such period for (a) provisions for gains from sales or joint ventures, and (b) decreases in deferred taxes and other non-cash items.

 

“Consolidated Interest Expense” for any period, and without duplication, means all interest (including the interest component of rentals on capitalized leases, letter of credit fees, commitment fees and other like financial charges) and all amortization of debt discount on all Debt (including, without limitation, payment-in-kind, zero coupon and other like securities) but excluding legal fees, title insurance charges, other out-of-pocket fees and expenses incurred in connection with the issuance of Debt and the amortization of any such debt issuance costs that are capitalized, all determined for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” for any period means the amount of consolidated net income (or loss) of the Company and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP.

 

“Debt” means any indebtedness of the Company or any Subsidiary, whether or not contingent, in respect of (i) money borrowed or evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness secured by any mortgage, pledge, lien, charge, encumbrance, trust deed, deed of trust, deed to secure debt, security agreement or any security interest existing on property owned by the Company or any Subsidiary, (iii) letters of credit or amounts representing the balance deferred and unpaid of the purchase price of any property except any such balance that constitutes an accrued expense or trade payable or (iv) any lease of property by the Company or any Subsidiary as lessee that is reflected on the Company’s consolidated balance sheet as a capitalized lease in accordance with GAAP, in the case of items of indebtedness under (i) through (iii) above to the extent that any such items (other than letters of credit) would appear as liabilities on the Company’s consolidated balance sheet in accordance with GAAP, and also includes, to the extent not otherwise included, any obligation of the Company or any Subsidiary to be

 

4

 

liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), indebtedness of another Person (other than the Company or any Subsidiary) of the type referred to in (i), (ii), (iii) or (iv) above (it being understood that Debt shall be deemed to be incurred by the Company or any Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof).

 

“Executive Group” means, collectively, those individuals holding the offices of Chairman, Vice Chairman, Chief Executive Officer, President, Chief Operating Officer or any Vice President of the Company.

 

“Final Maturity Date” means October 15, 2026.

 

“Independent Investment Banker” means, with respect to any Redemption Date for the Notes, Citigroup Global Markets Inc. and its successors, Merrill Lynch, Pierce, Fenner & Smith Incorporated and its successors, RBC Capital Markets, LLC and its successors, U.S. Bancorp Investments, Inc. and its successors or Wells Fargo Securities, LLC and its successors (whichever shall be appointed by the Company) or, if all such firms or the respective successors, if any, to such firms, as the case may be, are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

 

“Intercompany Debt” means indebtedness owed by the Company or any Subsidiary solely to the Company or any Subsidiary.

 

“New York Business Day” means any day, other than a Saturday or a Sunday, that is not a day on which banking institutions in The City of New York are authorized or required by law, regulation or executive order to close.

 

“Reference Treasury Dealer” means with respect to any Redemption Date for the Notes, (i) Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets, LLC and their respective successors (provided, however, that if any such firm or any such successor, as the case may be, ceases to be a primary U.S. Government securities dealer in The City of New York (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer), (ii) one other Primary Treasury Dealer selected by U.S. Bancorp Investments, Inc. or its successor after consultation with the Company and (iii) one other Primary Treasury Dealer selected by Wells Fargo Securities, LLC or its successor after consultation with the Company.

 

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date for the Notes, the average, as determined by the Company, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third New York Business Day preceding such Redemption Date.

 

“Secured Debt” means Debt secured by any mortgage, lien, charge, encumbrance, trust deed, deed of trust, deed to secure debt, security agreement, pledge, conditional sale or other title retention agreement, capitalized lease, or other security interest or agreement granting or conveying security title to or a security interest in real property or other tangible assets.

 

“Subsidiary” means (i) any corporation, partnership, joint venture, limited liability company or other entity the majority of the shares, if any, of the non-voting capital stock or other equivalent ownership interests of which (except directors’ qualifying shares) are at the time directly or indirectly owned by the Company, and the majority of the shares of the voting capital stock or other equivalent ownership interests of which (except for directors’ qualifying shares) are at the time directly or indirectly owned by the Company, any other Subsidiary or Subsidiaries, and/or one or more individuals of the Executive Group (or, in the event of death or disability of any of such individuals, his/her respective legal representative(s), or such individuals’ successors in office as an officer of the Company), and (ii) any other entity the accounts of which are consolidated with the accounts of the Company. The foregoing definition of “Subsidiary”

 

5

 

shall only be applicable with respect to the covenants set forth above under the captions “Limitation on Incurrence of Total Debt,” “Limitation on Incurrence of Secured Debt,” “Debt Service Coverage,” and “Maintenance of Total Unencumbered Assets,” this definition, the other definitions set forth herein under this caption “Certain Definitions,” and, insofar as Section 801 of the Indenture is applicable to the Notes, the term “Subsidiary,” as that term is used in Section 801(2) of the Indenture, shall have the meaning set forth in this definition (instead of the meaning set forth in Section 101 of the Indenture).

 

“Treasury Rate” means, with respect to any Redemption Date for the Notes:

 

(a)                           the yield, under the heading that represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15(519)” or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the Final Maturity Date of the Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month), or

 

(b)                           if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

 

The Treasury Rate shall be calculated on the third New York Business Day preceding the applicable Redemption Date.

 

“Total Assets” as of any date means the sum of (i) Undepreciated Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP (but excluding accounts receivable and intangibles).

 

“Total Unencumbered Assets” as of any date means Total Assets minus the value of any properties of the Company and its Subsidiaries that are encumbered by any mortgage, charge, pledge, lien, security interest, trust deed, deed of trust, deed to secure debt, security agreement, or other encumbrance of any kind (other than those relating to Intercompany Debt), including the value of any stock of any Subsidiary that is so encumbered, determined on a consolidated basis in accordance with GAAP; provided, however, that, in determining Total Unencumbered Assets as a percentage of outstanding Unsecured Debt for purposes of the covenant set forth above under “Maintenance of Total Unencumbered Assets,” all investments in any Person that is not consolidated with the Company for financial reporting purposes in accordance with GAAP shall be excluded from Total Unencumbered Assets to the extent that such investment would otherwise have been included. For purposes of this definition, the value of each property shall be equal to the purchase price or cost of each such property and the value of any stock subject to any encumbrance shall be determined by reference to the value of the properties owned by the issuer of such stock as aforesaid.

 

“Undepreciated Real Estate Assets” as of any date means the amount of real estate assets of the Company and its Subsidiaries on such date, before depreciation and amortization, determined on a consolidated basis in accordance with GAAP.

 

“Unsecured Debt” means Debt of the Company or any Subsidiary that is not Secured Debt.

 

If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

 

6

 

As provided in and subject to the provisions of the Indenture, the Holder of this Note shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Notes, the Holders of not less than 25% in principal amount of the Notes at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity reasonably satisfactory to it and the Trustee shall not have received from the Holders of a majority in principal amount of the Notes at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Note for the enforcement of any payment of principal of, or premium, if any, or interest on, this Note on or after the respective due dates therefor.

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Notes. The Indenture also contains provisions permitting the Holders of not less than a majority in principal amount of the Notes at the time Outstanding, on behalf of the Holders of all Notes, to waive compliance by the Company with certain provisions of the Indenture. Furthermore, provisions in the Indenture permit the Holders of not less than a majority of the aggregate principal amount of the Outstanding Notes to waive, in certain circumstances, on behalf of all Holders of the Notes, certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and premium, if any, and interest on, this Note at the times, places and rate, and in the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Security Register, upon surrender of this Note for registration of transfer at the office or agency of the Company in any Place of Payment for the Notes, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar for the Notes duly executed by, the Holder hereof or his or her attorney duly authorized in writing, and thereupon one or more new Notes of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees.

 

As provided in the Indenture and subject to certain limitations therein set forth, Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series of different authorized denominations, as requested by the Holder surrendering the same.

 

The Notes of this series are issuable only in registered form, without interest coupons, in denominations of $2,000 and integral multiples of $1,000 in excess thereof. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

No recourse shall be had for the payment of the principal of, or premium, if any, or the interest on this Note, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture or any indenture supplemental thereto, against any past, present or future stockholder, employee, officer or director, as such, of the Company or of any successor, either directly or through the Company or any successor, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.

 

7

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes as a convenience to the Holders of the Notes. No representation is made as to the correctness or accuracy of such CUSIP numbers as printed on the Notes, and reliance may be placed only on the other identification numbers printed hereon.

 

Unless the certificate of authentication hereon has been executed by the Trustee by manual signature of one of its authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

The headings included in this Note are for convenience only and shall not affect the construction hereof.

 

[Signature page follows]

 

8

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

 

	
 
    	
 
    	
 
    	
REALTY INCOME CORPORATION
    
	
[SEAL]
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Paul M. Meurer
    
	
 
    	
 
    	
 
    	
 
    	
Executive Vice President, Chief Financial Officer and Treasurer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Attest:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Michael R. Pfeiffer
    	
 
    	
 
    	
 
    
	
 
    	
Executive Vice President, General Counsel and Secretary
    	
 
    	
 
    	
 
    

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION:

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Authorized Signatory
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    

 

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, the undersigned hereby

sells, assigns and transfers to

 

PLEASE INSERT SOCIAL

SECURITY OR OTHER IDENTIFYING

NUMBER OF ASSIGNEE

 

(Please Print or Typewrite Name and Address

including Zip Code of Assignee)

 

the within Note of REALTY INCOME CORPORATION, and

hereby does irrevocably constitute and appoint

 

Attorney to transfer said Note on the books of the within-named Company with full power of substitution in the premises.

 

Dated:

 

NOTICE: The signature to this assignment must correspond with the name as it appears on the first page of the within Note in every particular, without alteration or enlargement or any change whatever.

 

	
Signature Guaranty
    	
 
    	
 
    
	
 
    	
(Signature must be guaranteed by
    	
 
    
	
 
    	
a participant in a signature
    	
 
    
	
 
    	
guarantee medallion program)

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