Document:

Exhibit
10.5

This AMENDMENT TO
RIGHTS AGREEMENT (the “Amendment”) is entered into as of the 15th day of
September, 2006, by and between iParty Corp., a Delaware corporation (the “Company”),
and Continental Stock Transfer & Trust Company, a New York corporation (the”Rights
Agent”).

WITNESSETH

WHEREAS, the
Company and the Rights Agent did enter into that certain Rights Agreement dated
as of November 9, 2001 (the “Rights Agreement”); and

WHEREAS, the
parties now wish to amend the Rights Agreement to allow the Board of Directors
of the Company to allow Rights (as such term is defined in the Rights
Agreement) to be issued in respect of any securities of the Company which are
approved by the Board of Directors, and by their express terms are granted
Rights thereunder, and to make changes to the address of the Company and its
legal counsel.

NOW, THEREFORE, in
consideration of the premises and mutual agreements between the parties, and
other good and valuable consideration the receipt and adequacy of which is
hereby acknowledged, the parties hereby agree as follows:

Section 1.  Definitions.  Capitalized terms not otherwise herein
defined shall have the respective meanings ascribed thereto in the Rights
Agreement.

Section 2.  Amendment to Section 3(c) of the Rights
Agreement.   Section 3(c) of the
Rights Agreement is hereby deleted in the entirety, and is replaced and
substituted by the following new Section 3(c):

“(c)        Rights shall be issued in respect of all
shares of Capital Stock that become outstanding, and in respect of any other
securities of the Company which are approved by the Board of Directors, and by
their express terms are granted Rights hereunder, after the Record Date but
prior to the earlier of the Distribution Date, the Expiration Date or the Final
Expiration Date and, in certain circumstances provided in Section 22 hereof,
may be issued in respect of shares of Capital Stock that become outstanding
after the Distribution Date. Certificates for Capital Stock (including, without
limitation, certificates issued upon original issuance, disposition from the
Company’s treasury or transfer or exchange of Capital Stock) after the Record
Date but prior to the earliest of the Distribution Date, the Expiration Date,
or the Final Expiration Date (or, in certain circumstances as provided in
Section 22 hereof, after the Distribution Date) shall have impressed, printed,
written or stamped thereon or otherwise affixed thereto a legend in a form
substantially as follows:

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER
HEREOF TO THE SAME NUMBER OF RIGHTS (SUBJECT TO ADJUSTMENT) AS THE NUMBER OF
SHARES OF CAPITAL 

 

STOCK REPRESENTED BY THIS CERTIFICATE, SUCH RIGHTS
BEING ON THE TERMS PROVIDED UNDER THE RIGHTS AGREEMENT BETWEEN iPARTY CORP. AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY (THE “RIGHTS AGENT”), DATED AS
OF NOVEMBER 9, 2001, AS IT MAY BE AMENDED FROM TIME TO TIME (THE “RIGHTS
AGREEMENT”), THE TERMS OF WHICH ARE INCORPORATED HEREIN BY REFERENCE AND A COPY
OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF iPARTY CORP. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS SHALL
BE EVIDENCED BY SEPARATE CERTIFICATES AND SHALL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. iPARTY CORP. SHALL MAIL TO THE REGISTERED HOLDER OF THIS CERTIFICATE
A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN SECTION 7(E) OF
THE RIGHTS AGREEMENT, RIGHTS ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.”

Section 3.  Amendment
to Section 25 Notice Addresses.  
Section 25 of the Rights Agreement is hereby amended by deleting in the
entirety the addresses of the Company and its legal counsel set forth therein,
and replacing and substituting therefor the following new names and addresses:

“iParty Corp.

270 Bridge Street, Suite 301

Dedham, MA 02132

Attention:  Chief Executive Officer

With a copy to:

Posternak Blankstein & Lund LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Attention:  Donald H. Siegel, P.C.”

Section 4.  Ratification
and Approval.  The Rights Agreement,
as amended by this Amendment, is hereby ratified and approved in the entirety.

 2
 

 

IN WITNESS WHEREOF, the parties hereto have
duly executed this Amendment as of the day and date first above written.

	
  iPARTY CORP.

  	
  CONTINENTAL STOCK

  
	
   

  	
  TRANSFER
  & TRUST

  
	
   

  	
  COMPANY

  
	
   

  	
   

  
	
  /s/ PATRICK
  FARRELL

  	
  /s/ ROGER BERNHAMMER

  
	
   

  	
   

  
	
  By: Patrick
  Farrell

  	
  By: R. Bernhammer

  
	
   

  	
   

  
	
  Title: President
  & CFO

  	
  Title: Vice Pres.

  

 

 3Exhibit
4.2

PRINCIPAL AMOUNT

$275,000,000

REGISTERED NO.:  R-1

CUSIP NO.: 756109AJ3

ISIN NO.:  US756109AJ30

REALTY INCOME
CORPORATION

5.950% NOTES DUE 2016

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

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

Realty Income Corporation,
a Maryland corporation (the “Company,” which term shall include any successor
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
Two Hundred Seventy-Five Million Dollars on September 15, 2016, and to pay
interest thereon from September 18, 2006 or from the most recent date to which
interest has been paid or duly provided for, semi-annually in arrears on March
15 and September 15 of each year (the “Interest Payment Dates”), commencing
March 15, 2007, at the rate of 5.950% 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 (or one or more
Predecessor Securities) is registered in the Security Register applicable to
the Notes at the close of business on March 1 or September 1 (the “Regular
Record Dates”), as the case may be, immediately preceding the applicable
Interest Payment Date regardless of whether the Regular Record Date is a
Business Day.  Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may either be paid to the Person in
whose name this 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 5.950% 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, 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 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 “5.950% Notes due 2016,” limited
(subject to exceptions provided in the Indenture and subject to the right of the
Company to reopen such series for the issuance of additional Securities of such
series on the terms and subject to the conditions specified in the Indenture)
in aggregate principal amount to $275,000,000. 
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.

 

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

(a) 100% of the principal
amount of the 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 20 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.  Notwithstanding the foregoing, installments
of interest on Notes whose Stated Maturity is on or prior to the relevant
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.

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 is referred to as the “Adjusted Total
Assets”).

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

Debt Service Coverage.  The Company will not, and will not permit any
Subsidiary to, incur any Debt, other than Intercompany Debt, if the ratio of
Consolidated Income Available for Debt Service to the Annual Debt Service
Charge for the period consisting of the four consecutive fiscal

 

quarters most recently ended prior to the date on
which such additional Debt is to be incurred is less than 1.5 to 1.0, on a pro
forma basis after giving effect to the incurrence of such Debt and the
application of the proceeds therefrom, and calculated on the assumption that
(i) such Debt and any other Debt incurred by the Company or any of its
Subsidiaries since the first day of such four-quarter period and the application
of the proceeds therefrom (including to refinance other Debt since the first
day of such four-quarter period) had occurred on the first day of such period,
(ii) the repayment or retirement of any other Debt of the Company or any of its
Subsidiaries since the first day of such four-quarter period had occurred on
the first day of such period (except that, in making such computation, the
amount of Debt under any revolving credit facility, line of credit or similar
facility shall be computed based upon the average daily balance of such Debt
during such period), and (iii) in the case of any acquisition or disposition by
the Company or any Subsidiary of any asset or group of assets since the first
day of such four-quarter period, including, without limitation, by merger,
stock purchase or sale, or asset purchase or sale, such acquisition or
disposition had occurred on the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation.  If the Debt
giving rise to the need to make the foregoing calculation or any other Debt
incurred after the first day of the relevant four-quarter period bears interest
at a floating rate then, for purposes of calculating the Annual Debt Service Charge,
the interest rate on such Debt shall be computed on a pro forma basis as if the
average interest rate which would have been in effect during the entire such
four-quarter period had been the applicable rate for the entire such period.

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

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

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

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

“Comparable Treasury
Issue” means, with respect to any Redemption Date for the 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)           the average of four Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or

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

 

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

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

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

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

“Debt” means any indebtedness of the Company or any
Subsidiary, whether or not contingent, in respect of (i) money borrowed or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
secured by any mortgage, pledge, lien, charge, encumbrance, trust deed, deed of
trust, deed to secure debt, security agreement or any security interest
existing on property owned by the Company or any Subsidiary, (iii) letters of
credit or amounts representing the balance deferred and unpaid of the purchase
price of any property except any such balance that constitutes an accrued
expense or trade payable or (iv) any lease of property by the Company or any
Subsidiary as lessee that is reflected on the Company’s consolidated balance
sheet as a capitalized lease in accordance with GAAP, in the case of items of
indebtedness under (i) through (iii) above to the extent that any such items
(other than letters of credit) would appear as liabilities on the Company’s
consolidated balance sheet in accordance with GAAP, and also includes, to the
extent not otherwise included, any obligation of the Company or any Subsidiary
to be liable for, or to pay, as obligor, guarantor or otherwise (other than for
purposes of collection in the ordinary course of business), indebtedness of
another Person (other than the Company or any Subsidiary) of the type referred
to in (i), (ii), (iii) or (iv) above (it being understood that Debt shall be
deemed to be incurred by the Company or any Subsidiary whenever the Company or
such Subsidiary shall create, assume, guarantee or otherwise become liable in
respect thereof).

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

“Final Maturity
Date” means September 15, 2016.

 

“Independent
Investment Banker” means, with respect to any Redemption Date for
the Notes, Banc of America Securities LLC and its successors or Citigroup
Global Markets Inc. and its successors or Credit Suisse Securities (USA) LLC
and its successors (whichever shall be appointed by the Trustee after
consultation with 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 Trustee after consultation
with the Company.

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

 “Reference Treasury Dealer” means with
respect to any Redemption Date for the Notes, Banc of America Securities LLC,
Citigroup Global Markets Inc. and Credit Suisse Securities (USA) 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
Trustee, after consultation with the Company, shall substitute therefor another
Primary Treasury Dealer) and one other Primary Treasury Dealer selected by the
Trustee after consultation with the Company.

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

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

“Subsidiary” means (i) any corporation, partnership, joint
venture, limited liability company or other entity the majority of the shares,
if any, of the non-voting capital stock or other equivalent ownership interests
of which (except directors’ qualifying shares) are at the time directly or
indirectly owned by the Company, and the majority of the shares of the voting
capital stock or other equivalent ownership interests of which (except for
directors’ qualifying shares) are at the time directly or indirectly owned by
the Company, any other Subsidiary or Subsidiaries, and/or one or more
individuals of the Executive Group (or, in the event of death or disability of
any of such individuals, his/her respective legal representative(s), or such
individuals’ successors in office as an officer of the Company), and
(ii) any other entity the accounts of which are consolidated with the
accounts of the Company.  This definition
shall apply only for purposes of the covenants set forth above under the
captions “Limitation on Incurrence of Total Debt,” “Limitation on Incurrence of
Secured Debt,” “Debt Service Coverage,” and “Maintenance of Total Unencumbered
Assets,” the other definitions set forth herein under this caption “Certain
Definitions,” and, insofar as Section 801 of the Indenture is applicable to the
Notes, the term “Subsidiary,” as used in Section 801(2) of the Indenture, shall
have the meaning set forth in this definition (instead of the meaning set forth
in Section 101 of the Indenture).

“Treasury Rate” means, with respect to any Redemption
Date for the 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 Business Day preceding the applicable Redemption
Date.

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

“Total Unencumbered Assets” as of any date means Total Assets minus
the value of any properties of the Company and its Subsidiaries that are
encumbered by any mortgage, charge, pledge, lien, security interest, trust
deed, deed of trust, deed to secure debt, security agreement, or other
encumbrance of any kind (other than those relating to Intercompany Debt),
including the value of any stock of any Subsidiary that is so encumbered
determined on a consolidated basis in accordance with GAAP.  For purposes of this definition, the value of
each property shall be equal to the purchase price or cost of each such
property and the value of any stock subject to any encumbrance shall be
determined by reference to the value of the properties owned by the issuer of
such stock as aforesaid.

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

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

If an Event of Default
with respect to the 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.

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

 

reasonable indemnity 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 $1,000 and any integral multiple thereof. 
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

Prior to due presentment
of this 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.

THE INDENTURE AND THE
NOTES, INCLUDING 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.

 

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

[Seal]

	
  

  	
  REALTY INCOME CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Thomas A. Lewis

  
	
   

  	
   

  	
  Vice Chairman of the Board and

  Chief Executive Officer

  

 

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
TRUST COMPANY, N.A., as Trustee

	
  

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  

 

Dated:  September 18, 2006

 

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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