United States
Securities
and Exchange Commission
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
Date
of report: April 29, 2021
(Date
of Earliest Event Reported)
REALTY
INCOME CORPORATION
(Exact name of registrant as specified in its charter)
Maryland
|
1-13374
|
33-0580106
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(Commission File Number)
|
(IRS Employer Identification
No.)
|
11995
El Camino Real, San Diego, California 92130
(Address of principal executive offices)
(858) 284-5000
(Registrant’s telephone number, including area code)
N/A
(former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x
|
Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
|
|
|
¨
|
Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
|
|
|
¨
|
Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
¨
|
Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
|
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities
Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
|
|
Trading symbol
|
|
Name of Each Exchange On
Which
Registered
|
Common Stock, $0.01 Par Value
|
|
O
|
|
New York Stock Exchange
|
1.625% Notes due 2030
|
|
O30
|
|
New York Stock Exchange
|
Item 1.01 Entry Into a Material Definitive Agreement.
The Transactions
On April 29, 2021, Realty Income
Corporation, a Maryland corporation (“Realty Income”), entered into an
Agreement and Plan of Merger (the “Merger Agreement”) with Rams MD
Subsidiary I, Inc., a Maryland corporation and a direct wholly owned subsidiary of Realty Income (“Merger
Sub 1”), Rams Acquisition Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the
Company (“Merger Sub 2”), VEREIT, Inc., a Maryland corporation
(“VEREIT”) and VEREIT Operating Partnership, L.P., a Delaware limited
partnership (“VEREIT OP”). The Merger Agreement provides for the
merger of Merger Sub 2 with and into VEREIT OP with VEREIT OP surviving as a wholly owned subsidiary of Realty Income (the
“Partnership Merger”) and, immediately following the Partnership Merger,
the Merger Agreement provides for the merger of VEREIT with and into Merger Sub 1 (the “Merger” and together with the
Partnership Merger, the “Mergers”), with Merger Sub 1 surviving as a wholly owned subsidiary of Realty Income.
Merger Agreement
The Merger
Pursuant to the terms and subject to the
conditions of the Merger Agreement, at the date and time the Merger becomes effective (the “Effective
Time”), (i) each share of VEREIT common stock, par value $0.01 per share (the “VEREIT
Common Stock”) will automatically be converted into a number of newly issued shares of Realty Income Common Stock equal
to the Exchange Ratio 0.705 (the "Exchange Ratio") of a newly issued share of common stock, par value $0.01 per share, or Realty
Income ("Realty Income Common Stock"), subject to adjustment as provided in the Merger Agreement and (ii) each share of VEREIT
Series F Preferred Stock issued and outstanding immediately prior to the Effective Time will automatically be cancelled and
retired and shall cease to exist, but the holders of such shares will retain the right to receive the Series F Preferred Stock
Redemption Amount (as defined below) on the redemption date set forth in the Series F Preferred Stock Redemption Notice (as
defined below). Holders of shares of VEREIT Common Stock will receive cash in lieu of fractional shares.
Immediately prior to the Mergers, VEREIT will
issue a notice of redemption (the “Series F Preferred Stock Redemption Notice”) with respect to all of the outstanding
shares of VEREIT Series F Preferred Stock with a redemption date as set forth in the Series F Preferred Stock Redemption
Notice, and Realty Income will cause funds to be deposited in escrow to pay the redemption price for each share of VEREIT Series F
Preferred Stock at the liquidation preference of $25.00 plus all accrued and unpaid dividends up to and including the redemption
date set forth in the Series F Preferred Stock Redemption Notice (such amount, the “Series F Preferred Stock Redemption
Amount”).
The Partnership Merger
Pursuant to the terms and subject to the
conditions of the Merger Agreement,, at the date and time the Partnership Merger becomes effective (the “Partnership
Merger Effective Time”), (i) each outstanding VEREIT OP Common Unit (as defined in the Merger Agreement) owned by
VEREIT immediately prior to the Partnership Merger Effective Time, subject to the terms and conditions set forth in the Merger
Agreement, will remain outstanding as a common unit of partnership interest in the surviving entity, and (ii) each outstanding
VEREIT OP Common Unit owned by a partner of the VEREIT OP other than VEREIT (each such partner, a “VEREIT
OP Minority Partner”) that is issued and outstanding immediately prior to the Partnership Merger Effective Time,
subject to the terms and conditions set forth in the Merger Agreement, will be converted into the number of newly issued shares of
Realty Income Common Stock equal to the Exchange Ratio), subject to adjustment as provided in the Merger Agreement, (iii) each
outstanding VEREIT Series F Preferred Unit that is issued and outstanding immediately prior to the Partnership Merger Effective
Time (other than VEREIT OP Series F Preferred Units owned by VEREIT), subject to the terms and conditions of the Merger
Agreement, will be converted into the right to receive $25.00, plus all accumulated and unpaid distributions to and including
the redemption date that is set forth in the Series F Preferred Stock Redemption Notice (the “Series F
Preferred Unit Redemption Amount”), and (iv) each VEREIT OP Series F Preferred Unit owned by VEREIT that is
issued and outstanding immediately prior to the Partnership Merger Effective Time, subject to the terms and conditions of the Merger
Agreement, will remain outstanding as one Series F Preferred Unit or the surviving entity. The VEREIT OP Minority Partners will
receive cash in lieu of fractional shares.
Treatment of Equity Awards
Pursuant to the terms and subject to the
conditions of the Merger Agreement, as of the Effective Time, each outstanding VEREIT equity-based award will be treated as follows:
(i) each VEREIT stock option that is outstanding and unexercised as of immediately prior to the Effective Time will be
converted into a Realty Income stock option to purchase a number of shares of Realty Income Common Stock (rounded down to the
nearest whole number of shares) equal to the product obtained by multiplying the number of shares of VEREIT Common Stock subject to
such VEREIT stock option by the Exchange Ratio, at an exercise price per share of Realty Income Common Stock (rounded up to the
nearest whole cent) equal to the quotient obtained by dividing the exercise price per share of VEREIT Common Stock of such VEREIT
stock option by the Exchange Ratio; (ii) each award of VEREIT restricted stock units that is outstanding as of immediately
prior to the Effective Time will be converted into a Realty Income restricted stock unit award with respect to a number of whole
shares of Realty Income Common Stock (rounded to the nearest whole number of shares) equal to the product obtained by multiplying
(A) (1) for time-based restricted stock units, the number of shares of VEREIT Common Stock subject to such restricted
stock unit award as of immediately prior to the Effective Time or (2) for performance-based restricted stock units, the number
of shares of VEREIT Common Stock subject to such performance-based restricted stock unit award determined based on actual level of
achievement of the applicable performance goals as of immediately prior to the Effective Time (in accordance with the applicable
award agreement and the terms of the Merger Agreement) by (B) the Exchange Ratio, and will be credited with a dividend
equivalent balance that is equal to the dividend equivalent balance credited on the corresponding VEREIT restricted stock units as
of immediately prior to the Effective Time; and (iii) each VEREIT deferred stock unit award that is outstanding as of
immediately prior to the Effective Time will generally be converted into the right to receive the number of share of Realty Income
Common Stock equal to the product obtained by multiplying the Exchange Ratio by the number of shares underlying such award. Each converted award will continue to be subject
to the same vesting and other terms and conditions as applied to the corresponding VEREIT award as of immediately prior to the
Effective Time, except that Realty Income restricted stock units resulting from the conversion of performance-based VEREIT
restricted stock units will, following the Effective Time, be subject to the time-vesting conditions applicable to the
performance-based VEREIT restricted stock units, but will no longer be subject to performance-vesting conditions.
Contemplated Spin-Off of Office Properties
It is contemplated that after the Effective
Time, subject to the terms and conditions of the Merger Agreement, Realty Income and VEREIT will contribute certain of their office
real properties (the “OfficeCo Business”) to a newly formed wholly owned
subsidiary of Realty Income (“OfficeCo”), and Realty Income will
distribute all of the outstanding voting shares of common stock in OfficeCo to Realty Income’s shareholders (which, at that
time, would also include the VEREIT stockholders as a result of the Merger) on a pro rata basis (the “Spin-Off”).
Following the consummation of the Spin-Off, Realty Income and VEREIT intend for OfficeCo to operate as a separate, publicly-traded
REIT. Subject to the terms and conditions of the Merger Agreement, the parties may also seek to sell some or all of the OfficeCo
Business in connection with the closing of the Mergers.
Certain Governance Matters
The Merger Agreement provides that the boards
of directors of Realty Income and VEREIT will mutually select two members of the VEREIT board of directors who will be appointed to the
Realty Income board of directors immediately following the Effective Time. After the Effective Time, the parties intend to maintain the
office of VEREIT located in Phoenix, Arizona for at least seven (7) years from the date of the Merger Agreement.
Certain Other Terms and Conditions of the Merger
Agreement
The Merger Agreement contains customary
representations and warranties from each of Realty Income and VEREIT. VEREIT has agreed to
customary pre-closing covenants, including covenants to use commercially reasonable efforts to operate its business in the
ordinary course and to refrain from taking certain actions without Realty Income’s consent. Realty Income has agreed to
customary pre-closing covenants, including a more limited set of covenants to refrain from taking certain actions without
VEREIT’s consent. Each party has agreed to additional covenants, including, among others, covenants relating to (1) in
the case of Realty Income, its obligation to call a meeting of its shareholders to (i) approve the issuance of shares of Realty
Income Common Stock pursuant to the Merger Agreement (the “Realty Income share
issuance”) or (ii) in the event that the Merger occurs pursuant to the Alternative Structure (defined below), to
adopt and approve, the Merger Agreement, and, subject to certain exceptions, the obligation of its board of directors to recommend
that its shareholders approve the Realty Income share issuance or the Merger Agreement, as applicable, (2) in the case of
VEREIT, its obligation to call a meeting of its stockholders to adopt the Merger Agreement, and, subject to certain exceptions, the
obligation of its board of directors to recommend that its stockholders adopt the Merger Agreement, and (3) each
party’s non-solicitation obligations related to alternative acquisition proposals.
The respective boards of directors of Realty Income
and VEREIT have unanimously approved the Merger Agreement. The Mergers are expected to close during the fourth quarter of 2021.
Conditions to
Completing the Mergers
The closing of the Mergers is subject to certain
conditions, including: (1) adoption and approval by VEREIT’s stockholders of the Merger Agreement and approval by Realty Income’s
shareholders of the Realty Income Share Issuance; (2) the effectiveness of the registration statement on Form S-4 to be filed
with the Securities and Exchange Commission (“SEC”) by Realty Income in connection with the transactions contemplated
by the Merger Agreement; (3) approval for listing on the New York Stock Exchange (“NYSE”) of the shares of
Realty Income Common Stock to be issued in the Mergers or reserved for issuance in connection therewith; (4) no injunction or law
prohibiting the Mergers; (5) accuracy of each party’s representations, subject in most cases to materiality or material adverse
effect qualifications; (6) material compliance with each party’s covenants; (7) receipt by each of Realty Income and VEREIT
of an opinion to the effect that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the “Code”), and (8) receipt by VEREIT of an opinion that Realty
Income qualifies as a real estate investment trust (“REIT”) under the Code and receipt by Realty Income of an opinion
that VEREIT qualifies as a REIT under the Code.
Additionally, Realty Income will not be obligated
to consummate the Mergers until the Spin-Off is ready, in all respects, to be consummated contemporaneously with the closing of the Mergers,
including the SEC declaring effective the Form 10 registration statement related to the Spin-Off. However, if this condition is not
satisfied or waived by January 29, 2022, Realty Income will be automatically deemed to have waived this condition (and at that point,
assuming all other conditions to closing have been satisfied, the parties will be obligated to close the Mergers,
regardless of whether the Spin-Off is ready to be consummated).
Non Solicit; Termination; Termination Fees
Realty Income and VEREIT have agreed not to solicit
or enter into an agreement regarding an Acquisition Proposal (as defined in the Merger Agreement), and, subject to certain exceptions,
are not permitted to enter into discussions or negotiations concerning, or provide non-public information to a third party in connection
with, any Acquisition Proposal. However, prior to obtaining the stockholder or shareholder approval, as applicable, VEREIT or Realty Income
may engage in discussions or negotiations and provide non-public information to a third party which has made an unsolicited written bona
fide Acquisition Proposal with respect to such party if such party’s board of directors determines in good faith, after
consultation with outside legal counsel, that such Acquisition Proposal is reasonably likely to lead to a Superior Proposal (as defined
in the Merger Agreement) or if the failure to do so would reasonably be expected to lead to a breach of its duties to VEREIT or Realty Income, as applicable.
The Merger Agreement contains certain termination
rights for Realty Income and VEREIT. The Merger Agreement can be terminated by either party (1) by mutual written consent; (2) if
the Merger has not been consummated by April 29, 2022; (3) if there is a permanent, non-appealable injunction
or law restraining or prohibiting the consummation of the Merger; (4) if either party’s stockholders or shareholders, as applicable,
fail to approve the transactions; (5) if the other party’s board of directors changes its recommendation in favor of the Merger,
fails to reaffirm its recommendation, recommends a competing Acquisition Proposal (or fails to recommend against a competing proposal)
or materially breaches its obligations regarding shareholder approval or non-solicitation; or (6) if the other party has breached
its representations or covenants in a way that prevents satisfaction of a closing condition, subject to a cure period. Additionally, VEREIT
may terminate the Merger Agreement in order to enter into an agreement providing for a Superior Proposal.
Upon a termination of the Merger Agreement, under
certain circumstances, VEREIT will be required to pay a termination fee to Realty Income of the lesser of $365.0 million or the maximum
amount that could be paid to Realty Income without causing it to fail to meet the REIT requirements for such year, except that in certain
circumstances the termination fee will be the lesser of $195.0 million or the maximum amount that could be paid to Realty Income without
causing it to fail to meet the REIT requirements for such year if (1) a third party submits a Qualified Proposal (as defined in the
Merger Agreement) prior to May 29, 2021 and (2) prior to June 13, 2021, (i) VEREIT terminates the Merger Agreement
to enter into an agreement with respect to a Superior Proposal, or (ii) Realty Income terminates the agreement following VEREIT’s
board of directors changing its recommendation.
Upon a termination of the Merger Agreement,
under certain circumstances, Realty Income will be required to pay a termination fee to VEREIT of the lesser of $838.0 million or
the maximum amount that could be paid to Realty Income without causing it to fail to meet the REIT requirements for such year.
The Merger Agreement also provides that a
party must pay the other party an expense reimbursement of the lesser of $25.0 million or the maximum amount that can be paid to the
other party without causing it to fail to meet the REIT requirements for such year, if the Merger Agreement is terminated because
such party’s stockholders or shareholders, as applicable, fails to approve the transactions contemplated by the Merger
Agreement. The expense reimbursement will be set off against any termination fee if the termination fee later becomes payable.
Alternative Structure
In the event that (i) Realty Income is not
able to, after using reasonable best efforts, to obtain certain amendments to the Second Amended and Restated Credit Agreement, dated
August 7, 2019, by and among Realty Income, the lenders party thereto, Wells Fargo Bank, National Association, and the other parties
named therein prior to the date that is fifteen (15) business days prior to the earlier of the VEREIT stockholders meeting with respect
to the approval of the Mergers or the Realty Income shareholders meeting with respect to the approval of the Realty Income share issuance,
or (ii) VEREIT provides its prior written consent, then Realty Income may elect to modify the structure of the Merger such that VEREIT
merges with and into Realty Income (rather than Merger Sub 1) (such structure, the “Alternative Structure”), with Realty
Income continuing as the surviving corporation, and the parties have agreed, in good faith, to execute an amendment to the Merger Agreement
to give effect to such change. The Alternative Structure would not affect the consideration that would be paid to the equity holders of
VEREIT or VEREIT OP in the Mergers.
The foregoing summary of the Merger Agreement
is not complete and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached as Exhibit 2.1
to this this Current Report on Form 8-K (this “Form 8-K”) and is incorporated by reference in its entirety.
The representations, warranties and covenants
of each party set forth in the Merger Agreement have been made only for the purposes of, and were and are solely for the benefit of the
parties to, the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between Realty Income and VEREIT instead of establishing these matters
as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors.
Accordingly, the representations and warranties may not describe the actual state of affairs at the date they were made or at any other
time, and investors should not rely on them as statements of fact. In addition, such representations and warranties (1) will not
survive consummation of the Mergers, and (2) were made only as of the date of the Merger Agreement or such other date as is specified
in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties may change after the
date of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures.
Accordingly, the Merger Agreement is included with this filing only to provide investors with information regarding the terms of the Merger
Agreement, and not to provide investors with any factual information regarding VEREIT or Realty Income, their respective affiliates or
their respective businesses. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information
regarding VEREIT, Realty Income, their respective affiliates or their respective businesses, the Merger Agreement and the Mergers that
will be contained in, or incorporated by reference into, the Registration Statement on Form S-4 that will include a joint proxy statement
of Realty Income and VEREIT and a prospectus of Realty Income, as well as in the Forms 10-K, Forms 10-Q and other filings that each of
Realty Income and VEREIT makes with SEC.
Item 8.01 Other Events
In connection with the announcement of the Merger
Agreement, Realty Income and VEREIT provided information regarding the proposed transaction in connection with presentations to analysts
and investors. The updated information made available in connection with the presentations is attached hereto as Exhibit 99.1 and
incorporated by reference herein.
Forward Looking Statements
This communication may include “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act. All statements other than statements of historical
fact are “forward-looking statements” for purposes of federal and state securities laws. These forward-looking statements,
which are based on current expectations, estimates and projections about the industry and markets in which Realty Income and VEREIT operate
and beliefs of and assumptions made by Realty Income management and VEREIT management, involve uncertainties that could significantly
affect the financial or operating results of Realty Income, VEREIT, the combined company or any company spun-off by the combined company.
Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “will,” and variations of such words and similar expressions are intended to identify such forward-looking
statements. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transactions
involving Realty Income and VEREIT, including future financial and operating results, plans, objectives, expectations and intentions.
All statements that address operating performance, events or developments that we expect or anticipate will occur in the future —
including statements relating to creating value for stockholders, benefits of the proposed transactions to clients, employees, stockholders
and other constituents of the combined company, integrating our companies, cost savings and the expected timetable for completing the
proposed transactions — are forward-looking statements. These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking
statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and, therefore, actual
outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. For example, these
forward-looking statements could be affected by factors including, without limitation, risks associated with the ability to consummate
the proposed merger and the timing of the closing of the proposed merger; the ability to secure favorable interest rates on any borrowings
incurred in connection with the proposed transactions; the impact of indebtedness incurred in connection with the proposed transactions;
the ability to successfully integrate our operations and employees; the ability to realize anticipated benefits and synergies of the proposed
transactions as rapidly or to the extent anticipated by financial analysts or investors; potential liability for a failure to meet regulatory
or tax-related requirements, including the maintenance of REIT status; material changes in the dividend rates on securities or the ability
to pay dividends on common shares or other securities; potential changes to tax legislation; changes in demand for developed properties;
adverse changes in the financial condition of joint venture partner(s) or major tenants; risks associated with the acquisition, development,
expansion, leasing and management of properties; risks associated with the ability to consummate the Spin-Off and the terms thereof, and
the timing of the closing of the proposed spin-off; risks associated with the ability to consummate any sales of office property assets
of Realty Income and VEREIT and the impact of such sales on OfficeCo or the combined company; failure to obtain debt financing to capitalize
OfficeCo; risks associated with the geographic concentration of Realty Income, VEREIT or OfficeCo; risks associated with the industry
concentration of tenants; the potential impact of announcement of the proposed transactions or consummation of the proposed transactions
on business relationships, including with clients, employees, customers and competitors; unfavorable outcomes of any legal proceedings
that have been or may be instituted against Realty Income, VEREIT or any company spun-off by the combined company; costs related to uninsured
losses, condemnation, or environmental issues; the ability to retain key personnel; costs, fees, expenses and charges related to the proposed
transactions and the actual terms of the financings that may be obtained in connection with the proposed transactions; changes in local,
national and international financial markets, insurance rates and interest rates; general adverse economic and local real estate conditions;
the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general downturn in their
business; foreign currency exchange rates; increases in operating costs and real estate taxes; changes in dividend policy or ability to
pay dividends for Realty Income’s or VEREIT’s common stock or preferred stock; impairment charges; unanticipated changes in
Realty Income’s or VEREIT’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until
maturity; pandemics or other health crises, such as coronavirus (COVID-19); and those additional risks and factors discussed in reports
filed with the U.S. Securities and Exchange Commission (“SEC”) by Realty Income and VEREIT. Moreover, other risks and uncertainties
of which Realty Income or VEREIT are not currently aware may also affect each of the companies’ forward-looking statements and may
cause actual results and the timing of events to differ materially from those anticipated. The forward-looking statements made in this
communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements, even if they are subsequently
made available by Realty Income or VEREIT on their respective websites or otherwise. Neither Realty Income nor VEREIT undertakes any obligation
to update or supplement any forward-looking statements to reflect actual results, new information, future events, changes in its expectations
or other circumstances that exist after the date as of which the forward-looking statements were made.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation
of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction, Realty Income
and VEREIT will file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 containing
a joint proxy statement/prospectus and other documents regarding the proposed transaction. The joint proxy statement/prospectus will contain
important information about the proposed transaction and related matters.
STOCKHOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS
(INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT REALTY INCOME, VEREIT AND THE PROPOSED TRANSACTION.
Investors and security holders of Realty Income and VEREIT will be
able to obtain free copies of the registration statement, the joint proxy statement/prospectus and other relevant documents filed by Realty
Income and VEREIT with the SEC through the website maintained by the SEC at www.sec.gov. Copies of the documents filed by Realty Income
with the SEC are also available on Realty Income’s website at www.realtyincome.com, and copies of the documents filed by VEREIT
with the SEC are available on VEREIT’s website at www.vereit.com.
Realty Income, VEREIT and their respective directors and executive
officers may be deemed to be participants in the solicitation of proxies from Realty Income’s and VEREIT’s stockholders in
respect of the proposed transaction. Information regarding Realty Income’s directors and executive officers can be found in Realty
Income’s definitive proxy statement filed with the SEC on April 1, 2021. Information regarding VEREIT’s directors and
executive officers can be found in VEREIT’s definitive proxy statement filed with the SEC on April 15, 2021. Additional information
regarding the interests of such potential participants will be included in the joint proxy statement/prospectus and other relevant documents
filed with the SEC in connection with the proposed transaction if and when they become available. These documents are available on the
SEC’s website and from Realty Income or VEREIT, as applicable, using the sources indicated above.
Item 9.01 Financial Statements and Exhibits.
Exhibit No
|
|
Description
|
|
|
|
2.1*
|
|
Agreement and Plan of Merger, dated as of April 29, 2021, by and among Realty Income Corporation, Rams MD Acquisition Sub I, Inc., Rams Acquisition Sub II, LLC, VEREIT, Inc. and VEREIT Operating Partnership, L.P.
|
99.1
|
|
Updated Joint Investor Presentation, dated April 29, 2021.
|
104
|
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
*Pursuant to Item 601 (6)(2) of Regulation
S-K, the Disclosure Letters to the Merger Agreement (identified therein) have been omitted from this Report and will be furnished to the
SEC supplementally upon request.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
REALTY INCOME CORPORATION
|
|
|
Date:
|
April 30, 2021
|
By:
|
/s/ Michelle Bushore
|
|
|
Michelle Bushore
|
|
|
Executive Vice President, Chief Legal Officer, General Counsel and Secretary
|
Exhibit 2.1
EXECUTION
VERSION
AGREEMENT AND PLAN OF MERGER
by and among
REALTY INCOME CORPORATION,
RAMS MD SUBSIDIARY I, INC.,
RAMS ACQUISITION SUB II, LLC,
VEREIT, INC.,
and
VEREIT
Operating Partnership, L.P.,
Dated as of April 29, 2021
TABLE OF CONTENTS
Article I THE TRANSACTIONS
|
2
|
Section 1.1 The Mergers
|
2
|
Section 1.2 Closing
|
3
|
Section 1.3 Organizational Documents
|
3
|
Section 1.4 Directors and Officers
|
3
|
Section 1.5 Tax Consequences
|
4
|
Article II TREATMENT OF SECURITIES
|
4
|
Section 2.1 Effect on Capital Stock
|
4
|
Section 2.2 Effect on Partnership Interests
|
5
|
Section 2.3 Exchange of Certificates
|
6
|
Section 2.4 Further Assurances
|
11
|
Section 2.5 Treatment of VEREIT Equity Awards
|
11
|
Section 2.6 Adjustments to Prevent Dilution
|
14
|
Section 2.7 Lost Certificates
|
14
|
Section 2.8 No Dissenters’ Rights
|
14
|
Article III REPRESENTATIONS AND WARRANTIES
|
14
|
Section 3.1 Representations and Warranties of VEREIT
|
14
|
Section 3.2 Representations and Warranties of Realty Income
|
30
|
Article IV COVENANTS RELATING TO CONDUCT OF BUSINESS
|
47
|
Section 4.1 Covenants of VEREIT
|
47
|
Section 4.2 Covenants of Realty Income
|
53
|
Article V ADDITIONAL AGREEMENTS
|
56
|
Section 5.1 Preparation of Proxy Statement; Stockholders Meetings
|
56
|
Section 5.2 Access to Information
|
58
|
Section 5.3 Reasonable Best Efforts
|
59
|
Section 5.4 Acquisition Proposals
|
60
|
Section 5.5 NYSE Listing
|
64
|
Section 5.6 Employee Matters
|
65
|
Section 5.7 Fees and Expenses
|
67
|
Section 5.8 Governance
|
67
|
Section 5.9 Exculpation; Indemnification; Directors’ and Officers’ Insurance
|
68
|
Section 5.10 Dividends
|
69
|
Section 5.11 Public Announcements
|
70
|
Section 5.12 Additional Agreements
|
70
|
Section 5.13 Tax Matters
|
70
|
Section 5.14 Financing Cooperation
|
71
|
Section 5.15 Separation and OfficeCo Distribution
|
74
|
Section 5.16 Redemption of VEREIT Series F Preferred Stock
|
77
|
Section 5.17 Notification of Certain Matters; Transaction Litigation.
|
78
|
Section 5.18 Section 16 Matters
|
78
|
Section 5.19 Alternative Structure
|
79
|
Article VI CONDITIONS PRECEDENT
|
79
|
Section 6.1 Conditions to Each Party’s Obligation
|
79
|
Section 6.2 Conditions to Obligations of VEREIT
|
80
|
Section 6.3 Conditions to Obligations of Realty Income
|
81
|
Article VII TERMINATION AND AMENDMENT
|
82
|
Section 7.1 Termination
|
82
|
Section 7.2 Effect of Termination
|
84
|
Article VIII GENERAL PROVISIONS
|
89
|
Section 8.1 Non-Survival of Representations, Warranties and Agreements
|
89
|
Section 8.2 Notices
|
89
|
Section 8.3 Interpretation
|
90
|
Section 8.4 Counterparts
|
91
|
Section 8.5 Entire Agreement; No Third-Party Beneficiaries
|
91
|
Section 8.6 Governing Law
|
91
|
Section 8.7 Severability
|
91
|
Section 8.8 Assignment
|
92
|
Section 8.9 Submission to Jurisdiction
|
92
|
Section 8.10 Enforcement
|
92
|
Section 8.11 WAIVER OF JURY TRIAL
|
93
|
Section 8.12 Amendment
|
93
|
Section 8.13 Extension; Waiver
|
93
|
Article IX DEFINITIONS
|
93
|
Exhibit A
|
Terms of Separation and OfficeCo Distribution
|
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF
MERGER, dated as of April 29, 2021 (this “Agreement”), is by and among REALTY INCOME CORPORATION, a Maryland corporation
(“Realty Income”), RAMS MD SUBSIDIARY I, INC., a Maryland corporation and a direct wholly owned Subsidiary of Realty
Income (“Merger Sub 1”), RAMS ACQUISITION SUB II, LLC, a Delaware limited liability company and a direct wholly owned
Subsidiary of Realty Income (“Merger Sub 2”), VEREIT, INC., a Maryland corporation (“VEREIT”), and
VEREIT OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“VEREIT OP”). Each of Realty Income, Merger Sub
1, Merger Sub 2, VEREIT and VEREIT OP is referred to herein as a “party” and, collectively, the “parties.”
WHEREAS, the parties intend
that, subject to the terms and conditions set forth herein, (a) at the date and time the Partnership Merger (as defined below) becomes
effective (the “Partnership Merger Effective Time”), Merger Sub 2 will be merged with and into VEREIT OP pursuant to
the Partnership Merger, with VEREIT OP continuing as the surviving entity of the Partnership Merger, and in which (i) each outstanding
VEREIT Partnership Common Unit that is owned by VEREIT immediately prior to the Partnership Merger Effective Time will remain outstanding
as one Surviving VEREIT Partnership Common Unit (as defined below), and (ii) each outstanding VEREIT Partnership Common Unit that
is owned by a VEREIT OP Minority Partner (as defined below) immediately prior to the Partnership Merger Effective Time will be converted
into the right to receive a number of newly issued shares of common stock, par value $0.01 per share, of Realty Income (the “Realty
Income Common Stock”) equal to 0.705, subject to adjustment as provided in Section 2.6 (the “Exchange Ratio”);
and (b) immediately following the Partnership Merger Effective Time, at the Effective Time (as defined below), VEREIT shall merge
with and into Merger Sub 1 pursuant to the Merger (as defined below), with Merger Sub 1 continuing as the surviving corporation, and in
which each outstanding share of common stock, par value $0.01 per share, of VEREIT (the “VEREIT Common Stock”) shall
be converted into the right to receive a number of newly issued shares of Realty Income Common Stock equal to the Exchange Ratio;
WHEREAS, each of the respective
boards of directors, and general partners, as applicable, of VEREIT, VEREIT OP, Realty Income, and Merger Sub 1 and Merger Sub 2 has approved
this Agreement and declared this Agreement and the transactions contemplated hereby, including the Partnership Merger and the Merger,
to be advisable and in the best interests of VEREIT, VEREIT OP, Realty Income, Merger Sub 1 and Merger Sub 2, respectively, and their
respective stockholders or equity holders, as applicable, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, each of (a) VEREIT,
in its capacity as the general partner of VEREIT OP, and (b) Realty Income, in its capacity as sole stockholder of Merger Sub 1 and in
its capacity as sole member of Merger Sub 2, has taken all actions required for the execution of this Agreement by VEREIT OP, Merger Sub
1 and Merger Sub 2, respectively, and to approve the consummation by VEREIT OP, Merger Sub 1 and Merger Sub 2, respectively, of the transactions
contemplated hereby, including the Partnership Merger and the Merger, as applicable; and
WHEREAS, for U.S. federal
income tax purposes, (a) it is intended that the Merger will qualify as a “reorganization” within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the “Code”) and (b) this Agreement is intended to be and is adopted
as a “plan of reorganization” for the Merger for purposes of Sections 354 and 361 of the Code.
NOW, THEREFORE, in consideration
of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, intending to be legally bound, the parties hereto agree as follows:
Article
I
THE
TRANSACTIONS
Section
1.1 The
Mergers.
(a) The
Partnership Merger.
(i) Upon
the terms and subject to satisfaction or waiver (subject to applicable Law) of the conditions set forth in this Agreement, and in accordance
with the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”) and the Delaware Limited Liability Company
Act (the “DLLCA”), at the Partnership Merger Effective Time, Merger Sub 2 shall be merged with and into VEREIT OP
(the “Partnership Merger”), the separate existence of Merger Sub 2 shall cease, and VEREIT OP shall continue as the
surviving entity in the Partnership Merger (“Surviving VEREIT OP”). The Partnership Merger will have the effects provided
in this Agreement and as set forth in the DRULPA and the DLLCA.
(ii) The
parties shall cause the Partnership Merger to be consummated by duly executing and filing as soon as practicable on the Closing Date
(as defined below) (i) a certificate of merger with respect to the Partnership Merger (the “Partnership Certificate of Merger”)
with the Delaware Secretary of State, in such form as required by, and executed in accordance with, the applicable provisions of the
DRULPA and the DLLCA and (ii) any other filings, recordings or publications required, if any, under the DRULPA and the DLLCA in connection
with the Partnership Merger. The Partnership Merger shall become effective at the time that the Partnership Certificate of Merger has
been accepted for filing by the Delaware Secretary of State or at such other date and time as may be agreed to by VEREIT and Realty Income
and specified in the Partnership Certificate of Merger, but in any event prior to the Merger (as defined below).
(b) The
Merger.
(i) Upon
the terms and subject to satisfaction or waiver (subject to applicable Law) of the conditions set forth in this Agreement, and in accordance
with the Maryland General Corporation Law (the “MGCL”), at the Effective Time (as defined below), VEREIT shall be
merged with and into Merger Sub 1 (the “Merger” and together with the Partnership Merger, the “Mergers”).
As a result of the Merger, the separate existence of VEREIT shall cease, and Merger Sub 1 shall continue as the surviving corporation
of the Merger (the “Surviving Corporation”) and a wholly owned Subsidiary of Realty Income, with its corporate name
changed to “Realty Income MD Subsidiary I, Inc.” The Merger will have the effects provided in this Agreement and as set forth
in the MGCL.
(ii) The
parties shall cause the Merger to be consummated by duly executing and filing as soon as practicable on the Closing Date (as defined
below) (i) articles of merger for the Merger (the “Articles of Merger”) with the State Department of Assessment and
Taxation of the State of Maryland (“SDAT”), in such form as required by, and executed in accordance with the relevant
provisions of, the MGCL and (ii) any other filings, recordings or publications required, if any, under the MGCL in connection with the
Merger. The Merger shall become effective at the time when the Articles
of Merger have been accepted for record by the SDAT, with such date and time specified in the Articles of Merger, or on such other date
and time (not to exceed 30 days from the date the Articles of Merger are accepted for record) as may be agreed to by VEREIT and Realty
Income and specified in the Articles of Merger (the date and time the Merger becomes effective being the “Effective Time”),
it being understood and agreed that the parties shall cause the Effective Time to occur promptly following the Partnership Merger Effective
Time.
Section
1.2 Closing.
The closing of the Mergers (the “Closing”) will take place on the date that is the second (2nd) Business Day after
the satisfaction or waiver (subject to applicable Law) of the conditions set forth in Article VI (excluding conditions that, by
their terms, are to be satisfied on the Closing Date, but subject to the satisfaction or waiver (subject to applicable Law) of those
conditions as of the Closing), unless another date is agreed to in writing by Realty Income and VEREIT (the date on which the Closing
occurs, the “Closing Date”). The Closing shall take place by electronic exchange of signatures and documents, unless
otherwise agreed to in writing by Realty Income and VEREIT.
Section
1.3 Organizational
Documents.
(a) The
charter of Merger Sub 1 as in effect immediately prior to the Effective Time shall be the charter of the Surviving Corporation until
thereafter amended in accordance with applicable Law. The bylaws of Merger Sub 1 as in effect immediately prior to the Effective Time
shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with applicable Law.
(b) The
limited partnership agreement of VEREIT OP as in effect immediately prior to the Partnership Merger Effective Time shall be the limited
partnership agreement of the Surviving VEREIT OP, with such changes, effective after the Partnership Merger Effective Time, as may be
determined by Realty Income in its sole discretion prior to the Partnership Merger Effective Time, until thereafter amended in accordance
with applicable Law and the applicable provisions of such limited partnership agreement.
Section
1.4 Directors
and Officers.
(a) From
and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable Law, the directors
and officers of Merger Sub 1 immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation.
(b) From
and after the Partnership Merger Effective Time, until the earlier of such time as successors are duly elected or appointed and qualified
in accordance with applicable Law, (i) the general partner of VEREIT OP immediately prior to the Partnership Merger Effective Time shall
be the general partner of Surviving VEREIT OP until the Effective Time, and from and after the Effective Time, the Surviving Corporation
shall be the general partner of Surviving VEREIT OP, and (ii) the officers and authorized signatories of Merger Sub 2 immediately prior
to the Partnership Merger Effective Time shall be the officers and authorized signatories of Surviving VEREIT OP.
Section
1.5 Tax
Consequences. It is intended that, for U.S. federal income tax purposes, the Merger shall qualify as a “reorganization”
within the meaning of Section 368(a) of the Code, and this Agreement is intended to be, and is hereby adopted as, a “plan
of reorganization” for the Merger for purposes of Sections 354 and 361 of the Code.
Article
II
TREATMENT
OF SECURITIES
Section
2.1 Effect
on Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of any of the parties or the
holders of any of the securities of the parties, the following shall occur:
(a) VEREIT
Common Stock. Subject to Section 2.3(e), each share of common stock, par value $0.01 per share, of VEREIT (the “VEREIT
Common Stock”) issued and outstanding immediately prior to the Effective Time shall be automatically converted into a number
of newly issued shares of Realty Income Common Stock equal to the Exchange Ratio. As a result of the Merger, all shares of VEREIT Common
Stock shall no longer be outstanding and shall be automatically cancelled and retired and shall cease to exist as shares of VEREIT Common
Stock, and each evidence of shares in book-entry form previously evidencing shares of VEREIT Common Stock immediately prior to the Effective
Time (the “VEREIT Book-Entry Shares”) and each certificate previously representing shares of VEREIT Common Stock immediately
prior to the Effective Time (the “VEREIT Common Stock Certificates”) shall thereafter represent the right to receive
the shares of Realty Income Common Stock into which such shares of VEREIT Common Stock were converted, in accordance with Section
2.3, without interest.
(b) VEREIT
Series F Preferred Stock. Each share of VEREIT Series F Preferred Stock outstanding immediately prior to the Effective Time shall
be automatically cancelled and retired and shall cease to exist, but the holders thereof immediately prior to the Effective Time shall
retain the right to receive, and shall receive, the payment of the VEREIT Series F Preferred Stock Redemption Amount with respect to
each share of VEREIT Series F Preferred Stock pursuant to the terms of the Series F Preferred Stock Redemption Notice issued pursuant
to Section 5.16.
(c) Realty Income Capital Stock.
(i) Treatment
of Merger Sub 1 Common Stock. Each share of common stock, par value $0.0001 per share, of Merger Sub 1 (the “Merger Sub
1 Common Stock”) issued and outstanding immediately prior to the Merger shall remain outstanding following the Merger as a
share of the Surviving Corporation.
(ii) Treatment
of Realty Income Common Stock. Each share of Realty Income Common Stock outstanding immediately prior to the Merger shall remain
outstanding following the Merger as a share of Realty Income Common Stock.
Section
2.2 Effect
on Partnership Interests. As of the Partnership Merger Effective Time, by virtue of the Partnership Merger and without any action
on the part of any of the parties or the holders of any of the securities of the parties, the following shall occur:
(a) Limited
Liability Company Interests in Merger Sub 2. All of the limited liability company interests of Merger Sub 2 issued and outstanding
immediately prior to the Partnership Merger Effective Time shall, collectively, be converted into and become a number of common units
of partnership interest in Surviving VEREIT OP (each, a “Surviving VEREIT Partnership Common Unit”) equal to the number
of VEREIT Partnership Common Units owned by the VEREIT OP Minority Partners (as defined below), which shall be held by Realty Income.
(b) VEREIT
Partnership Common Units Held by VEREIT. Each VEREIT Partnership Common Unit that is owned by VEREIT immediately prior to the Partnership
Merger Effective Time, including each VEREIT Partnership Common Unit that constitutes VEREIT’s general partnership interest in
VEREIT OP and each VEREIT Partnership Common Unit that constitutes VEREIT’s limited partnership interest in VEREIT OP (the “VEREIT
Partner Units”), shall remain outstanding as one Surviving VEREIT Partnership Common Unit and, immediately following the Effective
Time, shall be held by the Surviving Corporation, and no payment shall be made with respect thereto. For the avoidance of doubt, the
number of Surviving VEREIT Partnership Common Units owned by VEREIT following the Partnership Merger Effective Time (and immediately
prior to the Effective Time) shall equal the number of shares of VEREIT Common Stock to be cancelled pursuant to Section 2.1(a).
(c) VEREIT
Partnership Common Units Held by VEREIT OP Minority Partners. Subject to Section 2.3(e), each VEREIT Partnership Common Unit
issued and outstanding immediately prior to the Partnership Merger Effective Time owned by a holder of VEREIT Partnership Common Units
other than VEREIT (each such holder, a “VEREIT OP Minority Partner”) shall be automatically converted into the right
to receive a number of newly issued shares of Realty Income Common Stock equal to the Exchange Ratio. As a result of the Partnership
Merger, all VEREIT Partnership Common Units issued and outstanding immediately prior to the Partnership Merger Effective Time owned by
a VEREIT OP Minority Partner shall no longer be outstanding and shall be automatically cancelled and retired and shall cease to exist,
and each evidence of such VEREIT Partnership Common Units in book-entry form previously evidencing such VEREIT Partnership Common Units
immediately prior to the Partnership Merger Effective Time (the “VEREIT Book-Entry Partnership Common Units”) and
each certificate previously representing such VEREIT Partnership Common Units immediately prior to the Partnership Merger Effective Time
(the “VEREIT Partnership Common Unit Certificates”) shall thereafter represent the right to receive the shares of
Realty Income Common Stock into which such VEREIT Partnership Common Units were converted, in accordance with Section 2.3, without
interest.
(d) VEREIT
Partnership Series F Preferred Units Held by VEREIT. Each VEREIT Partnership Series F Preferred Unit that is owned by VEREIT immediately
prior to the Partnership Merger Effective Time (the “VEREIT Series F Preferred Partner Units”) shall remain outstanding
as one Series F Preferred Unit in Surviving VEREIT OP (each, a “Surviving VEREIT Partnership Series F Preferred Unit”)
and, immediately following the Effective Time, shall be held by the Surviving Corporation, and no payment shall be made with respect
thereto. For the avoidance of doubt, the number of Surviving VEREIT Partnership Series F Preferred Units owned by VEREIT following the
Partnership Merger Effective Time (and immediately prior to the Effective Time) shall equal the number of shares of VEREIT Series F Preferred
Stock to be redeemed pursuant to Section 5.16.
(e) VEREIT
Partnership Series F Preferred Units Held by VEREIT OP Minority Partners. Each VEREIT Partnership Series F Preferred Unit issued
and outstanding immediately prior to the Partnership Merger Effective Time owned by a VEREIT OP Minority Partner shall be automatically
cancelled and converted into the right to receive cash in the amount of $25.00 (the “VEREIT Partnership Series F Preferred Unit
Liquidation Preference”), plus all accumulated and unpaid distributions to and including the redemption date set forth
in the Series F Preferred Stock Redemption Notice, per unit of VEREIT Partnership Series F Preferred Unit (the “VEREIT Partnership
Series F Preferred Unit Payment Amount”). As a result of the Partnership Merger, all VEREIT Partnership Series F Preferred
Units issued and outstanding immediately prior to the Partnership Merger Effective Time owned by a VEREIT OP Minority Partner shall no
longer be outstanding and shall be automatically cancelled and retired and shall cease to exist, and each evidence of such VEREIT Partnership
Series F Preferred Units in book-entry form previously evidencing such VEREIT Partnership Series F Preferred Units immediately prior
to the Partnership Merger Effective Time (the “VEREIT Book-Entry Partnership Series F Preferred Units,” and, together
with the VEREIT Book-Entry Shares and VEREIT Book-Entry Partnership Series F Preferred Units, the “VEREIT Book-Entry Securities”)
and each certificate previously representing such VEREIT Partnership Series F Preferred Units immediately prior to the Partnership Merger
Effective Time (the “VEREIT Partnership Series F Preferred Unit Certificates,” and, together with the VEREIT Common
Stock Certificates and the VEREIT Partnership Common Unit Certificates, the “VEREIT Certificates”) shall thereafter
represent the right to receive the VEREIT Partnership Series F Preferred Payment Amount, in accordance with Section 2.3, without
interest.
Section
2.3 Exchange
of Certificates.
(a) Exchange
Agent. As of or prior to the Partnership Merger Effective Time, Realty Income shall deposit, or shall cause to be deposited, with
a bank or trust company designated by Realty Income and reasonably acceptable to VEREIT (the “Exchange Agent”), for
the benefit of the holders of VEREIT Certificates, and VEREIT Book-Entry Securities, for exchange in accordance with this Article
II, (i) certificates or, at Realty Income’s option, evidence of shares in book-entry form representing the shares of Realty
Income Common Stock, issuable pursuant to Section 2.1(a) and Section 2.2(c) in exchange for such VEREIT Certificates, or
VEREIT Book-Entry Securities, as applicable and (ii) cash in immediately available funds in an amount sufficient to pay the fractional
share consideration under Section 2.3(e) and any dividends or distributions payable under Section 2.3(c), in each case,
with respect thereto, and the consideration payable under Section 2.2(e) in exchange for such VEREIT Partnership Series F Preferred
Unit Certificates, or VEREIT Book-Entry Partnership Series F Preferred Units, as applicable. Such certificates and evidence of shares
in book-entry form for shares of Realty Income Common Stock (together with any deposited cash sufficient to pay the fractional share
consideration and any dividends or other distributions with respect thereto) so deposited are hereinafter referred to as the “Exchange
Fund.”
(b) Exchange
Procedures.
(i)
As soon as reasonably practicable after the Effective Time (but in no event later than five (5) Business Days thereafter), Realty
Income shall cause the Exchange Agent to mail (and to make available for collection by hand) to each holder of record of one or more VEREIT
Certificates as of immediately prior to the Partnership Merger Effective Time (with respect to the VEREIT OP Minority Partners) or the
Effective Time (with respect to the holders of VEREIT Common Stock), (1) a letter of transmittal (a “Letter of Transmittal”),
which shall specify that delivery shall be effected, and risk of loss and title to the VEREIT Certificates shall pass only upon proper
delivery of the VEREIT Certificates (or affidavits of loss in lieu thereof), to the Exchange Agent, and which Letter of Transmittal shall
be in such form and have such other provisions as Realty Income may reasonably specify, and (2) instructions for use in effecting
the surrender of (A) in the case of VEREIT Certificates other than VEREIT Partnership Series F Preferred Unit Certificates, the VEREIT
Certificates in exchange for certificates or, at Realty Income’s option, evidence of shares in book-entry form representing the
shares of Realty Income Common Stock issuable pursuant to Section 2.1(a) and Section 2.2(c), together with, in the case
of Realty Income Common Stock, any amounts that such holder has the right to receive in respect of dividends or other distributions on
shares of Realty Income Common Stock pursuant to and in accordance with Section 2.3(c) and any cash such holder is entitled to
receive in lieu of fractional shares of Realty Income Common Stock pursuant to and in accordance with Section 2.3(e), or (B) in
the case of VEREIT Partnership Series F Preferred Unit Certificates, the consideration payable under Section 2.2(e).
(ii) Upon
surrender of a VEREIT Certificate (or affidavit of loss in lieu thereof) for cancellation to the Exchange Agent, together with a Letter
of Transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may reasonably
be required by the Exchange Agent, the holder of such VEREIT Certificate shall be entitled to receive in exchange therefor (1) in the
case of VEREIT Certificates other than VEREIT Partnership Series F Preferred Unit Certificates, the shares of Realty Income Common Stock
formerly represented by such VEREIT Certificate pursuant to the provisions of this Article II, plus any amounts that such holder
has the right to receive in respect of dividends or other distributions on shares of Realty Income Common Stock pursuant to and in accordance
with Section 2.3(c) and any cash such holder is entitled to receive in lieu of fractional shares of Realty Income Common Stock
that such holder has the right to receive pursuant to and in accordance with Section 2.3(e), or (2) in the case of VEREIT Partnership
Series F Preferred Unit Certificates, the consideration payable under Section 2.2(e), in each case, to be mailed, made
available for collection by hand or delivered by wire transfer, within five (5) Business Days following the later to occur of (A) the
Effective Time or (B) the Exchange Agent’s receipt of such VEREIT Certificate (or affidavit of loss in lieu thereof), and the VEREIT
Certificate (or affidavit of loss in lieu thereof) so surrendered shall be forthwith cancelled. The Exchange Agent shall accept such
VEREIT Certificates (or affidavits of loss in lieu thereof) upon compliance with such reasonable terms and conditions as the Exchange
Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. Until surrendered as contemplated
by this Section 2.3(b), each VEREIT Certificate shall be deemed, at any time after the Effective Time, to represent only the right
to receive, upon such surrender, the consideration as expressly set forth in this Article II.
(iii) As
promptly as practicable following the Effective Time (but in no event later than five (5) Business Days thereafter), Realty Income shall
cause the Exchange Agent:
(A) to
issue to each holder of VEREIT Book-Entry Securities as of immediately prior to the Partnership Merger Effective Time (with respect to
the VEREIT OP Minority Partners) or the Effective Time (with respect to the holders of VEREIT Common Stock) (A) in the case of VEREIT
Book-Entry Securities other than VEREIT Book-Entry Partnership Series F Preferred Units, that number of uncertificated whole shares of
Realty Income Common Stock that such holder is entitled to receive in respect of such VEREIT Book-Entry Securities pursuant to this Article
II, or (B) in the case of VEREIT Book-Entry Partnership Series F Preferred Units, the consideration payable under Section 2.2(e),
in each case, automatically without any action on the part of such holder or delivery of any certificate, Letter of Transmittal or
other evidence to the Exchange Agent, and such VEREIT Book-Entry Securities shall have been cancelled in accordance with this Article
II; and
(B) subject
to Section 2.3(h), to issue and deliver to each holder of VEREIT Book-Entry Securities a check or wire transfer of any amounts
that such holder has the right to receive in respect of dividends or other distributions on shares of Realty Income Common Stock pursuant
to and in accordance with Section 2.3(c) and any cash such holder is entitled to receive in lieu of fractional shares of Realty
Income Common Stock that such holder has the right to receive pursuant to and in accordance with Section 2.3(e)
(iv) In
the event of a transfer of ownership of shares of VEREIT Common Stock or of VEREIT Partnership Common Units or VEREIT Partnership Series
F Preferred Units held by VEREIT OP Minority Partners that is not registered in the transfer records of VEREIT or VEREIT OP, as applicable,
it shall be a condition of payment that any VEREIT Certificate surrendered in accordance with the procedures set forth in this Section
2.3 shall be properly endorsed or shall be otherwise in proper form for transfer, or any VEREIT Book-Entry Securities shall be properly
transferred, and that the Person requesting such payment shall have paid any Transfer Taxes (as defined below) and other Taxes required
by reason of the payment of the consideration to a Person other than the registered holder of the VEREIT Certificate surrendered or VEREIT
Book-Entry Securities properly transferred, or shall have established to the satisfaction of Realty Income that such Tax either has been
paid or is not applicable. No interest shall be paid or accrued for the benefit of (A) holders of the VEREIT Certificate on the consideration
otherwise payable upon the surrender of the VEREIT Certificate pursuant to this Article II or (B) VEREIT Book-Entry Securities
on the consideration otherwise payable in respect of such shares pursuant to this Article II.
(c) Dividends
or Other Distributions with Respect to Realty Income Common Stock. No dividends or other distributions declared or made with respect
to Realty Income Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered VEREIT Certificate
with respect to the shares of Realty Income Common Stock represented thereby and issuable hereunder, and all such dividends and other
distributions shall instead be deposited by Realty Income with the Exchange Agent and shall be included in the Exchange Fund, and no
cash payment in lieu of fractional shares shall be paid to any such holder pursuant to Section 2.3(e), in each case until the
holder of such VEREIT Certificate shall surrender such VEREIT Certificate in accordance with this Article II. Subject to the effect
of applicable Laws, following the surrender of any such VEREIT Certificate (other than VEREIT Partnership Series F Preferred Unit Certificates),
there shall be paid to the holder of the certificates and/or evidence of shares in book-entry form representing whole shares of Realty
Income Common Stock issued in exchange therefor, without interest, (i) at the time of such surrender the amount of any cash payable with
respect to a fractional share of Realty Income Common Stock to which such holder is entitled pursuant to Section 2.3(e) and the
amount of dividends or other distributions with a record date after the Effective Time theretofore paid (but withheld pursuant to the
immediately preceding sentence) with respect to such whole shares of Realty Income Common Stock and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Realty Income Common Stock.
(d) No
Further Ownership Rights. All shares of Realty Income Common Stock issued upon conversion of shares of VEREIT Common Stock or VEREIT
Partnership Common Units (including any cash paid pursuant to Section 2.3(c), Section 2.3(e) or Section 2.3(i))
shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of VEREIT Common Stock or VEREIT Partnership
Common Units, respectively. All consideration paid upon cancellation of VEREIT Partnership Series F Preferred Units pursuant to Section
2.3(e) shall be deemed to have been paid in full satisfaction of all rights pertaining to VEREIT Partnership Series F Preferred Units.
There shall be no further registration of transfers on the stock transfer books of Realty Income or the Surviving Corporation of the
shares of VEREIT Common Stock or on the unit transfer books of VEREIT OP of the VEREIT Partnership Common Units held by VEREIT OP Minority
Partners which were outstanding immediately prior to the Partnership Merger Effective Time or the Effective Time, as applicable. If,
after the Partnership Merger Effective Time or the Effective Time, as applicable, VEREIT Certificates are presented to Realty Income
or the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II.
(e) No Fractional Shares. No certificates or scrip representing fractional shares of Realty Income Common Stock shall be issued
upon the surrender for exchange of VEREIT Certificates, and/or VEREIT Book-Entry Securities representing VEREIT Common Stock or VEREIT
Partnership Common Units, and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder
of Realty Income. In lieu thereof, upon surrender of the applicable VEREIT Certificates or VEREIT Book-Entry Securities, Realty Income
shall pay each holder of VEREIT Common Stock and each holder of VEREIT Partnership Common Units an amount in cash equal to the product
obtained by multiplying (i) the fractional share interest to which such holder (after taking into account all shares of VEREIT Common
Stock or VEREIT Partnership Common Units, as applicable, held at the Partnership Merger Effective Time (with respect to the VEREIT OP
Minority Partners) or the Effective Time (with respect to the holders of VEREIT Common Stock) by such holder) would otherwise be entitled
by (ii) the closing price on the New York Stock Exchange (the “NYSE”), as reported on the consolidated tape at the
close of the NYSE regular session of trading, for a share of Realty Income Common Stock on the last trading day immediately preceding
the Effective Time.
(f) Termination
of Exchange Fund. Any portion of the Exchange Fund that remains undistributed to the former holders of shares of VEREIT Common Stock
(whose such shares are entitled to be exchanged for shares of Realty Income Common Stock in accordance with and subject to the provisions
of this Article II), the holders of VEREIT Partnership Common Units (whose such VEREIT Partnership Common Units are entitled to
be exchanged for shares of Realty Income Common Stock in accordance with and subject to the provisions of this Article II), and
the holders of VEREIT Partnership Series F Preferred Units (whose such VEREIT Partnership Series F Preferred Units are entitled to be
exchanged for consideration in accordance with and subject to the provisions of this Article II) for nine (9) months after the
Effective Time shall be delivered to the Surviving Corporation, upon demand, and any such former holders of shares of VEREIT Common Stock,
VEREIT Partnership Common Units or VEREIT Partnership Series F Preferred Units who have not theretofore complied with this Article
II shall thereafter look only to the Surviving Corporation for payment of their claim for VEREIT Common Stock, VEREIT Partnership
Common Units or VEREIT Partnership Series F Preferred Units, as applicable, including any amounts in respect of dividends or other distributions
on shares of Realty Income Common Stock pursuant to and in accordance with Section 2.3(c) and any cash in lieu of fractional shares
of Realty Income Common Stock pursuant to and in accordance with Section 2.3(e).
(g) No
Liability. None of VEREIT, VEREIT OP, Realty Income, Merger Sub 1, Merger Sub 2 or the Surviving Corporation or any employee, officer,
director, agent or affiliate of any of them shall be liable to any holder of shares of VEREIT Common Stock or any holder of VEREIT Partnership
Common Units for shares of Realty Income Common Stock (or dividends or other distributions with respect thereto) or cash in lieu of fractional
shares of Realty Income Common Stock or any holder of VEREIT Partnership Series F Preferred Units for the consideration payable pursuant
to Section 2.3(e) from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat
or similar Law. Any amounts remaining unclaimed by holders of any such shares or units immediately prior to the time at which such amounts
would otherwise escheat to, or become property of, any Governmental Entity (as defined below) shall, to the extent permitted by applicable
Law, become the property of the Surviving Corporation, free and clear of any claims or interest of any such holders or their successors,
assigns or personal Representatives previously entitled thereto.
(h) Withholding.
Each of Realty Income, VEREIT, Merger Sub 1, Merger Sub 2, the Surviving Corporation, VEREIT OP, the Surviving VEREIT OP and the Exchange
Agent, as applicable, shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of VEREIT Common Stock, VEREIT Partnership Common Units, VEREIT Series F Preferred Stock, VEREIT Partnership Series
F Preferred Units or VEREIT Equity Awards (as defined below) (including with respect to any related accrued dividends, dividend equivalents
or other distributions) such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code
and the rules and regulations promulgated thereunder, or any provision of state, local or foreign tax law. To the extent that amounts
are so deducted or withheld by Realty Income, VEREIT, Merger Sub 1, Merger Sub 2, the Surviving Corporation, VEREIT OP, the Surviving
VEREIT OP or the Exchange Agent, such withheld amounts shall be paid to the appropriate taxing authority within the period required under
applicable Law and shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction
and withholding was made by Realty Income, VEREIT, Merger Sub 1, Merger Sub 2, the Surviving Corporation, VEREIT OP, the Surviving VEREIT
OP or the Exchange Agent, as applicable.
(i) Dividends
and Other Distributions. In the event that (a) a dividend or other distribution with respect to the shares of VEREIT Common Stock
that is permitted under the terms of this Agreement (1) is declared after the date of this Agreement with a record date prior to the
Effective Time and (2) has not been paid as of the Effective Time, or (b) a dividend or other distribution with respect to the VEREIT
Partnership Common Units that is permitted under the terms of this Agreement (1) is declared after the date of this Agreement with a
record date prior to the Partnership Merger Effective Time and (2) has not been paid as of the Partnership Merger Effective Time,
then, in each case, the holders of shares of VEREIT Common Stock or the holders of VEREIT Partnership Common Units, as applicable, shall
be entitled to receive such dividend or other distribution from VEREIT or VEREIT OP, as applicable, as of immediately prior to the Effective
Time or the Partnership Merger Effective Time, as applicable (subject to Section 5.10).
Section
2.4 Further
Assurances. If, at any time following the Effective Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm,
of record or otherwise, in Realty Income its right, title or interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of any party hereto, or (b) otherwise to carry out the purposes of this Agreement, Realty Income and its proper
officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of any such Person, all
such deeds, bills of sale, assignments and assurances and to do, in the name and on behalf of any such Person, all such other acts and
things as may be necessary, desirable or proper to vest, perfect or confirm Realty Income’s right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of such party and otherwise to carry out the purposes of
this Agreement.
Section
2.5 Treatment
of VEREIT Equity Awards.
(a) VEREIT Stock Options. As of the Effective Time, by virtue of the Merger and without any action on the part of the holders
thereof, each VEREIT Stock Option, whether vested or unvested, that is outstanding and unexercised as of immediately prior to the Effective
Time shall be assumed by Realty Income and shall be converted into a Realty Income Stock Option to acquire (i) that number of shares of
Realty Income Common Stock (rounded down to the nearest whole number of shares) equal to the product obtained by multiplying (A) the number
of shares of VEREIT Common Stock subject to such VEREIT Stock Option as of immediately prior to the Effective Time by (B) the Exchange
Ratio, (ii) at an exercise price per share of Realty Income Common Stock (rounded up to the nearest whole cent) equal to the quotient
obtained by dividing (A) the exercise price per share of VEREIT Common Stock of such VEREIT Stock Option by (B) the Exchange Ratio; provided,
however, that each such VEREIT Stock Option which is an “incentive stock option” (as defined in Section 422 of
the Code) shall be adjusted in accordance with the foregoing in a manner consistent with the requirements of Section 424 of the Code.
The parties intend that the adjustments in this Section 2.5(a) are in accordance with Treasury Regulation Section 1.409A-1(B)(5)(v)(D)
and will not subject any VEREIT Stock Option to Section 409A of the Code. Except as otherwise provided in this Section 2.5(a),
each such VEREIT Stock Option assumed and converted into a Realty Income Stock Option pursuant to this Section 2.5(a) shall continue
to have, and shall be subject to, the same terms and conditions as applied to the corresponding VEREIT Stock Option as of immediately
prior to the Effective Time.
(b) VEREIT
RSU Awards. As of the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof, each VEREIT
RSU Award that is outstanding as of immediately prior to the Effective Time (whether or not then vested) shall be assumed by Realty Income
and shall be converted into a Realty Income RSU Award with respect to a number of whole shares of Realty Income Common Stock (rounded
to the nearest whole number of shares) equal to the product obtained by multiplying (A) (1) for each time-based VEREIT RSU Award, the
number of shares of VEREIT Common Stock subject to such VEREIT RSU Award as of immediately prior to the Effective Time or (2) for each
performance-based VEREIT RSU Award, the number of shares of VEREIT Common Stock subject to such performance-based VEREIT RSU Award determined
based on the actual level of achievement of the applicable performance goals as of immediately prior to the Effective Time and otherwise
in accordance with the applicable award agreement by (B) the Exchange Ratio; provided, that the actual level of achievement of
performance goals based on relative total shareholder return shall be determined prior to the Effective Time by the Compensation Committee
of the Board of Directors of VEREIT and shall be calculated by measuring the total shareholder return of each applicable peer company
through the second to last trading day prior to the Effective Time and, in the case of VEREIT, by computing such total shareholder return
using a per share price of VEREIT Common Stock equal to the product, rounded to two decimal places, of (x) the Exchange Ratio, multiplied
by (y) the volume-weighted average trading price of Realty Income Common Stock over the five consecutive trading days ending on the second
to last trading day prior to the Effective Time. As of immediately after the Effective Time, each such Realty Income RSU Award shall
be credited with a dividend equivalent balance that is equal to the dividend equivalent balance credited on the corresponding VEREIT
RSU Award as of immediately prior to the Effective Time. Except as otherwise provided in this Section 2.5(b), each VEREIT RSU
Award assumed and converted into a Realty Income RSU Award pursuant to this Section 2.5(b) shall continue to have, and shall be
subject to, the same terms and conditions as applied to the corresponding VEREIT RSU Award as of immediately prior to the Effective Time
(including dividend equivalent rights and including all time and service vesting conditions, but excluding performance vesting conditions).
For the avoidance of doubt, time and service vesting conditions applicable to performance-vesting VEREIT RSU Awards that are converted
into Realty Income RSU Awards shall continue to apply to such Realty Income RSU Awards through the date on which the applicable performance
period would have otherwise ended (or such later date as may be applicable under the applicable VEREIT RSU Award agreement).
(c) VEREIT DSU Awards. As of the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof,
each VEREIT DSU Award that is outstanding as of immediately prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holders thereof, become fully vested and be automatically converted into the right to receive, at or within
five (5) Business Days following the Effective Time, a number of newly issued shares of Realty Income Common Stock equal to the product
obtained by multiplying the number of shares of VEREIT Common Stock subject to such VEREIT DSU Award as of immediately prior to the Effective
Time by the Exchange Ratio (rounded down to the nearest whole number of shares), with any resulting fractional share being treated in
accordance with Section 2.3(e) above and with any Dividend Credits (as defined in the applicable VEREIT DSU Award agreement) with
respect to such VEREIT DSU Award that have not been converted into additional units prior to the Effective Time paid in cash at, or within
five (5) Business Days following, the Effective Time in accordance with the applicable VEREIT DSU Award agreement; provided that
solely to the extent that settlement of a VEREIT DSU Award at the Effective Time would result in the application of a tax penalty on the
holder of such award pursuant to Section 409A of the Code, such VEREIT DSU Award shall be assumed by Realty Income and shall be converted
into a Realty Income DSU Award with respect to a number of whole shares of Realty Income Common Stock (rounded to the nearest whole number
of shares) equal to the product obtained by multiplying the number of shares of VEREIT Common Stock subject to such VEREIT DSU Award as
of immediately prior to the Effective Time by the Exchange Ratio, which Realty Income DSU Award shall be credited with the amount of the
Dividend Credits (as defined in the applicable VEREIT DSU Award Agreement) that have not been converted into additional units prior to
the Effective Time and are credited on the corresponding VEREIT DSU Award as of immediately prior to the Effective Time. Each VEREIT DSU
Award assumed and converted into a Realty Income DSU Award pursuant to this Section 2.5(c) shall continue to have, and shall be
subject to, the same terms and conditions as applied to the corresponding VEREIT DSU Award as of immediately prior to the Effective Time
(including with respect to dividend equivalent rights). Any payment in respect of any VEREIT DSU Award which immediately prior to such
assumption and conversion or cancellation, as applicable, was treated as “deferred compensation” subject to Section 409A of
the Code shall be made in a manner that complies with Section 409A of the Code.
(d) VEREIT Actions. Prior to the Effective Time, the Board of Directors of VEREIT (or an applicable committee thereof) shall
adopt such resolutions as are necessary to provide for the treatment of the VEREIT Stock Options, VEREIT RSU Awards, and VEREIT DSU Awards
(collectively, the “VEREIT Equity Awards”) as contemplated by this Section 2.5.
(e) Plans
and Awards Assumed by Realty Income; Realty Income Actions. At the Effective Time, Realty Income shall assume all obligations in
respect of the VEREIT Equity Plans, including each outstanding VEREIT Equity Award that is converted into a Realty Income Stock Option,
Realty Income RSU Award or Realty Income DSU Award. Prior to the Effective Time, the Board of Directors of Realty Income (or an applicable
committee thereof) shall adopt such resolutions as are necessary to reserve for issuance a number of authorized but unissued shares of
Realty Income Common Stock for delivery upon exercise or settlement of the Realty Income Stock Options, Realty Income RSU Awards or Realty
Income DSU Award in accordance with this Section 2.5. Effective as of the Effective Time, Realty Income shall file a registration
statement on Form S-8 (or any successor or other appropriate form) with respect to the shares of Realty Income Common Stock subject to
such Realty Income Stock Options, Realty Income RSU Awards and Realty Income DSU Awards. Realty Income may process any cash payments
contemplated by this Section 2.5, including accrued distributions and VEREIT dividend equivalents, through the payroll of Realty
Income, the Surviving Corporation or their respective affiliates (rather than through the Exchange Agent).
Section
2.6 Adjustments
to Prevent Dilution. If, at any time during the period between the date of this Agreement and the Effective Time, there is a change
in the number or class of (i) issued and outstanding shares of VEREIT Common Stock, (ii) issued and outstanding VEREIT Partnership Common
Units or (iii) issued and outstanding shares of Realty Income Common Stock, or securities convertible or exchangeable into shares of
VEREIT Common Stock, VEREIT Partnership Common Units or shares of Realty Income Common Stock, in each case, as a result of a reclassification,
stock or unit split (including reverse stock or unit split), stock or unit dividend or distribution (including any dividend or distribution
of securities convertible into stock or units) or other stock or unit distribution, recapitalization, combination or exchange offer of
shares or other similar transaction, the Exchange Ratio shall be equitably adjusted, without duplication, to proportionally reflect any
such change; provided, that this Section 2.6 shall not be construed to permit VEREIT or Realty Income to take any action
with respect to its or its Subsidiaries’ securities that is otherwise prohibited by the terms of this Agreement.
Section
2.7 Lost
Certificates. If any VEREIT Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such VEREIT Certificate or to be lost, stolen or destroyed and, if requested by Realty Income, the posting by such
Person of a bond, in such reasonable amount as Realty Income may direct, as indemnity against any claim that may be made against it with
respect to such VEREIT Certificate, the Exchange Agent (or, if subsequent to the termination of the Exchange Fund and subject to Section
2.3(f), Realty Income) shall issue, in exchange for such lost, stolen or destroyed VEREIT Certificate, the shares of Realty Income
Common Stock into which the shares of VEREIT Common Stock or VEREIT Partnership Common Units represented by such VEREIT Certificate were
converted pursuant to Article II, together with any amounts that such holder has the right to receive in respect of dividends
or other distributions on shares of Realty Income Common Stock pursuant to and in accordance with Section 2.3(c) and any cash
such holder is entitled to receive in lieu of fractional shares of Realty Income Common Stock pursuant to and in accordance with Section
2.3(e).
Section
2.8 No
Dissenters’ Rights. No dissenters’, or objecting stockholders’ appraisal rights shall be available with respect
to the Mergers or the other transactions contemplated by this Agreement.
Article
III
REPRESENTATIONS
AND WARRANTIES
Section
3.1 Representations and Warranties of VEREIT. Except (x) as set forth in the disclosure letter delivered to Realty Income
by VEREIT immediately prior to the execution of this Agreement (the “VEREIT Disclosure Letter”) (it being understood
that any matter disclosed pursuant to any section or subsection of the VEREIT Disclosure Letter shall be deemed to be disclosed for all
purposes of this Agreement and the VEREIT Disclosure Letter, as long as the relevance of such disclosure is reasonably apparent on the
face of such disclosure) or (y) as disclosed in the VEREIT SEC Documents (as defined below) filed with the SEC within two (2) years prior
to the date hereof (other than disclosures in the “Risk Factors” or “Forward Looking Statements” sections of
such reports or any other disclosures in such reports to the extent they are predictive, cautionary or forward-looking in nature), VEREIT
hereby represents and warrants to Realty Income as follows:
(a) Organization,
Standing and Power.
(i) VEREIT
and each of its Subsidiaries is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization,
with the corporate, partnership or limited liability company (as the case may be) power and authority to own and operate its business
as presently conducted. VEREIT and each of its Subsidiaries is duly qualified as a foreign corporation or other entity to do business
and is in good standing in each jurisdiction where the ownership and operation of its properties or the nature of its activities makes
such qualification necessary, except for such failures to be so qualified as would not have, or would not reasonably be expected to have,
individually or in the aggregate, a VEREIT Material Adverse Effect.
(ii) Section
3.1(a)(ii) of the VEREIT Disclosure Letter sets forth a true and complete list of the Subsidiaries of VEREIT, together with the jurisdiction
of organization or incorporation, as the case may be, of each such Subsidiary. Each Subsidiary of VEREIT and, to VEREIT’s knowledge,
each joint venture of VEREIT, is in compliance in all material respects with the terms of its organizational documents.
(iii) Except
as set forth on Section 3.1(a)(iii) of the VEREIT Disclosure Letter, neither VEREIT, VEREIT OP nor any of their Subsidiaries directly
or indirectly owns any interest or investment (whether equity or debt) in any Person (other than in the Subsidiaries of VEREIT, and investments
in short-term investment securities that would constitute “cash items” within the meaning of Section 856(c)(4)(A) of the
Code).
(iv) Section
3.1(a)(iv) of the VEREIT Disclosure Letter sets forth a true and complete list of each Subsidiary of VEREIT that is a REIT, a Qualified
REIT Subsidiary or Taxable REIT Subsidiary.
(b) Capital
Structure.
(i) The
authorized capital stock of VEREIT consists of 1,500,000,000 shares of VEREIT Common Stock and 100,000,000 shares of preferred stock,
par value $0.01 per share, of VEREIT. As of the close of business on April 23, 2021, (A) (i) 229,129,954 shares of VEREIT Common Stock
were issued and outstanding, (ii) 14,871,246 shares of VEREIT Series F Preferred Stock were issued and outstanding, (iii) 20,028,207
shares of VEREIT Common Stock were reserved for issuance pursuant to future awards under the VEREIT Equity Plans, (iv) 1,040,598 shares
of VEREIT Common Stock were subject to outstanding VEREIT Stock Options, (v) 1,090,834 shares of VEREIT Common Stock were subject to
outstanding VEREIT RSU Awards (assuming maximum performance for any such awards that are subject to performance-based vesting), (vi)
113,868 shares of VEREIT Common Stock were subject to outstanding VEREIT DSU Awards, (vii) approximately 152,033.8 shares of VEREIT Common
Stock were reserved for issuance in respect of VEREIT Partnership Common Units and (viii) no shares of VEREIT Common Stock were held
by any Subsidiaries of VEREIT and (B) (i) 229,281,987.8 VEREIT Partnership Common Units were issued and outstanding, of which 152,033.8
VEREIT Partnership Common Units were owned by the Persons and in the amounts indicated in Section 3.1(b)(i) of the VEREIT Disclosure
Letter and 229,129,954 VEREIT Partnership Common Units were owned by VEREIT, (ii) 14,921,012 VEREIT Partnership Series F Preferred Units
were issued and outstanding, of which 49,766 VEREIT Partnership Series F Preferred Units were owned by the Persons and in the amounts
indicated in Section 3.1(b)(i) and 14,871,246 VEREIT Partnership Series F Preferred Units were owned by VEREIT, (iii) no other
VEREIT Partnership Units (including VEREIT Partnership Preferred Units) were issued and outstanding, and (iv) no VEREIT Partnership Units
were held by any Subsidiaries of VEREIT. All outstanding shares of VEREIT Common Stock and VEREIT Series F Preferred Stock, and all outstanding
VEREIT Partnership Units have been duly authorized and validly issued and are fully paid and non-assessable and not subject to preemptive
rights.
(ii) No
bonds, debentures, notes or other Indebtedness having the right to vote on any matters on which stockholders may vote (“Voting
Debt”) of VEREIT or any of its Subsidiaries is issued or outstanding.
(iii) As
of the close of business on April 23, 2021, except for (A) this Agreement and the VEREIT Partnership Agreement, (B) outstanding VEREIT
Partnership Units, (C) VEREIT Equity Awards issued and outstanding under the VEREIT Equity Plans, (D) with respect to any joint venture
in which VEREIT or any of its subsidiaries owns an interest, and (E) as set forth on Section 3.1(b)(iii) of the VEREIT Disclosure
Letter, there are no options, warrants, calls, rights, commitments or agreements of any character to which VEREIT or any Subsidiary of
VEREIT is a party or by which it or any such Subsidiary is bound obligating VEREIT or any Subsidiary of VEREIT to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock or any Voting Debt or stock appreciation rights of VEREIT
or of any Subsidiary of VEREIT or obligating VEREIT or any Subsidiary of VEREIT to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. As of the close of business on April 23, 2021, there are no outstanding contractual obligations
of VEREIT or any of its Subsidiaries, except as set forth on Section 3.1(b)(iii) of the VEREIT Disclosure Letter, (1) other than
in respect of VEREIT Partnership Units under the VEREIT Partnership Agreement or in respect of VEREIT Equity Awards under the VEREIT
Equity Plans, to repurchase, redeem or otherwise acquire any shares of capital stock of VEREIT or any of its Subsidiaries or (2) pursuant
to which VEREIT or any of its Subsidiaries is or could be required to register shares of VEREIT Common Stock or other securities under
the U.S. Securities Act of 1933, as amended (the “Securities Act”).
(c) Authority.
(i) Each of VEREIT and VEREIT OP has all requisite corporate or limited partnership power and authority to execute, deliver and perform
their applicable obligations under this Agreement and, subject to the receipt of the affirmative vote of the holders of the majority of
the outstanding shares of VEREIT Common Stock to approve the Merger (the “VEREIT Required Stockholders Vote”) and the
consent of VEREIT, in its capacity as general partner of VEREIT OP, to consummate the transactions contemplated hereby, as applicable
(including the Partnership Merger). The execution and delivery of this Agreement by VEREIT and VEREIT OP, as applicable, and the performance
by VEREIT and VEREIT OP, as applicable, of their obligations hereunder and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of VEREIT (in the case of VEREIT) and VEREIT (in the case of VEREIT OP), and
no other corporate or limited partnership action on the part of VEREIT and VEREIT OP, other than the receipt of the VEREIT Required Stockholders
Vote is necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement (in the case of VEREIT and VEREIT
OP) has been duly and validly executed and delivered by VEREIT and VEREIT OP, as applicable, and (subject to execution by the other parties
thereto) constitutes a valid and binding obligation of each of VEREIT and VEREIT OP, subject to execution by the other parties thereto,
enforceable against VEREIT and VEREIT OP, as applicable, in accordance with its terms, except as enforceability is subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws of general applicability relating
to or affecting creditors’ rights generally and general equitable principles.
(ii) Except
as set forth on Section 3.1(c)(ii) of the VEREIT Disclosure Letter, the execution and delivery of this Agreement by VEREIT
and VEREIT OP does not, and the consummation by VEREIT and VEREIT OP of the transactions contemplated hereby, will not
(A) subject to the receipt of the VEREIT Required Stockholders Vote, conflict with, or result in any violation of, or
constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or the loss of a material benefit under, or the creation of a Lien, pledge, security interest,
charge or other encumbrance on any assets (any such conflict, violation, default, right of termination, cancellation or
acceleration, loss or creation, regardless of context, a “Violation”) pursuant to, any provision of the
organizational documents of VEREIT or VEREIT OP, or (B) subject to obtaining or making the notification, filings, consents,
approvals, orders, authorizations, registrations, waiting period expirations or terminations, declarations and filings referred to
in paragraph (iii) below, result in any Violation of any Contract, VEREIT Benefit Plan or Law applicable to VEREIT or any of its
Subsidiaries or their respective properties or assets, which Violation under this clause (B) only would have, or would reasonably be
expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect.
(iii) Except
for (A) the applicable requirements, if any, of state securities or “blue sky” Laws (“Blue Sky Laws”),
(B) required filings or approvals under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”)
and the Securities Act, (C) any filings or approvals required under the rules and regulations of the NYSE, (D) any required filings or
authorizations, clearances, consents, approvals, or waiting period terminations or expirations under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 as amended (the “HSR Act”) and foreign antitrust, competition or merger control Laws, (E)
the filing of the Articles of Merger with, and the acceptance for record of the Articles of Merger by, the SDAT pursuant to the MGCL
and (F) the filing of the Partnership Certificate of Merger with the Delaware Secretary of State pursuant to the DRULPA and the DLLCA,
no consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission
or other governmental authority or instrumentality, domestic or foreign, or industry self-regulatory organization (a “Governmental
Entity”), is required by or with respect to VEREIT or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by VEREIT and VEREIT OP or the consummation by VEREIT and VEREIT OP of the transactions contemplated hereby, as applicable,
the failure to make or obtain which would have, or would reasonably be expected to have, individually or in the aggregate, a VEREIT Material
Adverse Effect.
(d) SEC Documents; Regulatory Reports.
(i) VEREIT
has timely filed or furnished to the SEC all reports, schedules, statements and other documents required to be filed or furnished by
it under the Securities Act or the Exchange Act since December 31, 2018 together with all certifications required pursuant to the
Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”) (such documents, as supplemented or amended since
the time of filing, and together with all information incorporated by reference therein and schedules and exhibits thereto, the “VEREIT
SEC Documents”). As of their respective dates, the VEREIT SEC Documents at the time filed (or, if amended or superseded by
a filing prior to the date of this Agreement, as of the date of such filing) complied in all material respects with the applicable requirements
of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, and the rules and regulations of the SEC promulgated thereunder applicable
to such VEREIT SEC Documents, and none of the VEREIT SEC Documents when filed contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of VEREIT included in the VEREIT SEC Documents complied as to form, as
of their respective dates of filing with the SEC, in all material respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto (except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC), have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated
in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act)
and fairly present in all material respects the consolidated financial position of VEREIT and its consolidated Subsidiaries and the consolidated
results of operations, changes in stockholders’ equity and cash flows of such companies as of the dates and for the periods shown.
(ii)
VEREIT has established and maintains a system of internal control over financial reporting (as defined in Rules 13a–15(f)
and 15d–15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting.
VEREIT (A) has designed and maintains disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e) of the
Exchange Act) to provide reasonable assurance that all information required to be disclosed by VEREIT in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules
and forms and is accumulated and communicated to VEREIT’s management as appropriate to allow timely decisions regarding required
disclosure, and (B) has disclosed, based on its most recent evaluation of internal control over financial reporting, to VEREIT’s
outside auditors and the audit committee of the Board of Directors of VEREIT (1) all significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect VEREIT’s
ability to record, process, summarize and report financial information and (2) any fraud, whether or not material, that involves management
or other employees who have a significant role in VEREIT’s internal control over financial reporting. Since December 31, 2018,
any material change in internal control over financial reporting required to be disclosed in any VEREIT SEC Document has been so disclosed.
(iii)
Except as set forth on Section 3.1(d)(iii) of the VEREIT Disclosure Letter, VEREIT has made available to Realty Income complete
and correct copies of all written correspondence between the SEC, on the one hand, and VEREIT, on the other hand, since December 31,
2018.
(iv)
Neither VEREIT, VEREIT OP nor any Subsidiary of VEREIT is a party to, or has any commitment to become a party to, any joint venture,
off-balance sheet partnership or any similar Contract or arrangement, including any Contract relating to any transaction or relationship
between or among VEREIT, VEREIT OP or any Subsidiary of VEREIT, on the one hand, and any unconsolidated affiliate of VEREIT, VEREIT OP
or any Subsidiary of VEREIT, including any structured finance, special purpose or limited purpose entity or Person, on the other hand,
or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC), where the result, purpose
or effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, VEREIT, VEREIT OP,
or any Subsidiary of VEREIT or any of their financial statements or other SEC Documents of VEREIT.
(v) Since
December 31, 2018, (A) neither VEREIT nor any of its Subsidiaries nor, to the knowledge of VEREIT, any Representative of VEREIT
or any of its Subsidiaries has received or otherwise obtained knowledge of any material complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of VEREIT or any of its Subsidiaries
or their respective internal accounting controls relating to periods after December 31, 2018, including any material complaint,
allegation, assertion or claim that VEREIT or any of its Subsidiaries has engaged in questionable accounting or auditing practices (except
for any of the foregoing after the date hereof which have no reasonable basis), and (B) to the knowledge of VEREIT, no attorney representing
VEREIT or any of its Subsidiaries, whether or not employed by VEREIT or any of its Subsidiaries, has reported to the Board of Directors
of VEREIT or any committee thereof evidence of a material Violation of securities Laws or breach of fiduciary duty relating to periods
after December 31, 2018, by VEREIT or any of its officers, directors, employees or agents.
(e) Information Supplied. None of the information supplied or to be supplied by VEREIT for inclusion or incorporation by reference
in (i) the Form S-4 or the Form 10 will, at the time the applicable Form is filed with the SEC and at the time it becomes effective under
the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the Joint Proxy Statement/Prospectus (as defined below) will, at the date
of mailing to stockholders and at the times of the meetings of stockholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading or (iii) the OfficeCo Distribution Prospectus will,
at the date of effectiveness of the Form 10 and of mailing to stockholders, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Joint Proxy Statement/Prospectus will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations of the SEC thereunder, except that no representation or warranty is
made by VEREIT with respect to statements made or incorporated by reference therein based on information supplied by Realty Income for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus.
(f) Compliance
with Applicable Laws. VEREIT and each of its Subsidiaries is in compliance with all Laws applicable to their operations or with respect
to which compliance is a condition of engaging in the business thereof, except to the extent that failure to comply would not have, or
would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect. Neither VEREIT nor any
of its Subsidiaries has received any written notice since December 31, 2018 asserting a failure, or possible failure, to comply
with any such Law, the subject of which written notice has not been resolved as required thereby or otherwise to the reasonable satisfaction
of the party sending the notice, except for (i) matters being contested in good faith and set forth in Section 3.1(f) of the VEREIT
Disclosure Letter and (ii) such failures as would not have, or would not reasonably be expected to have, individually or in the aggregate,
a VEREIT Material Adverse Effect.
(g) Legal Proceedings. There is no suit, action, investigation or proceeding (whether judicial, arbitral, administrative or
other) pending or, to the knowledge of VEREIT, threatened in writing, against or affecting VEREIT or any of its Subsidiaries as to which
there is a significant possibility of an adverse outcome which would have, or would reasonably be expected to have, individually or in
the aggregate, a VEREIT Material Adverse Effect, nor is there any judgment, decree, injunction or order of any Governmental Entity or
arbitrator outstanding against VEREIT or any Subsidiary of VEREIT which would have, or would reasonably be expected to have, individually
or in the aggregate, a VEREIT Material Adverse Effect.
(h) Taxes. Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT
Material Adverse Effect:
(i) VEREIT
and each of its Subsidiaries have (A) duly and timely filed (or there have been timely filed on their behalf) with the appropriate taxing
authority all Tax Returns required to be filed by them (after giving effect to any extensions), and such Tax Returns are true, correct
and complete, (B) duly paid in full (or there has been paid on their behalf), or made adequate provision for, all Taxes required to be
paid by them, and (C) withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third party;
(ii)
neither VEREIT nor any of its Subsidiaries has received a written claim or, to the knowledge of VEREIT, an unwritten claim, by
any taxing authority in a jurisdiction where VEREIT or such Subsidiary does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction;
(iii)
there are no disputes, audits, examinations or proceedings pending (or threatened in writing), or claims asserted, for Taxes upon
VEREIT or any of its Subsidiaries and neither VEREIT nor any of its Subsidiaries is a party to any litigation or administrative proceeding
relating to Taxes;
(iv) neither VEREIT nor any of its Subsidiaries has entered into any “closing agreement” as described in Section 7121 of
the Code (or any similar provision of state, local or foreign income Tax Law), has requested, has received or is subject to any written
ruling of a taxing authority or has entered into any written agreement with a taxing authority with respect to any Taxes;
(v) neither VEREIT nor any of its Subsidiaries has granted any extension or waiver of the limitation period for the assessment or collection
of Tax that remains in effect;
(vi)
there are no Tax allocation or sharing agreements or similar arrangements with respect to or involving VEREIT or any of its Subsidiaries,
and, after the Closing Date, neither VEREIT nor any of its Subsidiaries shall be bound by any such Tax allocation or sharing agreements
or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date (in each case,
excluding customary tax indemnities included in loan agreements or commercial agreements entered into in the ordinary course of business,
agreements solely between VEREIT and/or its Subsidiaries and VEREIT Tax Protection Agreements (as defined below));
(vii)
neither VEREIT nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax
Return (other than a group the common parent of which was VEREIT or a Subsidiary of VEREIT) or (B) has any liability for the Taxes of
any Person (other than VEREIT or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local, or foreign Law), as a transferee or successor, by contract (excluding customary commercial contracts not primarily related
to Taxes and VEREIT Tax Protection Agreements (as defined below)), or otherwise;
(viii)
VEREIT (A) for all taxable years commencing with its taxable year ended December 31, 2011 through its taxable year ended December 31
immediately prior to the Effective Time, has elected and has been subject to federal taxation as a REIT and has satisfied all requirements
to qualify as a REIT, and has so qualified, for federal Tax purposes for such years, (B) at all times since such date, has operated in
such a manner so as to qualify as a REIT for federal Tax purposes and will continue to operate (in each case, taking into account the
permitted REIT Dividends (as defined below) under Section 5.10(b)) through the Effective Time in such a manner so as to so qualify
for the taxable year that includes the Closing Date and (C) has not taken or omitted to take any action that could reasonably be expected
to result in a challenge by the IRS or any other taxing authority to its status as a REIT, and no such challenge is pending or, to VEREIT’s
knowledge, threatened. Each Subsidiary of VEREIT has been since the later of its acquisition or formation and continues to be treated
for federal and state income Tax purposes as (A) a partnership (or a disregarded entity) and not as a corporation or an association
or publicly traded partnership taxable as a corporation, (B) a Qualified REIT Subsidiary, (C) a Taxable REIT Subsidiary or (D) a REIT.
(ix)
Section 3.1(h)(ix) of the VEREIT Disclosure Letter sets forth each asset of VEREIT and the VEREIT Subsidiaries which would
be subject to rules similar to Section 1374 of the Code. With respect to each such asset, Section 3.1(h)(ix) of the VEREIT
Disclosure Letter sets forth (A) the amount of any gain that could be subject to Tax pursuant to such rules, based on a good faith estimate
of the value of such asset at the relevant date that a determination thereof is required to be made under such rules (it being understood
that the estimated value of any such asset that is a partnership interest shall be determined on a “look-through” basis by
reference to the underlying assets) and (B) the date after which such gain will no longer be subject to Tax pursuant to such rules;
(x)
neither VEREIT nor any of its Subsidiaries has participated in any “listed transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b)(2);
(xi)
neither VEREIT nor any of its Subsidiaries (other than Taxable REIT Subsidiaries) currently has or, as of December 31 of any
taxable year through and including the taxable year ended December 31 immediately prior to the Effective Time, has had any earnings
and profits attributable to such entity or any other corporation in any non-REIT year within the meaning of Section 857 of the Code;
(xii)
except as set forth on Section 3.1(h)(xii) of the VEREIT Disclosure Letter, (A) there are no Tax Protection Agreements to
which VEREIT or any of its Subsidiaries is a party (a “VEREIT Tax Protection Agreement”) currently in force, and (B)
no Person has raised, or to the knowledge of VEREIT threatened to raise, a material claim against VEREIT or any of its Subsidiaries for
any breach of any VEREIT Tax Protection Agreement and none of the transactions contemplated by this Agreement will give rise to any liability
or obligation to make any payment under any VEREIT Tax Protection Agreement;
(xiii)
as of the date of this Agreement, VEREIT is not aware of any fact or circumstance that could reasonably be expected to prevent
the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code; and
(xiv) neither
VEREIT nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation”
(within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355(a)
of the Code (A) in the two years prior to the date of this Agreement or (B) in a distribution which could otherwise constitute part of
a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction
with the transactions contemplated by this Agreement.
(i) Material
Contracts. Section 3.1(i) of the VEREIT Disclosure Letter sets forth a list of all VEREIT Material Contracts as of the date
of this Agreement, true, correct and complete copies of which VEREIT has made available to Realty Income prior to the date of this Agreement.
For purposes of this Agreement, “VEREIT Material Contract” means any Contract (other than VEREIT Benefit Plans) to
which VEREIT or any of its Subsidiaries is a party to or bound that:
(i)
is required to be filed as an exhibit to VEREIT’s Annual Report on Form 10-K pursuant to Item 601(b)(2), (4), (9) or (10)
of Regulation S-K under the Exchange Act;
(ii)
relates to any partnership, joint venture, co-investment or similar agreement with any third parties requiring aggregate payments
after the date hereof by VEREIT or any of its Subsidiaries pursuant to any such partnership, joint venture, co-investment or similar agreement
in excess of $10,000,000, or involving value or assets in excess of $10,000,000;
(iii)
contains any non-compete or exclusivity provision or otherwise limits in any material respect the ability of VEREIT or any of its
Subsidiaries to engage in any line of business in any geographic area, except for any such provision that may be contained in VEREIT Leases
entered into in the ordinary course of business consistent with past practice;
(iv)
involves the future disposition or acquisition of assets or properties with a fair market value in excess of $10,000,000; provided
that in the case of a Contract providing for (1) an acquisition of a retail property with a single tenant, such threshold shall be $15,000,000,
(2) an acquisition of an industrial property with a single tenant, such threshold shall be $25,000,000, and (3) a transaction involving
a sale-leaseback transaction or a portfolio transaction, such threshold shall be $60,000,000 (unless any individual properties contained
in such portfolio transaction otherwise exceed any of such thresholds described above);
(v) obligates
VEREIT, VEREIT OP or any of their Subsidiaries to make non-discretionary expenditures (other than principal and/or interest payments
or the deposit of other reserves with respect to debt obligations) in excess of $5,000,000, in any 12-month period, other than any VEREIT
Lease or any ground lease pursuant to which any third party is a lessee or sublessee on any VEREIT Property (as defined below); or
(vi) evidences
a capitalized lease obligation or other Indebtedness to any Person, or any guaranty thereof, in excess of $10,000,000, other than any
Contract in respect of a ground lease or office leases or obligations thereunder.
Except as would not have, or
would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect, each of the VEREIT Material
Contracts is a legal, valid and binding obligation of VEREIT, or the Subsidiary of VEREIT that is a party thereto, and, to VEREIT’s
knowledge, the other parties thereto, enforceable against VEREIT and its Subsidiaries and, to VEREIT’s knowledge, the other parties
thereto in accordance with its terms, except as such enforceability is subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights generally
and general equitable principles. None of VEREIT or any of its Subsidiaries is, and to VEREIT’s knowledge no other party is, in
breach, default or Violation (and no event has occurred or not occurred through VEREIT’s or any Subsidiary of VEREIT’s action
or inaction or, to VEREIT’s knowledge, through the action or inaction of any third party, that with notice or the lapse of time
or both would constitute a breach, default or Violation) of any term, condition or provision of any VEREIT Material Contract to which
VEREIT or any Subsidiary of VEREIT is now a party, or by which any of them or their respective properties or assets may be bound, except
for such breaches, defaults or Violations as would not have, or would not reasonably be expected to have, individually or in the aggregate,
a VEREIT Material Adverse Effect.
(j) Benefit
Plans.
(i) Section
3.1(j)(i) of the VEREIT Disclosure Letter contains a true, complete and correct list of each material Benefit Plan sponsored, maintained
or contributed to by VEREIT or any of its Subsidiaries, or which VEREIT or any of its Subsidiaries is obligated to sponsor, maintain
or contribute to, other than any plan or program maintained by a Governmental Entity to which VEREIT or its Subsidiaries contribute pursuant
to applicable Law (the “VEREIT Benefit Plans”). No VEREIT Benefit Plan is established or maintained outside of the
United States or for the benefit of current or former employees, directors or individual independent contractors of VEREIT or any of
its Subsidiaries residing outside of the United States.
(ii) VEREIT
has delivered or made available to Realty Income a true, correct and complete copy of each VEREIT Benefit Plan and, with respect thereto,
if applicable, (A) all amendments, trust (or other funding vehicle) agreements, summary plan descriptions and insurance Contracts,
(B) the most recent annual report (Form 5500 series including, where applicable, all schedules and actuarial and accountants’ reports)
filed with the IRS and the most recent actuarial report or other financial statement relating to such VEREIT Benefit Plan, (C) the most
recent determination or opinion letter from the IRS for such VEREIT Benefit Plan and (D) any notice to or from the IRS or any office
or Representative of the Department of Labor relating to any unresolved compliance issues in respect of such VEREIT Benefit Plan.
(iii)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse
Effect, (A) each VEREIT Benefit Plan has been maintained and administered in compliance with its terms and with applicable Law, including,
but not limited to, ERISA and the Code and in each case the regulations promulgated thereunder, (B) each VEREIT Benefit Plan intended
to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter as to its qualification
from the IRS or is entitled to rely on an advisory or opinion letter as to its qualification issued with respect to an IRS approved master
and prototype or volume submitter plan, and there are no existing circumstances or any events that have occurred that would reasonably
be expected to adversely affect the qualified status of any such plan, (C) neither VEREIT nor its Subsidiaries has engaged in a transaction
that has resulted in, or could result in, the assessment of a civil penalty upon VEREIT or any of its Subsidiaries pursuant to Section 502(i)
of ERISA or a Tax imposed pursuant to Section 4975 or 4976 of the Code that has not been satisfied in full, (D) there does not now
exist, nor do any circumstances exist that would reasonably be expected to result in, any Controlled Group Liability that would be a liability
of VEREIT or any of its Subsidiaries, (E) all payments required to be made by or with respect to each VEREIT Benefit Plan (including all
contributions, insurance premiums or intercompany charges) with respect to all prior periods have been timely made or paid by VEREIT or
its Subsidiaries in accordance with the provisions of each of the VEREIT Benefit Plans and applicable Law and (F) there are no pending
or, to VEREIT’s knowledge, threatened claims by or on behalf of any VEREIT Benefit Plan, by any employee or beneficiary covered
under any VEREIT Benefit Plan or otherwise involving any VEREIT Benefit Plan (other than routine claims for benefits).
(iv)
None of VEREIT, any of its Subsidiaries or any other entity (whether or not incorporated) that, together with VEREIT or a Subsidiary
of VEREIT, would be treated as a single employer under Section 414 of the Code or Section 4001(b) of ERISA, maintains, contributes
to, or participates in, or has ever during the past six (6) years maintained, contributed to, or participated in, or otherwise has any
obligation or liability with respect to: (A) a plan subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the
Code, (B) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA), a “multiple employer
plan” (as defined in Section 413(c) of the Code) or a “multiemployer plan” (as defined in Section 3(37) of
ERISA), or (C) any plan or arrangement which provides retiree medical or welfare benefits, except as required by applicable Law.
(v) Except
as set forth in Section 3.1(j)(v) of the VEREIT Disclosure Letter, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will (A) result in any payment
(including severance, unemployment compensation, “excess parachute payment” (within the meaning of Section 280G of the
Code), forgiveness of Indebtedness or otherwise) becoming due to any current or former director, employee or other service provider of
VEREIT or any of its Subsidiaries under any VEREIT Benefit Plan or otherwise, (B) increase any benefits otherwise payable or trigger
any other obligation under any VEREIT Benefit Plan, (C) result in any acceleration of the time of payment, funding or vesting of any
such benefits or (D) result in any limitation on the right of VEREIT or any of its Subsidiaries to amend, merge, terminate or receive
a reversion of assets from any VEREIT Benefit Plan or related trust. No VEREIT Benefit Plan provides for, and neither VEREIT nor any
of its Subsidiaries is otherwise obligated to provide, the gross-up or reimbursement of Taxes under Section 409A or 4999 of the
Code.
(k) Employment and Labor Matters.
(i) (A)
Except in accordance with applicable Law, neither VEREIT nor any of its Subsidiaries is a party to or bound by any collective bargaining
or similar agreement or work rules or practices with any labor union, works council, labor organization or employee association applicable
to employees of VEREIT or any of its Subsidiaries, (B) there are no strikes or lockouts with respect to any employees of VEREIT or any
of its Subsidiaries pending or, to VEREIT’s knowledge, threatened, (C) to the knowledge of VEREIT, there is no union organizing
effort pending or threatened against VEREIT or any of its Subsidiaries, (D) there is no unfair labor practice, labor dispute (other
than routine individual grievances) or labor arbitration proceeding pending or, to the knowledge of VEREIT, threatened with respect to
employees of VEREIT or any of its Subsidiaries, and (E) there is no slowdown or work stoppage in effect or, to the knowledge of VEREIT,
threatened with respect to employees of VEREIT or any of its Subsidiaries, nor, has VEREIT or any of its Subsidiaries experienced any
events described in clauses (B), (D) and (E) hereof within the past three (3) years, except, in each case, as would not have, or would
not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect.
(ii)
Except for such matters as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT
Material Adverse Effect, VEREIT and its Subsidiaries are, and have been, in compliance with all applicable Laws respecting (A) employment
and employment practices, (B) terms and conditions of employment and wages and hours, (C) unfair labor practices and (D) occupational
safety and health and immigration.
(l) Absence
of Certain Changes. Since December 31, 2020, (i) VEREIT and its Subsidiaries have conducted their respective businesses in the
ordinary course in all material respects, except in response to Covid-19 and the Covid-19 Measures, and (ii) there has not been a VEREIT
Material Adverse Effect that is continuing.
(m) Board Approval. The Board of Directors of VEREIT, by resolutions duly adopted by unanimous vote of those directors voting
at a meeting duly called and held, has (i) approved this Agreement and declared this Agreement and the transactions contemplated hereby,
including the Mergers, to be advisable and in the best interests of VEREIT and its stockholders, and (ii) resolved to recommend that the
stockholders of VEREIT approve the Merger and direct that such matter be submitted for consideration by VEREIT stockholders at the VEREIT
Stockholders Meeting (as defined below). VEREIT has taken all actions required for the execution of this Agreement by VEREIT OP and the
consummation by VEREIT OP of the transactions contemplated hereby, including the Partnership Merger.
(n) Takeover
Statute. Each of VEREIT and VEREIT OP has taken such actions and votes as are necessary on its part to render the provisions of any
“fair price,” “moratorium” or “control share acquisition” statute, the provisions contained in Subtitle
6 of Title 3 of the MGCL or the provisions of any other anti-takeover statute or similar federal or state statute (the “Takeover
Statutes”) inapplicable to this Agreement, the Mergers and the other transactions contemplated by this Agreement.
(o) Vote
Required. The VEREIT Required Stockholders Vote, and approval by the General Partner of VEREIT OP, is the only vote of the holders
of any class or series of capital stock of VEREIT or of partnership interests of VEREIT OP necessary to approve and adopt this Agreement
and the transactions contemplated hereby (including the Mergers).
(p) Properties.
(i) Except
as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect, as
of the date hereof, (A) VEREIT has delivered to or made available to Realty Income a copy of each Material VEREIT Lease that is true
and complete in all material respects. (B) to the knowledge of VEREIT, as of the date hereof, each Material VEREIT Lease is in full force
and effect, and neither VEREIT nor any of its Subsidiaries nor, to the knowledge of VEREIT, any other party to a Material VEREIT Lease,
is in default beyond any applicable notice and cure period under any Material VEREIT Lease, which default is in effect on the date of
this Agreement and (C) neither VEREIT, VEREIT OP nor any of their Subsidiaries has, prior to the date hereof, received from any counterparty
under any Material VEREIT Lease a notice from the tenant of any intention to vacate and terminate prior to the end of the term of such
Material VEREIT Lease. Section 3.1(p)(i) of the VEREIT Disclosure Letter sets forth, as of December 31, 2020, a complete list
of all Material VEREIT Leases, including, with respect to each Material VEREIT Lease, the address, the identities of the landlord and
tenant, the square feet of rented area, the annualized rent as of the date hereof and the remaining term of such lease. Except as set
forth on Section 3.1(p)(i) of the VEREIT Disclosure Letter or except as has been resolved prior to the date hereof, as of the
date of this Agreement, (1) no tenant under any Material VEREIT Lease is currently asserting in writing a right to cancel or terminate
such Material VEREIT Lease prior to the end of the current term, and (2) neither VEREIT, VEREIT OP nor any of their Subsidiaries has
received notice of any insolvency or bankruptcy proceeding (or threatened proceedings) involving any tenant under any Material VEREIT
Lease where such proceeding remains pending, except, in each case, as would not reasonably be expected, individually or in the aggregate
to be material and adverse to VEREIT and its Subsidiaries, taken as a whole.
(ii) Except
as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect, VEREIT
or a Subsidiary of VEREIT, or a joint venture of VEREIT or any of its Subsidiaries, owns fee simple title to or has a valid leasehold
interest in, each of the real properties reflected as an asset on the most recent balance sheet of VEREIT included in the VEREIT SEC
Documents (each, a “VEREIT Property” and collectively, the “VEREIT Properties”), in each case free
and clear of all Liens except for (A) debt and other matters set forth in Section 3.1(p)(ii) of the VEREIT Disclosure Letter,
(B) inchoate mechanics’, workmen’s, repairmen’s and other inchoate Liens imposed for construction work in progress
or otherwise incurred in the ordinary course of business, (C) mechanics’, workmen’s and repairmen’s Liens (other than
inchoate Liens for work in progress) which have heretofore been bonded or insured, (D) all matters disclosed on existing title policies
or surveys, none of which, individually or in the aggregate, would have a material adverse effect on the use and operation of such VEREIT
Property, (E) real estate Taxes and special assessments not yet due and payable or which are being contested in good faith in the ordinary
course of business and (F) Liens and other encumbrances that would not cause a material adverse effect on the value or use of the affected
property. Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material
Adverse Effect, none of VEREIT nor any Subsidiary of VEREIT has received written notice to the effect that there are any condemnation
proceedings that are pending or, to the knowledge of VEREIT, threatened, with respect to any material portion of any of the VEREIT Properties.
Except for the owners of the properties in which VEREIT or any Subsidiary of VEREIT has a leasehold interest and except for any VEREIT
Property that is held by a joint venture or fund, no Person other than VEREIT or a Subsidiary of VEREIT has any ownership interest in
any of the VEREIT Properties (other than immaterial easements, licenses or similar rights). Section 3.1(p)(ii) of the VEREIT Disclosure
Letter contains a complete and accurate list in all material respects of the street address of each parcel of VEREIT Property.
(iii)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse
Effect, policies of title insurance or updates or endorsements have been issued, insuring VEREIT’s or the applicable Subsidiary
of VEREIT’s fee simple title to each of the VEREIT Properties owned by VEREIT in amounts at least equal to the purchase price paid
for ownership of such VEREIT Property or such entity that owned such VEREIT Properties at the time of the issuance of each such policy,
and no material claim has been made against any such policy that has not been resolved. With respect to the VEREIT real properties used
in connection with the Material VEREIT Leases, true and correct copies of each of the policies of title insurance or updates or endorsements
have been made available to Realty Income, except, in each case, as would not reasonably expected to be material and adverse to VEREIT
and its Subsidiaries, taken as a whole.
(iv)
Except as set forth on Section 3.1(p)(iv) of the VEREIT Disclosure Letter, VEREIT and any Subsidiary of VEREIT (A) have
not received written notice of any structural defects, or Violation of Law, relating to any VEREIT Property which would have, or would
reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect and (B) have not received written notice
of any physical damage to any VEREIT Property which would have, or would reasonably be expected to have, individually or in the aggregate,
a VEREIT Material Adverse Effect for which there is not insurance in effect covering the cost of the restoration and the loss of revenue.
(v) Except
for secured loan documents entered into in the ordinary course of business or as otherwise set forth on Section 3.1(p)(v) of the
VEREIT Disclosure Letter, there are no written agreements which restrict VEREIT or any Subsidiary of VEREIT from transferring any of
the VEREIT Properties, and none of the VEREIT Properties is subject to any restriction on the sale or other disposition thereof or on
the financing or release of financing thereon, except, in each case, as would not have, or would not reasonably be expected to have,
individually or in the aggregate, a VEREIT Material Adverse Effect.
(vi)
VEREIT and the Subsidiaries of VEREIT have good and sufficient title to, or are permitted to use under valid and existing leases,
all personal and non-real properties and assets reflected in their books and records as being owned by them or reflected on the most recent
balance sheet of VEREIT included in the VEREIT SEC Documents (except as since sold or otherwise disposed of in the ordinary course of
business) or used by them in the ordinary course of business, free and clear of all Liens, and except as would not have, or would not
reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect.
(vii) Except
for discrepancies, errors or omissions that, individually or in the aggregate, have not had and would not reasonably be expected to have
a VEREIT Material Adverse Effect, the property data tape, dated as of December 31, 2020, which data tape has previously been made available
to Realty Income by or on behalf of VEREIT, VEREIT OP or any of their Subsidiaries, correctly (A) references each VEREIT Lease that was
in effect as of December 31, 2020 and to which VEREIT, VEREIT OP or any of their Subsidiaries are parties as lessors or sublessors with
respect to each of the applicable VEREIT Properties, and (B) identifies the rent currently payable and security deposit amounts currently
held under the VEREIT Leases as of December 31, 2020. Except as would not have, or would not reasonably be expected to have, individually
or in the aggregate, a VEREIT Material Adverse Effect, all security deposits have been held by VEREIT, VEREIT OP or one of their Subsidiaries,
as applicable, in all material respects in accordance with applicable Law and the applicable VEREIT Leases.
(q) Environmental
Matters. Except as set forth in Section 3.1(q) of the VEREIT Disclosure Letter or as otherwise would not have, or would not
reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect:
(i) (A)
VEREIT, each VEREIT Subsidiary and each of the VEREIT Properties is in compliance and, except for matters that have been fully and finally
resolved, has complied with all applicable Environmental Laws; (B) there is no litigation, investigation, request for information or
other claim or proceeding pending or, to the knowledge of VEREIT, threatened against VEREIT or any VEREIT Subsidiary under any applicable
Environmental Laws or with respect to Hazardous Materials; (C) VEREIT holds all of the Permits (as defined below) required under applicable
Environmental Laws for its current operations and is in compliance with the terms of any such Permits; and (D) VEREIT has not received
any written notice of Violation or actual or potential liability under any applicable Environmental Laws or with respect to Hazardous
Materials that remains unresolved, or that any judicial, administrative or compliance order or claim has been issued against VEREIT or
any VEREIT Subsidiary which remains unresolved;
(ii)
to the knowledge of VEREIT, neither VEREIT nor any VEREIT Subsidiary has used, generated, stored, treated or handled any Hazardous
Materials on the VEREIT Properties in a manner that would reasonably be expected to result in liability under any Environmental Law, and
there are currently no underground storage tanks, active or abandoned, used now or in the past for the storage of Hazardous Materials
on, in or under any VEREIT Properties in Violation of applicable Environmental Laws. To the knowledge of VEREIT, neither VEREIT nor any
VEREIT Subsidiary nor any other Person has caused a release of or arranged for the disposal or treatment of Hazardous Materials at any
site that would reasonably be expected to result in liability or remediation obligations to VEREIT or any VEREIT Subsidiary under any
Environmental Law; and
(iii)
to the knowledge of VEREIT, all Hazardous Material which has been removed from any VEREIT Properties was handled, transported and
disposed of at the time of removal in compliance with applicable Environmental Laws.
(r) Intellectual
Property. Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material
Adverse Effect, (i) VEREIT and its Subsidiaries own or have a valid license to use all trademarks, service marks, trade names, copyrights
and patents (including any registrations or applications for registration of any of the foregoing) (collectively, the “VEREIT
Intellectual Property”) necessary to carry on their business substantially as currently conducted, (ii) neither VEREIT nor
any such Subsidiary has received any notice of infringement of or conflict with, and to VEREIT’s knowledge, there are no infringements
of or conflicts with, the rights of others with respect to the use of any VEREIT Intellectual Property and (iii) to VEREIT’s knowledge,
no Person is infringing on or violating any rights of the VEREIT Intellectual Property.
(s) Permits.
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect,
(i) the permits, licenses, approvals, variances, exemptions, orders, franchises, certifications and authorizations from Governmental
Entities and accreditation and certification agencies, bodies or other organizations, including building permits and certificates of
occupancy (collectively, “Permits”) held by VEREIT and its Subsidiaries are valid and sufficient in all respects for
all business presently conducted by VEREIT and its Subsidiaries and for the operation of the properties of VEREIT and its Subsidiaries,
(ii) all applications required to have been filed for the renewal of such Permits have been duly filed on a timely basis with the appropriate
Governmental Entities, and all other filings required to have been made with respect to such Permits have been duly made on a timely
basis with the appropriate Governmental Entities and (iii) neither VEREIT nor any of its Subsidiaries has received any claim or notice
indicating that VEREIT or any of its Subsidiaries is currently not in compliance with the terms of any such Permits, and to VEREIT’s
knowledge no such noncompliance exists.
(t) Insurance. VEREIT and its Subsidiaries have obtained and maintained in full force and effect insurance in such amounts,
on such terms and covering such risks as VEREIT’s management believes is reasonable and customary for its business. VEREIT or the
applicable Subsidiary of VEREIT has paid, or caused to be paid, all premiums due under such policies and is not in default with respect
to any obligations under such policies, except, in each case, as would not reasonably be expected, individually or in the aggregate to
be material and adverse to VEREIT and its Subsidiaries, taken as a whole. All such policies are valid, outstanding and enforceable and
neither VEREIT nor any of its Subsidiaries has agreed to modify or cancel any of such insurance policies nor has VEREIT or any of its
Subsidiaries received any notice of any actual or threatened modification or cancellation of such insurance other than in the ordinary
course of business consistent with past practice or such as is normal and customary in VEREIT’s industry.
(u) Investment
Company Act of 1940. Neither VEREIT nor any Subsidiary of VEREIT is, or on the Closing Date will be, required to be registered as
an investment company under the Investment Company Act of 1940, as amended.
(v) Brokers
or Finders. Neither VEREIT nor any of its Subsidiaries has employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders fees in connection with the Merger or the other transactions contemplated by this Agreement (including the
OfficeCo Distribution), except that VEREIT has engaged J.P. Morgan Securities LLC (“J.P. Morgan”) as its financial
advisor and will owe fees, compensation and indemnification to J.P. Morgan in connection therewith.
(w) Opinion of VEREIT Financial Advisor. The Board of Directors of VEREIT has received the opinion of J.P. Morgan, financial
advisor to VEREIT, to the effect that, as of the date of such opinion and based on and subject to the assumptions, qualifications, limitations
and other matters set forth therein, the Exchange Ratio is fair, from a financial point of view, to the holders of VEREIT Common Stock.
(x) No
Undisclosed Material Liabilities. There are no liabilities or obligations of VEREIT or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise, other than (i) liabilities or obligations disclosed, reflected,
reserved against or otherwise provided for in VEREIT’s most recent balance sheet for the year ended December 31, 2020 or in the
notes thereto; (ii) liabilities or obligations incurred in the ordinary course of business consistent with past practices since December
31, 2020; (iii) liabilities or obligations arising out of this Agreement or the transactions contemplated hereby; and (iv) liabilities
or obligations that would not reasonably be expected to have, individually or in the aggregate, a VEREIT Material Adverse Effect.
(y) No
Additional Representations. Except for the representations and warranties made by VEREIT in this Article III, neither VEREIT
nor any other Person makes any express or implied representation or warranty with respect to VEREIT or its Subsidiaries or their respective
businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects in connection with this Agreement or the
transactions contemplated hereby, and VEREIT hereby disclaims any such other representations or warranties. In particular, without limiting
the foregoing disclaimer, neither VEREIT nor any other Person makes or has made any representation or warranty to Realty Income, Merger
Sub 1, Merger Sub 2 or any of their affiliates or Representatives with respect to (i) any financial projection, forecast, estimate, budget
or prospect information relating to VEREIT or any of its Subsidiaries or their respective businesses or (ii) any oral or, except for
the representations and warranties made by VEREIT in this Article III, written information presented to Realty Income, Merger
Sub 1, Merger Sub 2 or any of their affiliates or Representatives in the course of their due diligence investigation of VEREIT or its
Subsidiaries or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, the negotiation
of this Agreement or in the course of the transactions contemplated hereby.
Section
3.2 Representations
and Warranties of Realty Income. Except (x) as set forth in the disclosure letter delivered to VEREIT by Realty Income immediately
prior to the execution of this Agreement (the “Realty Income Disclosure Letter”) (it being understood that any matter
disclosed pursuant to any section or subsection of the Realty Income Disclosure Letter shall be deemed to be disclosed for all purposes
of this Agreement and the Realty Income Disclosure Letter, as long as the relevance of such disclosure is reasonably apparent on the
face of such disclosure) or (y) as disclosed in the Realty Income SEC Documents filed with the SEC within two (2) years prior to the
date hereof (other than disclosures in the “Risk Factors” or “Forward Looking Statements” sections of such reports
or any other disclosures in such reports to the extent they are predictive, cautionary or forward-looking in nature), Realty Income hereby
represents and warrants to VEREIT as follows:
(a) Organization, Standing and Power.
(i) Realty
Income and each of its Subsidiaries is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its
organization, with the corporate, partnership or limited liability company (as the case may be) power and authority to own and operate
its business as presently conducted. Realty Income and each of its Subsidiaries is duly qualified as a foreign corporation or other entity
to do business and is in good standing in each jurisdiction where the ownership and operation of its properties or the nature of its
activities makes such qualification necessary, except for such failures to be so qualified as would not have, or would not reasonably
be expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect.
(ii)
Section 3.2(a)(ii) of the Realty Income Disclosure Letter sets forth a true and complete list of the Subsidiaries of Realty
Income, together with the jurisdiction of organization or incorporation, as the case may be, of each such Subsidiary. Each Subsidiary
of Realty Income and, to Realty Income’s knowledge, each joint venture of Realty Income, is in compliance in all material respects
with the terms of its organizational documents.
(iii)
Except as set forth on Section 3.2(a)(iii) of the Realty Income Disclosure Letter, neither Realty Income nor any of its
Subsidiaries directly or indirectly owns any interest or investment (whether equity or debt) in any Person (other than in the Subsidiaries
of Realty Income, the joint ventures of Realty Income and investments in short-term investment securities that would constitute “cash
items” within the meaning of Section 856(c)(4)(A) of the Code).
(iv) Section
3.2(a)(iv) of the Realty Income Disclosure Letter sets forth a true and complete list of each Subsidiary of Realty Income that is
a REIT, a Qualified REIT Subsidiary or a Taxable REIT Subsidiary.
(b) Capital Structure.
(i) The
authorized capital stock of Realty Income consists of 740,200,000 shares of Realty Income Common Stock, and 69,900,000 shares of preferred
stock, par value $0.01 per share. The authorized capital stock of Merger Sub 1 consists of 1,000 shares of Merger Sub 1 Common Stock,
par value $0.0001 per share. The authorized capital of Merger Sub 2 consists of 100% membership interests. From the date hereof until
immediately prior to the Merger, all of the capital stock or other equity interests of Merger Sub 1 and Merger Sub 2 shall be owned,
directly or indirectly, by Realty Income. As of the close of business on April 23, 2021, (A) (i) 373,514,747 shares of Realty Income
Common Stock were issued and outstanding (including the shares subject to Realty Income Restricted Stock Awards included in clause (iii)
below), (ii) 742,460 shares of Realty Income Common Stock were reserved for issuance pursuant to future awards under the Realty Income
Management Incentive Plan, the Realty Income 2003 Stock Incentive Award Plan, and the Realty Income Corporation 2012 Incentive Award
Plan (collectively, the “Realty Income Equity Plans”), (iii) 221,915 shares of Realty Income Common Stock were subject
to Realty Income Restricted Stock Awards, (iv) 674,997 shares of Realty Income Common Stock were subject to Realty Income Performance
Share Awards (assuming maximum performance for any such awards that are subject to performance-based vesting), (v) 24,854 shares of Realty
Income Common Stock were subject to Realty Income RSU Awards, and (vi) no shares of Realty Income Common Stock were held by Subsidiaries
of Realty Income and (B) no shares of Realty Income preferred stock were issued and outstanding. All outstanding shares of Realty Income
Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and not subject to preemptive rights.
(ii)
No Voting Debt of Realty Income or any of its Subsidiaries is issued or outstanding.
(iii)
As of the close of business on April 23, 2021, except for (A) this Agreement and the partnership agreement of Realty Income, L.P.
(the “Realty Income Partnership Agreement”), (B) partnership units outstanding under the Realty Income Partnership
Agreement, and (C) awards in respect of Realty Income Common Stock issued and outstanding under the Realty Income Equity Plans (“Realty
Income Equity Awards”), there are no options, warrants, calls, rights, commitments or agreements of any character to which Realty
Income or any Subsidiary of Realty Income is a party or by which it or any such Subsidiary is bound obligating Realty Income or any Subsidiary
of Realty Income to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of common stock or any Voting
Debt or stock appreciation rights of Realty Income or of any Subsidiary of Realty Income or obligating Realty Income or any Subsidiary
of Realty Income to grant, extend or enter into any such option, warrant, call, right, commitment or agreement. As of the close of business
on April 23, 2021, there are no outstanding contractual obligations of Realty Income or any of its Subsidiaries (1) other than in respect
of partnership units under the Realty Income Partnership Agreement or in respect of Realty Income Equity Awards under the Realty Income
Equity Plans, to repurchase, redeem or otherwise acquire any shares of common stock of Realty Income or any of its Subsidiaries or (2) pursuant
to which Realty Income or any of its Subsidiaries is or could be required to register shares of Realty Income Common Stock or other securities
under the Securities Act.
(c) Authority.
(i) Each
of Realty Income, Merger Sub 1 and Merger Sub 2 has all requisite corporate power and authority to execute, deliver and perform their
applicable obligations under this Agreement, and, subject to the receipt of the affirmative vote of the holders of a majority of the
votes of shares of Realty Income Common Stock cast to approve the Realty Income Stock Issuance (the “Realty Income Required
Stockholders Vote”), to consummate the transactions contemplated hereby, as applicable. The execution and delivery of this
Agreement by Realty Income, Merger Sub 1 and Merger Sub 2, as applicable, and the performance by Realty Income, Merger Sub 1 and Merger
Sub 2 of their obligations hereunder and the consummation of the transactions contemplated hereby have been duly authorized by the Board
of Directors of Realty Income (in the case of Realty Income), by the Board of Directors of Merger Sub 1 and the sole stockholder of Merger
Sub 1 (in the case of Merger Sub 1) and by the sole member of Merger Sub 2 (in the case of Merger Sub 2), and all other necessary corporate
action on the part of Realty Income, Merger Sub 1 and Merger Sub 2, other than the receipt of the Realty Income Required Stockholders
Vote, and no other corporate proceedings on the part of Realty Income, Merger Sub 1 or Merger Sub 2 are necessary to authorize this Agreement
or the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Realty Income, Merger Sub
1 and Merger Sub 2, as applicable, and (subject to execution by the other parties thereto) constitutes a valid and binding obligation
of each of Realty Income, Merger Sub 1 and Merger Sub 2, as applicable, subject to execution by the other parties thereto, enforceable
against Realty Income, Merger Sub 1 and Merger Sub 2, as applicable, in accordance with its terms, except as enforceability is subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors’ rights generally and general equitable principles.
(ii) Except
as set forth on Section 3.2(c)(ii) of the Realty Income Disclosure Letter, the execution and delivery of this Agreement by Realty
Income, Merger Sub 1 and Merger Sub 2 does not, and the consummation by Realty Income, Merger Sub 1 and Merger Sub 2 of the transactions
contemplated hereby, as applicable will not, (A) subject to the receipt of the Realty Income Required Stockholders Vote, conflict with,
or result in any Violation of, any provision of the organizational documents of Realty Income or (B) subject to obtaining or making the
notification, filings, consents, approvals, orders, authorizations, registrations, waiting period expirations or terminations, declarations
and filings referred to in paragraph (iii) below, result in any Violation of any Contract, Realty Income Benefit Plan (as defined below)
or Law applicable to Realty Income, Merger Sub 1, Merger Sub 2 or any of their Subsidiaries or their respective properties or assets,
which Violation under this clause (B) only would have, or would reasonably be expected to have, individually or in the aggregate, a Realty
Income Material Adverse Effect.
(iii) Except for (A) the applicable requirements, if any, of Blue Sky Laws, (B) required filings or approvals under the Exchange
Act and the Securities Act, (C) any filings or approvals required under the rules and regulations of the NYSE, (D) any required filings
or authorizations, clearances, consents, approvals, or waiting period terminations or expirations under the HSR Act and foreign antitrust,
competition or merger control Laws, (E) the filing of the Articles of Merger with, and the acceptance for record of the Articles of Merger
by the SDAT pursuant to the MGCL and (F) the filing of the Partnership Certificate of Merger with the Delaware Secretary of State pursuant
to the DRULPA and the DLLCA, no consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental
Entity, is required by or with respect to Realty Income or any of its Subsidiaries in connection with the execution and delivery of this
Agreement by Realty Income, Merger Sub 1 or Merger Sub 2 or the consummation by Realty Income, Merger Sub 1 or Merger Sub 2 of the transactions
contemplated hereby, as applicable, the failure to make or obtain which would have, or would reasonably be expected to have, individually
or in the aggregate, a Realty Income Material Adverse Effect.
(d) SEC
Documents; Regulatory Reports.
(i) Realty Income has timely filed or furnished to the SEC all reports, schedules, statements and other documents required to be filed
or furnished by it under the Securities Act or the Exchange Act since December 31, 2018, together with all certifications required
pursuant to the Sarbanes-Oxley Act (such documents, as supplemented or amended since the time of filing, and together with all information
incorporated by reference therein and schedules and exhibits thereto, the “Realty Income SEC Documents”). As of their
respective dates, the Realty Income SEC Documents at the time filed (or, if amended or superseded by a filing prior to the date of this
Agreement, as of the date of such filing) complied in all material respects with the applicable requirements of the Securities Act, the
Exchange Act and the Sarbanes-Oxley Act, and the rules and regulations of the SEC promulgated thereunder applicable to such Realty Income
SEC Documents, and none of the Realty Income SEC Documents when filed contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of Realty Income included in the Realty Income SEC Documents complied as to form,
as of their respective dates of filing with the SEC, in all material respects with all applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto (except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC), have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated
in the notes thereto, or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X under the Exchange Act)
and fairly present in all material respects the consolidated financial position of Realty Income and its consolidated Subsidiaries and
the consolidated results of operations, changes in stockholders’ equity and cash flows of such companies as of the dates and for
the periods shown.
(ii)
Realty Income has established and maintains a system of internal control over financial reporting (as defined in Rules 13a–15(f)
and 15d–15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting.
Realty Income (A) has designed and maintains disclosure controls and procedures (as defined in Rules 13a–15(e) and 15d–15(e)
of the Exchange Act) to provide reasonable assurance that all information required to be disclosed by Realty Income in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s
rules and forms and is accumulated and communicated to Realty Income’s management as appropriate to allow timely decisions regarding
required disclosure and (B) has disclosed, based on its most recent evaluation of internal control over financial reporting, to Realty
Income’s outside auditors and the audit committee of the Board of Directors of Realty Income (1) all significant deficiencies and
material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
Realty Income’s ability to record, process, summarize and report financial information and (2) any fraud, whether or not material,
that involves management or other employees who have a significant role in Realty Income’s internal control over financial reporting.
Since December 31, 2018, any material change in internal control over financial reporting required to be disclosed in any Realty
Income SEC Document has been so disclosed.
(iii) Realty Income has made available to VEREIT complete and correct copies of all written correspondence between the SEC, on the one
hand, and Realty Income, on the other hand, since December 31, 2018.
(iv) Neither
Realty Income nor any Subsidiary of Realty Income is a party to, or has any commitment to become a party to, any joint venture, off-balance
sheet partnership or any similar Contract or arrangement, including any Contract relating to any transaction or relationship between
or among Realty Income or any Subsidiary of Realty Income, on the one hand, and any unconsolidated affiliate of Realty Income or any
Subsidiary of Realty Income, including any structured finance, special purpose or limited purpose entity or Person, on the other hand,
or any “off balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC), where the result, purpose
or effect of such Contract is to avoid disclosure of any material transaction involving, or material liabilities of, Realty Income or
any Subsidiary of Realty Income or any of their financial statements or other SEC Documents of Realty Income.
(v) Since
December 31, 2018, (A) neither Realty Income nor any of its Subsidiaries nor, to the knowledge of Realty Income, any Representative
of Realty Income or any of its Subsidiaries has received or otherwise obtained knowledge of any material complaint, allegation, assertion
or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Realty Income
or any of its Subsidiaries or their respective internal accounting controls relating to periods after December 31, 2018, including
any material complaint, allegation, assertion or claim that Realty Income or any of its Subsidiaries has engaged in questionable accounting
or auditing practices (except for any of the foregoing after the date hereof which have no reasonable basis), and (B) to the knowledge
of Realty Income, no attorney representing Realty Income or any of its Subsidiaries, whether or not employed by Realty Income or any
of its Subsidiaries, has reported to the Board of Directors of Realty Income or any committee thereof evidence of a material Violation
of securities Laws or breach of fiduciary duty relating to periods after December 31, 2018, by Realty Income or any of its officers,
directors, employees or agents.
(e) Information
Supplied. None of the information supplied or to be supplied by Realty Income for inclusion or incorporation by reference in (i)
the Form S-4 or the Form 10 will, at the time the applicable Form is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, (ii) the Joint Proxy Statement/Prospectus (as defined below) will, at the date of mailing
to stockholders and at the times of the meetings of stockholders to be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading or (iii) the OfficeCo Distribution Prospectus will, at the date
of effectiveness of the Form 10 and of mailing to stockholders, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Joint Proxy Statement/Prospectus and OfficeCo Distribution Prospectus will comply as to form
in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder, except that no
representation or warranty is made by Realty Income with respect to statements made or incorporated by reference therein based on information
supplied by VEREIT for inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus or OfficeCo Distribution Prospectus.
(f) Compliance
with Applicable Laws. Realty Income and each of its Subsidiaries is in compliance with all Laws applicable to their operations or
with respect to which compliance is a condition of engaging in the business thereof, except to the extent that failure to comply would
not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect. Neither
Realty Income nor any of its Subsidiaries has received any written notice since December 31, 2018 asserting a failure, or possible
failure, to comply with any such Law, the subject of which written notice has not been resolved as required thereby or otherwise to the
reasonable satisfaction of the party sending the notice, except for (i) matters being contested in good faith and set forth in Section
3.2(f) of the Realty Income Disclosure Letter and (ii) such failures as would not have, or would not reasonably be expected to have,
individually or in the aggregate, a Realty Income Material Adverse Effect.
(g) Legal Proceedings. There is no suit, action, investigation or proceeding (whether judicial, arbitral, administrative or
other) pending or, to the knowledge of Realty Income, threatened in writing, against or affecting Realty Income or any of its Subsidiaries
as to which there is a significant possibility of an adverse outcome which would have, or would reasonably be expected to have, individually
or in the aggregate, a Realty Income Material Adverse Effect, nor is there any judgment, decree, injunction or order of any Governmental
Entity or arbitrator outstanding against Realty Income or any Subsidiary of Realty Income which would have, or would reasonably be expected
to have, individually or in the aggregate, a Realty Income Material Adverse Effect.
(h) Taxes.
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material Adverse
Effect:
(i) Realty
Income and each of its Subsidiaries have (A) duly and timely filed (or there have been timely filed on their behalf) with the appropriate
taxing authority all Tax Returns required to be filed by them (after giving effect to any extensions), and such Tax Returns are true,
correct and complete, (B) duly paid in full (or there has been paid on their behalf), or made adequate provision for, all Taxes required
to be paid by them and (C) withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third party;
(ii)
neither Realty Income nor any of its Subsidiaries has received a written claim or, to the knowledge of Realty Income, an unwritten
claim, by any taxing authority in a jurisdiction where Realty Income or such Subsidiary does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction;
(iii)
there are no disputes, audits, examinations or proceedings pending (or threatened in writing), or claims asserted, for Taxes upon
Realty Income or any of its Subsidiaries, and neither Realty Income nor any of its Subsidiaries is a party to any litigation or administrative
proceeding relating to Taxes;
(iv)
neither Realty Income nor any of its Subsidiaries has entered into any “closing agreement” as described in Section
7121 of the Code (or any similar provision of state, local or foreign income Tax Law), has requested, has received or is subject to any
written ruling of a taxing authority or has entered into any written agreement with a taxing authority with respect to any Taxes;
(v) neither
Realty Income nor any of its Subsidiaries has granted any extension or waiver of the limitation period for the assessment or collection
of Tax that remains in effect;
(vi) there
are no Tax allocation or sharing agreements or similar arrangements with respect to or involving Realty Income or any of its Subsidiaries,
and, after the Closing Date, neither Realty Income nor any of its Subsidiaries shall be bound by any such Tax allocation or sharing agreements
or similar arrangements or have any liability thereunder for amounts due in respect of periods prior to the Closing Date (in each case,
excluding customary tax indemnities included in loan agreements or commercial agreements entered into in the ordinary course of business,
agreements solely between Realty Income and/or its Subsidiaries and Realty Income Tax Protection Agreements (as defined below));
(vii)
neither Realty Income nor any of its Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income
Tax Return (other than a group the common parent of which was Realty Income or a Subsidiary of Realty Income) or (B) has any liability
for the Taxes of any Person (other than Realty Income or any of its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local, or foreign Law), as a transferee or successor, by contract (excluding customary commercial contracts
not primarily related to Taxes and Realty Income Tax Protection Agreements (as defined below)), or otherwise;
(viii)
Realty Income (A) for all taxable years commencing with its taxable year ended December 31, 1994 through its taxable year
ended December 31 immediately prior to the Effective Time, has elected and has been subject to federal taxation as a REIT and has
satisfied all requirements to qualify as a REIT, and has so qualified, for federal Tax purposes for such years, (B) at all times since
such date, has operated in such a manner so as to qualify as a REIT for federal Tax purposes and will continue to operate (in each case,
taking into account the permitted REIT Dividends under Section 5.10(b)) through the Effective Time in such a manner so as to so
qualify for the taxable year that includes the Closing Date and (C) has not taken or omitted to take any action that could reasonably
be expected to result in a challenge by the IRS or any other taxing authority to its status as a REIT, and no such challenge is pending
or, to Realty Income’s knowledge, threatened. Each Subsidiary of Realty Income has been since the later of its acquisition or formation
and continues to be treated for federal and state income Tax purposes as (A) a partnership (or a disregarded entity) and not as a corporation
or an association or publicly traded partnership taxable as a corporation, (B) a Qualified REIT Subsidiary, (C) a Taxable REIT Subsidiary
or (D) a REIT;
(ix)
Section 3.2(h)(ix) of the Realty Income Disclosure Letter sets forth each asset of Realty Income and the Subsidiaries of
Realty Income which would be subject to rules similar to Section 1374 of the Code. With respect to each such asset, Section 3.2(h)(ix)
of the Realty Income Disclosure Letter sets forth (A) the amount of any gain that could be subject to Tax pursuant to such rules, based
on a good faith estimate of the value of such asset at the relevant date that a determination thereof is required to be made under such
rules (it being understood that the estimated value of any such asset that is a partnership interest shall be determined on a “look-through”
basis by reference to the underlying assets) and (B) the date after which such gain will no longer be subject to Tax pursuant to such
rules;
(x) neither
Realty Income nor any of its Subsidiaries has participated in any “listed transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b)(2);
(xi)
neither Realty Income nor any of its Subsidiaries (other than Taxable REIT Subsidiaries) currently has or, as of December 31
of any taxable year through and including the taxable year ended December 31 immediately prior to the Effective Time, has had any
earnings and profits attributable to such entity or any other corporation in any non-REIT year within the meaning of Section 857
of the Code;
(xii)
except as set forth on Section 3.2(h)(xii) of the Realty Income Disclosure Letter, (A) there are no Tax Protection Agreements
to which Realty Income or any of its Subsidiaries is a party (a “Realty Income Tax Protection Agreement”) currently
in force, and (B) no Person has raised, or to the knowledge of Realty Income threatened to raise, a material claim against Realty Income
or any of its Subsidiaries for any breach of any Realty Income Tax Protection Agreement, and none of the transactions contemplated by
this Agreement will give rise to any liability or obligation to make any payment under any Realty Income Tax Protection Agreement;
(xiii)
as of the date of this Agreement, Realty Income is not aware of any fact or circumstance that could reasonably be expected to prevent
the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(xiv)
Merger Sub 1 is, since its formation has been, and at the Effective Time will be, properly treated as a Qualified REIT Subsidiary;
and
(xv)
neither Realty Income nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment
under Section 355(a) of the Code (A) in the two years prior to the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of
the Code) in conjunction with the transactions contemplated by this Agreement.
(i)
Material Contracts. Section 3.2(i) of the Realty Income Disclosure Letter sets forth a list of all Realty Income
Material Contracts as of the date of this Agreement, true, correct and complete copies of which Realty Income has made available to VEREIT
prior to the date of this Agreement. For purposes of this Agreement, “Realty Income Material Contract” means any Contract
(other than Realty Income Benefit Plans (as defined below)) to which Realty Income or any of its Subsidiaries is a party to or bound that:
(i)
is required to be filed as an exhibit to Realty Income’s Annual Report on Form 10-K pursuant to Item 601(b)(2), (4), (9)
or (10) of Regulation S-K under the Exchange Act;
(ii)
relates to any partnership, joint venture, co-investment or similar agreement with any third parties requiring aggregate payments
after the date hereof by Realty Income or any of its Subsidiaries of Realty Income pursuant to any such partnership, joint venture, co-investment
or similar agreement in excess of $1,000,000,000, or involving value or assets in excess of $1,000,000,000;
(iii)
contains any non-compete or exclusivity provision or otherwise limits in any material respect the ability of Realty Income or any
of its Subsidiaries to engage in any line of business in any geographic area, except for any such provision that may be contained in Realty
Income Leases entered into in the ordinary course of business consistent with past practice;
(iv)
involves the future disposition or acquisition of, or any merger, consolidation or similar business combination transaction involving,
assets or properties with a fair market value in excess of $1,000,000,000;
(v)
obligates Realty Income or any of its Subsidiaries to make non-discretionary expenditures (other than principal and/or interest
payments or the deposit of other reserves with respect to debt obligations) in excess of $1,000,000,000 in any 12-month period, except
for any Realty Income Lease or any ground lease pursuant to which any third party is a lessee or sublessee on any Realty Income Property
(as defined below); or
(vi)
evidences a capitalized lease obligation or other Indebtedness to any Person, or any guaranty thereof, in excess of $1,000,000,000,
other than any Contract in respect of a ground lease or office leases or obligations thereunder.
Except as would not have, or
would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect, each of the Realty
Income Material Contracts is a legal, valid, and binding obligation of Realty Income or the Subsidiary of Realty Income that is a party
thereto, and, to Realty Income’s knowledge, the other parties thereto, enforceable against Realty Income and its Subsidiaries and,
to Realty Income’s knowledge, the other parties thereto in accordance with its terms, except as such enforceability is subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors’ rights generally and general equitable principles. None of Realty Income or any of its Subsidiaries
is, and to Realty Income’s knowledge no other party is, in breach, default or Violation (and no event has occurred or not occurred
through Realty Income’s or any Subsidiary of Realty Income’s action or inaction or, to Realty Income’s knowledge, through
the action or inaction of any third party, that with notice or the lapse of time or both would constitute a breach, default or Violation)
of any term, condition or provision of any Realty Income Material Contract to which Realty Income or any Subsidiary of Realty Income is
now a party, or by which any of them or their respective properties or assets may be bound, except for such breaches, defaults or Violations
as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect.
(j)
Benefit Plans.
(i)
Section 3.2(j)(i) of the Realty Income Disclosure Letter contains a true, complete and correct list of each material Benefit
Plan sponsored, maintained or contributed to by Realty Income or any of its Subsidiaries, or which Realty Income or any of its Subsidiaries
is obligated to sponsor, maintain or contribute to, other than any plan or program maintained by a Governmental Entity to which Realty
Income or its Subsidiaries contribute pursuant to applicable Law (the “Realty Income Benefit Plans”). Except as set
forth on Section 3.2(j)(i) of the Realty Income Disclosure Letter, no Realty Income Benefit Plan is established or maintained outside
of the United States or for the benefit of current or former employees, directors or individual independent contractors of Realty Income
or any of its Subsidiaries residing outside of the United States.
(ii)
Realty Income has delivered or made available to VEREIT a true, correct and complete copy of each Realty Income Benefit Plan and,
with respect thereto, if applicable, (A) all amendments, trust (or other funding vehicle) agreements, summary plan descriptions and
insurance Contracts, (B) the most recent annual report (Form 5500 series including, where applicable, all schedules and actuarial and
accountants’ reports) filed with the IRS and the most recent actuarial report or other financial statement relating to such Realty
Income Benefit Plan, (C) the most recent determination or opinion letter from the IRS for such Realty Income Benefit Plan and (D) any
notice to or from the IRS or any office or Representative of the Department of Labor relating to any unresolved compliance issues in respect
of such Realty Income Benefit Plan.
(iii)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material
Adverse Effect, (A) each Realty Income Benefit Plan has been maintained and administered in compliance with its terms and with applicable
Law, including, but not limited to, ERISA and the Code and in each case the regulations promulgated thereunder, (B) each Realty Income
Benefit Plan intended to be “qualified” under Section 401(a) of the Code has received a favorable determination or opinion
letter as to its qualification from the IRS or is entitled to rely on an advisory or opinion letter as to its qualification issued with
respect to an IRS approved master and prototype or volume submitter plan, and there are no existing circumstances or any events that have
occurred that would reasonably be expected to adversely affect the qualified status of any such plan, (C) neither Realty Income nor its
Subsidiaries has engaged in a transaction that has resulted in, or could result in, the assessment of a civil penalty upon Realty Income
or any of its Subsidiaries pursuant to Section 502(i) of ERISA or a Tax imposed pursuant to Section 4975 or 4976 of the Code
that has not been satisfied in full, (D) there does not now exist, nor do any circumstances exist that would reasonably be expected to
result in, any Controlled Group Liability that would be a liability of Realty Income or any of its Subsidiaries, (E) all payments required
to be made by or with respect to each Realty Income Benefit Plan (including all contributions, insurance premiums or intercompany charges)
with respect to all prior periods have been timely made or paid by Realty Income or its Subsidiaries in accordance with the provisions
of each of the Realty Income Benefit Plans and applicable Law and (F) there are no pending or, to Realty Income’s knowledge, threatened
claims by or on behalf of any Realty Income Benefit Plan, by any employee or beneficiary covered under any Realty Income Benefit Plan
or otherwise involving any Realty Income Benefit Plan (other than routine claims for benefits).
(iv)
None of Realty Income, any of its Subsidiaries or any other entity (whether or not incorporated) that, together with Realty Income
or a Subsidiary of Realty Income, would be treated as a single employer under Section 414 of the Code or Section 4001(b) of
ERISA, maintains, contributes to, or participates in, or has ever during the past six (6) years maintained, contributed to, or participated
in, or otherwise has any obligation or liability with respect to: (A) a plan subject to Title IV or Section 302 of ERISA or Section 412
or 4971 of the Code, (B) a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA), a “multiple
employer plan” (as defined in Section 413(c) of the Code) or a “multiemployer plan” (as defined in Section 3(37)
of ERISA), or (C) any plan or arrangement which provides for retiree medical or welfare benefits, except as required by applicable Law.
(v)
Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone
or in conjunction with any other event) will (A) result in any payment (including severance, unemployment compensation, “excess
parachute payment” (within the meaning of Section 280G of the Code), forgiveness of Indebtedness or otherwise) becoming due
to any current or former director, employee or other service provider of Realty Income or its Subsidiaries under any Realty Income Benefit
Plan or otherwise, (B) increase any benefits otherwise payable or trigger any other obligation under any Realty Income Benefit Plan, (C)
result in any acceleration of the time of payment, funding or vesting of any such benefits or (D) result in any limitation on the right
of Realty Income or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Realty Income Benefit
Plan or related trust. No Realty Income Benefit Plan provides for, and neither Realty Income nor any of its Subsidiaries is otherwise
obligated to provide, the gross-up or reimbursement of Taxes under Section 409A or 4999 of the Code.
(k)
Employment and Labor Matters.
(i)
(A) Except in accordance with applicable Law, neither Realty Income nor any of its Subsidiaries is a party to or bound by any collective
bargaining or similar agreement or work rules or practices with any labor union, works council, labor organization or employee association
applicable to employees of Realty Income or any of its Subsidiaries (“Realty Income Employees”), (B) there are no strikes
or lockouts with respect to any Realty Income Employees pending or, to Realty Income’s knowledge, threatened, (C) to the knowledge
of Realty Income, there is no union organizing effort pending or threatened against Realty Income or any of its Subsidiaries, (D) there
is no unfair labor practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the
knowledge of Realty Income, threatened with respect to Realty Income Employees and (E) there is no slowdown or work stoppage in effect
or, to the knowledge of Realty Income, threatened with respect to Realty Income Employees, nor, has Realty Income or any of its Subsidiaries
experienced any events described in clauses (B), (D) and (E) hereof within the past three (3) years, except, in each case, as would not
have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect.
(ii)
Except for such matters as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty
Income Material Adverse Effect, Realty Income and its Subsidiaries are, and have been, in compliance with all applicable Laws respecting
(A) employment and employment practices, (B) terms and conditions of employment and wages and hours, (C) unfair labor practices and (D)
occupational safety and health and immigration.
(l)
Absence of Certain Changes. Since December 31, 2020, (i) Realty Income and its Subsidiaries have conducted their respective
businesses in the ordinary course in all material respects, except in response Covid-19 and the Covid-19 Measures and (ii) there has not
been a Realty Income Material Adverse Effect that is continuing.
(m)
Board Approval. The Board of Directors of Realty Income, by resolutions duly adopted by unanimous vote of those directors
voting at a meeting duly called and held, has (i) approved this Agreement, and declared this Agreement, and the transactions contemplated
hereby, including the Mergers, and the issuance of Realty Income Common Stock in connection with the Mergers (the “Realty Income
Stock Issuance”) on the terms set forth herein, to be advisable and in the best interests of Realty Income and its stockholders,
(ii) upon the terms and subject to the conditions of this Agreement, resolved to recommend that the stockholders of Realty Income approve
the Realty Income Stock Issuance, and direct that such matters be submitted for consideration by Realty Income stockholders at the Realty
Income Stockholders Meeting (as defined below), and (iii) taken all appropriate and necessary actions to render any and all limitations
on ownership of shares of Realty Income Common Stock, as set forth in the organizational documents of Realty Income, inapplicable to the
Merger and the other transactions contemplated by this Agreement. The Board of Directors of Merger Sub 1, by unanimous written consent
has approved this Agreement and declared this Agreement and the transactions contemplated hereby, including the Mergers, to be advisable
and in the best interests of Merger Sub 1 and its sole stockholder upon the terms and subject to the conditions of this Agreement. The
sole member of Merger Sub 2 has (i) determined this Agreement and the transactions contemplated hereby, including the Mergers, to be advisable
and in the best interests of Merger Sub 2 and its sole member and (ii) approved and adopted this Agreement and the transactions contemplated
hereby.
(n)
Takeover Statute. Each of Realty Income, Merger Sub 1 and Merger Sub 2 has taken such actions and votes as are necessary
on its part to render the provisions of any Takeover Statute inapplicable to this Agreement, the Mergers and the other transactions contemplated
by this Agreement.
(o)
Vote Required. The Realty Income Required Stockholders Vote is the only vote of the holders of any class or series of capital
stock of Realty Income necessary to approve and adopt this Agreement, and the transactions contemplated hereby (including the Mergers).
(p)
Properties.
(i)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material
Adverse Effect, as of the date hereof, (A) Realty Income has delivered to or made available to VEREIT a true and complete copy in all
material respects of each Realty Income Lease under which annual rents payable exceed $10,000,000 (each, a “Material Realty Income
Lease”), (B) to the knowledge of Realty Income, as of the date hereof, each Material Realty Income Lease is in full force and
effect, and neither Realty Income nor any of its Subsidiaries nor, to the knowledge of Realty Income, any other party to a Material Realty
Income Lease, is in default beyond any applicable notice and cure period under any Material Realty Income Lease, which default is in effect
on the date of this Agreement, and (C) neither Realty Income nor any of its Subsidiaries has, prior to the date hereof, received from
any counterparty under any Material Realty Income Lease a notice from the tenant of any intention to vacate prior to the end of the term
of such Material Realty Income Lease. Except as set forth in Section 3.2(p)(i) of the Realty Income Disclosure Letter or except
as has been resolved prior to the date hereof, as of the date of this Agreement, (1) no tenant under any Material Realty Income Lease
is currently asserting in writing a right to cancel or terminate such Material Realty Income Lease prior to the end of the current term,
and (2) none of Realty Income or any Realty Income Subsidiary has received notice of any insolvency or bankruptcy proceeding (or threatened
proceeding) involving any tenant under any Material Realty Income Lease where such proceeding remains pending, except, in each case, as
would not reasonably be expected, individually or in the aggregate, to be material and adverse to Realty Income and its Subsidiaries,
taken as a whole.
(ii)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material
Adverse Effect, Realty Income, or a Subsidiary of Realty Income, or a joint venture of Realty Income or any of its Subsidiaries, owns
fee simple title to or has a valid leasehold interest in, each of the real properties reflected as an asset on the most recent balance
sheet of Realty Income included in the Realty Income SEC Documents (each, a “Realty Income Property” and collectively,
the “Realty Income Properties”), in each case free and clear of all Liens except for (A) debt and other matters set
forth in Section 3.2(p)(ii) of the Realty Income Disclosure Letter, (B) inchoate mechanics’, workmen’s, repairmen’s
and other inchoate Liens imposed for construction work in progress or otherwise incurred in the ordinary course of business, (C) mechanics’,
workmen’s and repairmen’s Liens (other than inchoate Liens for work in progress) which have heretofore been bonded or insured,
(D) all matters disclosed on existing title policies or surveys, none of which, individually or in the aggregate, would have a material
adverse effect on the use and operation of such Realty Income Property, (E) real estate Taxes and special assessments not yet due and
payable or which are being contested in good faith in the ordinary course of business and (F) Liens and other encumbrances that would
not cause a material adverse effect on the value or use of the affected property. Except as would not have, or would not reasonably be
expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect, none of Realty Income, nor any Subsidiary
of Realty Income has received written notice to the effect that there are any condemnation proceedings that are pending or, to the knowledge
of Realty Income, threatened, with respect to any material portion of any of the Realty Income Properties. Except for the owners of the
properties in which Realty Income or any Subsidiary of Realty Income has a leasehold interest and except for any Realty Income Property
that is held by a joint venture or fund, no Person other than Realty Income or a Subsidiary of Realty Income has any ownership interest
in any of the Realty Income Properties (other than immaterial easements, licenses or similar rights).
(iii)
Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material
Adverse Effect, policies of title insurance or updates or endorsements have been issued, insuring Realty Income’s or the applicable
Subsidiary of Realty Income’s fee simple title to each of the Realty Income Properties owned by Realty Income in amounts at least
equal to the purchase price paid for ownership of such Realty Income Property or such entity that owned such Realty Income Properties
at the time of the issuance of each such policy, and no material claim has been made against any such policy that has not been resolved.
(iv)
Realty Income or any Subsidiary of Realty Income (A) have not received written notice of any structural defects, or Violation of
Law, relating to any Realty Income Property which would have, or would reasonably be expected to have, individually or in the aggregate,
a Realty Income Material Adverse Effect and (B) have not received written notice of any physical damage to any Realty Income Property
which would have, or would reasonably be expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect for
which there is not insurance in effect covering the cost of the restoration and the loss of revenue.
(v)
Except for secured loan documents entered into in the ordinary course of business or as otherwise set forth on Section 3.2(p)(v)
of the Realty Income Disclosure Letter, there are no written agreements which restrict Realty Income or any Subsidiary of Realty Income
from transferring any of the Realty Income Properties, and none of the Realty Income Properties is subject to any restriction on the sale
or other disposition thereof (other than rights of first offer or rights of first refusal, tenant options or other similar preemptive
rights) or on the financing or release of financing thereon, except, in each case, as would not have, or would not reasonably be expected
to have, individually or in the aggregate, a Realty Income Material Adverse Effect.
(vi)
Realty Income and the Subsidiaries of Realty Income have good and sufficient title to, or are permitted to use under valid and
existing leases, all personal and non-real properties and assets reflected in their books and records as being owned by them or reflected
on the most recent balance sheet of Realty Income included in the Realty Income SEC Documents (except as since sold or otherwise disposed
of in the ordinary course of business) or used by them in the ordinary course of business, free and clear of all Liens, and except as
would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty Income Material Adverse Effect.
(q)
Environmental Matters. Except as would not have, or would not reasonably be expected to have, individually or in the aggregate,
a Realty Income Material Adverse Effect:
(i)
(A) Realty Income, each Subsidiary of Realty Income and each of the Realty Income Properties is in compliance and, except for matters
that have been fully and finally resolved, has complied with all applicable Environmental Laws; (B) there is no litigation, investigation,
request for information or other claim or proceeding pending or, to the knowledge of Realty Income, threatened against Realty Income or
any Subsidiary of Realty Income under any applicable Environmental Laws or with respect to Hazardous Materials; (C) Realty Income holds
all of the Permits required under applicable Environmental Laws for its current operations and is in compliance with the terms of any
such Permits and (D) Realty Income has not received any written notice of Violation or actual or potential liability under any applicable
Environmental Laws or with respect to Hazardous Materials that remains unresolved, or that any judicial, administrative or compliance
order or claim has been issued against Realty Income or any Subsidiary of Realty Income which remains unresolved;
(ii)
to the knowledge of Realty Income, neither Realty Income nor any Subsidiary of Realty Income has used, generated, stored, treated
or handled any Hazardous Materials on the Realty Income Properties in a manner that would reasonably be expected to result in liability
under any Environmental Law, and there are currently no underground storage tanks, active or abandoned, used now or in the past for the
storage of Hazardous Materials on, in or under any Realty Income Properties in Violation of applicable Environmental Laws. To the knowledge
of Realty Income, neither Realty Income nor any Subsidiary of Realty Income nor any other Person has caused a release of or arranged for
the disposal or treatment of Hazardous Materials at any site that would reasonably be expected to result in liability or remediation obligations
to Realty Income or any Realty Income Subsidiary under any Environmental Law; and
(iii)
to the knowledge of Realty Income, all Hazardous Material which has been removed from any Realty Income Properties was handled,
transported and disposed of at the time of removal in compliance with applicable Environmental Laws.
(r)
Intellectual Property. Except as would not have, or would not reasonably be expected to have, individually or in the aggregate,
a Realty Income Material Adverse Effect, (i) Realty Income and its Subsidiaries own or have a valid license to use all trademarks,
service marks, trade names, copyrights and patents (including any registrations or applications for registration of any of the foregoing)
(collectively, the “Realty Income Intellectual Property”) necessary to carry on their business substantially as currently
conducted, (ii) neither Realty Income nor any such Subsidiary has received any notice of infringement of or conflict with, and to Realty
Income’s knowledge, there are no infringements of or conflicts with, the rights of others with respect to the use of any Realty
Income Intellectual Property and (iii) to Realty Income’s knowledge, no Person is infringing on or violating any rights of the Realty
Income Intellectual Property.
(s)
Permits. Except as would not have, or would not reasonably be expected to have, individually or in the aggregate, a Realty
Income Material Adverse Effect, (i) the Permits held by Realty Income and its Subsidiaries are valid and sufficient in all respects for
all business presently conducted by Realty Income and its Subsidiaries and for the operation of the properties of Realty Income and its
Subsidiaries, (ii) all applications required to have been filed for the renewal of such Permits have been duly filed on a timely basis
with the appropriate Governmental Entities, and all other filings required to have been made with respect to such Permits have been duly
made on a timely basis with the appropriate Governmental Entities and (iii) neither Realty Income nor any of its Subsidiaries has received
any claim or notice indicating that Realty Income or any of its Subsidiaries is currently not in compliance with the terms of any such
Permits, and to Realty Income’s knowledge no such noncompliance exists.
(t)
Insurance. Realty Income and its Subsidiaries have obtained and maintained in full force and effect insurance in such amounts,
on such terms and covering such risks as Realty Income’s management believes is reasonable and customary for its business. Realty
Income or the applicable Subsidiary of Realty Income has paid, or caused to be paid, all premiums due under such policies and is not in
default with respect to any obligations under such policies, except, in each case, as would not reasonably be expected, individually or
in the aggregate, to be material and adverse to Realty Income and its Subsidiaries, taken as a whole. All such policies are valid, outstanding
and enforceable and neither Realty Income nor any of its Subsidiaries has agreed to modify or cancel any of such insurance policies nor
has Realty Income or any of its Subsidiaries received any notice of any actual or threatened modification or cancellation of such insurance
other than in the ordinary course of business consistent with past practice or such as is normal and customary in Realty Income’s
industry.
(u)
Investment Company Act of 1940. Neither Realty Income nor any Subsidiary of Realty Income is, or on the Closing Date will
be, required to be registered as an investment company under the Investment Company Act of 1940, as amended.
(v)
Activities of Merger Sub 1 and Merger Sub 2. Merger Sub 1 was formed on April 23, 2021, and Merger Sub 2 was formed on April
23, 2021, in each case solely for the purpose of engaging in the transactions contemplated by this Agreement. Merger Sub 1 and Merger
Sub 2 have engaged in no other business activities, have no liabilities or obligations and have conducted their operations only as contemplated
hereby.
(w)
Brokers or Finders. Neither Realty Income nor any of its Subsidiaries has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with the Merger or the other transactions contemplated by
this Agreement (including the OfficeCo Distribution), except that Realty Income has engaged Moelis & Company LLC as its financial
advisor and will owe fees, compensation and indemnification to Moelis in connection therewith.
(x)
Opinion of Realty Income Financial Advisor. The Board of Directors of Realty Income has received the opinion of Moelis &
Company LLC, financial advisor to Realty Income, to the effect that, as of the date thereof and based on and subject to the assumptions,
qualifications, limitations and other matters set forth therein, the Exchange Ratio is fair from a financial point of view to Realty Income.
(y)
No Undisclosed Material Liabilities. There are no liabilities or obligations of Realty Income or any of its Subsidiaries
of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than: (i) liabilities or obligations
disclosed, reflected, reserved against or otherwise provided for in Realty Income’s most recent balance sheet for the year ended
December 31, 2020 or in the notes thereto; (ii) liabilities or obligations incurred in the ordinary course of business consistent with
past practices since December 31, 2020; (iii) liabilities or obligations arising out of this Agreement or the transactions contemplated
hereby; and (iv) liabilities or obligations that would not reasonably be expected to have, individually or in the aggregate, a Realty
Income Material Adverse Effect.
(z)
No Additional Representations. Except for the representations and warranties made by Realty Income in this Article III,
neither Realty Income nor any other Person makes any express or implied representation or warranty with respect to Realty Income or its
Subsidiaries or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects in connection
with this Agreement or the transactions contemplated hereby, and Realty Income hereby disclaims any such other representations or warranties.
In particular, without limiting the foregoing disclaimer, neither Realty Income nor any other Person makes or has made any representation
or warranty to VEREIT, VEREIT OP or any of their affiliates or Representatives with respect to (i) any financial projection, forecast,
estimate, budget or prospect information relating to Realty Income or any of its Subsidiaries or their respective businesses, or (ii)
any oral or, except for the representations and warranties made by VEREIT in this Article III, written information presented to
VEREIT, VEREIT OP or any of their affiliates or Representatives in the course of their due diligence investigation of Realty Income or
its Subsidiaries or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, the
negotiation of this Agreement or in the course of the transactions contemplated hereby.
Article
IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section
4.1
Covenants of VEREIT.
(a)
From and after the date hereof until the earlier of the Effective Time or termination of this Agreement in accordance with its
terms, and except (i) as expressly contemplated or permitted by this Agreement, (ii) to the extent required in order to effect the Separation
or the OfficeCo Distribution on the terms and conditions set forth herein, (iii) as set forth in Section 4.1(a) of the VEREIT Disclosure
Letter, (iv) as required by applicable Law or the regulations or requirements of any stock exchange or regulatory organization applicable
to VEREIT or any of its Subsidiaries, (v) to the extent action is reasonably taken (or reasonably omitted) in response to Covid-19 or
Covid-19 Measures that are reasonably necessary to protect the health and safety of VEREIT’s or its Subsidiaries’ employees
and other individuals having business dealings with or relating to VEREIT or any of its Subsidiaries or to respond to third-party supply,
customer, service or other business disruptions caused by Covid-19 or any Covid-19 Measures, or (vi) with Realty Income’s prior
written consent (which consent is not to be unreasonably withheld, conditioned or delayed), VEREIT agrees as to itself and its Subsidiaries
that such entities shall use commercially reasonable efforts to (1) carry on their respective businesses in the ordinary course consistent
with past practice in all material respects, (2) maintain their material assets and properties in their current condition in all material
respects (normal wear and tear and damage caused by casualty or by any reason outside of VEREIT and its Subsidiaries’ reasonable
control excepted), (3) preserve VEREIT’s business organization intact, and to maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors and tenants, (4) maintain all insurance policies in all material respects and (5)
maintain the status of VEREIT as a REIT.
(b)
VEREIT agrees as to itself and its Subsidiaries that, from the date hereof until the earlier of the Effective Time or termination
of this Agreement in accordance with its terms, except (1) as expressly contemplated or permitted by this Agreement, (2) to the extent
required to effect the Separation or the OfficeCo Distribution in accordance with the terms set forth on Exhibit A, (3) as set
forth in Section 4.1(b) of the VEREIT Disclosure Letter, (4) as required by applicable Law or the regulations or requirements of
any stock exchange or regulatory organization applicable to VEREIT or any of its Subsidiaries, or (5) with Realty Income’s prior
written consent (which consent is not to be unreasonably withheld, conditioned or delayed), such entities shall not:
(i)
enter into any new material line of business or create any new Significant Subsidiaries;
(ii)
except (A) as permitted by Section 5.10, (B) for payment of any accrued dividends, dividend equivalents or other distributions
pursuant to any VEREIT Equity Awards in accordance with the terms thereof as in effect on the date of this Agreement (or in the case of
VEREIT Equity Awards issued in accordance with this Agreement following the date hereof, in accordance with the terms thereof), (C) for
dividends by a Subsidiary of VEREIT to VEREIT or a Subsidiary of VEREIT, (D) for the declaration and payment by VEREIT of dividends required
pursuant to the terms of the VEREIT Series F Preferred Stock and (E) for the declaration and payment by VEREIT OP of distributions required
pursuant to the terms of the VEREIT Partnership Series F Preferred Units, declare, set aside
or pay any dividends on or make other distributions in respect of any of its capital stock, partnership interests, or other equity interests;
(iii)
(A) split, combine, subdivide or reclassify any of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its capital stock, or (B) repurchase, redeem or otherwise acquire,
or permit any Subsidiary to redeem, purchase or otherwise acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than (1) repurchases, redemptions or exchanges of VEREIT Partnership Units required
pursuant to the VEREIT Partnership Agreement, (2) acquisitions of shares of VEREIT Common Stock tendered by holders of, or otherwise deliverable
pursuant to, VEREIT Equity Awards in accordance with the terms thereof as in effect on the date of this Agreement (or, in the case of
VEREIT Equity Awards issued in accordance with this Agreement following the date hereof, in accordance with the terms thereof) in order
to satisfy obligations to pay the exercise price and/or Tax withholding obligations with respect thereto or (3) as required by Section
4.07 of the VEREIT Charter;
(iv)
except for (A) issuances of shares of VEREIT Common Stock upon the exercise or settlement of VEREIT Equity Awards in accordance
with the terms thereof as in effect on the date of this Agreement (or, in the case of VEREIT Equity Awards issued in accordance with this
Agreement following the date hereof, in accordance with the terms thereof), (B) repurchases, redemptions or exchanges of VEREIT Partnership
Units for VEREIT Common Stock required by the VEREIT Partnership Agreement, or (C) issuances by a Subsidiary of its capital stock to its
parent or to another wholly owned Subsidiary of VEREIT, issue, deliver or sell, or authorize or propose the issuance, delivery or sale
of, any shares of VEREIT’s capital stock or that of a Subsidiary of VEREIT, any Voting Debt, any stock appreciation rights, stock
options, restricted shares or other equity-based awards (whether discretionary, formulaic or automatic grants and whether under the VEREIT
Equity Plans or otherwise) or any securities convertible into or exercisable or exchangeable for, or any rights, warrants or options to
acquire, any such shares or Voting Debt, or enter into any agreement with respect to any of the foregoing;
(v)
amend or propose to amend the organizational documents of VEREIT or VEREIT OP or their respective Subsidiaries, or enter into,
or, except as permitted by Section 4.1(b)(vi) or Section 4.1(b)(vii), permit any Subsidiary to enter into, a plan of consolidation,
merger or reorganization with any person other than a wholly owned Subsidiary of VEREIT;
(vi)
other than acquisitions of real property for cash (“Acquisitions”) (A) in the ordinary course that would not
reasonably be expected to materially delay, impede or affect the consummation of the transactions contemplated by this Agreement in the
manner contemplated hereby and for which the fair market value of the total consideration paid by VEREIT and its Subsidiaries in such
Acquisitions does not exceed, in the case of an Acquisition of a retail property with a single tenant, $15,000,000 individually, in the
case of an Acquisition of an industrial property with a single tenant, $25,000,000, in the case of an Acquisition involving a sale-leaseback
transaction or a portfolio transaction, $60,000,000 million individually (unless any individual properties contained in such portfolio
transaction otherwise exceed any of such thresholds described above) (provided that, in each case, (1) VEREIT has provided Realty
Income a copy of its weekly acquisition pipeline report in advance to Realty Income, (2) prior to entering into any commitment with respect
to any such Acquisition, VEREIT reasonably consults with Realty Income regarding such Acquisition, and (3) no such Acquisitions shall
be office properties), and (B) as set forth on Section 4.1(b)(vi) of the VEREIT Disclosure Letter; provided that, such Acquisitions
under clause (A) and (B), in the aggregate, shall not exceed $350,000,000 in any given calendar quarter, and shall not exceed $1,000,000,000
in any given calendar year (in each case, less the total acquisition volume for such period prior to the date of this Agreement), acquire,
by merging or consolidating with, by purchasing a substantial equity interest in or a substantial portion of the assets of, by forming
a partnership or joint venture with, or by any other manner, any real property, any personal property, any business or any corporation,
partnership, association or other business organization or division thereof; provided, however, that the foregoing shall
not prohibit (x) internal reorganizations or consolidations involving existing Subsidiaries that would not present a material risk of
any material delay in the consummation of the Merger, or (y) the creation of new Subsidiaries organized to conduct or continue activities
otherwise permitted by this Agreement;
(vii)
other than (A) internal reorganizations or consolidations involving existing Subsidiaries that would not present a material risk
of any material delay in the consummation of the Mergers, the Separation or the OfficeCo Distribution, (B) the dispositions set forth
on Section 4.1(b)(vii) of the VEREIT Disclosure Letter or (C) as permitted by Section 5.15, sell, assign, encumber or otherwise
dispose of any of its assets (including capital stock of its Subsidiaries and Indebtedness of others held by VEREIT and its Subsidiaries);
(viii)
incur, create or assume, refinance, replace or prepay any Indebtedness (or modify any of the material terms of any outstanding
Indebtedness), guarantee any Indebtedness of any Person or issue or sell any warrants or rights to acquire any Indebtedness of VEREIT
or any of its Subsidiaries, other than (A) Indebtedness of any wholly owned Subsidiary of VEREIT to VEREIT or to another wholly owned
Subsidiary of VEREIT, (B) Indebtedness of any Subsidiary of VEREIT to or among one of its wholly owned Subsidiaries, (C) any borrowings
under VEREIT’s existing revolving credit facility in an amount not to exceed $360,000,000 outstanding;
(ix)
except as disclosed in any VEREIT SEC Document filed prior to the date of this Agreement, (x) fail to maintain all financial books
and records in all material respects in accordance with GAAP or (y) change its methods of accounting in effect as of December 31,
2020, except as required by changes in GAAP (or any interpretation thereof) or in applicable Law, the SEC or the Financial Accounting
Standards Board or any similar organization;
(x)
adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution,
restructuring, recapitalization or reorganization; provided, however, that the foregoing shall not prohibit internal
reorganizations or consolidations involving wholly owned Subsidiaries that would not reasonably be expected to prevent or materially impede,
hinder or delay the consummation of the Mergers, the Separation or the OfficeCo Distribution;
(xi)
other than (A) any action permitted under clauses (A) through (C) of Section 4.1(b)(viii), under Section 4.1(b)(xviii)
or under Section 4.1(b)(xix), (B) any termination, modification or renewal in accordance with the terms of any existing VEREIT
Material Contract that occurs automatically without any action by VEREIT, VEREIT OP or any of their Subsidiaries, (C) in connection with
any Tenant Improvements at any of the VEREIT Properties, but solely to the extent required pursuant to the terms of the applicable VEREIT
Lease, including any new lease or amendment thereto pursuant to Section 4.1(b)(xix) below, or (D) as may be reasonably necessary
to comply with the terms of this Agreement (provided, that, with respect to clauses (A) through (C) of this Section 4.1(b)(xi)
no such actions may cause a Contract to include a change of control or similar provision that would require a material payment to or would
give rise to any material rights (including termination rights) of the other party or parties thereto as a result of the consummation
of the Mergers or the other transactions contemplated by this Agreement or that would reasonably be expected to require a material payment
to or would give rise to any material rights (including termination rights) of the other party or parties if a change of control of Realty
Income were to occur immediately following consummation of the Merger (a “Change of Control Cost”)), terminate, cancel,
renew or request or agree to any material amendment or material modification to, material change in, or material waiver under or assignment
of, any VEREIT Material Contract or enter into or materially amend any Contract that, if existing on the date of this Agreement, would
be a VEREIT Material Contract, or enter into any Contract that would create a Change of Control Cost or amend or modify any existing Contract
so as to create a Change of Control Cost;
(xii)
waive the excess share provisions of, or otherwise grant or increase an exception to or waiver of any ownership limits set forth
in, the organizational documents of VEREIT or any of its Subsidiaries for any Person;
(xiii)
take any action, or fail to take any action, which would reasonably be expected to cause VEREIT to fail to qualify as a REIT or
any of its Subsidiaries to cease to be treated as a partnership or disregarded entity for federal income tax purposes or as a Qualified
REIT Subsidiary, a Taxable REIT Subsidiary or a REIT under the applicable provisions of Section 856 of the Code, as the case may
be;
(xiv)
make or commit to make any capital expenditures in excess of the 2021 capital expenditure budget set forth on Section 4.1(b)(xiv)
of the VEREIT Disclosure Letter (less any capital expenditures incurred by VEREIT or its Subsidiaries from January 1, 2021 to the date
of this Agreement);
(xv)
take any action, or knowingly fail to take any action, which action or failure to act could be reasonably expected to prevent the
Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;
(xvi)
enter into any Tax Protection Agreement, make, change or rescind any material Tax election or change a material method of Tax accounting,
amend any material Tax Return, settle or compromise any material federal, state, local or foreign income Tax liability, audit, claim or
assessment for an amount materially in excess of amounts reserved therefor on the financial statements of VEREIT, enter into any material
closing agreement related to Taxes, or knowingly surrender any right to claim any material Tax refund, except in each case, (x) in the
ordinary course of business consistent with past practice, (y) as required by law, or (z) as necessary (i) to preserve the status of VEREIT
as a REIT under the Code, or (ii) to qualify or preserve the status of any Subsidiary of VEREIT as a partnership or disregarded entity
for federal income tax purposes or as a Qualified REIT Subsidiary, a Taxable REIT Subsidiary or a REIT under the applicable provisions
of Section 856 of the Code, as the case may be;
(xvii)
other than with respect to claims of or receivables owed to VEREIT or its Subsidiaries which arise in the ordinary course of business,
waive, release, assign, settle or compromise any claim, action or proceeding, other than waivers, releases, assignments, settlements or
compromises that (A) with respect to the payment of monetary damages, involve only the payment of monetary damages (excluding any portion
of such payment payable under an existing property-level insurance policy) (x) equal to or lesser than the amounts specifically reserved
with respect thereto on the most recent balance sheet of VEREIT and its consolidated Subsidiaries included in the VEREIT SEC Documents
or (y) that do not exceed $4,000,000 individually or $10,000,000 in the aggregate, (B) do not involve the imposition of injunctive relief
against VEREIT or any of its Subsidiaries or the Surviving Corporation following the Effective Time, and (C) do not provide for any admission
of material liability by VEREIT or any of its Subsidiaries, excluding in each case any matter relating to Taxes (which, for the avoidance
of doubt, shall be governed by Section 4.1(b)(xvi));
(xviii)
except as required by the terms of any VEREIT Benefit Plan as in effect on the date hereof, (A) materially increase the compensation,
bonus or pension, welfare, severance or other benefits payable or provided to, or pay any bonus to, or grant any new cash- or equity-based
awards (including VEREIT Equity Awards) or long-term cash awards to, any current or former directors, employees or other service providers
of VEREIT or any of its Subsidiaries, (B) grant or provide any change of control, severance or retention payments or benefits to
any current or former director, employee or other service provider of VEREIT or any of its Subsidiaries, (C) establish, adopt, enter
into or amend any VEREIT Benefit Plan or any other plan, policy, program, agreement or arrangement that would be a VEREIT Benefit Plan
if in effect on the date hereof, other than immaterial amendments that do not result in an increase in cost to VEREIT or its affiliates
of maintaining such VEREIT Benefit Plan or other plan, trust, fund, policy or arrangement that would be a VEREIT Benefit Plan if in effect
on the date hereof, (D) enter into or amend any collective bargaining agreement or similar agreement, (E) hire any new employee of VEREIT
or its Subsidiaries equal to or greater than the Vice President level or whose annual total annual compensation opportunity exceeds $250,000,
other than to replace employees who terminate employment following the date of this Agreement whose annual total annual compensation opportunity
does not exceed $250,000, (F) promote or terminate the employment (other than for cause) of any employee of VEREIT or its Subsidiaries
at the level of Vice President or above and whose annual total annual compensation opportunity is equal to or exceeds $250,000 (in the
case of promotion, whether before or after such promotion), or (G) take any action to accelerate the vesting or payment, or fund or in
any way secure the payment, of compensation or benefits under any VEREIT Benefit Plan or other plan, trust, fund, policy or arrangement
that would be a VEREIT Benefit Plan if in effect on the date hereof;
(xix)
enter into, renew, terminate, or amend, waive, release or compromise in any material respects or assign any material rights or
claims under, or, other than as set forth on Section 4.1(xix) of the VEREIT Disclosure Letter, enter into any rent abatement or rent deferral
arrangements with respect to, any VEREIT Lease (or any lease for real property that, if existing as of the date hereof, would be a VEREIT
Lease) except for entering into any new lease or renewing or modifying in any material respect any VEREIT Lease, in each case, in the
ordinary course of business consistent with past practice on market terms; provided that (A) no such new lease shall contain any
Change of Control Costs and (B) VEREIT shall, within fifteen (15) Business Days of the end of each calendar month, provide notice to Realty
Income of such new, renewed or materially modified leases and shall provide Realty Income with an overview of VEREIT’s pending leasing
activity;
(xx)
form any new funds, non-traded real estate investment trusts, joint ventures or other pooled investment vehicles, or similar investment
structure;
(xxi)
amend or modify the compensation terms or any other material obligations of VEREIT contained in the engagement letter with J.P.
Morgan in a manner adverse to VEREIT or any of VEREIT’s Subsidiaries or engage other financial advisers in connection with the transactions
contemplated by this Agreement; provided, however, that the foregoing shall not restrict VEREIT from obtaining a new fairness
opinion from J.P. Morgan in connection with any Superior Proposal;
(xxii)
effect any deed in lieu of foreclosure, or sell, lease, assign, encumber or transfer to a lender any property securing Indebtedness
owed to such lender; or
(xxiii)
agree to, or make any commitment to, take, or authorize, any of the actions prohibited by this Section 4.1.
(c)
Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit VEREIT from taking
any action at any time or from time to time, that in the reasonable judgment of the Board of Directors of VEREIT, upon advice of counsel
to VEREIT, is reasonably necessary for VEREIT to avoid incurring entity level income or excise Taxes under the Code or to maintain its
qualification as a REIT under the Code for any period or portion thereof ending on or prior to the Effective Time, including making dividend
or other distribution payments to stockholders of VEREIT or holders of VEREIT Partnership Units in accordance with this Agreement or otherwise
or to qualify or preserve the status of any VEREIT Subsidiary as a disregarded entity or partnership for federal income tax purposes or
as a Qualified REIT Subsidiary, a Taxable REIT Subsidiary or a REIT, under the applicable provisions of Section 856 of the Code,
as the case may be.
(d)
VEREIT shall (i) use its reasonable best efforts to obtain or cause to be provided the opinions referred to in Section 6.2(c)
and Section 6.3(d), (ii) use its reasonable best efforts to obtain or cause to be provided opinions of counsel consistent with
the opinions of counsel referred to in Section 6.2(c) and Section 6.3(d) but dated as of the effective date of the Form
S-4, to the extent required for the Form S-4 to be declared effective by the SEC, (iii) deliver to VEREIT REIT Counsel an officer’s
certificate, dated as of the Closing Date and, if applicable, as of the effective date of the Form S-4, as applicable, signed by an officer
of VEREIT and VEREIT OP and in form and substance reasonably satisfactory to VEREIT REIT Counsel and Realty Income (it being agreed and
understood that an officer’s certificate substantially similar to the draft officer’s certificate provided to Realty Income
prior to the date of this Agreement is and will be in form and substance reasonably satisfactory to Realty Income subject to reasonable
changes to take into account changes in fact or law), containing representations of VEREIT and VEREIT OP reasonably necessary or appropriate
to enable VEREIT REIT Counsel to render the tax opinion described in Section 6.3(d) and any similar opinions described in Section
4.1(d)(ii), and (iv) deliver to VEREIT Merger Counsel and Realty Income Merger Counsel a tax representation letter substantially in
form and substance set forth in Section 4.1(d) of the VEREIT Disclosure Letter, with such changes as are mutually agreeable to
VEREIT, Realty Income, VEREIT Merger Counsel and Realty Income Merger Counsel (such agreement not to be unreasonably withheld, conditioned
or delayed) and such changes reasonably acceptable to VEREIT Merger Counsel and Realty Income Merger Counsel as may be necessary or appropriate
to reflect the terms of the Separation, the OfficeCo Distribution, any OfficeCo Sale and any changes in the facts or the structure of
the transaction after the date hereof, containing representations of VEREIT reasonably necessary or appropriate to enable such counsel
to render the applicable tax opinions described in Section 6.2(c) and Section 6.3(c) and any similar opinions described
in Section 4.1(d)(ii) and Section 4.2(d)(ii).
(e)
Notwithstanding anything to the contrary set forth in this Agreement, (i) nothing contained in this Agreement shall give Realty
Income, directly or indirectly, the right to control or direct VEREIT’s or VEREIT’s Subsidiaries’ operations prior to
the Closing, (ii) prior to the Closing, VEREIT shall exercise, consistent with the terms and conditions of this Agreement, complete control
and supervision over its and its Subsidiaries’ operations, and (iii) notwithstanding anything to the contrary set forth in this
Agreement, no consent of Realty Income shall be required with respect to any matter set forth in Section 4.1 or elsewhere in this
Agreement to the extent that the requirement of such consent could violate any applicable law.
Section
4.2
Covenants of Realty Income.
(a)
From and after the date hereof until the earlier of the Partnership Merger Effective Time or termination of this Agreement in accordance
with its terms, and except (i) as expressly contemplated or permitted by this Agreement, (ii) to the extent required in order to
effect the Separation and the OfficeCo Distribution on the terms and conditions set forth herein, (iii) as set forth in Section
4.2(a) of the Realty Income Disclosure Letter, (iv) as required by applicable Law or the regulations or requirements of any stock
exchange or regulatory organization applicable to Realty Income or any of its Subsidiaries, (v) to the extent action is reasonably taken
(or reasonably omitted) in response to Covid-19 or Covid-19 Measures that are reasonably necessary to protect the health and safety of
VEREIT’s or its Subsidiaries’ employees and other individuals having business dealings with or relating to VEREIT or any of
its Subsidiaries or to respond to third-party supply, customer, service or other business disruptions caused by Covid-19 or any Covid-19
Measures, or (vi) with VEREIT’s prior written consent (which consent is not to be unreasonably withheld, conditioned or delayed),
Realty Income agrees as to itself and its Subsidiaries that such entities shall use commercially reasonable efforts to (1) carry on their
respective businesses in the ordinary course consistent with past practice in all material respects, (2)maintain their material assets
and properties in their current condition in all material respects (normal wear and tear and damage caused by casualty or by any reason
outside of Realty Income and its Subsidiaries’ reasonable control excepted), (3)preserve Realty Income’s business organization
intact, and to maintain its existing relations and goodwill with customers, suppliers, distributors, creditors, lessors and tenants, (4)
maintain all insurance policies in all material respects and (5) maintain the status of Realty Income as a REIT.
(b)
Realty Income agrees as to itself and its Subsidiaries that, from the date hereof until the earlier of the Effective Time or termination
of this Agreement in accordance with its terms, except (1) as expressly contemplated or permitted by this Agreement, (2) to the extent
required in order to effect the Separation or the OfficeCo Distribution in accordance with the terms set forth on Exhibit A, (3)
as set forth in Section 4.2(b) of the Realty Income Disclosure Letter, (4) as required by applicable Law or the regulations or
requirements of any stock exchange or regulatory organization applicable to Realty Income or any of its Subsidiaries, or (5) with VEREIT’s
prior written consent (which consent is not to be unreasonably withheld, conditioned or delayed), such entities shall not:
(i)
(A) split, combine, subdivide or reclassify any of its capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its capital stock, or (B) repurchase, redeem or otherwise acquire,
or permit any Subsidiary to redeem, purchase or otherwise acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than (1) repurchases, redemptions or exchanges of partnership units of Realty Income,
L.P. for Realty Income Common Stock required pursuant to the Realty Income Partnership Agreement, or (2) acquisitions of shares of Realty
Income Common Stock tendered by holders of, or otherwise deliverable pursuant to, Realty Income Equity Awards in accordance with the terms
of the applicable Realty Income Equity Plan in order to satisfy obligations to pay the exercise price and/or Tax withholding obligations
with respect thereto;
(ii)
amend or propose to amend the organizational documents of Realty Income, Merger Sub 1 or Merger Sub 2;
(iii)
except as disclosed in any Realty Income SEC Document filed prior to the date of this Agreement, (x) fail to maintain all financial
books and records in all material respects in accordance with GAAP or (y) change its methods of accounting in effect as of December 31,
2020, except as required by changes in GAAP (or any interpretation thereof) or in applicable Law, the SEC or the Financial Accounting
Standards Board or any similar organization;
(iv)
adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution,
restructuring, recapitalization or reorganization; provided, however, that the foregoing shall not prohibit internal
reorganizations or consolidations involving existing wholly owned Subsidiaries that would not reasonably expected to prevent or materially
impede, hinder or delay the consummation of the transactions contemplated by this Agreement;
(v)
waive the excess share provisions of, or otherwise grant or increase an exception to or waiver of any ownership limits set forth
in, the organizational documents of Realty Income or any of its Subsidiaries for any person (other than VEREIT, VEREIT OP or any of their
respective Subsidiaries);
(vi)
take any action, or fail to take any action, which would reasonably be expected to cause Realty Income to fail to qualify as a
REIT or any of its Subsidiaries to cease to be treated as a partnership or disregarded entity for federal income tax purposes or as a
Qualified REIT Subsidiary, a Taxable REIT Subsidiary or a REIT under the applicable provisions of Section 856 of the Code, as the
case may be;
(vii)
take any action, or knowingly fail to take any action, which action or failure to act could be reasonably expected to prevent the
Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code; or
(viii)
agree to, or make any commitment to, take, or authorize, any of the actions prohibited by this Section 4.2.
(c)
Notwithstanding anything to the contrary set forth in this Agreement, nothing in this Agreement shall prohibit Realty Income from
taking any action, at any time or from time to time, that in the reasonable judgment of the Board of Directors of Realty Income, upon
advice of tax counsel to Realty Income, is reasonably necessary for Realty Income to avoid incurring entity level income or excise Taxes
under the Code or maintain its qualification as a REIT under the Code, including making dividend or other distribution payments to stockholders
of Realty Income in accordance with this Agreement or otherwise or to qualify or preserve the status of any Subsidiary of Realty Income
as a disregarded entity or partnership for federal income tax purposes or as a Qualified REIT Subsidiary, a Taxable REIT Subsidiary or
a REIT under the applicable provisions of Section 856 of the Code, as the case may be.
(d)
Realty Income shall (i) use its reasonable best efforts to obtain or cause to be provided the opinions referred to in Section
6.2(d) and Section 6.3(c), (ii) use its reasonable best efforts to obtain or cause to be provided opinions of counsel consistent
with the opinions of counsel referred to in Section 6.2(d) and Section 6.3(c) but dated as of the effective date of the
Form S-4, to the extent required for the Form S-4 to be declared effective by the SEC, (iii) deliver to Realty Income REIT Counsel an
officer’s certificate, dated as of the Closing Date and as of the effective date of the Form S-4, as applicable, signed by an officer
of Realty Income and in form and substance reasonably satisfactory to Realty Income REIT Counsel and VEREIT (it being agreed and understood
that an officer’s certificate substantially similar to the draft officer’s certificate provided to VEREIT prior to the date
of this Agreement, if any, will be in form and substance reasonably satisfactory to VEREIT subject to reasonable changes to take into
account Realty Income’s ownership of VEREIT’s assets following the Merger and any changes in fact or law), containing representations
of Realty Income reasonably necessary or appropriate to enable Realty Income REIT Counsel to render the tax opinion described in Section
6.2(d) and any similar opinion described in Section 4.2(d)(ii), and (iv) deliver to Realty Income Merger Counsel and VEREIT
Merger Counsel a tax representation letter in form and substance substantially as set forth in Section 4.2(d) of the Realty Income
Disclosure Letter, with such changes as are mutually agreeable to Realty Income, VEREIT, Realty Income Merger Counsel and VEREIT Merger
Counsel (such agreement not to be unreasonably withheld, conditioned or delayed) and such changes reasonably acceptable to VEREIT Merger
Counsel and Realty Income Merger Counsel as may be necessary or appropriate to reflect the terms of the Separation, the OfficeCo Distribution,
any OfficeCo Sale and any changes in the facts or the structure of the transaction after the date hereof, containing representations of
Realty Income and Merger Sub I reasonably necessary or appropriate to enable such counsel to render the applicable tax opinions described
in Section 6.2(c) and Section 6.3(c) and any similar opinions described in Section 4.2(d)(ii) and Section 4.1(d)(ii).
Article
V
ADDITIONAL AGREEMENTS
Section
5.1
Preparation of Proxy Statement; Stockholders Meetings.
(a)
As promptly as reasonably
practicable following the date hereof, each of the parties hereto shall cooperate in preparing and shall cause to be filed with the SEC
mutually acceptable proxy materials which shall constitute the joint proxy statement/prospectus relating to the matters to be submitted
to the VEREIT stockholders at the VEREIT Stockholders Meeting (as defined below) and to the Realty Income stockholders at the Realty Income
Stockholders Meeting (as defined below) (such joint proxy statement/prospectus, and any amendments or supplements thereto, the “Joint
Proxy Statement/Prospectus”), and Realty Income (and, if required, Merger Sub 1 and Merger Sub 2) shall prepare and file with
the SEC a registration statement on Form S-4 (of which the Joint Proxy Statement/Prospectus shall be a part) with respect to the Realty
Income Stock Issuance (such Form S-4, and any amendments or supplements thereto, the “Form S-4”). Each of the parties
hereto shall use reasonable best efforts to have the Joint Proxy Statement/Prospectus cleared by the SEC and the Form S-4 declared effective
by the SEC and to keep the Form S-4 effective as long as is necessary to consummate the Mergers and the transactions contemplated thereby.
VEREIT and Realty Income shall, as promptly as practicable after receipt thereof, provide the other party with copies of any written comments
and advise the other party of any oral comments with respect to the Joint Proxy Statement/Prospectus or the Form S-4 received from the
SEC. Each party shall cooperate and provide the other party with a reasonable opportunity to review and comment on any amendment or supplement
to the Joint Proxy Statement/Prospectus and the Form S-4 prior to filing such with the SEC, and each party will provide the other party
with a copy of all such filings made with the SEC. Each party shall use its reasonable best efforts to take any action required to be
taken under any applicable state securities laws in connection with the Mergers and the Realty Income Stock Issuance, and each party shall
furnish all information concerning it and the holders of its capital stock or shares of common stock as may be reasonably requested in
connection with any such action. Each party will advise the other party, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective, the issuance of any stop order, the suspension of the qualification of the Realty Income Common Stock issuable
in connection with the Mergers for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Joint Proxy Statement/Prospectus
or the Form S-4. If, at any time prior to the Partnership Merger Effective Time, any information relating to either of the parties, or
their respective affiliates, officers or directors, should be discovered by either party, and such information should be set forth in
an amendment or supplement to any of the Form S-4 or the Joint Proxy Statement/Prospectus so that such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, the party that discovers such information shall promptly notify the other party hereto and,
to the extent required by law, rules or regulations, an appropriate amendment or supplement describing such information shall be promptly
filed with the SEC and disseminated to the stockholders of VEREIT and Realty Income.
(b)
VEREIT shall duly take all lawful action to call, give notice of, convene and hold a meeting of its stockholders as promptly as
practicable following the date upon which the Form S-4 becomes effective (the “VEREIT Stockholders Meeting”) for the
purpose of obtaining the VEREIT Required Stockholders Vote. Unless a Change in VEREIT Recommendation (as defined below) has occurred in
accordance with Section 5.4, the Board of Directors of VEREIT shall use its reasonable best efforts to obtain from the stockholders
of VEREIT the VEREIT Required Stockholders Vote. VEREIT covenants that, unless a Change in VEREIT Recommendation has occurred in accordance
with Section 5.4, VEREIT will, through its Board of Directors, recommend to its stockholders approval of the Merger and further
covenants that the Joint Proxy Statement/Prospectus and the Form S-4 will include such recommendation. Notwithstanding the foregoing provisions
of this Section 5.1(b), if, on a date for which the VEREIT Stockholders Meeting is scheduled, VEREIT has not received proxies representing
a sufficient number of shares of VEREIT Common Stock to obtain the VEREIT Required Stockholders Vote, whether or not a quorum is present,
VEREIT shall have the right to make one or more successive postponements or adjournments of the VEREIT Stockholders Meeting; provided
that the VEREIT Stockholders Meeting is not postponed or adjourned to a date that is more than thirty (30) days after the date for which
the VEREIT Stockholders Meeting was originally scheduled (excluding any adjournments or postponements required by applicable Law). VEREIT
agrees that, unless this Agreement shall have been terminated in accordance with Section 7.1, its obligations to hold the VEREIT
Stockholders Meeting pursuant to this Section 5.1(b) shall not be affected by the commencement, public proposal, public disclosure
or communication to VEREIT of any Acquisition Proposal (as defined below) or by any Change in VEREIT Recommendation.
(c)
Realty Income shall duly take all lawful action to call, give notice of, convene and hold a meeting of its stockholders as promptly
as practicable following the date upon which the Form S-4 becomes effective (the “Realty Income Stockholders Meeting”)
for the purpose of obtaining the Realty Income Required Stockholders Vote. Unless a Change in Realty Income Recommendation has occurred
in accordance with Section 5.4, the Board of Directors of Realty Income shall use its reasonable best efforts to obtain from the
stockholders of Realty Income the Realty Income Required Stockholders Vote. Realty Income covenants that, unless a Change in Realty Income
Recommendation has occurred in accordance with Section 5.4, Realty Income will, through its Board of Directors, recommend to its
stockholders approval of the Realty Income Stock Issuance and further covenants that the Joint Proxy Statement/Prospectus and the Form
S-4 will include such recommendation. Notwithstanding the foregoing provisions of this Section 5.1(c), if, on a date for which
the Realty Income Stockholders Meeting is scheduled, Realty Income has not received proxies representing a sufficient number of shares
of Realty Income Common Stock to obtain the Realty Income Required Stockholders Vote, whether or not a quorum is present, Realty Income
shall have the right to make one or more successive postponements or adjournments of the Realty Income Stockholders Meeting; provided
that the Realty Income Stockholders Meeting is not postponed or adjourned to a date that is more than thirty (30) days after the date
for which the Realty Income Stockholders Meeting was originally scheduled (excluding any adjournments or postponements required by applicable
Law). Realty Income agrees that, unless this Agreement shall have been terminated in accordance with Section 7.1, its obligations
to hold the Realty Income Stockholders Meeting pursuant to this Section 5.1(c) shall not be affected by the commencement, public
proposal, public disclosure or communication to Realty Income of any Acquisition Proposal or by any Change in Realty Income Recommendation.
(d)
Each of the parties hereto shall use their reasonable best efforts to cause the VEREIT Stockholders Meeting and the Realty Income
Stockholders Meeting to be held on the same date.
Section
5.2
Access to Information.
(a)
For purposes of facilitating the transactions contemplated hereby, and subject to applicable Law, upon reasonable request and advance
notice, each of the parties hereto shall (and shall cause each of their respective Subsidiaries to) afford to the Representatives of the
other parties reasonable access, during normal business hours and in accordance with reasonable procedures established by such party,
during the period prior to the Partnership Merger Effective Time, to all its properties (other than for purposes of invasive testing),
books, Contracts, records and Representatives, and, during such period, each of the parties shall (and shall cause each of their respective
Subsidiaries to) make available to the other parties, upon any other party’s reasonable request, (i) a copy of each report, schedule,
registration statement and other document filed or received by it during such period pursuant to the requirements of Federal or state
securities laws, or the rules and regulations of self-regulatory organizations (other than reports or documents which such party is not
permitted to disclose under applicable Law) and (ii) all other information concerning its business, properties and personnel as such other
party may reasonably request; provided, however, that (x) any physical access to the properties, information and personnel
of any party and its Subsidiaries may be limited to the extent such party reasonably determines in good faith, in light of COVID-19 or
any COVID-19 Measures, that such access would reasonably be expected to jeopardize the health and safety of any employee of such party
or its Subsidiaries, and (y) Realty Income and its Subsidiaries shall only be required to provide access or make available such information
pursuant to the foregoing sentence to the extent such information is necessary for VEREIT and its Subsidiaries’ to consummate the
transactions contemplated by this Agreement. Notwithstanding anything in this Section 5.2(a) to the contrary, neither Realty Income
nor VEREIT nor any of their respective Subsidiaries or representatives shall, without the other party’s prior consent (not to be
unreasonably withheld conditioned or delayed), communicate with any employees of the other party, other than, with respect to Realty Income,
the employees set forth on Section 5.2 of the Realty Income Disclosure Letter, and with respect to VEREIT, the employees set forth
on Section 5.2 of the VEREIT Disclosure Letter; provided that the parties shall, following the date hereof, promptly
develop a mutually acceptable protocol to manage communications between the parties and their employees. In addition, neither party nor
any of its Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would jeopardize
the attorney-client privilege of the institution in possession or control of such information or contravene any Law, rule, regulation,
order, judgment or decree. The parties will make appropriate substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply. Notwithstanding anything contained in this Agreement to the contrary, neither Realty Income nor VEREIT
shall be required to provide any access or make any disclosure to the other pursuant to this Section 5.2 to the extent
such access or information is reasonably pertinent to a litigation where Realty Income or any of its affiliates, on the one hand, and
VEREIT or any of its affiliates, on the other hand, are adverse parties or reasonably likely to become adverse parties.
(b)
The parties will hold any such information which is nonpublic in confidence to the extent required by, and in accordance with,
the provisions of the Amended and Restated Confidentiality Agreement between VEREIT and Realty Income, dated as of March 12, 2021, and
as it may be amended from time to time (the “Confidentiality Agreement”), which Confidentiality Agreement will remain
in full force and effect; provided that in the event this Agreement is terminated at any time prior to the Effective Time, the
terms of the Confidentiality Agreement shall survive for a period of two (2) years following such termination.
Section
5.3
Reasonable Best Efforts.
(a) Subject to the terms
and conditions of this Agreement, each of the parties hereto shall use its reasonable best efforts to take, or cause to be taken, all
actions and to do promptly, or cause to be done promptly, and to assist and cooperate with each other in doing, all things necessary,
proper or advisable under applicable Law to cause the conditions in Article IV to be satisfied and to consummate and
make effective the Mergers and the other transactions contemplated by this Agreement as soon as practicable, including preparing and filing
as promptly as practicable all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions
of information, applications and other documents necessary to consummate the Mergers and the other transactions contemplated by this Agreement.
In furtherance and not in limitation of the foregoing, each of the parties hereto agrees to (i) use its reasonable best efforts to cooperate
with the other party in determining which filings are required to be made prior to the Closing with, and which consents, clearances, approvals,
waiting period expirations or terminations, Permits or authorizations are required to be obtained prior to the Closing from, any Governmental
Entity in connection with the execution and delivery of this Agreement and the consummation of the Mergers and the other transactions
contemplated by this Agreement and in timely making all such filings, (ii) promptly furnish the other party, subject in appropriate cases
to appropriate confidentiality agreements to limit disclosure to outside lawyers and consultants, with such information and reasonable
assistance as such other party and its affiliates may reasonably request in connection with their preparation of necessary filings, registrations
and submissions of information to any Governmental Entity, (iii) supply as promptly as reasonably practicable any additional information
and documentary material that may be reasonably requested pursuant to any applicable Laws by any Governmental Entity, and (iv) take or
cause to be taken all other actions necessary, proper or advisable to obtain applicable clearances, consents, authorizations, approvals
or waivers and cause the expiration or termination of the applicable waiting periods with respect to the Merger and the other transactions
contemplated by this Agreement under any applicable Laws as promptly as practicable. In addition, each of Realty Income and VEREIT shall
use reasonable best efforts to obtain all consents, approvals, waivers, licenses, permits, franchises, authorizations or Orders (“Consents”)
of Persons other than Governmental Entities that are necessary, proper or advisable to consummate the Mergers, the Separation, the OfficeCo
Distribution and the other transactions contemplated thereby; provided, however, that, except as otherwise provided in Section
5.15 or Exhibit A of this Agreement, none of Realty Income, VEREIT nor any of their respective Subsidiaries shall be required
to make, or commit or agree to make, any concession or payment to, or incur any liability to, any such non-Governmental Entity to obtain
any such Consent that is not contingent on the closing of the Merger (unless the parties mutually consent to such concession, payment
or liability (such consent not to be unreasonably withheld, conditioned or delayed)).
(b)
Each of the parties hereto shall, in connection with the efforts referenced in Section 5.3(b), use its reasonable best efforts
to: (i) cooperate in all respects with each other in connection with any investigation or other inquiry, including any proceeding initiated
by a private party; (ii) promptly notify the other party of any communication concerning this Agreement or any of the transactions contemplated
hereby to that party from or with any Governmental Entity and consider in good faith the views of the other party and keep the other party
reasonably informed of the status of matters related to the transactions contemplated by this Agreement, including furnishing the other
with any written notices or other communications received by such party from, or given by such party to, any Governmental Entity and of
any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions
contemplated hereby, except that any materials concerning one party’s valuation of the other party may be redacted; and (iii) permit
the other party to review in draft any proposed communication to be submitted by it to any Governmental Entity with reasonable time and
opportunity to comment, and consult with each other in advance of any in-person or telephonic meeting or conference with any Governmental
Entity or, in connection with any proceeding by a private party, with any other Person, and, to the extent permitted by the applicable
Governmental Entity or Person, not agree to participate in any meeting or discussion with any Governmental Entity relating to any filings
or investigations concerning this Agreement and or any of the transactions contemplated hereby unless it invites the other party’s
Representatives to attend in accordance with applicable Laws. The parties may, as they deem advisable and necessary, designate any competitively
sensitive materials provided to the other under this Section 5.3 as “outside counsel only.” Such materials and the
information contained therein shall be given only to outside counsel of the recipient and will not be disclosed by such outside counsel
to employees, officers, or directors of the recipient without the advance written consent of the party providing such materials.
(c)
In furtherance and not in limitation of the foregoing, each of the parties hereto shall use its reasonable best
efforts to resolve objections, if any, as may be asserted with respect to the transactions contemplated by this Agreement under any
Laws, including defending any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby (including seeking to have any stay, temporary restraining order or
preliminary injunction entered by any court or other Governmental Entity vacated or reversed).
(d)
Each of VEREIT, the Board of Directors of VEREIT, Realty Income and the Board of Directors of Realty Income shall, if any state
takeover statute or similar statute becomes applicable to this Agreement, the Mergers, the Separation, the OfficeCo Distribution or any
other transactions contemplated hereby, use all reasonable best efforts to ensure that the Mergers, the OfficeCo Distribution and the
other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated hereby and otherwise
to minimize the effect of such statute or regulation on this Agreement, the Mergers and the other transactions contemplated hereby.
Section
5.4
Acquisition Proposals.
(a) Each of VEREIT and
Realty Income agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or its Subsidiaries shall,
and that it shall instruct and use its reasonable best efforts to cause its and its Subsidiaries’ Representatives not to, directly
or indirectly, (i) initiate, solicit, knowingly encourage or facilitate any inquiries or the making of any proposal or offer with respect
to, or a transaction to effect, a merger, reorganization, share sale, share exchange, asset sale, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving any purchase or sale of 20% or more of the consolidated assets
(including stock or other ownership interests) of it and its Subsidiaries, taken as a whole and determined on a fair market value basis,
or any purchase or sale of, or tender or exchange offer for, its voting securities that, if consummated, would result in any person (or
the stockholders or other equity interest holders of such Person) beneficially owning securities representing 20% or more of its total
voting power (or of the surviving parent entity in such transaction), in each case, other than any proposal, offer or transaction expressly
permitted by Section 5.15(d) (any such proposal, offer or transaction (other than a proposal or offer made by one party to this
Agreement or any Subsidiary thereof to another party to this Agreement or any Subsidiary thereof or any proposal, offer or transaction
expressly permitted by Section 5.15(d)) being hereinafter referred to as an “Acquisition Proposal”), (ii) participate
in any discussions with or provide any confidential information or data to any person relating to an Acquisition Proposal, or engage in
any negotiations concerning an Acquisition Proposal, or knowingly facilitate any effort or attempt to make or implement an Acquisition
Proposal, (iii) approve or execute or enter into any letter of intent, agreement in principle, merger agreement, asset purchase or share
exchange agreement, option agreement or other similar agreement related to any Acquisition Proposal (an “Acquisition Agreement”)
or (iv) propose or agree to do any of the foregoing.
(b) (i)
Notwithstanding the foregoing, the Board of Directors of VEREIT and the Board of Directors of Realty Income shall each be permitted,
prior to its respective meeting of stockholders to be held pursuant to Section 5.1, and subject to (A) compliance with the other
terms of this Section 5.4 and (B) first entering into a confidentiality agreement having provisions that are no less favorable
to such party than those contained in the Confidentiality Agreement (provided that such agreement need not contain any standstill or similar
provision prohibiting the making of an Acquisition Proposal), to engage in discussions and negotiations with, or provide any nonpublic
information or data to, any Person in response to an unsolicited bona fide written Acquisition Proposal by such Person first made
after the date of this Agreement (that did not result from a material breach of this Section 5.4) and which the Board of Directors
of VEREIT or the Board of Directors of Realty Income, as applicable, concludes in good faith (after consultation with outside legal counsel
and financial advisors) constitutes or is reasonably likely to result in a Superior Proposal, if and only to the extent that the directors
of VEREIT or of Realty Income, as applicable, conclude in good faith (after consultation with their outside legal counsel) that failure
to do so would reasonably be expected to result in a breach of their duties to VEREIT or Realty Income, as applicable. VEREIT or Realty
Income, as applicable, shall provide the other with a copy of any nonpublic information or data provided to a third party pursuant to
the prior sentence prior to or substantially concurrently with furnishing such information to such third party (except to the extent that
such nonpublic information or data shall have been previously provided to the other party).
(ii)
Each party shall notify the other party promptly (but in no event later than twenty-four (24) hours) after receipt of any Acquisition
Proposal, or any request for nonpublic information relating to such party or any of its Subsidiaries by any person that informs such party
or any of its Subsidiaries that it is considering making, or has made, an Acquisition Proposal, or any inquiry from any person seeking
to have discussions or negotiations with such party relating to a possible Acquisition Proposal. Such notice shall be made orally and
confirmed in writing, and shall indicate the identity of the Person making the Acquisition Proposal, inquiry or request and the material
terms and conditions of any inquiries, proposals or offers (including a copy thereof if in writing and any related documentation or written
correspondence). Each party shall also promptly, and in any event within twenty-four (24) hours, notify the other party, orally and in
writing, if it enters into discussions or negotiations concerning any Acquisition Proposal or provides nonpublic information or data to
any person in accordance with this Section 5.4(b) and keep the other party reasonably informed of the status and terms of any such
proposals, offers, discussions or negotiations on a reasonably current basis, including by providing a copy of all material documentation
or written correspondence relating thereto. Notwithstanding anything to the contrary in this Agreement, each party may contact any Person
submitting an Acquisition Proposal after the date of this Agreement (that did not result from a material breach of this Section 5.4)
to clarify and understand the terms of the Acquisition Proposal so as to determine whether such Acquisition Proposal constitutes or is
reasonably likely to result in a Superior Proposal.
(iii)
Except as provided in Section 5.4(b)(iv) or Section 5.4(b)(v), neither the Board of Directors of VEREIT, the Board
of Directors of Realty Income, nor any committee thereof shall (a) withhold, withdraw, modify or qualify in any manner adverse to the
other party, or propose publicly to withhold, withdraw, modify or qualify in any manner adverse to the other party, the approval, recommendation
or declaration of advisability by the Board of Directors of VEREIT or the Board of Directors of Realty Income, as applicable, or any such
committee thereof with respect to this Agreement or the transactions contemplated hereby, (b) fail to include the approval, recommendation
or declaration of advisability by the Board of Directors of VEREIT or the Board of Directors of Realty Income, as applicable, or any such
committee thereof with respect to this Agreement or the transactions contemplated hereby in the Joint Proxy Statement/Prospectus, (c)
make or publicly propose to make any recommendation in connection with a tender offer or exchange offer commenced by a third party other
than a recommendation against such offer or a customary “stop, look and listen” communication or (d) in the event an Acquisition
Proposal has been publicly announced or publicly disclosed, fail to publicly reaffirm the approval, recommendation or declaration of advisability
by the Board of Directors of VEREIT or the Board of Directors of Realty Income, as applicable, or any such committee thereof with respect
to this Agreement or the transactions contemplated hereby within five (5) Business Days of the other party’s written request that
Realty Income or VEREIT, as applicable, do so (provided that a party shall be entitled to make such a written request for reaffirmation
only once with respect to each Acquisition Proposal and once for each material amendment to each such Acquisition Proposal) (any of the
foregoing (a), (b), (c) or (d), a “Change in VEREIT Recommendation” or a “Change in Realty Income Recommendation,”
respectively).
(iv)
Notwithstanding anything in this Agreement to the contrary, with respect to an Acquisition Proposal, the Board of Directors of
VEREIT or Board of Directors of Realty Income, as applicable, may make a Change in VEREIT Recommendation or a Change in Realty Income
Recommendation, as applicable (and in the event that the Board of Directors of VEREIT determines such Acquisition Proposal to be a Superior
Proposal, in accordance with this Section 5.4, terminate this Agreement pursuant to Section 7.1(d)(i)), in each case (including
with respect to any such termination), if and only if (A) an unsolicited bona fide written Acquisition Proposal (that did not result
from a material breach of this Section 5.4) is made to VEREIT or Realty Income, as applicable, by a third party, and such Acquisition
Proposal is not withdrawn, (B) the Board of Directors of VEREIT or the Board of Directors of Realty Income, as applicable, has concluded
in good faith (after consultation with outside legal counsel and financial advisors) that such Acquisition Proposal constitutes a Superior
Proposal, (C) the Board of Directors of VEREIT or of Realty Income, as applicable, has concluded in good faith (after consultation with
its outside legal counsel) that failure to do so would reasonably be expected to result in a breach of its duties to VEREIT or Realty
Income, as applicable, (D) four (4) Business Days (the “Notice Period”) shall have elapsed since the party proposing
to take such action has given written notice to the other party advising such other party that the notifying party intends to take such
action and specifying in reasonable detail the reasons therefor, including the terms and conditions of any such Superior Proposal that
is the basis of the proposed action (a “Notice of Recommendation Change”) (it being understood that any amendment to
any material term of such Superior Proposal shall require a new Notice of Recommendation Change and a new Notice Period, except that the
four (4) Business Day Notice Period referred to in clause (D) above shall instead be equal to the longer of (1) three (3) Business Days
or (2) the period remaining under the Notice Period under clause (D) above immediately prior to the delivery of such additional notice
under this clause (D)), (E) during the Notice Period, the notifying party has considered and, at the reasonable request of the other party,
engaged in good faith discussions with such party regarding, any adjustment or modification of the terms of this Agreement proposed by
the other party, and (F) the Board of Directors of the party proposing to take such action, following the Notice Period, again reasonably
determines in good faith (after consultation with outside legal counsel, and taking into account any adjustment or modification of the
terms of this Agreement proposed by the other party) that failure to do so would reasonably be expected to result in a breach of its duties
to such party.
(v)
Notwithstanding anything in this Agreement to the contrary, in circumstances not involving or relating to an Acquisition Proposal,
the Board of Directors of VEREIT or Board of Directors of Realty Income, as applicable, may make a Change in VEREIT Recommendation or
a Change in Realty Income Recommendation, as applicable, if and only if (A) a material development or material change in circumstances
has first occurred or arisen after the date of this Agreement that was neither known to such party nor reasonably foreseeable as of the
date of this Agreement; provided, that (x) such change or development does not relate to an Acquisition Proposal and (y) in no
event shall the fact in and of itself that VEREIT or Realty Income meets or exceeds or fails to meet or exceed internal or published projections,
forecasts or revenue or earnings predictions for any period constitute such a material development or material change in circumstances
that was not reasonably foreseeable as of the date of this Agreement (but the foregoing shall not exclude any change or development underlying
such failure to meet or exceed such projections, forecasts or predictions), (B) the Board of Directors of the party proposing to take
such action has first reasonably determined in good faith (after consultation with outside legal counsel) that failure to do so would
reasonably be expected to result in a breach of its duties to such party, (C) the Notice Period shall have elapsed since the party proposing
to take such action has given a Notice of Recommendation Change to the other party advising that the notifying party intends to take such
action and specifying in reasonable detail the reasons therefor, (D) during the Notice Period, the notifying party has considered
and, at the reasonable request of the other party, engaged in good faith discussions with such party regarding, any adjustment or modification
of the terms of this Agreement proposed by the other party, and (E) the Board of Directors of the party proposing to take such action,
following the Notice Period, again reasonably determines in good faith (after consultation with outside legal counsel, and taking into
account any adjustment or modification of the terms of this Agreement proposed by the other party) that failure to do so would reasonably
be expected to result in a breach of its duties to such party.
(vi)
Nothing contained in this Section 5.4 shall prohibit either party or its Subsidiaries from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making a statement contemplated by Item
1012(a) of Regulation M-A or Rule 14d-9 promulgated under the Exchange Act, or from issuing a “stop, look and listen” statement
pending disclosure of its position thereunder; provided, however, that compliance with such rules shall not in any way limit
or modify the effect that any action taken pursuant to such rules has under any other provision of this Agreement, including Section
7.1(d) or Section 7.1(e), as applicable; and provided, further that any such disclosure that addresses
or relates to the approval, recommendation or declaration of advisability by the Board of Directors of such party, as applicable, with
respect to this Agreement or an Acquisition Proposal shall be deemed to be a Change in VEREIT Recommendation or Change in Realty Income
Recommendation, as applicable, unless the Board of Directors of such party, in connection with such communication publicly states that
its recommendation with respect to this Agreement and the transactions contemplated hereby has not changed or refers to the prior recommendation
of such party, without disclosing any Change in VEREIT Recommendation or Change in Realty Income Recommendation, as applicable.
(c)
Each of VEREIT and Realty Income agrees that (i) it will and will cause its Subsidiaries, and its and their Representatives to,
cease immediately and terminate any and all existing activities, discussions or negotiations with any third parties conducted heretofore
with respect to any Acquisition Proposal, and (ii) except with respect to VEREIT and its Subsidiaries, it will not release any third party
from, or waive any provisions of, any confidentiality or standstill agreement to which it or any of its Subsidiaries is a party with respect
to any Acquisition Proposal, and will use reasonable efforts to enforce the provisions of such agreements. Each of VEREIT and Realty Income
agrees that it will use its reasonable best efforts to promptly inform its and its Subsidiaries’ respective Representatives of the
obligations undertaken in this Section 5.4.
(d)
Neither party shall submit to the vote of its stockholders any Acquisition Proposal other than the Merger, the Realty Income Stock
Issuance and the other transactions contemplated hereby prior to the termination of this Agreement.
(e)
For purposes of this Agreement, “Superior Proposal” for VEREIT or Realty Income means a bona fide written
Acquisition Proposal that the Board of Directors of VEREIT or Board of Directors of Realty Income, respectively, concludes in good faith,
after consultation with its financial advisors and outside legal counsel, taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal (including any break-up fees, expense reimbursement provisions, conditions
to consummation and certainty and speed of Closing), (i) is more favorable to the stockholders of VEREIT or Realty Income, respectively,
than the transactions contemplated by this Agreement, and (ii) is reasonably likely to receive all required governmental approvals on
a timely basis and otherwise reasonably capable of being completed on the terms proposed; provided that, for purposes of this definition
of “Superior Proposal,” the term Acquisition Proposal shall have the meaning assigned to such term in Section 5.4(a),
except that the reference to “20% or more” in the definition of “Acquisition Proposal” shall be deemed to be a
reference to “75% or more.”
Section
5.5
NYSE Listing. Realty Income shall use reasonable best efforts to cause (a) the shares of Realty Income Common Stock
to be issued in the Mergers and (b) the shares of Realty Income Common Stock to be reserved for issuance upon exercise or settlement of
Realty Income Equity Awards issued at the Effective Time to be approved for listing on the NYSE, subject to official notice of issuance.
Section
5.6
Employee Matters.
(a)
For a period of one (1) year following the Effective Time (or, if earlier, the date of the applicable employee’s termination
of employment), Realty Income shall provide, or shall cause to be provided, to each employee of VEREIT and its Subsidiaries immediately
prior to the Effective Time (each, a “VEREIT Employee”), for so long as such VEREIT Employee continues employment with
Realty Income or its Subsidiaries (including the Surviving Corporation and its Subsidiaries) following the Effective Time (and in the
case of clause (iv), for the applicable period following termination of such VEREIT Employee’s employment), (i) at least the base
compensation provided to such VEREIT Employee immediately prior to the Effective Time; (ii) an annual bonus opportunity that is no less
favorable than is provided to similarly situated employees of Realty Income or its Subsidiaries; (iii) long-term incentive award opportunities,
whether cash or equity, that are no less favorable than are provided to similarly situated employees of Realty Income or its Subsidiaries;
(iv) the severance benefits set forth on Section 5.6(a) of the VEREIT Disclosure Letter in accordance with the terms and conditions
described thereon; and (v) other employee benefits (excluding, for this purpose, the compensation contemplated by clauses (i)-(iv) above
and defined benefit pension plans, post-retirement medical and welfare plans, and retention change in control or similar plans, policies
or agreements) that are substantially comparable in the aggregate to those provided to a similarly situated employee of Realty Income
or its Subsidiaries; provided that, for purposes of this clause (v), the employee benefits generally provided to employees of VEREIT
and its Subsidiaries as of immediately prior to the Effective Time shall be deemed to be substantially comparable in the aggregate to
those provided to similarly situated employees of Realty Income or its Subsidiaries, it being understood that the VEREIT Employees may
commence participation in the “employee benefit plans,” as defined in Section 3(3) of ERISA (whether or not subject to
ERISA), maintained by Realty Income or any of its Subsidiaries (collectively, the “New Plans”) at such times as are
determined by Realty Income.
(b)
For purposes of any New Plans providing benefits to any VEREIT Employees after the Effective Time, Realty Income shall, or shall
cause its applicable Subsidiary to: (i) use commercially reasonable efforts to waive all pre-existing conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable to the VEREIT Employees and their eligible dependents under
any New Plans in which such employees may be eligible to participate after the Effective Time, except, with respect to pre-existing conditions
or exclusions, to the extent such pre-existing conditions or exclusions would apply under the analogous VEREIT Benefit Plan; (ii) use
commercially reasonable efforts to provide each VEREIT Employee and their eligible dependents under any New Plan with credit for any co-payments
and deductibles paid during the portion of the plan year of the corresponding VEREIT Benefit Plan ending on the date such VEREIT Employee’s
participation in the New Plan begins (to the same extent that such credit was given under the analogous VEREIT Benefit Plan prior to the
date that the VEREIT Employee first participates in the New Plan) in satisfying any applicable deductible or out-of-pocket requirements
under the New Plan; and (iii) recognize all service of the VEREIT Employees with VEREIT and its Subsidiaries (and any predecessors or
affiliates thereof), for all purposes in any New Plan in which such employees may be eligible to participate after the Effective Time
to the same extent such service was taken into account under the analogous VEREIT Benefit Plan prior to the date that the VEREIT Employee
first participates in the New Plan; provided, however, that the foregoing clause (iii) shall not apply (A) to the extent
it would result in duplication of benefits, or (B) for any purpose with respect to any defined benefit pension plan, postretirement welfare
plan or any New Plan under which similarly situated employees of Realty Income and its Subsidiaries do not receive credit for prior service
or that is grandfathered or frozen, either with respect to level of benefits or participation.
(c)
If the parties agree (which agreement shall not be unreasonably withheld, conditioned or delayed) not less than ten (10) Business
Days before the Closing Date, VEREIT shall adopt resolutions and take such corporate action as is necessary to terminate the VEREIT Benefit
Plans that are Tax-qualified defined contribution plans (collectively, the “VEREIT Qualified DC Plan”), effective as
of the day prior to the Closing Date. The form and substance of such resolutions and any other actions taken in connection with the foregoing
termination shall be subject to the review and comment of Realty Income (which comments shall be considered by VEREIT in good faith).
If the VEREIT Qualified DC Plan is terminated prior to the Closing Date, Realty Income shall cause the VEREIT Employees who participated
in the VEREIT Qualified DC Plan as of the day prior to the Closing Date to be eligible to participate in a Tax-qualified defined contribution
plan of Realty Income or a Subsidiary thereof on the Closing Date. Upon the distribution of the assets in the accounts under the VEREIT
Qualified DC Plan to the participants, Realty Income shall cause an applicable Tax-qualified defined contribution plan of Realty Income
or its Subsidiaries to accept a rollover, from such participants who are then actively employed by Realty Income or its Subsidiaries who
elect of (i) the cash portion of any “eligible rollover distributions” (within the meaning of Section 402(c)(4) of the
Code) to such employee from the VEREIT Qualified DC Plan and (ii) the portion of any such eligible rollover distribution that consists
of a promissory note applicable to a loan from the VEREIT Qualified DC Plan to such employee.
(d)
(i) If the Effective Time occurs prior to the date on which annual bonuses with respect to VEREIT’s 2021 fiscal year are
paid to employees of VEREIT and its Subsidiaries (the “2021 Annual Bonus Payment Date”), then Realty Income shall pay
to each VEREIT Employee who is eligible to receive an annual cash bonus from VEREIT or a Subsidiary thereof as of immediately prior to
the Effective Time under VEREIT’s annual bonus program (the “VEREIT Annual Bonus Program”), (x) if such VEREIT
Employee remains actively employed by VEREIT, Realty Income or any of their respective Subsidiaries through December 31, 2021, a 2021
annual bonus in an amount equal to 100% of such VEREIT Employee’s target 2021 annual bonus amount, payable no later than March 15,
2022 or (y) if such VEREIT Employee’s employment is terminated without Cause (as defined in Section 5.6(d) of the VEREIT
Disclosure Schedule) by Realty Income or any of its Subsidiaries (including the Surviving Corporation and its Subsidiaries) on or after
the Effective Time and prior to December 31, 2021, a prorated 2021 annual bonus, payable within thirty (30) days following termination
of employment, equal to the product of (A) the amount equal to 100% of such VEREIT Employee’s target 2021 annual bonus amount, multiplied
by (B) a fraction, the numerator of which is the number of days during 2021 that the VEREIT Employee was employed by VEREIT, Realty Income
or any of their respective Subsidiaries and the denominator of which is 365 (provided that such prorated 2021 annual bonus shall not be
payable to any VEREIT Employee who is otherwise entitled to receive, and does receive, a prorated annual bonus payment for the same period
of service under the terms of such VEREIT Employee’s employment agreement with VEREIT or pursuant to any other VEREIT plan, policy
agreement or arrangement).
(ii)
If the Effective Time occurs on or after January 1, 2022, then Realty Income shall pay to each VEREIT Employee who is eligible
to receive an annual cash bonus from VEREIT or a Subsidiary thereof as of immediately prior to the Effective Time under the VEREIT Annual
Bonus Program, whose employment is terminated without Cause (as defined in Section 5.6(d) of the VEREIT Disclosure Schedule) by
Realty Income or any of its Subsidiaries (including the Surviving Corporation and its Subsidiaries) on or within ninety (90) days following
the Effective Time, a prorated 2022 annual bonus, payable within thirty (30) days following termination of employment, equal to the product
of (x) the amount equal to 100% of such VEREIT Employee’s target 2022 annual bonus amount (or target 2021 annual bonus amount if
the 2022 annual bonus target has not yet been set) under the VEREIT Annual Bonus Program, multiplied by (y) a fraction, the numerator
of which is the number of days during 2022 that the VEREIT Employee was employed by VEREIT, Realty Income or any of their respective Subsidiaries
and the denominator of which is 365 (provided that such prorated 2022 annual bonus shall not be payable to any VEREIT Employee
who is otherwise entitled to receive, and does receive, a prorated annual bonus payment for the same period of service under the terms
of such VEREIT Employee’s employment agreement with VEREIT or pursuant to any other VEREIT plan, policy agreement or arrangement).
(e)
Realty Income and VEREIT shall cooperate in good faith in order to include provisions substantially similar to the provisions of
this Section 5.6 in the documentation for the OfficeCo Distribution with respect to employees of OfficeCo who were employed by
VEREIT and its Subsidiaries as of immediately prior to the Effective Time.
(f)
The provisions of this Section 5.6 are solely for the benefit of the parties to this Agreement, no current or former director,
employee or other service provider or any other person shall be a third-party beneficiary of this Agreement, and nothing herein shall
be construed as an amendment to any Realty Income Benefit Plan, VEREIT Benefit Plan or other compensation or Benefit Plan or arrangement
for any purpose. Without limiting the generality of the foregoing, nothing contained in this Agreement shall obligate Realty Income, VEREIT
or any of their respective affiliates to (i) maintain any particular Benefit Plan or (ii) retain the employment or services of any current
or former director, employee or other service provider.
Section
5.7
Fees and Expenses. Whether or not the Merger is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid by the party incurring such expense, except as otherwise
provided in Section 7.2, Section 5.15 or Exhibit A and except that (a) if the Mergers are consummated, the Surviving
Corporation shall pay, or cause to be paid, any and all Transfer Taxes imposed in connection with the Mergers, and (b) expenses incurred
in connection with filing, printing and mailing the Joint Proxy Statement/Prospectus, the Form S-4, the OfficeCo Distribution Prospectus
and the Form 10 and filing fees of the parties to this Agreement in connection with any filings required under the Laws governing antitrust
or merger control matters related to the transactions contemplated by this Agreement shall be shared equally by VEREIT and Realty Income.
Section
5.8
Governance.
(a) Realty Income and the
Board of Directors of Realty Income, as applicable, shall take all actions necessary so that, as of the Effective Time, two (2) individuals
who are members of the Board of Directors of VEREIT as of the date hereof and who shall be mutually selected and agreed upon by the Board
of Directors of VEREIT and the Board of Directors of Realty Income prior to the Closing Date, and who have consented to serve on the Board
of Directors of Realty Income following the Effective Time, shall be elected or appointed to the Board of Directors of Realty Income.
Prior to the Closing Date, Realty Income shall provide VEREIT with a true and correct copy of the resolutions of the Board of Directors
of Realty Income providing for the appointment, effective as of the Effective Time, of such individuals.
(b)
From and after the Effective Time, the parties intend to maintain the current office of VEREIT located in Phoenix, Arizona for
a period of at least seven years from the date of this Agreement.
Section
5.9
Exculpation; Indemnification; Directors’ and Officers’ Insurance.
(a) From and after the Effective
Time, Realty Income shall, to the fullest extent permitted by applicable Law, exculpate, indemnify, defend and hold harmless, and provide
advancement of expenses to, each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Effective
Time, an officer or director of VEREIT, Realty Income or their respective Subsidiaries (the “Indemnified Parties”)
against all losses, claims, damages, costs, expenses, liabilities or judgments or amounts arising from any claim, action, suit, proceeding
or investigation based in whole or in part on the fact that such Person is or was a director, officer, manager or general partner of VEREIT,
Realty Income or their respective Subsidiaries, as applicable, or was prior to the Effective Time serving at the request of any such party
as a director or officer of another Person, and pertaining to any matter existing or occurring, or any acts or omissions occurring, at
or prior to the Effective Time, whether asserted or claimed prior to, or at or after, the Effective Time (including matters, acts or omissions
occurring in connection with the approval of this Agreement and the consummation of the transactions contemplated hereby), in each case,
to the same extent such Persons are exculpated or indemnified or have the right to advancement of expenses as of the date of this Agreement
by VEREIT, Realty Income or any of their respective Subsidiaries pursuant to any of their organizational documents or applicable Law in
existence on the date hereof.
(b)
Prior to the Effective Time, each of VEREIT and Realty Income may obtain and fully pay for “tail” prepaid insurance
policy(ies), each with a claim period of six (6) years from and after the Effective Time from an insurance carrier believed to be sound
and reputable, with respect to directors’ and officers’ liability insurance and fiduciary insurance (“VEREIT D&O
Insurance” and “Realty Income D&O Insurance”) for the current and former directors and officers of VEREIT,
Realty Income and their respective Subsidiaries, as applicable, as to the status of each such person as a director or officer of VEREIT,
Realty Income or any of their respective Subsidiaries or the service of each such person prior to the Effective Time at the request of
any such party as a director or officer of another Person and for facts or events that occurred at or prior to the Effective Time, each
of which VEREIT D&O Insurance and Realty Income D&O Insurance: (i) shall not have an annual premium in excess of 300% of the last
annual premium paid by VEREIT (in the case of VEREIT D&O Insurance) or Realty Income (in the case of Realty Income D&O Insurance)
(300% of such last annual premium paid by VEREIT, the “VEREIT Maximum Premium” and 300% of such last annual premium
paid by Realty Income, the “Realty Income Maximum Premium”, with respect to, as applicable, the existing directors’
and officers’ liability insurance and fiduciary insurance) prior to the date hereof for its existing directors’ and officers’
liability insurance and fiduciary insurance; and (ii) shall have terms, conditions, retentions and limits of coverage no less favorable
than the existing directors’ and officers’ liability insurance and fiduciary insurance for VEREIT (in the case of the VEREIT
D&O Insurance) and Realty Income (in the case of the Realty Income D&O Insurance) with respect to matters existing or occurring
prior to the Effective Time (including with respect to acts or omissions occurring in connection with this Agreement and consummation
of the transaction contemplated hereby); provided, however, that if terms, conditions, retentions and limits of coverage
at least as favorable as the existing directors’ and officers’ liability insurance and fiduciary insurance for VEREIT or Realty
Income cannot be obtained or can be obtained only by paying an annual premium in excess of the applicable VEREIT Maximum Premium (in the
case of the VEREIT D&O Insurance) or the applicable Realty Income Maximum Premium (in the case of the Realty Income D&O Insurance),
VEREIT or Realty Income, as the case may be, may obtain as much similar insurance as is reasonably practicable for an annual premium equal
to the applicable VEREIT Maximum Premium (in the case of the VEREIT D&O Insurance) or the applicable Realty Income Maximum Premium
(in the case of the Realty Income D&O Insurance). After the Effective Time, Realty Income shall maintain such directors’ and
officers’ liability insurance and fiduciary insurance policies in full force and effect for each of their full six (6) year terms
and continue to honor its respective obligations under each policy. If VEREIT or Realty Income for any reason does not obtain such “tail”
prepaid insurance as of the Effective Time, Realty Income (i) shall continue to maintain in effect, for a period of six (6) years from
and after the Effective Time for the respective current and former directors and officers of VEREIT, Realty Income and their respective
Subsidiaries as to the status of each such Person as a director or officer of VEREIT, Realty Income or their respective Subsidiaries,
as the case may be, and for facts or events that occurred at or prior to the Effective Time, the existing directors’ and officers’
liability insurance and fiduciary insurance of VEREIT or Realty Income, as applicable, each of which insurance shall not have an annual
premium in excess of the applicable VEREIT Maximum Premium (in the case of the VEREIT D&O Insurance) or the applicable Realty Income
Maximum Premium (in the case of the Realty Income D&O Insurance) and shall have terms, conditions, retentions and limits of coverage
at least as favorable as the existing directors’ and officers’ liability insurance and fiduciary insurance for VEREIT and
Realty Income, as applicable, with respect to matters existing or occurring prior to the Effective Time (including with respect to acts
or omissions occurring in connection with this Agreement and consummation of the transaction contemplated hereby); provided, however,
that if terms, conditions, retentions and limits of coverage at least as favorable as such existing insurance cannot be obtained or can
be obtained only by paying an annual premium in excess of the applicable VEREIT Maximum Premium or the applicable Realty Income Maximum
Premium, Realty Income shall only be required to obtain as much similar insurance as is reasonably practicable for an annual premium equal
to the applicable VEREIT Maximum Premium or the applicable Realty Income Maximum Premium; and (ii) shall maintain such respective directors’
and officers’ liability insurance and fiduciary insurance policies in full force and effect for each of their full six (6) year
terms and continue to honor its obligations under each policy.
(c)
If Realty Income or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the extent necessary, proper provision shall be made so that
the successors and assigns of Realty Income shall assume the obligations set forth in this Section 5.9. Without limiting the generality
of the foregoing, any obligation of Realty Income to maintain and honor insurance policies pursuant to this Section 5.9 shall survive
the Separation and the OfficeCo Distribution.
(d)
Realty Income shall pay all reasonable expenses, including reasonable attorneys’ fees, that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided in this Section 5.9; provided, that such Indemnified Party provides
an undertaking to repay such expenses to the extent it is determined by a final and non-appealable judgment of a court of competent jurisdiction
that such Person is not legally entitled to indemnification under Law.
(e)
The provisions of this Section 5.9 (i) are intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party and his or her heirs and Representatives, shall be binding on all successors and assigns of Realty Income and VEREIT shall not be
amended in a manner that is adverse to any Indemnified Party (including his or her successors, assigns and heirs) without the prior written
consent of such Indemnified Party (including such successors, assigns and heirs) affected thereby, and (ii) are in addition to, and not
in substitution for, any other rights to indemnification, advancement of expenses or contribution that any such Person may have by contract
or otherwise.
Section
5.10 Dividends.
(a)
From and after the date of this Agreement until the earlier of the Effective Time and termination of this Agreement, neither VEREIT,
VEREIT OP nor Realty Income shall make, declare or set aside any dividend or other distribution to its respective stockholders or unitholders
without the prior written consent of VEREIT (in the case of Realty Income) or Realty Income (in the case of VEREIT or VEREIT OP); provided,
however, that the written consent of the other party shall not be required for the declaration and payment of regular quarterly
cash dividends by VEREIT and the declaration and payment of regular quarterly cash distributions by VEREIT OP or monthly (in the case
of Realty Income) cash dividends in accordance with past practice at a rate not in excess of the regular cash dividend most recently declared
prior to the date of this Agreement with respect to each of the shares of VEREIT Common Stock, shares of VEREIT Series F Preferred Stock,
VEREIT Partnership Series F Preferred Units, VEREIT Partnership Common Units and shares of Realty Income Common Stock, respectively, subject
to customary increases in accordance with past practices (it being agreed that the timing of any such distributions will be coordinated
so that, if either the holders of VEREIT Common Stock or the holders of shares of Realty Income Common Stock receive a distribution for
a particular period prior to the Closing Date, then the holders of shares of Realty Income Common Stock and the holders of VEREIT Common
Stock, respectively, shall receive a distribution for a comparable period prior to the Closing Date).
(b)
Notwithstanding the foregoing or anything else to the contrary in this Agreement, each of VEREIT and Realty Income, as applicable,
shall be permitted to declare and pay a dividend to its stockholders, the record date and payment date for which shall be the close of
business on the last Business Day prior to the Closing Date, distributing any amounts determined by such party (in each case in consultation
with the other party) to be the minimum dividend required to be distributed in order for such party to qualify as a REIT and to avoid
to the extent reasonably possible the incurrence of income or excise Tax (any dividend paid pursuant to this paragraph, a “REIT
Dividend”).
(c)
If either party determines that it is necessary to declare a REIT Dividend, it shall notify the other party at least twenty (20)
days prior to the Partnership Merger Effective Time, and such other party shall be entitled to declare a dividend per share payable (i)
in the case of VEREIT, to holders of VEREIT Common Stock, in an amount per share of VEREIT Common Stock equal to the product of (A) the
REIT Dividend declared by Realty Income with respect to each share of Realty Income Common Stock and (B) the Exchange Ratio and (ii) in
the case of Realty Income, to holders of shares of Realty Income Common Stock, in an amount per share of Realty Income Common Stock equal
to the quotient obtained by dividing (x) the REIT Dividend declared by VEREIT with respect to each share of VEREIT Common Stock by (y)
the Exchange Ratio. The record date and payment date for any dividend payable pursuant to this Section 5.10(c) shall be the close
of business on the last Business Day prior to the Closing Date.
Section
5.11
Public Announcements. VEREIT and Realty Income shall use reasonable best efforts (a) to develop a joint communications
plan, (b) to ensure that all press releases and other public statements with respect to the transactions contemplated hereby (including
the Separation and the OfficeCo Distribution) shall be consistent with such joint communications plan, and (c) except in respect of any
announcement required by applicable Law or by obligations pursuant to any listing agreement with or rules of any securities exchange,
or as required in connection with required notifications or filings under the HSR Act or any foreign antitrust, competition, or merger
control Law or in response to any request by a Governmental Entity investigating the transactions described herein, to consult with each
other before issuing any press release or, to the extent practical, otherwise making any public statement with respect to this Agreement
or the transactions contemplated hereby (including the Separation and the OfficeCo Distribution). In addition to the foregoing, except
to the extent disclosed in or consistent with the Joint Proxy Statement/Prospectus or OfficeCo Distribution Prospectus in accordance with
the provisions of Section 5.1 or as otherwise permitted under Section 5.4, or as required in connection with required notifications
or filings under the HSR Act or any foreign antitrust, competition, or merger control Law or in response to any request by a Governmental
Entity investigating the transactions described herein, no party shall issue any press release or otherwise make any public statement
or disclosure concerning the other party or the other party’s business, financial condition or results of operations without the
consent of such other party, which consent shall not be unreasonably withheld or delayed.
Section
5.12
Additional Agreements. In case at any time after the Effective Time, any further action is necessary or desirable
to carry out the purposes of this Agreement or to vest Realty Income with full title to all properties, assets, rights, approvals, immunities
and franchises of VEREIT, the proper officers and directors of each party to this Agreement shall take all such necessary action.
Section
5.13 Tax
Matters.
(a) VEREIT and Realty
Income agree to use their reasonable best efforts to cause the Merger to qualify as a “reorganization” within the meaning
of Section 368(a) of the Code. The parties shall treat the Merger as a tax-free “reorganization” under Section 368(a)
of the Code and no party shall take any position for tax purposes inconsistent therewith, except to the extent otherwise required pursuant
to a “determination” within the meaning of Section 1313(a) of the Code.
(b)
Realty Income shall, with VEREIT’s good faith cooperation and assistance, prepare, execute and file, or cause to be prepared,
executed and filed, all returns, questionnaires, applications or other documents regarding any real property transfer, sales, use, transfer,
value added, stock transfer, recording, registration, stamp or similar Taxes that become payable in connection with the transactions contemplated
by this Agreement (collectively, “Transfer Taxes”) and VEREIT and Realty Income shall cooperate to minimize the amount
of such Transfer Taxes to the extent permitted by applicable Law. In addition, VEREIT and Realty Income shall cooperate in good faith
to minimize (i) the recognition of built-in gain under Treasury Regulation Section 1.337(d)-7(b), and (ii) any state Taxes, in each
case, imposed with respect to the transactions contemplated by this Agreement.
Section
5.14 Financing
Cooperation.
(a)
Consistent with applicable Laws, VEREIT shall use reasonable best efforts to, and shall cause its Subsidiaries and each of its
and its Subsidiaries’ respective officers and employees to use reasonable best efforts to, provide to Realty Income and its Subsidiaries,
at Realty Income’s sole expense, all cooperation as may be reasonably requested in writing by Realty Income that is necessary in
connection with (i) the Realty Income Credit Agreement Amendment and the Realty Income PPN Amendment, (ii) the arranging, obtaining and
syndication of the OfficeCo Debt Financing (as defined in Exhibit A)and (iii) one or more equity or debt offerings of Realty Income, that
Realty Income and its Subsidiaries may pursue prior to the Effective Time (any such transaction in clause (ii) or (iii) a “Financing”),
including, without limitation, in the event such action is customary in connection with the applicable Financing, using reasonable best
efforts to: (i) cooperate with customary marketing efforts relating to such Financing, including assisting in the preparation of customary
confidential information memoranda, private placement memoranda, lender presentations, prospectuses, offering memoranda and other customary
offering documents and marketing materials; (ii) assist in the preparation of rating agency presentations and participate in a reasonable
number of meetings with rating agencies, roadshows, due diligence sessions, drafting sessions and meetings with prospective lenders and
debt and equity investors, in each case, by audio or videoconference at such times as coordinated reasonably in advance thereof at mutually
agreed times; (iii) deliver documentation and other information reasonably requested by sources of such Financing as promptly as
reasonably practicable with respect to (x) applicable “know-your-customer”, FINCEN and anti-money laundering rules and regulations,
including the PATRIOT Act and (y) the U.S. Treasury Department’s Office of Foreign Assets Control and the Foreign Corrupt Practices
Act, in each case, to the extent such information is required pursuant to the applicable Financing; (iv) deliver as promptly as reasonably
practicable all financial information and real property and other diligence materials related to VEREIT and its Subsidiaries customary
or reasonably necessary for the completion of such Financing; (v) direct VEREIT’s independent auditors to cooperate with Financing
that is a securities offering consistent with their customary practice, including requesting VEREIT’s independent accountants to
prepare and deliver customary comfort letters (it being understood that such customary comfort letters shall include a SAS 100 review
of any interim financial statements and “negative assurance” comfort covering any “stub” period) if customary
for such Financing, in connection with any Financing to the applicable underwriters, arrangers, initial purchasers or placement agents
thereof in each case, on customary terms and consistent with the customary practice of such independent accountants; (vi) assist with
the preparation of pro forma financial information and pro forma financial statements solely with respect to VEREIT to the extent customary
or reasonably necessary for the completion of the Financing, including, if applicable, of the type that would be required by Regulation
S-X and Regulation S-K promulgated under the Securities Act for a public offering of securities of Realty Income and for Realty Income’s
preparation of pro forma financial statements; (vii) assist in the preparation of customary projections, estimates and other forward looking
financial information regarding the future performance of VEREIT to the extent customary or reasonably necessary for the completion of
the Financing; and (viii) the execution and delivery of such definitive financing documents, including certificates, credit agreements,
note purchase agreements, dealer manager agreements, solicitation agent agreements, authorization letters, guarantees, schedules, legal
opinions and other documents, as may be reasonably necessary to facilitate such Financing, in each case in form and substance reasonably
satisfactory to the party executing such document; provided that any such documents referred to in this clause (viii) shall be effective
no earlier than the Effective Time (other than any authorization letters that are required to be given in advance of such time in order
for the Financing to be consummated on or after the Effective Time). VEREIT hereby consents to the use of its and its Subsidiaries’
logos in connection with any Financing; provided that such logos are used solely in a manner that is not intended to or is reasonably
likely to harm or disparage VEREIT or its Subsidiaries or the reputation or goodwill of such party or its Subsidiaries. Notwithstanding
any other provision set forth herein or in any other agreement between Realty Income and VEREIT or its affiliates, the parties hereto
agree that Realty Income may share with the sources of such Financing customary projections and other confidential information with respect
to VEREIT (including information about VEREIT’s Subsidiaries) after giving effect to the Merger and the transactions contemplated
hereby that the parties have cooperated in preparing, and that Realty Income, its Subsidiaries and such sources of Financing may share
information about VEREIT and its Subsidiaries (notwithstanding anything to the contrary herein or in the Confidentiality Agreement) with
potential sources of the Financing in connection with any marketing efforts in connection with the Financing, provided that the recipients
of such information agree to customary confidentiality arrangements in form and substance reasonably acceptable to VEREIT.
(b)
During the period from the date of this Agreement and the earlier to occur of the Effective Time and the date, if any, on which
this Agreement is terminated pursuant to Section 7.1 (the “Interim Period”), Realty Income or one or more of
its Subsidiaries may (i) commence any of the following: (A) one or more offers to purchase (including any “change of control offer”
under the VEREIT Notes Indenture and/or the notes issued thereunder) any or all of the outstanding debt issued under the VEREIT Notes
Indenture for cash (collectively, the “Offers to Purchase”); or (B) one or more offers to exchange any or all of the
outstanding debt issued under the VEREIT Notes Indenture for securities issued by the Realty Income or any of its affiliates (the “Offers
to Exchange”); and (ii) solicit the consent of the holders of debt issued under the VEREIT Notes Indenture regarding certain
proposed amendments thereto (the “Consent Solicitations” and, together with the Offers to Purchase and Offers to Exchange,
if any, the “Note Offers and Consent Solicitations”); provided that any such notice or offer shall expressly reflect
that, and it shall be the case that, the closing of any such transaction shall not be consummated until the Effective Time. Any Note Offers
and Consent Solicitations shall be made on such terms and conditions (including price to be paid and conditionality) as are proposed by
Realty Income and which are permitted by the terms of the VEREIT Notes Indenture and applicable Laws, including SEC rules and regulations.
Realty Income shall consult with VEREIT regarding the material terms and conditions of any Note Offers and Consent Solicitations, including
the timing and commencement of any Note Offers and Consent Solicitations and any tender deadlines. Realty Income shall have provided VEREIT
with the necessary offer to purchase, offer to exchange, consent solicitation statement, letter of transmittal, press release, if any,
in connection therewith, and each other document relevant to the transaction that will be distributed by Realty Income in the applicable
Note Offers and Consent Solicitations (collectively, the “Debt Offer Documents”) a reasonable period of time in advance
of commencing the applicable Note Offers and Consent Solicitations to allow VEREIT and its counsel to review and comment on such Debt
Offer Documents, and Realty Income shall give reasonable and good faith consideration to any comments made or input provided by VEREIT
and its legal counsel. Subject to the receipt of the requisite holder consents, in connection with any or all of the Consent Solicitations
(including for the avoidance of doubt any other liability management transaction hereunder that includes a Consent Solicitation), VEREIT
shall execute a supplemental indenture to the VEREIT Notes Indenture in accordance with the terms thereof amending the terms and provisions
thereof as described in the applicable Debt Offer Documents in a form as reasonably requested by Realty Income (the “Supplemental
Indenture”); provided that the amendments effected by such supplemental indenture shall not become operative until the
Effective Time. During the Interim Period, at Realty Income’s sole expense, VEREIT shall and shall cause its Subsidiaries to, and
shall cause its and their Representatives to, provide all cooperation reasonably requested by Realty Income to assist Realty Income in
connection with any Note Offers and Consent Solicitations (including using reasonable best efforts to direct VEREIT’s independent
accountants to provide customary consents for use of their reports to the extent required in connection with any Note Offers and Consent
Solicitations). The dealer manager, solicitation agent, information agent, depositary or other agent retained in connection with any Note
Offers and Consent Solicitations will be selected and retained by Realty Income. If, at any time prior to the completion of the Note Offers
and Consent Solicitations, VEREIT or any of its Subsidiaries, on the one hand, or Realty Income or any of its Subsidiaries, on the other
hand, discovers any information that should be set forth in an amendment or supplement to the Debt Offer Documents, so that the Debt Offer
Documents shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of circumstances under which they are made, not misleading, such party that
discovers such information shall use reasonable best efforts to promptly notify the other party, and an appropriate amendment or supplement
prepared by Realty Income describing such information shall be disseminated to the holders of the notes outstanding under the VEREIT Notes
Indenture.
(c)
Realty Income shall promptly, upon request by VEREIT, reimburse VEREIT and its Subsidiaries for all reasonable and documented out-of-pocket
costs and expenses paid to third parties (including advisor’s fees and expenses) incurred by VEREIT and its Subsidiaries in connection
with the cooperation provided pursuant to this Section 5.14 and indemnify and hold harmless VEREIT, its Subsidiaries and their
respective officers, directors and other Representatives from and against any and all liabilities, losses, damages, claims, costs, expenses,
interest, awards, judgments and penalties (collectively, “Losses”) suffered or incurred by them in connection with
any Financing, any information utilized in connection therewith or any action taken by VEREIT or any Subsidiary of VEREIT pursuant to
this Section 5.14, in each case, whether or not the Merger is consummated or this Agreement is terminated; provided, however,
that the foregoing indemnity shall not apply with respect to any Losses resulting from any gross negligence or willful misconduct of VEREIT
or its Subsidiaries or Representatives or a Willful Breach of VEREIT or any Subsidiary of VEREIT under this Agreement.
(d)
Notwithstanding the requirements of Section 5.14(a), neither VEREIT nor any of its Subsidiaries shall be required to take
or permit the taking of any action pursuant to Section 5.14 that (i) would unreasonably interfere with the business or operations
of VEREIT or its Subsidiaries, (ii) would require VEREIT, its Subsidiaries or any Persons who are directors or officers of VEREIT or its
Subsidiaries to pass resolutions or consents to approve or authorize the execution of any Financing or any Note Offers or Consent Solicitations
or execute or deliver any certificate, document, instrument or agreement or agree to any change or modification of any existing certificate,
document, instrument or agreement, in each case, that is effective prior to the Effective Time, or that would be effective if the Effective
Time does not occur (other than (x) authorization letters contemplated by Section 5.14(a)(viii) and (y) to the extent required
to be executed or delivered prior to the Effective Time pursuant to Section 5.14(a)), (iii) would cause any representation or warranty
in this Agreement to be breached by VEREIT or any of its Subsidiaries, (iv) would require VEREIT or any of its Subsidiaries to pay any
commitment or other similar fee prior to the Effective Time or incur any other expense, liability or obligation in connection with any
Financing or any Note Offers and Consent Solicitations prior to the Effective Time, or have any obligation of VEREIT or any of its Subsidiaries
under any agreement, certificate, document or instrument be effective until the Effective Time, (v) could reasonably be expected to cause
any director, officer or employee or stockholder of VEREIT or any of its Subsidiaries to incur any personal liability, (vi) could reasonably
be expected to conflict with the organizational documents of VEREIT or its Subsidiaries or any Laws, (vii) could reasonably be expected
to result in a material violation or breach of, or a default (with or without notice, lapse of time, or both) under, any contract to which
VEREIT or any of its Subsidiaries is a party, (viii) would require providing access to or disclosing information that would reasonably
be expected to jeopardize any attorney-client privilege of VEREIT or any of its Subsidiaries, (ix) would require delivering or causing
to be delivered any opinion of counsel in connection with any Financing or any Note Offers or Consent Solicitations (other than to the
extent required by Section 5.14(b) in connection with the entry into a Supplemental Indenture, an opinion of counsel if the trustee
under the VEREIT Notes Indenture requires an opinion of counsel to VEREIT) or (x) could reasonably be expected to cause VEREIT to fail
to qualify as a REIT for federal income tax purposes (including by reason of potential payments under Section 5.14(c) from such action).
(e)
Upon the request of Realty Income, VEREIT shall use reasonable best efforts to, and cause its Subsidiaries and each of its and
its Subsidiaries’ respective officers and employees to use commercially reasonable efforts to, facilitate the payoff of the VEREIT
Credit Agreement, including obtaining a customary payoff letter in connection therewith (the “Credit Agreement Payoff”);
provided that any such action described above shall not be required unless it can be and is conditioned on the occurrence of the Closing.
(f)
For the avoidance of doubt, the parties hereto acknowledge and agree that the provisions contained in this Section 5.14
represent the sole obligation of VEREIT, its Subsidiaries and their respective Representatives with respect to cooperation in connection
with the arrangement of any Financing to be obtained by Realty Income or any of its Subsidiaries and OfficeCo with respect to the transactions
contemplated by this Agreement and no other provision of this Agreement (including the Exhibits and Schedules hereto) shall be deemed
to expand or modify such obligations. Notwithstanding the foregoing, it is expressly understood and agreed that the parties’ obligation
to consummate the Merger and the transactions contemplated hereby are not contingent upon the completion of any Financing, any Note Offers
or Consent Solicitations or the Credit Agreement Payoff. Notwithstanding anything to the contrary in this Agreement (including the Exhibits
and Schedule hereto), any breach by VEREIT of any of the covenants required to be performed by it under this Section 5.14 shall
not be considered in determining the satisfaction of the condition set forth in Section 6.3(b).
Section
5.15
Separation and OfficeCo Distribution.
(a)
From and after the date hereof, unless the condition set forth in Section 6.3(f) shall have been satisfied or irrevocably
waived by Realty Income, each of VEREIT and Realty Income shall, and shall cause their respective Subsidiaries to cooperate and use reasonable
best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable
to, as promptly as practicable, consummate and make effective, on the Business Day following the Closing, the Separation and the OfficeCo
Distribution, in each case, in accordance with the terms set forth on Exhibit A, including (i) preparing and causing to be executed
all agreements necessary to effect the Separation and the OfficeCo Distribution, including a separation and distribution agreement (the
“Distribution Agreement”) containing, among other provisions, the terms contemplated therefor on Exhibit A,
(ii) effectuating the transfer of the OfficeCo Properties to OfficeCo or Subsidiaries thereof and obtaining any Consents and making any
notifications required in connection therewith in accordance with the terms set forth on Exhibit A, (iii) determining and electing
or appointing the individuals who will comprise OfficeCo’s board of directors and management team upon consummation of the OfficeCo
Distribution in accordance with the terms set forth on Exhibit A, (iv) preparing and causing a registration statement on Form 10
(such registration statement, and any amendments or supplements thereto, the “Form 10”) to be filed by OfficeCo with
respect to the Separation and the OfficeCo Distribution with, and declared effective, by the SEC, and keeping the Form 10 effective as
long as is necessary to consummate the OfficeCo Distribution and the transactions contemplated thereby, and (v) obtaining all requisite
corporate and other approvals, authorizations and declarations, and obtaining a customary solvency opinion in connection therewith, if
necessary. In addition, from and after the date hereof, unless the condition set forth in Section 6.3(f) shall have been satisfied
or irrevocably waived by Realty Income, and except as expressly permitted or required pursuant to Section 5.15(d), VEREIT shall,
and shall cause its Subsidiaries to, refrain from taking any action after the date of this Agreement that, to Viking’s knowledge,
would reasonably be expected to prevent the consummation of the Separation and the OfficeCo Distribution on terms consistent with the
terms set forth in Exhibit A by the Spin-off Outside Date.
(b)
Each party shall, as promptly as practicable after receipt thereof, provide the other party with copies of any written comments
and advise such other party of any oral comments with respect to the Form 10 received from the SEC, and each party shall cooperate and
provide the other party with a reasonable opportunity to review and comment on any filing, amendment or supplement to the Form 10, or
any responses to comments received from the SEC, prior to filing such with the SEC. In addition, each party shall use its reasonable best
efforts to take any action required to be taken under any applicable state securities laws in connection with the OfficeCo Distribution,
and shall furnish all information concerning it and the holders of its capital stock or shares of common stock as may be reasonably requested
in connection with any such action. Each party will advise the other party promptly after it receives notice of the time when the Form
10 has become effective, the issuance of any stop order, the suspension of the qualification of the securities of OfficeCo issuable in
connection with the OfficeCo Distribution for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Form
10. If, at any time prior to the Effective Time, any information relating to either of the parties, or their respective affiliates, officers
or directors, should be discovered by either party, and such information should be set forth in an amendment or supplement to the Form
10 so that it would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly
notify the other party hereto and, to the extent required by Law, the parties shall cooperate to cause OfficeCo to promptly file with
the SEC an appropriate amendment or supplement describing such information. In addition, each of VEREIT and Realty Income shall promptly
advise the other party upon receiving any written communication from any Governmental Entity and any material written communication given
or received in connection with any legal proceeding by a private party, in each case in connection with the Separation or the OfficeCo
Distribution and reasonably cooperate to respond to any such communication.
(c)
In furtherance of (and without limiting) the foregoing obligations in this Section 5.15, the parties shall use reasonable
best efforts to consult and cooperate with each other with respect to the Separation and the OfficeCo Distribution, and each party shall
keep the other party informed on a reasonably timely basis of the status of matters related to the Separation and the OfficeCo Distribution.
In the event that the parties do not agree on the terms of the Separation or the OfficeCo Distribution or actions to be taken in furtherance
thereof (including with respect to the terms set forth on Exhibit A), Realty Income shall, acting in good faith and after consultation
with VEREIT, have the ultimate decision-making authority.
(d) (i) Notwithstanding anything
to the contrary in this Section 5.15 or Section 5.4, at any time prior to the Effective Time, Realty Income, its Subsidiaries
and their respective directors, officers, employees and other Representatives may, directly or indirectly, and in the event that Realty
Income requests cooperation from VEREIT in connection therewith, VEREIT and its Subsidiaries and their respective directors, officers,
employees and other Representatives may, to the extent requested or approved by Realty Income, directly or indirectly, (x) solicit, initiate,
propose, facilitate, induce or encourage any proposals from third parties which to acquire all or any portion of the OfficeCo Properties
(each, an “OfficeCo Proposal”), including by furnishing to any Person or its Representatives any information relating
to the OfficeCo Business; (y) continue, enter into, participate in or otherwise engage in any discussions or negotiations with any Person
or its Representatives with respect to one or more OfficeCo Proposals; and (z) otherwise cooperate with, assist, participate in or take
any action to facilitate any OfficeCo Proposals.
(ii) Realty Income shall reasonably
consult with and consider in good faith any comments of VEREIT with respect to any OfficeCo Proposal, and shall keep VEREIT informed on
a reasonably timely basis of the status of matters related thereto. In addition, upon written request from Realty Income, VEREIT shall,
and shall cause its Subsidiaries to, use reasonable best efforts to cooperate with Realty Income and its Subsidiaries in connection with
the activities set forth in Section 5.15(d)(i), including by participating in the strategy with respect to the marketing and sale
of any such OfficeCo Properties, and affording to any Person or its Representatives reasonable access to the business, properties, assets,
books, records or other non-public information regarding the OfficeCo Properties, subject to any such Person and/or its Representatives
entering into a customary non-disclosure agreement with VEREIT.
(iii) At any time prior to
the Effective Time, Realty Income and its Subsidiaries may negotiate and, acting in good faith and after consultation with VEREIT, enter
into one or more binding agreements with third party purchasers providing for the sale of all or any portion of the OfficeCo Properties
on such terms as determined by Realty Income (each, including any ancillary documentation related thereto, an “OfficeCo Sale
Agreement”), and consummate the transactions contemplated thereby, and, the parties agree to cooperate and use reasonable best
efforts to facilitate the entry into such OfficeCo Sale Agreements and the consummation of the transactions contemplated thereby, provided,
however, that, with respect to each OfficeCo Sale Agreement, if such sale relates to OfficeCo Properties owned by VEREIT or its
Subsidiaries, (A) either (1) such sale is conditioned upon the closing of the Merger, or (2) Realty Income complies with the indemnification
requirements of Section 5.15(d)(iv) with respect to such sale, (B) such sale (1) shall not occur prior to the Partnership Merger
Effective Time and (2) shall not occur prior to the Effective Time if such sale would reasonably be expected to cause VEREIT to fail to
qualify as a REIT for federal Tax purposes and (C) such OfficeCo Sale Agreement (1) does not obligate VEREIT or its Subsidiaries to pay
any material consent, termination or other similar fee that is payable prior to the Closing (unless Realty Income agrees to reimburse
VEREIT or its Subsidiaries for such fees and such reimbursement would not reasonably be expected to cause VEREIT to fail to qualify as
a REIT for federal Tax purposes), (2) may be terminated by VEREIT or its Subsidiaries, or shall be automatically terminated, in each case,
if this Agreement is terminated, and (3) does not create any material obligations, commitments or liabilities for VEREIT or its Subsidiaries
that would survive the termination of such OfficeCo Sale Agreement or this Agreement (an OfficeCo Sale Agreement that satisfies the foregoing
requirements, a “Qualifying OfficeCo Sale Agreement”). Upon written request from Realty Income, VEREIT shall, and shall
cause its Subsidiaries and Representatives to, use reasonable best efforts to cooperate and facilitate such sale or sales, including affording
to any Person or its Representatives reasonable access to the business, properties, assets, books, records or other information regarding
any applicable OfficeCo Properties owned by VEREIT or its Subsidiaries, subject to any such Person and/or its Representatives entering
into a customary non-disclosure agreement with VEREIT.
(iv) With respect to any
sale of OfficeCo Properties owned by VEREIT or its Subsidiaries otherwise made in accordance with this Section 5.15, Realty
Income may make an irrevocable election (the “OfficeCo Sale Election”), by written notice to VEREIT (the
“OfficeCo Sale Notice”), to require that VEREIT or its Subsidiaries, as applicable, enter into one or more
Qualifying OfficeCo Sale Agreements on such terms as determined by Realty Income and, subject to the terms and conditions thereof
and any applicable third-party consent or other rights, to sell, immediately prior to the Effective Time, all or any portion of the
OfficeCo Properties owned by VEREIT or its Subsidiaries (an “OfficeCo Sale”), in each case, as specified by
Realty Income in the OfficeCo Sale Notice; provided, however, that no such sale shall occur (A) prior to the
Partnership Merger Effective Time or (B) prior to the Effective Time if such sale would reasonably be expected to cause VEREIT to
fail to qualify as a REIT for federal Tax purposes. In the event that Realty Income has made an OfficeCo Sale Election, subject to
the proviso in the preceding sentence, (X) VEREIT and its Subsidiaries shall sign such Qualifying OfficeCo Sale Agreement(s) and use
reasonable best efforts to cooperate with Realty Income to consummate such OfficeCo Sale(s) immediately prior to the Effective Time
in accordance with the terms of the applicable Qualifying OfficeCo Sale Agreement(s) and this Section 5.15(d), and (Y) if the
Merger does not close, Realty Income shall indemnify, defend, protect and hold harmless VEREIT and its Subsidiaries (and regardless
of whether the Merger closes any persons who are officers or directors thereof) for any Losses arising out of any OfficeCo Sale(s)
contemplated by the OfficeCo Sale Election, including, without limitation, in connection with any agreements, documents or other
instruments required to be delivered by VEREIT and its Subsidiaries with respect to such sale(s) (other than such Losses arising
from the gross negligence, willful misconduct or bad faith of VEREIT, its Subsidiaries or any persons who are officers or directors
thereof and, in each case, subject to the last sentence of Section 7.2(h)).
(e)
In connection with the foregoing obligations in this Section 5.15 and Exhibit A, (i) each of Realty Income, VEREIT
and their respective Subsidiaries shall reasonably consult with each other with respect to all expenses, costs or Consent Fees to be incurred
in connection with the Separation and the OfficeCo Distribution or the sales contemplated by Section 5.15(d), and (ii) all Consent
fees incurred by VEREIT, Realty Income and their respective Subsidiaries in connection with obtaining any Consents required for the Separation,
the OfficeCo Distribution or the sales contemplated by Section 5.15(d) shall be shared equally by VEREIT and Realty Income. The
parties will reasonably cooperate to minimize any adverse tax consequences as a result of the reimbursement by VEREIT or Realty Income
of any expenses, costs or Consent Fees pursuant to this Section 5.15(e).
(f)
Notwithstanding anything to the contrary in this Section 5.15, none of VEREIT, Realty Income or their respective Subsidiaries
(or any persons who are employees, officers or directors thereof) shall be required pursuant to this Section 5.15 or Exhibit
A (or, for the avoidance of doubt, Section 5.3 with respect to the matters addressed in this Section 5.15 and Exhibit
A) to (i) take any action (or refrain from taking action) that would cause any representation, warranty or covenant in this Agreement
to be materially breached by any party (unless such breach is expressly waived by the other party) or to result in any violation or breach
of any Law by the parties or their Subsidiaries, (ii) make, or commit or agree to make, any material concession or material payment to,
or incur any material obligations to, any third party unless (A) such concession, payment or obligation is contingent upon consummation
of the Merger (or the requirements of Section 5.15(d) are satisfied with respect thereto) or, in the case of any material obligations,
terminable upon the termination of this Agreement, or (B) VEREIT and Realty Income mutually consent to such concession, payment or obligation
(not to be unreasonably withheld, conditioned or delayed), (iii) require Realty Income, VEREIT or any of their respective Subsidiaries
to be an issuer or other obligor with respect to any financing of OfficeCo or to repay or defease any mortgages or other Indebtedness
unless such obligations are contingent upon consummation of the Merger or (iv) take any action (or refrain from taking any action) that
could reasonably be expected to cause VEREIT to fail to qualify as a REIT for federal income tax purposes.
(g)
In the event that Realty Income has made a final determination to abandon its pursuit of the Separation and the OfficeCo Distribution,
it shall promptly notify VEREIT in writing, and upon delivery of such notice, Realty Income will be deemed to have irrevocably waived
the condition set forth in Section 6.3(f).
Section
5.16 Redemption
of VEREIT Series F Preferred Stock. On the Closing Date, immediately following the issuance of the Series F Preferred Unit Redemption
Notice and immediately prior to the Partnership Merger Effective Time, (i) VEREIT shall issue a notice of redemption (the “Series
F Preferred Stock Redemption Notice”) of each of the shares of the VEREIT Series F Preferred Stock compliant with the VEREIT
Charter and otherwise in form and substance (including with respect to the redemption date specified therein), reasonably satisfactory
to Realty Income and (ii) Realty Income shall irrevocably set aside and deposit, separate and apart from its other funds, in trust
for the benefit of the holders of the VEREIT Series F Preferred Stock, cash in immediately available funds in the amount of $25.00 (the
“VEREIT Series F Preferred Stock Liquidation Preference”) plus all accrued and unpaid dividends to and including
the redemption date set forth in the Series F Preferred Stock Redemption Notice, per share of VEREIT Series F Preferred Stock (the “VEREIT
Series F Preferred Stock Redemption Amount”).
Section
5.17 Notification
of Certain Matters; Transaction Litigation.
(a)
VEREIT shall give prompt notice to Realty Income, and Realty Income shall give prompt notice to VEREIT, of any written notice or
other written communication received by such party from any Governmental Entity in connection with this Agreement, the Mergers, the Separation,
the OfficeCo Distribution or the other transactions contemplated by this Agreement, or from any Person alleging that the consent of such
Person is or may be required in connection with the Mergers, the Separation, the OfficeCo Distribution or the other transactions contemplated
by this Agreement.
(b)
VEREIT shall give prompt notice to Realty Income, and Realty Income shall give prompt notice to VEREIT, of any litigation, claim
or other proceeding commenced or, to such party’s knowledge, threatened against, relating to or involving such party or any of the
VEREIT Subsidiaries or the Realty Income Subsidiaries, respectively, which relate to this Agreement, the Mergers, the OfficeCo Distribution
or the other transactions contemplated by this Agreement. VEREIT shall give Realty Income an opportunity to reasonably participate in
the defense and settlement of any stockholder litigation against VEREIT and/or its directors relating to this Agreement and the transactions
contemplated hereby, and no such settlement shall be agreed to without Realty Income’s prior written consent (which consent shall
not be unreasonably withheld, conditioned or delayed). Realty Income shall give VEREIT the opportunity to reasonably participate in the
defense and settlement of any stockholder litigation against Realty Income and/or its directors relating to this Agreement and the transactions
contemplated hereby, and no such settlement which could reasonably be expected to impair or impede the parties’ ability to timely
perform their obligations under this Agreement or the consummation of the transactions contemplated hereby shall be agreed to without
VEREIT’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).
Section
5.18
Section 16 Matters. VEREIT, Realty Income. Merger Sub 1 and Merger Sub 2 each shall take all such steps as may be
necessary or appropriate to ensure that (a) any dispositions of VEREIT Common Stock (including derivative securities related to such
stock) resulting from the Merger and the other transactions contemplated by this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to VEREIT immediately prior to the Effective Time are exempt under Rule
16b-3 promulgated under the Exchange Act, and (b) any acquisitions of Realty Income Common Stock (including derivative securities related
to such stock) resulting from the Mergers, the OfficeCo Distribution and the other transactions contemplated by this Agreement by each
individual who may become subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Realty Income are
exempt under Rule 16b-3 promulgated under the Exchange Act.
Section
5.19
Alternative Structure. Notwithstanding anything to the contrary contained in this Agreement, (A) if (i) Realty Income
uses reasonable best efforts to obtain the Realty Income Credit Agreement Amendment as promptly as practicable after the date hereof,
and (ii) Realty Income has not obtained the Realty Income Credit Agreement Amendment by the date that is fifteen (15) Business Days prior
to the earlier of the date of the VEREIT Stockholders Meeting and the Realty Income Stockholders Meeting, or (B) or otherwise with the
consent of VEREIT (which shall not be unreasonably withheld or delayed), Realty Income, in its sole discretion, may elect to modify the
structure of the Merger so as to provide that VEREIT shall merge into and Realty Income (rather than Merger Sub 1), with Realty Income
continuing as the surviving corporation of the Merger (the “Alternative Structure”); provided that (a) the consideration
to be paid to the stockholders of VEREIT is not thereby changed in nature or kind or reduced in amount as a result of such modification,
(b) the Alternative Structure will not adversely affect (1) the tax treatment to the stockholders of Realty Income or VEREIT as a result
of the Merger or payment or receipt of the Merger Consideration, or (2) the qualification and taxation of VEREIT as a REIT for federal
income tax purposes for any period, and (c) other than the modification to the Realty Income Required Stockholders Vote to require a majority
of the outstanding shares of Realty Income Common Stock as a result of the Alternative Structure, such Alternative Structure (after giving
effect to the following sentence) will not and, will not reasonably be expected to, jeopardize, impede or materially delay the consummation
of the transactions contemplated by this Agreement. In the event that Realty Income elects to implement the Alternative Structure, the
parties agree, in good faith, to prepare and execute an amendment to this Agreement to reflect the Alternative Structure and any necessary
modifications to the terms of the Agreement to give effect to the Alternative Structure (including all necessary or appropriate changes
to the definitions of the Merger, the Surviving Corporation, the Realty Income Required Stockholders Vote and the Realty Income Stock
Issuance and such terms impacted thereby).
Article
VI
CONDITIONS PRECEDENT
Section
6.1
Conditions to Each Party’s Obligation. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following conditions unless waived by such party in writing:
(a)
Stockholder Approval. VEREIT shall have obtained the VEREIT Required Stockholders Vote, and Realty Income shall have obtained
the Realty Income Required Stockholders Vote.
(b)
NYSE Listing. The shares of (i) Realty Income Common Stock to be issued in the Merger, (ii) Realty Income Common Stock to
be issued in the Partnership Merger, and (iii) Realty Income Common Stock to be reserved for issuance upon exercise or settlement of VEREIT
Equity Awards, in each case, shall have been approved for listing on the NYSE, subject to official notice of issuance.
(c)
Form S-4. The Form S-4 shall have become effective under the Securities Act and shall not be the subject of any stop order
or proceedings seeking a stop order.
(d)
No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Mergers shall
be in effect. There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable
to the Mergers by any Governmental Entity of competent jurisdiction which makes the consummation of the Mergers illegal.
Section
6.2
Conditions to Obligations of VEREIT. The obligation of VEREIT to effect the Merger is subject to the satisfaction
of the following conditions unless waived by VEREIT in writing:
(a)
Representations and Warranties. (i) The representations and warranties of Realty Income set forth in Section 3.2 clauses
(a)(i) (Organization, Standing and Power), (b) (Capital Structure) (other than clause (i) thereof), (c)(i) (Authority),
(m) (Board Approval), (o) (Vote Required), (u) (Investment Company Act of 1940), (w) (Brokers or Finders),
and (x) (Opinion of Realty Income Financial Advisor) shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent made as of an earlier date, in
which case as of such date), (ii) the representations and warranties set forth in Section 3.2(b)(i) shall be true and correct in
all but de minimis respects as of the date of this Agreement, and (iii) the other representations and warranties of Realty
Income set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date (except to the extent expressly made as of an earlier date, in which case as of such date), except, in the
case of this clause (iii), where the failure of such representations and warranties to be so true and correct (without giving effect to
any limitation as to materiality or Realty Income Material Adverse Effect) has not had, and would not reasonably be expected to have,
individually or in the aggregate, a Realty Income Material Adverse Effect.
(b)
Performance of Obligations of Realty Income Entities. Each of Realty Income, Merger Sub 1 and Merger Sub 2 shall have performed
in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing.
(c)
Merger Opinion. VEREIT shall have received the opinion of VEREIT Merger Counsel in form and substance substantially as set
forth in Section 6.2(c) of the VEREIT Disclosure Letter, and with such reasonable changes as are reasonably acceptable to VEREIT,
dated as of the Closing Date, to the effect that, on the basis of the facts, representations and assumptions set forth in such opinion,
the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The tax opinion will
be subject to customary exceptions, assumptions and qualifications, and in rendering such opinion, counsel may require and rely upon the
officer’s certificates delivered pursuant to Section 4.1(d) and Section 4.2(d). The condition set forth in this Section
6.2(c) may not be waived after receipt of the VEREIT Required Stockholders Vote, unless further stockholder approval is obtained with
appropriate disclosure.
(d)
REIT Opinion. VEREIT shall have received a tax opinion of Realty Income REIT Counsel, in form and substance substantially
as set forth in Section 6.2(d) of the Realty Income Disclosure Letter, and with such changes as are mutually agreeable to VEREIT and Realty
Income (such agreement not to be unreasonably withheld, conditioned or delayed), dated as of the Closing Date and addressed to VEREIT,
to the effect that, commencing with Realty Income’s taxable year ended December 31, 1994, Realty Income has been organized
and has operated in conformity with the requirements for qualification and taxation as a REIT under the Code and its proposed method of
operation will enable Realty Income to continue to meet the requirements for qualification and taxation as a REIT under the Code for its
taxable year that includes the Effective Time and future taxable years. The tax opinion will be subject to customary exceptions, assumptions
and qualifications, be based on the representations contained in the officer’s certificates delivered pursuant to Section 4.2(d)
and assume the accuracy of the representations contained in the officer’s certificate delivered to VEREIT REIT Counsel pursuant
to Section 4.1(d).
(e)
Closing Certificate. VEREIT shall have received a certificate signed on behalf of Realty Income by the Chief Executive Officer
and Chief Financial Officer of Realty Income, dated as of the Closing Date, to the effect that the conditions set forth in Section
6.2(a) and Section 6.2(b) have been satisfied.
Section
6.3
Conditions to Obligations of Realty Income. The obligation of Realty Income to effect the Merger is subject to the
satisfaction of the following conditions unless waived by Realty Income in writing:
(a)
Representations and Warranties. (i) The representations and warranties of VEREIT set forth in Section 3.1 clauses (a)(i)
(Organization, Standing and Power), (b) (Capital Structure) (other than clause (i) thereof), (c)(i) (Authority),
(m) (Board Approval), (o) (Vote Required), (u) (Investment Company Act of 1940), (v) (Brokers or Finders)
and (w) (Opinions of VEREIT Financial Advisors) shall be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (except to the extent made as of an earlier date, in which case
as of such date), (ii) the representations and warranties set forth in Section 3.1(b)(i) shall be true and correct in all but de
minimis respects as of the date of this Agreement, and (iii) the other representations and warranties of VEREIT set forth in this
Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing
Date (except to the extent expressly made as of an earlier date, in which case as of such date), except, in the case of this clause (iii),
where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to materiality
or VEREIT Material Adverse Effect) has not had, and would not reasonably be expected to have, individually or in the aggregate, a VEREIT
Material Adverse Effect.
(b)
Performance of Obligations of VEREIT. Each of VEREIT and VEREIT OP shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing Date.
(c) Merger
Opinion. Realty Income shall have received the opinion of Realty Income Merger Counsel in form and substance as set forth in
Section 6.3(c) of the Realty Income Disclosure Letter, and with such reasonable changes as are reasonably acceptable to Realty
Income, dated as of the Closing Date, to the effect that, on the basis of the facts, representations and assumptions set forth in
such opinion, the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. The tax
opinion will be subject to customary exceptions, assumptions and qualifications, and in rendering such opinion, counsel may require
and rely upon the officer’s certificates delivered pursuant to Section 4.1(d) and Section 4.2(d). The condition
set forth in this Section 6.3(c) may not be waived after receipt of the Realty Income Required Stockholders Vote, unless
further stockholder approval is obtained with appropriate disclosure.
(d)
REIT Opinion. Realty Income shall have received a tax opinion of VEREIT REIT Counsel, in form and substance substantially
as set forth in Section 6.3(d) of the VEREIT Disclosure Letter, and with such changes as are mutually agreeable to Realty Income and VEREIT
(such agreement not to be unreasonably withheld, conditioned or delayed), dated as of the Closing Date and addressed to Realty Income,
to the effect that, commencing with VEREIT’s taxable year ended December 31, 2011 and through the Effective Time, VEREIT has
been organized and has operated in conformity with the requirements for qualification and taxation as a REIT under the Code. The tax opinion
will be subject to customary exceptions, assumptions and qualifications, and based on the representations contained in the officer’s
certificates delivered pursuant to Section 4.1(d).
(e)
Closing Certificate. Realty Income shall have received a certificate signed on behalf of VEREIT by the Chief Executive Officer
and Chief Financial Officer of VEREIT, dated as of the Closing Date, to the effect that the conditions set forth in Section 6.3(a)
and Section 6.3(b) have been satisfied.
(f)
OfficeCo. The Separation and the OfficeCo Distribution shall be, in all respects, ready to be consummated in accordance
with Exhibit A hereto contemporaneously with the Closing of the Merger, including without limitation that the SEC shall have declared
the Form 10, and the Form 10 remains, effective, and will close on the Business Day following the Closing; provided, however,
Realty Income shall automatically be deemed to have irrevocably waived the condition set forth in this Section 6.3(f) on January
29, 2022 (the “Spin-Off Outside Date”).
Article
VII
TERMINATION AND AMENDMENT
Section
7.1
Termination. This Agreement may be terminated at any time prior to the Effective Time, by action taken or authorized
by the Board of Directors of the terminating party or parties, whether before or after approval of the Merger by the stockholders of VEREIT
or Realty Income:
(a)
by mutual consent of VEREIT and Realty Income in a written instrument;
(b)
by either VEREIT or Realty Income, upon written notice to the other party, if any Governmental Entity of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action permanently enjoining or otherwise prohibiting the Mergers, and
such order, decree, ruling or other action has become final and non-appealable; provided, however, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party whose failure to comply with any provision of this
Agreement has been the primary cause of, or resulted in, such action;
(c)
by either VEREIT or Realty Income, upon written notice to the other party, if the Merger shall not have been consummated on or
before April 29, 2022 (the “Outside Date”); provided, the right to terminate this Agreement under this Section
7.1(c) shall not be available to any party whose material breach of any representation, warranty, covenant or other agreement has
been the primary cause of, or resulted in, the failure of the Merger to occur on or before such date;
(d)
by VEREIT, upon written notice to Realty Income:
(i)
at any time prior to the receipt of the VEREIT Required Stockholders Vote in order to enter into an Acquisition Agreement with
respect to a Superior Proposal in accordance with the express terms and conditions of Section 5.4; provided, however,
that this Agreement may not be so terminated unless the payment required by Section 7.2(b)(i) is made in full to Realty Income
substantially concurrently with the occurrence of such termination and the entry into such Acquisition Agreement with respect to such
Superior Proposal; and
(ii)
upon a Change in Realty Income Recommendation;
(e)
by Realty Income, upon written notice to VEREIT:
upon a Change in VEREIT
Recommendation;
(f)
by VEREIT, upon written notice to Realty Income, if either Realty Income, Merger Sub 1 or Merger Sub 2 shall have breached or failed
to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, or if any representation or warranty
of Realty Income shall have become untrue, which breach or failure to perform or to be true, either individually or in the aggregate,
if occurring or continuing on the Closing Date, (A) would result in the failure to be satisfied of the condition set forth in Section
6.2(a) or (b) and (B) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) thirty (30) Business Days
after the giving of written notice to Realty Income of such breach; provided that VEREIT shall not have the right to terminate
this Agreement pursuant to this Section 7.1(f) if VEREIT or VEREIT OP is then in breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement that would result in the failure to be satisfied of the condition set forth in Section
6.3(a) or (b);
(g)
by Realty Income, upon written notice to VEREIT, if either VEREIT or VEREIT OP shall have breached or failed to perform any of
its representations, warranties, covenants or agreements set forth in this Agreement, or if any representation or warranty of VEREIT shall
have become untrue, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing
on the Closing Date, (A) would result in the failure to be satisfied of the condition set forth in Section 6.3(a) or (b)
and (B) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) thirty (30) Business Days after the giving of written
notice to VEREIT of such breach; provided that Realty Income shall not have the right to terminate this Agreement pursuant to this
Section 7.1(g) if Realty Income, Merger Sub 1 or Merger Sub 2 is then in breach of any of its representations, warranties, covenants
or agreements set forth in this Agreement that would result in the failure to be satisfied of the condition set forth in Section 6.2(a)
or (b);
(h)
by either VEREIT or Realty Income, if the VEREIT Required Stockholders Vote shall not have been obtained upon a vote taken thereon
at the duly convened VEREIT Stockholders Meeting or at any adjournment or postponement thereof, in each case at which a vote on obtaining
the VEREIT Required Stockholders Vote was taken; provided, however, that the right to terminate this Agreement under this
Section 7.1(h) shall not be available to VEREIT where a failure to obtain the VEREIT Required Stockholders Vote was primarily caused
by any action or failure to act of VEREIT or its Subsidiaries that constitutes a material breach of its obligations under Section 5.1
or Section 5.4; or
(i)
by either VEREIT or Realty Income, if the Realty Income Required Stockholders Vote shall not have been obtained upon a vote taken
thereon at the duly convened Realty Income Stockholders Meeting or at any adjournment or postponement thereof, in each case at which a
vote on obtaining the Realty Income Required Stockholders Vote was taken; provided, however, that the right to terminate
this Agreement under this Section 7.1(i) shall not be available to Realty Income where a failure to obtain the Realty Income Required
Stockholders Vote was primarily caused by any action or failure to act of Realty Income or its Subsidiaries that constitutes a material
breach of its obligations under Section 5.1 or Section 5.4.
Section
7.2
Effect of Termination.
(a) In the event of termination
of this Agreement by either VEREIT or Realty Income as provided in Section 7.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of VEREIT or Realty Income or their respective officers or directors, except with
respect to Section 5.2(b), Section 5.7, this Section 7.2 and Article VIII and except for the Confidentiality
Agreement, each of which shall survive such termination and except that no party shall be relieved or released from any liabilities or
damages arising out of its fraud or Willful Breach of this Agreement.
(b)
VEREIT Termination Fee.
(i)
If VEREIT shall terminate this Agreement pursuant to Section 7.1(d)(i), then VEREIT shall pay to Realty Income the VEREIT
Termination Fee as a condition to the effectiveness of such termination.
(ii)
If Realty Income shall terminate this Agreement pursuant to Section 7.1(e), then VEREIT shall pay to Realty Income the VEREIT
Termination Fee within three (3) Business Days after termination of this Agreement.
(iii)
In the event that (A) a bona fide Acquisition Proposal with respect to VEREIT shall have been publicly announced or
shall have become publicly disclosed and shall not have been publicly withdrawn prior to the date that is at least ten (10) Business Days
prior to the VEREIT Stockholders Meeting, (B) thereafter this Agreement is terminated (1) by Realty Income or VEREIT pursuant to
Section 7.1(c) (if the VEREIT Required Stockholders Vote has not theretofore been obtained) or pursuant to Section 7.1(h)
or (2) by Realty Income pursuant to Section 7.1(g) due to a material breach by VEREIT of its obligations under Section 5.1 or Section
5.4, and (C) prior to the date that is twelve (12) months after the date of such termination, VEREIT either (1) consummates a transaction
of a type set forth in the definition of “Acquisition Proposal” or (2) enters into an Acquisition Agreement, then VEREIT shall,
on the earlier of the date such transaction is consummated or the date such Acquisition Agreement is entered into, pay to Realty Income
a one-time fee equal to the VEREIT Termination Fee less the amount of any Realty Income Expense Reimbursement previously paid to Realty
Income (if any) pursuant to Section 7.2(b)(iv) (provided that, for purposes of this clause (C), each reference to “20%”
in the definitions of “Acquisition Proposal” and “Acquisition Agreement” shall be deemed to be a reference to
“50.1%”).
(iv)
In the event that VEREIT or Realty Income terminates this Agreement pursuant to Section 7.1(h) under circumstances in which
the VEREIT Termination Fee is not then payable, then VEREIT shall pay to Realty Income a one-time fee equal to the Realty Income Expense
Reimbursement within three (3) Business Days after such termination; provided that the payment by VEREIT of the Realty Income Expense
Reimbursement pursuant to this Section 7.2(b)(iv), shall not relieve VEREIT of any subsequent obligation to pay the VEREIT Termination
Fee pursuant to Section 7.2(b)(iii).
(c)
Realty Income Termination Fee.
(i)
If VEREIT shall terminate this Agreement pursuant to Section 7.1(d)(ii), then Realty Income shall pay to VEREIT the Realty
Income Termination Fee within three (3) Business Days after termination of this Agreement.
(ii)
In the event that (A) a bona fide Acquisition Proposal with respect to Realty Income shall have been publicly announced
or shall have become publicly disclosed and shall not have been publicly withdrawn prior to the
date that is at least ten (10) Business Days prior to the Realty Income Stockholders Meeting, (B) thereafter this Agreement is
terminated (1) by Realty Income or VEREIT pursuant to Section 7.1(c) (if the Realty Income Required Stockholders Vote has not theretofore
been obtained) or pursuant to Section 7.1(i) or (2) by VEREIT pursuant to Section 7.1(f) due to a material breach by Realty
Income of its obligations under Section 5.1 or Section 5.4, and (C) prior to the date that is twelve (12) months after the date of
such termination, Realty Income either (1) consummates a transaction of a type set forth in the definition of “Acquisition Proposal”
or (2) enters into an Acquisition Agreement, then Realty Income shall, on the earlier of the date such transaction is consummated or the
date such Acquisition Agreement is entered into, pay to VEREIT a one-time fee equal to the Realty Income Termination Fee less the amount
of any VEREIT Expense Reimbursement previously paid to VEREIT (if any) pursuant to Section 7.2(c)(iii) (provided that, for
purposes of this clause (C), each reference to “20%” in the definitions of “Acquisition Proposal” and “Acquisition
Agreement” shall be deemed to be a reference to “50.1%”).
(iii)
In the event that VEREIT or Realty Income terminates this Agreement pursuant to Section 7.1(i) under circumstances in which
the Realty Income Termination Fee is not then payable, then Realty Income shall pay to VEREIT a one-time fee equal to the VEREIT Expense
Reimbursement within three (3) Business Days after such termination; provided that the payment by Realty Income of the VEREIT
Expense Reimbursement pursuant to this Section 7.2(c)(iii), shall not relieve Realty Income of any subsequent obligation to pay
the Realty Income Termination Fee pursuant to Section 7.2(c)(iii).
(d)
In no event shall this Section 7.2 require (i) VEREIT to pay the VEREIT Termination Fee on more than one occasion or (ii)
Realty Income to pay the Realty Income Termination Fee on more than one occasion.
(e)
Each of the parties hereto acknowledges that the agreements contained in this Section 7.2 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the parties would not enter into this Agreement. Accordingly, if either
VEREIT or Realty Income fails to pay all amounts due to the other party under this Section 7.2 on the dates specified, then either
VEREIT or Realty Income, as applicable, shall pay all costs and expenses (including legal fees and expenses) incurred by such other party
in connection with any action or proceeding (including the filing of any lawsuit) taken by it to collect such unpaid amounts, together
with interest on such unpaid amounts at the prime lending rate prevailing at such time, as published in The Wall Street Journal,
from the date such amounts were required to be paid until the date actually received by such other party. Each of the parties hereto acknowledges
that each of the Realty Income Expense Reimbursement, VEREIT Expense Reimbursement, Realty Income Termination Fee and VEREIT Termination
Fee is not a penalty, but rather are liquidated damages in a reasonable amount that will compensate a party in the circumstances in which
such amounts are due and payable, which amounts would otherwise be impossible to calculate with precision.
(f)
The “VEREIT Termination Fee” shall be an amount equal to the lesser of (i) the VEREIT Base Amount (as defined
below) and (ii) the maximum amount, if any, that can be paid to Realty Income without causing it to fail to meet the requirements of Sections 856(c)(2)
and (3) of the Code (the “REIT Requirements”) for such year determined as if (a) the payment of such amount did not
constitute Qualifying Income, and (b) Realty Income has 0.5% of its gross income from unknown sources during such year which was not Qualifying
Income (in addition to any known or anticipated income of Realty Income which was not Qualifying Income), in each case as determined by
independent accountants to Realty Income. Notwithstanding the foregoing, in the event Realty Income receives Tax Guidance providing that
Realty Income’s receipt of the VEREIT Base Amount should either constitute Qualifying Income or should be excluded from gross income
within the meaning of the REIT Requirements, the VEREIT Termination Fee shall be an amount equal to the VEREIT Base Amount and VEREIT
shall, upon receiving notice that Realty Income has received the Tax Guidance, pay to Realty Income the unpaid VEREIT Base Amount within
five (5) Business Days. In the event that Realty Income is not able to receive the full VEREIT Base Amount due to the above limitations,
VEREIT shall place the unpaid amount in escrow by wire transfer within three (3) days of the date when the VEREIT Termination Fee would
otherwise be due but for the above limitations and shall not release any portion thereof to Realty Income unless and until Realty Income
receives either one or a combination of the following once or more often: (i) a letter from Realty Income’s independent accountants
indicating the maximum amount that can be paid at that time to Realty Income without causing Realty Income to fail to meet the REIT Requirements
(calculated as described above) or (ii) the Tax Guidance, in either of which events VEREIT shall pay to Realty Income the lesser of the
unpaid VEREIT Base Amount or the maximum amount stated in the letter referred to in (i) above within five (5) Business Days after VEREIT
has been notified thereof. The obligation of VEREIT to pay any unpaid portion of the VEREIT Termination Fee shall terminate on the December 31
following the date which is three (3) years from the date the VEREIT Termination Fee first becomes payable under Section 7.2(b).
Amounts remaining in escrow after the obligation of VEREIT to pay the VEREIT Termination Fee terminates shall be released to VEREIT. “Qualifying
Income” shall mean income described in Sections 856(c)(2)(A)–(I) and 856(c)(3)(A)–(I) of the Code. “Tax
Guidance” shall mean a reasoned opinion from nationally recognized federal income tax counsel experienced in REIT tax matters
or a ruling from the IRS. The “VEREIT Base Amount” shall mean $365,000,000; provided, however, that,
in the event the VEREIT Termination Fee becomes payable as a result of the termination of this Agreement prior to the Window Period End
Time (a) by VEREIT pursuant to Section 7.1(d)(i) with respect to a Superior Proposal by a Qualified Bidder or (b) by Realty Income
pursuant to Section 7.1(e) in response to a Change in VEREIT Recommendation effected in compliance with Section 5.4(b)(iv)
with respect to a Superior Proposal by a Qualified Bidder, then, in the case of either of the immediately preceding clauses (a) or (b),
the “VEREIT Base Amount” shall mean $195,000,000.
The “Realty Income
Termination Fee” shall be an amount equal to the lesser of (i) the Realty Income Base Amount (as defined below) and (ii) the
maximum amount, if any, that can be paid to VEREIT without causing it to fail to meet the REIT Requirements for such year determined as
if (a) the payment of such amount did not constitute Qualifying Income, and (b) VEREIT has 0.5% of its gross income from unknown sources
during such year which was not Qualifying Income (in addition to any known or anticipated income of VEREIT which was not Qualifying Income),
in each case as determined by independent accountants to VEREIT. Notwithstanding the foregoing, in the event VEREIT receives Tax Guidance
providing that VEREIT’s receipt of the Realty Income Base Amount would either constitute Qualifying Income or would be excluded
from gross income within the meaning of the REIT Requirements, the Realty Income Termination Fee shall be an amount equal to the Realty
Income Base Amount and Realty Income shall, upon receiving notice that VEREIT has received the Tax Guidance, pay to VEREIT the unpaid
Realty Income Base Amount within five (5) Business Days. In the event that VEREIT is not able to receive the full Realty Income Base Amount
due to the above limitations, subject to VEREIT’s prior delivery to Realty Income of the VEREIT Tax Accrual Opinion with respect
to such escrow, Realty Income shall place the unpaid amount in escrow (the “Realty Income Termination Fee Escrow”)
by wire transfer within three (3) days of the date when the Realty Income Termination Fee would otherwise be due but for the above limitations
and shall not release any portion thereof to VEREIT unless and until VEREIT receives either one or a combination of the following once
or more often: (i) a letter from VEREIT’s independent accountants indicating the maximum amount that can be paid at that time to
VEREIT without causing VEREIT to fail to meet the REIT Requirements (calculated as described above) or (ii) the Tax Guidance, in either
of which events Realty Income shall pay to VEREIT the lesser of the unpaid Realty Income Base Amount or the maximum amount stated in the
letter referred to in (i) above within five (5) Business Days after Realty Income has been notified thereof. The obligation of Realty
Income to pay any unpaid portion of the Realty Income Termination Fee shall terminate on the December 31 following the date which
is three (3) years from the date the Realty Income Termination Fee first becomes payable under Section 7.2(c). Amounts remaining
in escrow after the obligation of Realty Income to pay the Realty Income Termination Fee terminates shall be released to Realty Income.
The “Realty Income Base Amount” shall mean $838,000,000. The “VEREIT Tax Accrual Opinion” means
an opinion of nationally recognized federal income tax counsel experienced in REIT tax matters based on then applicable law and complying
with the requirements of Treasury Regulations Section 1.856-7(c)(2) to the effect that the deposit into the Realty Income Termination
Fees Escrow Account or the VEREIT Expense Reimbursement Escrow, as applicable, should not cause the Company to recognize income for U.S.
federal income tax purposes and for any Company taxable year in excess of the amount released from such escrow to VEREIT in such taxable
year.
(g)
The “Realty Income Expense Reimbursement” shall be an amount equal to the lesser of (i) the Realty Income Expense
Reimbursement Base Amount (as defined below) and (ii) the maximum amount, if any, that can be paid to Realty Income without causing it
to fail to meet the REIT Requirements for such year determined as if (a) the payment of such amount did not constitute Qualifying Income,
and (b) Realty Income has 0.5% of its gross income from unknown sources during such year which was not Qualifying Income (in addition
to any known or anticipated income of Realty Income which was not Qualifying Income), in each case as determined by independent accountants
to Realty Income. Notwithstanding the foregoing, in the event Realty Income receives Tax Guidance providing that Realty Income’s
receipt of the Realty Income Expense Reimbursement Base Amount should either constitute Qualifying Income or should be excluded from gross
income within the meaning of the REIT Requirements, the Realty Income Expense Reimbursement shall be an amount equal to the Realty Income
Expense Reimbursement Base Amount and VEREIT shall, upon receiving notice that Realty Income has received the Tax Guidance, pay to Realty
Income the unpaid Realty Income Expense Reimbursement Base Amount within five (5) Business Days. In the event that Realty Income is not
able to receive the full Realty Income Expense Reimbursement Base Amount due to the above limitations, VEREIT shall place the unpaid amount
in escrow by wire transfer within three (3) days of the date when the Realty Income Expense Reimbursement would otherwise be due but for
the above limitations and shall not release any portion thereof to Realty Income unless and until Realty Income receives either one or
a combination of the following once or more often: (i) a letter from Realty Income’s independent accountants indicating the maximum
amount that can be paid at that time to Realty Income without causing Realty Income to fail to meet the REIT Requirements (calculated
as described above) or (ii) the Tax Guidance, in either of which events VEREIT shall pay to Realty Income the lesser of the unpaid Realty
Income Expense Reimbursement Base Amount or the maximum amount stated in the letter referred to in (i) above within five (5) Business
Days after VEREIT has been notified thereof. The obligation of VEREIT to pay any unpaid portion of the Realty Income Expense Reimbursement
shall terminate on the December 31 following the date which is three (3) years from the date the Realty Income Expense Reimbursement
first becomes payable under Section 7.2(b). Amounts remaining in escrow after the obligation of VEREIT to pay the Realty Income
Expense Reimbursement terminates shall be released to VEREIT. The “Realty Income Expense Reimbursement Base Amount”
shall mean $25,000,000.
(h)
The “VEREIT Expense Reimbursement” shall be an amount equal to the lesser of (i) the VEREIT Expense Reimbursement
Base Amount (as defined below) and (ii) the maximum amount, if any, that can be paid to VEREIT without causing it to fail to meet the
REIT Requirements for such year determined as if (a) the payment of such amount did not constitute Qualifying Income, and (b) VEREIT has
0.5% of its gross income of income from unknown sources during such year which was not Qualifying Income (in addition to any known or
anticipated income of VEREIT which was not Qualifying Income), in each case as determined by independent accountants to VEREIT. Notwithstanding
the foregoing, in the event VEREIT receives Tax Guidance providing that VEREIT’s receipt of the VEREIT Expense Reimbursement Base
Amount would either constitute Qualifying Income or would be excluded from gross income within the meaning of the REIT Requirements, the
VEREIT Expense Reimbursement shall be an amount equal to the VEREIT Expense Reimbursement Base Amount and Realty Income shall, upon receiving
notice that VEREIT has received the Tax Guidance, pay to VEREIT the unpaid VEREIT Expense Reimbursement Base Amount within five (5) Business
Days. In the event that VEREIT is not able to receive the full VEREIT Expense Reimbursement Base Amount due to the above limitations,
subject to VEREIT’s prior delivery of the VEREIT Tax Accrual Opinion with respect to such escrow, Realty Income shall place the
unpaid amount in escrow (the “VEREIT Expense Reimbursement Escrow”) by wire transfer within three (3) days of the VEREIT
Expense Reimbursement first becomes payable under Section 7.2(c) and shall not release any portion thereof to VEREIT unless and
until VEREIT receives either one or a combination of the following once or more often: (i) a letter from VEREIT’s independent accountants
indicating the maximum amount that can be paid at that time to VEREIT without causing VEREIT to fail to meet the REIT Requirements (calculated
as described above) or (ii) the Tax Guidance, in either of which events Realty Income shall pay to VEREIT the lesser of the unpaid Realty
Income Base Amount or the maximum amount stated in the letter referred to in (i) above within five (5) Business Days after Realty Income
has been notified thereof. The obligation of Realty Income to pay any unpaid portion of the VEREIT Expense Reimbursement shall terminate
on the December 31 following the date which is three (3) years from the date the VEREIT Expense Reimbursement first becomes payable
under Section 7.2(c). Amounts remaining in escrow after the obligation of Realty Income to pay the VEREIT Expense Reimbursement
terminates shall be released to Realty Income. The “VEREIT Expense Reimbursement Base Amount” shall mean $25,000,000.
The limitation, escrow and release provisions in this paragraph shall also apply to any indemnities payable to VEREIT under Section
5.15(d)(iv) (i.e., applying this paragraph to such indemnities as if the “VEREIT Expense Reimbursement Base Amount” was
the amount of such indemnities before the application of this sentence).
Article
VIII
GENERAL PROVISIONS
Section
8.1
Non-Survival of Representations, Warranties and Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach
of such representations, warranties, covenants, and agreements, shall survive the Effective Time, except for those covenants and agreements
contained herein and therein that by their terms apply or are to be performed in whole or in part after the Effective Time or which otherwise
by their terms survive the termination of this Agreement or the Effective Time.
Section
8.2
Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (a) upon personal
delivery to the party to be notified, (b) when received when sent by email to the party to be notified; provided, however,
that if the sending party receives a “bounce back” or similar message indicating non-delivery is received with respect thereto,
notice given by email shall not be effective unless either (i) a duplicate copy of such email notice is promptly given by one of the other
methods described in this Section 8.2 or (ii) the receiving party delivers a written confirmation of receipt for such notice either
by email or any other method described in this Section 8.2 or (c) when delivered by a courier (with confirmation of delivery);
in each case to the party to be notified at the following address:
if to VEREIT or VEREIT OP, to:
VEREIT
2325 E. Camelback Road, 9th Floor
Phoenix, AZ 85016
Attention:
|
Lauren Goldberg
|
E-mail:
|
LGoldberg@VEREIT.com
|
with a copies (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
|
51 West 52nd Street
|
New York, New York 10019
|
Attention:
|
Adam O. Emmerich
|
|
Karessa L. Cain
|
Fax No.:
|
(212) 403-2000
|
E-mail:
|
AOEmmerich@wlrk.com
|
|
KLCain@wlrk.com
|
if to Realty Income, Merger Sub 1 or Merger Sub 2, to:
Realty Income Corporation
11995 El Camino Real
San Diego, California, 92130
Attention:
|
General Counsel
|
Email:
|
mbushore@realtyincome.com
|
with copies (which shall not constitute notice) to:
Latham & Watkins LLP
650 Town Center Drive, 20th Floor
Costa Mesa, California 92626
Attention:
|
Charles Ruck
|
|
William Cernius
|
|
Darren Guttenberg
|
Fax No.:
|
(714) 755-8290
|
E-mail:
|
charles.ruck@lw.com
|
|
william.cernius@lw.com
|
|
darren.guttenberg@lw.com
|
Section
8.3
Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall
be to a Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever
the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to
be followed by the words “without limitation.” The phrase “made available” in this Agreement shall mean that the
information referred to has been made available if requested by the party to whom such information is to be made available. The phrases
“herein,” “hereof,” “hereunder” and words of similar import shall be deemed to refer to this Agreement
as a whole, including the Exhibits and Schedules hereto, and not to any particular provision of this Agreement. When used herein,
the word “extent” and the phrase “to the extent” shall mean the degree to which a subject or other thing extends,
and such word or phrase shall not simply mean “if.” References to “$” and “dollars” are to the currency
of the United States of America. Any dollar or percentage thresholds set forth herein shall not be used as a benchmark for the determination
of what is or is not “material,” a “Realty Income Material Adverse Effect” or a “VEREIT Material Adverse
Effect” under this Agreement. “Writing”, “written” and comparable terms refer to printing, typing and other
means of reproducing words (including electronic media) in a visible form. Any pronoun shall include the corresponding masculine, feminine
and neuter forms. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as
if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement. The table of contents and headings set forth in this Agreement are for convenience of reference
purposes only and shall not affect or be deemed to affect in any way the meaning or interpretation of this Agreement or any term or provision
hereof.
Section
8.4
Counterparts. This Agreement may be executed in counterparts, each of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each of the parties and delivered to each other party (including
by means of electronic delivery), it being understood that the parties need not sign the same counterpart. Signatures to this Agreement
transmitted by facsimile transmission, by electronic mail in “portable document format” (“.pdf”) form, or by any
other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as
physical delivery of the paper document bearing the original signature.
Section
8.5
Entire Agreement; No Third-Party Beneficiaries. This Agreement (including the documents and the instruments referred
to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof, other than the Confidentiality Agreement, which shall survive the execution and delivery
of this Agreement. Except (a) for, after the Effective Time, the rights of the holders of VEREIT Common Stock to receive the shares of
Realty Income Common Stock and cash in lieu of fractional shares as provided in Article I and Article II, plus any dividends
or other distributions as provided in Section 2.3(c) or Section 2.3(i), and (b) as provided in Section 5.9(e) which,
in each case, shall inure to the benefit of the respective Persons benefiting therefrom who are expressly intended to be third-party beneficiaries
thereof and who may enforce the covenants contained therein, nothing in this Agreement is intended to confer upon any person other than
the parties hereto or their respective heirs, successors, executors, administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
Section
8.6
Governing Law. This Agreement shall be governed and construed in accordance with the Laws of the State of Maryland
(without giving effect to choice of law principles thereof).
Section
8.7
Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability and, unless the effect of such invalidity
or unenforceability would prevent the parties from realizing the major portion of the economic benefits of the Merger that they currently
anticipate obtaining therefrom, shall not render invalid or unenforceable the remaining terms and provisions of this Agreement or affect
the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
Section
8.8
Assignment. Neither this Agreement nor any of the rights, interests or obligations of the parties hereunder shall
be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties,
and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and permitted assigns.
Section
8.9
Submission to Jurisdiction. For the purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby, each party hereto irrevocably submits to the jurisdiction of the Circuit
Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the U.S. District Court for the District of Maryland,
Northern Division (the “Maryland Courts”). In the case of any suit, action or other proceeding in the Circuit
Court for Baltimore City, Maryland, each of the parties irrevocably agrees to request
and/or consent to the assignment of any such suit, action or other proceeding to such court’s Business and Technology Case Management
Program. Each party hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in the Maryland Courts, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. Each party hereto further irrevocably consents to the service of process out of any of the aforementioned
courts in any such suit, action or other proceeding by the mailing of copies thereof by registered mail to such party at its address set
forth in this Agreement, such service of process to be effective upon acknowledgment of receipt of such registered mail; provided
that nothing in this Section shall affect the right of any party to serve legal process in any other manner permitted by Law. The consent
to jurisdiction set forth in this Section shall not constitute a general consent to service of process in the State of Maryland and shall
have no effect for any purpose except as provided in this Section. The parties hereto agree that a final judgment in any such suit, action
or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by
Law.
Section
8.10
Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms on a timely basis or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court identified in Section 8.9, this being in addition to any other remedy to
which they are entitled at law or in equity. The parties further agree not to assert that a remedy of specific enforcement is unenforceable,
invalid, contrary to applicable Law or inequitable for any reason, not to assert that a remedy of monetary damages would provide an adequate
remedy for any such breach.
Section
8.11
WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE SHARES OR SUBJECT MATTER HEREOF
OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE),
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO
AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
Section
8.12
Amendment. At any time prior to the Partnership Merger Effective Time, this Agreement may be amended by the parties
hereto, by an instrument in writing signed on behalf of each of the parties; provided, that after the VEREIT Required Stockholders
Vote or the Realty Income Required Stockholders Vote is obtained, no amendment shall be made which by Law requires further approval by
the stockholders of Realty Income or VEREIT without such further approval by such stockholders.
Section
8.13
Extension; Waiver. At any time prior to the Effective Time, the parties hereto, by action taken or authorized by
the Board of Directors of VEREIT or the Board of Directors of Realty Income, as applicable, may, to the extent legally allowed, (a) extend
the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto, and (c) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party. The failure of a party to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights. No single or partial exercise of any right, remedy, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. Any waiver shall be effective only
in the specific instance and for the specific purpose for which given and shall not constitute a waiver to any subsequent or other exercise
of any right, remedy, power or privilege hereunder.
Article
IX
DEFINITIONS
“Benefit Plan”
means, with respect to any entity, any compensation or employee benefit plan, program, policy, agreement or other arrangement, including
any “employee benefit plan” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), including
any bonus, cash- or equity-based incentive, deferred compensation, stock purchase, health, medical, dental, disability, accident, life
insurance, or vacation, paid time off, perquisite, fringe benefit, severance, change of control, retention, employment, separation, retirement,
pension, or saving, plan, program, policy, agreement or arrangement.
“Business Day”
means any day other than a Saturday, Sunday or other day on which the banks in New York are authorized by Law or executive order to be
closed.
“Contract”
means any contract, agreement, lease, license, note, bond, mortgage, indenture, commitment or other instrument or obligation.
“Controlled Group Liability”
means any and all liabilities (i) under Title IV of ERISA, (ii) under Section 302 of ERISA, (iii) under Sections 412 and 4971
of the Code, or (iv) as a result of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA
and Section 4980B of the Code.
“Covid-19”
means SARS-CoV-2 or Covid-19, and any variants or evolutions thereof.
“Covid-19 Measures”
means any applicable quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut
down, closure or sequester or any other applicable law, Order, directive, guideline or recommendation by a Governmental Entity, public
health authority or industry group, including the Coronavirus Aid, Relief, and Economic Security Act (CARES), in each case, in connection
with or in response to Covid-19.
“Environmental Laws”
means any applicable Law relating (a) to releases, discharges, emissions or disposals to air, water, land or groundwater of Hazardous
Materials; (b) to the use, handling or disposal of polychlorinated biphenyls, asbestos or urea formaldehyde or any other Hazardous Material;
(c) to the treatment, storage, disposal or management of Hazardous Materials; (d) to exposure to Hazardous Materials or any other toxic,
hazardous or other controlled, prohibited or regulated substances; (e) to the transportation, release or any other use of Hazardous Materials;
or (f) to the pollution, protection or regulation of the environmental or natural resources, including the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq. (“CERCLA”), the Resource Conservation
and Recovery Act, 42 U.S.C. 6901, et seq. (“RCRA”), the Toxic Substances Control Act, 15 U.S.C. 2601, et
seq., those portions of the Occupational, Safety and Health Act, 29 U.S.C. 651, et seq. relating to Hazardous Materials exposure
and compliance, the Clean Air Act, 42 U.S.C. 7401, et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251, et seq.,
the Safe Drinking Water Act, 42 U.S.C. 300f, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1802 et seq.
(“HMTA”) and the Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001, et seq. (“EPCRA”),
and other comparable Laws and all rules and regulations promulgated pursuant thereto or published thereunder.
“ERISA” means
the Employee Retirement Income Security Act of 1974, as amended.
“GAAP” means
United States generally accepted accounting principles.
“Hazardous Materials”
means each and every element, compound, chemical mixture, contaminant, pollutant, material, waste or other substance which is defined,
regulated or identified under applicable Environmental Laws because of its hazardous, toxic, dangerous or deleterious properties. Without
limiting the generality of the foregoing, “Hazardous Materials” include “hazardous substances” as defined in CERCLA,
“extremely hazardous substances” as defined in EPCRA, “hazardous waste” as defined in RCRA, “hazardous materials”
as defined in HMTA, crude oil, petroleum products or any fraction thereof, radioactive materials, including source, byproduct or special
nuclear materials, asbestos or asbestos-containing materials, chlorinated fluorocarbons, polychlorinated biphenyls, per- and polyfluoroalkyl
substances and radon.
“Indebtedness”
means, with respect to any Person, without duplication, as of the date of determination (i) all obligations of such Person for borrowed
money, including accrued and unpaid interest, and any prepayment fees or penalties, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person issued or assumed as the deferred purchase price of property
(including any potential future earnout, purchase price adjustment, release of “holdback” or similar payment, but excluding
obligations of such Person incurred in the ordinary course of business consistent with past practice), (iv) all lease obligations of such
Person capitalized on the books and records of such Person, (v) all Indebtedness of others secured by a Lien on property or assets owned
or acquired by such Person, whether or not the Indebtedness secured thereby have been assumed, (vi) all obligations of such Person under
interest rate, currency or commodity derivatives or hedging transactions or similar arrangement (valued at the termination value thereof),
(vii) all letters of credit or performance bonds issued for the account of such Person, to the extent drawn upon, and (viii) all guarantees
and keepwell arrangements of such Person of any Indebtedness of any other Person other than a wholly owned Subsidiary of such Person.
“Initial Period” means the period
commencing on the date of this Agreement and ending at 11:59 p.m. (New York time) on May 29, 2021.
“IRS” means
the U.S. Internal Revenue Service or any successor agency.
“Law” means
any federal, state, local or foreign law (including common law), statute, ordinance, rule, regulation, judgment, Order, injunction, decree
or agency requirement of any Governmental Entity.
“Lien” means
any with respect to any asset (including any security), any mortgage, deed of trust, claim, condition, covenant, lien, pledge, charge,
security interest, preferential arrangement, option or other third-party right (including right of first refusal or first offer), restriction,
right of way, easement, or title defect or encumbrance of any kind in respect of such asset, including any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership.
“Material VEREIT Leases” means
the VEREIT Leases listed on Section 9.1(a) of the VEREIT Disclosure Letter.
“OfficeCo”
shall have the meaning set forth in Exhibit A to this Agreement.
“OfficeCo Debt Financing”
shall have the meaning set forth in Exhibit A to this Agreement.
“OfficeCo Distribution”
shall have the meaning set forth in Exhibit A to this Agreement.
“OfficeCo Distribution
Prospectus” means a prospectus relating to the securities of OfficeCo to be issued in the OfficeCo Distribution to the Realty
Income stockholders after the Closing, and any amendments or supplements thereto.
“Order” means
any order, writ, decree, judgment, award, injunction, ruling, settlement or stipulation issued, promulgated, made, rendered or entered
into by or with any Governmental Entity or arbitral body or tribunal with competent jurisdiction (in each case, whether temporary, preliminary
or permanent).
“Person”
means an individual, a corporation, a partnership, a limited liability company, an association, a trust, or any other entity, group (as
such term is used in Section 13 of the Exchange Act) or organization, including a Governmental Entity, and any permitted successors
and assigns of such Person.
“Qualified Bidder”
means a Person that has made during the Initial Period an unsolicited bona fide written Acquisition Proposal (provided that
the Acquisition Proposal by such Person did not result from a breach of Section 5.4(a) or Section 5.4(c)) that the Board
of Directors of VEREIT during the Initial Period, has concluded in good faith (after consultation with its outside legal counsel and its
financial advisors) either constitutes or is reasonably likely to result in a Superior Proposal.
“Qualified REIT Subsidiary”
means a “qualified REIT subsidiary” within the meaning of Section 856(i)(2) of the Code.
“Realty Income Credit
Agreement Amendment” shall have the meaning set forth in Section 5.14 of the Realty Income Disclosure Letter.
“Realty Income DSU
Award” means an award of deferred stock units that corresponds to a number of shares of Realty Income Common Stock.
“Realty Income Lease”
means each lease, sublease, sub-sublease, license and other agreement (including any amendments, notices, deferral agreements or other
modifications thereto) under which Realty Income or any of its Subsidiaries leases, subleases, licenses, uses or occupies (in each case
whether as landlord, tenant, sublandlord, subtenant or by other occupancy arrangement), or has the right to use or occupy, now or in the
future, any real property.
“Realty Income Material
Adverse Effect” means an event, development, change or occurrence that is materially adverse to the financial condition, business
or results of operations of Realty Income and its Subsidiaries, taken as a whole; provided, however, that a Realty Income
Material Adverse Effect shall not include any event, development, change or occurrence to the extent arising out of, relating to or resulting
from:
(a) changes in general business,
economic or market conditions in the United States or elsewhere in the world (including changes generally in prevailing interest rates,
credit availability and liquidity, currency exchange rates and price levels or trading volumes in the United States or foreign securities
or credit markets);
(b) changes generally affecting
the industry or industries in which Realty Income or any of its Subsidiaries operates or any of the markets or geographical areas in which
Realty Income or any of its Subsidiaries operate;
(c) any change or proposed
change after the date hereof in Law or the interpretation thereof or GAAP or the interpretation thereof;
(d) changes in political or
social conditions, including civil unrest, protects, public demonstrations, acts of war, armed hostility or terrorism (including cyber-terrorism
or cyber-attacks), riots, demonstrations, public disorders, civil disobedience or any escalation or any worsening thereof;
(e) earthquakes, hurricanes,
tornados or other acts of God, natural disasters or calamities;
(f) any epidemics, pandemics
or disease outbreaks (including Covid-19) or worsening thereof and any Covid-19 Measures;
(g) the negotiation, execution,
announcement or existence of this Agreement or the consummation of the transactions contemplated hereby (including the Mergers, the Separation
and the OfficeCo Distribution), including the impact thereof on relationships, contractual or otherwise, of Realty Income or any of its
Subsidiaries with tenants, customers, suppliers, lenders, partners, employees or regulators (provided, that this clause (g) shall not
apply to any inaccuracy in the representations and warranties set forth in Section 3.2(c)(ii)(B));
(h) any failure by Realty
Income to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period
(it being understood and agreed that the facts and circumstances giving rise to such failure that are not otherwise excluded from the
definition of a Realty Income Material Adverse Effect may be taken into account in determining whether there has been a Realty Income
Material Adverse Effect);
(i) any change in the price
or trading volume of shares of Realty Income Common Stock (it being understood and agreed that the facts and circumstances giving rise
to such change that are not otherwise excluded from the definition of a Realty Income Material Adverse Effect may be taken into account
in determining whether there has been a Realty Income Material Adverse Effect);
(j) any reduction in the credit
rating of Realty Income or its Subsidiaries (it being understood and agreed that the facts and circumstances giving rise to such change
that are not otherwise excluded from the definition of a Realty Income Material Adverse Effect may be taken into account in determining
whether there has been a Realty Income Material Adverse Effect);
(k) compliance with the
terms of, or the taking of any action required by, this Agreement (including the Mergers, the Separation and the OfficeCo
Distribution) (other than any action or failure to take any action pursuant to Section 4.2, unless VEREIT has unreasonably
withheld, conditioned or delayed its written consent to any such action or failure to take action);
provided, that (x) if
any event, development, change or occurrence described in any of clauses (a), (b), (c), (d), (e) or (f) has had a disproportionate adverse
effect on Realty Income and its Subsidiaries, taken as a whole, relative to other similarly situated participants in the commercial real
estate REIT industry, then the incremental disproportionate adverse impact (and only the incremental disproportionate adverse impact)
of such event, development, change or may be taken into account for purposes of determining whether a Realty Income Material Adverse
Effect has occurred, and (y) if any event, development, change or occurrence has caused or is reasonably likely to cause Realty Income
to fail to qualify as a REIT for federal Tax purposes, such event, development, change or occurrence shall be considered a Realty Income
Material Adverse Effect, unless such failure has been, or is able to be, cured on commercially reasonable terms under the applicable
provisions of the Code.
“Realty Income Merger
Counsel” means Latham & Watkins LLP.
“Realty Income PPN
Amendment” shall have the meaning set forth in Section 5.14 of the Realty Income Disclosure Letter.
“Realty Income Performance
Share Award” means an award of performance shares that correspond to a number of shares of Realty Income Common Stock.
“Realty Income REIT
Counsel” means Latham & Watkins LLP.
“Realty Income Restricted
Stock Award” means an award of restricted shares of Realty Income Common Stock.
“Realty Income RSU
Awards” means an award of restricted stock units that corresponds to a number of shares of Realty Income Common Stock.
“Realty Income Stock
Option” means an option to purchase a number of shares of Realty Income Common Stock.
“REIT” means
a real estate investment trust within the meaning of Sections 856 through 860 of the Code.
“Representatives”
means, with respect to any Person, such Person’s officers, employees, agents, or representatives (including investment bankers,
financial or other advisors or consultants, auditors, accountants, attorneys, brokers, finders or other agents).
“SEC” means
the U.S. Securities and Exchange Commission.
“Separation”
shall have the meaning set forth in Exhibit A to this Agreement.
“Significant Subsidiary”
means any Subsidiary of VEREIT or Realty Income, as the case may be, that would qualify as a “Significant Subsidiary” of such
party within the meaning of Regulation S-X of the SEC (and, for the avoidance of doubt, irrespective of whether or not such Subsidiary
has been included in Exhibit 21 to VEREIT’s or Realty Income’s respective Annual Reports on Form 10-K).
“Subsidiary”
means, with respect to any Person, any corporation, partnership, limited liability company, joint venture, real estate investment trust,
or other organization, whether incorporated or unincorporated, or other legal entity of which (i) such Person directly or indirectly owns
or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions; (ii) such Person holds a majority of the equity economic interest
and (iii) solely for the purposes of Section 3.1(f) (Compliance with Applicable Laws), Section 3.1(g) (Legal Proceedings), 3.1(j) (Benefit
Plans), 3.1(k) (Employment and Labor Matters), 3.1(q) (Environmental Matters), 3.1(r) (Intellectual Property), and the covenants contained
in this Agreement, such Person is a general partner, manager or managing member, provided, that, notwithstanding anything to the contrary
herein, a Person shall not be deemed to breach any representation, covenant or agreement in this Agreement as a result of any action or
inaction such Person takes or fails to take as a result of any binding obligation such Person has to any joint venture partner.
“Tax” or
“Taxes” means all federal, state, local, foreign and other taxes, levies, fees, imposts, assessments, impositions or
other similar government charges in the nature of a tax, including income, estimated income, business, occupation, franchise, real property,
payroll, personal property, sales, transfer, stamp, use, employment, commercial rent, withholding (including dividend withholding and
withholding required pursuant to Sections 1445 and 1446 of the Code), occupancy, premium, gross receipts, profits, windfall profits,
deemed profits, license, lease, severance, capital, production, corporation, ad valorem, excise, duty or other taxes, including interest,
penalties and additions (to the extent applicable) thereto, whether disputed or not.
“Tax Protection Agreement”
means any agreement pursuant to which (i) any liability to direct or indirect holders of units in a partnership that is a Subsidiary of
VEREIT or Realty Income (a “Relevant Partnership”) or any interests in any Subsidiary of any Relevant Partnership (any
such units or interests, “Relevant Partnership Units”) relating to Taxes may arise, whether or not as a result of the
consummation of the transactions contemplated by this Agreement; (ii) in connection with the deferral of income Taxes of a direct or indirect
holder of Relevant Partnership Units, a party to such agreement has agreed to (a) maintain a minimum level of debt or continue a particular
debt, (b) retain or not dispose of assets for a period of time that has not since expired, (c) make or refrain from making Tax elections,
(d) operate (or refrain from operating) in a particular manner, (e) use (or refrain from using) a specified method of taking into account
book-tax disparities under Section 704(c) of the Code with respect to one or more assets of such party or any of its Subsidiaries,
(f) use (or refrain from using) a particular method for allocating one or more liabilities of such party or any of its Subsidiaries under
Section 752 of the Code and/or (g) only dispose of assets in a particular manner; and/or (iii) any persons, whether or not partners
in any Relevant Partnership, have been or are required to be given the opportunity to guaranty or assume debt of such Relevant Partnership
or any Subsidiary of such Relevant Partnership or are so guarantying or have so assumed such debt.
“Tax Return”
shall mean any report, return, document, declaration or other information or filing filed or required to be supplied to any taxing authority
or jurisdiction (foreign or domestic) with respect to Taxes, including any schedule or attachment thereto and any amendment thereof, any
information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests
for the extension of time in which to file any such report, return, document, declaration or other information.
“Taxable REIT Subsidiary”
means a “taxable REIT subsidiary” within the meaning of Section 856(l) of the Code.
“Tenant Improvements”
means the construction or improvement of long-term real property (not including furniture, fixtures, equipment or inventory) for use in
a tenant’s trade or business at the applicable property.
“to Realty Income’s
knowledge” or “to the knowledge of Realty Income” means the actual knowledge of any of the individuals listed
in Section 9.1 of the Realty Income Disclosure Letter.
“to VEREIT’s
knowledge” or “to the knowledge of VEREIT” means the actual knowledge of any of the individuals listed in
Section 9.1(b) of the VEREIT Disclosure Letter.
“VEREIT Credit Agreement”
means the Credit Agreement, dated as of May 23, 2018, by and among VEREIT OP, as borrower, VEREIT, as parent, Wells Fargo Bank, National
Association, as administrative agent, and the other parties party thereto (as amended, supplemented or otherwise modified from time to
time).
“VEREIT DSU Award”
means an award of deferred stock units that corresponds to a number of shares of VEREIT Common Stock granted under the VEREIT Equity Plans.
“VEREIT Equity Plans”
means (i) the VEREIT Equity Plan, as amended, (ii) the VEREIT Non-Executive Director Stock Plan, and (iii) the VEREIT 2021 Equity Incentive
Plan.
“VEREIT Lease”
means each lease, sublease, sub-sublease, license and other agreement (including any amendments, notices, deferral agreements or other
modifications thereto) under which VEREIT or any of its Subsidiaries leases, subleases, licenses, uses or occupies (in each case whether
as landlord, tenant, sublandlord, subtenant or by other occupancy arrangement), or has the right to use or occupy, now or in the future,
any real property.
“VEREIT Material Adverse
Effect” means an event, development, change or occurrence that is materially adverse to the financial condition, business or
results of operations of VEREIT and its Subsidiaries, taken as a whole; provided, however, that a VEREIT Material Adverse
Effect shall not include any event, development, change or occurrence to the extent arising out of, relating to or resulting from:
(a) changes in general business,
economic or market conditions in the United States or elsewhere in the world (including changes generally in prevailing interest rates,
credit availability and liquidity, currency exchange rates and price levels or trading volumes in the United States or foreign securities
or credit markets);
(b) changes generally affecting
the industry or industries in which VEREIT or any of its Subsidiaries operates or any of the markets or geographical areas in which VEREIT
or any of its Subsidiaries operate;
(c) any change or proposed
change after the date hereof in Law or the interpretation thereof or GAAP or the interpretation thereof;
(d) changes in political or
social conditions, including civil unrest, protects, public demonstrations, acts of war, armed hostility or terrorism (including cyber-terrorism
or cyber-attacks), riots, demonstrations, public disorders, civil disobedience or any escalation or any worsening thereof;
(e) earthquakes, hurricanes,
tornados or other acts of God, natural disasters or calamities;
(f) any epidemics, pandemics
or disease outbreaks (including Covid-19) or worsening thereof and any Covid-19 Measures;
(g) the negotiation, execution,
announcement or existence of this Agreement or the consummation of the transactions contemplated hereby (including the Mergers, the Separation
and the OfficeCo Distribution), including the impact thereof on relationships, contractual or otherwise, of Realty Income or any of its
Subsidiaries with tenants, customers, suppliers, lenders, partners, employees or regulators (provided, that this clause (g) shall not
apply to any inaccuracy in the representations and warranties set forth in Section 3.1(c)(ii)(B));
(h) any failure by VEREIT
to meet any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period (it being
understood and agreed that the facts and circumstances giving rise to such failure that are not otherwise excluded from the definition
of a VEREIT Material Adverse Effect may be taken into account in determining whether there has been a VEREIT Material Adverse Effect);
(i) any change in the price
or trading volume of shares of VEREIT Common Stock (it being understood and agreed that the facts and circumstances giving rise to such
change that are not otherwise excluded from the definition of a VEREIT Material Adverse Effect may be taken into account in determining
whether there has been a VEREIT Material Adverse Effect);
(j) any reduction in the credit
rating of VEREIT or its Subsidiaries (it being understood and agreed that the facts and circumstances giving rise to such change that
are not otherwise excluded from the definition of a VEREIT Material Adverse Effect may be taken into account in determining whether there
has been a VEREIT Material Adverse Effect); and
(k) compliance with the terms
of, or the taking of any action required by, this Agreement (including the Mergers, the Separation and the OfficeCo Distribution) (other
than any action or failure to take any action pursuant to Section 4.1, unless Realty Income has unreasonably withheld, conditioned
or delayed its written consent to any such action or failure to take action);
provided, that (x) if
any event, development, change or occurrence described in any of clauses (a), (b), (c), (d), (e) or (f) has had a disproportionate adverse
effect on VEREIT and its Subsidiaries, taken as a whole, relative to other similarly situated participants in the commercial real estate
REIT industry, then the incremental disproportionate adverse impact (and only the incremental disproportionate adverse impact) of such
event, development, change or may be taken into account for purposes of determining whether a VEREIT Material Adverse Effect has occurred,
and (y) if any event, development, change or occurrence has caused or is reasonably likely to cause VEREIT to fail to qualify as a REIT
for federal Tax purposes, such event, development, change or occurrence shall be considered a VEREIT Material Adverse Effect, unless such
failure has been, or is able to be, cured on commercially reasonable terms under the applicable provisions of the Code.
“VEREIT Merger Counsel”
means Wachtell, Lipton, Rosen & Katz.
“VEREIT Notes Indenture”
means that certain Indenture, dated as of February 6, 2014, by and among ARC Properties Operating Partnership, L.P., Clark Acquisition,
LLC, the guarantors party thereto and U.S. Bank National Association, as trustee (as amended, supplemented or otherwise modified from
time to time, including, without limitation, by that certain First Supplemental Indenture, dated as of February 9, 2015, by and among
ARC Properties Operating Partnership, L.P., American Realty Capital Properties, Inc. and U.S. Bank National Association).
“VEREIT Partnership
Agreement” means the Third Amended and Restated Agreement of Limited Partnership of VEREIT OP, dated as of January 3, 2014,
as amended from time to time.
“VEREIT Partnership
Common Unit” has the meaning assigned to the term “OP Unit” in the VEREIT Partnership Agreement.
“VEREIT Partnership
Preferred Unit” has the meaning assigned to the term “Preferred Units” in the VEREIT Partnership Agreement.
“VEREIT Partnership
Series F Preferred Unit” has the meaning assigned to the term “Series F Preferred Unit” in the VEREIT Partnership
Agreement.
“VEREIT Partnership
Unit” has the meaning assigned to the term “Partnership Unit” in the VEREIT Partnership Agreement.
“VEREIT REIT Counsel”
means Goodwin Procter LLP.
“VEREIT RSU Award”
means an award of restricted stock units that corresponds to a number of shares of VEREIT Common Stock granted under the VEREIT Equity
Plans.
“VEREIT Series F Preferred
Stock” means the 6.70% Series F Cumulative Redeemable Preferred Stock, par value $0.01 per share, of VEREIT.
“VEREIT Stock Option”
means each option to purchase shares of VEREIT Common Stock granted under the VEREIT Equity Plans.
“Willful Breach”
means a deliberate and willful act or a deliberate and willful failure to act, in each case, which action or failure to act (as applicable)
occurs with the actual knowledge that such act or failure to act constitutes or would result in a material breach of this Agreement, regardless
of whether breaching was the intent and object of the act or the failure to act, and which in fact does cause a material breach of this
Agreement.
“Window Period End
Time” means, with respect to a Qualified Bidder, the later of (a) 11:59 p.m. (New York time) on June 13, 2021 and (b) 11:59
p.m. (New York time) on the first (1st) Business Day after the end of any Notice Period (including any extensions thereof pursuant to
Section 5.4(b)(iv)) with respect to a Superior Proposal by such Qualified Bidder for which such Notice Period commenced on or prior
to June 13, 2021.
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, VEREIT, VEREIT OP, Realty Income,
Merger Sub 1 and Merger Sub 2 have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of
the date first set forth above.
|
|
VEREIT, INC.
|
|
|
By:
|
/s/ Glenn J. Rafrano
|
|
|
Name: Glenn J. Rafrano
|
|
|
Title: Chief Executive Officer
|
|
|
VEREIT OPERATING PARTNERSHIP, L.P.
|
|
|
By:
|
VEREIT
|
|
|
its sole general partner
|
|
|
By:
|
/s/ Glenn J. Rafrano
|
|
|
Name: Glenn J. Rafrano
|
|
|
Title: Chief Executive Officer
|
|
|
REALTY INCOME CORPORATION
|
|
|
By:
|
/s/ Sumit Roy
|
|
|
Name: Sumit Roy
|
|
|
Title: President, Chief Executive Officer
|
|
|
RAMS MD SUBSIDIARY I, INC.
|
|
|
By:
|
/s/ Sumit Roy
|
|
|
Name: Sumit Roy
|
|
|
Title: President, Chief Executive Officer
|
|
|
RAMS ACQUISITION SUB II, LLC.
|
|
|
By:
|
/s/ Sumit Roy
|
|
|
Name: Sumit Roy
|
|
|
Title: President, Chief Executive Officer
|
[Signature
Page to Agreement and Plan of Merger]
EXHIBIT A
By mutual agreement, Realty Income and VEREIT may further modify the
terms set forth in this Exhibit A to facilitate the objectives contemplated thereby.
Preliminary Matters
|
OfficeCo
|
OfficeCo will be a Maryland corporation that is initially a wholly owned direct or indirect subsidiary of Realty Income, or, subject to the consent of VEREIT (not to be unreasonably withheld, conditioned or delayed), VEREIT.
|
Separation
|
The “Separation” shall mean the separation of OfficeCo from Realty Income following the transfer to OfficeCo of the OfficeCo Business, in accordance with the terms of this Exhibit A and the Agreement.
|
OfficeCo Distribution
|
The Separation will be effectuated by a pro rata distribution (the “OfficeCo Distribution”) of all of the outstanding shares of OfficeCo common stock to the stockholders of Realty Income pursuant to the Form 10. Realty Income may elect to retain, cause an Affiliate to retain, or sell to a third party, a class of non-voting stock of OfficeCo.
|
Actions To Be Taken Prior to The Separation and The OfficeCo Distribution
|
OfficeCo Business
|
Realty Income, VEREIT and their respective Subsidiaries
will cooperate and use reasonable best efforts to transfer, following the consummation of the Merger and prior to the Separation, and
in accordance with the Reorganization Plan, the office real properties of Realty Income and VEREIT (and their respective Subsidiaries)
and certain other identified assets that are listed on Schedule A of the Realty Income Disclosure Schedule (the “OfficeCo
Properties”), as well as the material assets primarily related to those properties and material liabilities to the extent related
to those properties (including any OfficeCo Financing, the “OfficeCo Business”), unless Realty Income, after consultation
with and good faith consideration of any comments from VEREIT, elects to exclude any such OfficeCo Properties, assets or liabilities from
the OfficeCo Business.
Realty Income, after consultation with and good
faith consideration of any comments from VEREIT, may elect to include certain additional properties, assets or liabilities of VEREIT,
Realty Income or its Subsidiaries.
|
Reorganization Plan
|
Realty Income, VEREIT and their respective Subsidiaries will cooperate and Realty Income shall, following consultation with and good faith consideration of any comments from VEREIT, as promptly as practicable, determine a reorganization plan (as may be amended, the “Reorganization Plan”) to effectuate the transfer of the OfficeCo Business to OfficeCo or Subsidiaries thereof.
|
Separation Documents
|
Realty Income, VEREIT and OfficeCo, and/or, as
applicable, their respective Subsidiaries, will enter into a Separation and Distribution Agreement that will govern the rights and responsibilities
of each party with respect to its relationship with the other following the Separation, including with respect to the allocation of assets
and liabilities, cross-indemnification and other separation matters, in each case, on such terms as determined by Realty Income, after
consultation with and good faith consideration of any comments from VEREIT.
In addition, Realty Income, VEREIT and OfficeCo,
or their respective Subsidiaries, will enter into other customary agreements to the extent appropriate to address tax matters, employee
matters, transition services and other terms of the Separation and the OfficeCo Distribution, in each case, on such terms as determined
by Realty Income, after consultation with and good faith consideration of any comments from VEREIT.
|
Financing and Capital Structure
|
Realty Income and its Subsidiaries will use reasonable best efforts to procure, adequate financing for the capitalization of OfficeCo, as determined by Realty Income, after consultation with and good faith consideration of any comments from VEREIT (the “OfficeCo Debt Financing”), including the transfer to or assumption by OfficeCo or a Subsidiary thereof of mortgages related to OfficeCo Properties to be determined by Realty Income. VEREIT and its Subsidiaries will cooperate with respect to the OfficeCo Debt Financing on such terms as set forth in, and subject to, Section 5.14 of the Merger Agreement (other than with respect to the transfer to or assumption by OfficeCo or a Subsidiary thereof of mortgages related to OfficeCo Properties, which cooperation shall be on such terms as set forth in, and subject to, Section 5.15 of the Merger Agreement).
|
Governance and Management
|
OfficeCo’s certificate of incorporation
and bylaws will be amended and restated in connection with consummation of the Separation and the OfficeCo Distribution to contain terms
and provisions customary for a publicly traded REIT.
Prior to consummation of the Separation and the
OfficeCo Distribution, Realty Income will, after consultation with and good faith consideration of any comments from VEREIT, identify
and designate (i) individuals to serve on OfficeCo’s board of directors and committees thereof, and (ii) individuals to serve as
executive officers of OfficeCo.
|
Stock Exchange
|
VEREIT and Realty Income and their respective Subsidiaries will use reasonable best efforts to cause the shares of OfficeCo’s common stock to be listed for trading on a nationally recognized U.S. stock exchange, to be selected by Realty Income.
|
Form 10
|
VEREIT and Realty Income and their respective Subsidiaries will cooperate and use reasonable best efforts to prepare and cause the Form 10 to be filed with and declared effective by the SEC as promptly as practicable.
|
Corporate Approvals
|
VEREIT and Realty Income and their respective Subsidiaries will cooperate and use reasonable best efforts to procure the requisite corporate and other approvals required to consummate the Separation and the OfficeCo Distribution, including the approval and declaration by the Realty Income board of directors of the OfficeCo Distribution.
|
Solvency Opinion
|
Realty Income will engage a reputable solvency
expert to provide a customary solvency and surplus opinion with respect to Realty Income’s declaration and payment of the OfficeCo
Distribution, if deemed necessary by Realty Income.
In furtherance of the foregoing, Realty Income
and VEREIT will cooperate to provide such information, projections and analyses as may be required by the solvency expert in order to
render such opinion.
|
Third Party Consents and Approvals
|
VEREIT and Realty Income and their respective
Subsidiaries will cooperate and use reasonable best efforts to obtain any Consents required with respect to the Separation and the OfficeCo
Distribution in accordance with the Reorganization Plan.
VEREIT and Realty Income will reasonably cooperate
and seek to (i) minimize any fees or costs related to obtaining any such Consents, and (ii) cause such Consents, fees or costs to be contingent
on and payable after the consummation of the Merger.
|
|
Realty Income to
Combine With VEREIT
Further Distancing Itself as the
Preeminent Net Lease REIT
April 29, 2021
|
|
+
Forward-Looking Statements
2
This communication may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. All statements other than statements of historical fact are “forward-looking statements”
for purposes of federal and state securities laws. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which Realty Income
Corporation (“Realty Income”) and VEREIT, Inc. (“VEREIT”) operate and beliefs of and assumptions made by Realty Income management and VEREIT management, involve uncertainties that could significantly affect
the financial or operating results of Realty Income, VEREIT, the combined company or any company spun-off by the combined company. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,”
“estimates,” “will,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the
benefits of the proposed transactions involving Realty Income and VEREIT, including future financial and operating results, plans, objectives, expectations and intentions. All statements that address operating
performance, events or developments that we expect or anticipate will occur in the future — including statements relating to creating value for stockholders, benefits of the proposed transactions to clients, employees,
stockholders and other constituents of the combined company, integrating our companies, cost savings and the expected timetable for completing the proposed transactions — are forward-looking statements. These
statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements
are based on reasonable assumptions, we can give no assurance that our expectations will be attained and, therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such
forward-looking statements. For example, these forward-looking statements could be affected by factors including, without limitation, risks associated with the ability to consummate the proposed merger and the timing of
the closing of the proposed merger; the ability to secure favorable interest rates on any borrowings incurred in connection with the proposed transactions; the impact of indebtedness incurred in connection with the
proposed transactions; the ability to successfully integrate our operations and employees; the ability to realize anticipated benefits and synergies of the proposed transactions as rapidly or to the extent anticipated by
financial analysts or investors; the potential liability for a failure to meet regulatory or tax-related requirements, including the maintenance of REIT status; material changes in the dividend rates on securities or the ability
to pay dividends on common shares or other securities; potential changes to tax legislation; changes in demand for developed properties; adverse changes in the financial condition of joint venture partner(s) or major
tenants; risks associated with the acquisition, development, expansion, leasing and management of properties; risks associated with the ability to consummate the proposed spin-off of a company holding the office
property assets of Realty Income and VEREIT (“SpinCo”) and the terms thereof, and the timing of the closing of the proposed spin-off; the risks associated with the ability to list the common stock of SpinCo on a national
stock exchange following the proposed spin-off; risks associated with the ability to consummate any sales of the office property assets of Realty Income and VEREIT and the impact of such sales on SpinCo or the
combined company; risks associated with the ability to consummate the spin-off on terms contemplated by Realty Income and VEREIT; the failure to obtain debt financing to capitalize SpinCo, risks associated with the
geographic concentration of Realty Income, VEREIT or SpinCo; risks associated with the industry concentration of tenants; the potential impact of announcement of the proposed transactions or consummation of the
proposed transactions on relationships, including with clients, employees, customers and competitors; the unfavorable outcome of any legal proceedings that have been or may be instituted against Realty Income,
VEREIT or any company spun-off by the combined company; significant costs related to uninsured losses, condemnation, or environmental issues; the ability to retain key personnel; the amount of the costs, fees,
expenses and charges related to the proposed transactions and the actual terms of the financings that may be obtained in connection with the proposed transactions; changes in local, national and international financial
market, insurance rates and interest rates; general adverse economic and local real estate conditions; the inability of major tenants to continue paying their rent obligations due to bankruptcy, insolvency or a general
downturn in their business; foreign currency exchange rates; increases in operating costs and real estate taxes; changes in the dividend policy for Realty Income’s or VEREIT’s common stock or preferred stock or Realty
Income’s or VEREIT’s ability to pay dividends; impairment charges; unanticipated changes in Realty Income’s or VEREIT’s intention or ability to prepay certain debt prior to maturity and/or hold certain securities until
maturity; pandemics or other health crises, such as coronavirus (COVID-19); and those additional risks and factors discussed in reports filed with the U.S. Securities and Exchange Commission (“SEC”) by Realty Income
and VEREIT. Moreover, other risks and uncertainties of which Realty Income or VEREIT are not currently aware may also affect each of the companies’ forward-looking statements and may cause actual results and the
timing of events to differ materially from those anticipated. The forward-looking statements made in this communication are made only as of the date hereof or as of the dates indicated in the forward-looking statements,
even if they are subsequently made available by Realty Income or VEREIT on their respective websites or otherwise. Neither Realty Income nor VEREIT undertakes any obligation to update or supplement any forward-
looking statements to reflect actual results, new information, future events, changes in its expectations or other circumstances that exist after the date as of which the forward-looking statements were made.
No Offer or Solicitation
This communication and the information contained herein shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
|
|
+
Transaction Overview
3
Transaction Details
• All-stock acquisition by Realty Income Corporation (“Realty Income”) of VEREIT, Inc. (“VEREIT”), (the “Merger”)
• VEREIT’s shareholders to receive 0.705 of a share of Realty Income for each VEREIT common share
• Pro forma ownership of ~70% for Realty Income’s shareholders and ~30% for VEREIT’s shareholders
• Concurrent spin-off of substantially all office assets of both companies into a new, self-managed, publicly traded
REIT (“SpinCo”)
Management and Board
• Sumit Roy will remain President and Chief Executive Officer of Realty Income
• Michael D. McKee will remain Realty Income’s Non-Executive Chairman of the Board of Directors
• Two VEREIT board members to join Realty Income’s Board of Directors
Anticipated Synergies and
Earnings Impact
• Anticipate $45-$55 million of annual G&A synergies1
• Relative to the $3.465 midpoint of Realty Income’s 2021 AFFO per share guidance, the transaction is expected to be over
10% accretive to shareholders on an annualized, leverage-neutral basis
Expected Close • Expected to close Q4 2021 for both Merger and spin-off, subject to customary closing conditions, including shareholder
approval from both Realty Income and VEREIT and the continued planning and preparation for the spin-off
1. Cash synergies expected to be $35-40mm
|
|
+
A Powerful Combination
4
• Immediately AFFO Accretive – 10%+ accretive relative to the midpoint of Realty Income’s 2021 AFFO per share guidance
• Scale Driving Growth – Accelerates growth and client diversification, provides further runway for core clients to grow, and adds complementary investment
pipeline and capabilities to the platform
• Amplifies Cost of Capital Advantages – Benefit to existing VEREIT portfolio and catalyst for accretive, high-quality acquisition growth; attractive
opportunities to refinance existing VEREIT debt with a ~4.0% weighted average cost and $373 million of outstanding preferred equity at a rate of 6.7%, which is
freely prepayable at par
• Track Record of Dividend Growth And Total Returns – Continued membership in the S&P 500 Dividend Aristocrats® Index; immediate increase in dividend
per share to VEREIT’s shareholders upon close; Realty Income has delivered total return performance ahead of the S&P 500 and MSCI U.S. REIT Index (“RMZ”),
with lower volatility, since its listing
• Fortress Balance Sheet – Net lease industry leading credit ratings of A3 / A-; target leverage maintained at 5.5x debt/EBITDA. Other pro forma credit ratios
consistent with current Realty Income profile
• Unquestioned Leader in the Net Lease Industry – Realty Income will be the 6th largest REIT in the RMZ1 and ranked in the top half of the S&P 500 with a
best-in-class portfolio
1
2
3
4
5
6
1. Based on equity market capitalization
|
|
+
. Industry leading cost of equity and
debt capital
. Currently rated A3/A- vs. VEREIT’s
Baa2/BBB
. Incremental debt issuance
opportunities in lower
yielding currencies
Significant Accretion for Shareholders
5
Multiple AFFO levers to drive 10%+ AFFO per share accretion to shareholders on a leverage neutral basis
Debt Refinancing Opportunities
10%+ AFFO per
share accretion to
Realty Income’s
shareholders2
Realty Income
Cost of Capital Advantage
Operating Cost Savings
Enhanced
Investment Platform
. Estimated run rate cost synergies
of ~$45 - $55mm1
. Increased size, scale and
diversification unlocks
additional flexibility for growth
in core verticals
. Incremental opportunity to refinance
~$6 billion of VEREIT debt with a ~4.0%
weighted average cost and weighted
average term to maturity of ~6 years
. Additional $373 million of outstanding
preferred equity with a rate of 6.7%,
which is freely prepayable at par
. Near-term opportunity: ~$2.7bn of
preferred equity and maturing debt
through 2025 at a weighted average cost
of 5.1%
1. Cash synergies expected to be $35-40mm. An estimated 75% of savings are expected to be achieved in the first 12 months post-closing.
2. Annualized, leverage-neutral accretion relative to midpoint of Realty Income 2021 guidance ($3.465)
|
|
+
0.23%
0.32%
0.46% 0.49%
0.62%
0.69% 0.71%
0.89%
Blue Chip 1 Blue Chip 2 Blue Chip 3 Blue Chip 4 Blue Chip 5 Blue Chip 6 Blue Chip 7
0.23%
0.32%
0.42% 0.43%
0.62% 0.64% 0.69% 0.75% 0.78% 0.80%
0.99%
Transaction Size & Impact to Rent Concentration2
Current
Rent $100 $200 $300 $400 $500 $1,000
$200 3% 6% 8% 11% 13% 23%
$500 < 1% 2% 3% 5% 6% 11%
$800 < 1% 1% 2% 3% 4% 7%
$1,100 < 1% 1% 2% 2% 3% 5%
$1,700 < 1% < 1% 1% 1% 2% 3%
$2,500 < 1% < 1% < 1% 1% 1% 2%
Benefits of Scale: Overhead Efficiency and Growth Flexibility
6
Source: Company Filings
1. Based on Q4 Annualized G&A and book Gross Real Estate Value; SPG includes Advertising and Promotion and Home and Regional Office Costs; EQR and AVB include property management costs
2. Assumes 6.0% cap rate for illustrative purposes
3. Cash synergies expected to be $35-40mm
G&A Benchmarking (as a % of Gross Real Estate Value)1
+
Increased size will allow Realty Income to pursue even larger sale-leaseback transactions without
compromising prudent client and industry diversification metrics
Larger Size Creates Growth Optionality
Includes
estimated
corporate cost
synergies of $45-
55mm3
+
($ in mm)
Larger Asset Base Cements Position as Lowest Cost
Owner of Net Lease Assets
+
Top 10 RMZ REITs (Excluding Data Center REITs)
Net Lease Universe
|
|
+
Complementary Real Estate Portfolios Result in Greater Diversity for Realty Income
7 Source: Company filings, Company management
1. Statistics as of Q4 2020
2. Assumes 6.0% cap rate
Capacity Growth Example:
Convenience Stores Top Industries Top Tenants
Before Transaction1 After Transaction
Rank Industry % of
Rent Industry % of
Rent
1 Convenience Stores 12% Convenience Stores 9%
2 Grocery Stores 10% Grocery 8%
3 Drug Stores 8% Dollar Stores 8%
4 Dollar Stores 8% Drug Stores 8%
5 Health and Fitness 7% Restaurants - Casual 7%
6 Theaters 6% Restaurants - Quick Service 7%
7 Restaurants - Quick Service 5% Health and Fitness 5%
8 Home Improvement 4% Home Improvement 4%
9 Transportation Services 4% Theaters 4%
10 General Merchandise 3% Transportation Services 4%
Total 67% Total 64%
Before Transaction1 After Transaction
Rank Tenant % of
Rent Tenant % of
Rent
1 6% 5%
2 5% 4%
3 4% 4%
4 4% 3%
5 3% 3%
6 3% 3%
7 3% 2%
8 3% 2%
9 3% 2%
10 3% 2%
Total 36% Total 31%
Current Realty Income Convenience
Store Concentration (#1 Industry) 12%
Pro Forma Convenience Store
Concentration
(Remains #1 Industry but ~300 bps
lower concentration)
9%
Pro Forma Total Portfolio Rent ($bn) $2.5
Incremental Acquisition Capacity at
Pre-Transaction Concentration Level
($bn)2
~$1.3
|
|
+
Sustainable Cost of Capital Advantage & Material Refinancing Synergies
8
Pro Forma Debt Maturity Profile1
Weighted Average Coupon on Preferred Equity and Debt Maturities by Year Total - $ Total - %
6.7% 5.4% 4.8% 4.3% 4.8% 4.6% 4.9% 4.0% 2.9% 3.1% 5.5% 2.9% $6,356 4.1%
n.a. 0.8% 4.9% 4.7% 4.0% 3.9% 3.0% 3.0% 3.7% 3.3% 1.6% 3.5% $8,202 3.4%
6.7% 3.0% 4.8% 4.6% 4.5% 4.3% 3.7% 3.5% 3.1% 3.2% 1.7% 3.4% $14,558 3.7% +
Unsecured Debt Secured Debt Preferred Equity
($ in mm)
Source: Bloomberg
1. As of December 31, 2020 reported capital structure adjusted for previously disclosed activity
2. Reflects G-spread for Realty Income January 2031 USD unsecured bonds and VEREIT December 2032 unsecured bonds. As of April 27, 2021.
VEREIT capital structure includes ~$2.7bn of preferred
equity and maturing debt through 2025 with a weighted
average rate of ~5.1%
Realty Income enjoys a ~40-45 bps G-Spread2 benefit
compared to VEREIT on its outstanding debt
$300
$750 $1,100 $1,050
$1,575 $1,200
$1,650
$1,100
$547
$3,281
$357
$378
$144
$732 $1
$10
$11
$373
Pref. Equity 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+
|
|
+
($ in mm) Cumulative Annualized Interest Expense Accretion Assuming
Various 10-yr Indicatives: 1
Year Maturities2 Rate 2.4% 1.8% 0.9%
Pref + 2021 686 6.1% 25 30 36
2022 266 4.8% 32 38 46
2023 124 4.3% 34 41 50
2024 1,120 4.8% 61 74 94
2025 550 4.6% 73 90 115
Through ’25 $2,746 5.1% $73 $90 $115
2026 600 4.9% 88 108 139
2027 600 4.0% 98 121 157
2028 1,100 2.9% 103 133 178
2029 600 3.1% 107 141 192
2030 11 5.5% 107 141 192
2032 700 2.9% 110 148 205
Total $6,356 4.1% $110 $148 $206
Quantifying the Refinancing Opportunity
9
₤ € $
Source: Bloomberg
1. Estimated indicatives as of 4/26/21
2. As of December 31, 2020 reported capital structure adjusted for previously disclosed activity
Superior credit ratings and ability to issue in lower-
yielding international markets provide natural organic
growth lever for future value creation
Illustrative Outcomes Based on
Current Indicatives…
Synergies amplified..
…As capital allocation
progresses throughout
Europe, refinancing
opportunities support natural
net investment hedging needs
Estimated $75 - $115
million of annualized accretion
by YE 2025
Estimated $110 - $205
million of annualized accretion
over next 10 years
|
|
+
$0.90 $0.91 $0.93 $0.95 $0.98 $1.04 $1.09 $1.12 $1.15 $1.18 $1.24
$1.35
$1.44
$1.56 $1.66 $1.71 $1.72 $1.74$1.77
$2.15 $2.19 $2.27
$2.39
$2.53
$2.65
$2.73 $2.81 $2.82
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Dependable Dividends That Grow Over Time
10
Steady dividend track record supported by inherently stable business model, disciplined execution
One of only three REITs included in the S&P 500 Dividend Aristocrats® index
94 Consecutive quarterly increases
110 Total increases since 1994 NYSE Listing
4.4% Compound average annualized growth rate since NYSE listing
Immediate Dividend per Share
Increases for VEREIT’s Shareholders
Current Realty Income Annualized Dividend per Share $2.820
(x) Transaction Exchange Ratio 0.705
(=) Implied VEREIT Dividend per Share $1.988
Current VEREIT Dividend per Share $1.848
VEREIT Dividend per Share Increase ~7.6%
|
|
+
15.2%
11.4% 10.9% 10.5% 10.4%
Nasdaq Composite DJIA S&P 500 Equity REIT Index
Track Record of Favorable Returns to Shareholders
11
Since 1994 NYSE listing, Realty Income shares have outperformed benchmark indices
Compound Average Annual Total Shareholder Return Since 1994
+4.8% +4.7% +4.3% +3.8%
A track record of market and industry outperformance
Note: Return metrics as of 03/31/2021
1. Beta measured using monthly frequency
2. Measured as AFFO per share growth
3. Based on regression analysis comparing beta and total stock return CAGR since 1994
4. Includes ADC, EPRT, FCPT, NNN, SRC, STOR, VER, WPC
0.4
Beta vs. S&P 500
Since ‘94 NYSE Listing1
95th Percentile
Return per Unit of Market Risk
Compared to S&P 5003
1 of 3
Net Lease REITs4 with Positive Earnings2
Growth in 2020
24 of 25
Years of Positive Earnings per Share
Growth2
5.1%
Median AFFO Per
Share Growth Since 1996
|
|
+
72%
3%
24%
1%
Preserves Fortress Balance Sheet Supporting Growth and Resiliency
12
Key Credit Highlights
• Leverage neutral transaction / Net lease industry leading A3 Moody’s / A- S&P credit ratings and expected 5.5x leverage ratio1
• One of eight REITs with ‘A’ ratings from two major agencies
• Meaningful value embedded from the refinancing of ~$6 billion of VEREIT’s debt that will accrue to Realty Income over time
• Additional $373 million of outstanding preferred equity at a rate of 6.7%, which is freely prepayable at par, creates additional near-term refinancing opportunity
• Realty Income’s accelerating investment activity in the United Kingdom allows for significantly lower all-in borrowing costs in the high-grade unsecured bond market relative to the U.S.
• Proven access to low cost of debt capital in the U.S. (1.48%)2 and in the U.K. (1.71%)2
Pro Forma Capital Structure (% of Total Capitalization)3 Pro Forma Credit Metrics
Realty Income
12/31/20
Pro Forma
Realty Income4
Net Debt / LTM EBITDA 5.3x ~5.5x
LTM Fixed Charge Coverage 5.1x ~5.5x
Unencumbered Assets to Unsecured Debt 257% ~300%
Secured Debt / Gross Assets 1.4% < 3%
Total Debt / Gross Assets 40% ~35%
Unsecured Debt
$13bn
Secured Debt
$2bn
Common Equity
$37bn
Total
Capitalization
~$50bn
Preferred Equity
$0.4bn
Source: Bloomberg
1. Defined as net debt + preferred equity / Adjusted EBITDAre
2. 1.48% reflects the blended effective annual yield to maturity on Realty Income’s $725mm dual-tranche senior unsecured notes issuance in December 2020 at time of pricing; 1.71% reflects the effective annual yield to maturity of Realty Income’s £400mm senior unsecured notes issuance in September 2020 at time of
pricing
3. Reflects Realty Income’s capitalization as of 12/31/2020 pro forma for subsequent significant events
4. Estimated as of transaction close
|
|
+
~$50
$33.1
$19.6 $15.6 $13.2 $11.7 $7.9 $5.6 $4.5 $3.6 $3.0
O + VER O WPC VER STOR NNN SRC ADC BNL EPRT FCPT
$86.4
$63.6
$48.1 $46.0 $42.7 $37.0 $32.0 $27.7 $27.3 $26.3
PLD EQIX PSA SPG DLR O + VER WELL EQR AVB ARE
+
Leading Net Lease REIT Ranked 6th Among RMZ Constituents
13
ENTERPRISE VALUE ($BN)1 – NET LEASE INDUSTRY
EQUITY MARKET CAPITALIZATION VALUE ($BN) – TOP 10 RMZ REITS
Extends Realty Income’s Lead in
the Net Lease REIT Sector
6th Largest REIT
in the RMZ REIT Index
Source: Capital IQ and SNL market data as of 04/27/2021
1. Realty Income and VEREIT enterprise values adjusted for subsequent events post balance sheet date
+
|
|
+
Key Metrics Made Even Stronger Through Combination
14
Total Enterprise Value ($bn)
# of Properties
Portfolio Annualized Contractual Rent
($bn)
WALT (yrs)
Occupancy (%)
Top 10 Client Concentration
Top 10 Industry Concentration
Investment Grade (%)
2021 E Gross Acquisition Volume ($bn)
$2.5
31%
9.0
98%
45%
~$50
~10,300
Source: Company Filings, Company management, Capital IQ and SNL as of 04/27/2021
1. Realty Income and VEREIT portfolio metrics as of 12/31/2020
2. Excludes SpinCo; Pro forma WALT weighted by annualized rental income, pro forma occupancy by property count, pro forma investment grade (%) weighted by annualized rental income
3. Based on midpoint of 2021 guidance
$4.4 bn+
1 1
+ 2
“Pro Forma Realty Income”
64%
$1.7 $1.1
36% 27%
9.0 8.4
98% 98%
51% 39%
$33 $16
6,592 3,831
$3.25 bn+ $1.15 bn+ 3
67% 66%
|
|
+
Separation of Office Assets into New Publicly-Traded Company
15
. Office industry investment is not in the long term plans for Pro Forma Realty
Income and substantially all of the companies’ office assets1 expected to be
spun off
. Accordingly, separation of office assets ("SpinCo") into a self-managed REIT is
a strategic objective of the transaction
. Separation of SpinCo is anticipated to be effected via a spin-off into a newly
traded public company that owns the office assets of VEREIT and Realty
Income
. Consistent with the Merger, Realty Income’s shareholders will own ~70% of
SpinCo while VEREIT’s shareholders will own ~30%
. Expected to carry modest initial leverage to support early growth initiatives
. Further updates on the SpinCo separation process, management, and
governance will be provided periodically, including on Realty Income’s Q2
earnings call
. Expected to be led by experienced management team to be announced at a
later date
Separation Overview and Go-Forward Opportunity SpinCo Key Stats
Top 5 Industries Top 5 Clients
# of Properties
97
Total
Contractual Rent
$183mm
Top 10 Tenant
Concentration
47%
Q4 2020 Rent
Collections
Over 99%
% Investment Grade
76%
High quality tenancy, resilient collections and high yielding assets; Dedicated team focused on growing the portfolio
Client Name % Concentration
10%
7%
6%
4%
4%
Industry % Concentration
Healthcare 17%
Telecommunications 14%
Insurance 13%
Financial Services 11%
Government Services 11%
WALT
~4 years
1. Excludes six office assets encumbered by CMBS debt that becomes freely pre-payable at par in November 2023, and four office assets held in VEREIT's office joint venture, in which it holds a 20% interest
|
|
+
16
Unquestioned Leader in the Net Lease Industry
Fortress Balance Sheet
Scale Driving Growth
Amplifies Cost of Capital Advantages
Track Record of Dividend Growth and Total Returns
Immediately AFFO Accretive
+
Credit Profile
. Continue to curate
best-in-class
global real estate
portfolio known for
consistent cash
flow generation
. Relentlessly
unlock new swim
lanes for growth
and value creation
Portfolio Philosophy
. Maintain A3/A-
credit ratings with
target leverage in
mid-5x area
. Continue to drive
fixed charge
coverage ratio
higher with
flexibility to issue in
lower cost
currencies
. Retail clients that
have a service, non-
discretionary,
and/or low-price-
point component to
their business
. Industrial clients
that are primarily
investment grade
rated companies
and leaders in their
respective industries
Client Focus
Go Forward Business Strategy
|
VEREIT (NYSE:VER)
Historical Stock Chart
From Aug 2024 to Sep 2024
VEREIT (NYSE:VER)
Historical Stock Chart
From Sep 2023 to Sep 2024