Exhibit 10.2
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is entered into
by and between Realty Income Corporation, a Maryland corporation (the
“Company”), and  __________________, an individual residing in the county of San
Diego, state of California (the “Employee”), and shall be effective as of
_________________, 2008 (the “Effective Date”).
 
This Agreement is intended to amend and restate the Employment Agreement dated
as of _______________, 200__ between the Company and the Employee (the “Prior
Agreement”).
 
1.           Term.  The Company hereby continues to employ the Employee for an
indefinite term commencing on the date hereof and continuing until this
Agreement is terminated by either party as provided hereinafter in Paragraph 10
(such period being hereinafter sometimes referred to as the “term of this
Agreement”).  The Employee accepts such employment and agrees to perform the
services specified herein, all upon the terms and conditions hereinafter set
forth.
 
2.           Duties.  The Employee shall perform such management and
administrative duties as are from time-to-time assigned to him by the Company. 
If the Employee is elected an officer of the Company during the term of this
Agreement, the Employee will serve in such capacity without further
compensation.  The Employee also agrees to perform, without additional
compensation, such other services for the Company and for any subsidiary or
affiliated corporations of the Company or for any partnerships in which the
Company has an interest, as the Board of Directors of the Company (the “Board”)
shall from time-to-time specify.
 
3.           Extent of Services.  During the term of this Agreement, the
Employee shall devote his full time, attention and energy to the business of the
Company and, except as may be specifically permitted by the Board in writing,
shall not be engaged in any other business activity which would interfere with
the performance of his duties hereunder or be competitive with the business of
the Company.  The foregoing restrictions shall not be construed as preventing
the Employee from making passive investments in other businesses or enterprises;
provided, however, that such other investments will not require services on the
part of the Employee which would in any manner impair the performance of his
duties under this Agreement, and provided further that such other businesses or
enterprises are not engaged in any business competitive to the business of the
Company.
 
4.           Salary.  During the term of this Agreement, as compensation for the
proper and satisfactory performance of all duties to be performed by Employee
hereunder, the Company shall pay to the Employee a base salary of no less than
                 Dollars ($            ) per year less required deductions for
state and federal withholding tax, social security and all other required
employee taxes and payroll deductions.  From time-to-time during the term of
this Agreement, the amount of the Employee’s base salary may be increased by and
at the sole discretion of the Company. The base salary shall be payable in
installments in accordance with regular payroll policies of the Company in
effect from time-to-time during the term of this Agreement.
 

 
 
 
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5.           Annual Incentive Plan.  The Employee shall participate in the 2003
Incentive Award Plan of the Company as the same shall be adopted and amended
from time to time by the Compensation Committee of the Board.
 
6.           Medical Insurance; Benefit Plans.  During the term of this
Agreement, the Employee shall be entitled to participate, on the same terms as
are applied to all other employees, in any group medical insurance plan,
qualified pension or profit sharing plan or any other employee benefit plan from
time-to-time maintained by the Company.
 
7.           Expenses.  During the term of this Agreement, the Company shall pay
to or reimburse the Employee, upon submission of an appropriate statement by him
documenting such expenses as required by the Internal Revenue Code of 1986, as
amended (the “Code”), for all out-of-pocket expenses for entertainment, travel,
meals, hotel accommodations and the like reasonably incurred by him in the
course of his employment hereunder.
 
8.           Vacation.  The Employee shall be entitled to an annual vacation in
accordance with the Company’s Employee Handbook, as the same may be amended from
time to time.  Employee’s prior service with the Company shall be included in
determining vacation accrual and all other benefits.  Such vacation shall be
scheduled at such time as the Employee may choose, but shall be timed in such
manner as to avoid interference with the necessary performance of his duties
hereunder.  Unused vacation time shall accrue from year-to-year subject to the
limitations on carryover of vacation set forth in the Company’s Employee
Handbook, as the same may be amended from time to time.
 
9.           Sick/Personal Leave.  The Employee shall be entitled to
sick/personal leave in accordance with the Company’s Employee Handbook, as the
same may be amended from time to time.
 
10.           Termination.
 
 
a.
Death or Permanent Disability.  In the event that the Employee dies or is
physically or mentally unable to perform substantially all of his duties
hereunder, then this Agreement shall terminate upon the Employee’s death or
disability, and (with the exception of any life or disability insurance benefits
to which the Employee may be entitled) the Company shall have no further
obligation hereunder to the Employee or his spouse or estate except to pay to
the Employee (in the event of his disability) or the Employee’s spouse if she
should survive him, or to the Employee’s estate if his spouse shall not survive
him, the amount of the Employee’s base salary, and vacation, if any, accrued to
the date of his death or disability.

 
 
b.         Termination by the Company Without Cause/Constructive Termination. 
This Agreement may be terminated by the Company without Cause (as defined in the
Definitions Annex below) at any time upon written notice to the Employee,
provided that in the event of the Company’s termination of this Agreement
without Cause or Employee’s Constructive Termination (as defined in the
Definitions Annex below), in either case prior to or more

 

 
 
 
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than twelve months after a Change in Control (as defined in the Definitions
Annex below) the Company shall (i) pay to the Employee in a single lump sum an
amount equal to twelve (12) months’ base salary under this Agreement plus the
average of the last three (3) years’ cash bonus paid to the Employee, (ii) pay
any salary and accrued vacation pay to which the Employee may be entitled
hereunder prorated through the date of termination and (iii) continue to provide
Employee with group medical insurance at the Company’s expense (whether through
reimbursement of Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”) premiums or otherwise in the Company’s discretion) for a
period of twelve (12) months from the date of termination or until Employee
becomes covered under another group medical insurance plan, whichever occurs
first.  In the event of the Company’s termination of this Agreement without
Cause or Employee’s Constructive Termination (as defined below), in either case
on or within twelve months after a Change in Control, in lieu of the foregoing,
the Company shall (i) pay to the Employee in a single lump sum an amount equal
to eighteen (18) months’ base salary under this Agreement plus the average of
the last three (3) years’ cash bonus paid to the Employee, (ii) pay any accrued
salary and vacation pay to which the Employee may be entitled hereunder prorated
through the date of termination and (iii) continue to provide Employee with
group medical insurance at the Company’s expense (whether through reimbursement
of COBRA premiums or otherwise in the Company’s discretion) for a period of
eighteen (18) months from the date of termination or until Employee becomes
covered under another group medical insurance plan, whichever occurs first. 
Notwithstanding the foregoing, the severance payments described in this
Paragraph 10(b), other than the accrued salary and vacation described in clause
(ii), shall be payable only in the event that the termination of this Agreement
constitutes a “separation from service” within the meaning of Treasury
Regulation Section 1.409A-1(h) (a “Separation from Service”), and any such
severance payments pursuant to this Paragraph 10(b) shall be payable to the
Employee on the sixtieth (60th) day following the Separation from Service.  In
addition, in the event this Agreement is terminated by the Company or by the
Employee pursuant to this Paragraph 10(b), such termination shall be upon the
terms of, and the Company and the Employee shall execute, within fifty (50) days
following the Separation from Service, the Severance Agreement and General
Release substantially in the form of Exhibit A, attached hereto and incorporated
herein by reference and no severance (other than the accrued salary and vacation
described in clause (ii) above) shall be payable under this Agreement prior to
the execution by Employee and his failure to revoke such Severance Agreement and
General Release.

 
 
c.
Termination by the Employee.  This Agreement may be terminated by the Employee
without Cause at any time upon two (2) weeks’ written notice to the Company.

 

 
 
 
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d.         Internal Revenue Code Section 409A.  Notwithstanding any provision to
the contrary in this Agreement, if the Employee is deemed by the Company at the
time of his Separation from Service to be a “specified employee” for purposes of
Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any
portion of the benefits to which the Employee is entitled under this Agreement
is required in order to avoid a prohibited distribution under Section
409A(a)(2)(B)(i) of the Code, such portion of the Employee’s benefits shall not
be provided to the Employee prior to the earlier of (i) the expiration of the
six-month period measured from the date of the Separation from Service or (ii)
the date of the Employee’s death.  Upon the expiration of the applicable Code
Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this
Paragraph 10(d) shall be paid in a lump sum to the Employee, and any remaining
payments due under the Agreement shall be paid as otherwise provided herein.

 
 
e.         Failure to Perform.  Notwithstanding any other provision of this
Agreement, if the Employee shall be discharged by the Company for Cause or if
Employee voluntarily terminates employment other than as a result of a
Constructive Termination, then this Agreement shall automatically terminate
(except for the provisions of Paragraphs 12 and 13, which shall continue in
effect), and upon such termination, the Company shall have no further obligation
to the Employee or his spouse or estate, except that the Company shall pay to
the Employee, the amount of his base salary and vacation pay accrued to the date
of such termination.

 
11.           Corporate Opportunity.  The Employee acknowledges the value to the
Company of his knowledge, contacts and working relationships involving the
business of the Company.  Employee agrees to utilize all of such capacities for
the sole use and benefit of the Company and to first offer to the Company any
and all of those opportunities which shall come to his knowledge which are
within the area of business of the Company.
 
12.           Confidential Information.  The Employee acknowledges that in the
course of his employment with the Company, he will receive certain trade
secrets, know-how, lists of customers, employee records and other confidential
information and knowledge concerning the business of the Company (hereinafter
collectively referred to as “information”) which the Company desires to
protect.  The Employee understands that such information is confidential, and he
agrees not to reveal such information to anyone outside the Company.  The
Employee further agrees that during the term of this Agreement and thereafter he
will not use such information in competing with the Company.  At such time as
the Employee shall cease to be employed by the Company, he shall surrender to
the Company all papers, documents, writings and other property produced by him
or coming into his possession by or through his employment hereunder and
relating to the information referred to in this paragraph, and the Employee
agrees that all such materials will at all times remain the property of the
Company.
 
13.           Assignment of Proprietary Information.  During the term of this
Agreement, all patents, processes and other proprietary information developed by
the Employee in the course of
 

 
 
 
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his employment shall be the sole and exclusive property of the Company.  The
Employee covenants and agrees to execute any documents or take any action
necessary to effectively transfer any rights he may have in such proprietary
information to the Company and to maintain the rights, interest and title of the
Company in and to such information.  Nothing herein shall be deemed to deny
Employee the protection afforded by California Labor Code Section 2870.
 
14.           Indemnification.  The Company shall indemnify Employee against
liability pursuant to an Indemnity Agreement, which the Company and Employee
executed concurrent with the Prior Agreement.
 
15.           Notices.  All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date mailed, postage
prepaid, by certified mail, return receipt requested, or telegraphed and
confirmed if addressed to the respective parties as follows:
 
If to the
Employee:     ______________________________                                      

                    ___________________________________
 
                    ___________________________________

 
If to the Company:        Realty Income Corporation
Attention:  Chief Executive Officer
                   600 La Terraza Boulevard
             Escondido, California  92025-3873
 
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto as provided in this
Paragraph 15.
 
16.           Specific Performance.  The Employee acknowledges that a remedy at
law for any breach or attempted breach of Paragraphs 12 and 13 of this Agreement
will be inadequate, and therefore agrees that the Company shall be entitled to
specific performance and injunctive and other equitable relief in case of any
such breach or attempted breach, and further agrees to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
injunctive or any other equitable relief.

17.           Severability.  In the event any term, phrase, clause,  paragraph,
section, restriction, covenant or agreement contained in this Agreement shall be
held to be invalid or unenforceable, the same shall be deemed, and it is hereby
agreed that the same are meant to be several and shall not defeat or impair the
remaining provisions hereof.
 
18.           Waiver.  The waiver by the Company of any breach of any provision
of this Agreement by the Employee shall not operate or be construed as a waiver
of any subsequent or continuing breach of this Agreement by the Employee.
 
19.           Assignment.  This Agreement may not be assigned by the Employee. 
Neither of the Employee nor his spouse or estate shall have any right to
commute, encumber or dispose of
 

 
 
 
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any right to receive payments under this Agreement, it being agreed that such
payments and the rights thereto are nonassignable and nontransferable.
 
20.           Binding Effect.  Subject to the provisions of Paragraph 19, this
Agreement shall be binding upon and inure to the benefit of the parties hereto,
the Employee’s heirs and personal representatives, and the successors and
assigns of the Company.
 
21.           Entire Agreement.  This Agreement and the Indemnity Agreement
referred to herein sets forth the entire agreement and understanding between the
parties relating to the subject matter contained herein and supersedes all other
agreements, oral or written, between the parties relating to such subject
matter, including, but not limited to, the Prior Agreement and any and all other
agreements between the parties concerning employment, compensation, or profit
sharing (other than the Company’s equity compensation plans and any written
stock option or restricted stock agreement between the Company and Employee
setting forth the terms of equity compensation awards granted to Employees under
such plans).
 
22.           Withholding.  Any amounts payable under this Agreement shall be
subject to any required federal, state, local or other income, employment or
other tax withholdings.
 
23.           Amendment.  This Agreement may be amended only by an instrument in
writing executed by both parties hereto.
 
24.           Governing Law.  This Agreement shall be construed and enforced in
accordance with and governed by the law of the State of California.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
 
REALTY INCOME
CORPORATION                                                                                                EMPLOYEE
 
 
By:      ______________________________                                       
________________________
 
Title:    ______________________________              
 

 
 
 
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DEFINITIONS
 
For purposes of this Agreement, “Cause,” “Change in Control” and “Constructive
Termination” shall have the following defined meanings:
 
1.           “Cause” means (a) theft, dishonesty or falsification of any
employment or Company records; (b) malicious or reckless disclosure of the
Company’s confidential or proprietary information; (c) commission of any immoral
or illegal act or any gross or willful misconduct, where the Company reasonably
determines that such act or misconduct has (1) seriously undermined the ability
of the Company’s management to entrust Employee with important matters or
otherwise work effectively with Employee, (2) contributed to the Company’s loss
of significant revenues or business opportunities, or (3) significantly and
detrimentally effected the business or reputation of the Company or any of its
subsidiaries; and/or (d) Employee’s failure or refusal to work diligently to
perform tasks or achieve goals reasonably requested by the Board, provided such
breach, failure or refusal continues after the receipt of reasonable notice in
writing of such failure or refusal and an opportunity to correct the problem. 
“Cause” shall not mean a physical or mental disability.
 
2.           “Change in Control” shall mean the occurrence of any of the
following:
 
(a)           An acquisition in one transaction or a series of related
transactions (other than directly from the Company or pursuant to awards granted
under the Company’s equity incentive plan or compensatory options or other
similar awards granted by the Company) of the Company’s voting securities by any
individual or entity (a “Person”), immediately after which such Person has
beneficial ownership of fifty percent (50%) or more of the combined voting power
of the Company’s then outstanding voting securities (other than a Non-Control
Transaction, as defined below);
 
(b)           The individuals who, immediately prior to the Effective Date, are
members of the Board (the “Incumbent Board”), cease for any reason to constitute
at least a majority of the members of the Board; provided, however, that if the
election, or nomination for election, by the Company’s common stockholders, of
any new director was approved by a vote of at least a majority of the Incumbent
Board, such new director shall, for purposes of this Agreement, be considered as
a member of the Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened “Election Contest”
(as described in Rule 14a-11 promulgated under the Securities Exchange Act of
1934, as amended) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a “Proxy Contest”)
including by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
 
(c)           the consummation of
 
(i)           a merger, consolidation or reorganization involving the Company
unless:
 
(A)           the stockholders of the Company, immediately before such merger,
consolidation or reorganization, own, directly or indirectly, immediately
following such merger, consolidation
 

 
 
 
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or reorganization, more than fifty percent (50%) of the combined voting power of
the outstanding voting securities of the corporation resulting from such merger
or consolidation or reorganization (the “Surviving Corporation”) in
substantially the same proportion as their ownership of the Company’s voting
securities immediately before such merger, consolidation or reorganization,
 
(B)           the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least a majority of the members of
the board of directors of the Surviving Corporation, or a corporation
beneficially owning, directly or indirectly, a majority of the voting securities
of the Surviving Corporation, and
 
(C)           no Person, other than (i) the Company, (ii) any employee benefit
plan (or any trust forming a part thereof) that, immediately prior to such
merger, consolidation or reorganization, was maintained by the Company, the
Surviving Corporation, or any related entity or (iii) any Person who, together
with its Affiliates, immediately prior to such merger, consolidation or
reorganization had beneficial ownership of fifty percent (50%) or more of the
Company’s then outstanding voting securities, owns, together with its
Affiliates, beneficial ownership of fifty percent (50%) or more of the combined
voting power of the Surviving Corporation’s then outstanding voting securities.
 
(A transaction described in clauses (A) through (C) above is referred to herein
as a “Non-Control Transaction”);
 
(d)           a complete liquidation or dissolution of the Company; or
 
(e)           an agreement for the sale or other disposition of all or
substantially all of the assets or business of the Company to any Person.
 
For purposes of this Agreement, “Affiliate” shall mean, with respect to any
Person, any other Person that, directly or indirectly, controls, is controlled
by, or is under common control with, such Person.  Neither the Company nor any
Person controlled by the Company shall be deemed to be an Affiliate of any
holder of Common Stock.
 
3.           “Constructive Termination” means Employee’s resignation of
employment within sixty (60) days of one or more of the following events which
remains uncured thirty (30) days after Employee’s delivery of written notice
thereof:
 
(a)           the delegation to Employee of duties or the reduction of
Employee’s duties, either of which substantially reduces the nature,
responsibility, or character of Employee’s position immediately prior to such
delegation or reduction;
 
(b)           a material reduction by the Company in Employee’s base salary in
effect immediately prior to such reduction;
 
(c)           a material reduction by the Company in the kind or level of
employee benefits or fringe benefits to which Employee was entitled prior to
such reduction; or the taking
 

 
 
 
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of any action by the Company that would adversely affect Employee’s
participation in any plan, program or policy generally applicable to employees
of equivalent seniority;  and
 
(d)           the Company’s relocation of Employee’s principal office location
to a place more than forty (40) miles from the Company’s present headquarters
location (except that reasonably required travel on the Company’s business shall
not be considered a relocation).
 

 
 
 
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EXHIBIT A
 
SEVERANCE AGREEMENT AND GENERAL RELEASE
 
This Severance Agreement and General Release is entered into as of
 _____________________, 20___, by and between Realty Income Corporation (the
“Company”), and ____________________ (hereinafter “Employee”).
 
IN CONSIDERATION of the severance compensation as herein provided, to which
Employee is not otherwise entitled, Employee does hereby unconditionally,
irrevocably and absolutely release and discharge the Company, and its directors,
officers, employees, shareholders, agents, successors and assigns and any
related or subsidiary corporations or entities, from any and all loss,
liability, claims, demands, causes of action, or suit of any type related
directly or indirectly or in any way connected with Employee’s termination of
employment with the Company.  This release includes, but is not limited to, any
claims of employment discrimination arising under federal or state laws,
including the Age Discrimination in Employment Act of 1967, as amended.
 
IN FURTHER CONSIDERATION THEREOF, Employee irrevocably and absolutely agrees
that he will not prosecute nor allow to be prosecuted on his behalf, in any
administrative agency, whether federal or state, or in any court, whether
federal or state, or before any arbitrator, any claim, demand or grievance of
any type related to the matters released above, it being an intention of the
parties that with the execution by Employee of this Release, the Company, and
each of their officers, directors, employees, shareholders, agents, successors
and assigns and all subsidiary and related corporations and entities will be
absolutely, unconditionally and forever discharged of and from all obligations
to or on behalf of Employee related in any way to his termination of employment
with the Company.
 
Employee shall receive the following severance compensation:
 
a)             The total sum of                    ($             ), payable in
a lump sum.
 
b)            Group medical insurance paid for by the Company for the employee
and his family (if currently covered) through                  , or until
Employee becomes covered under another group medical insurance plan, whichever
occurs first.
 
Except as set forth herein, Employee shall not be entitled to any benefits as an
employee or former employee of the Company.
 
As a condition of the foregoing payments and benefits, Employee agrees to
preserve the confidentiality of all trade secrets and other confidential
information of the Company and each of their affiliates, and will not now or in
the future disrupt, damage, impair or interfere with the business of the
Company, or their affiliates, whether by way of interfering with or raiding
their employees, disrupting their relationships with customers, agents,
representatives or vendors or otherwise.
 
Employee agrees to cooperate with the Company in accomplishing a smooth and
orderly transition in the transfer of responsibilities of Employee to other
employees of the Company,
 

 
 
 
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particularly including pending matters of which Employee has the principal
knowledge and background information.  In this regard, Employee agrees to
respond in a timely fashion to the questions which may be presented occasionally
by the Company.  Such cooperation and responses shall not entitle Employee to
any additional compensation beyond the severance compensation specified herein
above, so long as such cooperation and responses do not unreasonably interfere
with Employee’s other gainful employment or efforts to secure gainful
employment.
 
Employee does expressly waive all of the benefits and rights granted to him
pursuant to California Civil Code Section 1542, which provides and reads as
follows:
 
“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”
 
Employee does certify that he has read all of this Severance Agreement and
General Release and the quoted Civil Code Section, and that he fully understands
all of the same, and that he has been given the opportunity, if he desires, to
review the terms of this Severance Agreement and General Release with counsel.
 
Employee expressly declares and represents that no promise, inducement or
agreement not herein expressed has been made to him and that this Severance
Agreement and General Release contains the entire agreement between the parties,
and that the terms hereof are contractual and not a mere recital.
 
This Severance Agreement and General Release may be pleaded as a full and
complete defense to, and may be used as the basis for an injunction against, any
action, suit or other proceeding which may be prosecuted, instituted or
attempted by Employee in breach hereof.
 
Employee further agrees that in the event an action or proceeding is instituted
by Employee or the Company or any party released hereby in order to enforce the
terms or provisions hereof, the prevailing party shall be entitled to an award
of reasonable costs and attorneys’ fees.
 
This Severance Agreement and General Release shall bind Employee, his heirs,
successors, agents, representatives and assigns, and each of them.
 
This Severance Agreement and General Release shall inure to the benefit of the
successors and assigns of the respective parties hereto.
 
Employee acknowledges that he has been given twenty-one (21) days in which to
consider the terms of the release provisions contained herein.  The release
contained herein shall not become effective or enforceable until seven (7) days
after employee signs this release.  Payment to employee of the sums provided
under this Agreement shall commence seven (7) days after employee signs this
release.
 

 
 
 
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IN WITNESS WHEREOF, the undersigned have executed this Severance Agreement and
General Release as of the date first above written.
 
REALTY INCOME
CORPORATION                                                                                                EMPLOYEE
 

 
By:       _______________________________                                      _______________________
 
Title:     _______________________________                  
 
 
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