exv10w8



 






Exhibit 10.8




TABLE OF CONTENTS



Part I. Separation Agreement and General Release



Part II. First Amendment to Separation Agreement and General Release



 









 



PART I




SEPARATION AGREEMENT AND GENERAL RELEASE




     THIS SEPARATION AGREEMENT AND GENERAL RELEASE (the “Agreement”) is made and entered into as of
April 23, 2004, by and between GARY M. RALSTON (“Ralston”) and COMMERCIAL NET LEASE REALTY, INC.
(“CNLR” or the “Company”).



     WHEREAS, pursuant to an Employment Agreement with CNLR, dated May 15, 1997 (the “Ralston
Employment Agreement”), Ralston currently is employed as CNLR’s Chief Operating Officer and
President;



     WHEREAS, Ralston has expressed an interest in leaving his position at CNLR;




     WHEREAS, the parties wish to resolve all matters between themselves on an amicable basis; and




     WHEREAS, contemporaneously with the execution of this Agreement, Ralston will enter into a
consulting agreement and investment agreement with James M. Seneff, Jr. (the “Seneff/Ralston
Agreements”), which the parties acknowledge and agree is not inconsistent with the promises they
undertake herein.



     NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth in
this Agreement, the sufficiency of which the parties hereto acknowledge, it is agreed as follows:



     1. Ralston will remain as CNLR’s Chief Operating Officer and President and will report to
CNLR’s Chief Executive Officer, Craig Macnab, until close of business on April 30, 2004 (the
“Separation Date”), after which he will no longer be employed by CNLR. As of the Separation Date,
Ralston will voluntarily resign as Chief Operating Officer and President and will also voluntarily
resign any other positions, titles, or offices he may hold at CNLR or any affiliated companies or
entities. Prior to the Separation Date, CNLR will continue to pay and provide Ralston’s current
salary and benefits, pursuant to normal payroll and business practices, as provided in the Ralston
Employment Agreement. Upon the execution of this Agreement, Ralston shall execute and deliver to
CNLR and its subsidiaries and affiliates (collectively, the “CNLR Group”) his letter of resignation
as an officer and director effective as of the Separation Date in form and substance identical to
the letter attached hereto as Exhibit “A.” The parties will agree on an appropriate press release
with respect to Ralston’s resignation.



     2. In consideration for Ralston’s promises in this Agreement, CNLR makes the following
promises:



          (a) CNLR agrees to pay Ralston the sum of Seven Hundred and Fifty Thousand Dollars ($750,000),
net of all legally required payroll and income tax withholdings. Of the $750,000, $250,000 shall be
due and payable on May 1, 2004, and the remaining $500,000 balance shall be paid in twenty-four
equal monthly installments, commencing on June 1, 2004.



          (b) CNLR will also pay Ralston by separate check his regular compensation for hours worked
through the Separation Date, but which remain unpaid as of the Separation Date, and any vacation
pay that is accrued but unused as of the Separation Date, net of all legally required payroll and
income tax withholdings.



          (c) CNLR agrees to pay Ralston the sum of Four Hundred Thirty-Seven Thousand Five Hundred
Dollars ($437,500), net of all legally required payroll and income tax withholdings on May 1, 2004.



 









 





          (d) CNLR will allow all shares of Restricted Stock (as described in the Restricted Stock
Agreement between Ralston and CNLR, dated March 14, 2003 (the “Restricted Stock Agreement”))
currently held in Ralston’s name to fully and completely vest as of the Separation Date and will
pay the “tax gross-up payment” as provided in Paragraph 7 of the Restricted Stock Agreement as of
such vesting date.. The remaining undistributed shares shall be held in escrow by the Company, and
shall be released to Ralston on a pro-rata basis each month over the two-year period commencing May
1, 2004, and Ralston shall be entitled to receive any and all dividends with respect to such
escrowed shares in accordance with the terms of the Restricted Stock Agreement. A letter will be
provided to Wachovia National Bank indicating that the shares have vested.



          (e) On or before May 31, 2004, CNLR will purchase (or will designate an affiliated or
unaffiliated purchaser for) Ralston’s shares of stock or other equity interests in Commercial Net
Lease Realty Services, Inc. for an aggregate purchase price of no less than $250,000 or no greater
than $315,000. Such purchase price will be based on a valuation prepared by Schonbraun Safris
McCann Bekritsky & Co. LLC. At the time of CNLR’s purchase of Ralston’s interests, the other
shareholders’ voting interests will be acquired by CNLR at a purchase price equal to each
shareholder’s pro-rata interest in Commercial Net Lease Realty Services based on Schonbraun
valuation.



          (f) Ralston acknowledges and represents to CNLR that as the President and Chief Operating
Officer of CNLR he is familiar with the operations, prospects, and financial condition of the CNLR
Group including but not limited to Commercial Net Lease Realty Services, Inc., he believes the
aggregate purchase price set forth in subparagraph (e) above is a fair and reasonable price for the
Equity Interests, and that neither CNLR, any member of the CNLR Group, nor any of their officers or
directors are making any representation as to the fair market value of the Equity Interests, any
evaluation of the advisability of the sale of such equity interests, or the fairness of the
purchase price for the Equity Interests. On or prior April 30, 2004, the parties hereto will agree
as to the allocation of the purchase price among the various Equity Interests.



          (g) CNLR will use commercially reasonable efforts to arrange for the purchase of Ralston’s
equity interests in CNL Commercial Finance, Inc., CNL Commercial Investors, Inc. and CNL Funding,
L.P. It is contemplated that these entities will be sold to third parties, and that Ralston shall
be entitled to his pro-rata share of the purchase price paid with respect thereto based upon his
percentage ownership of the entities.



          (h) CNLR will pay Ralston’s documented and reasonable attorneys’ fees related to negotiating
this Agreement, not to exceed $24,000.00, within thirty (30) days of Ralston’s submission of the
bill for legal services to CNLR.



          (i) The payments and promises set forth above will not be disbursed to Ralston until at least
seven (7) business days following CNLR’s receipt of this Agreement executed by Ralston and the
expiration without revocation of the revocation period described in Paragraph 13 of this Agreement.



     3. (a) CNLR agrees to engage Ralston to provide consulting services for twelve(12) months (the
“Consulting Services”), beginning May 1, 2004, at a rate of Two Hundred Fifty Thousand Dollars
($250,000) per year, payable in equal monthly installments at the beginning of each month
throughout the consulting period beginning on June 1, 2004. Until November 30, 2004, Ralston shall
provide up to forty (40) hours per month, and during the remainder of this term he shall provide up
to twenty (20) hours per month (the “Hours Requirement”) of Consulting Services to CNLR, including,
but not limited to, providing counsel and expertise relating to (i) transitioning in a new Chief Executive Officer, (ii)
assisting CNLR on issues arising with major tenants, brokers, and shareholders, and (iii)
assisting with investor relations. Ralston further agrees that, as a consultant, he shall render
the Consulting Services in a diligent, careful, thorough and professional manner consistent with
good business practices and shall at all times use his best efforts to endeavor to provide CNLR
competent assistance and to promote CNLR’s interest. At the request of CNLR, Ralston shall submit
to CNLR by the tenth business day of each month a written report summarizing his hours worked and
services provided in the preceding month. Should Ralston incur any reasonable out-of-pocket
expenses in connection with the Consulting Services (other than for such office space and support
as he might otherwise incur in connection with permissible activities other than the Consulting
Services), CNLR shall reimburse Ralston for such expenses upon the presentation of an itemized
invoice with appropriate supporting documentation. The consulting engagement shall not be deemed to
create an agency, joint venture, partnership or franchise relationship between CNLR and Ralston.
Ralston acknowledges that he is voluntarily terminating his employment relationship with CNLR and
is choosing to provide services to the Company as an independent contractor. Ralston acknowledges
that, after April 30, 2004, he will not be an employee of CNLR and, subject to subparagraph (b)
below, will not be entitled to any Company employment rights or benefits nor shall be authorized to
act on behalf of Company. Ralston shall not hold himself out as having authority to act on behalf
of CNLR unless specifically authorized to do so in writing by CNLR’s Chief Executive Officer.
Ralston shall be solely responsible for any and all tax obligations related to his Consulting
Services for the Company, including but not limited to, all city, state and federal income taxes,
social security withholding tax and other self employment tax incurred by him (provided that such
provision does not affect CNLR’s obligation to pay to Ralston the tax gross-up amounts provided in
Paragraph 2(d) hereof). Ralston will not cite his Consulting Services in support of any claim to be
an employee of CNLR for the purpose of claiming unemployment or workers’ compensation or seeking
other employment-related benefits (other than as may be required to enforce CNLR’s obligations
described in subparagraph



 









 




(b) below). CNLR shall not dictate the work hours of Ralston during the
term of his Consulting Services, nor have the right to control the manner, means, or method by
which Ralston performs the Consulting Services called for by this Agreement. Rather, CNLR shall be
entitled only to direct Ralston with respect to the elements of services to be performed by Ralston
and the results expected to be derived by CNLR there from, to inform Ralston as to where and when
such services shall be performed, and to review and assess the performance of such services by
Ralston for the limited purposes of assuring that such services have been reasonably satisfactorily
performed. CNLR shall be entitled to exercise broad general power of supervision and control over
the results of Ralston’s work to ensure satisfactory performance, including the right to inspect,
the right to stop work, the right to make suggestions or recommendations as to the details of the
work, and the right to propose modifications to the work. Except as may be otherwise agreed to by
CNLR in writing, Ralston shall not be entitled to any compensation for the Consulting Services
other than the compensation set forth in this Paragraph 3. It is acknowledged and understood that
if Ralston is requested to engage in development work on behalf of CNLR or its affiliates, to
negotiate joint ventures or other arrangements or provide services over and above the types of
services normally considered “consulting” in nature, CNLR and Ralston anticipate entering into
separate compensation agreements for such services, if any; provided, however, the parties
acknowledge and agree that, for the purposes of this Agreement, to the extent such services are
provided within the Hours Requirement, the services shall be deemed “consulting” in nature.




          (b) During the first eighteen (18) months of the Non-Compete Period described in Paragraph 5
below, CNLR shall pay, for the benefit of Ralston, all payments Ralston would otherwise be entitled
to make under the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) for such continuing
health benefits (including any medical, vision or dental benefits) under the Company’s health plans
and programs applicable to senior executives of the Company generally. During the remaining six (6)
month term of this Agreement, CNLR shall arrange to provide, for the benefit of Ralston, continuing
health benefits (including any medical, vision or dental benefits) comparable to those provided
under the Company’s health plans and programs applicable to senior executives of the Company. The
parties hereto expressly understand and agree that nothing in this subparagraph (b) shall restrict
the ability of the Company to amend or terminate such plans and programs from time to time in its
sole discretion; provided, however, that the Company shall in no event be required to provide such
coverage after such time as Ralston becomes entitled to receive health benefits from another
employer or recipient of Ralston’s services, other than a subsidiary or affiliate of CNLR (and
provided, further, that (i) such entitlement shall be determined without regard to any
individual waivers or other arrangements, and (ii) nothing contained herein shall require Ralston,
to the extent he determines to establish a company pursuant to the Seneff/Ralston Agreement, to
have such company provide health benefits to Ralston.



          (c) Until November 30, 2004, CNLR shall provide office space and appropriate support services
to Ralston to facilitate the provision of the consulting services during the initial term at a
location reasonably near the executive offices of the Company.



     4. The parties agree that their promises in Paragraphs 2, 3, 5, 8, 9,11, 12 and 15 are in
full, final and complete settlement of all known claims Ralston may have against CNLR, its
affiliates, subsidiaries, past and present officers, directors, employees, agents, successors and
assigns, and that the various covenants, obligations and undertakings of Ralston as set forth
herein are in full, final and complete settlement of all known claims that CNLR and its affiliates
may have against Ralston arising out of or relating to his employment by and service to CNLR and
its affiliates. Nothing contained herein shall constitute any waiver or relinquishment of the
rights of Ralston as a stockholder of CNLR. Notwithstanding the foregoing, to the extent that any
claim (whether or not known on the date hereof) by Ralston or CNLR is based on fraud, willful
misconduct or gross negligence by the other party, the rights of the party claiming fraud, willful
misconduct or gross negligence shall remain unaffected by this Paragraph 4, and such party may
pursue any cause of action against the other party, whether at law or equity.



     5. (a) Ralston acknowledges that as the Chief Operating Officer and President of CNLR he has
(i) acquired trade secrets (as defined in Section 688.024(4), Florida Statutes) of CNLR, (ii)
acquired valuable confidential business information concerning the past, present, and future
business of CNLR, and (iii) gained substantial relationships with CNLR customers and prospective
customers. Ralston further acknowledges that the Business of the Company (as defined below) is very
competitive and that competition by him in that business (except as permitted hereunder) would
severely injure the Company. Accordingly, Ralston shall not, for a period of twenty-four (24)
months following the date hereof (the “Non-Compete Period”), in any geographic market in which CNLR
or any member of the CNLR Group is then doing Business or preparing to do Business, directly or
indirectly, own, manage, control or participate in the ownership, management, or control of, or be
employed or engaged by or otherwise affiliated or associated as an employee, employer, consultant,
agent, principal, partner, stockholder, corporate officer, director or in any other individual or
representative capacity, engage or participate in any business that is in competition in any manner
whatsoever with the Business of the Company. For the purposes of this Agreement, the Business of
the Company shall be defined as the acquisition, ownership and management of a diversified
portfolio of high-quality, single-tenant, freestanding properties leased to retail, office and
industrial businesses. Notwithstanding the foregoing, Ralston shall be permitted to engage in the
following activities;



 









 





               (i) Ralston may invest in securities of any entity, solely for investment purposes and without
participating in the business thereof, if (i) such securities are traded on any national securities
exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (ii)
Ralston is not a controlling person of, or a member of a group which controls, such entity and
(iii) Ralston does not, directly or indirectly, own five percent or more of any class of securities
of such entity;



               (ii) Ralston may engage in private commercial real estate development business within the
State of Florida through the development of commercial real estate projects provided that (A)
Ralston notifies CNLR of the activities he intends to engage in prior to commencing the same, and
(B) he provides CNLR with the opportunity to participate in the purchase of projects he may develop
on a “first refusal” basis (that is, Ralston will provide CNLR with the opportunity to acquire the
projects he develops on terms and conditions at least as favorable as those offered to third
parties prior to accepting any purchase from a third party);



               (iii) Ralston may have an ownership interest in, and engage in any real estate activities
through, the company formed pursuant to the Seneff/Ralston Agreements; and



               (iv) Ralston may become an owner, officer or employee of a privately held real estate
competitor so long as (A) Ralston is the largest single stockholder of the real estate competitor
(other than Seneff and any other shareholder approved by Seneff), (B) Ralston is actively involved
in the management thereof, (C) the Real Estate Competitor is not funded by publicly-solicited debt
or equity, and (D) the real estate competitor engages in activities that the company referred to in
(iii) above elects not to participate in and such activities are conducted solely in the State of
Florida.



          (b) Ralston further agrees that, during the Non-Compete Period, without the prior written
consent of CNLR or except in connection with activities he may permissibly undertake pursuant to
Paragraph 5(a) above, he (1) shall not solicit, directly or indirectly, for his own behalf or on
behalf of any other person(s), any customer of the Company that had utilized services from the
Company at any time during the Ralston’s employment or during the Non-Compete Period in any line of
business that the Company conducts during Non-Compete Period or that the Company is actively
soliciting, for the purpose of marketing or providing any service competitive with any service then
offered by the Company; or (2) shall not engage, directly or indirectly, by himself or in
connection with any other person(s), in the development or marketing of any service which will
compete with any service that the Company is then providing, developing or marketing or is in the
process of developing or marketing as of the Separation Date or (3) shall not directly or
indirectly, whether for Ralston’s own account or for the account of any other person, firm,
corporation or other business organization, intentionally interfere with the Company’s or any of
its affiliates, relationship with, or endeavor to entice away from the Company or any of its
affiliates, any person who during Ralston’s employment with the Company and its affiliates (or the
predecessors of either) is or was a customer or client of the Company or any of its affiliates (or
any predecessor of either). Ralston further agrees that he shall not, directly or indirectly
knowingly solicit or encourage to leave the employment or other service of the Company or any of
its affiliates, any employee thereof or hire (on behalf of Ralston or any other person or entity)
any employee who has left the employment or other service of the Company or any of its affiliates
(or any predecessor of either) within one year of the termination of such employee’s or independent
contractor’s employment or other service with the Company and its affiliates.



          (c) Ralston acknowledges that these restrictions set forth in this Paragraph 5 are reasonable
in scope and duration. Ralston further acknowledges that he has sufficient assets and other skills
to provide a reasonable livelihood for himself while such obligations are in force, and that
together with the consulting engagement set forth in Paragraph 3, he has the ability to provide
such a livelihood.



          (d) The restrictions contained in this Paragraph 5 shall terminate upon consummation of any
transaction resulting in a “change in control” of CNLR. For the purposes of this Agreement, a
change in control of CNLR occurs whenever as a result of a transaction or series of related
transactions involving a merger with or acquisition by individuals or entities that are not
affiliates of CNLR pursuant to which the then current shareholders (defined as those shareholders
of CNLR immediately prior to the consummation of the transaction or the consummation of the first
of the series of related transactions) wind up holding less than 50% of the resulting equity
interests of CNLR or its successor.



     6. Nothing in this Agreement shall be construed as an admission of liability by CNLR, its
affiliates, subsidiaries, or its past and present officers, directors, employees or agents, and
CNLR specifically disclaims liability to or wrongful treatment of Ralston on the part of itself,
its affiliates, subsidiaries, and its past and present officers, directors, employees and agents.



     7. Ralston represents that he has not filed any complaints or charges against the CNLR Group
with the Equal Employment Opportunity Commission, or with any other federal, state or local agency
or court, and covenants that he will not seek to recover on any claim released in this Agreement.
Ralston also agrees that he will not in the future make any claim, charge, complaint, or demand, or
file any suit, of any kind against any member of the CNLR Group or any of their



 









 




officers, directors, employees, or agents based upon any facts or events which have occurred at any time
prior to the execution of this Agreement except to the extent that he may file any claim, whether
at law or equity or in any agency (whether or not known on the date hereof) based on fraud, willful
misconduct or gross negligence by any member of the CNLR Group or any of their officers, directors,
employees, or agents.




     8. Ralston covenants not to sue, and fully and forever releases and discharges CNLR, its
parents, subsidiaries, affiliates, divisions, successors and assigns, together with its past and
present trustees, directors, officers, employees, agents, attorneys and representatives
(collectively, the “CNLR Releasees”) from any and all claims, debts, liens, liabilities, demands,
obligations, acts, agreements, causes of action, suits, costs and expenses (including attorneys’
fees), damages (whether pecuniary, actual, compensatory, punitive or exemplary) or liabilities of
any nature or kind whatsoever in law or equity or otherwise, whether now known or unknown, arising
out of or in any way connected with Ralston’s employment with CNLR; provided, however, that nothing
in this Agreement shall either waive any rights or claims of Ralston that arise after Ralston signs
this Agreement or impair or preclude Ralston’s right to take action to enforce the terms of this
Agreement or to pursue any claim (whether known or unknown) based on fraud, willful misconduct or
gross negligence. CNLR covenants not to sue, and fully and forever releases and discharges Ralston
from any and all known claims, debts, liens, liabilities, demands, obligations, acts, agreements,
causes of action, suits, costs and expenses (including attorneys’ fees), damages (whether
pecuniary, actual, compensatory, punitive or exemplary) or liabilities of any nature or kind
whatsoever in law or equity or otherwise, whether now known or unknown, arising out of or in any
way connected with Ralston’s employment with CNLR; provided, however, that nothing in this
Agreement shall either waive any rights or claims of CNLR that arise after CNLR signs this
Agreement or impair or preclude CNLR’s right to take action to enforce the terms of this Agreement
or to pursue any claim (whether known or unknown) based on fraud, willful misconduct or gross
negligence. This release by Ralston includes but is not limited to claims arising under federal,
state or local laws prohibiting employment discrimination, including but not limited to Title VII
of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended,
the Equal Pay Act and the Americans with Disabilities Act, claims for attorneys’ fees or costs,
workers’ compensation claims, and any and all claims regarding any claimed employment contract,
whether written, oral, implied or otherwise, relating to CNLR’s right to terminate its employees,
or any other claims under federal, state, or local statute, regulation or ordinance, common law, or
any other law in any way relating to Ralston’s employment with CNLR or the termination of that
employment.



     9. Each of CNLR and Ralston agrees, without limiting the generality of the above release, not
to sue or otherwise institute or cause to be instituted or to in any way participate in or
voluntarily assist in the prosecution of any complaints, charges or grievances against any releasee
concerning any claims released in this Agreement.



     10. Ralston shall keep secret and retain in strictest confidence all confidential matters
relating to (i) the Company’s business and affairs (which term includes activities other than the
Business of the Company as defined herein) , (ii) the business of any of its affiliates and (iii)
the Company and any of its affiliates, learned by Ralston heretofore or hereafter directly or
indirectly from the Company or any of its subsidiaries or any predecessor of either (all such
confidential matters, the “Confidential Company Information”), including, without
limitation, information with respect to the Business and any aspect thereof, profit or loss
figures, and the Company’s or its affiliates, (or any of their predecessors) properties, and shall
not disclose such Confidential Company Information to anyone outside of the Company or its
affiliates except with the Company’s prior express written consent and except for Confidential
Company Information which (i) at the time of receipt or thereafter becomes publicly known through
no wrongful act of Ralston, (ii) is clearly obtainable in the public domain, (iii) was not acquired
by Ralston in connection with Ralston’s employment, service or affiliation with the Company, (iv)
was not acquired by Ralston from the Company or its representatives or affiliates or from a
third-party who has an agreement with the Company not to disclose such information, or (v) is
required to be disclosed by rule of law or by order of a court or governmental body or agency.
Notwithstanding the foregoing, Ralston shall be entitled to retain a copy of his contacts file and
other personal materials he may have developed, generated or received during his service with the
Company, and shall be entitled to use the same in connection with permissible real estate
activities as set forth in Paragraph 5 hereof; provided that nothing contained in this sentence
shall permit Ralston to disclose the same to third parties in violation of the provisions of this
Paragraph 10. On the Separation Date, Ralston shall deliver to CNLR his CNLR identification card
and office keys and any other CNLR property or tangible Company Confidential Information in his
possession, custody, or control as the Company may request.



     11. Ralston agrees that he will truthfully give evidence and provide all other assistance
which CNLR or any of its affiliates may from time to time reasonably require in connection with the defense or
prosecution of any action or proceeding that has been or may be instituted by or against CNLR or
any of its affiliates in relation to events which occurred during the period of Ralston’s
employment with CNLR. CNLR will reimburse Ralston for all reasonable out-of-pocket expenses
incurred in connection with such cooperation upon the presentation of an itemized invoice with
appropriate supporting documentation. CNLR and its officers and employees agree that they will
truthfully give evidence and provide all other assistance which Ralston may from time to time
reasonably require in connection with the defense or prosecution of any



 









 




action or proceeding that has been or may be instituted by or against Ralston in relation to events which occurred during the
period of Ralston’s employment with CNLR, and Ralston shall reimburse CNLR for all reasonable
out-of-pocket expenses incurred in connection with such cooperation upon the presentation of an
itemized invoice with appropriate supporting documentation except to the extent that such expenses
would otherwise be indemnifiable by the Company as contemplated by Paragraph 12 hereof.




     12. Ralston shall continue to be entitled to the indemnification rights provided by the
articles of incorporation, bylaws or special indemnification agreements with respect to actions
taken by him (a) during the period of Ralston’s employment with CNLR, (b) specifically at the
request of CNLR during the period he is providing Consulting Services to the Company as
contemplated by Paragraph 3(a), and (c) to the extent he is requested and agrees to provide
services to the Company beyond the scope of the consulting services contemplated in Paragraph 3
(such an engagement in development work on behalf of CNLR or its affiliates or negotiating joint
ventures or other arrangements) and such services are in excess of the Hours Requirement in
accordance with the term and conditions thereon as in effect on the date hereof, subject only to
such amendments as may be effective for all senior executive officers of CNLR hereafter.



     13. Ralston acknowledges that he had adequate time to consider this Agreement and that he has
seven (7) calendar days from the date he executes this Agreement in which to revoke it and that
this Agreement will not be effective or enforceable nor the amounts set forth in Paragraph 2 paid
until after the seven-day revocation period ends without revocation by Ralston. Revocation can be
made by delivery of a written notice of revocation to Jay Whitehurst, General Counsel, Commercial
Net Lease Realty, Inc., 450 South Orange Avenue, Suite 900, Orlando, FL, 32801, by midnight on or
before the seventh calendar day after Ralston signs the Agreement.



     14. Ralston acknowledges that he has been advised to consult with an attorney of his choice
with regard to this Agreement. Ralston hereby acknowledges that he understands the significance of
this Agreement, and represents that the terms of this Agreement are fully understood and
voluntarily accepted by him.



     15. CNLR and Ralston agree that they will treat the existence and terms of this Agreement as
confidential and will not discuss the Agreement (with the exception of Paragraphs 1, 3 and 5
herein), the fact of settlement, or the negotiations and communications leading to this Agreement,
with anyone other than: (i) their counsel or tax advisor, as necessary to seek their professional
advice, (ii) in the case of Ralston, his wife, (iii) as required by compulsory legal process
(provided that, to the extent reasonably practicable, the party required to disclose the terms
hereof provide written thereof to the other party at least five (5) business days prior to the date
that such disclosure is required), (iv) in the case of CNLR, its independent accountants, (v) in
the case of CNLR, to a prospective lender or in connection with a proposed transaction (provided
that the recipient of the of the disclosure is bound by a written confidentiality agreement), (vi)
upon the advice of counsel, to comply with securities law disclosure requirements, or (vi) in order
to enforce the terms of this Agreement. To the extent CNLR elects to make the existence or terms of
this Agreement public under the provisions of (iii), (iv) or (v) hereof, Ralston shall not be
precluded from discussing or disclosing those matters publicly disclosed by CNLR with or to third
parties.



     16. Ralston shall not disparage, denigrate or comment negatively upon, either orally or in
writing, any member of the CNLR Group or any CNLR Releasee to or in the presence of any other
person or entity unless compelled to do so by a valid subpoena or court order; provided, however,
that if Ralston receives such a subpoena or court order he gives, to the extent reasonably
practicable, CNLR written notice thereof at least five (5) business days prior to the date on which Ralston is required to comply. CNLR
shall not disparage, denigrate or comment negatively upon, either orally or in writing Ralston to
or in the presence of any other person or entity unless compelled to do so by a valid subpoena or
court order; provided, however, that if CNLR receives such a subpoena or court order CNLR gives, to
the extent reasonably practicable, Ralston written notice thereof at least five (5) business days
prior to the date on which CNLR is required to comply. Nothing contained herein is intended to or
shall limit or either parties’ ability to make truthful statements necessary to comply with
applicable laws, rules or regulations, to obtain any benefits under any bond and/or insurance
policy, or to commence, institute, prosecute or defend any lawsuit, action, claim or proceeding
before or in any court, regulatory, governmental, arbitral or other authority.



     17. In the event of violation by either party of the undertakings or agreements set forth in
this Agreement, either Ralston or CNLR, as applicable, shall have the right to obtain an injunction
or decree of specific performance from any court of competent jurisdiction to restrain the other
party from violating such undertakings or agreements or to compel such party to perform such
undertakings or agreements. Notwithstanding the foregoing, neither party shall be entitled to
exercise the rights and remedies set forth in the remaining sentences of this Paragraph unless (a)
such party has given notice to the other party of the violation (setting forth with reasonable
specificity the nature of the violation), and (b) the other party has been given an appropriate
period to cure the violation. For violations of obligations to make payments hereunder, the cure
period shall be three (3) business days. For violations of other obligations that are capable of
being cured, the cured period shall be thirty (30) days. There shall be no cure period for
violations of obligations that cannot be cured. In the event of a breach by Ralston, CNL shall have
the right to (i) immediately stop the payments as described in Paragraph 2(a), (ii) cause the
forfeiture of any shares of unissued Restricted Stock held in escrow as described in Paragraph
2(d), and (iii) terminate the consulting



 









 




obligations described in Paragraph 3. Ralston shall
indemnify and hold the Company harmless from, and shall be fully responsible for, all costs and
expenses, including without limitation actual attorney fees and related legal costs and expenses
incurred by the Company, in enforcing the covenants, undertakings and agreements of Ralston under
this Agreement. In the case of a breach thereof by CNLR (i) all payments required to be made
hereunder shall be accelerated and shall be immediately due and payable, (ii) the shares of
restricted stock of CNLR held in escrow shall be immediately released to Ralston, and (iii) the
restrictions of Paragraph 5 hereof shall immediately terminate. CNLR shall indemnify and hold the
Ralston harmless from, and shall be fully responsible for, all costs and expenses, including
without limitation actual attorney fees and related legal costs and expenses incurred by Ralston,
in enforcing the covenants, undertakings and agreements of CNLR under this Agreement. Nothing
herein contained shall in any way limit or exclude any and all other rights granted by law or
equity to Ralston or the Company.




     18. This Agreement shall be binding on CNLR and Ralston and upon their respective heirs,
administrators, representatives, executors, successors and assigns, and shall run to the benefit of
the Releasees and each of them and to their respective heirs, administrators, representatives,
executors, successors and assigns. Except for the obligations to pay fees to Ralston in connection
with his performance of the Consulting Services (the “Consulting Fees”), the obligations of CNLR to
Ralston pursuant to this Agreement shall not be affected by the death, disability or incapacity of
Ralston (a “Death or Disability Event”), and in the event thereof, any payments required hereunder
shall be made to his heirs or personal representative at such time had such obligations would have
been payable had there not been a Death or Disability Event. In the event of a Death or Disability
Event, CNLR’s obligation to pay the Consulting Fees shall terminate on the date of such event and
CNLR’s obligation to pay such fees shall cease, provided, however, any accrued and unpaid
Consulting Fees shall be payable by CNLR to Ralston’s heirs or personal representative through and
including the Death or Disability Event. For the purposes of this Agreement, a Disability Event
shall be defined as an event or circumstance arising by way of illness or accident that prevents
Ralston from carrying out his consulting obligations under Paragraph 3 hereunder for three calendar
months out of any consecutive period of six (6) calendar months.



     19. This Agreement sets forth the entire agreement between Ralston and CNLR, and fully
supersedes any and all prior agreements or understandings between them regarding its subject
matter, including the Ralston Employment Agreement and Restricted Stock Agreement (provided,
however, that those provisions of the Restricted Stock Agreement referred to herein shall remain
valid and effective, notwithstanding the termination of such Agreement). This Agreement may only be
modified by written agreement signed by both parties.



     20. If any of the provisions of this Agreement, including without limitation any of the
restrictive covenants herein, or any part thereof, is determined to be invalid or unenforceable by
any court or administrative agency of competent jurisdiction, or in the event that any provision
cannot be modified so as to be valid and enforceable, then that provision shall be deemed severed
from the Agreement and the remainder of the Agreement shall remain in full force and effect. The
language of all valid parts of this Agreement shall in all cases be construed as a whole, according
to its fair meaning and not strictly for or against any of the parties.



     21. Except as set forth in Paragraph 17 above, any dispute between the parties concerning the
performance, breach, construction or interpretation of this Agreement, or in any manner arising out
of this Agreement, shall be submitted to binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (“AAA”), which arbitration shall be
carried out in the manner set forth below:



          (a) Within fifteen (15) days after written notice by one party to the other party of its
demand for arbitration under this Paragraph 11, which demand shall set forth the name and address
of its designated arbitrator, the other party shall select its designated arbitrator and so notify
the demanding party. Within fifteen (15) days thereafter, the two arbitrators so selected shall
select the third arbitrator. The dispute shall be heard by the arbitrators so selected within
ninety (90) days after selection of the third arbitrator. The decision of any two arbitrators shall
be binding upon the parties. Should any party or arbitrator fail to make a selection, the AAA shall
designate such arbitrator upon the application of either party. Any arbitrator designated by any
party, the selected arbitrators or the AAA must meet the standards of R-17 of the Commercial
Arbitration Rules of the AAA. The decision of the arbitration panel so selected shall be final and
binding upon the parties.



          (b) The arbitration proceedings shall take place in Orlando, Florida, and the determination of
the arbitrators in such proceedings shall be binding on the parties. Judgment upon any award
rendered by the arbitrators may be entered into by any court having competent jurisdiction without
any right of appeal.



          (c) Each party shall pay its or his own expenses of arbitration (including its attorneys’ fees
and costs), and the expenses of the arbitrators and the arbitration proceeding shall be shared
equally. However, the arbitrators shall have the power to assess against a party, as part of their
award, all or any part of the arbitration expenses of the other party (including reasonable
attorneys’ fees) and the expenses and costs of the arbitrators and the arbitration proceeding.



 









 





     22. All notice required to be given under this Agreement to any party shall be in writing and
delivered personally to the other party by hand delivery or sent by United States certified mail,
return receipt requested, postage prepaid, addressed to the other party at the address set forth
below or at such other address as such party shall so notify the other party. Any notice shall be
deemed to be received when received if hand delivered or two (2) business days after being properly
deposited in the United States mail as set forth above.



     23. No provision of this Agreement shall be construed against or interpreted to the
disadvantage of any party by reason of such party having, or being deemed to have, drafted,
devised, or imposed such provision.



     24. This Agreement shall be governed in all respects by Florida law, without regard to its
conflict of laws principles.



 









 





PLEASE READ CAREFULLY.

THIS AGREEMENT AND GENERAL RELEASE INCLUDES A

RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.



	 	 	 	 	 
	 	 	 
	Dated: As of April 23, 2004 	/s/Gary M. Ralston	 
	 	GARY M. RALSTON 	 
	 	
152 Trismen Terrace
Winter Park, FL 32789 	 
	 
	Dated: As of April 23, 2004 	COMMERCIAL NET LEASE REALTY, INC.

	 
	 	BY:	 	 	 
	 	450 South Orange Avenue
Suite 900
Orlando, FL 32801

Attn: General Counsel	 





 









 





PART II




FIRST AMENDMENT TO SEPARATION

AGREEMENT AND GENERAL RELEASE




     This First Amendment to Separation Agreement and General Release (“Amendment”) is made and
entered into as of the 30th day of December 2004, by and between Gary M. Ralston (“Ralston”) and
Commercial Net Lease Realty, Inc., a Maryland corporation (“CNLR” or the “Company”).



     WHEREAS, Ralston and CNLR have entered into that certain Separation Agreement and General
Release dated as of April 23, 2004 (the “Agreement”), which provides, among other things, for
payment by CNLR of certain amounts to Ralston and consulting services to be provided by Ralston to
CNLR, as well as a non-compete period applicable to Ralston;



     WHEREAS, CNLR and Ralston have agreed that CNLR may prepay all remaining amounts due to
Ralston, subject to a two percent (2%) discount, and that upon such prepayment that Ralston will be
released from all obligations in connection with consulting services or in connection with any
non-compete period.



     NOW, THEREFORE, in consideration of the premises hereof, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:



          1. All capitalized terms used herein shall have the same meaning as ascribed thereto in the
Agreement.



          2. CNLR will pay all amounts due to Ralston under the Agreement within ten (10) days from the
effective date hereof.



          3. The provisions of Paragraph 3(a) of the Agreement concerning Consulting Services to be
provided by Ralston and the provisions of Paragraph 5 of the Agreement concerning Ralston’s
non-compete obligations and the related Non-Compete Period are hereby terminated in their entirety.



          4. CNLR shall promptly cause all remaining shares escrowed pursuant to Paragraph 2(d) of the
Agreement to be released to Ralston.



          5. In all other respects, the Agreement shall remain in full force and effect in accordance
with its terms.



	 	 	 
	COMMERCIAL NET LEASE REALTY, INC.
	 	 
	 
	 	 
	By: /s/ Julian E. Whitehurst     
	 	   /s/ Gary M. Ralston   
	Name: Julian E. Whitehurst

	 	Gary M. Ralston
	Title: Executive Vice President and Chief Operating officer