exv10w6



 




EMPLOYMENT AGREEMENT 


(Dennis E. Tracy)


      THIS EMPLOYMENT AGREEMENT is dated as of January 1, 2003, by and between COMMERCIAL NET LEASE
REALTY SERVICES, INC., a Maryland corporation (hereinafter referred to as the “Company”), and
DENNIS E. TRACY (hereinafter referred to as the “Executive”).


      WHEREAS, the Company wishes to offer employment to the Executive, and the Executive wishes to
accept such offer, on the terms set forth below.


      Accordingly, the parties hereto agree as follows:


      1. Term. The Company hereby employs the Executive, and the Executive hereby accepts
such employment for an initial term commencing as of the date hereof and ending on December 31,
2003, unless sooner terminated in accordance with the provisions of Section 4 or Section 5 (the
period during which the Executive is employed hereunder being hereinafter referred to as the
“Term”). The Term shall be subject to automatic one (1) year renewals unless either party hereto
notifies the other, in accordance with Section 7.5, of non-renewal at least ninety (90) days prior
to the end of any such Term.


      2. Duties. The Executive, in his capacity as Chief Development Officer and Executive
Vice President of the Company, shall faithfully perform for the Company the duties of said office
and shall perform such other duties of an executive, managerial or administrative nature as shall
be specified and designated from time to time by the Board of Directors of the Company’s parent,
Commercial Net Lease Realty, Inc. (“CNLR”) (the “Board”), the Chief Executive Officer or the
President of the Company (including the performance of services for, and serving on the Board of
Directors of, any subsidiary of the Company without any additional compensation). The Executive
shall devote substantially all of the Executive’s business time and effort to the performance of
the Executive’s duties hereunder, provided that in no event shall this sentence prohibit the
Executive from performing personal and charitable activities and any other activities approved by
the Board, so long as such activities do not interfere with the Executive’s duties for the Company.


      3. Compensation.


          3.1. Salary. The Company shall pay the Executive during the Term a salary at the rate
of $187,500.00 per annum (the “Annual Salary”), in accordance with the customary payroll practices
of the Company applicable to senior executives generally. Annual Salary will increase annually on
January 1 of each year by an amount as may be approved by the Board, with such increase to be
effective on the date salary increases are effective for the employees of the Company generally
and, upon such increase, the increased amount shall thereafter be deemed to be the Annual Salary.


          3.2. Bonus. The Executive will be eligible to participate in the Company’s Annual
Bonus Program (the “Bonus Plan”), the terms of which will be established by the Compensation
Committee of the Company.


          3.3. Benefits — In General. The Executive shall be permitted during the Term to
participate in any group life, hospitalization or disability insurance plans, health programs,
pension and profit sharing plans and similar benefits that may be available to other senior
executives of the Company generally, on the same terms as may be applicable to such other
executives, in each case to the extent that the Executive is eligible under the terms of such plans
or programs.


          3.4. Vacation. The Executive shall be entitled to vacation of twenty (20) days per
year.


          3.5. Automobile. The Company will provide the Executive a monthly allowance of $500
for the use of an automobile. At the option of the Company, in lieu of providing such allowance,
the Company will provide the Executive with an automobile of suitable standard to the Executive’s
position.


 









 





          3.6. Disability Benefits and Life Insurance. The Executive shall be entitled to
long-term disability coverage providing benefits (to continue for such period as is provided in the
applicable disability plan or program, as amended from time to time) equal to two-thirds of Annual
Salary in the case of a covered disability and life insurance benefits with a face amount equal to
Annual Salary.


          3.7. Expenses. The Company shall pay or reimburse the Executive for all ordinary and
reasonable out-of-pocket expenses actually incurred (and, in the case of reimbursement, paid) by
the Executive during the Term in the performance of the Executive’s services under this Agreement;
provided that the Executive submits such expenses in accordance with the policies applicable to
senior executives of the Company generally.


      4. Termination upon Death or Disability. If the Executive dies during the Term, the
obligations of the Company to or with respect to the Executive shall terminate in their entirety
except as otherwise provided under this Section 4. If the Executive becomes eligible for disability
benefits under the Company’s long-term disability plans and arrangements (or, if none apply, would
have been so eligible under the most recent plan or arrangement), the Company shall have the right,
to the extent permitted by law, to terminate the employment of the Executive upon notice in writing
to the Executive; provided that the Company will have no right to terminate the Executive’s
employment if, in the opinion of a qualified physician reasonably acceptable to the Company, it is
reasonably certain that the Executive will be able to resume the Executive’s duties on a regular
full-time basis within ninety (90) days of the date the Executive receives notice of such
termination. Upon death or other termination of employment by virtue of disability, (i) the
Executive (or the Executive’s estate or beneficiaries in the case of the death of the Executive)
shall have no right to receive any compensation or benefit hereunder on and after the effective
date of the termination of employment other than Annual Salary and other benefits (but excluding
any bonuses except as provided in the Bonus Plan or in clause (ii) below) earned and accrued under
this Agreement prior to the date of termination (and reimbursement under this Agreement for
expenses incurred prior to the date of termination); (ii) the Executive (or the Executive’s estate
or beneficiaries in the case of the death of the Executive) shall be entitled to a cash payment
equal to the Executive’s Annual Salary (as in effect on the effective date of such termination)
payable no later than thirty (30) days after such termination; and (iii) this Agreement shall
otherwise terminate upon such death or other termination of employment and there shall be no
further rights with respect to the Executive hereunder (except as provided in Section 7.14).


      5. Certain Terminations of Employment.


          5.1. Termination for Cause; Termination of Employment by the Executive Without Good
Reason.


               (a) For purposes of this Agreement, “Cause” shall mean:


                    (i) the Executive’s (A) conviction for (or pleading nolo contendere to) any felony, or a
misdemeanor involving moral turpitude, or (B) indictment for any felony or misdemeanor involving
moral turpitude, if such indictment is not discharged or otherwise resolved within eighteen (18)
months;


                    (ii) the Executive’s commission of an act of fraud, theft or dishonesty related to the
performance of the Executive’s duties hereunder;


                    (iii) the willful and continuing failure or habitual neglect by the Executive to perform the
Executive’s duties hereunder;


                    (iv) any material violation by the Executive of the covenants contained in Section 6; or


                    (v) the Executive’s willful and continuing material breach of this Agreement.


Notwithstanding the foregoing, if there exists (without regard to this sentence) an event or
condition that


 









 





constitutes Cause under clause (iii) or (v) above, the Executive shall have thirty (30) days from
the date such notice is given to cure such event or condition and, if the Executive does so, such
event or condition shall not constitute Cause hereunder.


               (b) For purposes of this Agreement, “Good Reason” shall mean, unless otherwise consented to by
the Executive:


                    (i) the material reduction of the Executive’s authority, duties and responsibilities, or the
assignment to the Executive of duties materially inconsistent with the Executive’s position or
positions with the Company and its subsidiaries;


                    (ii) a reduction in Annual Salary of the Executive;


                    (iii) the failure by the Company to obtain an agreement in form and substance reasonably
satisfactory to the Executive from any successor to the business of the Company to assume and agree
to perform this Agreement; or


                    (iv) the Company’s material and willful breach of this Agreement.


Notwithstanding the foregoing, if there exists (without regard to this sentence) an event or
condition that constitutes Good Reason under clause (i), (ii) or (iv) above, the Company shall have
thirty (30) days from the date on which the Executive gives the notice thereof to cure such event
or condition and, if the Company does so, such event or condition shall not constitute Good Reason
hereunder.


               (c) The Company may terminate the Executive’s employment hereunder for Cause. If the Company
terminates the Executive for Cause, (i) the Executive shall have no right to receive any
compensation or benefit hereunder on and after the effective date of the termination of employment
other than Annual Salary and other benefits (but excluding any bonuses except as provided in the
Bonus Plan) earned and accrued under this Agreement prior to the effective date of the termination
of employment (and reimbursement under this Agreement for expenses incurred prior to the effective
date of the termination of employment); and (ii) this Agreement shall otherwise terminate upon such
termination of employment and the Executive shall have no further rights hereunder (except as
provided in Section 7.14).


               (d) The Executive may terminate his employment without Good Reason. If the Executive
terminates the Executive’s employment with the Company without Good Reason: (i) the Executive shall
have no right to receive any compensation or benefit hereunder on and after the effective date of
the termination of employment other than Annual Salary and other benefits (but excluding any
bonuses except as provided in the Bonus Plan) earned and accrued under this Agreement prior to the
effective date of the termination of employment (and reimbursement under this Agreement for
expenses incurred prior to the effective date of the termination of employment); and (ii) this
Agreement shall otherwise terminate upon such termination of employment and the Executive shall
have no further rights hereunder (except as provided in Section 7.14).


          5.2. Termination Without Cause; Termination for Good Reason; Failure to Renew
Employment Agreement. The Company may terminate the Executive’s employment at any time for any
reason or no reason and the Executive may terminate the Executive’s employment with the Company for
Good Reason. If the Company or the Executive terminates the Executive’s employment and such
termination is not described in Section 4 or Section 5.1, or if the Company, for any reason, does
not renew this agreement at the expiration of its Term, (i) the Executive shall have no right to
receive any compensation or benefit hereunder on and after the effective date of the termination of
employment or expiration of the Term other than Annual Salary and other benefits (but excluding any
bonuses except as provided in the Bonus Plan and clause (ii) below) earned and accrued under this
Agreement prior to the effective date of the termination of employment or expiration of the Term
(and reimbursement under this Agreement for expenses incurred prior to the effective date of the
termination of employment or expiration of the Term); (ii) except as otherwise provided in Section
5.3 below, the Executive shall receive (A) a cash payment equal to two (2) times the Executive’s
Annual Salary (as in effect on the effective date of such


 









 





termination or expiration) payable in twelve (12) equal monthly installments (plus interest on such
unpaid amount at the Prime Rate, as hereinafter defined, commencing on the first day of the first
calendar month following such termination or expiration and continuing on the first day of each
calendar month thereafter until paid in full and (B) for a period of one (1) year after termination
of employment or expiration of the term 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 as the Executive would have received under this Agreement (and
at such costs to the Executive) as would have applied in the absence of such termination or
expiration (but not taking into account any post-termination increases in Annual Salary that may
otherwise have occurred without regard to such termination and that may have favorably affected
such benefits) it being expressly understood and agreed that nothing in this clause (ii)(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 the Executive becomes entitled to receive health benefits
from another employer or recipient of the Executive’s services (and provided, further, that such
entitlement shall be determined without regard to any individual waivers or other arrangements);
(iii) all outstanding unvested options held by the Executive shall vest and such options shall
remain exercisable for one (1) year following termination or expiration (or, if shorter, the
balance of the regular term of the options); and (iv) this Agreement shall otherwise terminate upon
such termination of employment or expiration of the Term and the Executive shall have no further
rights hereunder (except as provided in Section 7.14). As used herein, the term “Prime Rate” shall
mean the prime rate of interest as published in the Wall Street Journal (or, if the Wall Street
Journal is no longer published, a similar national business publication) from time to time.


          5.3. Change of Control. Immediately upon a “change of control”, as hereinafter
defined, then the provisions of Section 5.2 (ii)(A) above shall be automatically deleted and
replaced with the following new Section 5.2(ii)(A):


      “ . . . [(ii) except as otherwise provided in Section 5.3 below, the Executive shall receive]
(A) a cash payment equal to two (2) times (x) the Executive’s Annual Salary (as in effect on the
effective date of such termination or expiration) plus (y) the average of the Executive’s annual
bonus compensation for the previous three (3) years (or such lesser period of time as the Executive
has been employed by the Company if the Executive has not been so employed for three (3) previous
years) payable no later than thirty (30) days after such termination or expiration and [B] . . .”


      For the purposes hereof, the term “change of control” shall mean:


               (a) a “person” or “group” (which terms shall have the meaning they have when used in Section
13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than CNLR,
any trustee or other fiduciary holding securities under an employee benefit plan of CNLR, any
corporation owned directly or indirectly, by the stockholders of CNLR in substantially the same
proportions as their ownership of voting securities of CNLR) becomes (other than solely by reason
of a repurchase of voting securities by CNLR), the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of forty percent (40%) or more of the combined
voting power of CNLR’s then total outstanding voting securities; or


               (b) CNLR consolidates with or merges with or into another corporation or partnership or
conveys, transfers or leases, in any transaction or series of transactions, all or substantially
all of its assets to any corporation or partnership, or any corporation or partnership consolidates
with or merges with or into CNLR, in any event pursuant to a transaction in which the outstanding
voting stock of CNLR is reclassified or changed into or exchanged for cash, securities or other
property, other than any such transaction where (i) the outstanding voting securities of CNLR are
changed into or exchanged for voting securities of the surviving corporation and (ii) the persons
who were the beneficial owners of CNLR’s voting securities immediately prior to such transaction
beneficially own immediately after such transaction fifty percent (50%) or more of the total
outstanding voting power of the surviving corporation, or CNLR is liquidated or dissolved or adopts
a plan of liquidation or dissolution.


 









 





      6. Covenants of the Executive.


          6.1. Covenant Against Competition; Other Covenants. The Executive acknowledges that
(i) the principal business of the Company and CNLR is the development, acquisition, ownership,
management and sale of a diversified portfolio of high-quality, single-tenant, freestanding
properties leased to retail businesses (such business, and any and all other businesses that after
the date hereof, and from time to time during the Term, become material and substantial with
respect to the Company’s then-overall business, herein being collectively referred to as the
“Business”); (ii) the Company knows of a limited number of persons who have developed the Company’s
Business; (iii) the Company’s Business is, in part, national in scope; (iv) the Executive’s work
for the Company and its subsidiaries (and the predecessors of either) has given and will continue
to give the Executive access to the confidential affairs and proprietary information of the
Company; (vi) the covenants and agreements of the Executive contained in this Section 6 are
essential to the business and goodwill of the Company; and (vii) the Company would not have entered
into this Agreement but for the covenants and agreements set forth in this Section 6. In light of
the foregoing, during the Term and for a period of one (1) year thereafter (and, as to Sections
6.1(b) and (d), at any time during and after the Executive’s employment with the Company and its
subsidiaries (and the predecessors of either)):


               (a) The Executive shall not, 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 in
any state in which the Company conducts its Business. In the case of a termination by the Company
without Cause or by the Executive for Good Reason, the preceding covenant shall expire on the date
of termination; provided, however, that notwithstanding the foregoing, the Executive 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) the Executive is not a
controlling person of, or a member of a group which controls, such entity, and (iii) the Executive
does not, directly or indirectly, own one percent (1%) or more of any class of securities of such
entity.


               (b) The Executive shall keep secret and retain in strictest confidence, and shall not use for
his benefit or the benefit of others, except in connection with the business and affairs of the
Company and its affiliates, all confidential matters relating to the Company’s Business and the
business of any of its affiliates and to the Company and any of its affiliates, learned by the
Executive heretofore or hereafter directly or indirectly from the Company or any of its
subsidiaries (or any predecessor of either) (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 except with the
Company’s 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 the Executive, (ii)
is clearly obtainable in the public domain, (iii) was not acquired by the Executive in connection
with the Executive’s employment or affiliation with the Company, (iv) was not acquired by the
Executive from the Company or its representatives 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.


               (c) The Executive shall not, without the Company’s prior written consent, directly or
indirectly, (i) 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 the Executive 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 (1) year of the termination of such
employee’s or independent contractor’s employment or other service with the Company and its
affiliates, or (ii) whether for the Executive’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 the
Executive’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).


               (d) All memoranda, notes, lists, records, property and any other tangible product and
documents (and all copies thereof) made, produced or compiled by the Executive or made available to
the Executive concerning the Business of the Company and its affiliates shall be the Company’s
property and shall be delivered to the Company at any time on request.


               (e) Notwithstanding anything set forth in this Section to the contrary, if at any time after a
“change of control”, as defined above, (i) the Company or the Executive terminates the Executive’s
employment and such termination is not described in Section 4 or Section 5.1, or (ii) the Company,
for any reason, does not renew this agreement at the expiration of its Term, then the covenants set
forth in this Section 6.1 shall expire and terminate immediately upon the expiration or earlier
termination of this Agreement.


          6.2. Rights and Remedies upon Breach. The Executive acknowledges and agrees that any
breach by him of any of the provisions of Section 6.1 (the “Restrictive Covenants”) would result in
irreparable injury and damage for which money damages would not provide an adequate remedy.
Therefore, if the Executive breaches, or threatens to commit a breach of, any of the Restrictive
Covenants, the Company and its affiliates shall have the right and remedy to have the Restrictive
Covenants specifically enforced (without posting bond and without the need to prove damages) by any
court having equity jurisdiction, including, without limitation, the right to an entry against the
Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent)
against violations, threatened or actual, and whether or not then continuing, of such covenants.
This right and remedy shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company and its affiliates under law or in equity (including, without limitation,
the recovery of damages). The existence of any claim or cause of action by the Executive, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the
Restrictive Covenants.


      7. Other Provisions


          7.1. Severability. The Executive acknowledges and agrees that (i) the Executive has
had an opportunity to seek advice of counsel in connection with this Agreement and (ii) the
Restrictive Covenants are reasonable in geographical and temporal scope and in all other respects.
If it is determined that any of the provisions of this Agreement, including, without limitation,
any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder
of the provisions of this Agreement shall not thereby be affected and shall be given full affect,
without regard to the invalid portions.


          7.2. Duration and Scope of Covenants. If any court or other decision maker of
competent jurisdiction determines that any of the Executive’s covenants contained in this
Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof,
are unenforceable because of the duration or geographical scope of such provision, then, after such
determination has become final and unappealable, the duration or scope of such provision, as the
case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form,
such provision shall then be enforceable and shall be enforced.


          7.3. Enforceability; Jurisdictions. The Company and the Executive intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction within
the geographical scope of the Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of breadth of scope or
otherwise it is the intention of the Company and the Executive that such determination not bar or
in any way affect the Company’s right, or the right of any of its affiliates, to the relief
provided above in the courts of any other jurisdiction within the geographical scope of such
Restrictive Covenants, as to breaches of such Restrictive Covenants in such other respective
jurisdictions, such Restrictive Covenants as they relate to each jurisdiction’s being, for this
purpose, severable, diverse and independent covenants, subject, where appropriate, to the doctrine
of res


 









 





judicata. Any controversy or claim arising out of or relating to this Agreement or the
breach of this Agreement that is not resolved by the Executive and the Company (or its affiliates,
where applicable), other than those arising under Section 6, to the extent necessary for the
Company (or its affiliates, where applicable) to avail itself of the rights and remedies provided
under Section 6.2, shall be submitted to arbitration in Orlando, Florida, in accordance with
Florida law and the procedures of the American Arbitration Association. The determination of the
arbitrators shall be conclusive and binding on the Company (or its affiliates, where applicable)
and the Executive and judgment may be entered on the arbitrator(s)’ award in any court having
jurisdiction.


          7.4. Attorneys’ Fees. In the event of any legal proceeding (including an arbitration
proceeding) relating to this Agreement or any term or provision thereof, the losing party shall be
responsible to pay or reimburse the prevailing party for all reasonable attorneys’ fees incurred by
the prevailing party in connection with such proceeding.


          7.5. Notices. Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, five (5) days after the date of deposit in the United States mail as
follows:



	 	 	 	 	 
	(i)	 	If to the Company, to:	 	450 South Orange Avenue
	 	 	 	 	Suite 1400
	 	 	 	 	Orlando, Florida 32801
	 	 	 	 	Attention: Gary M. Ralston, Chairman of the Board
	 	 	 	 	Facsimile: (407) 650-1044
	 	 	 	 	 
	 	 	with a copy to:	 	Shaw Pittman LLP
	 	 	 	 	2300 N Street, N.W.
	 	 	 	 	Washington, D.C. 20037
	 	 	 	 	Attention: John McDonald, Esquire
	 	 	 	 	Facsimile: (202) 663-8007
	 	 	 	 	 
	(ii)	 	It fo the Executive, to:	 	Dennis E. Tracy
	 	 	 	 	450 South Orange Avenue
	 	 	 	 	Suite 900
	 	 	 	 	Orlando, Florida 32801
	 	 	 	 	Facsimile: (407) 650-1055
	 	 	 	 	 
	 	 	with a copy to:	 	Dennis E. Tracy
	 	 	 	 	843 Palmer Avenue
	 	 	 	 	Winter Park, FL 32789





Any such person may by notice given in accordance with this Section to the other parties hereto
designate another address or person for receipt by such person of notices hereunder.


          7.6. Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements, written or
oral, with the Company or its subsidiaries (or any predecessor of either).


          7.7. Waivers and Amendments. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or privilege nor any single or
partial exercise of any such right, power or privilege, preclude any other or further exercise
thereof or the exercise of any other such


 










 





right, power or privilege.


          7.8. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.


          7.9. Assignment. This Agreement, and the Executive’s rights and obligations hereunder,
may not be assigned by the Executive; any purported assignment by the Executive in violation hereof
shall be null and void. In the event of any sale, transfer or other disposition of all or
substantially all of the Company’s assets or business, whether by merger, consolidation or
otherwise, the Company may assign this Agreement and its rights hereunder.


          7.10. Withholding. The Company shall be entitled to withhold from any payments or
deemed payments any amount of withholding required by law. No other taxes, fees, impositions,
duties or other charges or offsets of any kind shall be deducted or withheld from amounts payable
hereunder, unless otherwise required by law.


          7.11. No Duty to Mitigate. The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other employment or
otherwise, nor will any payments hereunder be subject to offset in the event the Executive does
mitigate.


          7.12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors, permitted assigns, heirs, executors and legal
representatives.


          7.13. Counterparts. This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original but all such
counterparts together shall constitute one and the same instrument. Each counterpart may consist of
two (2) copies hereof each signed by one of the parties hereto.


          7.14. Survival. Anything contained in this Agreement to the contrary notwithstanding
the provisions of Section 6, 7.3, 7.4, 7.10, and the other provisions of this Section 7 (to the
extent necessary to effectuate the survival of Sections 6, 7.3, 7.4, and 7.10) shall survive
termination of this Agreement and any termination of the Executive’s employment hereunder.


          7.15. Existing Agreements. Executive represents to the Company that the Executive is
not subject or a party to any employment or consulting agreement, non-competition covenant or other
agreement, covenant or understanding which might prohibit the Executive from executing this
Agreement or limit the Executive’s ability to fulfill the Executive’s responsibilities hereunder.


          7.16. Headings. The headings in this Agreement are for reference only and shall not
affect the interpretation of this Agreement.


          7.17. Parachute Provisions. If any amount payable to or other benefit receivable by
the Executive pursuant to this Agreement is deemed to constitute a Parachute Payment (as defined
below), alone or when added to any other amount payable or paid to or other benefit receivable or
received by the Executive which is deemed to constitute a Parachute Payment (whether or not under
an existing plan, arrangement or other agreement), and would result in the imposition on the
Executive of an excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended,
then, in addition to any other benefits to which the Executive is entitled under this Agreement,
the Executive shall be paid by the Company an amount in cash equal to the sum of the excise taxes
payable by the Executive by reason of receiving Parachute Payments plus the amount necessary to put
the Executive in the same after-tax position (taking into account any and all applicable federal,
state and local excise, income or other taxes at the highest applicable rates on such Parachute
Payments and on any payments under this Section 7.17) as if no excise taxes had been imposed with
respect to Parachute Payments. The amount of any payment under this Section 7.17 shall be computed
by a certified public accounting firm mutually and reasonably acceptable to the Executive and the
Company, the computation expenses of which shall be paid by the Company.


 









 





“Parachute Payment” shall mean any payment deemed to constitute a “parachute payment” as defined in
Section 280G of the Internal Revenue Code of 1986, as amended.


      IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and year first
above written.

	 	 	 	 	 
	 	COMPANY:



COMMERCIAL NET LEASE REALTY, INC.

 	 
	 	By:  	/s/Gary M. Ralston
 	 
	 	 	Name:  	Gary M. Ralston 	 
	 	 	Its:  President 	 
	 
	 	EXECUTIVE:

 	 
	 	By:  	/s/Dennis E. Tracy
 	 
	 	 	Dennis E. Tracy