Document:

Exhibit
10.1

EMPLOYMENT
AGREEMENT

THIS
AGREEMENT, dated as of                    ,
2006, 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”).

1.             Term.  The Company hereby employs 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.

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, 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.  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 or Employee’s Constructive Termination (as
defined in the Definitions Annex below), in either case prior to or more 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
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 or Employee’s
Constructive Termination (as defined below), in either case on or within twelve
months after a Change in Control, 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 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.  In the
event this Agreement is terminated by the Company pursuant to this Paragraph
10(b), such termination shall be upon the terms of, and the Company and the
Employee shall execute, the Severance Agreement and General Release substantially
in the form of Exhibit A, attached hereto and incorporated herein by reference
and no severance 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.

d.                                      Internal Revenue Code Section 409A.  The
foregoing notwithstanding, to the extent required to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), if Employee is
deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B) of
the Code as the date of termination of employment, Employee agrees that the
payments due to him under Section 10(b) in connection with a termination of his
employment that would otherwise have been payable at any time during the
six-month period immediately following such termination of employment shall not
be paid prior to, and shall instead be payable in a lump sum as soon as
practicable following, the expiration of such six-month period.

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 section, 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 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, to be executed concurrent
herewith.

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

  
	
   

  	
   

  	
  220 West Crest
  Street

  
	
   

  	
   

  	
  Escondido,
  California 92025-1707

  

 

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
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, any and all 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:

  	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

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 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
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).

 

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, 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.

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:Exhibit
10.2

EMPLOYMENT
AGREEMENT

THIS
AGREEMENT, dated as of               ,
2006, 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”).

1.             Term.  The Company hereby employs 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.

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, 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.  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 or Employee’s Constructive Termination (as
defined in the Definitions Annex below), in either case prior to or more 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 six (6) 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
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 six (6)
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 or Employee’s
Constructive Termination (as defined below), in either case on or within twelve
months after a Change in Control, the Company shall (i) pay to the Employee in
a single lump sum an amount equal to nine (9) 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 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 nine (9) months from the date of termination or
until Employee becomes covered under another group medical insurance plan,
whichever occurs first.  In the
event this Agreement is terminated by the Company pursuant to this Paragraph
10(b), such termination shall be upon the terms of, and the Company and the
Employee shall execute, the Severance Agreement and General Release substantially
in the form of Exhibit A, attached hereto and incorporated herein by reference
and no severance 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.

d.                                      Internal Revenue Code Section 409A.  The
foregoing notwithstanding, to the extent required to comply with Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), if Employee is
deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B) of
the Code as the date of termination of employment, Employee agrees that the
payments due to him under Section 10(b) in connection with a termination of his
employment that would otherwise have been payable at any time during the
six-month period immediately following such termination of employment shall not
be paid prior to, and shall instead be payable in a lump sum as soon as
practicable following, the expiration of such six-month period.

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 section, 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 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, to be executed concurrent
herewith.

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

  
	
   

  	
   

  	
  220 West Crest
  Street

  
	
   

  	
   

  	
  Escondido,
  California 92025-1707

  

 

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
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, any and all 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:

  	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

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 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 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).

 

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, 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.

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:

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