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                                                                    EXHIBIT 10.2

                                  GLOBALSANTAFE
                          2003 LONG-TERM INCENTIVE PLAN

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                               ADOPTED MAY 6, 2003

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                                  GLOBALSANTAFE
                          2003 LONG-TERM INCENTIVE PLAN

                               SECTION 1 - GENERAL

         1.1      Purpose. The GlobalSantaFe 2003 Long-Term Incentive Plan (the
"Plan") has been established by GlobalSantaFe Corporation (the "Company")
effective March 4, 2003, to (i) attract and retain persons eligible to
participate in the Plan, (ii) motivate Participants by means of appropriate
incentives to achieve long-range goals, (iii) provide incentive compensation
opportunities using the Company's ordinary shares or cash that are competitive
with those of other similar companies, and (iv) further identify Participants'
interests with those of the Company's other shareholders through compensation
that is based on the Company's ordinary shares, thereby promoting the long-term
financial interest of the Company and the Related Companies, including growth in
value of the Company's equity and enhancement of long-term stockholder return.

         1.2      Participation. Subject to the terms and conditions of the
Plan, the Committee shall determine and designate from time to time, from among
the Eligible Individuals, those persons who will be granted one or more Awards
under the Plan and thereby become "Participants" in the Plan. At the discretion
of the Committee, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or in replacement of (a) awards
outstanding under the Plan or any other plan or arrangement of the Company or a
Related Company, or (b) awards outstanding under a plan or arrangement of a
business or entity all or part of which is acquired by the Company or a Related
Company; provided, however, that except for adjustments described in paragraph
(c) of subsection 7.2, the Grant Price of any Option or SAR shall not be
decreased including by means of issuance of a substitute Option or SAR with a
lower Grant Price.

         1.3      Operation and Administration. The operation and administration
of the Plan, including the Awards made under the Plan, shall be subject to the
provisions of Section 7 (relating to operation and administration).

         1.4      Construction and Definitions. Where the context admits, words
in any gender shall include any other gender, words in the singular shall
include the plural and the plural shall include the singular. Capitalized terms
in the Plan shall be defined as set forth in the Plan, including the definition
provisions of Section 2.

                            SECTION 2 - DEFINED TERMS

                  For purposes of the Plan, the terms listed below shall be
defined as follows:

(a)      Agreement. The term "Agreement" has the meaning ascribed to it in
         subsection 7.10.

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(b)      Award. The term "Award" means any award or benefit granted to any
         Participant under the Plan, including without limitation the grant of
         Options, SARs, Stock Awards, Cash Awards or Performance Awards.

(c)      Board. The term "Board" means the Board of Directors of the Company.

(d)      Cash Award. The term "Cash Award" has the meaning ascribed to it in
         subsection 5.1.

(e)      Code. The term "Code" means the Internal Revenue Code of 1986, as
         amended. A reference to any provision of the Code shall include
         reference to any successor provision of the Code.

(f)      Committee. The term "Committee" has the meaning ascribed to it in
         subsection 8.1.

(g)      Company. The term "Company" has the meaning ascribed to it in
         subsection 1.1.

(h)      Effective Date. The term "Effective Date" has the meaning ascribed to
         it in subsection 7.1.

(i)      Eligible Individual. The term "Eligible Individual" shall mean any
         employee of the Company or a Related Company, any consultant or other
         person providing key services to the Company or a Related Company, any
         person to whom an offer of employment has been made by the Company or a
         Related Company and is expected to become such an employee within the
         following six months, and any Non-Employee Director.

(j)      Exercise Price. The term "Exercise Price" has the meaning ascribed to
         it in paragraph (c) of subsection 3.1.

(k)      Fair Market Value. For purposes of determining the "Fair Market Value"
         of a share of Stock, the following rules shall apply:

         (i)      If the Stock is at the time listed or admitted to trading on
                  any stock exchange, then the "Fair Market Value" shall be the
                  mean between the lowest and highest reported sale prices of
                  the Stock on the date in question on the principal exchange on
                  which the Stock is then listed or admitted to trading;
                  provided that, in the discretion of the Committee, "Fair
                  Market Value" for purposes of the exercise of an Option or SAR
                  may be the price prevailing on the exchange at the time of
                  exercise. If no reported sale of Stock takes place on the date
                  in question on the principal exchange, then the reported
                  closing asked price of the Stock on such date on the principal
                  exchange shall be determinative of "Fair Market Value."

         (ii)     If the Stock is not at the time listed or admitted to trading
                  on a stock exchange, the "Fair Market Value" shall be the mean
                  between the lowest reported bid price and highest reported
                  asked price of the Stock on the date in question in the
                  over-the-counter market, as such prices are reported in a
                  publication of general circulation selected by the Committee
                  and regularly reporting the market price of the Stock in such
                  market.

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         (iii)    If the Stock is not listed or admitted to trading on any stock
                  exchange or traded in the over-the-counter market, the "Fair
                  Market Value" shall be as determined in good faith by the
                  Committee.

(l)      Incentive Stock Option. The term "Incentive Stock Option" has the
         meaning ascribed to it in paragraph (a) of subsection 3.1.

(m)      Non-Employee Director. The term "Non-Employee Director" shall mean an
         individual serving as a member of the Board who is not an employee of
         the Company or a Related Company.

(n)      Non-Qualified Stock Option. The term "Non-Qualified Stock Option" has
         the meaning ascribed to it in paragraph (a) of subsection 3.1.

(o)      Option. The term "Option" has the meaning ascribed to it in paragraph
         (a) of subsection 3. 1.

(p)      Participant. The term "Participant" has the meaning ascribed to it in
         subsection 1.2.

(q)      Plan. The term "Plan" has the meaning ascribed to it in subsection 1.1.

(r)      Performance Award. The term "Performance Award" has the meaning
         ascribed to it in subsection 6.1.

(s)      Pricing Date. The term "Pricing Date" has the meaning ascribed to it in
         paragraph (c) of subsection 3.1.

(t)      Prior Plans. The term "Prior Plans" has the meaning ascribed to it in
         paragraph (a) of subsection 7.2.

(u)      Qualified Performance Award. The term "Qualified Performance Award" has
         the meaning ascribed to it in subsection 6.2.

(v)      Related Company. The term "Related Company" means any subsidiary of the
         Company and any other business venture in which the Company has a
         significant interest as determined in the discretion of the Committee.

(w)      SAR. The term "SAR" has the meaning ascribed to it in paragraph (b) of
         subsection 3.1.

(x)      Stock. The term "Stock" means the ordinary shares, $.01 par value per
         share, of the Company.

(y)      Stock Award. The term "Stock Award" has the meaning ascribed to it in
         subsection 4.1.

                          SECTION 3 - OPTIONS AND SARS

         3.1      Definitions

(a)      The grant of an "Option" entitles the Participant to purchase shares of
         Stock at an Exercise Price established by the Committee. Options
         granted under this Section 3 may

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         be either Incentive Stock Options or Non-Qualified Stock Options, as
         determined in the discretion of the Committee. An "Incentive Stock
         Option" is an Option that is intended to satisfy the requirements
         applicable to an "incentive stock option" as described in section
         422(b) of the Code and shall comply with, among other things, the
         requirements of subsections 3.2, 3.3 and 7.1 of the Plan. A
         "Non-Qualified Stock Option" is an Option that is not intended to be an
         "incentive stock option" as that term is described in section 422(b) of
         the Code.

(b)      A stock appreciation right (an "SAR") entitles the Participant to
         receive, in cash or Stock (as determined in accordance with subsection
         3.4), value equal to all or a portion of the excess of: (i) the Fair
         Market Value of a specified number of shares of Stock at the time of
         exercise; over (ii) an Exercise Price established by the Committee. A
         SAR may be granted in tandem with an Option, subject to the terms and
         restrictions established by the Committee.

(c)      Exercise Price. The "Exercise Price" of each Option and SAR granted
         under this Section 3 shall be established by the Committee or shall be
         determined by a method established by the Committee; provided, however,
         that the Exercise Price shall not be less than the Fair Market Value of
         a share of Stock as of the Pricing Date. For purposes of the preceding
         sentence, the "Pricing Date" shall be the date on which the Option or
         SAR is granted, except that the Committee may provide that: (a) the
         Pricing Date is the date on which the recipient is hired or promoted
         (or similar event), if the grant of the Option or SAR occurs not more
         than 90 days after the date of such hiring, promotion or other event;
         or (b) if an Option or SAR is granted in tandem with or in substitution
         for an outstanding Award, the Pricing Date is the date of grant of such
         outstanding Award.

         3.2      Exercise. Each Option and each SAR shall be exercisable in
accordance with such terms and conditions and during such periods as may be
established by the Committee; provided, however, that (a) each Option and each
SAR shall be exercisable only during a fixed period of time ending no later than
ten years from the date such Option or SAR is granted, and (b) to the extent
required by the Code, the aggregate Fair Market Value of the shares of Stock
with respect to which Incentive Stock Options granted to any individual
Participant are exercisable for the first time during any calendar year shall
not exceed $100,000, valued at the date or dates the Options are granted, and
any Option designated as an Incentive Stock Option that is in excess of such
limit required by the Code shall be treated as a Non-Qualified Stock Option.

         3.3      Payment of Option Exercise Price. The payment of the Exercise
Price of an Option granted under this Section 3 shall be subject to the
following:

(a)      Subject to the following provisions of this subsection 3.3, the full
         Exercise Price for shares of Stock purchased upon the exercise of any
         Option shall be paid at the time of such exercise except that, in the
         case of an exercise arrangement approved by the Committee and described
         in paragraph (c) of this subsection 3.3, payment may be made as soon as
         practicable after the exercise.

(b)      The Exercise Price shall be payable in cash or by tendering shares of
         Stock (by either actual delivery of shares or by attestation, with such
         shares being valued at Fair Market Value as of the day of exercise),
         excluding any shares deemed unacceptable for any reason by the
         Committee, or in any combination thereof, as determined by the
         Committee.

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(c)      The Committee may permit a Participant to elect to pay the Exercise
         Price upon the exercise of an Option by authorizing a third party to
         sell some or all of the shares of Stock acquired upon exercise of an
         Option and remit to the Company a sufficient portion of the sale
         proceeds to pay the entire Exercise Price and any tax withholding
         resulting from such exercise.

         3.4      Settlement of Award. Distribution following exercise of an
Option or SAR, and shares of Stock distributed pursuant to such exercise, shall
be subject to such conditions, restrictions and contingencies as the Committee
may establish. Settlement of SARs may be made in shares of Stock valued at their
Fair Market Value at the time of exercise, in cash, or in any combination
thereof, as determined in the discretion of the Committee. The Committee may in
its discretion impose such conditions, restrictions and contingencies with
respect to shares of Stock acquired pursuant to the exercise of an Option or an
SAR as the Committee determines to be desirable.

                         SECTION 4 - OTHER STOCK AWARDS

         4.1.     Definition. A "Stock Award" is a grant of shares of Stock or
of a right to receive shares of Stock, or their cash equivalent or a combination
of both, in the future.

         4.2      Restrictions on Stock Awards. Each Stock Award shall be
subject to such terms and conditions, restrictions and contingencies, if any, as
the Committee shall determine. Restrictions and contingencies limiting the right
to receive shares of Stock, or their cash equivalent or a combination of both,
in the future pursuant to a Stock Award shall limit such right for a minimum of
three years from the date such Stock Award is granted or be based on the
achievement of single or multiple performance goals over a period ending at
least one year from the date such Stock Award is granted. Such restrictions
and/or contingencies may terminate or be subject to termination before the
passage of the period of time designated and/or the achievement of such
performance goals only in the event of grants made in connection with the
initial employment or service of a Participant, the death, disability, or
retirement from or other non-cause termination of employment or service with the
Company or a Related Company of the holder of such Stock Award, or in the event
of a change of control, as defined in the terms of such Stock Award, of the
Company or a Related Company. Any unrestricted grant of shares of Stock pursuant
to a Stock Award shall be made only in lieu of salary or bonus that otherwise
would be payable by the Company or a Related Company.

                             SECTION 5 - CASH AWARDS

         5.1      Definition. A "Cash Award" is a cash bonus paid solely on
account of the attainment of one or more objective performance goals that have
been pre-established by the Committee.

         5.2      Restrictions on Cash Awards. Each Cash Award shall be subject
to such terms and conditions, restrictions and contingencies, if any, as the
Committee shall determine. Restrictions and contingencies limiting the right to
receive a cash payment pursuant to a Cash Award shall be based on the
achievement of single or multiple performance goals over a period of time
determined by the Committee. The maximum cash payment to be made to any one
individual pursuant to any Cash Award during any calendar year shall not exceed
$3,000,000.

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                         SECTION 6 - PERFORMANCE AWARDS

         6.1      Definition. A "Performance Award" is an Award made pursuant to
this Plan to a Participant that is subject to the attainment of one or more
performance goals.

         6.2      Restrictions on Performance Awards. Performance Awards not
intended to qualify as qualified performance-based compensation under Section
162(m) of the Code shall be based on achievement of such goals and be subject to
such terms, conditions and restrictions as the Committee or its delegate shall
determine. Performance Awards granted under the Plan that are intended to
qualify as qualified performance-based compensation under Section 162(m) of the
Code ("Qualified Performance Awards") shall be paid, vested or otherwise
deliverable solely on account of the attainment of one or more pre-established,
objective performance goals established by the Committee. The performance goals
may be cumulative, annual or end-of-performance period goals, may be relative to
a peer group or based on increases or changes relative to stated values, and may
be based on any one or more of the following measures: (a) earnings before or
after interest, taxes, depreciation and amortization; (b) earnings per share;
(c) stock price performance; (d) net income (before or after taxes); (e) cash
flow; (f) total shareholder return; (g) revenue growth; (h) return on equity or
on assets or on net investment; (i) profit returns and margins and (j) working
capital or cost containment or reduction. Unless otherwise stated, such a
performance goal need not be based upon an increase or positive result under a
particular business criterion and could include, for example, maintaining the
status quo or limiting economic losses (measured, in each case, by reference to
specific business criteria). In interpreting Plan provisions applicable to
Qualified Performance Awards, it is the intent of the Plan to conform with the
standards of Section 162(m) of the Code and Treasury Regulation
Section 1.162-27(e)(2)(i) as to grants to those Employees whose compensation is,
or is likely to be, subject to Section 162(m) of the Code, and the Committee in
establishing performance goals and interpreting the Plan shall be guided by such
provisions. Prior to the payment of any compensation pursuant to a Qualified
Performance Awards, the Committee must certify in writing that applicable
performance goals and any of the material terms thereof were, in fact,
satisfied. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Qualified Performance Awards made pursuant to this
Plan shall be determined by the Committee.

                    SECTION 7 - OPERATION AND ADMINISTRATION

         7.1      Effective Date and Duration. Subject to its approval by the
stockholders of the Company at the Company's 2003 annual meeting of
stockholders, the Plan shall be effective as of March 4, 2003 (the "Effective
Date"); provided, however, that, to the extent Awards are made under the Plan
prior to its approval by stockholders, they shall be contingent on approval of
the Plan by the stockholders of the Company. The Plan shall be unlimited in
duration and, in the event of Plan termination, shall remain in effect as long
as any Awards under it are outstanding; provided, however, that, to the extent
required by the Code, no Incentive Stock Options may be granted under the plan
on a date that is more than ten years from the date the Plan is approved by
stockholders.

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         7.2      Shares Subject to Plan.

(a)      (i)      Subject to the following provisions of this subsection 7.2,
                  the maximum number shares of Stock that may be delivered to
                  Participants and their beneficiaries under the Plan shall be
                  equal to the sum of: (I) 6,000,000 shares of Stock; (II) any
                  shares of Stock available for future awards under the
                  GlobalSantaFe 1998 Stock Option and Incentive Plan, the
                  GlobalSantaFe 2001 Long-Term Incentive Plan and the
                  GlobalSantaFe 2001 Non-Employee Director Stock Option and
                  Incentive Plan, (the "Prior Plans") as of the Effective Date;
                  and (III) any shares of Stock represented by awards granted
                  under the Prior Plans that are forfeited, expire or are
                  canceled without delivery of shares of Stock or which result
                  in the forfeiture of shares of Stock back to the Company. The
                  Committee may from time to time adopt and observe such
                  procedures concerning the counting of shares against the Plan
                  maximum as it may deem appropriate.

         (ii)     Any shares of Stock granted under the Plan that are forfeited
                  because of the failure to meet an Award contingency or
                  condition shall again be available for delivery pursuant to
                  new Awards granted under the Plan. To the extent any shares of
                  Stock covered by an Award are not delivered to a Participant
                  or beneficiary because the Award is forfeited or canceled, or
                  the shares of Stock are not delivered because the Award is
                  settled in cash, such shares shall not be deemed to have been
                  delivered for purposes of determining the maximum number of
                  shares of Stock available for delivery under the Plan.

         (iii)    If the Exercise Price or other purchase price of any stock
                  option or other award granted under the Plan or the Prior
                  Plans is satisfied by tendering shares of Stock to the Company
                  by either actual delivery or by attestation, or if the tax
                  withholding obligation resulting from the settlement of any
                  such option or other award is satisfied by tendering or
                  withholding shares of Stock, only the number of shares of
                  Stock issued net of the shares of Stock tendered or withheld
                  shall be deemed delivered for purposes of determining the
                  maximum number of shares of Stock available for delivery under
                  the Plan.

         (iv)     Shares of Stock delivered under the Plan in settlement,
                  assumption or substitution of outstanding awards or
                  obligations to grant future awards under the plans or
                  arrangements of another entity shall not reduce the maximum
                  number of shares of Stock available for delivery under the
                  Plan, to the extent that such settlement, assumption or
                  substitution is a result of the Company or a Related Company
                  acquiring another entity or an interest in another entity.

(b)      Subject to paragraph (c) of this subsection 7.2, the following
         additional maximums are imposed under the Plan.

         (i)      The entire number of shares of Stock that may be issued
                  pursuant to the Plan may be issued as Incentive Stock Options.

         (ii)     The maximum number of shares of Stock that may be issued in
                  conjunction with Awards granted pursuant to Section 4
                  (relating to Stock Awards) shall be 500,000 shares.

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         (iii)    The maximum number of shares of Stock that may be covered by
                  Awards granted to any one employee during any one calendar
                  year pursuant to this Plan shall be 400,000 shares. The
                  maximum number of shares of Stock that may be covered by
                  Awards granted to any one Non-Employee Director during any one
                  calendar year pursuant to this Plan shall be 25,000 shares.

(c)      In the event of a corporate transaction involving the Company
         (including without limitation any stock divided, stock split,
         extraordinary cash dividend, recapitalization, reorganization, merger,
         consolidation, split-up, spin-off, combination or exchange of shares),
         the Committee may adjust Awards to preserve the benefits or potential
         benefits of the Awards. Action by the Committee may include adjustment
         of: (i) the number and kind of shares which may be issued or delivered
         under the Plan; (ii) the number and kind of shares subject to
         outstanding Awards; (iii) the Award limits set forth in paragraph (b)
         of subsection 7.2; and (iv) the Exercise Price of outstanding Options
         and SARs; as well as any other adjustments that the Committee
         determines to be equitable.

         7.3      Limit on Distribution. Distribution of shares of Stock or
other amounts under the Plan shall be subject to the following:

(a)      Notwithstanding any other provision of the Plan, the Company shall have
         no liability to deliver any shares of Stock under the Plan or make any
         other distribution of benefits under the Plan unless such delivery or
         distribution would comply with all applicable laws (including without
         limitation the requirements of the Securities Act of 1933) and the
         applicable requirements of any securities exchange or similar entity.

(b)      To the extent that the Plan provides for the issuance of stock
         certificates to reflect the issuance of shares of Stock, the issuance
         may be effected on a non-certificated basis to the extent not
         prohibited by applicable law or the applicable rules of any stock
         exchange.

         7.4      Tax Withholding. Whenever the Company proposes or is required
to distribute Stock under the Plan, the Company may require the recipient to
remit to the Company, or the Company or any Related Company may withhold from
any payments due or becoming due to the recipient, an amount sufficient to
satisfy any Federal, state and local tax withholding requirements prior to the
delivery of any certificate for such shares; provided, however, that, in the
discretion of the Committee, the Company may withhold from the shares to be
delivered shares with a Fair Market Value sufficient to satisfy all or a portion
of such tax withholding requirements, or the Company may accept delivery of
shares of Stock with a Fair Market Value sufficient to satisfy all or a portion
of such tax withholding requirement, excluding any shares deemed unacceptable
for any reason by the Committee. Whenever under the Plan payments are to be made
to a Participant or beneficiary in cash, such payments may be net of an amount
sufficient to satisfy any Federal, state and local tax withholding requirements.
At the discretion of the Committee, the terms and conditions of any Award may
provide for a cash payment to a Participant equal to any tax the Participant
must pay in connection with the settlement of the Award and/or the disposition
of Stock received upon settlement of the Award. If no provision is made in an
Award regarding excise taxes on golden parachute payments under Section 280G of
the Code, then payments under the Plan will be capped to avoid imposition of the
excise tax and loss of deduction.

         7.5      Shares as Payment. Subject to the overall limitation on the
number of shares of Stock that may be delivered under the Plan, the Committee
may use available shares of Stock, valued at their Fair Market Value, as the
form of payment for any compensation, grants or rights

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earned or due under any other compensation plans or arrangements of the Company
or a Related Company.

         7.6      Dividends and Dividend Equivalents. An Award may provide the
Participant with the right to receive dividends or dividend equivalent payments
with respect to Stock which may be either paid currently or credited to an
account for the Participant, and may be settled in cash or Stock as determined
by the Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.

         7.7      Payments. Awards may be settled through cash payments, the
delivery of shares of Stock, the granting of replacement Awards (subject to the
restrictions described in subsection 1.2), or a combination thereof as the
Committee shall determine. Any Award settlement, including payment deferrals,
may be subject to such conditions, restrictions and contingencies as the
Committee shall determine. The Committee may permit or require the deferral of
any Award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest or
dividend equivalents, including converting such credits into deferred Stock
equivalents.

         7.8      Transferability. Except as otherwise provided by the
Committee, Awards under the Plan are not transferable. The transfer restrictions
in this Section 7.8 shall not apply to:

         (i)      transfers to the Company,

         (ii)     the designation of a beneficiary to receive benefits in the
                  event of the Participant's death or, if the Participant has
                  died, transfers to or exercise by the Participant's
                  beneficiary, or, in the absence of a validly designated
                  beneficiary, transfers by will or the laws of descent and
                  distribution; provided that, no transfer by will or by the
                  laws of descent and distribution shall be effective to bind
                  the Company unless the Committee shall have been furnished
                  with a copy of the deceased Participant's will or such other
                  evidence as the Committee may deem necessary to establish the
                  validity of the transfer,

         (iii)    transfers pursuant to a domestic relations order,

         (iv)     permitted transfers or exercises on behalf of the Participant
                  by his or her legal representative, if the Participant has
                  suffered a disability,

         (v)      the authorization by the Committee of "cashless exercise"
                  procedures with third parties who provide financing for the
                  purpose of (or who otherwise facilitate) the exercise of
                  Awards consistent with applicable laws and the express
                  authorization of the Committee, or

         (vi)     if permitted by the Committee in the applicable Agreement, a
                  transfer by the Participant to (i) the children or
                  grandchildren of the Participant ("Immediate Family Members"),
                  (ii) a trust or trusts for the exclusive benefit of such
                  Immediate Family Members, or (iii) a partnership or
                  partnerships in which such Immediate Family Members have at
                  least ninety-nine percent (99%) of the equity, profit and loss
                  interests. Subsequent transfers of a transferred Award shall
                  be prohibited except by will or the laws of descent and
                  distribution, unless such transfers are

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                  made to the original Participant or a person to whom the
                  original Participant could have made a transfer in the manner
                  described herein. No transfer shall be effective unless and
                  until written notice of such transfer is provided to the
                  Committee, in the form and manner prescribed by the Committee.
                  Following transfer, the Award shall continue to be subject to
                  the same terms and conditions as were applicable immediately
                  prior to transfer, and, except as otherwise provided in the
                  applicable Agreement, the term "Participant" shall be deemed
                  to refer to the transferee. The consequences of termination of
                  employment or service shall continue to be applied with
                  respect to the original Participant as specified in the
                  Agreement.

         7.9      Form and Time of Elections. Unless otherwise specified herein,
each election required or permitted to be made by any Participant or other
person entitled to benefits under the Plan, and any permitted modification or
revocation thereof, shall be made and delivered to the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.

         7.10     Agreement With Company. At the time of an Award to a
Participant under the Plan, the Committee may require a Participant to enter
into an agreement with the Company (the "Agreement") in a form specified by the
Committee, agreeing to the terms and conditions of the Plan and to such
additional terms and conditions not inconsistent with the Plan as the Committee
may prescribe in its sole discretion.

         7.11     Limitation of Implied Rights.

(a)      Neither a Participant nor any other person shall by reason of the Plan
         acquire any right in or title to any assets, funds or property of the
         Company or any Related Company whatsoever, including without limitation
         any specific funds, assets, or other property which the Company or any
         Related Company, in their sole discretion, may set aside in
         anticipation of a liability under the Plan. A Participant shall have
         only a contractual right to the stock or amounts, if any, payable under
         the Plan, unsecured by any assets of the Company or any Related
         Company. Nothing contained in the Plan shall constitute a guarantee
         that the assets of such companies shall be sufficient to pay any
         benefits to any person.

(b)      The Plan does not constitute a contract of employment, and selection as
         a Participant and/or the grant or an Award will not give any employee
         the right to be retained in the employ of the Company or any Related
         Company, the right to receive any future Award under the Plan, or any
         right or claim to any benefit under the Plan, unless such right or
         claim has specifically accrued under the terms of the Plan. Except as
         otherwise provided in the Plan, no Award under the Plan shall confer
         upon the holder thereof any right as a stockholder of the Company prior
         to the date on which the individual fulfills all conditions for receipt
         of such right.

         7.12     Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent, reliable, and signed, made or presented by the proper
party or parties.

         7.13     Action by Company or Related Company. Any action required or
permitted to be taken by the Company or any Related Company shall be by
resolution of its board of directors, or by action of one or more members of the
board (including a committee of the board) who are

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duty authorized to act for the board, or, except to the extent prohibited by
applicable law or applicable rules of any stock exchange, by a duly authorized
officer of the company.

         7.14     Separate Fund. Neither the Company, the Board or the Committee
has any obligation to create a separate fund for the performance of any cash
payment obligation under the Plan, but any or all of them may, at their own
discretion, create trust funds or similar arrangements for such purpose.

         7.15     Liability for Cash Payments. Each Related Company shall be
liable for payment of cash due under the Plan with respect to any Participant to
the extent that such benefits are attributable to the services rendered for that
Related Company by the Participant. Any disputes relating to liability of a
Related Company for cash payments shall be resolved by the Committee.

                              SECTION 8 - COMMITTEE

         8.1      Administration. The authority to control and manage the
operation and administration of the Plan shall be vested in a committee (the
"Committee") or, as applicable, the Board, in accordance with this Section 8.

         8.2      Selection and Composition of Committee. The Committee shall be
selected by the Board and shall consist of two or more members of the Board who
are not employees of the Company or a Related Company.

         8.3      Powers of Committee. The authority to manage and control the
operation and administration of the Plan with respect to awards to employees or
consultants shall be vested in the Committee, subject to the following:

(a)      Subject to the provisions of the Plan, the Committee will have the
         authority and discretion to select from among the Eligible Individuals
         those persons who shall receive Awards, to determine the time or times
         of receipt, to determine the types of Awards and the number of shares
         covered by the Awards, to establish the terms, conditions, performance
         criteria, restrictions, and other provisions of such Awards, and,
         subject to the same restrictions imposed upon the Board by Section 9,
         to amend, cancel or suspend Awards. In making such Award
         determinations, the Committee may take into account the nature of
         services rendered by the individual, the individual's present and
         potential contribution to the Company's success, and such other factors
         as the Committee deems relevant.

(b)      Subject to the provisions of the Plan, the Committee will have the
         authority and discretion to determine the extent to which Awards under
         the Plan will be structured to conform to the requirements applicable
         to performance-based compensation as described in Code section 162(m)
         and to take such action, establish such procedures, and impose such
         restrictions at the time such Awards are granted as the Committee
         determines to be necessary or appropriate to conform to such
         requirements.

(c)      The Committee will have the authority and discretion to establish terms
         and conditions of Awards as the Committee determines to be necessary or
         appropriate to conform to applicable requirements or practices of
         jurisdictions outside of the United States.

                                     - 11 -

<PAGE>

(d)      The Committee will have the authority and discretion to interpret the
         Plan, to establish, amend and rescind any rules and regulations
         relating to the Plan, to determine the terms and provisions of any
         agreements made pursuant to the Plan, and to make all other
         determinations that may be necessary or advisable for the
         administration of the Plan.

(e)      Any interpretation of the Plan by the Committee and any decision made
         by it under the Plan is conclusive, final and binding.

(f)      At its discretion, the Committee may terminate or suspend the granting
         of Awards under the Plan at any time or from time to time.

(g)      In controlling and managing the operation and administration of the
         Plan, the Committee shall act by a majority of its then members, by
         meeting or by writing filed without a meeting. The Committee shall
         maintain and keep adequate records concerning the Plan and concerning
         its proceedings and acts in such form and detail as the Committee may
         decide.

         8.4      Powers of the Board. Notwithstanding any Plan provision to the
contrary, the Board shall have the same powers, duties, and authority to
administer the Plan with respect to Awards granted to Non-Employee Directors as
the Committee retains with respect to Awards granted to employees and
consultants as described in subsection 8.3 and other applicable Plan provisions.

         8.5      Delegation by Committee. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee or the
Board may allocate all or any part of their respective responsibilities and
powers to any one or more of their respective members and may delegate all or
any part of its responsibilities and powers to any person or persons. Any such
allocation or delegation may be revoked by the Committee or the Board, as
applicable, at any time.

         8.6      Information to be Furnished to Committee. The Company and
Related Companies shall furnish the Committee or the Board, as applicable, with
such data and information as may be required for it to discharge their
respective duties. The records of the Company and Related Companies as to an
employee's or Participant's employment or other provision of services,
termination of employment or cessation of the provision of services, leave of
absence, re-employment and compensation shall be conclusive on all persons
unless determined to be incorrect. Participants and other persons entitled to
benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee or the Board, as applicable, considers desirable to
carry out the terms of the Plan.

         8.7      Duplicated Signatures. At their discretion, the Committee or
the Board, as applicable, may accept a duplicated signature on any document,
whether faxed, photocopied or otherwise duplicated, which will be effective to
the same extent as an original signature unless there is a showing of fraud or
other wrongdoing, the burden of making such showing being on the person
asserting such fraud or wrongdoing.

                      SECTION 9 - AMENDMENT AND TERMINATION

          The Board may at any time amend, suspend or terminate the Plan,
provided that, subject to subsection 7.2 (relating to certain adjustments to
shares), no amendment or

                                     - 12 -

<PAGE>

termination may in the absence of written consent to the change by the affected
Participant (or, if the Participant is not then living, the affected
beneficiary), adversely affect the rights of any Participant or beneficiary
under any Award granted under the Plan prior to the date such amendment is
adopted by the Board. Notwithstanding the foregoing, the Committee may amend the
Plan by its own action if any such amendment is necessary for the Plan to meet
applicable legal requirements or if the amendment does not materially increase
the Plan costs nor substantially modify the eligibility, vesting or benefit
provisions of the Plan. To the extent required by applicable law or the
requirements of the principal national exchange on which the Stock is listed, a
Plan amendment shall be subject to shareholder approval.

                                     - 13 -exv10w3

 

Exhibit 10.3

EMPLOYEE’s COPY

Partnership’s Copy

CAPITAL AUTOMOTIVE L.P.

EMPLOYMENT AGREEMENT

To Thomas D. Eckert:

     This Agreement establishes the terms of your employment with Capital
Automotive L.P., a Delaware limited partnership (the “Partnership”). It
replaces your prior employment agreement with Capital Automotive REIT, a
Maryland real estate investment trust (the “Company”), under which the Company
assigned your agreement to the Partnership, and your prior employment agreement
with the Partnership. You remain an employee of the Company, but your primary
responsibility is as an employee of the Partnership.

	 	 	 
	Employment and Duties	 	
You and the Partnership agree to your
employment with the Partnership and to your
services as President and Chief Executive
Officer on the terms contained herein. In
such position, you will report directly to
the Company’s Board of Trustees (the
“Board”) and to the General Partner of the
Partnership. You agree to perform whatever
duties the Partnership may assign you from
time to time, consistent with your position
as a senior executive. During your
employment, you agree to devote your full
business time, attention, and energies to
performing those duties (except as the
Partnership otherwise agrees from time to
time). You agree to faithfully serve the
Partnership, to conform to and comply with
the lawful and good faith directions and
instructions given you by the Partnership,
and to use your best efforts to promote and
serve the interests of the Partnership. You
agree to comply with the non-competition,
secrecy, and other provisions of Exhibit A
to this Agreement.
	 	 	 
	Term	 	
Your employment under this Agreement begins
as of August 1, 2003 (the “Effective Date”)
and ends on January 1, 2007, unless it is
terminated sooner under this Agreement.
	 	 	 
	 	 	
The period running from the Effective Date
to the date that the Agreement terminates as
set forth in the preceding sentence is the
“Term.”
	 	 	 
	 	 	
Termination or expiration of this Agreement
ends your employment but does not end your
obligation to comply with Exhibit A.
	 	 	 
	Compensation	 	 
	 	 	 
	          Salary and Bonus	 	
The Partnership (or, in its discretion, the
Company) will pay you an annual salary (the
“Salary”) for 2003 at the rate of not less
than $400,000 in accordance with its payroll
practices. Your target bonus for calendar
year 2003 will be $400,000. Each calendar
year thereafter while you are employed under
this Agreement, the Partnership or its
Compensation Committee will review your
Salary and target bonus and consider you for
increases from the Partnership.
	 	 	 
	          Employee Benefits	 	
While you are employed under this Agreement,
the Partnership will provide you with the
same benefits, including medical insurance
coverage, as the Partnership makes generally
available from time to time to the
Partnership’s employees, as those benefits
are amended or terminated from time to time,
and such other benefits as are commensurate
with your position as a senior executive of
a public company, including either a company
automobile or an allowance for an
automobile. Your participation in the
Partnership’s benefit plans will be subject
to the terms of the applicable plan
documents and the Partnership’s generally
applied

 

 

	 	 	 
	 	 	
policies, and the Partnership in its
sole discretion may from time to time adopt,
modify, interpret, or discontinue such plans
or policies.
	 	 	 
	Place of Employment	 	
Your principal place of employment will be
at the Partnership’s headquarters in the
Washington metropolitan area (or such other
offices as the Partnership may establish
from time to time and to which it assigns
you in its sole discretion). You understand
and agree that you must travel from time to
time for business reasons.
	 	 	 
	Indemnification	 	
The Partnership will indemnify you to the
fullest extent authorized by law if you are
made a party to any action, suit, or
proceeding, whether criminal, civil,
administrative, or investigative, because
you are or were a manager, officer, or
employee of the Partnership or serve or
served any other entity as a director,
officer, or employee at the Partnership’s
request; provided, however, that you must
repay the Partnership for any
indemnification if the final determination
of an arbitrator or a court of competent
jurisdiction declares, after the expiration
of the time within which judicial review (if
permitted) of such determination may be
perfected, that indemnification by the
Partnership is not permissible under
applicable law.
	 	 	 
	Expenses	 	
The Partnership will reimburse you for
reasonable and necessary travel and other
business-related expenses you incur for the
Partnership in performing your duties under
this Agreement. You must itemize and
substantiate all requests for
reimbursements. You must submit requests
for reimbursement in accordance with the
policies and practices of the Partnership
and within 60 days after incurring the
expense.
	 	 	 
	No Other Employment	 	
For so long as you are employed by the
Partnership, you agree that you will not,
directly or indirectly, provide services to
any person or organization for which you
receive compensation or otherwise engage in
activities that would conflict or interfere
significantly with the faithful performance
of your duties to the Partnership without
the Partnership’s prior written consent.
(This prohibition excludes any work
performed at the Partnership’s direction
including any work for the Company.) The
Partnership acknowledges that, as of the
Effective Date, you serve as a director of
The Munder Funds (a family of mutual funds)
and the National Association of Real Estate
Investment Trusts (NAREIT) and agrees that
such directorships do not violate the
prohibition on other employment. You may
manage your personal investments, as long as
the management takes only minimal amounts of
time and is consistent with the provisions
of the No Competition Section in Exhibit A
and is otherwise consistent with the
policies and practices of the Partnership.

2

 

	 	 	 
	 	 	
You represent to the Partnership that you are not subject to any
agreement, commitment, or policy of any third party that would
prevent you from entering into or performing your duties under
this Agreement, and you agree that you will not enter into any
agreement or commitment or agree to any policy that would
prevent or hinder your performance of duties and obligations
under this Agreement, including Exhibit A.
	 	 	 
	No Conflicts of Interest	 	
You confirm that you have fully disclosed to the Partnership and
the Company, to the best of your knowledge, all circumstances
under which you, your spouse, and your relatives (including
their spouses, children, and relatives) have or may have a
conflict of interest with the Company or the Partnership. You
further agree to fully disclose to the Partnership any such
circumstances that might arise during the Term. You agree to
fully comply with the Partnership’s policy and practices
relating to conflicts of interest.
	 	 	 
	No Payments to
Governmental Officials	 	
You will neither pay nor permit payment of any remuneration to
or on behalf of any governmental official other than payments
required or permitted by applicable law.
	 	 	 
	Termination	 	
Subject to the provisions of this section, the Partnership may
terminate your employment, or you may resign, except that, if
you voluntarily resign, you must provide the Partnership with 90
days’ prior written notice (unless the Partnership has
previously waived such notice in writing or authorized a shorter
notice period).
	 	 	 
	          For Cause	 	
The Partnership may terminate your employment for “Cause” if you:
	 	 	 

	 	 	 
	 	 	
(i) engage in dishonesty that relates materially to the
performance of services or any obligations under this Agreement,
including Exhibit A;
	 	 	 
	 	 	
(ii) are convicted of, or plead guilty or no contest to, any
misdemeanor (other than for minor infractions) involving fraud,
breach of trust, misappropriation, or other similar activity or
any felony;
	 	 	 
	 	 	
(iii) perform your duties under this Agreement in a grossly
negligent manner; or
	 	 	 
	 	 	
(iv) willfully breach this Agreement, including Exhibit A, in a
manner materially injurious to the Partnership. An act or
omission is only “willful” if you acted in bad faith or without
any reasonable belief that the action or omission was in the
interests of the Partnership and consistent with your duties and
obligations under this Agreement.
	 	 	 

	 	 	 
	 	 	Your termination for Cause under (i) and (ii) will be effective
immediately upon the Partnership’s mailing or transmission of
such notice. Before terminating your employment for Cause under
(iii) or (iv), the Partnership will specify in writing to you
the nature of the act, omission, refusal, or failure that it
deems to constitute Cause. The Partnership will give you the
opportunity to correct the situation (and thus avoid termination
for Cause under (iii) or (iv)). You must complete the
correction within a reasonable period of time after the written
notice to you, and the Partnership agrees to provide you no less
than 15 days for

3

 

	 	 	 
	 	 	such correction.
	 	 	 
	          Without Cause 	 	Subject to the provisions below under Payments on Termination,
the Partnership may terminate your employment under this
Agreement before the end of the Term without Cause.
	 	 	 
	          Good Reason 	 	You may resign for Good Reason with 45 days’ advance written
notice as provided below. “Good Reason” means the occurrence,
without your written consent, of any of the following
circumstances:
	 	 	 

	 	 	 
	 	 	
the Partnership’s failure to perform or observe any of the
material terms or provisions of this Agreement,
	 	 	 
	 	 	
the assignment to you of any duties inconsistent with, or any
substantial diminution in, your employment status or
responsibilities as in effect on the date of this Agreement or
your departure from the Board (other than by your voluntary
resignation or your choice not to stand for re-election),
	 	 	 
	 	 	
the Partnership’s relocation of its headquarters to a location
that would increase your commuting distance by more than 50
miles, based on your residence when this Agreement is executed,
or
	 	 	 
	 	 	
a Change of Control, consisting of any one or more of the
following events:

	 	 	 
	 	 	
a person, entity, or group (other than the Company, the
Partnership, any subsidiary of either, any Company Group benefit
plan, or any underwriter temporarily holding securities for an
offering of such securities) acquires ownership of more than 40%
of the undiluted total voting power of the Company’s then-outstanding securities eligible to vote to elect members of
the Board (“Company Voting Securities”);
	 	 	 
	 	 	
consummation of a merger or consolidation of the Company into
any other entity—unless the holders of the Company Voting
Securities outstanding immediately before such consummation,
together with any trustee or other fiduciary holding securities
under a Company Group benefit plan, hold securities that
represent immediately after such merger or consolidation more
than 60% of the combined voting power of the then outstanding
voting securities of either the Company or the other surviving
entity or its parent; or
	 	 	 
	 	 	
the stockholders of the Company approve (i) a plan of complete
liquidation or dissolution of the Company or (ii) an agreement
for the Company’s sale or disposition of all or substantially

all the Company’s assets, and such liquidation, dissolution,
sale, or disposition is consummated.

	 	 	 
	 	 	Even if other tests are met, a Change of Control has not
occurred under any circumstance in which the Company files for
bankruptcy protection or is reorganized following a bankruptcy
filing.

4

 

	 	 	 
	 	 	You must give notice to the Partnership of your intention to
resign for Good Reason within 30 days after the occurrence of
the condition or event (within 24 months if the condition or
event is a Change of Control) that you assert entitles you to
resign for Good Reason. In that notice, you must specify the
condition or event that you consider provides you with Good
Reason and (except if the condition or event is a Change of
Control) must give the Partnership an opportunity to cure the
condition or event within 30 days after your notice. If the
Partnership fails to cure the condition, your resignation will
be effective on the 45th day after your notice (unless the Board
has previously waived such notice period in writing or agreed to
a shorter notice period).
	 	 	 
	 	 	You will not be treated as resigning for Good Reason if the
Partnership had Cause to terminate your employment as of the
date of your notice of resignation.
	 	 	 
	          Disability
	 	If you become “disabled” (as defined below), the Partnership may
terminate your employment. If the Partnership terminates your
employment because you become disabled or employment terminates
because of your death, any unvested restricted shares and any
phantom shares previously granted to you shall become Pro Rata
Vested (as defined below). You are “disabled” if you are unable,
despite whatever reasonable accommodations the law requires, to
render services to the Partnership for more than 90 consecutive
days because of physical or mental disability, incapacity, or
illness. You are also disabled if you are deemed to be disabled
within the meaning of the Partnership’s long-term disability
policy as then in effect.
	 	 	 
	          
Death
	 	If you die during the Term, the Term will end as of the date of
your death.
	 	 	 
	          
Payments on
Termination
	 	If the Partnership terminates your employment for or without
Cause or because of disability or death or you resign, the
Partnership will pay you any unpaid portion of your Salary
pro-rated through the date of actual termination and any annual
bonuses already determined by such date but not yet paid,
reimburse any substantiated but unreimbursed business expenses,
pay any accrued and unused vacation time (to the extent
consistent with the Partnership’s policies), and provide such
other benefits as applicable laws or the terms of the benefits
require. Except to the extent the law requires otherwise or as
provided in the Vesting and Other Benefits section below or in
your option agreement, restricted share agreement or phantom
share agreement(s), neither you nor your beneficiary or estate
will have any rights or claims under this Agreement or otherwise
to receive severance or any other compensation, or to
participate in any other plan, arrangement, or benefit, after
such termination.
	 	 	 
	          
Vesting and
Other
Benefits
          
on Termination
or Change of

          Control
	 	In addition to the foregoing payments, if a Change of Control
occurs, the Partnership terminates your employment without
Cause, or you resign for Good Reason before the end of the Term:

	 	 	 	 	 
	 	 	 	I.
	all of the stock options and restricted shares held by you
before your termination of employment or the Change of Control
(whichever is applicable) will become fully vested; and
	 	 	 	 	 
	 	 	 	
II.
	all of the phantom shares credited to you before your
termination of employment or the Change of Control (whichever is
applicable) shall be deemed to have been

5

 

	 	 	 	 	 
	 	 	 	 	credited for three (3)
years for purposes of Section 6.3 of the Capital Automotive
Group Phantom Share Purchase Program; and

	 	 	 	 	 	 	 
	 	 	 	
III.
	(a)
	 	in the case of termination without Cause or
resignation for Good Reason, and provided that you have not
previously received any benefit under the following paragraph
III(b), the Partnership will pay you an amount equal to your
Salary, as then in effect, for 24 months in a single lump sum as
soon as practicable but in any event no more than 90 days after
termination; or
	 	 	 	 	 	 	 
	 	 	 	 	(b)
	 	in the case of a Change of Control, the Partnership will
pay you an amount equal to 3 times the sum of your annual
Salary, as then in effect, plus your most recently established
target bonus, in a single lump sum as soon as practicable but in
any event no more than 10 days after the Change of Control; and
	 	 	 	 	 	 	 

	 	 	 	 	 
	 	 	 	
IV.
	the Partnership will pay the premium cost for you to receive
any group health coverage the Partnership must offer you under
Section 4980B of the Internal Revenue Code of 1986 (the “Code”)
for the period of such coverage; and
	 	 	 	 	 
	 	 	 	
V.
	the Partnership will pay you, at the time the Partnership would otherwise pay your annual bonus, your pro rata share of
the bonus for the year of your termination (or Change of
Control), where the pro rata factor is based on days elapsed in
such year until the date of termination (or Change of Control) over 365, less any portion of the bonus for such year already
paid.
	 	 	 	 	 

	 	 	 
	 	 	
You are not required to mitigate amounts payable under the
Vesting and Other Benefits paragraphs by seeking other
employment or otherwise; however, of the foregoing benefits, an
amount equal to two hundred percent of your annual Salary is
being provided as consideration for your compliance with the
requirements of Exhibit A. Consequently, you agree to return
such amount if you fail to comply with Exhibit A.
	 	 	 
	 	 	
Expiration of this Agreement, whether because of notice of
non-renewal or otherwise, does not constitute termination
without Cause nor is it grounds for resignation with Good
Reason.

6

 

	 	 	 
	 	 	In addition to the foregoing, if
this Employment Agreement is not
renewed by the Partnership on or
before January 1, 2007, and the
Partnership at any time thereafter
terminates your employment without
Cause or you resign for Good
Reason, (i) any unvested
restricted shares granted prior to
or during the Term and held by you
before your termination of
employment will become vested to
the extent of the ratio of the
number of days that you have been
employed by the Partnership or the
Company since the date they were
granted and the total number of
days of employment otherwise
required for them to fully vest
(determined separately for each
grant), and (ii) all of the
phantom shares granted prior to or
during the Term and credited to
you before your termination of
employment will be deemed to have
been credited for three (3) years
for the purposes of Section 6.3 of
the Capital Automotive Group
Phantom Share Purchase Program to
the extent of the ratio of the
number of days that you have been
employed by the Partnership or the
Company since the date they were
granted and the three (3) years of
employment otherwise required for
them to fully vest for purposes of
that section (determined
separately for each grant). The
pro rata vesting and crediting
referenced in (i) and (ii) in the
foregoing sentence are referred to
herein as “Pro Rata Vested.”
	 	 	 
	          
Internal Revenue Code

          Section 280G 	 	If you become entitled to any
benefits under this Agreement (the
“Agreement Benefits”), and any of
those benefits will be subject to
the tax (the “Excise Tax”) imposed
by Section 4999 of the Code (or
any similar tax that may hereafter
be imposed), the Partnership will
pay to you an additional amount
(the “Gross-up Payment”) such that
the net amount retained by you,
after deduction of any Excise Tax on the total benefits received by
you and any federal, state and
local income tax and Excise Tax on
the Gross-up Payment provided for
by this section, but before
deduction for any federal, state
or local income tax on the
Agreement Benefits, will be equal
to the total benefits that you
would have received had the Excise
Tax not been applicable and the
Gross-up Payment not paid.
Notwithstanding the foregoing, you
and the Partnership agree to in
good faith take any reasonable
actions, at no cost to either
party, to minimize or avoid
application of the Excise Tax.
	 	 	 
	Assignment	 	The Partnership may assign or
otherwise transfer this Agreement
and any and all of its rights,
duties, obligations, or interests
under it to:
	 	 	 

	 	 	 
	 	 	
the Company or any of the
affiliates or subsidiaries of the
Company or
	 	 	 
	 	 	
the Partnership or to any business
entity that at any time by merger,
consolidation, or otherwise
acquires all or substantially all
of the Company’s stock or assets
or the partnership units or assets
of the Partnership or to which the
Company or the Partnership transfers all or substantially all
of its assets.

	 	 	 
	 	 	Upon such assignment or transfer,
any such business entity will be
deemed to be substituted for the
Partnership for all purposes.
Assignment or transfer does not
constitute termination without
Cause nor is it grounds for
resignation with Good Reason absent the occurrence of a Change
of Control. This Agreement binds
the Partnership, its successors or
assigns, and your heirs and the
personal representatives of your
estate. Without the Partnership’s prior written consent, you may not
assign or delegate

7

 

	 	 	 
	 	 	
this Agreement or any or all rights,
duties, obligations, or
interests under it.
	 	 	 
	Severability	 	
If the final determination of an
arbitrator or a court of competent
jurisdiction declares, after the
expiration of the time within
which judicial review (if
permitted) of such determination
may be perfected, that any term or
provision of this Agreement,
including any provision of Exhibit
A, is invalid or unenforceable,
the remaining terms and provisions
will be unimpaired, and the
invalid or unenforceable term or
provision will be deemed replaced
by a term or provision that is
valid and enforceable and that
comes closest to expressing the
intention of the invalid or
unenforceable term or provision.
	 	 	 
	Amendment; Waiver	 	
Neither you nor the Partnership may modify, amend, or waive the
terms of this Agreement other than
by a written instrument signed by
you and a duly authorized
representative of the General
Partner of the Partnership.
Either party’s waiver of the other
party’s compliance with any
provision of this Agreement is not
a waiver of any other provision of
this Agreement or of any
subsequent breach by such party of
a provision of this Agreement.
	 	 	 
	Withholding	 	
The Partnership will reduce its
compensatory payments to you for
withholding and FICA taxes, and
any other withholdings and
contributions required by law.
	 	 	 
	Third Party Beneficiary	 	
You understand and agree that the
Company is a third party
beneficiary of this Agreement.
	 	 	 
	Governing Law	 	
The laws of the Commonwealth of
Virginia (other than its conflict
of laws provisions) govern this
Agreement.
	 	 	 
	Notices	 	
Notices must be given in writing
by personal delivery, by certified
mail, return receipt requested, by
telecopy, or by overnight
delivery. You should send or
deliver your notices to the
Partnership’s headquarters. The
Partnership will send or deliver
any notice given to you at your
address as reflected on the
Partnership’s personnel records.
You and the Partnership may change
the address for notice by like
notice to the others. You and the
Partnership agree that notice is
received on the date it is
personally delivered, the date it
is received by certified mail, the
date of guaranteed delivery by the
overnight service, or the date the
fax machine confirms receipt.
	 	 	 
	Payments and Benefits Upon Death	 	
If, at the time of your death, the
Partnership owes you any payments
or other benefits as a result of
termination of your employment,
resignation, a Change of Control,
or your Disability, all of those
payments and benefits shall become
due and payable to your estate to
the same extent, at the same
times, and subject to the same
terms as they would have been due
and payable to you but for your
death. Further, any payments or
other benefits that become due on
account of your death shall be
paid to your estate.

8

 

	 	 	 
	Legal Fees	 	
If a claim is asserted for breach of any provision of
this Agreement, you will be entitled to recover your
reasonable attorney’s fees and expenses if you prevail.
	 	 	 
	Arbitration	 	
Any disputes between the Partnership and you in any way
concerning your employment, the termination of your
employment, this Agreement or its enforcement shall be
submitted at the initiative of either party to binding
arbitration in the Washington Metropolitan area before
a single arbitrator pursuant to the Rules for
Resolution of Employment Disputes of the American
Arbitration Association, or its successor, then in
effect. The decision of the arbitrator shall be
rendered in writing, shall be final, and may be entered
as a judgment in any court in the Commonwealth of
Virginia. The Partnership and you each irrevocably
consents to the jurisdiction of the federal and state
courts located in Virginia for this purpose. Each
party shall be responsible for its or his own costs
incurred in such arbitration and in enforcing any
arbitration award, including attorney’s fees, provided,
however, that you will be entitled to recover your
reasonable attorney’s fees and expenses if you prevail.
Notwithstanding the foregoing, the Partnership, in its
sole discretion, may bring an action in any court of
competent jurisdiction to seek injunctive relief and
such other relief as it shall elect to enforce your
obligations in Exhibit A.
	 	 	 
	Superseding Effect	 	
This Agreement supersedes any prior oral or written
employment or severance agreements between you and the
Company or the Partnership. This Agreement supersedes
all prior or contemporaneous negotiations, commitments,
agreements, and writings with respect to the subject
matter of this Agreement. All such other negotiations,
commitments, agreements, and writings will have no
further force or effect; and the parties to any such
other negotiation, commitment, agreement, or writing
will have no further rights or obligations thereunder.

9

 

If you accept the terms of this Agreement, please sign in the space indicated
below. We encourage you to consult with any advisors of your choosing.

	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE L.P.
	 	 	 	 	 
	 	 	General Partner:
	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE REIT, a Maryland

real estate investment trust
	 	 	 	 	 
	 	 	
By:
	 	   /s/ John M. Weaver
	 	 	 	 	

	 	 	 	 	 
	 	 	
Its:
	 	Senior Vice President, Secretary, and General Counsel

	 	 	 	 	 
	 	 	SEEN & AGREED TO:
	 	 	 	 	 
	 	 	CAPITAL AUTOMOTIVE REIT
	 	 	 	 	 
	 	 	
By:
	 	/s/ John M. Weaver
	 	 	 	 	

	 	 	 	 	 
	 	 	
Its:
	 	Senior Vice President, Secretary, and General Counsel

I accept and agree to the terms of employment set forth in this Agreement:

    /s/ Thomas D. Eckert

Thomas D. Eckert

Dated: August 11, 2003

10

 

Exhibit A

	 	 	 
	No Competition	 	
In consideration of your employment by the Partnership and
salary and benefits under this Agreement, during the term
of your employment, and except as set forth below, until
the date two years after your employment with the Company,
the Partnership, or their successors, assigns, affiliates,
or subsidiaries (collectively, the “Company Group”) ends
for any reason (the “Restricted Period”), you agree as
follows:
	 	 	 
	 	 	
The Company is a real estate investment trust formed to
acquire real properties owned by automobile dealerships and
other automotive-related businesses and lease the
properties to such businesses. You will not, directly or
indirectly, promote, be employed by, lend money to, invest
in, or engage in any Competing Business within the Market
Area. That prohibition includes, but is not limited to,
acting, either singly or jointly or as agent for, or as an
employee of or consultant to, any one or more persons,
firms, entities, or corporations directly or indirectly (as
a director, independent contractor, representative,
consultant, member, or otherwise) that constitutes such a
Competing Business. You may own up to 3% of the
outstanding capital stock of any corporation that is
actively publicly traded without violating this No
Competition covenant. This covenant does not preclude you
from being employed by any non-public automobile dealership
or dealership group or other non-public automotive-related
business that is a lessee or prospective lessee of
properties the Company or the Partnership holds or is
actively considering acquiring.
	 	 	 
	 	 	
If, during the Restricted Period, you are offered and want
to accept employment with a business that engages in
activities similar to the Company’s or the Partnership’s,
you will inform the Partnership in writing of the identity
of the business, your proposed duties with that business,
and the proposed starting date of that employment. You
will also inform that business of the terms of this Exhibit
A. The Partnership will analyze the proposed employment
and make a good faith determination as to whether it would
threaten the Partnership’s legitimate competitive
interests. If the Partnership determines that the proposed
employment would not pose an unacceptable threat to its
interests, the Partnership will notify you that it does not
object to the employment.
	 	 	 
	 	 	
You acknowledge that, during the portion of the Restricted
Period that follows your employment, you may engage in any
business activity or gainful employment of any type and in
any place except as described above. You acknowledge that
you will be reasonably able to earn a livelihood without
violating the terms of this Agreement.
	 	 	 
	 	 	
You understand and agree that the rights and obligations
set forth in this No Competition Section will continue for
two years from the date of termination of this Agreement
and your employment with the Partnership or the Company
Group.

11

 

	 	 	 
	Definitions	 	 
	 	 	 
	          Competing
Business	 	
Competing Business means any service or
financial product of any person or
organization other than the Company Group, in
existence or then under development, that
competes or could potentially compete,
directly or indirectly, with any service or
financial product of the Company Group upon
which or with which you have worked for the
Partnership or the Company Group or about
which you acquire knowledge while working for
the Partnership or the Company Group.
Competing Business includes any enterprise
engaged in the formation or operation of real
estate investment trusts or other entities
that invest primarily in automobile
dealership or automotive-related properties
or provide real estate financing to
automobile dealerships or automotive-related
businesses, provided that Competing Business excludes banks, finance companies, and other
financial institutions that are not primarily
involved in real estate financing so long as
your employment or other involvement is also
not primarily involved in real estate
financing. Competing Business also includes
any public company the primary business of
which is to retail and/or service motor
vehicles. Competing Business excludes real
estate investment trusts and similar entities
that do not engage in activities related to
automotive dealerships or automotive-related
businesses.
	 	 	 
	          Market Area	 	
The Market Area consists of the United States.
	 	 	 
	No Interference; 
No Solicitation	 	
During the Restricted Period, you agree that
you will not, directly or indirectly, whether
for yourself or for any other individual or
entity (other than the Partnership or its
affiliates or subsidiaries), intentionally
solicit or endeavor to entice away from the
Company Group:

	 	 	 
	 	 	
any person whom the Company Group employs
(other than as your personal secretary) or
otherwise engages to perform services as a
consultant or sales representatives; or
	 	 	 
	 	 	
any person or entity who is, or was, within
the Restricted Period, a contractor or
subcontractor of the Company Group known to
you or a lessee or prospective lessee of
properties the Company Group holds or is
actively considering acquiring.

	 	 	 
	Secrecy	 	 
	 	 	 
	          Preserving
Company 

          Confidences	 	
Your employment with the Partnership under
and, if applicable, before this Agreement has
given and will give you Confidential
Information (as defined below). You
acknowledge and agree that using, disclosing,
or publishing any Confidential Information in
an unauthorized or improper manner could
cause the Partnership or Company Group substantial loss and damages that could not
be readily calculated and for which no remedy
at law would be adequate. Accordingly, you
agree with the Partnership that you will not
at any time, except in performing your
employment duties to the Partnership or the
Company Group under this Agreement (or with
the Partnership’s prior written consent),
directly or indirectly, use, disclose, or
publish, or permit others not so authorized
to use, disclose, or publish any Confidential
Information that you may learn or become
aware of, or may have learned or become aware
of, because of your prior or continuing
employment, ownership, or association with
the Partnership or

12

 

	 	 	 
	 	 	
the Company Group or any of their
predecessors, or use any such information in
a manner detrimental to the interests of the
Partnership or the Company Group.
	 	 	 
	          Preserving Others’
Confidences	 	
You agree not to use in working for the
Company Group and not to disclose to the
Company Group any trade secrets or other
information you do not have the right to use
or disclose and that the Company Group is not
free to use without liability of any kind.
You agree to promptly inform the Partnership in writing of any patents, copyrights,
trademarks, or other proprietary rights known
to you that the Partnership or the Company
Group might violate because of information
you provide.
	 	 	 
	          Confidential Information	 	
“Confidential Information” includes, without
limitation, information the Partnership or
the Company Group has not previously
disclosed to the public or to the trade with
respect to the Partnership’s or the Company
Group’s present or future business,
operations, services, products, research,
inventions, discoveries, drawings, designs,
plans, processes, models, technical
information, facilities, methods, trade
secrets, copyrights, software, source code,
systems, patents, procedures, manuals,
specifications, any other intellectual
property, confidential reports, price lists,
pricing formulas, customer lists, financial
information (including the revenues, costs,
or profits associated with any of the
Partnership’s or the Company Group’s products
or services), business plans, lease
structure, projections, prospects,
opportunities or strategies, acquisitions or
mergers, advertising or promotions, personnel
matters, legal matters, any other
confidential and proprietary information, and
any other information not generally known
outside the Partnership or the Company Group that may be of value to the Partnership or
the Company Group but excludes any
information already properly in the public
domain. “Confidential Information” also
includes confidential and proprietary
information and trade secrets that third
parties entrust to the Partnership or the
Company Group in confidence.
	 	 	 
	 	 	
You understand and agree that the rights and
obligations set forth in this Secrecy Section
will continue indefinitely and will survive
termination of this Agreement and your
employment with the Partnership or the
Company Group.
	 	 	 
	Exclusive Property	 	
You confirm that all Confidential Information is and must remain the exclusive property of
the Partnership or the relevant member of the
Company Group. All business records,
business papers, and business documents you
keep or make in the course of your employment
by the Partnership relating to the
Partnership or any member of the Company
Group must be and remain the property of the
Partnership or the relevant member of the
Company Group. Upon the termination of this
Agreement with the Partnership or upon the
Partnership’s request at any time, you must
promptly deliver to the Partnership or to the
relevant member of the Company Group any
Confidential Information or other materials
(written or otherwise) not available to the
public or made available to the public in a
manner you know or reasonably should
recognize the Partnership did not authorize,
and any copies, excerpts, summaries,
compilations, records and documents you made
or that came into your possession during your
employment. You agree that you will not,
without the Partnership’s consent, retain
copies, excerpts, summaries or compilations
of the foregoing information and materials.
You understand and agree that the

13

 

	 	 	 
	 	 	
rights and obligations set forth in this
Exclusive Property Section will continue
indefinitely and will survive termination of
this Agreement and your employment with the
Company Group.
	 	 	 
	Maximum Limits	 	
If any of the provisions of Exhibit A are
ever deemed to exceed the time, geographic
area, or activity limitations the law
permits, you and the Partnership agree to
reduce the limitations to the maximum
permissible limitation, and you and the
Partnership authorize a court or arbitrator
having jurisdiction to reform the provisions
to the maximum time, geographic area, and
activity limitations the law permits.
	 	 	 
	Injunctive Relief	 	
Without limiting the remedies available to
the Partnership, you acknowledge:

	 	 	 
	 	 	
that a breach of any of the covenants in this
Exhibit A may result in material irreparable
injury to the Partnership and Company Group for which there is no adequate remedy at law;
and
	 	 	 
	 	 	
that it will not be possible to measure
damages for such injuries precisely.

	 	 	 
	 	 	You agree that, if there is a breach or
threatened breach, the Partnership or any
member of the Company Group will be entitled
to obtain a temporary restraining order
and/or a preliminary or permanent injunction
restraining you from engaging in activities
prohibited by any provisions of this Exhibit
A or such other relief as may be required to
specifically enforce any of the covenants in
this Exhibit A. 

14

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