Exhibit
10.1


 


EMPLOYMENT AGREEMENT


BETWEEN


MICHAEL THOMAS BENNETT AND SPIRIT FINANCE CORPORATION


 


THIS EMPLOYMENT AGREEMENT (the “Agreement”),
dated as of April 5, 2005 (“Effective Date”), is by and between SPIRIT FINANCE CORPORATION, a Maryland corporation (the “Company”),
and Michael Thomas Bennett (the “Executive”):


 


W I T
N E S S E T H :


 


WHEREAS, the Company wishes to employ the Executive in
the capacities and on the terms and conditions set forth below, and the
Executive has agreed to such employment in the capacities and on the terms and
conditions set forth below.


 


NOW, THEREFORE, the Company and the Executive, in
consideration of the respective covenants set forth below, hereby agree as
follows:


 


Section
1.  Employment.


 


(a)                                  Positions.  The Executive shall be employed by the
Company during the Term (defined below) as its Senior Vice President -
Operations.


 


(b)                                 Duties.  The Executive’s principal employment duties
and responsibilities shall be those duties and responsibilities customary for
the position of Senior Vice President - Operations and such other executive
duties and responsibilities as the Chief Operating Officer or Board of
Directors of the Company (the “Board”) shall from time to time reasonably assign
to the Executive.  These duties and responsibilities
shall include, but are not limited to, supervising all business and legal
issues associated with financings provided or obtained by the Company, working
with the Company’s outside legal counsel, primary responsibility for compliance
matters pursuant to agreements of the Company and under federal and state
laws.  At the Company’s recommendation
and upon approval of the Board, the Executive shall also be a voting member of
the Company’s investment committee and a control person required to file
reports under Section 16 of the Securities Exchange Act of 1934, as
amended.  The Executive shall report
directly to Christopher H. Volk, President and Chief Operating Officer of the
Company or his successor.


 


(c)                                  Extent of Services.  Except for illnesses and vacation periods,
the Executive shall devote substantially all of his business time and attention
and his best efforts to the performance of his duties and responsibilities
under this Agreement.  Notwithstanding
the foregoing, Executive (i) may make any investment where he is not
obligated or required to, and shall not in fact, devote any substantial managerial
efforts; (ii) may participate in charitable, academic or community
activities, and in trade or professional organizations; or (iii) may hold
directorships in other companies consistent with the Company’s conflict of
interest policies and corporate governance guidelines as in effect from time to
time (the activities in clauses (i) through (iii) above are collectively
referred to herein as the “Excluded Businesses”); provided that none of the
Excluded


 





















 


Businesses individually
or in the aggregate interfere with the performance of the Executive’s duties
under this Agreement.


 


Section
2.  Term.  This Agreement shall be effective as of the
Effective Date and the Executive shall commence employment on April 18, 2005
(the “Commencement Date”).  This
Agreement shall continue in full force and effect until December 15, 2006 and
shall be automatically extended for an additional one-year period thereafter, unless
either party terminates this Agreement not later than 60 days prior to December
15, 2006 by providing written notice to the other party of such party’s intent
not to renew, or it is sooner terminated pursuant to Section 7.  For purposes of this Agreement, “Term” shall
mean the actual duration of the Executive’s employment hereunder, taking into
account any extensions pursuant to this Section 2 or early termination of
employment pursuant to Section 7.


 


Section
3.  Base Salary.  Commencing on the Commencement Date, the
Company shall pay the Executive a base salary annually (the “Base Salary”),
which shall be payable in periodic installments according to the Company’s
normal payroll practices.  The initial
Base Salary shall be $225,000.  The Board or the Compensation
Committee of the Board (the “Compensation Committee”) shall review the Base
Salary at least once a year to determine whether the Base Salary should be
increased effective January 1 of any year during the Term; provided,
however, that on January 1 of each year during the Term the initial Base
Salary shall be increased by a minimum positive amount equal to the Base Salary
in effect on January 1 of the prior year multiplied by the percentage
increase in the Consumer Price Index for such year.  The amount of the increase shall be
determined before March 31 of each year and shall be retroactive to January 1.  The Base Salary, including any increases,
shall not be decreased during the Term.  For
purposes of this Agreement, the term “Base Salary” shall mean the amount
established and adjusted from time to time pursuant to this Section 3.


 


Section
4.  Annual Incentive Bonus.  The Executive shall be entitled to receive an
annual cash Incentive Bonus for each fiscal year during the Term of this
Agreement consistent with a bonus policy adopted by the Compensation Committee
(the “Bonus Policy”).  If the Executive
or the Company, as the case may be, satisfies the threshold performance
criteria contained in such Bonus Policy for a fiscal year, he shall receive an
annual Incentive Bonus equal to at least 25% of the Executive’s Base Salary.  If the Executive or the Company, as the case
may be, satisfies the target performance criteria contained in the Bonus Policy
for a fiscal year, he shall receive an annual Incentive Bonus equal to at least
50% of the Executive’s Base Salary.  If
the Executive or the Company, as the case may be, satisfies the maximum target
performance criteria contained in the Bonus Policy for a fiscal year, he shall
receive an annual Incentive Bonus equal to 90% of the Executive’s Base Salary
(the “Maximum Target Bonus”).  If the
Executive or the Company, as the case may be, fails to satisfy the threshold performance
criteria contained in the Bonus Policy for a fiscal year, the Compensation Committee
may determine whether any Incentive Bonus shall be payable to the Executive for
that year.  The Bonus Policy shall
contain both individual and Company goals established by the Compensation
Committee.  The Board or the Compensation
Committee shall review the Bonus Policy at least once a year to determine
whether the Maximum Target Bonus should be increased effective January 1
of any year during the Term, or whether any additional changes should be made
to the Bonus Policy effective January 1 of any year.  The annual Incentive Bonus, if any, shall be
paid to the Executive no later than 30 days after the date the Compensation
Committee determines


 


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whether the criteria in
the Bonus Policy for such fiscal year were satisfied and determined the amount
of the actual bonus.  For purposes of
this Agreement, the term “Incentive Bonus” shall mean the amount established
pursuant to this Section 4.


 


Section
5.  Stock Based Awards.  The Company has established the 2003 Stock
Option and Incentive Plan (the “Stock Option Plan”).  Pursuant to the recommendation of the
President and senior management of the Company, the Company shall grant the
Executive Restricted Share Grants (the “Initial Restricted Share Grant”) of
20,000 restricted shares in July 2005, subject to formal approval by the
Compensation Committee.  The Common
Shares covered by the Initial Restricted Share Grant shall vest in five equal
annual installments of 4,000 shares commencing January 20, 2006 and each year
thereafter; provided that 50% of such shares shall vest if the Executive is
employed by the Company at the time of vesting and the remaining shares shall
vest based upon performance goals of the Company as determined by the
Compensation Committee; and provided further, however, that the Executive will
be 100% vested in the Initial Restricted Share Grant upon (i) a Change of
Control, as defined herein; (ii) a termination by the Company without
Cause, as defined herein; (iii) a termination by the Executive for Good
Reason, as defined herein; (iv) his death; or (v) his becoming
Permanently Disabled, as defined herein. 
The Executive will forfeit all unvested Initial Restricted Share Grant
shares if he is terminated for Cause or he terminates his employment hereunder
for other than Good Reason.  The
Executive shall be eligible to receive future Restricted Share Grants as
determined by the Compensation Committee.


 


Section
6.  Benefits.


 


(a)                                  Vacation.  The Executive shall be entitled to three weeks
of vacation each full calendar year in accordance with the Company’s policies
and procedures related to vacation time.


 


(b)                                 Sick and Personal Days.  The Executive shall be entitled to sick and
personal days on an as needed basis in accordance with the Company’s policies,
procedures and limits related to sick and personal time.


 


(c)                                  Employee Benefits.


 


(i)                                     Participation in Employee Benefit Plans.  The Executive and his spouse and eligible
dependents, if any, and their respective designated beneficiaries where applicable,
will be eligible for and entitled to participate in any Company sponsored
employee benefit plans, including but not limited to benefits such as group
health, dental, accident, disability insurance, group life insurance and a 401(k)
plan, as such benefits may be offered from time to time pursuant to the terms
of such benefit plans, on a basis no less favorable than that applicable to any
other executive of the Company.


 


(ii)                                  Disability Insurance. 
The Company shall maintain, at its cost, supplemental renewable long-term
disability insurance consistent with the policies of the Company unless determined
in good faith by the Compensation Committee to be unreasonable in cost.


 


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(d)                                 Other Benefits.


 


(i)                                     Annual Physical.  The
Company shall provide, at its cost, a medical examination for the Executive on
an annual basis by a licensed physician in the Scottsdale or Phoenix, Arizona
area selected by the Executive.


 


(ii)                                  Directors and Officers Insurance.  During the Term and the period that begins on
the effective date of termination under Section 7 and ends on December 15, 2007,
the Executive shall be entitled to director and officer insurance coverage for his
acts and omissions while an officer and director of the Company on a basis no
less favorable to him than the coverage provided to any other current officers
and directors during the time the Executive is a director or officer, provided,
however, that all insurance policies providing such director and officer
coverage shall provide coverage for any claim made related to any time the
Executive was a director or officer of the Company or any subsidiary, except
for any period prior to the date of this Agreement for which no coverage need
be provided or any period after which customary tail coverage shall lapse.


 


(iii)                               Life Insurance.  The
Company may purchase on the life of the Executive key man life insurance with
the Company as the beneficiary of the death benefit as the Company deems
appropriate.


 


(iv)                              Expenses, Office and Secretarial Support.  The Executive shall be entitled to
reimbursement of all reasonable expenses, in accordance with the Company’s
policy as in effect from time to time and on a basis no less favorable than
that applicable to any other executive of the Company, including, without
limitation, telephone, reasonable travel and reasonable entertainment expenses
incurred by the Executive in connection with the business of the Company,
promptly upon the presentation by the Executive of appropriate documentation.  The Executive shall also be entitled to
appropriate office space, administrative support, and such other facilities and
services as are reasonably suitable to the Executive’s positions and adequate
for the performance of the Executive’s duties.


 


Section
7.  Termination.  The employment of the Executive by the
Company pursuant to this Agreement shall terminate upon the occurrence of any
of the following:


 


(a)                                  Death or Permanent Disability.  Immediately upon death or Permanent
Disability of the Executive.  As used in
this Agreement, “Permanent Disability” shall have the same meaning as such term
has under any Company Long Term Disability Plan.  If the Company has no Long Term Disability
Plan, “Permanent Disability” shall mean an inability due to a physical or
mental impairment to perform the material services contemplated under this
Agreement for a period of six months, whether or not consecutive, during
any 365-day period.  A determination of
Permanent Disability shall be made by a physician satisfactory to both the
Executive and the Company; provided that if the Executive and the Company do
not agree on a physician, the Executive and the Company shall each select a
physician and these two together shall select a third physician, whose
determination as to Permanent Disability shall be binding on all parties.


 


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The appointment of one or
more individuals to carry out the offices or duties of the Executive during a
period of the Executive’s inability to perform such duties pending a
determination of Permanent Disability shall not be considered a breach of this
Agreement by the Company.


 


(b)                                 For Cause.  At the election of the Company and subject to
the provisions of this Section 7(b), immediately upon written notice by
the Company to the Executive of his termination for Cause.  For purposes of this Agreement, “Cause” for
termination shall be deemed to exist solely in the event of (i) the
conviction of the Executive of, or the entry of a plea of guilty or
nolo contendere by the Executive to, a felony (not including a conviction,
plea of guilty or nolo contendere arising solely under a statutory provision
imposing criminal liability upon the Executive on a strict liability basis due
to the position held by the Executive, so long as any act or omission of the
Executive with respect to such matter was not taken or omitted in contravention
of any applicable policy or directive of the Board); (ii) a breach of his
duty of loyalty which has a material adverse effect upon the Company;
(iii) a failure to perform or adhere to duties that are consistent with
the terms of this Agreement, or the Company’s reasonable and customary
guidelines of employment or reasonable and customary corporate governance
guidelines or policies, including, without limitation, any business code of
ethics adopted by the Board, or to follow the lawful directives of the Board
(provided such directives are consistent with the terms of this Agreement),
which, in any such case, continues for 30 days after written notice from
the Board to the Executive; (iv) negligence or misconduct in the
performance of the Executive’s duties which has a material adverse effect upon
the Company; or (v) a material breach of this Agreement by the Executive that
continues for 30 days after written notice from the Board to the Executive.  For purposes of this Section 7(b), no
act, or failure to act, on the Executive’s part will be deemed “negligence” or “misconduct”
unless done, or omitted to be done, by the Executive not in good faith and
without a reasonable belief that the Executive’s act, or failure to act, was in
the best interest of the Company.  The
parties agree that in order to terminate the Executive pursuant to clauses (ii),
(iv) and (v) hereof, a determination shall be made by a majority of the
independent members of the Board.


 


(c)                                  Without Cause; Without Good Reason.  At the election of the Company, without
Cause, and at the election of the Executive, without Good Reason, in either
case upon 30 days’ prior written notice to the Executive or the Company,
as the case may be.


 


(d)                                 For Good Reason.  At the election of the Executive, for Good
Reason.  For purposes of this Agreement, “Good
Reason” shall mean any of the following actions or omissions, provided the Executive
notifies the Company of his determination that Good Reason exists within 60 days
of the action or omission on which such determination is based:


 


(i)                                     a
material reduction of or adverse change in the Executive’s duties, titles,
responsibilities or reporting requirements, or the assignment to the Executive of
any duties, responsibilities or reporting requirements that are materially inconsistent
with his position as Senior Vice President - Operations, as the case may be;


 


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(ii)                                  a
reduction by the Company in the Executive’s annual Base Salary or Maximum
Target Bonus;


 


(iii)                               Executive
not being offered employee benefits or material fringe benefits, both in terms
of the amount of the benefit and the level of the Executive’s participation
therein, enjoyed by the Executive under the employee benefit and welfare plans
of the Company, including, without limitation, such benefits as group health,
dental, 401(k), accident, disability insurance or group life insurance, on the
same terms and conditions as other similar executives of the Company except as
is required by applicable law;


 


(iv)                              absent
the Executive’s prior written consent, the requirement by the Company that the
principal place of business at which the Executive performs his duties be
changed to a location that is outside of a 35-mile radius of Scottsdale, Arizona
(or a substantial increase in the amount of travel that the Executive is
required to do because of a relocation of the Company’s headquarters from
Scottsdale, Arizona).  The parties
acknowledge that for these purposes, Executive’s principal place of business
will be Scottsdale, Arizona;


 


(v)                                 any
failure by the Company to obtain from any successor to the Company an agreement
reasonably satisfactory to Executive to assume and perform this Agreement, as
contemplated by Section 17(e); or


 


(vi)                              a
breach by the Company of any provision of this Agreement that continues for a
period of 30 days after Executive provides written notice to the Company
of such breach.


 


Notwithstanding the
foregoing, in the event that Executive provides the Company with a notice of
termination stating Good Reason, the Company shall have 30 days thereafter in
which to cure or resolve the behavior otherwise constituting Good Reason.


 


Section
8.  Effects of Termination.


 


(a)                                  Termination By the Company Without Cause;
By the Executive for Good Reason.  If the employment of the Executive should
terminate by reason of termination by the Company for any reason other than
Cause, or by the Executive for Good Reason, then the Company shall pay all
compensation and benefits for the Executive as follows:


 


(i)                                     any
Base Salary, Incentive Bonus, expense reimbursements and all other compensation
related payments that are payable as of the date of his termination of
employment that are related to his period of employment preceding his
termination date, including pay in lieu of accrued, but unused, vacation;


 


(ii)                                  the
prorated amount of the Maximum Target Bonus for the year in which the
termination of employment occurs, pro rated for the portion of such year during
which the Executive was employed prior to the effective date of his


 


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termination and
subtracting all Incentive Bonus payments received by Executive during such year
that relate only to such year;


 


(iii)                               the
amount equal to one and one-half (1.5) times the sum of (A) Base Salary,
plus (B) his Maximum Target Bonus, at the rates in effect on the effective
date of his termination of employment.


 


The sum of the amount payable under clauses (ii)
and (iii) hereof is referred to herein as his “Severance Payment”;


 


(iv)                              the
Severance Payment shall be made in a single, lump sum cash payment no later
than 30 days after the effective date of the Executive’s termination of
employment.


 


(v)                                 the
Company shall allow the Executive to continue to participate during the 18
month period following termination (the “Severance Period”) in any and all of
the employee benefit and welfare plans and programs of the Company, excluding
any 401(k) plan, in which the Executive was entitled to participate
immediately prior to his termination, to the same extent and upon the same
terms as the Executive participated in such plans prior to his termination;
provided that the Executive’s continued participation is permissible pursuant
to the terms of such plans and otherwise practicable under the general terms
and provisions of such benefit plans and programs.  During the Severance Period, the Company
shall pay for the Executive’s continued participation in said employee benefit
and welfare plans, including, but not limited to, premiums for group health,
dental, accident, directors and officers insurance and group life insurance,
but excluding any 401(k) plan or disability insurance.  To the extent that continued participation is
neither permissible nor practicable, the Company shall take such actions as may
be necessary to provide the Executive with substantially comparable benefits
(without additional cost to the Executive, including any additional taxes)
outside the scope of such plans including, without limitation, reimbursing the
Executive for his costs in obtaining such coverage, such as COBRA premiums paid
by the Executive and/or his eligible dependents, provided such costs are consistent
with the policies of the Company unless such costs are determined in good faith
to be unreasonable by the Compensation Committee.  If the Executive engages in regular
employment after his termination of employment (whether as an executive or as a
self-employed person but excluding his management or operation of the Excluded
Businesses), any employee benefit and welfare benefits received by the
Executive in consideration of such employment which are the same type as the
employee benefit and welfare benefits provided by the Company will relieve the
Company of its obligation under this Section 8(a)(v) to provide such type
of benefits;


 


(vi)                              the
Executive’s stock options awarded under the Stock Option Plan (or any other or
successor plan) shall immediately become 100% vested and he shall have a two-year
period following the effective date of his termination of


 


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employment in which to
exercise his vested stock options, including those stock options that vested
upon his termination of employment; and


 


(vii)                           the
Executive’s restricted Common Shares awarded under the Stock Option Plan (or
any other or successor plan) shall immediately become 100% vested and all
restrictions shall lapse.


 


(b)                                 Termination on Death.  Upon a termination of employment due to the
Executive’s death, the Executive shall become 100% vested in his stock options
and restricted Common Shares awarded under the Stock Option Plan.  The Executive’s personal representative shall
have a one-year period following the Executive’s death in which to exercise his
vested stock options, including those stock options that vested on death.  The Company shall pay to the Executive’s
personal representative any Base Salary, Incentive Bonus, expense reimbursements
and all other compensation related payments that are payable as of his date of
death and that are related to his period of employment preceding his date of
death.  Within 60 days after the
Executive’s death, the Company shall pay to the Executive’s personal
representative the prorated amount of the Maximum Target Bonus for the year in which
the Executive’s death occurs, prorated for the portion of the year during which
the Executive was employed prior to his death, and subtracting out all Incentive
Bonus payments related to that year received by the Executive during such year.


 


(c)                                  Termination on Permanent Disability.  Upon a termination of employment due to the
Executive’s Permanent Disability, the Executive shall become 100% vested in his
stock options and restricted Common Shares awarded under the Stock Option
Plan.  The Executive or his
representative shall have a one-year period following the Executive becoming
Permanently Disabled in which to exercise his vested stock options, including
those stock options that vested on Permanent Disability.  The Company shall pay to the Executive any
Base Salary, Incentive Bonus, expense reimbursements and all other compensation
related payments that are payable as of his date of Permanent Disability and
that are related to his period of employment preceding his date of Permanent
Disability.  Within 60 days after
the Executive’s Permanent Disability, the Company shall pay to the Executive
the prorated amount of the Maximum Target Bonus for the year in which the
Executive’s Permanent Disability occurs, prorated for the portion of the year
during which the Executive was employed prior to his Permanent Disability, and
subtracting out all Incentive Bonus payments related to that year received by
the Executive during such year.


 


(d)                                 By the Company for Cause or By the
Executive Without Good Reason.  In the event that the Executive’s employment
is terminated by the Company for Cause or by the Executive without Good Reason,
the Company shall pay the Executive his Base Salary, Incentive Bonus, expense
reimbursements and all other compensation related payments that are payable as
of his termination of employment date and that are related to his period of
employment preceding his termination date. 
The Executive shall be entitled to exercise his vested stock options,
determined as of his termination date, pursuant to the terms of the option
grant.  All unvested options and unvested
restricted Common Shares shall be forfeited on his termination date.


 


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(e)                                  Termination of Authority.  Immediately upon the Executive terminating or
being terminated from his employment with the Company for any reason,
notwithstanding anything else appearing in this Agreement or otherwise, the
Executive will stop serving the functions of his terminated or expired
positions, and shall be without any of the authority or responsibility for such
positions.  On request of the Board at
any time following his termination of employment for any reason, the Executive
shall resign from the Board if then a member. 
Upon termination of employment, the Executive shall also be entitled to
all benefits accrued and vested under any employee benefit plan of the Company.


 


(f)                                    Release.  Prior to the payment by the Company of the
Executive’s Severance Payment, the Company, as a condition to such payments,
shall request a customary release from the Executive with respect to all
potential claims the Executive may have against the Company related to the
Executive’s employment with the Company prior to the date of payment by the
Company of the Executive’s Severance Payment. 
If the Executive does not deliver such release, the Company shall not be
required to pay the Executive all or any portion of the Severance Payment;
provided, however, if the Executive shall bring legal action related to his
Employment, nothing in this subsection (f) shall prevent the Executive from
receiving the Severance Payment as an award in such legal action provided the
Executive gives such release at the time of payment of the award.


 


Section
9.  Change of Control.


 


(a)                                  Change of Control.  For purposes of this Agreement, a “Change of
Control” will be deemed to have taken place upon the occurrence of any of the
following events:


 


(i)                                     any
person, entity or affiliated group, excluding any employee benefit plan of the Company,
acquiring more than 50% of the then outstanding voting shares of the Company;


 


(ii)                                  the
consummation of any merger or consolidation of the Company into another
company, such that the holders of the voting shares of the Company immediately
prior to such merger or consolidation represent less than 50% of the combined voting
power of the securities of the surviving company or the parent of such
surviving company;


 


(iii)                               the
complete liquidation of the Company or the sale or disposition of all or
substantially all of the Company’s assets, such that after the transaction, the
holders of the voting shares of the Company immediately prior to the
transaction is less than 50% of the voting securities of the acquiror or the
parent of the acquiror; or


 


(iv)                              a
majority of the independent members of the Board of the Company votes in favor
of a decision that a Change of Control has occurred.


 


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(b)                                 Certain Benefits Upon a Change of Control.  In the event of a Change of Control, the
Executive shall become 100% vested in the stock options and restricted Common
Shares awarded under the Stock Option Plan (or any other or successor plan) and
if the Executive voluntarily terminates his employment without Good Reason
after the Change of Control, then the Executive shall have a one-year period
following the Change of Control in which to exercise his vested stock options,
including those stock options that vested upon the Change of Control.


 


Section
10.  Excess Parachute Excise Tax.


 


(a)                                  If
it is determined (as hereafter provided) that any payment or distribution by
the Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation any stock option, stock
appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code by
reason of being “contingent on a change in ownership or control” of the
Company, within the meaning of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such excise tax (such tax or taxes,
together with any such interest and penalties, are hereafter collectively
referred to as the “Excise Tax”), then Executive shall be entitled to receive
an additional payment or payments (a “Gross-Up Payment”) in an amount such
that, after payment by Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.


 


(i)                                     Subject
to the provisions of this Section 10 hereof, all determinations required
to be made under this Section 10, including whether an Excise Tax is
payable by Executive and the amount of such Excise Tax and whether a Gross-Up
Payment is required and the amount of such Gross-Up Payment, shall be made by
the nationally recognized firm of certified public accountants (the “Accounting
Firm”) used by the Company prior to the Change of Control (or, if such
Accounting Firm shall be a nationally recognized firm of certified public
accountants, as selected by Executive). 
The Accounting Firm shall be directed by the Company or Executive to
submit its preliminary determination and detailed supporting calculations to
both the Company and Executive within 15 calendar days after the date of
termination of employment, if applicable, and any other such time or times as
may be requested by the Company or Executive. 
If the Accounting Firm determines that any Excise Tax is payable by
Executive, the Company shall pay the required Gross-Up Payment to, or for the
benefit of, Executive within five business days after receipt of such
determination and calculations.  If the
Accounting Firm determines that no Excise Tax is payable by Executive, it
shall, at the same time as it makes such determination, furnish Executive with
an opinion that he has substantial authority not to report any Excise Tax on
his/her federal, state, local income or other tax


 


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return.  Any determination by the Accounting Firm as
to the amount of the Gross-Up Payment shall be binding upon the Company and
Executive absent a contrary determination by the Internal Revenue Service or a
court of competent jurisdiction; provided, however, that no such determination
shall eliminate or reduce the Company’s obligation to provide any Gross-Up
Payment that shall be due as a result of such contrary determination or the
Executive’s obligation to repay any amounts as a result of such contrary
determination.


 


(ii)                                  The
federal, state and local income or other tax returns filed by Executive (or any
filing made by a consolidated tax group which includes the Company) shall be
prepared and filed on a consistent basis with the determination of the
Accounting Firm with respect to the Excise Tax payable by Executive.  Executive shall make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of his/her federal income
tax return as filed with the Internal Revenue Service and corresponding state
and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company,
evidencing such payment.


 


(b)                                 In
the event that the Internal Revenue Service claims that any payment or benefit
received under this Agreement constitutes as “excess parachute payment”, within
the meaning of Section 280G(b)(1) of the Code, Executive shall notify the
Company in writing of such claim.  Such
notification shall be given as soon as practicable but no later than 10
business days after Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such
claim is requested to be paid.  Executive
shall not pay such claim prior to the expiration of the 30 day period following
the date on which Executive gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due).  If the Company notifies
Executive in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (1) give the Company any information
reasonably requested by the Company relating to such claim; (2) take such
action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including without limitation, accepting
legal representation with respect to such claim by an attorney reasonably
selected by the Company and reasonably satisfactory to Executive; (3) cooperate
with the Company in good faith in order to effectively contest such claim; and
(4) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest and
penalties and related legal, consulting or other similar fees) incurred in
connection with such contest and shall indemnify and hold Executive harmless,
on an after-tax basis, for and against any Excise Tax or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and any payment of costs and expenses.


 


(i)                                     The
Company shall control all proceedings taken in connection with such contest
and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the tax


 


11





















 


authority in respect of
such claim and may, at its sole option, either direct Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner,
and Executive agrees to prosecute such contest before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company
directs Executive to pay such claim and sue for a refund, the Company shall
advance the amount of such payment to Executive on an interest-free basis, and
shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or other tax (including interest and penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that if Executive is required
to extend the statute of limitations to enable the Company to contest such
claim, Executive may limit this extension solely to such contested amount.  The Company’s control of the contest shall be
limited to issues with respect to which a corporate deduction would be
disallowed pursuant to Section 280G of the Code and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.  In addition, no position may be taken nor any
final resolution be agreed to by the Company without Executive’s consent if
such position or resolution could reasonably be expected to adversely affect
Executive (including adversely affecting any other tax position of Executive
unrelated to matters covered hereby).


 


(ii)                                  If,
after the receipt by Executive of any amount advanced by the Company in
connection with the contest of the Excise Tax claim, Executive becomes entitled
to receive any refund with respect to such claim, Executive shall promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto).


 


(c)                                  The
Company and Executive shall each provide the Accounting Firm access to and
copies of any books, records and documents in the possession of the Company or
Executive, as the case may be, reasonably requested by the Accounting Firm, and
otherwise cooperate with the Accounting Firm in connection with the preparation
and issuance of the determination contemplated by this Section 10.


 


(d)                                 The
fees and expenses of the Accounting Firm for its services in connection with
the determinations and calculations contemplated by this Section 10 hereof
shall be borne by the Company.  If such
fees and expenses are initially advanced by Executive, the Company shall
reimburse Executive the full amount of such fees and expenses within five
business days after receipt from Executive of a statement therefor and
reasonable evidence of his payment thereof.


 


Section
11.  Confidential Information.  At any time during or after Executive’s
employment with the Company, Executive shall not, without the prior written
consent of the Company, use, divulge, disclose or make accessible to any other
person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries (“Confidential Information”), pursuant to the policies set forth
in the Company’s employee handbook and compliance manual, as amended from time


 


12





















 


to time.  The Company acknowledges that prior to his
employment with the Company, the Executive has lawfully acquired extensive
knowledge of the industries and businesses in which the Company engages in
business and the Company’s customers, and that the provisions of this Section 11
are not intended to restrict the Executive’s use of such previously acquired
knowledge.  Upon termination of the
Executive’s employment with the Company for any reason, the Executive shall
return to the Company all Company property and all written Confidential
Information in the possession of the Executive.


 


In the event that the Executive receives a request or
is required (by deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) to disclose all or any part of
the Confidential Information, the Executive agrees to (a) promptly notify
the Company in writing of the existence, terms and circumstances surrounding
such request or requirement; (b) consult with the Company on the
advisability of taking legally available steps to resist or narrow such request
or requirement; and (c) assist the Company in seeking a protective order
or other appropriate remedy.  In the
event that such protective order or other remedy is not obtained or that the
Company waives compliance with the provisions hereof, the Executive shall not
be liable for such disclosure unless disclosure to any such tribunal was caused
by or resulted from a previous disclosure by the Executive not permitted by
this Agreement.


 


Section
12.  Noncompetition and Nonsolicitation.  During the Term and for a period of 12 calendar months after the termination of the Executive’s
employment (the “Non-compete Period”), the Executive shall not, directly or
indirectly, either as a principal, agent, employee, employer, stockholder,
partner or in any other capacity whatsoever: (a) engage or assist others
engaged, in whole or in part, in any business which is engaged in a business or
enterprise that is substantially similar to and in competition with the
business of the Company that the Company was engaged in, or a planned business
of the Company that had been proposed in writing to senior officers of the
Company or the Board and had not been rejected by the Company or the Board,
during the period of the Executive’s employment with the Company; or
(b) without the prior consent of the Board, employ or solicit the
employment of, or assist others in employing or soliciting the employment of,
any individual employed by the Company (other than the Executive’s personal
assistant or Executive’s secretary) at any time while the Executive was also so
employed; provided, however, that the provisions of this Section 12 shall
not apply in the event the Company materially breaches this Agreement.  For purposes of this Section 12, a business
shall be in competition with the Company only if a significant portion of its
business is to originate mortgage loans to or purchase real estate from and
lease such real estate back to operators of single-tenant retail, distribution
or service companies in the United States. 
Notwithstanding any other provision of this Agreement, in the event the
Executive’s employment is terminated “For Cause,” the Non-Compete Period shall
be 12 calendar months.


 


Nothing in this Section 12 shall impede, restrict
or otherwise interfere with the Executive’s management and operation of the
Excluded Businesses.  Further, nothing in
this Section 12 shall prohibit Executive from making any passive
investment in a public company, or where he is the owner of 5% or less of the
issued and outstanding voting securities of any entity, provided such ownership
does not result in his being obligated or required to devote any managerial
efforts.


 


13





















 


The Executive agrees that the restraints imposed upon him
pursuant to this Section 12 are necessary for the reasonable and proper
protection of the Company and its subsidiaries and affiliates, and that each
and every one of the restraints is reasonable in respect to subject matter,
length of time and geographic area.  The
parties further agree that, in the event that any provision of this Section 12
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its being extended over too great a time, too large a geographic
area or too great a range of activities, such provision shall be deemed to be
modified to permit its enforcement to the maximum extent permitted by law.


 


Section
13.  Intellectual Property.  During the Term, the Executive shall promptly
disclose to the Company or any successor or assign, and grant to the Company
and its successors and assigns without any separate remuneration or
compensation other than that received by him in the course of his employment, his
entire right, title and interest in and to any and all inventions,
developments, discoveries, models, or any other intellectual property of any
type or nature whatsoever developed solely during the Term (“Intellectual
Property”), whether developed by him during or after business hours, or alone
or in connection with others, that is in any way related to the business of the
Company, its successors or assigns.  This
provision shall not apply to books or articles authored by the Executive during
non-work hours, consistent with his obligations under this Agreement, so long
as such books or articles (a) are not funded in whole or in part by the
Company, (b) do not interfere with the performance of the Executive’s duties
under this Agreement, and (c) do not contain any Confidential Information
or Intellectual Property of the Company. 
The Executive agrees, at the Company’s expense, to take all steps
necessary or proper to vest title to all such Intellectual Property in the
Company, and cooperate fully and assist the Company in any litigation or other
proceedings involving any such Intellectual Property.


 


Section
14.  Disputes.


 


(a)                                  Equitable Relief.  The Executive acknowledges and agrees that
upon any breach by the Executive of his obligations under Section 11, 12
or 13 hereof, the Company will have no adequate remedy at law, and accordingly
will be entitled to specific performance and other appropriate injunctive and
equitable relief.


 


(b)                                 Arbitration.  Excluding only requests for equitable relief
by the Company under Section 14(a), in the event that there is any claim
or dispute arising out of or relating to this Agreement or the breach hereof,
and the parties hereto shall not have resolved such claim or  dispute within 60 days after written
notice from one party to the other setting forth the nature of such claim or
dispute, then such claim or dispute shall be settled if mutually agreed by
binding arbitration in Maricopa County, Arizona, in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association (“Rules”),
by an arbitrator mutually agreed upon by the parties hereto or, in the absence
of such agreement, by an arbitrator selected according to such Rules.  Notwithstanding the foregoing, if either the
Company or the Executive shall request, such mutually agreeable arbitration
shall be conducted by a panel of three arbitrators, one selected by the
Company, one selected by the Executive and the third selected by agreement of
the first two arbitrators, or, in the absence of such agreement, in accordance
with such Rules.  Judgment upon the award
rendered by such arbitrator(s) shall be


 


14





















 


entered in any Court
having jurisdiction thereof upon the application of either party.  The parties agree to use their reasonable
best efforts to have such arbitration completed as soon as is reasonably
practicable.  Notwithstanding anything
herein to the contrary, except as provided in paragraph (c) below the
losing party shall pay the reasonable costs and expenses (including reasonable
attorney fees and expenses) of the prevailing party with respect to such
arbitration, except the Executive, if he is the losing party, shall not be
required to pay such expenses and costs if the claim relates to statutory
discrimination claims that he would not otherwise be required to pay if such
claim had been brought in a court of competent jurisdiction.


 


(c)                                  Legal Fees.  The Company shall pay or promptly reimburse
the Executive for the reasonable legal fees and expenses incurred by the
Executive in successfully enforcing or defending any right of the Executive
pursuant to this Agreement even if the Executive does not prevail on all issues;
provided, however, the Company shall have no obligation to reimburse the
Executive unless the amount recovered by the Executive from the Company is the
greater of (a) $10,000 or (b) 25% of the amount claimed by the Executive in any
demand letter, arbitration or judicial proceeding.


 


Section
15.  Indemnification.  The Company shall indemnify the Executive, to
the maximum extent permitted by applicable law and the governing instruments of
the Company, against all costs, charges and expenses incurred or sustained by
the Executive, including the cost of legal counsel selected and retained by the
Executive in connection with any action, suit or proceeding to which the
Executive may be made a party by reason of the Executive being or having been
an officer, director or employee of the Company.


 


Section
16.  Cooperation in Future Matters.  The Executive hereby agrees that for a period
of 12 months following his termination of employment he shall cooperate with
the Company’s reasonable requests relating to matters that pertain to the Executive’s
employment by the Company, including, without limitation, providing information
or limited consultation as to such matters, participating in legal proceedings,
investigations or audits on behalf of the Company, or otherwise making himself
reasonably available to the Company for other related purposes.  Any such cooperation shall be performed at
scheduled times taking into consideration the Executive’s other commitments,
and the Executive shall be compensated at a reasonable hourly or per diem rate
to be agreed upon by the parties to the extent such cooperation is required on
more than an occasional and limited basis. 
The Executive shall not be required to perform such cooperation to the
extent it conflicts with any requirements of exclusivity of services for
another employer or otherwise, nor in any manner that in the good faith belief
of the Executive would conflict with his rights under or ability to enforce
this Agreement.


 


Section
17.  General.


 


(a)                                  Notices.  All notices and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if sent by overnight
courier or by certified mail, return receipt requested, postage prepaid or sent
by written telecommunication or facsimile, to the relevant address set forth
below, or to such other address as the recipient of such notice or


 


15





















 


communication shall have
specified in writing to the other party hereto, in accordance with this Section 17(a).


 


to the Company:


 


Spirit Finance Corporation


14631 N. Scottsdale Road


Suite 200


Scottsdale, AZ 
85254 Facsimile:  (480) 606-0826


Attention:  President


 


to Executive, at his last residence shown on the
records of the Company.


 


Any such notice shall be effective (i) if
delivered personally, when received; (ii) if sent by overnight courier,
when receipted for; (iii) if mailed, five days after being mailed;
and (iv) on confirmed receipt if sent by written telecommunication or facsimile;
provided a copy of such communication is sent by regular mail, as described
above.


 


(b)                                 Severability.  If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired.


 


(c)                                  Waivers.  No delay or omission by either party hereto
in exercising any right, power or privilege hereunder shall impair such right,
power or privilege, nor shall any single or partial exercise of any such right,
power or privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege.


 


(d)                                 Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  In making proof of this Agreement, it shall
not be necessary to produce or account for more than one such counterpart.


 


(e)                                  Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Company’s successors and the Executive’s personal
or legal representatives, executors, administrators, heirs, distributees,
devisees and legatees.  This Agreement
shall not be assignable by the Executive, it being understood and agreed that
this is a contract for the Executive’s personal services.  This Agreement shall not be assignable by the
Company except that the Company shall assign it in connection with a
transaction involving the succession by a third party to all or substantially
all of the Company’s business and/or assets (whether direct or indirect and
whether by purchase, merger, consolidation, liquidation or otherwise).  When assigned to a successor, the assignee
shall assume this Agreement and expressly agree to perform this Agreement in
the same manner and to the same extent as the Company would be required to
perform it in the absence of such an assignment.  For all purposes under this Agreement, the
term “Company” shall include any successor to the Company’s business and/or
assets that


 


16





















 


executes and delivers the
assumption agreement described in the immediately preceding sentence or that
becomes bound by this Agreement by operation of law.


 


(f)                                    Entire Agreement.  This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter hereof
and may not be amended except by a written instrument hereafter signed by the
Executive and a duly authorized representative of the Board (other than the
Executive); provided, however, the parties acknowledge a letter dated March 30,
2005 to the Executive from the President of the Company regarding transitional
expenses and parking.


 


(g)                                 Governing Law.  This Agreement and the performance hereof
shall be construed and governed in accordance with the laws of the State of
Arizona, without giving effect to principles of conflicts of law. Each
of the parties hereto hereby irrevocably submits to the jurisdiction of any
state or federal court located in Phoenix or Scottsdale, Arizona in respect of
any suit, action or proceeding arising out of or relating to this Agreement,
and irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts.  Each of the parties hereto irrevocably
waives, to the fullest extent it may effectively do so under applicable law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding brought in any such court and any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.


 


(h)                                 Construction.  The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.  The headings of sections of this Agreement
are for convenience of reference only and shall not affect its meaning or
construction.  Whenever any word is used
herein in one gender, it shall be construed to include the other gender, and
any word used in the singular shall be construed to include the plural in any
case in which it would apply and vice versa.


 


(i)                                     Payments and Exercise of Rights After
Death.  Any amounts
payable hereunder after the Executive’s death shall be paid to the Executive’s
designated beneficiary or beneficiaries, whether received as a designated
beneficiary or by will or the laws of descent and distribution.  The Executive may designate a beneficiary or
beneficiaries for all purposes of this Agreement, and may change at any time
such designation, by notice to the Company making specific reference to this
Agreement.  If no designated beneficiary
survives the Executive or the Executive fails to designate a beneficiary for
purposes of this Agreement prior to his death, all amounts thereafter due
hereunder shall be paid, as and when payable, to his spouse, if he survives the
Executive, and otherwise to his estate.


 


(j)                                     Consultation With Counsel.  The Executive acknowledges that he has had a
full and complete opportunity to consult with counsel or other advisers of his
own choosing concerning the terms, enforceability and implications of this
Agreement, and that the Company has not made any representations or warranties
to the Executive


 


17





















 


concerning the terms,
enforceability and implications of this Agreement other than as are reflected
in this Agreement.


 


(k)                                  Withholding.  Any payments provided for in this Agreement
shall be paid after deduction for any applicable income tax withholding
required under federal, state or local law.


 


(l)                                     No Mitigation of Damages.  Executive shall not be
required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise after the termination
of his employment hereunder.


 


(m)                               Consumer Price Index.  For purposes of this Agreement, the term “CPI”
refers to the Consumer Price Index as published by the Bureau of Labor
Statistics of the United States Department of Labor, U.S. City Average,
All Items for Urban Wage Earners and Clerical Workers (1982-1984=100).  If the CPI is hereafter converted to a
different standard reference base or otherwise revised, the determination of
the CPI adjustment shall be made with the use of such conversion factor,
formula or table for converting the CPI, as may be published by the Bureau of
Labor Statistics, or, if the bureau shall no longer publish the same, then with
the use of such conversion factor, formula or table as may be published by an
agency of the United States, or failing such publication, by a nationally
recognized publisher of similar statistical information.


 


(n)                                 Survival.  The
provisions of Sections 8, 9, 10, 11, 12, 13, 14, 15 and 16 shall survive
the termination of this Agreement.


 


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IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the date
first above written.


 


 


	
   

  	
   

  	
  SPIRIT FINANCE
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   /s/
  Christopher H. Volk

  	
   

  
	
   

  	
   

  	
   

  	
  Christopher H.
  Volk, President and Chief

  Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MICHAEL THOMAS
  BENNETT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Michael Thomas Bennett

  	
   

  
	
   

  	
   

  	
  Michael Thomas
  Bennett

  



 


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