Document:

Exhibit 10.1

MASTER REPURCHASE AGREEMENT

Dated as of October 13,
2006

AMONG:

CITIGROUP GLOBAL MARKETS
REALTY CORP., as buyer (“Buyer”, which term shall include any “Principal”
as defined and provided for in Annex I) or as agent pursuant hereto (“Agent”),

SPIRIT FINANCE
ACQUISITIONS, LLC, as seller with respect to Purchased Assets that are LLC
Interests (“LLC Seller”),

SPIRIT SPE WAREHOUSE FUNDING, LLC, as seller with
respect to Purchased Assets that are Loans (“Loan Seller”),

and

SPIRIT FINANCE CORPORATION, as seller with respect to
Purchased Assets that are Loans (“Spirit Seller”; collectively LLC
Seller, Loan Seller and Spirit Seller as applicable, “Seller”).

1.                                      APPLICABILITY

Buyer shall, from time to
time, agree to enter into transactions in which Seller transfers to Buyer
Eligible Assets against the transfer of funds by Buyer, with a simultaneous
agreement by Buyer to transfer to Seller such Purchased Assets at a date
certain, against the transfer of funds by Seller.  Each such transaction shall be referred to
herein as a “Transaction” and, unless otherwise agreed in writing, shall
be governed by this Agreement.

2.                                      DEFINITIONS
AND INTERPRETATION

a)                                      Defined
Terms.

“Accepted Servicing
Standards” shall have the meaning assigned thereto in the Custody Agreement.

“Additional Purchased
Assets” shall have the meaning assigned thereto in Section 6 hereof.

“Affiliate” shall
mean, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person.  For purposes of this definition,
“control” (together with the correlative meanings of 

 

“controlled by” and “under
common control with”) means possession, directly or indirectly, of the power
(a) to vote 10% or more of the securities (on a fully diluted basis) having
ordinary voting power for the directors or managing general partners (or their
equivalent) of such Person, or (b) to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract, or otherwise.

“Agent” shall mean
Citigroup Global Markets Realty Corp. or any successor.

“Agreement” shall
mean this Master Repurchase Agreement, as may be amended, supplemented or
otherwise modified from time to time.

“ALTA” shall mean
the American Land Title Association.

 “Appraisal” shall mean, with respect to
a Loan, an appraisal of the related Mortgaged Property securing a Loan (i) from
an MAI professional real estate appraiser who (A) is a member in good standing
of the Appraisal Institute and (B) if the state in which the subject Mortgaged
Property is located certifies or licenses appraisers, is certified or licensed
in such state, (ii) conducted in accordance with the standards of the Appraisal
Institute or such other standards as mutually agreed to by the parties hereto,
and (iii) performed within six (6) months of the date such Appraisal is
delivered to Buyer, or such other form of appraisal approved by Buyer in its
sole discretion.

“Appraised Value”
shall mean the value set forth in an appraisal (described on the Asset
Schedule) made in connection with the origination or acquisition of the related
Loan as the value of the Mortgaged Property securing such Loan.

“Asset Base” shall
mean, as of any date of determination, the aggregate Collateral Value of all
Purchased Assets.

“Asset Base
Certificate” shall mean the certificate prepared by Seller substantially in
the form of Exhibit B, attached hereto.

“Asset Schedule”
shall mean the list of Loans and/or LLC Interests delivered by Seller to Buyer
and Custodian together with each Transaction Notice and attached by Custodian
to the Trust Receipt and setting forth (i) as to each Loan, the related
Borrower name, the address of the related Mortgaged Property and the
outstanding principal balance of the Loan as of the initial Purchase Date,
together with any other information specified by Buyer from time to time, and
(ii) as to any LLC Interests, any information specified by Buyer from time to
time.

“Bankruptcy Code”
shall mean the United States Bankruptcy Code of 1978, as amended from time to
time.

“Borrower” shall
mean the obligor or obligors on a Note, including any Person that has acquired
the related collateral and assumed the obligations of the original obligor or
obligors under the Note and, in the case of Net Lease Loans, the Tenant of the
related Mortgaged Property.

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“Business Day”
shall mean any day other than (i) a Saturday or Sunday, (ii) a day on which the
New York Stock Exchange, the Federal Reserve Bank of New York, Custodian or
banking and savings and loan institutions in New York, New York or the city and
state in which Custodian’s offices are located are closed, or (iii) a day on
which trading in securities on the New York Stock Exchange or any other major
securities exchange in the United States is not conducted.

“Buyer’s Margin Amount”
shall mean, with respect to any Transaction as of any date of determination,
the amount obtained by application of the Buyer’s Margin Percentage to the
Repurchase Price (exclusive of accrued Pricing Differential) for such
Transaction as of such date.

“Buyer’s Margin
Percentage” shall have the meaning assigned thereto in the Side Letter.

“Capital Lease
Obligations” shall mean, for any Person, all obligations of such Person to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) Property to the extent such obligations are required to be
classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.

“Cash Equivalents”
shall mean (a) securities with maturities of 90 days or less from the date of
acquisition issued or fully guaranteed or insured by the United States
Government or any agency thereof, (b) certificates of deposit with maturities
of 90 days or less from the date of acquisition and overnight bank deposits of
any commercial bank having capital and surplus in excess of $500,000,000, (c)
repurchase obligations of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than seven (7) days
with respect to securities issued or fully guaranteed or insured by the United
States Government, (d) commercial paper of a domestic issuer rated at least “A-1”
or the equivalent thereof by S&P or “P-1” or the equivalent thereof by
Moody’s and in either case maturing within 90 days after the day of
acquisition, (e) securities with maturities of 90 days or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory, the securities of which state,
commonwealth, territory, political subdivision or taxing authority (as the case
may be) are rated at least “A” by S&P or “A” by Moody’s, (f) securities
with maturities of 90 days or less from the date of acquisition backed by
standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition or, (g) shares of money market
mutual or similar funds which invest exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.

“Change in Control”
shall mean the acquisition by any Person, or two or more Persons acting in
concert, of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934,
as amended from time to time) of outstanding shares of voting stock of such
Person at any 

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time, if after giving
effect to such acquisition such Person or Persons owns twenty percent (20%) or
more of such outstanding voting stock.

“Change in Law”
shall mean (a) the adoption of any law, rule or regulation after the date of
this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by Buyer (or any Affiliate of Buyer)
with any request, guideline or directive (whether or not having the force of
law) of any Governmental Authority made or issued after the date of this
Agreement.

“Closing Date”
shall mean October 13, 2006.

“Code” shall mean
the Internal Revenue Code of 1986, as amended from time to time.

“Collateral” shall
have the meaning assigned thereto in Section 9 hereof.

“Collateral Value”
shall mean with respect to each Purchased Asset, (i) on the applicable Purchase
Date, the value of such Purchased Asset as ascribed by Buyer, and (ii) on any
date of determination following the applicable Purchase Date, the least of (a)
the outstanding principal balance of such Purchased Asset, (b) the related
Market Value, (c) a value equal to 60% of the Appraised Value of such Purchased
Asset and (d) a value equal to 60% of the cost of acquiring such Purchased
Asset, as applicable; provided, that the Collateral Value shall be deemed to be
zero with respect to each Purchased Asset that is not an Eligible Asset.

“Collection Account”
shall have the meaning assigned thereto in the Custody Agreement.

“Computer Tape”
shall mean a computer tape or other electronic medium generated by or on behalf
of Seller and delivered to Buyer and Custodian which provides information
relating to the Purchased Assets, including the information set forth in the
Asset Schedule, in a format acceptable to Buyer.

“Confirmation”
shall have the meaning assigned thereto in Section 4(b) hereof.

“Contractual
Obligation” shall mean as to any Person, any material provision of any
agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound or any material provision of any
security issued by such Person.

“Custody Agreement”
shall mean the Custody and Servicing Agreement, dated as of October 13, 2006,
as may be amended, among Seller, Buyer, Servicer and Custodian.

“Custodian” shall
mean LaSalle Bank National Association or its successors and permitted assigns.

“Custodian’s Loan File”
shall have the meaning assigned thereto in the Custody Agreement.

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“Default” shall
mean an Event of Default or an event that with notice or lapse of time or both
would become an Event of Default.

“Default Rate”
shall mean, as of any date of determination, the lesser of (i) the Pricing Rate
plus 3.50% and (ii) the maximum rate permitted by applicable law.

“Defaulted Loan”
shall mean a Loan with respect to which a default (other than a payment
default) occurs that materially and adversely affects the interests of Seller
and that continues unremedied for the applicable grace period under the terms
of the Loan (or, if no grace period is specified, for 30 days).

“Delinquent Loan”
shall mean a Loan for which any related payment has not been received on or
before the date 30 days after the date on which such payment is due pursuant to
the related Note without regard to any grace period; provided, that a
Delinquent Loan shall remain a Delinquent Loan until the related Borrower cures
such delinquency and makes two (2) successive monthly payments on a timely
basis, including any related grace period.

“Effective Date”
shall mean October 13, 2006.

“Eligible Asset”
shall have the meaning assigned thereto in the Side Letter.

“ERISA” shall mean
the Employee Retirement Income Security Act of 1974, as amended from time to
time.

“ERISA Affiliate”
shall mean any corporation or trade or business that is a member of any group
of organizations (i) described in Section 414(b) or (c) of the Code of which
Seller is a member and (ii) solely for purposes of potential liability under
Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien
created under Section 302(f) of ERISA and Section 412(n) of the Code, described
in Section 414(m) or (o) of the Code of which Seller is a member.

“Event of Default”
shall have the meaning assigned thereto in Section 19 hereof.

“Foreign Buyer”
shall mean any Buyer that is organized under the laws of a jurisdiction other
than the one in which Seller is located. 
For purposes of this definition, the United States of America, each
state thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.

“GAAP” shall mean
generally accepted accounting principles in the United States of America in
effect from time to time.

“Governmental
Authority” shall mean, with respect to any Person, any nation or
government, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person, any of its subsidiaries or any of their
properties.

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“Guarantee” shall
mean, as to any Person, any obligation of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person or in any manner providing
for the payment of any Indebtedness of any other Person or otherwise protecting
the holder of such Indebtedness against loss (whether by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, or to take-or-pay or otherwise); provided, that the term “Guarantee”
shall not include (i) endorsements for collection or deposit in the ordinary
course of business or (ii) obligations to make servicing advances for
delinquent taxes and insurance, or other obligations in respect of a Mortgaged
Property, to the extent required by Buyer. The amount of any Guarantee of a
Person shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith. The terms “Guarantee”
and “Guaranteed” used as verbs shall have correlative meanings.

“Guarantor” shall
mean Spirit Finance Corporation.

“Hedge Counterparty”
shall mean Citibank, N.A. or a Person (i)(A) with long-term and commercial
paper or short-term deposit ratings of “P-1” by Moody’s and “A-1” by S&P
and (B) which shall agree in writing that, in the event that any of its
long-term or commercial paper or short-term deposit ratings cease to be at or
above “A-2” by Moody’s and “A” by S&P, it shall secure its obligations in
accordance with the request of Buyer or Buyer shall have the option to treat
such failure as an Early Termination Event (as defined in the related ISDA
Master Agreement) by such Hedge Counterparty, (ii) that has entered into a
Hedge Instrument and (iii) that is acceptable to Buyer.

“Hedge Instrument”
shall mean any interest rate cap agreement, interest rate floor agreement,
interest rate swap agreement or other interest rate hedging agreement entered
into by Seller with a Hedge Counterparty. 
Each Hedge Instrument shall meet the requirements set forth in Section
38 hereof with respect thereto and shall be a hedging instrument as described
in Section 856(c)(6) of the Code.

“Improvements”
shall mean all buildings, structures, improvements, parking areas, landscaping,
fixtures and articles of property now erected on, attached to, or used or
adapted for use in the operation of any Mortgaged Property, including, without
limitation, all heating, air conditioning and incinerating apparatus and
equipment, all boilers, engines, motors, dynamos, generating equipment, piping
and plumbing fixtures, water heaters, ranges, cooking apparatus and mechanical
kitchen equipment, refrigerators, freezers, cooling, ventilating, sprinkling
and vacuum cleaning systems, fire extinguishing apparatus, gas and electric
fixtures, carpeting, floor covering, underpadding, storm sashes, awnings,
signs, furnishings of public spaces, halls and lobbies, and shrubbery and
plants.

“Income” shall
mean, with respect to any Purchased Asset at any time, any principal thereof
and all interest thereon and all dividends, sale proceeds (including, without
limitation, any proceeds from the securitization of such Purchased Asset or
other disposition thereof) and other collections and distributions thereon
(including, without 

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limitation, any proceeds
received in respect of mortgage insurance), but not including any commitment or
origination fees.

“Indebtedness”
shall mean, for any Person: (a) obligations created, issued or incurred by such
Person for borrowed money (whether by loan, the issuance and sale of debt
securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such
Property from such Person); (b) obligations of such Person to pay the deferred
purchase or acquisition price of Property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business so long as such trade accounts
payable are payable within ninety (90) days of the date the respective goods
are delivered or the respective services are rendered; (c) indebtedness of
others secured by a Lien on the Property of such Person, whether or not the
respective indebtedness so secured has been assumed by such Person; (d) obligations
(contingent or otherwise) of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; (f) obligations of such Person under repurchase agreements or like
arrangements; (g) indebtedness of others Guaranteed by such Person; (h) all
obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; (i) indebtedness of general
partnerships of which such Person is a general partner; and (j) any other
indebtedness of such Person by a note, bond, debenture or similar instrument.

“Indenture” shall
mean the Amended and Restated Master Indenture, dated as of March 17, 2006,
among Spirit Master Funding, LLC, Citibank, N.A. and each joining party
thereto, as such may be supplemented or amended from time to time.

“Investment Company
Act” shall mean the Investment Company Act of 1940, as amended, including
all rules and regulations promulgated thereunder.

“Lease” shall mean
each lease entered into between a Borrower or Net Lease Borrower and a Tenant,
as amended or restated with the consent of Buyer.

“LIBO Rate” shall
mean with respect to each day a Transaction is outstanding (or if such day is
not a Business Day, the next succeeding Business Day), the rate (reset on a
daily basis) per annum equal to the rate published by Bloomberg or if such rate
is not available, the rate appearing at page 3750 of the Telerate Screen as
one-month LIBO Rate on such date, and if such rate shall not be so quoted, the
rate per annum at which Buyer is offered Dollar deposits at or about 11:00
A.M., New York City time, on such date by prime banks in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations in respect of its Transactions are then being conducted for delivery
on such day for a period of one month and in an amount comparable to the amount
of the Transactions to be outstanding on such day.

“Lien” shall mean
any lien, claim, charge, restriction, pledge, security interest, mortgage, deed
of trust or other encumbrance.

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“LLC Agreement”
shall mean the limited liability company agreement entered into by a Net Lease
Borrower, as applicable, pursuant to which LLC Interests are issued by such Net
Lease Borrower.

“LLC Certificate”
shall mean physical certificates evidencing LLC Interests.

“LLC Interests”
shall mean LLC membership interests issued pursuant to an LLC Agreement,
evidencing beneficial ownership interests in the related Net Lease Borrower.

“Loan”  shall mean a Mortgage Loan or Net Lease Loan
secured by Specialty Retailers, Drug Stores, Movie Theatres, Education
Facilities, Restaurants, Interstate Travel Plazas, Automotive Dealerships and
Retailers, Health Clubs/Gyms, Recreational Facilities, Specialty Medical
Facilities, Light Manufacturing Facilities and any other Loan secured by any
other asset type approved by Buyer in its sole discretion, in each case
originated by Seller or any of its Affiliates in accordance with the
Underwriting Guidelines.

“Loan Documents”
shall have the meaning assigned thereto in the Custody Agreement.

 “Margin Call” shall have the meaning
assigned thereto in Section 6 hereof.

“Margin Deficit”
shall have the meaning assigned thereto in Section 6 hereof.

“Market Value”
shall mean the value, determined by Buyer in its sole discretion, of the
Purchased Assets if sold in their entirety to a single third-party
purchaser.  Buyer’s determination of
Market Value shall be conclusive upon the parties, absent manifest error on the
part of Buyer.  Buyer shall have the
right to mark to market the Purchased Assets on a daily basis, which Market
Value with respect to one or more of the Purchased Assets may be determined to
be zero. Seller acknowledges that Buyer’s determination of Market Value is for
the limited purposes of determining (i) the Purchase Price, (ii) whether there
is a Margin Deficit pursuant to Section 6 hereof and (iii) Collateral Value for
purchasing purposes hereunder without the ability to perform customary
purchaser’s due diligence and is not necessarily equivalent to a determination
of the fair market value of the Purchased Assets achieved by obtaining
competing bids in an orderly market in which the originator/servicer is not in
default under a repurchase facility and the bidders have adequate opportunity
to perform customary loan and servicing due diligence.

“Master Lease”
shall mean a master lease pursuant to which multiple Mortgaged Properties are
leased.

“Master Lease FCCR”
shall mean the sum of all cash flows for all Mortgaged Properties under a
Master Lease (each, as used to calculate FCCR for one such Mortgaged Property
under such Master Lease).

“Master Loan Agreement”
shall mean the Master Loan Agreement, dated as of October 13, 2006, between
Spirit Master Funding III, LLC and Spirit SPE Warehouse Funding, LLC and, with
respect to Spirit Seller, the Master Loan Agreement dated September 13, 2005,
as amended, and any other master loan agreement between Spirit SPE Warehouse
Funding, LLC, Spirit Finance Corporation or any Affiliate thereof and a Net
Lease 

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Borrower approved by
Buyer from time to time, as applicable, each as may be amended, supplemented,
modified or restated from time to time subject to the consent of Buyer.

“Master Note”
shall mean the master promissory note issued pursuant to the applicable Master
Loan Agreement together with all riders thereto and amendments thereof or other
evidence of indebtedness of a Net Lease Borrower.

“Material Adverse
Change” shall mean, with respect to a Person, any material adverse change
in the business, condition (financial or otherwise), operations, performance or
properties taken as a whole or prospects of such Person.

“Material Adverse
Effect” shall mean a material adverse effect on (a) the property, business,
operations, financial condition or prospects of Seller or Gurantor, (b) the
ability of Seller or Guarantor to perform in all material respects its
obligations under any of the Program Documents to which it is a party, (c) the
validity or enforceability in all material respects of any of the Program
Documents, (d) the rights and remedies of Buyer under any of the Program
Documents, (e) the timely repurchase of the Purchased Assets or other amounts
payable in connection therewith or (f) the Collateral.

“Maximum Aggregate LLC
Interests Purchase Price” shall mean $150,000,000.

“Maximum Aggregate
Purchase Price” shall mean $250,000,000 plus the Maximum Aggregate LLC
Interest Purchase Price.

“Moody’s” shall
mean Moody’s Investors Service, Inc. and any successor or successors thereto.

“Mortgage” shall
mean with respect to a Loan, the mortgage, deed of trust or other instrument
which creates a first lien on the fee simple or leasehold estate in the real
property which secures the Note.

“Mortgage Loan”
shall mean each of the mortgage loans which Custodian has been instructed to
hold for Buyer pursuant to the Custody and Servicing Agreement, and which such
mortgage loans each include, without limitation, (i) a Note, the related Mortgage
and all other Loan Documents and (ii) all right, title and interest of Seller
in and to the Mortgaged Property covered by such Mortgage.

“Mortgaged Property”
shall mean the real property (including all improvements, buildings, fixtures,
building equipment and personal property thereon and all additions, alterations
and replacements made at any time with respect to the foregoing) and all other
collateral securing repayment of the debt evidenced by the applicable Note.

“Multiemployer Plan”
shall mean a multiemployer plan defined as such in Section 3(37) of ERISA to
which contributions have been or are required to be made by Seller or any ERISA
Affiliate and that is subject to Section 412 of the Code or Section 302 or by
Title IV of ERISA.

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“Net Lease Borrower”
shall mean Spirit Master Funding, LLC, Spirit Master Funding II, LLC, Spirit
Master Funding III, LLC, and any other Affiliate or Subsidiary of Seller
approved by Buyer.

“Net Lease Loan”
shall mean indebtedness of a Net Lease Borrower, evidenced by a Note issued
pursuant to the Master Loan Agreement, secured by a Mortgage on a Mortgaged
Property owned by such Net Lease Borrower.

“Net Worth” shall
mean, with respect to any Person, the excess of total assets of such Person,
over total liabilities of such Person, adding back accumulated depreciation but
excluding the impact of “other comprehensive income”, all as determined in
accordance with GAAP.

“Net Worth Increase
Amounts” shall mean, on any date of determination, 75% of the net proceeds
of any issuance of equity securities by Gurantor subsequent to the date of this
Agreement.

“Net Worth
Requirements” shall have the meaning assigned thereto in the Spirit
Guarantee.

“Non-Usage Fee” shall have the meaning assigned
thereto in the Side Letter.

“Note” shall mean,
with respect to any Loan, the Master Note or any other Note, as applicable,
together with all riders thereto and amendments thereof or other evidence of
indebtedness of the related Borrower.

“Notice Date”
shall have the meaning assigned thereto in Section 4 hereof.

“Obligations”
shall mean: (a) all of Seller’s obligations to pay the Repurchase Price on the
Repurchase Date, and other obligations and liabilities of Seller, to Buyer, its
Affiliates or Custodian arising under, or in connection with, the Program
Documents or otherwise, whether now existing or hereafter arising; (b) any and
all sums paid by Buyer or on behalf of Buyer pursuant to the Program Documents
in order to preserve any Purchased Asset or its interest therein; (c) in the
event of any proceeding for the collection or enforcement of any of Seller’s
indebtedness, obligations or liabilities referred to in clause (a), the
reasonable expenses of retaking, holding, collecting, preparing for sale,
selling or otherwise disposing of or realizing on any Purchased Asset, or of
any exercise by Buyer or such Affiliate of its rights under the related
agreements, including without limitation, reasonable attorneys’ fees and
disbursements and court costs; and (d) all of Seller’s indemnity obligations to
Buyer or Custodian or both pursuant to the Program Documents.

“PBGC” shall mean
the Pension Benefit Guaranty Corporation or any entity succeeding to any or all
of its functions under ERISA.

“Permitted Exceptions”
shall mean the exceptions to lien priority including but not limited to: (i)
the lien of current real property taxes and assessments not yet due and
payable; (ii) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording acceptable
to mortgage lending 

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institutions generally
and specifically referred to in the lender’s title insurance policy delivered
to Seller and (A) referred to or otherwise considered in the appraisal (if any)
made for Seller or (B) which do not adversely affect the appraised value of the
Mortgaged Property set forth in such appraisal; and (iii) other matters to
which like properties are commonly subject which do not materially interfere
with the benefits of the security intended to be provided by the Mortgage or
the use, enjoyment, value or marketability of the related Mortgaged Property.

“Person” shall
mean any legal person, including any individual, corporation, partnership,
association, joint venture, trust, limited liability company, unincorporated
organization, governmental entity or other entity of similar nature.

“Plan” shall mean
an employee benefit or other plan established or maintained by Seller or any
ERISA Affiliate and that is subject to Section 412 of the Code or Section 302 or
by Title IV of ERISA, other than a Multiemployer Plan.

“Price Differential”
shall mean, with respect to each Transaction as of any date, the aggregate
amount obtained by daily application of the Pricing Rate for such Transaction
to the Purchase Price on a 360-day-per-year basis for the actual number of days
during the period commencing on (and including) the Purchase Date and ending on
(but excluding) the date of determination (reduced by any amount of such Price
Differential in respect of such period previously paid by Seller to Buyer) with
respect to such Transaction.

“Pricing Rate”
shall mean the per annum percentage rate for determination of the Price
Differential calculated as described in Section 3(b) hereof or as otherwise set
forth in the related Confirmation.

“Prime Rate” shall
mean the prime rate of U.S. commercial banks as published in The Wall Street
Journal (or, if more than one such rate is published, the average of such
rates).

“Principal” shall
have the meaning given to it in Annex I.

“Program Documents”
shall mean this Agreement, the Custody Agreement, any Servicing Agreement, the
Spirit Guaranty, any Securities Account Control Agreement, any assignment of
Hedge Instrument, the Side Letter and any other agreement entered into by
Seller and/or Guarantor, on the one hand, and Buyer or one of its Affiliates
(or Custodian on its behalf) on the other, in connection herewith or therewith.

“Property” shall
mean any right or interest in or to property of any kind whatsoever, whether
real, personal or mixed and whether tangible or intangible.

“Purchase Date”
shall mean the date on which Purchased Assets are to be transferred by Seller
to Buyer.

“Purchase Price”
shall have the meaning assigned thereto in the Side Letter.

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“Purchased Assets”
shall mean, with respect to a Transaction, the LLC Interests, the Loans
comprising the Note as set forth in the applicable Master Loan Agreement, or
other Loans, together with the related Records, Servicing Rights, Seller’s
rights under any related Hedge Instruments, and other Collateral, such other
property, rights, titles or interests as are specified on a related Transaction
Notice, and all instruments, chattel paper, securities, investment property,
accounts, and general intangibles comprising or relating to all of the
foregoing.  The term “Purchased Assets”
with respect to any Transaction at any time also shall include Additional
Purchased Assets delivered pursuant to Section 6 hereof.

“Qualified Originator”
shall mean (a) Spirit SPE Warehouse Funding, LLC, (b) Spirit Finance
Corporation and (c) any other originator of Loans as may be approved by Buyer
in its sole discretion in writing from time to time.

“Rated Loan” shall
mean a Loan (i) with an Investment Grade Credit Rating or shadow rating from
any of the Rating Agencies or (ii) for which the timely payment of principal
and interest is insured by a monoline insurer, the long-term debt obligations
of which have an Investment Grade Credit Rating but are rated no lower than “AAA”
or “Aaa” by any of the Rating Agencies.

“Rating Agencies”
shall mean S&P and Moody’s.

“Records” shall
mean all instruments, agreements and other books, records, and reports and data
generated by other media for the storage of information maintained by Seller or
any other person or entity with respect to a Purchased Asset. Records shall
include the Notes, LLC Certificates, any Mortgages, the Custodian’s Loan Files
and any other instruments necessary to document or service a Loan or the LLC
Interests.

“Renewal Fee”
shall mean a fee as mutually agreed to by Buyer and Seller.

“Repurchase Date”
shall have the meaning assigned thereto in Section 3(b) and shall also include
the date determined by application of Section 20.

“Repurchase Price”
shall mean the price at which Purchased Assets are to be transferred from Buyer
to Seller upon termination of a Transaction, which will be determined in each
case (including Transactions terminable upon demand) as the sum of the Purchase
Price, the Price Differential, any of Buyer’s costs relating to the unwinding
of a related Hedge Instrument, as applicable, as of the date of such
determination.

“Requirement of Law”
shall mean as to any Person, the certificate of incorporation and by-laws
or other organizational or governing documents of such Person, and any law,
treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

“Responsible Officer”
shall mean, as to any Person, the chief executive officer or, with respect to
financial matters, the chief financial officer of such Person; provided, that
in the event any such officer is unavailable at any time he or she is required
to take any 

 12
 

 

action hereunder,
Responsible Officer shall mean any officer authorized to act on such officer’s
behalf as demonstrated by a certificate of corporate resolution.

“Restricted Payments”
shall mean with respect to any Person, collectively, all dividends or other
distributions of any nature (cash, securities, assets or otherwise), and all
payments, by virtue of redemption or otherwise, on any class of equity
securities (including, without limitation, warrants, options or rights
therefor) issued by such Person, whether such securities are now or may
hereafter be authorized or outstanding and any distribution in respect of any
of the foregoing, whether directly or indirectly.

“S&P” shall
mean Standard and Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor or successors thereto.

“Securities Account
Control Agreement” shall mean an agreement, in form and substance
acceptable to Buyer, among Seller, a securities intermediary and Buyer,
pursuant to which Buyer obtains a perfected security interest in one or more
Hedge Instruments.

“Servicer” shall
mean (i) Midland Loan Services, Inc., a Delaware corporation, or (ii) any other
servicer approved by Buyer in its sole discretion.

“Servicer Termination
Event” shall have the meaning assigned thereto in the Custody Agreement.

“Servicing Agreement”
shall mean any agreement (other than the Custody Agreement) giving rise or
relating to Servicing Rights with respect to a Purchased Asset, including any
assignment or other agreement relating to such agreement.

“Servicing Rights”
shall mean contractual, possessory or other rights of Seller, Servicer or any
other Person arising under a Servicing Agreement, the Custody Agreement or
otherwise, to administer or service a Purchased Asset or to possess related
Records.

“Servicing
Transmission” shall mean a computer-readable magnetic or other electronic
format acceptable to the parties containing the information identified on
Exhibit C.

“Side Letter”
shall mean the Side Letter, dated as of October 13, 2006, between Seller and
Buyer, as the same may be amended, restated or modified from time to time.

“Spirit Guaranty”
shall mean the limited Guaranty of Gurantor in favor of Buyer, dated as of
October 13, 2006.

“Subsidiary” shall
mean, with respect to any Person, any corporation, partnership or other entity
of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions of such
corporation, partnership or other entity (irrespective of whether or not at the
time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting
power by reason of the happening of any contingency) is at the time 

 13
 

 

directly or indirectly
owned or controlled by such Person or one or more Subsidiaries of such Person
or by such Person and one or more Subsidiaries of such Person.

“Tangible Net Worth”
shall mean, with respect to any Person, as of any date of determination: (i)
the consolidated Net Worth of such Person and its Subsidiaries, less (ii) the
consolidated net book value of all assets of such Person and its Subsidiaries
(to the extent reflected as an asset in the balance sheet of such Person or any
Subsidiary at such date) which will be treated as intangibles under GAAP,
including, without limitation, such items as deferred taxes, net leasehold
improvements, good will, trademarks, trade names, service marks, copyrights,
patents, licenses and unamortized debt discount and expense, but not including
lease intangibles.

“Tenant” shall
mean the tenant of a Mortgaged Property pursuant to a Lease or sub-lease of
such Mortgaged Property, together with such tenant’s Affiliates and any
guarantor of such tenant’s obligations under such Lease.

“Termination Date”
shall have the meaning assigned thereto in Section 28.

“Tier One Asset”
shall have the meaning assigned thereto in the Side Letter.

“Total Assets” shall
mean with respect to any Person, for any period, the aggregate assets of such
Person and its Subsidiaries during such period, calculated in accordance with
GAAP.

“Total Indebtedness”
shall mean with respect to any Person, for any period, the aggregate
Indebtedness of such Person and its Subsidiaries during such period, less the
amount of any nonspecific consolidated balance sheet reserves maintained in
accordance with GAAP.

“Transaction”
shall have the meaning assigned thereto in Section 1.

“Transaction Notice”
shall mean a written request of Seller to enter into a Transaction, in the form
attached to the Custody Agreement, which is delivered to Buyer and Custodian.

“Triple Net Lease”
shall mean a Lease under which the tenant pays all operating expenses of the
property including, without limitation, insurance, taxes, maintenance and
capital expenditures relating to such property.

“Trust Receipt”
shall mean a Trust Receipt and Certification as defined in the Custody
Agreement.

“Trustee Report”
shall mean the Trustee Report as defined in the Indenture.

“Underwriting
Guidelines” shall mean the Spirit Finance Corporation Underwriting Manual,
dated as of April 2005, which has been approved in writing by Buyer, as the
same may be amended from time to time.

 14

 

“Underwriting Package”
shall mean, with respect to each Loan, the Spirit Finance Credit Memorandum as
defined in the Underwriting Guidelines.

“Uniform Commercial
Code” shall mean the Uniform Commercial Code as in effect on the date
hereof in the State of New York; provided, that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than New York, “Uniform
Commercial Code” shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.

“Unit-Level FCCR”
shall mean with respect to the FCCR for any unit where unit information was
available as of the date of determination, the ratio of (1) the sum of the unit’s,
(i) pre-tax income, (ii) interest expense, (iii) all non-cash amounts in
respect of depreciation and amortization, (iv) all non-recurring expenses, (v)
specifically documented discretionary management fees, and (vi) all operating
lease or rent expense (including with respect to any equipment loans) less
(vii) all non-recurring income and normalized overhead based on parent company’s
general and administrative expenses as a percent of sales (if not available,
industry standards applied), for the related fiscal period, to (2) the sum of
the unit’s, (i) total operating lease or rent expense, (ii) interest expense
and (iii) scheduled principal payments on indebtedness payable in respect of
the unit or obligor, in each case for the period of time as to which such
figure is presented.

“Weighted Average
Aggregate FCCR” shall mean the FCCR calculated by weighting Unit-Level FCCR
and Master Lease FCCR by Collateral Value of the related Purchased Assets.

“Wet Funded Loan”
shall mean a Loan for which the related Custodian’s Loan File has not been
delivered to Custodian as of the related Purchase Date.  Upon delivery of the Custodian’s Loan File to
Custodian, the Loan shall cease to be a Wet Funded Loan.

b)                                     Capitalized
terms used but not defined in this Agreement shall have the meanings assigned
thereto in the Custody Agreement.

c)                                      Headings
are for convenience only and do not affect interpretation. The following rules
of this subsection (c) apply unless the context requires otherwise. The
singular includes the plural and conversely. A gender includes all genders.
Where a word or phrase is defined, its other grammatical forms have a
corresponding meaning. A reference to a subsection, Section, Annex or Exhibit
is, unless otherwise specified, a reference to a Section of, or annex or
exhibit to, this Agreement. A reference to a party to this Agreement or another
agreement or document includes the party’s successors and permitted substitutes
or assigns. A reference to an agreement or document is to the agreement or
document as amended, modified, novated, supplemented or replaced, except to the
extent prohibited by any Program Document. A reference to legislation or to a
provision of legislation includes a modification or re-enactment of it, a
legislative provision substituted for it and a regulation or statutory
instrument issued under it. A reference to writing includes a facsimile transmission
and any means of reproducing words in a tangible and permanently visible form.
A reference to conduct includes, without limitation, 

 15
 

 

an omission, statement or
undertaking, whether or not in writing. An Event of Default subsists until it
has been waived in writing by Buyer. The words “hereof”, “herein”, “hereunder”
and similar words refer to this Agreement as a whole and not to any particular
provision of this Agreement. The term “including” is not limiting and means “including
without limitation.” In the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and including”; the
words “to” and “until” each mean “to but excluding”, and the word “through”
means “to and including.” This Agreement may use several different limitations,
tests or measurements to regulate the same or similar matters. All such
limitations, tests and measurements are independent of each other and shall
each be performed in accordance with their terms. Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP, consistently applied. References herein to “fiscal
year” and “fiscal quarter” refer to such fiscal periods of Seller. Except where
otherwise provided in this Agreement, any determination, consent, approval,
statement or certificate made or confirmed in writing with notice to Seller by
Buyer or an authorized officer of Buyer provided for in this Agreement is
conclusive and binds the parties in the absence of manifest error, except where
the consent of Seller is required. A reference to an agreement includes a
security interest, guarantee, agreement or legally enforceable arrangement
whether or not in writing related to such agreement. A reference to a document
includes an agreement (as so defined) in writing or a certificate, notice,
instrument or document, or any information recorded in computer disk form.
Where Seller is required to provide any document to Buyer under the terms of
this Agreement, the relevant document shall be provided in writing or printed
form unless Buyer requests otherwise. At the request of Buyer, the document
shall be provided in computer disk form or both printed and computer disk form,
unless such computer disk copy requires Seller to pay an unreasonable
expense.  This Agreement is the result of
negotiations among and has been reviewed by counsels to Buyer and Seller, and
is the product of all the parties. In the interpretation of this Agreement, no
rule of construction shall apply to disadvantage one party on the ground that
such party proposed or was involved in the preparation of any particular
provision of this Agreement or this Agreement itself. Except where otherwise
expressly stated, Buyer may give or withhold, or give conditionally, approvals
and consents and may form opinions and make determinations and exercise
discretion at its absolute discretion. 
Any requirement of good faith, discretion or judgment by Buyer shall not
be construed to require Buyer to request or await receipt of information or
documentation not immediately available from or with respect to Seller, a
servicer of the Purchased Assets, any other Person or the Purchased Assets
themselves.

3.                                      THE
TRANSACTIONS

a)                                      Seller
shall repurchase Purchased Assets from Buyer on each related Repurchase
Date.  Each obligation to repurchase
exists without regard to any prior or intervening liquidation or foreclosure
with respect to each Purchased Asset (but liquidation or foreclosure proceeds
received by Buyer shall be applied to reduce the Repurchase Price except as
otherwise provided herein).  Seller is
obligated to obtain the Purchased Assets from Buyer or its designee (including
Custodian) at Seller’s expense on (or after) the related Repurchase Date.

b)                                     Provided
that the applicable conditions in Sections 10(a) and (b) have been satisfied,
each Purchased Asset that is a Loan that is repurchased by Seller on the 10th
day of 

 16
 

 

each month (or, if such 10th
day is not a Business Day, the immediately following Business Day) and each
Purchased Asset that is an LLC Interest that is repurchased by Seller on the
20th day of each month (or, if such 20th day is not a Business Day, the
immediately following Business Day) following the related initial Purchase Date
(the day of the month so determined for each month, or any other date
designated by Seller to Buyer for such a repurchase on at least one (1)
Business Day’s prior notice to Buyer, a “Repurchase Date,” which term
shall also include the date determined by application of Section 20) shall
automatically become subject to a new Transaction unless Buyer is notified by
Seller at least one (1) Business Day prior to the related Repurchase Date; provided,
that if the Repurchase Date so determined is later than the Termination Date,
the Repurchase Date for such Transaction shall automatically reset to the
Termination Date, and the provisions of this sentence as it might relate to a
new Transaction shall expire on such date. For each Purchased Asset subject to
a Transaction, unless otherwise agreed, (x) with respect to the LLC Interests,
to the extent Buyer does not have access to such report through Citibank, N.A.,
Seller shall provide to Buyer the most recent Trustee Report immediately upon
Seller’s receipt of same, (y) the accrued and unpaid Price Differential shall
be calculated beginning on the first day and ending on the last day of the
calendar month prior to the related Repurchase Date and settled in cash on each
related Repurchase Date and (z) the Pricing Rate shall be as set forth in the
Side Letter.  In the event a Pricing Rate
is based on a LIBO Rate that is not fixed for any such period, Agent shall establish
a LIBO Rate on each Business Day, based on one-month LIBO Rate for each such
day, and the Pricing Rate will change upon each change in LIBO Rate.  Notwithstanding any other provision herein or
in any Program Document, Seller must repurchase from Buyer each Purchased Asset
not later than one (1) year after the transfer of the related Eligible Asset
from Seller to Buyer.  The Repurchase
Date for each Transaction will not occur more than thirty-five (35) days
following the Purchase Date for such Transaction.

c)                                      In
the event Spirit Seller shall have no further Purchased Assets subject to any
outstanding Transactions, then, upon notice of at least three (3) Business Days’
prior notice to Buyer, Spirit Seller may withdraw as a Seller and this
Agreement and any other Program Document shall have no further force and effect
with respect to Spirit Seller as a Seller hereunder and thereunder.

4.                                      ENTERING
INTO TRANSACTIONS; TRANSACTION NOTICE, CONFIRMATIONS

a)                                      Unless
otherwise agreed, Seller shall give Buyer notice by no later than 5:00 p.m.
(New York City time) on the day that is two (2) Business Days prior to any
proposed Purchase Date (the date on which such notice is given, the “Notice
Date”). On the Notice Date, Seller shall request that Buyer enter into a
Transaction by furnishing to Buyer a Transaction Notice, Asset Schedule and
Asset Base Certificate.  Seller shall
deliver to Custodian a Transaction Notice, the related Asset Schedule and the
related Custodian’s Loan File for each Loan or LLC Interests subject to such
Transaction in accordance with the terms of the Custody Agreement.  In the event that on any Notice Date the
ratio of the Outstanding Note Principal Balance plus the outstanding Purchase
Price for Purchased Assets that are LLC Interests over the Aggregate Collateral
Value is greater than or equal to 85%, any Transaction that Seller shall
request on such Notice Date shall require the consent of Buyer in its sole
discretion; provided, however, that any such Notice Date occurs after the first
securitization of Purchased Assets following the Closing Date.

 17
 

 

b)                                     In
the event that the parties hereto desire to enter into a Transaction on terms
other than as set forth herein, the parties shall execute a “Confirmation”
specifying such terms prior to entering into such Transaction. Any such
Confirmation and the related Transaction Notice, together with this Agreement,
shall constitute conclusive evidence of the terms agreed between Buyer and
Seller with respect to the Transaction to which the Confirmation relates.

5.                                      PAYMENT
AND TRANSFER

Unless otherwise agreed,
all transfers of funds hereunder shall be in immediately available funds and
all Purchased Assets transferred shall be transferred to Custodian pursuant to
the Custody Agreement. Any Repurchase Price received by Buyer after 2:00 p.m.
(New York City time) shall be applied on the next succeeding Business Day.

6.                                      MARGIN
MAINTENANCE

a)                                      If
at any time the aggregate Market Value of all Purchased Assets subject to all
Transactions is less than the aggregate Buyer’s Margin Amount for all such
Transactions (a “Margin Deficit”), then Buyer may by notice to Seller
require Seller in such Transactions, at Buyer’s option, to transfer to Buyer
cash, additional Loans or LLC Interests acceptable to Buyer in its sole
discretion (“Additional Purchased Assets”), so that the cash and
aggregate Market Value of the Purchased Assets, including any such Additional
Purchased Assets, will thereupon equal or exceed such aggregate Buyer’s Margin
Amount (such requirement, a “Margin Call”).

b)                                     Notice
required pursuant to this Section 6 may be given by any means provided in
Section 36 hereof. Any notice given before 1:00 p.m. (New York City time) on a
Business Day shall be met, and the related Margin Call satisfied, no later than
5:00 p.m. (New York City time) on the next succeeding Business Day; notice
given after 1:00 p.m. (New York City time) on a Business Day shall be met, and
the related Margin Call satisfied, no later than 2:00 p.m. (New York City time)
on the second succeeding Business Day. The failure of Buyer, on any one or more
occasions, to exercise its rights hereunder, shall not change or alter the
terms and conditions to which this Agreement is subject or limit the right of
Buyer to do so at a later date. Seller and Buyer each agree that a failure or
delay by Buyer to exercise its rights hereunder shall not limit or waive Buyer’s
rights under this Agreement or otherwise existing by law or in any way create
additional rights for Seller.

7.                                      INCOME
PAYMENTS

Where a particular term
of a Transaction extends over the date on which Income is paid in respect of
any Purchased Assets subject to that Transaction, such Income shall be the
property of Buyer. Notwithstanding the foregoing, and provided no Default has
occurred and is continuing, all Income received, whether by Seller, Guarantor,
Buyer, Custodian, Servicer or any servicer or any other Person, in respect of
the Purchased Assets shall be applied in accordance with Section 4.1(c) of the
Custody Agreement.

8.                                      TAXES;
TAX TREATMENT

a)                                      All
payments made by Seller under this Agreement shall be made free and clear of,
and without deduction or withholding for or on account of, any present or
future taxes, levies, 

 18
 

 

imposts, deductions, charges or
withholdings, and all liabilities (including penalties, interest and additions
to tax) with respect thereto imposed by any Governmental Authority thereof or
therein, excluding income taxes, branch profits taxes, franchise taxes or any
other tax imposed on net income by the United States, a state or a foreign
jurisdiction under the laws of which Buyer is organized or of its applicable
lending office, or any political subdivision thereof (all such non-excluded
taxes, “Taxes”), all of which shall be paid by Seller for its own
account not later than the date when due. If Seller is required by law or
regulation to deduct or withhold any Taxes from or in respect of any amount
payable hereunder, it shall: (a) make such deduction or withholding; (b) pay
the amount so deducted or withheld to the appropriate Governmental Authority
not later than the date when due; (c) deliver to Buyer, promptly, original tax
receipts and other evidence satisfactory to Buyer of the payment when due of
the full amount of such Taxes; and (d) pay to Buyer such additional amounts as
may be necessary so that such Buyer receives, free and clear of all Taxes, a
net amount equal to the amount it would have received under this Agreement, as
if no such deduction or withholding had been made.

b)                                     In
addition, Seller agrees to pay to the relevant Governmental Authority, in
accordance with applicable law, any current or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
(including, without limitation, mortgage recording taxes, transfer taxes and
similar fees) imposed by the United States or any taxing authority thereof or
therein that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement (“Other
Taxes”).

c)                                      Seller
agrees to indemnify Buyer for the full amount of Taxes (including additional
amounts with respect thereto) and Other Taxes, and the full amount of Taxes of
any kind imposed by any jurisdiction on amounts payable under this Section
8(c), and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto; provided, that Buyer shall have provided
Seller with evidence, reasonably satisfactory to Seller, of payment of Taxes or
Other Taxes, as the case may be; provided, further, that Buyer gives notice to
Seller of all deficiency notices received by Buyer.

d)                                     Any
Foreign Buyer shall provide Seller with properly completed United States
Internal Revenue Service (IRS) Form W-8BEN or W-8ECI or any
successor form prescribed by the IRS, certifying that such Buyer is entitled to
benefits under an income tax treaty to which the United States is a party which
reduces the rate of withholding tax on payments of interest or certifying that
the income receivable pursuant to this Agreement is effectively connected with
the conduct of a trade or business in the United States on or prior to the date
upon which each such Foreign Buyer becomes a Buyer.  Each Foreign Buyer will resubmit the
appropriate form on the earliest of (A) the third anniversary of the prior
submission or (B) on or before the expiration of thirty (30) days after there
is a “change in circumstances” with respect to such Buyer as defined in Treas.
Reg. Section 1.1441(e)(4)(ii)(D).  For
any period with respect to which a Foreign Buyer has failed to provide Seller
with the appropriate form or other relevant document pursuant to this Section
8(d) (unless such failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Buyer shall not be entitled to any “gross-up” of Taxes or
indemnification under Section 8(c) with respect to Taxes imposed by the United
States; provided, however, that should a Foreign Buyer, which is otherwise
exempt from a withholding tax, become subject to Taxes 

 19
 

 

because of its failure to
deliver a form required hereunder, Seller shall take such steps as such Foreign
Buyer shall reasonably request to assist such Foreign Buyer to recover such
Taxes.

e)                                      Without
prejudice to the survival of any other agreement of Seller hereunder, the
agreements and obligations of Seller contained in this Section 8 shall survive
the termination of this Agreement. 
Nothing contained in this Section 8 shall require Buyer to make
available any of its tax returns or other information that it deems to be
confidential or proprietary.

f)                                        Each
party to this Agreement acknowledges that it is its intent for purposes of U.S.
federal, state and local income and franchise taxes to treat each Transaction
as indebtedness of Seller that is secured by the Purchased Assets and that the
Purchased Assets are owned by Seller in the absence of a Default by
Seller.  All parties to this Agreement
agree to such treatment and agree to take no action inconsistent with this
treatment, unless required by law.

9.                                      SECURITY
INTEREST

a)                                      Seller
and Buyer intend that the Transactions hereunder be sales to Buyer of the
Purchased Assets and not loans from Buyer to Seller secured by the Purchased
Assets. However, in order to preserve Buyer’s rights under this Agreement in
the event that a court or other forum recharacterizes the Transactions
hereunder as other than sales, and as security for Seller’s performance of all
of its Obligations, Seller hereby grants Buyer a fully perfected first priority
security interest in the following property, whether now existing or hereafter
acquired: (i) the Purchased Assets, (ii) the Records, (iii) all related
Servicing Rights, (iv) all mortgage guaranties and insurance relating to such
Purchased Assets (issued by governmental agencies or otherwise) or the related
Mortgaged Property and any mortgage insurance certificate or other document
evidencing such mortgage guaranties or insurance and all claims and payments
thereunder, (v) all instruments, chattel paper, securities, investment property
and general intangibles and other assets comprising or relating to the
Purchased Assets, (vi) any securities account, including the Collection Account
and all security entitlements to financial assets now or hereafter carried in
or credited to any securities account, (vii) all rights to Income and the
rights to enforce such payments arising from any of the Purchased Assets,
(viii) all guarantees or other support for the Purchased Assets, (ix) any and
all replacements, substitutions and distributions on the Purchased Assets, (x)
any interest in the Purchased Assets or the servicing of the Purchased Assets,
and (xi) any now existing or hereafter arising proceeds and distributions with
respect to any of the foregoing and any other property, rights, titles or interests
as are specified on a Transaction Notice (collectively, the “Collateral”).  Seller acknowledges and agrees that its
rights with respect to the Collateral (including without limitation, its
security interest in the Purchased Assets and any other collateral granted to
Seller pursuant to any other agreement) are and shall continue to be at all
times junior and subordinate to the rights of Buyer hereunder.

The parties acknowledge
and agree that the perfection of such security interest is intended to be accomplished
through possession of the related Purchased Assets by Buyer, Custodian or by
any other Person on Buyer’s behalf, and that such possession unless otherwise
agreed is for Buyer’s own account.

b)                                     Seller
hereby irrevocably constitutes and appoints Buyer and any officer or agent
thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full 

 20
 

 

irrevocable power and authority
in the place and stead of Seller and in the name of Seller or in its own name,
from time to time in Buyer’s discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be reasonably necessary or
desirable to accomplish the purposes of this Agreement, to file such financing
statement or statements relating to the Purchased Assets and the Collateral
without Seller’s signature thereon as Buyer at its option may deem appropriate,
and, without limiting the generality of the foregoing, Seller hereby gives
Buyer the power and right, on behalf of Seller, without assent by, but with
notice to, Seller, if an Event of Default shall have occurred and be
continuing, to do the following:

(i)                                     in the name of
Seller, or in its own name, or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due with respect to any other Purchased Assets and to file
any claim or to take any other action or proceeding in any court of law or equity
or otherwise deemed appropriate by Buyer for the purpose of collecting any and
all such moneys due with respect to any other Purchased Assets whenever
payable;

(ii)                                  to pay or discharge
taxes and Liens levied or placed on or threatened against the Purchased Assets;

(iii)                               (A) to direct any party
liable for any payment under any Purchased Assets to make payment of any and
all moneys due or to become due thereunder directly to Buyer or as Buyer shall
direct; (B) to ask or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at any time
in respect of or arising out of any Purchased Assets; (C) to sign and endorse
any invoices, assignments, verifications, notices and other documents in connection
with any Purchased Assets; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Purchased Assets or any proceeds thereof and to enforce any other
right in respect of any Purchased Assets; (E) to defend any suit, action or
proceeding brought against Seller with respect to any Purchased Assets; (F) to
settle, compromise or adjust any suit, action or proceeding described in clause
(E) above and, in connection therewith, to give such discharges or releases as
Buyer may deem appropriate; and (G) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any Purchased Assets
as fully and completely as though Buyer were the absolute owner thereof for all
purposes, and to do, at Buyer’s option and Seller’s expense, at any time, and
from time to time, all acts and things which Buyer deems necessary to protect,
preserve or realize upon the Purchased Assets and the Collateral and Buyer’s Liens
thereon and to effect the intent of this Agreement, all as fully and
effectively as Seller might do.

Seller hereby ratifies
all that said attorneys shall lawfully do or cause to be done by virtue
hereof.  This power of attorney is a
power coupled with an interest and shall be irrevocable until all Obligations
have been paid in full and this Agreement is terminated in accordance with the
terms hereof.

Seller also authorizes
Buyer, if an Event of Default shall have occurred, from time to time, to
execute, in connection with any sale provided for in Section 20 hereof, any 

 21
 

 

endorsements, assignments or
other instruments of conveyance or transfer with respect to the Purchased
Assets.  The powers conferred on Buyer
hereunder are solely to protect Buyer’s interests in the Purchased Assets and
shall not impose any duty upon it to exercise any such powers.  Buyer shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers, and neither
it nor any of its officers, directors, employees or agents shall be responsible
to Seller for any act or failure to act hereunder, except for its or their own
gross negligence or willful misconduct.

10.                               CONDITIONS
PRECEDENT

a)                                      As
conditions precedent to the first Transaction to occur on or after the
Effective Date, Buyer shall have completed the due diligence review pursuant to
Section 39, and such review shall be satisfactory to Buyer in its sole
discretion.  Buyer shall have received on
or before the day of such first Transaction the following, in form and
substance satisfactory to Buyer and duly executed by each party thereto:

(i)                                     The Program
Documents duly executed and delivered by the parties thereto and being in full
force and effect, free of any modification, breach or waiver;

(ii)                                  Evidence that all
other actions necessary or, in the opinion of Buyer, desirable to perfect and
protect Buyer’s interest in the Purchased Assets and other Collateral have been
taken, including, without limitation, duly executed and filed Uniform
Commercial Code financing statements on Form UCC-1;

(iii)                               A certified copy of
Seller’s limited liability company resolutions and Guarantor’s corporate
resolutions, approving the Program Documents and Transactions thereunder
(either specifically or by general resolution), and all documents evidencing
other necessary limited liability company or corporate action or governmental
approvals as may be required in connection with the Program Documents;

(iv)                              An incumbency certificate
of the secretaries of Seller, certifying the names, true signatures and titles
of Seller’s representatives duly authorized to request Transactions hereunder
and to execute the Program Documents and the other documents to be delivered
thereunder;

(v)                                 Opinions of Seller’s
counsel as to such matters as Buyer may reasonably request (including, without
limitation, perfected security interest in the Collateral) and in form and
substance acceptable to Buyer;

(vi)                              A copy of the
Underwriting Guidelines certified by an officer of Seller;

(vii)                           Evidence of establishment of
the Collection Account;

(viii)                        The Spirit Guaranty; and

(ix)                                Any other documents
reasonably requested by Buyer.

 22
 

 

b)                                     The
obligation of Buyer to enter into each Transaction (including the initial
Transaction) pursuant to this Agreement is subject to the following conditions
precedent:

(i)                                     Buyer or its
designee shall have received on or before the day of a Transaction with respect
to such Purchased Assets the following, in form and substance satisfactory to
Buyer and (if applicable) duly executed:

(A)                              Transaction
Notice and Asset Schedule delivered pursuant to Section 4(a);

(B)                                The
Trust Receipt with respect to such Purchased Assets, with the Asset Schedule
attached; and

(C)                                Such
certificates, customary opinions of counsel or other documents as Buyer may
reasonably request; provided, that such opinions of counsel shall not be
required routinely in connection with each Transaction but shall only be
required from time to time as deemed necessary by Buyer in good faith.

(ii)                                  No Default or Event
of Default shall have occurred and be continuing.

(iii)                               Buyer shall not have
determined that the introduction of or a change in any requirement of law or in
the interpretation or administration of any requirement of law applicable to
Buyer has made it unlawful, and no Governmental Authority shall have asserted
that it is unlawful, for Buyer to enter into Transactions with a Pricing Rate
based on LIBO Rate.

(iv)                              All representations and
warranties in the Program Documents shall be true and correct on the date of such
Transaction and Seller and Gurantor are in compliance with the terms and
conditions of the Program Documents.

(v)                                 The then aggregate
outstanding Purchase Price for all Purchased Assets, when added to the Purchase
Price for the requested Transaction, shall not exceed the Maximum Aggregate
Purchase Price with respect to all Purchased Assets.

(vi)                              Buyer shall have
determined that all actions necessary or, in the opinion of Buyer, desirable to
maintain Buyer’s perfected interest in the Purchased Assets and other
Collateral have been taken, including, without limitation, duly executed and
filed Uniform Commercial Code financing statements on Form UCC-1.

(vii)                           Seller shall have paid to
Buyer all fees and expenses owed to Buyer in accordance with this Agreement.

(viii)                        Buyer or its designee shall
have received any other documents reasonably requested by Buyer.

(ix)                                There is no Margin
Deficit at the time immediately prior to or immediately following such
Transaction.

 23
 

 

(x)                                   No event or events
shall have been reasonably determined by Buyer to have occurred resulting in
the effective absence of a “repo market” respecting loans or mortgage-backed or
asset-backed securities such that Buyer is or was unable to finance or fund
purchases under this Agreement through the “repo market” or Buyer’s customers.

(xi)                                Each secured party
(including any party that has a precautionary security interest in a Loan or
LLC Interests) has released all of its right, title and interest in, to and
under such Loan or LLC Interests (including, without limitation, any security
interest that such secured party or secured party’s agent may have by virtue of
its possession, custody or control thereof) and has filed Uniform Commercial
Code termination statements in respect of any Uniform Commercial Code filings
made in respect of such Loan or LLC Interests, and each such release and
Uniform Commercial Code termination statement has been delivered to Buyer prior
to such Transaction.

(xii)                             Seller shall have
delivered in such Transaction to Buyer, with respect to a Loan, the
Underwriting Package (A) for each Loan that is a Tier One Asset, not less than
four (4) Business Days prior to the date of the related Transaction Notice and
(B) for each Loan that is not a Tier One Asset, not less than ten (10) Business
Days prior to the date of the related Transaction Notice, and Buyer shall have
approved each such Loan in its sole discretion. Buyer agrees that it shall
notify Seller of its approval or disapproval of each such proposed Loan within
ten (10) Business Days after its receipt of the complete Underwriting Package
and supplemental requests (whether requested orally or in writing) related to
such proposed Loan. For purposes of this provision, an Underwriting Package
received by Buyer after 1:00 p.m. (New York City time) shall be deemed to be
received on the following Business Day.

(xiii)                          Each Loan constituting a
Purchased Asset in such Transaction shall have an interest rate not less than:
(A) with respect to a fixed-rate Loan, the 10-year U.S. Dollar Interest Rate
Swaps plus 1.75% as of the initial Purchase Date of such Purchased Asset; or
(B) with respect to a floating-rate Loan, LIBO Rate plus 1.75% as of the
initial Purchase Date of such Purchased Asset.

(xiv)                         Satisfaction of any conditions
precedent to the first Transaction on or after the Effective Date as set forth
in clause (a) of this Section 10 that were not satisfied prior to such first
Purchase Date.

(xv)                            With respect to the LLC
Interests, Seller shall have directed all payments on the LLC Interest to be
deposited into a cash account entitled “Citigroup Global Markets Realty Corp.”,
for the benefit of Buyer.

11.                               RELEASE
OF PURCHASED ASSETS

Upon timely payment in
full of the Repurchase Price and all other Obligations owing with respect to a
Purchased Asset, if no Default or Event of Default has occurred and is
continuing, Buyer shall, and shall direct Custodian to, release such Purchased
Asset unless such release would give rise to or perpetuate a Margin Deficit.
Except as set forth in Sections 6 and 

 24
 

 

16, Seller shall give at least
three (3) Business Days’ prior written notice to Buyer if such repurchase shall
occur on other than a Repurchase Date set forth in Section 3(b).

If such a Margin Deficit
is applicable, Buyer shall notify Seller of the amount thereof and Seller may
thereupon satisfy the Margin Call in the manner specified in Section 6.

12.                               RELIANCE

With respect to any
Transaction, Buyer may conclusively rely upon, and shall incur no liability to
Seller in acting upon, any request or other communication that Buyer reasonably
believes to have been given or made by a person authorized to enter into a
Transaction on Seller’s behalf.

13.                               REPRESENTATIONS
AND WARRANTIES

Seller hereby represents
and warrants, and shall on and as of the Purchase Date for any Transaction and
on and as of each date thereafter through and including the related Repurchase
Date be deemed to represent and warrant, that:

a)                                      Existence.  Seller (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and, with respect to Spirit Seller, qualifies as a real estate
investment trust under Section 856 of the Code and is in compliance with all
provisions of the Code governing its status as a real estate investment trust,
(b) has all requisite limited liability company, corporate or other power, and
has all governmental licenses, authorizations, consents and approvals,
necessary to own its assets and carry on its business as now being, or as
proposed to be, conducted, except where the lack of such licenses,
authorizations, consents and approvals would not be reasonably likely to have a
Material Adverse Effect, (c) is qualified to do business and is in good
standing in all other jurisdictions in which the nature of the business conducted
by it makes such qualification necessary, except where failure so to qualify
would not be reasonably likely (either individually or in the aggregate) to
have a Material Adverse Effect, and (d) is in compliance in all material
respects with all Requirements of Law, except where failure so to comply would
not have a Material Adverse Effect.

b)                                     Reserved.

c)                                      Litigation.  There are no actions, suits, arbitrations,
investigations or proceedings pending or, to its knowledge, threatened against
Seller or any of its Subsidiaries or affecting any of the property thereof
before any Governmental Authority, (i) as to which individually or in the
aggregate there is a reasonable likelihood of an adverse decision which would
be reasonably likely to have a Material Adverse Effect or (ii) which questions
the validity or enforceability of any of the Program Documents or any action to
be taken in connection with the transactions contemplated hereby and there is a
reasonable likelihood of a Material Adverse Effect or adverse decision.

d)                                     No
Breach.  Neither (a) the execution
and delivery of the Program Documents nor (b) the consummation of the
transactions therein contemplated in compliance with the terms and provisions
thereof will conflict with or result in a breach of the charter or by-laws (or
other 

 25
 

 

organizational or governing
documents) of Seller, or any applicable law, rule or regulation, or any order,
writ, injunction or decree of any Governmental Authority, or other material
agreement or instrument to which Seller, or any of its Subsidiaries, is a party
or by which any of them or any of their property is bound or to which any of
them is subject, or constitute a default under any such material agreement or
instrument, or (except for the Liens created pursuant to this Agreement) result
in the creation or imposition of any Lien upon any property of Seller or any of
its Subsidiaries, pursuant to the terms of any such agreement or instrument.

e)                                      Action.  Seller has all necessary limited liability
company, corporate or other power, authority and legal right to execute,
deliver and perform its obligations under each of the Program Documents to
which it is a party; the execution, delivery and performance by Seller of each
of the Program Documents to which it is a party has been duly authorized by all
necessary corporate or other action on its part; and each Program Document has
been duly and validly executed and delivered by Seller and constitutes a legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms.

f)                                        Approvals.  No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority, or any other
Person, are necessary for the execution, delivery or performance by Seller of
the Program Documents to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Agreement.

g)                                     Margin
Regulations.  Neither a Transaction
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation T, U or X.

h)                                     Taxes.  Seller and its Subsidiaries have filed all
Federal income tax returns and all other material tax returns that are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by any of them, except for any such taxes,
if any, that are being appropriately contested in good faith by appropriate
proceedings diligently conducted and with respect to which adequate reserves
have been provided. The charges, accruals and reserves on the books of Seller
and its Subsidiaries in respect of taxes and other governmental charges are
adequate.

i)                                         Investment
Company Act.  Neither Seller nor any
of its Subsidiaries is an “investment company”, or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act. Seller
is not subject to any Federal or state statute or regulation which limits its
ability to incur indebtedness.

j)                                         No
Legal Bar.  With the caveat as set
forth in 13(d), the execution, delivery and performance of this Agreement and
the Transactions hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or Contractual Obligation of Seller or of any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien (other than the Liens created hereunder) on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.

k)                                      No
Default.  Neither Seller nor any of
its Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which should reasonably be expected 

 26
 

 

to have a Material Adverse
Effect. No Default or Event of Default has occurred and is continuing under
this Agreement.

l)                                         Collateral;
Collateral Security.

(i)                                     Seller has not
assigned, pledged, or otherwise conveyed or encumbered any Purchased Asset to
any other Person, and immediately prior to the sale of any such Purchased Asset
to Buyer, Seller was the sole owner of such Purchased Asset and had good and
marketable title thereto, free and clear of all Liens, in each case except for
Liens to be released simultaneously with the Liens granted in favor of Buyer hereunder
and no Person other than Seller has any Lien on any Purchased Asset.

(ii)                                  The provisions of
this Agreement are effective to create in favor of Buyer a valid security
interest in all right, title and interest of Seller in, to and under the
Collateral.

(iii)                               Upon receipt by
Custodian of each Note, endorsed in blank by a duly authorized officer of the
payee or last endorsee, Buyer shall have a fully perfected first priority
security interest therein, in the Loan evidenced thereby and in Seller’s
interest in the related Mortgaged Property.

(iv)                               Upon receipt by
Custodian of each LLC Certificate, Buyer shall have a fully perfected first
priority security interest in the related LLC Interests.

(v)                                 Upon the filing of
financing statements on Form UCC-1, naming Buyer as “Secured Party” and Seller
as “Debtor” and describing the Collateral, the security interests granted
hereunder in the Collateral will constitute fully perfected first priority
security interests under the Uniform Commercial Code in all right, title and
interest of Seller in, to and under such Collateral, which can be perfected by
filing under the Uniform Commercial Code.

m)                                   Chief
Executive Office; Chief Operating Office. 
Seller’s chief executive office on the Effective Date is located at
14631 N. Scottsdale Road, Suite 200, Scottsdale, Arizona 85254 and the chief
operating office is located at 14631 N. Scottsdale Road, Suite 200, Scottsdale,
Arizona 85254.

n)                                     Location
of Books and Records.  The location
where Seller keeps its books and records, including all computer tapes and
records relating to the Purchased Assets and any Collateral, is its chief
executive office or chief operating office or the offices of Custodian and
Servicer.

o)                                     True
and Complete Disclosure.  The
information, reports, financial statements, exhibits and schedules furnished in
writing by or on behalf of Seller to Buyer in connection with the negotiation,
preparation or delivery of this Agreement and the other Program Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole, do not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading. All
written information furnished after the date hereof by or on behalf of Seller
to 

 27
 

 

Buyer in connection with this
Agreement and the other Program Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact
known to a Responsible Officer that, after due inquiry, could reasonably be
expected to have a Material Adverse Effect that has not been disclosed herein,
in the other Program Documents or in a report, financial statement, exhibit,
schedule, disclosure letter or other writing furnished to Buyer for use in
connection with the transactions contemplated hereby or thereby.

p)                                     ERISA.  Each Plan to which Seller or its Subsidiaries
make direct contributions, and, to the knowledge of Seller, each other Plan and
each Multiemployer Plan, is in compliance in all material respects with, and
has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Code and any other Federal or State law. No
event or condition has occurred and is continuing as to which Seller would be
under an obligation to furnish a report to Buyer under Section 14(a)(vi)
hereof.

q)                                     Licenses.  Buyer will not be required solely as a result
of purchasing the Purchased Assets to be licensed, registered or approved or to
obtain permits or otherwise qualify (i) to do business in any state in which it
currently so required or (ii) under any state consumer lending, fair debt
collection or other applicable state statute or regulation.

r)                                        True
Sales.  Any and all interest of a
Qualified Originator in, to and under any Mortgage funded in the name of or acquired
by such Qualified Originator or seller which is an Affiliate of Seller has been
sold, transferred, conveyed and assigned to Seller pursuant to a legal sale and
such Qualified Originator retains no interest in such Loan.

s)                                      No
Burdensome Restrictions.  No
Requirement of Law or Contractual Obligation of Seller or any of its
Subsidiaries has a Material Adverse Effect.

t)                                        Subsidiaries.  All of the Subsidiaries of Seller at the date
hereof are listed on Schedule A to this Agreement.

u)                                     Origination
and Acquisition of Loans.  The Loans
were originated or acquired by Seller or a Qualified Originator, and the
origination and collection practices used by Seller or Qualified Originator, as
applicable, with respect to the Loans have been, in all material respects
legal, proper, prudent and customary in the franchise or commercial, as
applicable, mortgage loan origination business and in accordance with the
Underwriting Guidelines.  The servicing
of each of the Loans has been in all material respects, legal, proper, prudent
and customary in the commercial mortgage loan servicing business and in
accordance with the Accepted Servicing Practices.

v)                                     Solvency;
Fraudulent Conveyance. As of the date hereof and immediately after giving
effect to each Transaction, the fair value of the assets of Seller is greater
than the fair value of its liabilities (including, without limitation,
contingent liabilities if and to the extent required to be recorded as a
liability on the financial statements of Seller in accordance with GAAP) of
Seller and Seller is and will be solvent, is and will be able to pay its debts
as they mature and does not and will not have an unreasonably small amount of
capital to engage in the 

 28
 

 

business in which it is engaged
and proposes to engage. Seller does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature. Seller is
not contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Seller or any of its
assets. Seller is not transferring any Purchased Asset with any intent to
hinder, delay or defraud any of its creditors.

w)                                   FCCR.  (i) The Weighted Average Aggregate FCCR for
all of the Purchased Assets is not less than 1.5; and (ii)(A) no more than five
percent (5%) of the Purchased Assets (by aggregate Collateral Value) have a
Unit-Level FCCR of between 1.25 and 1.10; provided, that if the aggregate
Collateral Value of the Purchased Assets is less than $100,000,000, then no
more than the greater of (1) five percent (5%) of the Purchased Assets (by
aggregate Collateral Value) or (2) $6,500,000 in Collateral Value of the
Purchased Assets have a Unit-Level FCCR of between 1.25 and 1.10; and (B) no
more than five percent (5%) of Purchased Assets have a Master Lease FCCR of
between 1.25 and 1.10; provided, that if the aggregate Collateral Value of the
Purchased Assets is less than $100,000,000, then no more than the greater of
(1) five percent (5%) of the Purchased Assets (by aggregate Collateral Value)
or (2) $6,500,000 in Collateral Value of the Purchased Assets have a Master
Lease FCCR of between 1.25 and 1.10.

x)                                       Program
Documents.  The Program Documents and
any other agreement executed and delivered in connection with the Loans and the
LLC Interests are genuine, and each is the legal, valid and binding obligation
of the maker thereof enforceable in accordance with its terms. The Program
Documents are in full force and effect, and the enforceability of the Program
Documents have not been contested by any other party.  No default or event of default exists under
any of the Program Documents that could reasonably be expected to have a
Material Adverse Effect or that has not been cured or remedied on a timely
basis.  Neither Seller nor any other
party to the Program Documents have waived the performance by any other party
of any action, if the failure to perform such action would cause the Program
Documents to be in default, nor has Seller waived any default resulting from
any action or inaction by such party, in each case if such waiver could
reasonably be expected to have a Material Adverse Effect.

y)                                     Corporate
Separateness.  The capital of Seller
is adequate for the respective business and undertakings of Seller.  Other than as provided in this Agreement and
the other Program Documents, Loan Seller is not engaged in any business
transactions with Guarantor or any of its Affiliates other than transactions in
the ordinary course of its business on an “arms-length” basis.  The funds and assets of Loan Seller are not,
and will not be, commingled with the funds of any other person.

14.                               COVENANTS
OF SELLER

Seller hereby covenants
with Buyer as follows:

a)                                      Financial
Statements.  Seller shall deliver to
Buyer:

(i)                                annual consolidated
audited financial statements of Seller or consolidated financial statements of
any entity that is consolidated with Seller and its Affiliates no later than 90
days after year-end and quarterly unaudited statements of Seller and its 

 29
 

 

Affiliates no later than 45 days after
quarter-end, all in accordance with GAAP, consistently applied, as at the end
of, and for, such period (subject to normal year-end audit adjustments);

(ii)                              as soon as reasonably
practicable, (A) quarterly and annual consolidating financial statements
reflecting material inter-company adjustments and (B) all form 10-K,
registration statements and other “corporate finance” filings made with the
Securities and Exchange Commission (other than 8-K and Section 16 filings);
provided, however, that Seller will provide Buyer with a copy of Seller’s or
its Affiliates’ annual SEC Form 10-K filing no later than 90 days after
year-end, all in accordance with GAAP, consistently applied, as at the end of,
and for, such period (subject to normal year-end audit adjustments);

(iii)                           reserved;

(iv)                         monthly portfolio performance
data with respect to the Notes and associated Collateral, including, without
limitation, any outstanding delinquencies, prepayments in whole or in part;

(v)                            from time to time such
other information regarding the Collateral and the financial condition,
operations, or business of Seller and Guarantor as Buyer may reasonably
request; and

(vi)                         as soon as reasonably
possible, and in any event within thirty (30) days after a Responsible Officer
knows, or with respect to any Plan or Multiemployer Plan to which Seller or any
of its Subsidiaries makes direct contributions, has reason to believe, that any
of the events or conditions specified below with respect to any Plan or
Multiemployer Plan has occurred or exists, a statement signed by a senior
financial officer of Seller setting forth details respecting such event or
condition and the action, if any, that Seller or its ERISA Affiliate proposes
to take with respect thereto (and a copy of any report or notice required to be
filed with or given to PBGC by Seller or an ERISA Affiliate with respect to
such event or condition):

(A)                              any
reportable event, as defined in Section 4043(b) of ERISA and the regulations
issued thereunder, with respect to a Plan, as to which PBGC has not by
regulation or otherwise waived the requirement of Section 4043(a) of ERISA that
it be notified within thirty (30) days of the occurrence of such event
(provided that a failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA, including, without limitation, the failure to
make on or before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event regardless of
the issuance of any waivers in accordance with Section 412(d) of the Code) (a “Reportable
Event”); and any request for a waiver under Section 412(d) of the Code for
any Plan;

 30

 

(B)                                the
distribution under Section 4041(c) of ERISA of a notice of intent to terminate
any Plan or any action taken by Seller or an ERISA Affiliate to terminate any
Plan;

(C)                                the
institution by PBGC of proceedings under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan, or the receipt by Seller
or any ERISA Affiliate of a notice from a Multiemployer Plan that such action
has been taken by PBGC with respect to such Multiemployer Plan;

(D)                               the
complete or partial withdrawal from a Multiemployer Plan by Seller or any ERISA
Affiliate that results in liability under Section 4201 or 4204 of ERISA
(including the obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by Seller or any ERISA Affiliate of notice
from a Multiemployer Plan that it is in reorganization or insolvency pursuant
to Section 4241 or 4245 of ERISA or that it intends to terminate or has
terminated under Section 4041A of ERISA;

(E)                                 the
institution of a proceeding by a fiduciary of any Multiemployer Plan against Seller
or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not
dismissed within thirty (30) days;

(F)                                 the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such Plan is a
part if Seller or an ERISA Affiliate fails to timely provide security to such
Plan in accordance with the provisions of said Sections; and

(vii)                      Seller will furnish to Buyer, at
the time it furnishes the financial statements pursuant to paragraph (iii)
above, a certificate of a Responsible Officer of Seller to the effect that, to
the best of such Responsible Officer’s knowledge, Seller during such fiscal
period has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Agreement and the other
Program Documents to be observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default except as
specified in such certificate (and, if any Default or Event of Default has
occurred and is continuing, describing the same in reasonable detail and
describing the action Seller has taken or proposes to take with respect
thereto).

b)                                     Litigation.  Seller will promptly, and in any event within
one (1) Business Day after service of process, give to Buyer notice of all
legal or arbitrable proceedings affecting Seller, Guarantor or any of its
Subsidiaries that questions or challenges the validity or enforceability of any
of the Program Documents or as to which there is a reasonable likelihood 

 31
 

 

of adverse determination which
would result in a Material Adverse Effect or in which the matter in controversy
exceeds $1,000,000.

c)                                      Existence,
Etc.  Each of Seller and its
Subsidiaries will:

(i)                                With respect to Seller
and Net Lease Borrowers only, preserve and maintain its legal existence and all
of its material rights, privileges, licenses and franchises;

(ii)                             comply with the
requirements of all applicable laws, rules, regulations and orders of
Governmental Authorities (including, without limitation, truth in lending, real
estate settlement procedures and all environmental laws) if failure to comply
with such requirements would be reasonably likely (either individually or in
the aggregate) to have a Material Adverse Effect;

(iii)                          keep adequate records and
books of account, in which complete entries will be made in accordance with
GAAP consistently applied;

(iv)                         pay and discharge all taxes,
assessments and governmental charges or levies imposed on it or on its income
or profits or on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the payment
of which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained; and

(v)                            permit representatives of Buyer,
during normal business hours upon one (1) Business Day’s prior written notice
at a mutually desirable time or at any time during the continuance of an Event
of Default, to examine, copy and make extracts from its books and records, to
inspect any of its Properties, and to discuss its business and affairs with its
officers, all to the extent reasonably requested by Buyer.

d)                                     Prohibition
of Fundamental Changes.  Seller shall
not enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that Seller
may merge or consolidate with (a) any Subsidiary of Seller or (b) any other
Person if Seller is the surviving entity, or Buyer consents to such merger or
consolidation; and provided, further, that if after giving effect thereto, no
Default would exist hereunder.

e)                                      Margin
Deficit.  If at any time there exists
a Margin Deficit, Seller shall cure same in accordance with Section 6(a)
hereof.

f)                                        Notices.
Seller shall give notice to Buyer promptly:

(i)                                upon Seller becoming
aware of, and in any event within one (1) Business Day after, the occurrence of
any Default or Event of Default or any event of default or default under any
other material agreement of Seller;

 32
 

 

(ii)                             upon Seller becoming aware
of any default related to any Purchased Asset or Collateral, any Material
Adverse Effect or any event or change in circumstances which should reasonably
be expected to have a Material Adverse Effect;

(iii)                          upon Seller becoming aware
during the normal course of its business that the Mortgaged Property in respect
of any Loan or Loans with an aggregate unpaid principal balance of at least
$250,000 has been damaged by waste, fire, earthquake or earth movement,
windstorm, flood, tornado or other casualty, or otherwise damaged so as to
materially and adversely affect the value of such Loan;

(iv)                         upon the entry of a judgment
or decree against Seller or Guarantor or any of its Subsidiaries in an amount
in excess of $1,000,000; and

(v)                            upon the termination of the
Custody Agreement or any other Servicing Agreement; and

(vi)                         of a move of Seller’s chief
executive office or chief operating office from the addresses referred to in
Section 13(m), which such notice shall be written notice thirty (30) days prior
to such move.

Each notice pursuant to
this Section 14(f) (other than (v) and (vi)) shall be accompanied by a
statement of a Responsible Officer of Seller setting forth details of the
occurrence referred to therein and stating what action Seller or Gurantor has
taken or proposes to take with respect thereto.

g)                                     Servicing.  Seller shall cause Servicer to service, or
cause to be serviced, the Purchased Assets, in accordance with Accepted
Servicing Practices, pending any delivery of such servicing to Buyer pursuant
to the Custody Agreement or any other Servicing Agreement, employing at least
the same procedures and exercising the same care that Servicer customarily
employs in servicing mortgaged properties and mortgage loans for its own
account.  Seller shall cause Servicer to
hold or cause to be held all escrow funds collected with respect to such
Purchased Assets in trust accounts and shall apply the same for the purposes
for which such funds were collected.  If Seller
should discover that, for any reason whatsoever, Seller or any entity
responsible to Buyer by contract for managing or servicing any such Purchased
Asset has failed to perform fully Servicer’s obligations with respect to the
servicing of the Purchased Assets or any of the obligations of such entities
with respect to the Loans or the LLC Interests, Seller shall promptly notify Buyer.  Prior to any Person other than Midland Loan
Services, Inc. becoming Servicer or a subservicer of the Purchased Assets, Buyer
shall have the right to approve each such Servicer and the form of all
Servicing Agreements or servicing side letter agreements with respect thereto.

h)                                     Underwriting
Guidelines.  Seller shall notify Buyer
in writing of any material modifications to the Underwriting Guidelines prior to
implementation of such change, and unless Buyer objects in writing within ten
(10) Business Days of receipt of notice, the proposed modifications shall be
deemed acceptable.

 33
 

 

i)                                         Lines
of Business.  Seller will not engage
to any substantial extent in any line or lines of business activity other than
financing, acquiring, leasing, selling or exchanging commercial real estate,
interests in commercial real estate or interests in entities that own or
operate commercial real estate, and the businesses generally carried on by it
as of the Initial Purchase Date.

j)                                         Transactions
with Affiliates.  Seller will not
enter into any transaction, including, without limitation, any purchase, sale,
lease or exchange of property or the rendering of any service, with any Affiliate
unless such transaction is (a) not expressly prohibited under this Agreement,
(b) in the ordinary course of Seller’s business and (c) upon fair and
reasonable terms no less favorable to Seller than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate.

k)                                      Limitation
on Liens.  Seller will not, nor will
it permit or allow others to, create, incur or permit to exist any Lien,
security interest or claim on or to any of its Collateral, except for: (i)
Liens (not otherwise permitted hereunder) which are created in connection with
the purchase of fixed assets and equipment necessary in the ordinary course of Seller’s
business or to finance residual certificates issued in connection with
securitizations of mortgage loans completed by Seller which are financed solely
based on a pledge of such residual certificates; and (ii) Liens on the
Collateral created pursuant to this Agreement. Seller will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or claim on or to the Collateral, other than the
security interests created under this Agreement, and Seller will defend the
right, title and interest of Buyer in and to any of the Collateral against the
claims and demands of all persons whomsoever. 
Seller will not permit or allow any of its Subsidiaries to create, incur
or permit to exist any Lien, security interest or claim on or to any Mortgaged
Property that is related to a Purchased Asset, except in accordance with the
Program Documents and any Master Loan Agreement.

l)                                         Limitation
on Sale of Assets.  Except for sales
and securitizations of Purchased Assets with respect to which Seller has paid
the Repurchase Price as set forth herein, Seller and its Subsidiaries, taken as
a collective whole, shall not convey, sell, lease, assign, transfer or
otherwise dispose of (collectively, “Transfer”), all or substantially
all of its Property, business or assets (including, without limitation,
receivables and leasehold interests) whether now owned or hereafter acquired or
allow any Subsidiary to Transfer substantially all of Seller’s consolidated
assets taken as a whole to any Person; provided, that Seller may after prior
written notice to Buyer allow such action with respect to any Subsidiary which
is not a material part of Seller’s overall business operations.

m)                                   Limitation
on Distributions.  Without Buyer’s
consent, except for customary distributions, Seller shall not make any payment
on account of, or set apart assets for a sinking or other analogous fund for
the purchase, redemption, defeasance, retirement or other acquisition of, any
stock or senior or subordinate debt of Seller, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of Seller.

n)                                     Reserved.

 34
 

 

o)                                     Restricted
Payments.  Seller shall not make any
Restricted Payments following an Event of Default.

p)                                     Servicing
Transmission.  Seller shall provide
to Buyer two (2) Business Days prior to each Repurchase Date (i) the Servicing
Transmission, with respect to the Mortgaged Properties serviced under the
Custody Agreement by Servicer which were a part of the Purchased Assets prior
to the first day of the current month, summarizing Servicer’s delinquency and
loss experience with respect to Mortgaged Properties serviced by Servicer
(including, in the case of the Mortgaged Properties and, specifically, the
Leases thereof, the following categories: current, 30-59, 60-89, 90-119,
120-149 and 150+ days delinquent) and (ii) any other information reasonably
requested by Buyer with respect to the Mortgaged Properties.  Servicer shall also include in the Servicing
Transmission such information relating to the servicing of the Purchased Assets
as may be required by Buyer under the Custody Agreement.

q)                                     No
Amendment or Waiver.  Seller will
not, nor will it permit or allow others to amend, modify, terminate or waive
any provision of any Purchased Asset to which Seller is a party in any manner
which shall reasonably be expected to materially and adversely affect the value
of such Purchased Asset as Collateral.  Seller
will not, nor will it permit or allow others to amend, modify, terminate or
waive any provision of any LLC Agreement pursuant to which Purchased Assets
have been issued without the prior written consent of Buyer.

r)                                        Maintenance
of Property; Insurance.  Seller shall
keep or cause the related operator of the Mortgaged Properties to keep the
related Mortgaged Property in good working order and condition.  Seller shall maintain or cause the related
mortgagor or Tenant under a Mortgage or Lease as operator of the Mortgaged
Property to maintain the insurance in form and amount as required under the
related Mortgage or Lease and shall not reduce such coverage without the
written consent of Buyer, and shall also maintain or cause the Tenant under the
terms of the Lease to maintain such insurance with financially sound and
reputable insurance companies, and with respect to property and risks of a
character usually maintained by entities engaged in the same or similar
business similarly situated, against loss, damage and liability of the kinds
and in the amounts customarily maintained by such entities.  The Schedule of Insurance attached as
Schedule B hereto sets forth the insurance in effect on the Initial Purchase
Date.

s)                                      Further
Identification of Collateral. Seller will furnish to Buyer from time to
time statements and schedules further identifying and describing the Purchased
Assets and such other reports in connection with the Purchased Assets as Buyer
may reasonably request, all in reasonable detail.

t)                                        Purchased
Asset Determined to be Defective. 
Upon discovery by Seller or Buyer of any breach of any representation or
warranty listed on Appendix A hereto applicable to any Purchased Asset that
would result in the Purchased Asset not being an Eligible Asset, the party
discovering such breach shall promptly give notice of such discovery to the
other.

u)                                     Illegal
Activities; Anti-Money Laundering Laws. Seller has not engaged, is not
engaging, and shall not in the future engage in any conduct or activity that
could subject its assets to forfeiture or seizure, including without
limitation, conduct or activities in violation of 

 35
 

 

the Racketeer Influenced and
Corrupt Organizations Act, the Bank Secrecy Act or narcotic drug laws.  Seller has complied with all applicable
anti-money laundering laws and regulations, including without limitation the
USA PATRIOT Act of 200l (collectively, the “Anti Money Laundering Laws”).  As and to the extent required by the Anti
Money Laundering Laws, Seller (i) has conducted the requisite due diligence in
connection with the origination of each Purchased Asset for purposes of the
Anti-Money Laundering Laws, including with respect to the legitimacy of the
applicable mortgagor, dealership guarantor, other obligor, and their respective
principals, and the origin of the assets used by the said mortgagor to purchase
the property in question, and (ii) maintains, and will maintain, sufficient
information to identify the applicable mortgagor and its principals, for
purposes of the Anti-Money Laundering Laws. 
No Purchased Asset is subject to nullification pursuant to Executive
Order 13224 (the “Executive Order”) or the regulations promulgated by
the Office of Foreign Assets Control of the United States Department of the
Treasury (the “OFAC Regulations”) or in violation of the Executive Order
or the OFAC Regulations, and no mortgagor or any of its principals, is subject
to the provisions of such Executive Order or the OFAC Regulations nor listed as
a “blocked person” for purposes of the OFAC Regulations.

v)                                     Non-Usage
Fee.  Seller agrees to pay to Buyer
on each Repurchase Date the accrued and unpaid Non-Usage Fee.

15.                               REPURCHASE
DATE PAYMENTS/COLLECTIONS

On each Repurchase Date,
Seller shall remit or shall cause to be remitted to Buyer the Repurchase Price
together with any other Obligations then due and payable.

16.                               REPURCHASE
OF PURCHASED ASSETS; CHANGE OF LAW

a)                                      Upon
discovery by Seller of a breach of any of the representations and warranties
set forth in Appendix A to this Agreement, Seller shall give prompt written
notice thereof to Buyer.  Upon any such
discovery by Buyer, Buyer will notify Seller. 
It is understood and agreed that the representations and warranties set
forth in Appendix A to this Agreement shall survive delivery of the respective
Custodian’s Loan Files to Custodian and shall inure to the benefit of Buyer and
Buyer’s successors and assigns.  The fact
that Buyer has conducted or has failed to conduct any partial or complete due
diligence investigation in connection with its purchase of any Loan or LLC
Interests shall not affect Buyer’s right to demand repurchase as provided under
this Agreement.  Seller shall within five
(5) Business Days of the earlier of Seller’s discovery or Seller’s receiving
notice, with respect to any Loan or LLC Interests, of (i) any breach of a
representation or warranty contained in Appendix A to this Agreement or (ii)
any failure to deliver any of the items required to be delivered as part of the
Custodian’s Loan File within the time period required for delivery pursuant to
the Custody Agreement, promptly cure such breach or delivery failure in all
material respects.  If within five (5) Business
Days after the earlier of Seller’s discovery of such breach or delivery failure
or Seller’s receiving notice thereof such breach or delivery failure has not
been remedied by Seller, Seller shall promptly upon receipt of written instructions
from Buyer purchase such Loan or LLC Interests, as applicable, at a purchase
price equal to the Repurchase Price with respect to such Loan or LLC Interests,
as applicable, by depositing such Repurchase Price in the Collection Account;
provided, however, that, with the exception of the delivery of a Note or LLC
Certificate, if Seller is diligently 

 36
 

 

pursuing a cure of such breach
or delivery failure, Seller shall have ten (10) days in addition to such five (5)
Business Day period to cure such breach or delivery failure in all material
respects.

b)                                     If
Buyer determines that the introduction of, any change in, or the interpretation
or administration of any requirement of law has made it unlawful or
commercially impracticable to engage in any Transactions with a Pricing Rate
based on LIBO Rate, then Seller (i) shall, upon its receipt of notice of such
fact and demand from Buyer (with a copy of such notice to Custodian),
repurchase the Purchased Assets subject to the Transaction on the next
succeeding Business Day and, at Seller’s election, concurrently enter into a
new Transaction with Buyer with a Pricing Rate based on the Prime Rate plus the
margin set forth in the Side Letter as part of the Pricing Rate and (ii) may
elect, by giving notice to Buyer and Custodian, that all new Transactions shall
have Pricing Rates based on the Prime Rate plus such margin.

c)                                      If
Buyer determines in its sole discretion that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on Buyer’s capital or on the capital of any Affiliate of Buyer as a consequence
of such Change in Law on this Agreement, then from time to time Seller will
compensate Buyer or Buyer’s Affiliate, as applicable, for such reduced rate of
return suffered as a consequence of such Change in Law.  Buyer shall provide Seller with prompt notice
as to any Change in Law.  Notwithstanding
any other provisions in this Agreement, in the event of any such Change in Law,
Seller will have the right to terminate all Transactions then outstanding
without any prepayment penalty as of a date selected by Seller, which date
shall be prior to the then applicable Repurchase Date and which date shall
thereafter for all purposes hereof be deemed to be the Repurchase Date.

17.                               RESERVED

18.                               REPURCHASE
TRANSACTIONS

Buyer may, in its sole
election, engage in repurchase transactions with the Purchased Assets or
otherwise pledge, hypothecate, assign, transfer or otherwise convey the
Purchased Assets with a counterparty of Buyer’s choice, in all cases subject to
Buyer’s obligation to reconvey the Purchased Assets (and not substitutes
therefor) on the Repurchase Date.  In the
event Buyer engages in a repurchase transaction with any of the Purchased
Assets or otherwise pledges or hypothecates any of the Purchased Assets, Buyer
shall have the right to assign to Buyer’s counterparty any of the applicable
representations or warranties in Appendix A to this Agreement and the remedies
for breach thereof, as they relate to the Purchased Assets that are subject to
such repurchase transaction.

19.                               EVENTS
OF DEFAULT

With respect to any
Transactions covered by or related to this Agreement, the occurrence of any of
the following events shall constitute, if declared as such by Buyer, an “Event
of Default” other than the events described in (f) and (g) below which, upon
their occurrence, shall automatically constitute an Event of Default:

 37
 

 

a)                                      Seller
fails to transfer the Purchased Assets to Buyer on the applicable Purchase Date
(provided Buyer has tendered the related Purchase Price); or

b)                                     Seller
either fails to repurchase the Purchased Assets on the applicable Repurchase
Date or fails to perform its obligations under Section 6; or

c)                                      any
representation, warranty or certification made or deemed made herein or in any
other Program Document by Seller or Guarantor or any certificate furnished to Buyer
pursuant to the provisions thereof, shall prove to have been false or
misleading in any material respect (which falsity is not cured within ten (10)
Business Days of the earlier of (i) the receipt of notice by Seller or
Guarantor and (ii) actual knowledge of Seller or Guarantor thereof, and could
reasonably result in a Material Adverse Effect) as of the time made or
furnished (other than the representations and warranties set forth in Appendix
A which shall be considered solely for the purpose of determining the Purchase
Price of the Loans or LLC Interests, as applicable); unless (i) Seller or
Guarantor shall have made any such representations and warranties with knowledge
that they were materially false or misleading at the time made and that such
falsity could reasonably result in a Material Adverse Effect, or (ii) any such
representations and warranties have been determined by Buyer in its sole
discretion to be materially false or misleading on a regular basis and that
such falsity could reasonably result in a Material Adverse Effect); or

d)                                     Seller
or Guarantor shall fail to observe or perform any covenant or agreement
contained in this Agreement or any other Program Document and such failure to
observe or perform shall continue unremedied for a period of five (5) Business
Days after the earlier of (i) receipt of notice by Seller or Guarantor or (ii)
actual knowledge of Seller or Guarantor; or

e)                                      a
final judgment or judgments for the payment of money in excess of $2,000,000 in
the aggregate (to the extent that it is, in the reasonable determination of Buyer,
uninsured and provided that any insurance or other credit posted in connection
with an appeal shall not be deemed insurance for these purposes) shall be
rendered against Seller or any of its Subsidiaries by one or more courts,
administrative tribunals or other bodies having jurisdiction over them and the
same shall not be discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be procured,
within sixty (60) days from the date of entry thereof and Seller or Guarantor
or any such Subsidiary shall not, within said period of sixty (60) days, or
such longer period during which execution of the same shall have been stayed or
bonded, appeal therefrom and cause the execution thereof to be stayed during
such appeal; or

f)                                        Seller
or Guarantor shall admit in writing its inability to pay its debts as such
debts become due; or

g)                                     Seller
or Gurantor or any of its Subsidiaries shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
examiner or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Bankruptcy Code, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in 

 38
 

 

writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or (vi) take any
corporate or other action for the purpose of effecting any of the foregoing; or

h)                                     a
proceeding or case shall be commenced, without the application or consent of Seller
or Guarantor or any of its Subsidiaries, in any court of competent jurisdiction,
seeking (i) its reorganization, liquidation, dissolution, arrangement or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of, or taking of possession by, a receiver, custodian, trustee,
examiner, liquidator or the like of Seller or Guarantor or any such Subsidiary
or of all or any substantial part of its property, or (iii) similar relief in
respect of Seller or Gurantor or any such Subsidiary under any law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement
or winding-up, or composition or adjustment of debts, and such proceeding or
case shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in effect,
for a period of sixty (60) or more days; or an order for relief against Seller
or Guarantor or any such Subsidiary shall be entered in an involuntary case
under the Bankruptcy Code; or

i)                                         without
the express prior written consent of Buyer, the Custody Agreement or any
Program Document shall for whatever reason (including an event of default
thereunder) be terminated or the lien on the Collateral created by this
Agreement or Seller’s material obligations hereunder shall cease to be in full
force and effect, or the enforceability thereof shall be contested by Seller;
or

j)                                         any
Material Adverse Effect or Buyer reasonably determines that there exists a
material impairment of Seller’s or Guarantor’s ability to perform its
obligations under this Agreement, the Note or any other Program Document; or

k)                                      
(i) any Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan or
Multiemployer Plan, (ii) any material “accumulated funding deficiency” (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or Multiemployer Plan or any Lien in favor of PBGC or a
Plan or Multiemployer Plan shall arise on the assets of Seller or any ERISA
Affiliate, (iii) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of Buyer,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Plan shall terminate for purposes of Title IV of ERISA, (v) Seller
or any ERISA Affiliate shall, or in the reasonable opinion of Buyer is likely
to, incur any liability in connection with a withdrawal from, or the insolvency
or reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan or Multiemployer Plan; and in each
case in clauses (i) through (vi) above, such event or condition, together with
all other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or

l)                                         any
Change in Control of Seller or Guarantor shall have occurred without the prior
consent of Buyer; or

 39
 

 

m)                                   Seller
shall grant, or suffer to exist, any Lien on any of the Purchased Assets or the
Collateral except the Liens contemplated hereby; or the Liens contemplated
hereby shall cease to be first priority perfected Liens on the Purchased Assets
or the Collateral in favor of Buyer or shall be Liens in favor of any Person
other than Buyer; or

n)                                     Buyer
shall reasonably request, specifying the reasons for such request, information,
and/or written responses to such requests, regarding the financial well-being
of Seller and such information and/or responses shall not have been provided
within five (5) Business Days of such request; or

o)                                     Seller
or any Subsidiary or Affiliate of Seller shall default under, or fail to
perform as required under, or shall otherwise materially breach the terms of
any instrument, agreement or contract between Seller or such other entity, on
the one hand, and Buyer or any of Buyer’s Affiliates on the other; or Seller or
any Subsidiary or Affiliate of Seller shall default under, or fail to perform
as requested under, the terms of any repurchase agreement, loan and security
agreement or similar credit facility or agreement for borrowed funds entered
into by Seller or such other entity and any third party, which default or
failure entitles any party to require acceleration or prepayment of any
indebtedness thereunder in an amount greater than $1,000,000.

20.                               REMEDIES

Upon the occurrence of an
Event of Default, Buyer, at its option (which option shall be deemed to have
been exercised immediately upon the occurrence of an Event of Default pursuant
to Section 19(f) or (g) hereof), shall have any or all of the following rights
and remedies, which may be exercised by Buyer:

a)                                      The
Repurchase Date for each Transaction hereunder shall be deemed immediately to
occur.

b)                                (i)                                     Seller’s obligations hereunder to repurchase all
Purchased Assets at the Repurchase Price therefor on the Repurchase Date in
such Transactions shall thereupon become immediately due and payable; all
Income paid after such exercise or deemed exercise shall be remitted to and
retained by Buyer and applied to the aggregate Repurchase Prices and any other
amounts owing by Seller hereunder; Seller shall immediately deliver to Buyer or
its designee any and all original papers, records and files relating to the
Purchased Assets subject to such Transaction then in Seller’s possession and/or
control; and all right, title and interest in and entitlement to such Purchased
Assets and Servicing Rights thereon shall be deemed transferred to Buyer.

(ii)                             Buyer shall have the right
to (A) sell, on or following the Business Day following the date on which the
Repurchase Price became due and payable pursuant to Section 20(b) without
notice or demand of any kind, at a public or private sale and at such price or
prices as Buyer may reasonably deem satisfactory any or all Purchased Assets or
(B) in its sole discretion, exercised in good faith, elect, in lieu of selling
all or a portion of such Purchased Assets, to give Seller credit for such
Purchased Assets in an amount equal to the Market Value of the Purchased Assets
against the aggregate unpaid 

 40
 

 

Repurchase Price and any other amounts owing
by Seller hereunder.  Seller shall remain
liable to Buyer for any amounts that remain owing to Buyer following a sale
and/or credit under the preceding sentence. 
The proceeds of any disposition of Purchased Assets shall be applied:
first, to the costs and expenses incurred by Buyer in connection with or as a
result of an Event of Default; second, to the aggregate Repurchase Prices;
third, to all other Obligations; and any amounts remaining shall be paid to
Seller.

(iii)                          The parties recognize that it
may not be possible to purchase or sell all of the Purchased Assets on a
particular Business Day, or in a transaction with the same purchaser, or in the
same manner because the market for such Purchased Assets may not be
liquid.  In view of the nature of the
Purchased Assets, the parties agree that liquidation of a Transaction or the
underlying Purchased Assets does not require a public purchase or sale and that
a good faith private purchase or sale shall be deemed to have been made in a
commercially reasonable manner. 
Accordingly, Buyer may elect the time and manner of liquidating any
Purchased Asset and nothing contained herein shall obligate Buyer to liquidate
any Purchased Asset on the occurrence of an Event of Default or to liquidate
all Purchased Assets in the same manner or on the same Business Day or
constitute a waiver of any right or remedy of Buyer.  Notwithstanding the foregoing, the parties to
this Agreement agree that the Transactions have been entered into in
consideration of and in reliance upon the fact that all Transactions hereunder
constitute a single business and contractual obligation and that each
Transaction has been entered into in consideration of the other Transactions.

c)                                      In
addition to its rights hereunder, Buyer shall have the right to proceed against
any of Seller’s assets which may be in the possession of Buyer, any of Buyer’s
Affiliates or its designee (including Custodian, to the extent acting as a
custodian for the benefit of Buyer), including the right to liquidate such
assets and to set-off the proceeds against moneys owed by Seller to Buyer
pursuant to this Agreement.  Buyer may
set off cash, the proceeds of the liquidation of the Purchased Assets and
Additional Purchased Assets, any other Collateral or its proceeds and all other
sums or obligations owed by Buyer to Seller hereunder against all of Seller’s
Obligations to Buyer, whether under this Agreement, under a Transaction, or
under any other agreement between the parties, or otherwise, whether or not
such Obligations are then due, without prejudice to Buyer’s right to recover
any deficiency.

d)                                     Buyer
shall have the right to obtain physical possession of the Records and all other
files of Seller relating to the Purchased Assets and all documents relating to
the Purchased Assets which are then or may thereafter come into the possession
of Seller or any third party acting for Seller and Seller shall deliver to
Buyer such assignments as Buyer shall request.

e)                                      Buyer
may direct all Persons servicing the Purchased Assets to take such action with
respect to the Purchased Assets as Buyer determines appropriate.

f)                                        Seller
shall be liable to Buyer for the amount of all expenses (plus interest thereon
at a rate equal to the Default Rate), and all costs and expenses incurred in
connection with hedging or covering transactions related to the Purchased Assets.

 41
 

 

g)                                     Seller
shall cause all sums received by it or on its behalf with respect to the
Purchased Assets to be deposited with Custodian (or such other Person as Buyer
may direct) after receipt thereof.

h)                                     Buyer
shall without regard to the adequacy of the security for the Obligations, be
entitled to the appointment of a receiver by any court having jurisdiction,
without notice, to take possession of and protect, collect, manage, liquidate,
and sell the Purchased Assets and any other Collateral or any portion thereof,
collect the payments due with respect to the Purchased Assets and any other
Collateral or any portion thereof, and do anything that Buyer is authorized
hereunder to do.  Seller shall pay all
costs and expenses incurred by Buyer in connection with the appointment and
activities of such receiver.

Buyer may enforce its
rights and remedies hereunder without prior judicial process or hearing, and
Seller hereby expressly waives, to the extent permitted by law, any right
Seller might otherwise have to require Buyer to enforce its rights by judicial
process.  Seller also waives, to the
extent permitted by law, any defense Seller might otherwise have to the
Obligations, arising from use of nonjudicial process, enforcement and sale of
all or any portion of the Purchased Assets and any other Collateral or from any
other election of remedies.  Seller
recognizes that nonjudicial remedies are consistent with the usages of the
trade, are responsive to commercial necessity and are the result of a bargain
at arm’s length.

In addition to all the
rights and remedies specifically provided herein, Buyer shall have all other
rights and remedies provided by applicable federal, state, foreign, and local
laws, whether existing at law, in equity or by statute.

Buyer shall have, except
as otherwise expressly provided in this Agreement, the right to exercise any of
its rights and/or remedies without presentment, demand, protest or further
notice of any kind other than as expressly set forth herein, all of which are
hereby expressly waived by Seller.

Seller hereby authorizes
Buyer, at Seller’s expense, to file such financing statement or statements
relating to the Purchased Assets and the Collateral without Seller’s signature
thereon as Buyer at its option may deem appropriate, and appoints Buyer as
Seller’s attorney-in-fact to execute any such financing statement or statements
in Seller’s name and to perform all other acts which Buyer deems appropriate to
perfect and continue the lien and security interest granted hereby and to
protect, preserve and realize upon the Purchased Assets and the Collateral,
including, but not limited to, the right to endorse notes, complete blanks in
documents and execute assignments on behalf of Seller as its attorney-in-fact.  This power of attorney is coupled with an
interest and is irrevocable without Buyer’s consent.

21.                               DELAY
NOT WAIVER; REMEDIES ARE CUMULATIVE

No failure on the part of
Buyer to exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by Buyer of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy.  All rights and remedies of Buyer
provided for herein are cumulative and in addition to any and all other rights
and remedies provided by law, 

 42
 

 

the Program Documents and
the other instruments and agreements contemplated hereby and thereby, and are
not conditional or contingent on any attempt by Buyer to exercise any of its
rights under any other related document. 
Buyer may exercise at any time after the occurrence of an Event of
Default one or more remedies, as it so desires, and may thereafter at any time
and from time to time exercise any other remedy or remedies.

22.                               USE
OF EMPLOYEE PLAN ASSETS

No assets of an employee
benefit plan subject to any provision of ERISA shall be used by either party
hereto in a Transaction.

23.                               INDEMNITY

a)                                      Seller
agrees to pay on demand (i) all reasonable out-of-pocket costs and expenses of
Buyer in connection with the preparation, execution, delivery, modification,
administration and amendment of the Program Documents (including, without
limitation, (A) all collateral review and UCC search and filing fees and
expenses and (B) the reasonable fees and expenses of counsel for Buyer with
respect thereto, with respect to advising Buyer as to its rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under this Agreement, with respect to negotiations with Seller or
with other creditors of Seller or any of their Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors’ rights
generally and any proceeding ancillary thereto) and (ii) all costs and expenses
of Buyer in connection with the enforcement of this Agreement, whether in any
action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors’ rights generally (including, without
limitation, the reasonable fees and expenses of counsel for Buyer) whether or
not the transactions contemplated hereby are consummated.

b)                                     Seller
agrees to indemnify and hold harmless Buyer and each of its respective
Affiliates and their officers, directors, employees, agents and advisors (each,
an “Indemnified Party”) from and against (and will reimburse each
Indemnified Party as the same is incurred) any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or other proceeding (whether or not such Indemnified Party is a
party thereto) relating to, resulting from or arising out of any of the Program
Documents and all other documents related thereto, any breach of a
representation or warranty of Seller or Seller’s officer in this Agreement or
any other Program Document, and all actions taken pursuant thereto) (i) the
Transactions, the actual or proposed use of the proceeds of the Transactions,
this Agreement or any of the transactions contemplated thereby, including,
without limitation, any acquisition or proposed acquisition or any indemnity
payable under any Servicing Agreement or other servicing arrangement, (ii) the
actual or alleged presence of hazardous materials on any Property or any
environmental action relating in any way to any Property or (iii) the actual or
alleged violation of any federal, state, municipal or local predatory lending
laws, except to the extent such claim, damage, loss, liability or expense is
found in a final, non-appealable judgment by a court of competent jurisdiction
to 

 43
 

 

have resulted from such
Indemnified Party’s gross negligence or willful misconduct.  Seller also agrees not to assert any claim
against Buyer or any of its Affiliates, or any of their respective officers,
directors, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or
otherwise relating to the Program Documents, the actual or proposed use of the
proceeds of the Transactions, this Agreement or any of the transactions
contemplated thereby.  THE FOREGOING
INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT
LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)
OF THE INDEMNIFIED PARTIES.

c)                                      If
Seller fails to pay when due any costs, expenses or other amounts payable by it
under this Agreement, including, without limitation, reasonable fees and
expenses of counsel and indemnities, such amount may be paid on behalf of
Seller by Buyer, in its sole discretion and Seller shall remain liable for any
such payments to Buyer.  No such payment by
Buyer shall be deemed a waiver of any of Buyer’s rights under the Program
Documents.

d)                                     Without
prejudice to the survival of any other agreement of Seller hereunder, the
agreements and obligations of Seller contained in this Section shall survive
the payment in full of the Repurchase Price and all other amounts payable
hereunder and delivery of the Purchased Assets by Buyer against full payment
therefor.

24.                               WAIVER
OF REDEMPTION AND DEFICIENCY RIGHTS

Seller hereby expressly
waives, to the fullest extent permitted by law, every statute of limitation on
a deficiency judgment, any reduction in the proceeds of any Purchased Assets as
a result of restrictions upon Buyer or Custodian contained in the Program
Documents or any other instrument delivered in connection therewith, and any
right that it may have to direct the order in which any of the Purchased Assets
shall be disposed of in the event of any disposition pursuant hereto.

25.                               REIMBURSEMENT

All sums reasonably
expended by Buyer in connection with the exercise of any right or remedy
provided for herein shall be and remain Seller’s obligation.  Seller agrees to pay, with interest at the
Default Rate to the extent that an Event of Default has occurred, the
reasonable out-of-pocket expenses and reasonable attorneys’ fees incurred by
Buyer and/or Custodian in connection with the enforcement of the Program
Documents, the taking of any action, including legal action, required or
permitted to be taken by Buyer (without duplication to Buyer) and/or Custodian
pursuant thereto, any “due diligence” or loan agent reviews conducted by Buyer
or on its behalf or any refinancing or restructuring in the nature of a “workout”.  If Buyer determines that, due to the
introduction of, any change in, or the compliance by Buyer with (i) any
eurocurrency reserve requirement or (ii) the interpretation of any law,
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
an increase in the cost to Buyer in engaging in the present or any future
Transactions, then Seller agrees to pay to Buyer, from time to time, upon
demand by Buyer (with a copy to Custodian) the actual cost of additional
amounts as specified by Buyer to compensate Buyer for such increased costs.  Notwithstanding any other provisions in this 

 44
 

 

Agreement, in the event
of any such change in the eurocurrency reserve requirement or the
interpretation of any law, regulation or any guideline or request from any
central bank or other Governmental Authority, Seller will have the right to
terminate all Transactions then outstanding as of a date selected by Seller,
which date shall be prior to the applicable Repurchase Date and which date
shall thereafter for all purposes hereof, be deemed to be the Repurchase Date.  In addition, Buyer shall promptly notify
Seller if any events in clause (i) or (ii) of this Section 25 occur.

In addition to any rights
and remedies of Buyer hereunder and by law, Buyer shall have the right, without
prior notice to Seller, any such notice being expressly waived by Seller to the
extent permitted by applicable law, upon any amount becoming due and payable by
Seller hereunder (whether at the stated maturity, by acceleration or otherwise)
to set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency,
and any other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by Buyer or any Affiliate thereof to or for the credit
or the account of Seller or any Affiliate thereof.  Buyer agrees promptly to notify Seller after
any such set off and application made by Buyer; provided, that the failure to
give such notice shall not affect the validity of such set off and application.

26.                               FURTHER
ASSURANCES

Seller agrees to do such
further acts and things and to execute and deliver to Buyer such additional
assignments, acknowledgments, agreements, powers and instruments as are reasonably
required by Buyer to carry into effect the intent and purposes of this
Agreement, to perfect the interests of Buyer in the Purchased Assets or to
better assure and confirm unto Buyer its rights, powers and remedies hereunder.

27.                               ENTIRE
AGREEMENT; PRODUCT OF NEGOTIATION

This Agreement supersedes
and integrates all previous negotiations, contracts, agreements and
understandings between the parties relating to a sale and repurchase of
Purchased Assets and Additional Purchased Assets thereto, and it, together with
the other Program Documents, and the other documents delivered pursuant hereto
or thereto, contains the entire final agreement of the parties.  No prior negotiation, agreement,
understanding or prior contract shall have any validity hereafter.

28.                               TERMINATION

This Agreement shall
remain in effect until the earlier of: (i) October 12, 2007; provided, that
such date may be extended, in Buyer’s sole discretion, upon written request of Seller
delivered to Buyer not less than 30 days prior to such date, or (ii) at Buyer’s
option, the occurrence of an Event of Default (such date, the “Termination
Date”).  However, no such termination
shall affect Seller’s outstanding obligations to Buyer at the time of such
termination.  Pursuant to any extension of
this Agreement, Seller shall pay to Buyer the Renewal Fee.  Seller’s obligations to indemnify Buyer
pursuant to this Agreement shall survive the termination hereof.  

 45
 

 

Failure of Buyer to respond to
Seller’s request for an extension pursuant to clause (i) above shall be deemed
a rejection of such request.

29.                               ASSIGNMENT

a)                                      The
Program Documents are not assignable by Seller. 
Buyer may from time to time assign all or a portion of its rights and
obligations under this Agreement and the Program Documents; provided, however,
that Buyer shall maintain, for review by Seller upon written request, a
register of assignees and a copy of an executed assignment and acceptance by
Buyer and assignee (“Assignment and Acceptance”), specifying the
percentage or portion of such rights and obligations assigned.  Upon such assignment, (a) such assignee shall
be a party hereto and to each Program Document to the extent of the percentage
or portion set forth in the Assignment and Acceptance, and shall succeed to the
applicable rights and obligations of Buyer hereunder, and (b) Buyer shall, to
the extent that such rights and obligations have been so assigned by it to
either (i) an Affiliate of Buyer which assumes the obligations of such Buyer or
(ii) to another Person which assumes the obligations of Buyer, be released from
its obligations hereunder accruing thereafter and under the Program
Documents.  Unless otherwise stated in
the Assignment and Acceptance, Seller shall continue to take directions solely
from Buyer unless otherwise notified by Buyer in writing.  Buyer may distribute to any prospective
assignee any document or other information delivered to Buyer by Seller.  Notwithstanding any assignment by Buyer
pursuant to this Section 29, Buyer shall remain liable as to the Transactions.

b)                                     Buyer
may sell to one or more Persons participations in all or a portion of its
rights and obligations under this Agreement or otherwise enter into one or more
syndications of its rights and obligations under this Agreement.  In the event of any such sale or syndication,
Buyer shall be entitled, after consultation with Seller, to change the
structure, terms (including pricing) or amount, if Buyer determines that such
changes are advisable in order to achieve a successful sale or syndication; provided,
however that such change to the structure, terms (including pricing) or amount
is not reasonably likely to trigger an Event of Default.  With respect to any such sale or syndication,
Seller agrees to (a) provide and cause its officers, directors and advisors to
provide Buyer and any other proposed buyer that becomes part of the syndicate
of Buyers upon request with all information reasonably deemed necessary by
Buyer to effectuate such sale or syndication, (b) assist Buyer upon its
reasonable request in the preparation of an offering memorandum to be used in
connection with such sale or syndication and (c) make available the officers,
directors and advisors of Seller and its affiliates, from time to time, to
attend and make presentations regarding the business and prospects of Seller
and its affiliates, as appropriate, at a meeting or meetings of prospective
buyers.  Notwithstanding the terms of
Section 8, each participant of Buyer shall be entitled to the additional
compensation and other rights and protections afforded Buyer under Section 8 to
the same extent as Buyer would have been entitled to receive them with respect
to the participation sold to such participant.

30.                               AMENDMENTS,
ETC.

No amendment or waiver of
any provision of this Agreement nor any consent to any failure to comply
herewith or therewith shall in any event be effective unless the same shall be
in writing and signed by Seller and Buyer, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

 46
 

 

31.                               SEVERABILITY

If any provision of
Program Document is declared invalid by any court of competent jurisdiction,
such invalidity shall not affect any other provision of the Program Documents,
and each Program Document shall be enforced to the fullest extent permitted by
law.

32.                               BINDING
EFFECT; GOVERNING LAW

This
Agreement shall be binding and inure to the benefit of the parties hereto and
their respective successors and assigns, except that Seller may not assign or
transfer any of its rights or obligations under this Agreement or any other
Program Document without the prior written consent of Buyer.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

33.                               CONSENT
TO JURISDICTION

SELLER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE PROGRAM DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.  SELLER HEREBY IRREVOCABLY
AND UNCONDITIONALLY CONSENTS, ON BEHALF OF ITSELF AND ITS PROPERTY, TO THE NON
EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR
RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING.  SELLER HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION
SELLER MAY HAVE TO, NON EXCLUSIVE PERSONAL JURISDICTION AND VENUE IN THE COURTS
OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, WITH RESPECT TO ANY DISPUTES ARISING OUT OF OR RELATING
TO THE PROGRAM DOCUMENTS.  SELLER HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER
PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY BUYER IN CONNECTION WITH
THIS AGREEMENT OR THE OTHER PROGRAM DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON
BEHALF OF ITSELF OR ITS PROPERTY, IN THE MANNER SPECIFIED IN THIS SECTION 33
AND TO SELLER’S ADDRESS SPECIFIED IN SECTION 36 OR SUCH OTHER ADDRESS AS SELLER
SHALL HAVE PROVIDED IN WRITING TO BUYER. 
NOTHING IN THIS SECTION 33 SHALL AFFECT THE RIGHT OF THE BUYER TO (I)
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW, OR (II)
BRING ANY ACTION OR PROCEEDING AGAINST SELLER OR ITS PROPERTIES IN THE COURTS
OF ANY OTHER JURISDICTIONS.

 47
 

 

34.                               SINGLE
AGREEMENT

Seller and Buyer
acknowledge that, and have entered hereinto and will enter into each
Transaction hereunder in consideration of and in reliance upon the fact that,
all Transactions hereunder constitute a single business and contractual
relationship and have been made in consideration of each other.  Accordingly, Seller and Buyer each agree (i)
to perform all of its obligations in respect of each Transaction hereunder, and
that a default in the performance of any such obligations shall constitute a
default by it in respect of all Transactions hereunder, and (ii) that payments,
deliveries and other transfers made by any of them in respect of any
Transaction shall be deemed to have been made in consideration of payments,
deliveries and other transfer in respect of any other Transaction hereunder,
and the obligations to make any such payments, deliveries and other transfers
may be applied against each other and netted.

35.                               INTENT

Seller and Buyer
recognize that each Transaction is a “repurchase agreement” as that term is
defined in Section 101 of Title 11 of the United States Code, as amended (“USC”)
(except insofar as the Loans or LLC Interests subject to such Transaction or
the term of such Transaction would render such definition inapplicable), a “forward
contract” as that term is defined in Section 101 of Title 11 of the USC and a “securities
contract” as that term is defined in Section 741 of Title 11 of the USC (except
insofar as the Loans or LLC Interests subject to such Transaction or the term
of such Transaction would render such definition inapplicable).

It is understood that
Buyer’s right to liquidate the Purchased Assets delivered to it in connection
with the Transactions hereunder or to exercise any other remedies pursuant to
Section 20 hereof is a contractual right to liquidate such Transaction as
described in Sections 555 and 559 of Title 11 of the USC.

36.                               NOTICES
AND OTHER COMMUNICATIONS

Except as provided
herein, any notice required or permitted by this Agreement shall be in writing
and shall be effective and deemed delivered only when received by the party to
which it is sent; provided, however, that a facsimile transmission shall be
deemed to be received when transmitted so long as the transmitting machine has
provided an electronic confirmation (without error message) of such
transmission.  Any such notice shall be
sent to a party at the address or facsimile transmission number set forth
below:

if to Loan Seller:

	
  Spirit SPE Warehouse Funding, LLC

  
	
  14631 N. Scottsdale Road

  
	
  Suite 200

  
	
  Scottsdale, Arizona 85254-2711

  
	
  Attention:

  	
  Catherine Stevenson

  
	
  Telephone:

  	
  (480) 606-0820

  
	
  Facsimile:

  	
  (480) 606-0826

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  

 

 48
 

 

 

	
  Kutak Rock LLP

  
	
  1801 California St., Suite 3100

  
	
  Denver, Colorado 80202

  
	
  Attention:

  	
  Paul E. Belitz, Esq.

  
	
  Telephone:

  	
  (303) 297-2400

  
	
  Facsimile:

  	
  (303) 292-7799

  

 

if to LLC Seller:

 

	
  Spirit Finance Acquisitions, LLC

  
	
  14631 N. Scottsdale Road

  
	
  Suite 200

  
	
  Scottsdale, Arizona 85254-2711

  
	
  Attention:

  	
  Catherine Stevenson

  
	
  Telephone:

  	
  (480) 606-0820

  
	
  Facsimile:

  	
  (480) 606-0826

  
	
   

  	
   

  
	
  with a copy to:

  
	
  Kutak Rock LLP

  
	
  1801 California St., Suite 3100

  
	
  Denver, Colorado 80202

  
	
  Attention:

  	
  Paul E. Belitz, Esq.

  
	
  Telephone:

  	
  (303) 297-2400

  
	
  Facsimile:

  	
  (303) 292-7799

  

 

if to Spirit Seller:

 

	
  Spirit Finance Corporation

  
	
  14631 N. Scottsdale Road

  
	
  Suite 200

  
	
  Scottsdale, Arizona 85254-2711

  
	
  Attention:

  	
  Catherine Stevenson

  
	
  Telephone:

  	
  (480) 606-0820

  
	
  Facsimile:

  	
  (480) 606-0826

  
	
   

  	
   

  
	
  with a copy to:

  
	
  Kutak Rock LLP

  
	
  1801 California St., Suite 3100

  
	
  Denver, Colorado 80202

  
	
  Attention:

  	
  Paul E. Belitz, Esq.

  
	
  Telephone:

  	
  (303) 297-2400

  
	
  Facsimile:

  	
  (303) 292-7799

  

 

if to Buyer or Agent:

 

	
  Citigroup Global Markets Realty Corp.

  
	
  390 Greenwich Street

  

 

 49
 

 

 

	
  New York, New York 10013

  
	
  Attention: Christian Anderson

  
	
  Telephone: (212) 723-9714

  
	
  Facsimile: (212) 723-8591

  
	
   

  
	
  Citigroup Global Markets Realty Corp.

  
	
  390 Greenwich Street

  
	
  New York, New York 10013

  
	
  Attention: John Pawlowski

  
	
  Telephone: (212) 723-4928

  
	
  Facsimile: (212) 723-8591

  

 

as such address or
number may be changed by like notice.

37.                               CONFIDENTIALITY

Buyer
acknowledges that Spirit Seller is a public company subject to the Securities
Act of 1933 and Securities Exchange Act of 1934 and that the information
furnished by Spirit Seller to Buyer in the Collection Report, Asset Base
Certificate and otherwise under this Agreement may constitute material
non-public information (“Confidential Information”) within the meaning
of such acts.  Except as consented to by Spirit
Seller, Buyer hereby agrees that it will keep all Confidential Information
confidential and not disclose such Confidential Information to any third party
and will not engage in, directly or indirectly, any transactions involving Spirit
Seller’s publicly traded securities based upon such Confidential Information.
Notwithstanding the foregoing provisions of this Section 37, nothing herein
shall prevent any division or department of Buyer from engaging in any lawful
transaction in Spirit Seller’s publicly traded securities in connection with
the ordinary course of the business of such division or department, provided
that the decision to enter into such transaction is, as required by applicable
law, not based, in whole or in part, on any part of the Confidential
Information that is material non-public information.

This Agreement and its
terms, provisions, supplements and amendments, and transactions and notices
hereunder, are proprietary to Buyer and Agent and shall be held by Seller (and
Seller shall cause Servicer to hold it) in strict confidence and shall not be
disclosed to any third party without the consent of Buyer except for (i)
disclosure to Seller’s direct and indirect parent companies, directors,
attorneys, agents or accountants, provided that such attorneys or accountants
likewise agree to be bound by this covenant of confidentiality or (ii) upon
prior written notice to Buyer, disclosure required by law, rule, regulation or
order of a court or other regulatory body or (iii) to the extent necessary in
dealing with obligors or tenants in connection with Purchased Assets or (iv)
with prior written notice to Buyer, to any approved Hedge Counterparty to the
extent necessary to obtain any Hedge Instrument hereunder or (v) with prior
written notice to Buyer, any required Securities and Exchange Commission or
state securities’ law disclosures or filings; provided, that Spirit Seller
shall not file the Side Letter with the Securities and Exchange Commission or
state securities office, unless otherwise agreed by Buyer in writing, and Spirit
Seller agrees to use best efforts not to file the terms of the Side Letter with
any such filing.  Notwithstanding
anything herein to the contrary, each party (and each employee, representative,
or other agent of each party) may disclose to any and all persons, without limitation
of any kind, the tax treatment and tax structure of the transaction and all 

 50
 

 

materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure. 
For this purpose, tax treatment and tax structure shall not include (i)
the identity of any existing or future party (or any Affiliate of such party)
to this Agreement or (ii) any specific pricing information or other commercial
terms, including the amount of any fees, expenses, rates or payments arising in
connection with the transactions contemplated by this Agreement.

38.                               HEDGE
INSTRUMENTS

Seller shall
notify Buyer two (2) Business Days prior to entering into any Hedge
Instruments.

39.                               DUE
DILIGENCE

Seller agrees to promptly
provide Buyer and its agents with access to, copies of and extracts from any
and all documents, records, agreements, instruments or information (including,
without limitation, any of the foregoing in computer data banks and computer
software systems) relating to its financial condition, the performance of its
obligations under the Program Documents, the documents contained in the
Servicing File or the Purchased Assets in the possession, or under the control,
of Seller.  In addition, Buyer has the
right to perform continuing due diligence reviews of (x) Seller and its
Affiliates, directors, officers, employees and significant shareholders,
including, without limitation, their respective financial condition and
performance of their obligations under the Program Documents, (y) the Servicing
File and the Purchased Assets and (z) Servicer. 
Seller shall also make available to Buyer a knowledgeable financial or
accounting officer for the purpose of answering questions respecting the
Purchased Assets.  Without limiting the
generality of the foregoing, Seller acknowledges that Buyer shall enter into
transactions with Seller based solely upon the information provided by Seller
to Buyer and the representations, warranties and covenants contained herein,
and that Buyer, at its option, has the right at any time to conduct a partial
or complete due diligence review on some or all of the Purchased Assets,
including, without limitation, ordering new credit reports, new Appraisals on
the related Mortgaged Properties and otherwise re-generating the
information used to originate such Purchased Assets.  Seller shall pay Buyer’s out-of-pocket
costs and expenses incurred by Buyer in connection with any due diligence
hereunder.

[Signature Page Follows]

 51

 

IN WITNESS WHEREOF, Buyer and Seller have caused their names to be
signed to this Agreement by their respective officers thereunto duly authorized
as of the date first above written.

	
  

  	
  CITIGROUP GLOBAL MARKETS
  REALTY 

  CORP., as Buyer and Agent, as applicable

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Pawlowski

  
	
   

  	
  Name:  John Pawlowski

  
	
   

  	
  Title:    Authorized Signer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPIRIT FINANCE ACQUISITIONS, LLC, as LLC 

  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Catherine Long

  
	
   

  	
  Name:  Catherine Long

  
	
   

  	
  Title:    Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPIRIT SPE WAREHOUSE FUNDING, LLC, as 

  Loan Sellers

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael T. Bennett

  
	
   

  	
  Name:  Michael T. Bennett

  
	
   

  	
  Title:    Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged and Consented to:

  	
   

  
	
   

  	
   

  
	
  SPIRIT FINANCE CORPORATION, as 

  Guarantor

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Christopher H. Volk

  	
   

  
	
  Name:  Christopher H. Volk

  	
   

  
	
  Title:    President

  	
   

  
				

 

 

	
  

  	
  SPIRIT FINANCE CORPORATION, as Spirit 

  Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Catherine Long

  
	
   

  	
  Name:  Catherine Long

  
	
   

  	
  Title:    Chief Financial
  Officer

  

 

 

Annex I

Buyer Acting as Agent

This Annex I forms a part
of the Master Repurchase Agreement, dated as of October 13, 2006 (the “Agreement”),
among Citigroup Global Markets Realty Corp., Spirit Finance Acquisitions, LLC,
Spirit SPE Warehouse Funding, LLC and Spirit Finance Corporation.  This Annex I sets forth the terms and
conditions governing all transactions in which a party selling assets or buying
assets, as the case may be (“Agent”), in a Transaction is acting as
agent for one or more third parties (each, a “Principal”).  Capitalized terms used but not defined in
this Annex I shall have the meanings ascribed to them in the Agreement.

1.                                       Additional Representations.  Agent hereby makes the following
representations, which shall continue during the term of any Transaction:
Principal has duly authorized Agent to execute and deliver the Agreement on its
behalf, has the power to so authorize Agent and to enter into the Transactions
contemplated by the Agreement and to perform the obligations of Seller or Buyer,
as the case may be, under such Transactions, and has taken all necessary action
to authorize such execution and delivery by Agent and such performance by it.

2.                                       Identification
of Principals.  Agent agrees (a) to
provide the other party, prior to the date on which the parties agree to enter
into any Transaction under the Agreement, with a written list of Principals for
which it intends to act as Agent (which list may be amended in writing from
time to time with the consent of the other party), and (b) to provide the other
party, before the close of business on the next business day after orally
agreeing to enter into a Transaction, with notice of the specific Principal or
Principals for whom it is acting in connection with such Transaction.  If (i) Agent fails to identify such Principal
or Principals prior to the close of business on such next business day or (ii)
the other party shall determine in its sole discretion that any Principal or
Principals identified by Agent are not acceptable to it, the other party may
reject and rescind any Transaction with such Principal or Principals, return to
Agent any Purchased Assets or portion of the Purchase Price, as the case may
be, previously transferred to the other party and refuse any further
performance under such Transaction, and Agent shall immediately return to the
other party any portion of the Purchase Price or Purchased Assets, as the case
may be, previously transferred to Agent in connection with such Transaction; provided, however, that (A) the other
party shall promptly (and in any event within one business day) notify Agent of
its determination to reject and rescind such Transaction and (B) to the extent
that any performance was rendered by any party under any Transaction rejected
by the other party, such party shall remain entitled to any Price Differential
or other amounts that would have been payable to it with respect to such
performance if such Transaction had not been rejected.  The other party acknowledges that Agent shall
not have any obligation to provide it with confidential information regarding
the financial status of its Principals; Agent agrees, however, that it will
assist the other party in obtaining from Agent’s Principals such information
regarding the financial status of such Principals as the other party may
reasonably request.

 1
 

 

3.                                       Limitation of
Agent’s Liability.  The parties
expressly acknowledge that if the representations of Agent under the Agreement,
including this Annex I, are true and correct in all material respects during
the term of any Transaction and Agent otherwise complies with the provisions of
this Annex I, then (a) Agent’s obligations under the Agreement shall not
include a guarantee of performance by its Principal or Principals and (b) the
other party’s remedies shall not include a right of setoff in respect of rights
or obligations, if any, of Agent arising in other transactions in which Agent
is acting as principal.

4.                                       Multiple
Principals.

(a)                                  In
the event that Agent proposes to act for more than one Principal hereunder,
Agent and the other party shall elect whether (i) to treat Transactions under
the Agreement as transactions entered into on behalf of separate Principals or
(ii) to aggregate such Transactions as if they were transactions by a single
Principal.  Failure to make such an
election in writing shall be deemed an election to treat Transactions under the
Agreement as transactions on behalf of a single Principal.

(b)                                 In
the event that Agent and the other party elect (or are deemed to elect) to
treat Transactions under the Agreement as transactions on behalf of separate
Principals, the parties agree that (i) Agent will provide the other party,
together with the notice described in Section 2(b) of this Annex I, notice
specifying the portion of each Transaction allocable to the account of each of
the Principals for which it is acting (to the extent that any such Transaction
is allocable to the account of more than one Principal); (ii) the portion of
any individual Transaction allocable to each Principal shall be deemed a
separate Transaction under the Agreement; (iii) the margin maintenance
obligations of Seller under Section 6 of the Agreement shall be determined on a
Transaction-by-Transaction basis (unless the parties agree to determine such
obligations on a Principal-by-Principal basis); and (iv) Buyer’s and Seller’s
remedies under the Agreement upon the occurrence of an Event of Default shall
be determined as if Agent had entered into a separate Agreement with the other
party on behalf of each of its Principals.

(c)                                  In
the event that Agent and the other party elect to treat Transactions under the
Agreement as if they were transactions by a single Principal, the parties agree
that (i) Agent’s notice under Section 2(b) of this Annex I need only identify
the names of its Principals but not the portion of each Transaction allocable
to each Principal’s account; (ii) the margin maintenance obligations of Seller
under Section 6 of the Agreement shall, subject to any greater requirement
imposed by applicable law, be determined on an aggregate basis for all
Transactions entered into by Agent on behalf of any Principal; and (iii) Buyer’s
and Seller’s remedies upon the occurrence of an Event of Default shall be
determined as if all Principals were a single Seller or Buyer, as the case may
be.

(d)                                 Notwithstanding
any other provision of the Agreement (including, without limitation, this Annex
I), the parties agree that any Transactions by Agent on 

 2
 

 

behalf of an employee
benefit plan under ERISA shall be treated as Transactions on behalf of separate
Principals in accordance with Section 4(b) of this Annex I (and all margin
maintenance obligations of the parties shall be determined on a
Transaction-by-Transaction basis).

5.                                       Interpretation
of Terms.  All references to “Seller”
or “Buyer”, as the case may be, in the Agreement shall, subject to the
provisions of this Annex I (including, among other provisions, the limitations
on Agent’s liability in Section 3 of this Annex I), be construed to reflect
that (i) each Principal shall have, in connection with any Transaction or
Transactions entered into by Agent on its behalf, the rights, responsibilities,
privileges and obligations of a “Seller” or “Buyer”, as the case may be,
directly entering into such Transaction or Transactions with the other party
under the Agreement, and (ii) Agent’s Principal or Principals have designated
Agent as their sole agent for performance of Seller’s obligations to Buyer or
Buyer’s obligations to Seller, as the case may be, and for receipt of
performance by Buyer of its obligations to Seller or Seller of its obligations
to Buyer, as the case may be, in connection with any Transaction or
Transactions under the Agreement (including, among other things, as Agent for
each Principal in connection with transfers of Securities, cash or other
property and as agent for giving and receiving all notices under the
Agreement).  Both Agent and its Principal
or Principals shall be deemed “parties” to the Agreement and all references to
a “party” or “either party” in the Agreement shall be deemed revised
accordingly.

 

 3

 

EXHIBIT A

RESERVED

 

 A-1

 

EXHIBIT B

ASSET BASE CERTIFICATE

SPIRIT FINANCE ACQUISITIONS, LLC/

SPIRIT FINANCE CORPORATION/

SPIRIT SPE WAREHOUSE FUNDING, LLC

ASSET BASE CERTIFICATE

AS OF

[Date]

 

	
   

  	
   

  	
   

  	
   

  	
  TOTAL LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchased Assets Collateral Value as shown on Asset Schedule (Appraised
  Values):

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a) Total Collateral
  Value =

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b) Less Collateral
  Values that are not “Eligible Assets” =

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c) Total Eligible
  Collateral Value

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Master Repurchase Agreement Advance Rate

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Asset Base (up to facility limit of $                  )

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchased Assets Outstanding (prior Asset Base Certificate):

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase Request As Of:

  	
  [Date]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal Repayments

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchased Assets Outstanding as of

  	
  [Date]

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Excess Availability (Deficiency) versus
  Borrowing Base

  	
   

  	
   

  	
   

  	
  $

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Aggregate Purchase Price

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Unused Aggregate Purchase Price

  	
   

  	
   

  	
   

  	
  $

  	
  (               

  	
  )

  

 

 

SCHEDULE A

SUBSIDIARIES

Spirit SPE Warehouse Funding, LLC

(a Delaware LLC)

Spirit Finance Acquisitions, LLC

(a Delaware LLC)

Spirit Management Company

(a Maryland Corporation)

Spirit Property Holdings, LLC

(a Delaware LLC)

Spirit Pocono Corporation

(a Pennsylvania Corporation)

Spirit SPE Property Holdings II, LLC

(a Delaware LL)

Spirit SPE Canton LLC

(a Delaware LLC)

Spirit Master Funding, LLC

(a Delaware LLC)

Spirit Master Funding II, LLC

(a Delaware LLC)

Spirit Master Funding III, LLC

(a Delaware LLC)

Spirit SPE Missoula, LLC

 i
 

 

(a Delaware LLC)

Spirit SPE Raleigh, LLC

(a Delaware LLC)

Spirit SPE Johnston, LLC

(a Delaware LLC)

Spirit SPE Columbia, LLC

(a Delaware LLC)

Spirit SPE US Plainview, LLC (1)

(a Delaware LLC)

Spirit SPE Covina, LLC

(a Delaware LLC)

Spirit SPE Worcester, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2005-1, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2005-2, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2005-3, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2005-5, LLC

(a Delaware LLC)

Spirit SPE General Holdings, LLC

(a Delaware LLC)

Spirit Limited Holdings, LLC

(a Delaware LLC)

 ii
 

 

Spirit SPE General Holdings II, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2005-4, LP

(a Delaware limited partnership)

Spirit SPE US Vernon, LP

(a Delaware limited partnership)

Spirit SPE US Levelland, LP

(a Delaware limited partnership)

Spirit SPE US Lubbock, LP

(a Delaware limited partnership)

Spirit SPE US Burkburnett, LP

(a Delaware limited partnership)

Spirit SPE US Wichita Falls, LP

(a Delaware limited partnership)

Spirit SPE US Childress, LP

(a Delaware limited partnership)

Spirit SPE US Amarillo 522, LP

(a Delaware limited partnership)

Spirit SPE US Amarillo 526, LP

(a Delaware limited partnership)

Spirit SPE US Amarillo 527, LP

(a Delaware limited partnership)

Spirit SPE US Amarillo 533, LP

(a Delaware limited partnership)

Spirit SPE US Snyder, LP

 iii
 

 

(a Delaware limited partnership)

Spirit SPE US Perryton, LP

(a Delaware limited partnership)

Spirit SK Acquisition, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2005-6, LLC

(a Delaware LLC)

Spirit SPE SK Acquisition, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2006-1, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2006-2, LLC

(a Delaware LLC)

Spirit SPE Portfolio 2006-3, LLC

(a Delaware LLC)

 

 iv

 

APPENDIX A

REPRESENTATIONS
AND WARRANTIES

 

 i

 

 

Representations, Warranties and Indemnities in Favor of

Buyer and Subsequent Purchasers with Respect to the Loans and the LLC Interests

(I)            By delivering a
Transaction Notice, Seller shall be deemed to represent and warrant to Buyer,
unless otherwise disclosed to and approved by Buyer, with respect to each such
Loan transferred on any Purchase Date and, unless otherwise expressly disclosed
by Seller in the list of exceptions to these representations and warranties
listed in the schedule of exceptions delivered by Seller (the “Exception
Schedule”) and approved by Buyer, as of each Purchase Date (or such other
date as specified below), as follows:

(a)           Immediately prior to the transfer and
assignment of the Loan to Buyer, Seller had good and insurable fee title to,
and was the sole owner and holder of, the Loan, free and clear of any and all
liens, encumbrances and other interests on, in or to the Loan.  Unless the Mortgage is in the name of
Collateral Agent, the related Assignment of Mortgage and assignment of leases
and rents (if any), constitutes the legal, valid and binding assignment of the
Mortgage and the related assignment of leases and rents from Seller to
Collateral Agent on behalf of Buyer. The endorsement of each Note is genuine,
properly endorsed and constitutes the legal, valid and binding assignment of
the Note and, together with the Assignment of Mortgage and assignment of leases
and rents (if any), legally and validly conveys all right, title and interest
in the subject Loan from Seller to Buyer.

(b)           Seller has full right and authority
to sell, contribute, assign and transfer the Loan to Buyer.  The entire agreement with the related
Borrower (whether originated by Seller or a different originator) is contained
in the Loan Documents and there are no warranties, agreements or options
regarding such Loan or the related Mortgaged Property not set forth
therein.  Other than the Loan Documents,
there are no agreements between any predecessor in interest in the Loan and
Borrower.

(c)           The information pertaining to the
Loan set forth in the Loan Schedule is true and correct in all material
respects.  The Loan is an Eligible Asset.
The Loan was originated or acquired in accordance with, and fully complies
with, the Underwriting Guidelines in all material respects.  The related Custodian’s Loan File contains
all of the documents and instruments required to be contained therein.

(d)           The following (“Permitted
Exceptions”): (i) liens for real estate taxes and special assessments not
yet due and payable or due but not yet delinquent, (ii) covenants, conditions
and restrictions, rights-of-way, easements and other matters of public record,
such exceptions being of a type or nature that are acceptable to mortgage
lending institutions generally, (iii) certain purchase options and (iv)
other matters to which like properties are commonly subject, which matters
referred to in clauses (i), (ii), (iii) and (iv) do not, individually or in the
aggregate, materially interfere with the value of the Mortgaged Property, do
not materially interfere or restrict the current use or operation of the
Mortgaged Property relating to the Loan and do not materially interfere with
the 

 1
 

 

security intended to be provided by the
Mortgage, the current use or operation of the Mortgaged Property or the current
ability of the Mortgaged Property to generate net operating income sufficient
to service the Loan.  Financing
Statements have been filed and/or recorded (or, if not filed and/or recorded,
have been submitted in proper form for filing and recording), in all public
places necessary to perfect a valid first priority security interest in all
items of personal property pledged by Borrower, if any, in connection with such
Loan and in all cases, subject to any applicable purchase money security interest
and to the extent perfection may be effected pursuant to applicable law solely
by recording or filing Financing Statements.

(e)           With respect to each Loan, the
related Mortgage constitutes a valid, legally binding and enforceable first
priority lien upon the related Mortgaged Property securing such Loan and the
improvements located thereon and forming a part thereof, prior to all other
liens and encumbrances, except for Permitted Exceptions.  The lien of the Mortgage is insured by an
ALTA lender’s title insurance policy (“Title Policy”), or its equivalent
as adopted in the applicable jurisdiction, issued by a nationally recognized
title insurance company, insuring the originator of the Loan, its successors
and assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Loan after all advances of principal, subject only to
Permitted Exceptions (or, if a title insurance policy has not yet been issued
in respect of the Loan, a policy meeting the foregoing description is evidenced
by a commitment for title insurance “marked up” (or by “pro-forma” otherwise
agreed to in a closing instruction letter countersigned by the title company)
as of the closing date of the Loan). 
Each Title Policy (or, if it has yet to be issued, the coverage to be
provided thereby) is in full force and effect, all premiums thereon have been
paid and no material claims have been made thereunder and no claims have been
paid thereunder.  Seller has not, by act
or omission, done anything that would materially impair the coverage under such
Title Policy.  Immediately following the
transfer and assignment of the Loan to Buyer, such Title Policy (or, if it has
yet to be issued, the coverage to be provided thereby) will inure to the
benefit of Buyer without the consent of or notice to the insurer.

(f)            Seller has not waived any material
default, breach, violation or event of acceleration existing under the Mortgage
or Mortgage Note.

(g)           Borrower has not waived any material
default, breach, violation or event of acceleration by Tenant existing under
the Lease.

(h)           There is no valid offset, defense or
counterclaim to the payment or performance obligations of the Loan.

(i)            The Mortgaged Property securing any
Loan is free and clear of any damage that would materially and adversely affect
its value as security for the Loan.  No
proceeding for the condemnation of all or any material portion of the Mortgaged
Property has been commenced and the Mortgaged Property is free and clear of any
damage that would materially and adversely affect the value or use of such
Mortgaged Property.

 2
 

 

(j)            The Loan complied with all
applicable usury laws in effect at its date of origination.

(k)           The proceeds of the Loan have been
fully disbursed and there is no requirement for future advances thereunder.  All costs, fees and expenses incurred in
making, closing and recording the Loan, including, but not limited to, mortgage
recording taxes and recording and filing fees relating to the origination of
such Loan, have been paid.  Any and all
requirements as to completion of any on-site or off-site improvement by
Borrower and as to disbursements of any escrow funds therefor that were to have
been complied with have been complied with.

(l)            Borrower under the related Mortgage
Note, Mortgage and all other Loan Documents had the power, authority and legal
capacity to enter into, execute and deliver the same, and, as applicable, such
Mortgage Note, Mortgage and Loan Documents have been duly authorized, properly
executed and delivered by the parties thereto, and each is the legal, valid and
binding obligation of the maker thereof (subject to any non recourse provisions
contained in any of the foregoing agreements and any applicable state anti
deficiency legislation), enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights of
creditors generally and by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law).

(m)          All improvements upon the Mortgaged
Property securing any Loan are insured under insurance policies (as described
in Schedule A the “Insurance Schedule”). 
The Loan documents require Borrower to maintain, or cause Tenant to
maintain, and the Lease requires Tenant to maintain insurance coverage
described on the Insurance Schedule and all insurance required under applicable
law including, without limitation, insurance against loss by hazards with extended
coverage in an amount (subject to a customary deductible) at least equal to the
full replacement cost of the improvements located on such Mortgaged Property,
including without limitation, flood insurance if any portion of the
improvements located upon the Mortgaged Property was, at the time of the
origination of the Loan, in a flood zone area as identified in the Federal
Register by the Federal Emergency Management Agency as a 100-year flood zone or
special hazard area, and flood insurance was available under the then current
guidelines of the Federal Insurance Administration is in effect with a
generally acceptable insurance carrier. 
The Loan Documents require Borrower to maintain, or to cause Tenant to
maintain on the Mortgaged Property securing any Loan a fire and extended perils
insurance policy, in an amount not less than the replacement cost and the
amount necessary to avoid the operation of any co-insurance provisions with
respect to the Mortgaged Property. All such insurance policies contain a standard
“additional insured” clause (or similar clause) naming Borrower (as landlord
under the related Lease), its successors and assigns (including, without
limitation, subsequent owners of the Mortgaged Property), as additional
insured, and may not be reduced, terminated or canceled without thirty (30)
days’ prior written notice to the additional insured.  In addition, the Mortgage requires Borrower
to (i) cause Seller, as the Mortgagee, to be named as an additional insured
mortgagee, and (ii) maintain (or to require Tenant to 

 3
 

 

maintain) in respect of the Mortgaged
Property workers’ compensation insurance (if applicable), commercial general,
liability insurance in amounts generally required by Seller, and at least six
(6) months rental or business interruption insurance.  The related Loan Documents obligate Borrower
to maintain such insurance and, at such Borrower’s failure to do so, authorizes
the mortgagee to maintain such insurance at Borrower’s cost and expense and to
seek reimbursement therefor from such Borrower. 
Each such insurance policy, as applicable, is required to name the
holder of the Mortgage as an additional insured or contain a mortgagee
endorsement naming the holder of the Mortgage as loss payee and requires prior
notice to the holder of the Mortgage of termination or cancellation, and no
such notice has been received, including any notice of nonpayment of premiums,
that has not been cured.  There have been
no acts or omissions that would impair the coverage of any such insurance
policy or the benefits of the mortgage endorsement.  All insurance contemplated in this section is
maintained with insurance companies with a General Policy Rating of “A” or
better by S&P or A:VI or better by Best’s Insurance Guide and are licensed
to do business in the state wherein Borrower or the Mortgaged Property subject
to the policy, as applicable, is located.

(n)           The Mortgaged Property securing any
Loan was subject to one or more environmental site assessments or reports (or
an update of a previously conducted assessment or report) prior to the
origination of such Loan, and Seller has no knowledge of any material and
adverse environmental conditions or circumstance affecting such Mortgaged
Property that was not disclosed in the related assessment or report(s).  There are no material and adverse
environmental conditions or circumstances affecting the Mortgaged Property
securing any such Loan other than, with respect to any adverse environmental
condition described in such report, those conditions for which remediation has
been completed and, thereafter, to the extent that such report or remediation
program so recommended, (i) a program of annual integrity testing and/or
monitoring was recommended and implemented in connection with the Mortgaged
Property securing any such Loan or an adjacent or neighboring property; (ii) an
operations and maintenance plan or periodic monitoring of such mortgaged
Property or nearby properties was recommended and implemented or (iii) a
follow-up plan was otherwise required to be taken under CERCLA (as defined
below) or under regulations established thereunder from time to time by the
Environmental Protection agency and such plan has been implemented in the case
of (i), (ii) and (iii) above, Seller determined in accordance with the Underwriting
Guidelines that adequate funding was available for such program or plan, as
applicable.  Seller has not taken any
action with respect to the Loan or the Mortgaged Property securing such Loan
that could subject Buyer, or its successors and assigns in respect of the Loan,
to any liability under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (“CERCLA”) or any other applicable
federal, state or local environmental law, and Seller has not received any
actual notice of a material violation of CERCLA or any applicable federal,
state or local environmental law with respect to the Mortgaged Property
securing such Loan that was not disclosed in the related report.  The Mortgage or other Loan Documents require
Borrower (and the Leases require Tenant) to comply with all applicable federal,
state and local environmental laws and regulations.

 4
 

 

(o)           The Loan is not cross-collateralized
with any mortgage loan that is not a Purchased Asset.

(p)           The terms of the Mortgage, Mortgage
Note, and other Loan Documents have not been impaired, waived, altered,
modified, satisfied, canceled or subordinated in any material respect, except
by written instruments that are part of the Custodian’s Loan File, recorded or
filed in the applicable public office if necessary to maintain the priority of
the lien of the related Mortgage, delivered to Buyer or its designee.

(q)           There are no delinquent taxes, ground
rents, assessments for improvements or other similar outstanding lienable
charges affecting the Mortgaged Property which are or may become a lien of
priority equal to or higher than the lien of the Mortgage.  For purposes of this representation and
warranty, real property taxes and assessments shall not be considered unpaid
until the date on which interest and/or penalties would be payable thereon.

(r)            Except for Loans secured by Ground
Leases, the interest of Borrower in the Mortgaged Property consists of a fee
simple estate in real property.

(s)           Each Loan is a whole loan and not a
participation interest.

(t)            The assignment of the Mortgage
referred to in the Custodian’s Loan File constitutes the legal, valid and
binding assignment of such Mortgage from the relevant assignor to Buyer or to
Collateral Agent.  The Assignment of
Leases and Rents set forth in the Mortgage or separate from the Mortgage and
related to and delivered in connection with each Loan establishes and creates a
valid, subsisting and, subject only to Permitted Exceptions, enforceable first
priority lien and first priority security interest in Borrower’s interest in
all leases, subleases, licenses or other agreements pursuant to which any
person is entitled to occupy, use or possess all or any portion of the real
property subject to the Mortgage, and each assignor thereunder has the full
right to assign the same.  The related
assignment of Mortgage or any assignment of leases and rents not included in a
Mortgage, executed and delivered in favor of Buyer is in recordable form and
constitutes a legal, valid and binding assignment, sufficient to convey to the
assignee named therein all of the assignor’s right, title and interest in, to
and under such assignment of leases and rents.

(u)           All escrow deposits relating to the
Loan that are required to be deposited with the related Seller or its agent
have been so deposited.

(v)           As of the date of origination of such
Loan and, as of the Transfer Date, as the case may be, the Mortgaged Property
securing such Loan was and is free and clear of any mechanics’ and materialmen’s
liens or liens in the nature thereof which create a lien prior to that created
by the Mortgage, except those which are insured against by the Title Policy
referred to in (e) above.

(w)          As of the date of the origination of
the Loan, no improvement that was included for the purpose of determining the
appraised value of the related Mortgaged 

 5
 

 

Property securing such Loan at the time of
origination of the Loan lay outside the boundaries and building restriction
lines of such property in any way that would materially and adversely affect
the value of such Mortgaged Property or the ability to operate the Mortgaged
Property under the related Lease (unless affirmatively covered by the title
insurance referred to in paragraph (e) above), and no improvements on adjoining
properties encroached upon such Mortgaged Property to any material extent.

(x)            (i) There exists no material
default, breach or event of acceleration under the Loan, the Master Loan
Agreement or any of the Loan Documents or the Lease, (ii) there exists no event
(other than payments due but not yet delinquent) that, with the passage of time
or with notice and the expiration of any grace or cure period, would constitute
such a material default, breach or event of acceleration and (iii) no payment
on any Loan is, or has previously been 30 or more days delinquent, however,
that this representation and warranty does not cover any default, breach or
event of acceleration that specifically pertains to any matter otherwise
covered or addressed by any other representation and warranty made by Seller
with respect to the Loans.

(y)           In connection with the origination of
each Loan, Seller inspected or caused to be inspected the Mortgaged Property
securing the Loan by inspection, appraisal or otherwise as required in Seller’s
Underwriting Guidelines then in effect.

(z)            The Loan contains no equity
participation by or shared appreciation rights in the lender or beneficiary
under the Mortgage, and does not provide for any contingent or additional
interest in the form of participation in the cash flow of the Mortgaged
Property securing the Loan, or for negative amortization.

(aa)         No holder of the Loan has advanced
funds or induced, solicited or knowingly received any advance of funds from a
party other than the owner of the Mortgaged Property securing the Loan,
directly or indirectly, for the payment of any amount required by the Loan
(other than amounts paid by Tenant as specifically provided under the related
Lease).

(bb)         To Seller’s knowledge, based on due
diligence customarily performed in the origination or acquisition of comparable
mortgage loans by Seller, as of the date of origination or acquisition of the
Loans, the related Borrowers were in compliance with all applicable laws
relating to the ownership and operation of the Mortgaged Properties securing
the Loan as they were then operated and were in possession of all material
licenses, permits and authorizations required by applicable laws for the
ownership and operation of such Mortgaged Properties as they were operated;
and, to Seller’s knowledge, (1) Tenant is not in default of its obligations
under any such applicable license, permit or agreement and (2) each such
license, permit and agreement is in full force and effect.  With respect to Mortgaged Properties that are
operated as franchised properties, and except with respect to Loans for which
the related Tenant is the franchisor, Tenant of such Mortgaged Property has
entered into a legal, valid, and binding franchise agreement and such Tenant
has represented in the applicable lease documents that, as of the date of
origination or acquisition of the Loan, there were no defaults under the
franchise agreement by such Tenant.

 

 6

 

 

(cc)         The origination, servicing and
collection practices Seller used with respect to the Loan, have complied with
applicable law in all material respects and are consistent and in accordance
with the terms of the related Loan Documents and in accordance with the
applicable servicing standard and customary industry standards.

(dd)         The Mortgage or Mortgage Note, together
with applicable state law, contains customary and enforceable provisions
(subject to the exceptions set forth in paragraph (l) above) such as to render
the rights and remedies of the holders thereof adequate for the practical
realization against the Mortgaged Property securing the Loan of the principal
benefits of the security intended to be provided thereby, including the right
of foreclosure under the laws of the state in which the Mortgaged Property
securing the Loan is located governing foreclosures of mortgages and deeds of
trust under power of sale.

(ee)         The Mortgage provides that insurance
proceeds and condemnation proceeds will be applied for one of the following
purposes: either to restore or repair the Mortgaged Property securing the Loan,
to repay the principal of the Loan or as otherwise directed by the holder of
such Mortgage.

(ff)           There are no actions, suits, legal,
arbitration or administrative proceedings or investigations by or before any
court or governmental authority or, to the best of Seller’s knowledge, pending
against or affecting Borrower, the Mortgaged Property securing the Loan that,
if determined adversely to such Borrower, Mortgaged Property securing the Loan,
would materially and adversely affect the value of the Mortgaged Property
securing the Loan or the ability of Borrower to pay principal, interest or any
other amounts due under the Loan or the Lease, as applicable.

(gg)         If the Mortgage is a deed of trust, a
trustee, duly qualified under applicable law to serve as such, is properly
designated and serving under such Mortgage. 
Except in connection with a trustee’s sale or as otherwise required by
applicable law, after default by Borrower, no fees or expenses are payable to
such trustee.

(hh)         Except in cases where either (i) a
release of a portion of the Mortgaged Property securing the Loan was
contemplated at origination of the Loan and such portion was not considered
material for purposes of  underwriting
the Loan, or (ii) release is conditioned upon the satisfaction of certain
underwriting and legal requirements and the payment of a release price, the
Mortgage Note or Mortgage do not require the holder thereof to release all or
any portion of the Mortgaged Property securing the Loan from the lien of the
Mortgage except upon payment in full of all amounts due under the Loan.

(ii)           The Mortgage does not permit the
Mortgaged Property securing the Loan to be encumbered by any lien junior to or
of equal priority with the lien of the Mortgage (excluding any lien relating to
another Loan that is cross collateralized with the Loan) without the prior
written consent of the holder thereof.

 7
 

 

(jj)           Borrower is not a debtor in any state
or federal bankruptcy or insolvency proceeding.

(kk)         As of the date of origination or
acquisition of each Mortgage by Seller, each Borrower which is not a natural
person was duly organized and validly existing under the laws of the state of
its jurisdiction.

(ll)           The Loan contains provisions for the
acceleration of the payment of the unpaid principal balance of the Loan if,
without complying with the requirements of the Loan, the Mortgaged Property
securing the Loan, or any controlling interest in Borrower, is directly or
indirectly transferred or sold.

(mm)       The Loan Documents for each of the Loans
provide that Borrower is to provide periodic financial and operating reports
including, without limitation, annual profit and loss statements, statements of
cash flow and other related information that Buyer reasonably requests from
time to time.

(nn)         To Seller’s actual knowledge, based
upon zoning letters, zoning report, the title insurance policy insuring the
lien of the Mortgage, historical use and/or other due diligence customarily
performed by Seller in connection with the origination of the Loan, the
improvements located on or forming part of such Mortgaged Property securing the
Loan comply in all material respects with applicable zoning laws and ordinances
(except to the extent that they may constitute legal non-conforming uses).

(oo)         Each Mortgaged Property is located
within one of the 50 United States or the District of Columbia.

(pp)         With respect to Loans and Net Lease
Loans secured by Mortgaged Property located in California or “seismic zones” 3
or 4, (i) the related Borrower has obtained, and is required under the Loan
Documents to maintain, earthquake insurance with respect to the Improvements on
such Mortgaged Property or is required to cause Tenant to maintain (and Tenant
has obtained) earthquake insurance if such Mortgaged Property is located in any
such area or (ii) Qualified Originator’s investment committee has approved
self-insurance by Borrower with respect to earthquake risk or (iii) a seismic
study was performed in connection with the origination of such Loan and such
study indicates a probable maximum loss of less than 20% of the appraised value
of such Mortgaged Property.

(qq)         Seller does not have knowledge of any
circumstance or condition with respect to such Loan, the Mortgaged Property
securing the Loan, the Lease or Borrower’s or Tenant’s credit standing that
could reasonably be expected to cause Buyer to regard such Loan as unacceptable
security, cause such Loan or Lease to become delinquent or have a material
adverse effect on the value or marketability of such Loan.

(rr)           The Mortgaged Property securing the
Loan has adequate rights of access to public rights-of-way and is served by
utilities, including, without limitation, adequate water, sewer, electricity,
gas, telephone, sanitary sewer, and storm drain facilities. All public
utilities necessary to the continued use and enjoyment of the 

 8
 

 

Mortgaged Property securing the Loan as
presently used and enjoyed are located in such public right-of-way abutting
such Mortgaged Property or are the subject of access easements for the benefit
of the Mortgaged Property, and all such utilities are connected so as to serve
such Mortgaged Property without passing over other property or are the subject
of access easements for  the benefit of
such Mortgaged Property. All roads necessary for the full use of the Mortgaged
Property securing the Loan for its current purpose have been completed and
dedicated to public use and accepted by all governmental authorities or are the
subject of access easements for the benefit of such Mortgaged Property.

(ss)         With respect to any Loan where all or a
material portion of the Mortgaged Property securing such Loan is a leasehold
estate, and the related Mortgage does not also encumber the related lessor’s
fee interest in such Mortgaged Property, based upon the terms of the Ground
Lease and any estoppel letter or other writing received from the Ground Lessor
included in the related Custodian’s Loan File and, if applicable, the related
Mortgage:

(1)           The Ground Lease or a memorandum
regarding such Ground Lease has been duly recorded.  The Ground Lessor has permitted the interest
of the Ground Lessee to be encumbered by the related Mortgage.  To the best of Seller’s knowledge, there has
been no material change in the terms of the Ground Lease since its recordation,
except by any written instruments which are included in the related Custodian’s
Loan File.

(2)           The Ground Lease may not be amended,
modified, canceled or terminated without the prior written consent of the
lender and that any such action without such consent is not binding on the
lender, its successors or assigns.

(3)           The Ground Lease has an original term
(or an original term plus one or more optional renewal terms, which, under all
circumstances, may be exercised, and is enforceable, by the lender) that
extends not less than 20 years beyond the stated maturity of the related Loan.

(4)           Based on the title insurance policy
referenced in (e) above, the Ground Leasehold interest is not subject to any
liens or encumbrances superior to, or of equal priority with, the Mortgage,
subject to Permitted Encumbrances and liens that encumber the Ground Lessor’s
fee interest.

(5)           The Ground Lease is assignable to the
lender and its assigns without the consent of the lessor thereunder.

(6)           The Ground Lease is in full force and
effect and no default has occurred under the Ground Lease and there is no
existing condition which, but for the passage of time or the giving of notice,
would result in a material default under the terms of the Ground Lease.

 9
 

 

(7)           The Ground Lessor is required to give
notice of any default by the related lessee to the lender.

(8)           The lender is permitted a reasonable
opportunity (including, where necessary, sufficient time to gain possession of
the interest of the lessee under the Ground Lease through legal proceedings, or
to take other action so long as the lender is proceeding diligently) to cure
any default under the Ground Lease, which is curable after the receipt of notice
of any default, before the Ground Lessor thereunder may terminate the Ground
Lease.

(9)           Either (i) the Ground Lease does not impose
restrictions on subletting or (ii) the Ground Lessor has consented to the
existing Ground Lease with respect to the related Mortgaged Property securing
the related Loan.  The Ground
Lessor is not permitted to disturb the possession, interest or quiet enjoyment
of any subtenant of the lessee in the relevant portion of the Mortgaged
Property subject to the Ground Lease for any reason, or in any material manner,
which would adversely affect the security provided by the related Mortgage.

(10)         Any related insurance proceeds or
condemnation award (other than in respect of a total or substantially total
loss or taking) is required to be applied either to the repair or restoration
of all or part of the related Mortgaged Property, with the lender or a trustee
appointed by it having the right to hold and disburse such proceeds as repair
or restoration progresses, or to the payment of the outstanding principal
balance of the Loan, together with any accrued interest, except that in the
case of condemnation awards, the Ground Lessor may be entitled to a portion of
such award.

(11)         Any related insurance proceeds, or
condemnation award in respect of a total or substantially total loss or taking
of the related Mortgaged Property is required to be applied first to the
payment of the outstanding principal balance of the Loan, together with any
accrued interest (except as provided by applicable law or in cases where a
different allocation would not be viewed as commercially unreasonable by any
institutional investor, taking into account the relative duration of the Ground
Lease and the related Mortgage and the ratio of the market value of the related
Mortgaged Property to the outstanding principal balance of such Loan).  Until the principal balance and accrued
interest are paid in full, neither the lessee nor the Ground Lessor under the
Ground Lease has an option to terminate or modify the Ground Lease without the
prior written consent of the lender as a result of any casualty or partial
condemnation, except to provide for an abatement of the rent.

(12)         Provided that the lender cures any defaults which are
susceptible to being cured, the Ground Lessor has agreed to enter into a 

 10
 

 

new lease upon
termination of the Ground Lease for any reason, including rejection of the
Ground Lease in a bankruptcy proceeding.

(tt)           None of the Loans are construction
loans.

(uu)         Each Lease for the related Mortgaged Property
was not delinquent (giving effect to any applicable grace period) in the
payment of any monthly Lease payments (other than percentage rents that are
being recalculated with respect to certain Leases set forth in the Lease
Schedule) as of the Closing Date, and has not been during the time owned by
Seller, 30 days or more delinquent in respect of any monthly Lease payment
required thereunder.

(vv)         Lessor estoppels containing protection
provisions have been obtained from the owner of the fee simple interest in each
Mortgaged Property in which Seller has only a ground leasehold interest.

(ww)       Neither each Lease nor any other
agreement, document or instrument executed in connection with such Lease has
been waived, modified, altered, satisfied, cancelled or subordinated in any
material respect, and such Lease has not been terminated or cancelled, nor has
any instrument been executed that would effect any such waiver, modification,
alteration, satisfaction, termination, cancellation, subordination or release,
except in each case by a written instrument that is part of the related
Custodian’s Loan File.

(xx)          The Loan is not a Defaulted Loan or a
Delinquent Loan as of the Closing Date.

(yy)         There are no pending actions, suits or
proceedings by or before any court or governmental authority against or
affecting, any Lease, such Mortgaged Property or, to Seller’s knowledge,
Tenant, that is reasonably likely to be determined adversely and, if determined
adversely, would materially and adversely effect the value of the Lease or use
or value of the Mortgaged Property, or the ability of Tenant to pay any amounts
due under the Lease.

(zz)          All of the material improvements built
or to be built on the Mortgaged Property that were included for the purpose of
determining the appraised value of the Mortgaged Property lay within the
boundaries of such Mortgaged Property and there are no encroachments into the
building setback restriction lines of such Mortgaged Property in any way that
would materially and adversely affect the value of the Mortgaged Property or
the ability of Tenant to pay any amounts due under the Lease (unless
affirmatively covered in the applicable Title Policy described in (e) above.)

(aaa)       There is no valid dispute, claim, offset,
defense or counterclaim to Seller’s rights in the Lease.

(bbb)      Each Lease or other agreement, document or
instrument executed in connection with such Lease is the legal, valid and
binding and enforceable obligation 

 11
 

 

of Tenant (subject to certain creditors’
rights exceptions and other exceptions of general application) and is in full
force and effect.

(ccc)       Each Lease, together with applicable
state law, contains customary and enforceable provisions such as to render the
rights and remedies of the lessors thereof adequate for the practical
realization against the related Mortgaged Property of the principal benefits of
the security intended to be provided thereby.

(ddd)      With respect to each Mortgaged Property:

(1)           such Mortgaged Property is not
subject to any lease other than a sublease and/or the related Lease; no person
has any possessory interest in, or right to occupy, the leased property except
under and pursuant to the Lease or such sublease; Tenant (or sub-tenant) is in
occupancy of the Mortgaged Property and is paying rent pursuant to the Lease;
and, in the case of any sublease, Tenant remains primarily liable on the Lease;

(2)           except with respect to those
Properties with respect to which Tenant can terminate the related Lease during
the last forty-two (42) months of the lease term in the event of a casualty and
any insurance proceeds related thereto are payable to Tenant, the obligations
of Tenant, including, but not limited to, the obligation to pay fixed and
additional rent, are not affected by reason of: any damage to or destruction of
any portion of the leased property; any taking of the leased property or any
part thereof by condemnation or otherwise; or any prohibition, limitation,
interruption, cessation, restriction, prevention or interference of Tenant’s
use, occupancy or enjoyment of the leased property, except Tenant’s rights to
abate or terminate its obligation to pay fixed or additional rent are coupled
with insurance proceeds or condemnation awards going to the lessor; or the
right to abate as a result of a landlord’s default;

(3)           Seller as lessor under the Lease does
not have any monetary obligations under the Lease that have not been satisfied;

(4)           Tenant has not been released, in
whole or in part, from its obligations under the terms of the Lease;

(5)           all obligations related to the
initial construction of the improvements on the Mortgaged Property have been
satisfied and except for the obligation to rebuild such improvements after a
casualty (which obligation is limited by available insurance proceeds), Seller
does not have any nonmonetary obligations under the Lease and has made no
representation or warranty under the Lease, the breach of which would result in
the abatement of rent, a right of setoff or termination of the Lease;

 

 12

 

 

(6)           there is no right of rescission,
set-off, abatement (except in the case of casualty or condemnation),
diminution, defense or counterclaim to the Lease, nor does  the operation of any of the terms of the
Lease, or the exercise of any rights thereunder, render the Lease
unenforceable, in whole or in part, or subject to any right of rescission,
set-off, abatement, diminution, defense or counterclaim, and no such right has
been asserted;

(7)           Tenant has agreed to indemnify the
lessor from any claims of any nature relating to the Lease and the related
leased property other than the lessor’s gross negligence or willful misconduct,
including, without limitation, arising as a result of violations of
environmental and hazardous waste laws resulting from Tenant’s operation of the
property;

(8)           any obligation or liability imposed
on the lessor by any easement or reciprocal easement agreement is also an
obligation of Tenant under the Lease;

(9)           Tenant is required to make rental
payments as directed by the lessor and its successors and assigns; and

(10)         except in certain cases where Tenant
may exercise a right of first refusal, the Lease is freely assignable by the
lessor and its successors and assigns to any person without the consent of
Tenant, and in the event the lessor’s interest is so assigned, Tenant is
obligated to recognize the assignee as lessor under such Lease, whether under
the Lease or by operation of law.

(eee)       In connection with Leases with a
guaranty:

(1)           such guaranty, on its face, is
unconditional, irrevocable and absolute, and is a guaranty of payment and not
merely of collection and contains no conditions to such payment, other than a
notice and right to cure; and the guaranty provides that it is the guaranty of
both the performance and payment of the financial obligations of Tenant under
the Lease and does not provide for offset, counterclaim or defense; and

(2)           such guaranty is binding on the
successors and assigns of the guarantor and inures to the benefit of the lessor’s
successors and assigns and cannot be released or amended without the lessor’s
consent or unless a predetermined performance threshold is achieved.

(fff)         No fraudulent acts were committed by
Seller during the origination process with respect to the Lease related to such
Mortgaged Property.

(ggg)      The origination, servicing and collection
of monthly Lease payments on such Lease is in all respects legal, proper and
prudent and in accordance with customary industry standards.

 13
 

 

(hhh)      To the extent required under applicable
law, Seller was authorized to transact and do business in the jurisdiction in
which such Mortgaged Property is located, except where such failure to qualify
would not result in a material adverse effect on the enforceability of the
related Lease.

(iii)          The Custodian’s Loan File contains a
survey with respect to such Mortgaged Property, which survey was deemed
sufficient to delete the standard title survey exception (to the extent the
deletion of such exception is available in the related state).

(jjj)          Seller did not intentionally select
such Loan, whether individually or together with other Loans, in a manner
adverse to Buyer or in a manner that results in Buyer receiving Loans that are
of lesser quality than Loans pledged to other lenders pursuant to any other
facility to which Seller or any of its Affiliates are a party.

(kkk)       With respect to any of the Properties
which are the subject of a Master Lease (noting that not all properties subject
to such Master Lease are included in the Properties), the lessor under the
Master Lease has assigned its interest in the Leases of the Properties to
Seller and Seller and the other lessors under the Master Leases have entered
into inter-lessor agreements by which the rents and the rights to enforce the
provisions of the Master Leases pertinent to any of the Properties have also
been assigned to Seller.

(lll)          Such Mortgaged Property is (i) free of
any damage that would materially and adversely affect the use or value of such
Mortgaged Property, (ii) in good repair and condition so as not to materially
and adversely affect the use or value of such Mortgaged Property; and all
building systems contained in such Mortgaged Property are in good working order
so as not to materially and adversely affect the use or value of such Mortgaged
Property.

(mmm)     All security deposits collected in
connection with such Mortgaged Property are being held in accordance with all
applicable laws.

(nnn)      Seller has taken (or has
caused to be taken) all such actions and precautions as a reasonably prudent
lender would take to protect and preserve the Collateral and its security
interest in all Collateral, including without limitation, notation of Seller as
lien holder on any certificates of title to property the nature of which is
such that ownership thereof is evidenced by a certificate of title, where such
notation is required under applicable law to perfect the interest therein.

(ooo)      Each Mortgage, Security Agreement and
every other Loan Document, contains customary and enforceable provisions so as
to render the rights and remedies of the holder thereof adequate for the
practical realization of the benefits of the security interests intended to be
provided thereby, including, where applicable, by judicial foreclosure, subject
to the limitations described in the next succeeding sentence. There is no
exemption under existing law available to the related Borrower which would
interfere with the mortgagee’s or secured party’s right to foreclose or to
realize upon such 

 14
 

 

related Mortgage, Security Agreement or other Loan Document, if any, as
applicable, other than which may be available under the insolvency laws, other
laws of general application relating to or affecting the enforcement of
creditors’ rights generally, applicable debt relief or homestead statutes or
general principles of equity.

(ppp)      Reserved.

(qqq)      As of the date of origination, the LTV (as
defined in the Underwriting Guidelines) of such Loan (other than Net Lease
Loans) does not exceed the required LTV specified in the Underwriting
Guidelines for such Loan type. With respect to Net Lease Loans, as of the date
of origination, the fair market value of the Mortgaged Property relating to
such Net Lease Loan, as determined by an Appraisal, was at least 100% of the
principal amount of such Net Lease Loan.

(rrr)         There has been performed, not more than
six months prior to the origination date for such Loan, an Appraisal of the
related Mortgaged Property.

(sss)       All principal, interest and any other
amounts due under such Loan are payable in U.S. dollars.  Interest and, as applicable, principal, is
payable on a monthly basis.

(ttt)         Neither Borrower nor any officer,
director, employee, member or Affiliate thereof is an officer, director,
employee, shareholder or partner or Affiliate of the Originator or Seller.

(uuu)      The information furnished to Buyer by
Seller and its Affiliates in connection with Buyer’s investigation of each
Loan, whether before or after the date hereof, is true and correct in all
material respects and does not omit any information necessary to make the
statements contained therein not misleading.

(vvv)      There is no action, suit, legal or
arbitration proceeding or administrative proceeding or investigation pending
or, to the best of Seller’s knowledge, threatened against or affecting any
Loan, Loan Document, Borrower or Collateral that have a reasonable probability
of having a material adverse effect on the Mortgaged Property or the related
Loan.

(www)    Seller is not subject to any judgment, writ,
decree, injunction or order of any federal, foreign, state or local court or
Governmental Authority relating to the acquisition, collection, administration
or enforcement of any Loan or the foreclosure, acquisition or disposition of
any Collateral or, in each case, any transactions or activities incidental thereto.

(xxx)        The transfer and assignment of the Loans
by Seller pursuant to this Agreement (i) does not constitute a sale of all or
substantially all of Seller’s assets and (ii) is not subject to the bulk
transfer, bulk sales or any similar statutory provisions in effect in any
applicable jurisdiction.

 15
 

 

(II)           By
delivering a Transaction Notice, Seller shall be deemed to represent and
warrant to Buyer, unless otherwise disclosed to and approved by Buyer, with
respect to each of the LLC Interests transferred on any Purchase Date and,
unless otherwise expressly disclosed by Seller in the Exception Schedule and
approved by Buyer, as of each Purchase Date (or such other date as specified
below), as follows:

(a)            Immediately prior to the
transfer and assignment to Buyer, Seller has good title to and is the 100%
owner and holder of the LLC Interests. 
Immediately prior to the transfer and assignment to Buyer, the LLC
Interests are not subject to an assignment or pledge and Seller has full right
and authority to sell and assign the LLC Interests.  Seller is transferring such LLC Interests to
Buyer free and clear of any and all liens, pledges, charges or security
interests of any nature encumbering the LLC Interests.

(b)            The initial
issuance and sale of the LLC Interests was duly authorized by all requisite
action on the part of the applicable Net Lease Borrower.  The LLC Interests conform as of the related
Purchase Date to the description thereof contained in the related LLC Agreement,
are duly and validly authorized, executed, and delivered in accordance with the
related LLC Agreement, and are validly issued and outstanding and entitled to
the benefits of such LLC Agreement.  The
LLC Interests are fully paid and non-assessable and have been offered, issued
and sold to Seller in compliance with all applicable laws.

(c)            The LLC Interests
are in certificated form and held by Seller.

(d)            Other than with respect to
the Transaction contemplated by this Agreement, there are (i) no outstanding
rights, options, warrants or agreements for a purchase, sale or issuance, in
connection with the LLC Interests, (ii) no agreements on the part of Seller to
sell or distribute the LLC Interests, and (iii) no obligations on the part of
Seller (contingent or otherwise) to purchase, repurchase, redeem or otherwise
acquire any securities or any interest therein (other than from Buyer) or to
pay any dividend or make any distribution in respect of the LLC Interests
(other than to Buyer).

(e)            The information set
forth on the Loan Schedule is true and correct in all material respects as of
the first day of the month for which such Loan Schedule relates or such other
date as may be indicated in such schedule.

(f)             Except as
otherwise permitted by the Agreement, the terms of the related Program
Documents and the related LLC Interests have not been impaired, altered or
modified in any material respect.

(g)            The LLC Interests are
assignable by Buyer in accordance with the LLC Agreement.  The related Program Documents permit Buyer to
sell, assign, pledge or transfer such LLC Interests.

(h)            All reports
provided by Seller to Buyer in connection with the Transaction contemplated
hereunder are true and correct in all material respects.

 16
 

 

(i)             The related Net
Lease Borrower is not in default under any material provisions of any
agreement, contract, instrument or indenture to which such Net Lease Borrower
is a party or by which it is bound, nor has any event occurred which, with
notice or lapse of time or both, would constitute a default under any such
agreement, contract, instrument or indenture, which event of default could have
a material adverse effect on the performance by Seller of its obligations under
the Program Documents to which it is a party.

 

 17Exhibit
10.1

SETTLEMENT
AGREEMENT AND MUTUAL RELEASES

This Settlement Agreement (together with the Exhibits
and Certifications attached hereto, the “Agreement”), effective as of October
12, 2006, is entered into by and among Align Technology, Inc. (“Align”), a
Delaware corporation with its principal place of business at 881 Martin Avenue,
Santa Clara, California 95050; OrthoClear Holdings, Inc. (“OC Holdings), a
British Virgin Islands company with its registered agent at Walkers, 171 Main
Street, Road Town, PO Box 92, Tortola, British Virgin Islands; OrthoClear,
Inc., a Delaware corporation with its principal place of business at 580
California Street, Suite 1725, San Francisco, California; OrthoClear Pakistan
PVT Ltd., a Pakistani corporation with its principal place of business at 8
Aitchison Road, Lahore, Pakistan (OC Holdings, OrthoClear, Inc., and OrthoClear
Pakistan PVT Ltd., collectively, “OrthoClear”); Joe Breeland (“Breeland”), an
individual who resides at 91 Pascal Lane, Austin, Texas; Muhammad Ziaullah
Chishti (“Chishti”), an individual c/o The Resource Group, 1700 Pennsylvania
Ave NW, Washington, DC; Christopher Kawaja, (“Kawaja”), an individual who
resides at 1801 Broadway Street, Apt. 601, San Francisco, California; Ross
Miller, an individual who resides at 934 La Mesa Terrace #H, Sunnyvale,
California; Peter Riepenhausen (“Riepenhausen”), an individual who resides at
Zeppelinalle 51, 60487 Frankfurt, Germany; 
Jeffrey Tunnell (“Tunnell”), an individual who resides at 209 W. Avenida
de los Lobos Marinos, San Clemente, California; and Huafeng “Charlie” Wen (“Wen”),
an individual who resides at 2117 Gossamer Ave, Redwood Shores, California;
(Breeland, Chishti, Kawaja, Miller, Riepenhausen, Tunnell, and Wen,
collectively, the “OrthoClear Individuals”); and Ross J. Miller DDS, A
Professional Dental Corporation, a professional corporation located at 333 W El
Camino Road, Sunnyvale, California (“Miller DDS”); and Bao Tran (“Tran”), an
individual who resides at 6768 Meadow Vista Court, San Jose, California; and
Eldon M. Bullington (“Bullington”), an individual who can be reached through
Align; Roger E.

 

George (“George”), an individual who can be reached
through Align; Gil Laks (“Laks”), an individual who can be reached through
Align; Thomas M. Prescott (“Prescott”), an individual who can be reached
through Align; Patricia Wadors (“Wadors”), an individual who can be reached
through Align; Kelsey Wirth (“Wirth”), an individual who can be reached through
Align; and Julie Yeomans (“Yeomans”), an individual who can be reached through
Align (Bullington, George, Laks, Prescott, Wadors, Wirth, and Yeomans,
collectively, the “Align Individuals”). 
Align, OrthoClear, the OrthoClear Individuals, Miller DDS, Tran and the
Align Individuals are collectively referred to herein as the “Parties.”

RECITALS

WHEREAS, Align
commenced civil litigation against OrthoClear, Inc. and OC Holdings on or about
July 19, 2005 in the case styled Align
Technology, Inc. v. OrthoClear, Inc. and OrthoClear Holdings, Inc.,
Case No. CV-05-02948-MMC, in the U.S. District Court for the Northern District
of California (the “Fed I Action”);

WHEREAS, Align
commenced civil litigation against OrthoClear, Inc. and OC Holdings on or about
June 19, 2006 in the case styled Align
Technology, Inc. v. OrthoClear, Inc. and OrthoClear Holdings, Inc.,
Case No. CV-06-03828-SC, in the U.S. District Court for the Northern District
of California (the “Fed II Action”);

WHEREAS, Align
commenced civil litigation against OrthoClear, Inc. and OrthoClear Holdings,
Inc. on or about January 11, 2006 in the case styled Align Technology, Inc. v. OrthoClear, Inc., et al., Case No.
06 C 0023 S, in the United States District Court for the Western District of
Wisconsin, which action was dismissed without prejudice but subject to reinstatement
(the “Fed III Action”);

WHEREAS, Align
commenced civil litigation against OrthoClear, Inc., OrthoClear Holdings, Inc,
Muhammad Ziaullah Chishti, Peter Riepenhausen, Joseph Breeland, Jeffrey

 2
 

 

Tunnell, Christopher Kawaja, Huafeng (“Charlie”) Wen,
and Bao Tran on or about February 2, 2005 in the case styled Align Technology, Inc. v. OrthoClear, Inc.,
OrthoClear Holdings, Inc, Muhammad Ziaullah Chishti, Peter Riepenhausen, Joe
Breeland, Jeff Tunnell, Christopher Kawaja, Charles Wen, and Bao Tran,
Case No. CGC-05-438361, in the Superior Court of California, County of San
Francisco (the “State Action”);

WHEREAS, Align
commenced civil litigation against Ross J. Miller and Miller DDS on or about
August 23, 2005 in the case styled Align
Technology, Inc. v. Ross J. Miller, and Ross J. Miller DDS, A Professional
Dental Corporation, Case No. C-05-03418-MMC, in the U.S. District
Court for the Northern District of California (the “Miller Action” (the Fed I
Action, the Fed II Action, the Fed III Action, the State Action, and the Miller
Action, collectively, the “Civil Actions”));

WHEREAS, Align
commenced civil litigation against OC Holdings, OrthoClear, Inc., OrthoClear
Pakistan PVT Ltd., on or about January 11, 2006, in the case styled In the Matter of Certain Incremental Dental
Positioning Adjustment Appliances and Methods of Producing Same,
Investigation No. 337-TA-562, in the United States International Trade
Commission (the “ITC Action” and, collectively with the Civil Actions, the “Actions”);

WHEREAS, Align possesses
certain intellectual property rights pertaining to the treatment of
malocclusions, including, but not limited to, United States and non-U.S.
patents, patent applications, copyrights, trademarks, service marks and trade
secrets (the “Align Worldwide IP Rights”);

WHEREAS,
Align has asserted some of the Align Worldwide IP Rights in
the Actions; and

 3
 

 

WHEREAS, the
Parties desire to fully and finally resolve the Actions on the terms and
conditions set forth herein, including those matters, issues, claims,
counterclaims, third-party actions, and defenses that were or could have been
raised by any of the Parties in any of the Actions, without incurring the costs
associated with further litigation.

AGREEMENT

NOW, THEREFORE, in
accordance with the foregoing recitals and in consideration of the mutual
covenants and consideration contained herein, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:

1.             ITC
Order:  Prior to or contemporaneous
with the execution of this Agreement by all Parties (the “Closing”), OrthoClear
shall execute and deliver to Align, and authorize Align to file in the ITC
Action: 

(a)           an
order and stipulation (the “Consent Order”) to the United States International
Trade Commission (the “ITC”), substantially in the form attached as Exhibit A
hereto; and 

(b)           a
Joint Motion to Terminate the ITC Action based upon an Consent Order, and
accompanying Memorandum of Points and Authorities (the “Joint Motion”),
substantially in the form attached as Exhibit B hereto.

2.             Transfer
of Intellectual Property Rights Agreement: 
Prior to or contemporaneous with the Closing, OrthoClear, Breeland,
Chishti, Kawaja, Tunnell, Riepenhausen, and Wen shall execute the Intellectual
Property Transfer Agreement attached hereto as Exhibit C.

3.             Settlement
Payment:  Align shall pay OC Holdings
the sum of twenty million dollars ($20,000,000) U.S. by wire transfer
simultaneously with the execution and delivery by OrthoClear to Align of (a)
fully executed originals of the Joint Motion and stipulation to entry of the
Consent Order as provided in Paragraph 1; (b) a fully executed original (or
originals, if in executed in counterparts) of the Intellectual Property
Transfer Agreement as provided in

 4
 

 

Paragraph 2; (c) the Non-Competition Covenants
contained in this Agreement and (d) a certification executed by the Chairman of
OC Holdings’ Board of Directors (the “Discontinuation Certification”) in
substantially the form attached as Exhibit D hereto confirming that (i) all
necessary approvals have been obtained for OrthoClear’s discontinuation,
worldwide, of all design, manufacture, marketing, and sales of removable dental
aligners and (ii) OrthoClear has completed such discontinuation.

4.             Patient
Transition:

(a)           OrthoClear
represents that it has not accepted any new patient cases for the treatment of
malocclusions, for treatment using removable dental aligners, or for treatment
involving other activities using OrthoClear’s existing proprietary technology
since at least September 27, 2006. 

(b)           OrthoClear
has delivered to Align and Align acknowledges receipt of patient case numbers
and dentist contact information for the purposes of facilitating the transfer
of patient cases to Align, which information Align shall maintain in accordance
with the same privacy protections as it does its own customer and patient
information.

(c)           Following
the Closing, Align will make treatment using removable dental aligners
available for all OrthoClear patient cases existing as of September 27, 2006 in
the United States, Canada, and Hong Kong, at no charge from Align to the
patient, the doctor, or OrthoClear.

(d)           Prior
to or contemporaneous with the Closing, the Parties will execute and cause to
be entered in one of the Actions an order in the form attached as Exhibit E
hereto directing OrthoClear, Inc. and OrthoClear Holdings, Inc. to provide to
Align Technology, Inc. the names of OrthoClear’s patients in the United States,
Hong Kong and Canada, and authorizing OrthoClear, Inc. and OrthoClear Holdings,
Inc. to provide such reasonably accessible patient

 5
 

 

information as the parties may agree would reasonably
assist Align Technology, Inc. in verifying and providing treatment for former
OrthoClear cases pursuant to this Paragraph 4. 

(e)           Align
and OrthoClear will cooperate to arrange and implement the transfer of
OrthoClear’s patient cases to Align.

5.             Discontinuation
and Dismissal of Civil Actions:

(a)           Prior
to or contemporaneous with the Closing, the Parties shall execute the
Stipulations of Dismissal, in the form attached hereto as Exhibits E - H, which
shall provide for final disposition of the Civil Actions.  Align shall cause the executed Stipulations
of Dismissal to be filed with the appropriate courts, and the Parties shall take
all other steps reasonably necessary and appropriate to cause the Civil Actions
to be dismissed with prejudice and without costs to any party.

(b)           Patent
Reexamination:  OrthoClear, the
OrthoClear Individuals, Miller DDS and Tran shall not, directly or indirectly,
initiate, take any further action in, or voluntarily support any party
(including OrthoClear or any other OrthoClear Individual) in any patent office
reexamination or opposition proceedings of any kind, world-wide, with respect
to any patents or patent applications owned, held or licensed by or for Align
pertaining to the treatment of malocclusion. 
OrthoClear shall, at no cost to OrthoClear, consent to, support and
cooperate in any request, petition or application to convert any pending Inter Parties Reexamination proceeding
before the United States Patent and Trademark Office (“PTO”) involving any
Align patent to an Ex Parte Reexamination
proceeding.  OrthoClear shall sign,
within 5 days of the Closing, a request to the PTO, prepared by Align,
substantially in the form of Exhibit I hereto, to withdraw the pending Petition
for Review of the PTO’s denial of re-examination for United States Patent
6,722,880, and Align shall be responsible for filing such request.

 6
 

 

6.             Mutual
Releases:

(a)           Releases
by OrthoClear, the OrthoClear Individuals and Miller DDS:  OrthoClear, the OrthoClear Individuals and
Miller DDS, for themselves, their corporate agents, successors, assigns,
trustees, attorneys, insurers, parents, subsidiaries, affiliates, officers, and
directors, and anyone claiming by and through them, hereby release and forever
discharge Align and the Align Individuals, their parents, subsidiaries,
affiliates, officers, directors, stockholders, employees, agents,
representatives, predecessors, successors, assigns and attorneys and all other
related persons, firms, and corporations, whether herein named or referred to
or not, from and concerning any and all demands, actions, causes of action,
suits at law, proceedings, debts, dues, damages, costs, attorneys’ fees, and
claims of any kind and nature, in law or equity, known or unknown, including,
but not limited to, any claims, counterclaims, or defenses which are or could
have been brought in the Actions, up to the date of the Closing.  In the event of a breach of this Agreement by
Align and the Align Individuals, OrthoClear, the OrthoClear Individuals, and
Miller DDS, shall not be precluded from asserting any claims, counterclaims, or
defenses they might have against Align and the Align Individuals.

(b)           Releases
by Tran:  Tran, for himself, his agents,
servants, successors, assigns, trustees, attorneys, insurers and anyone
claiming by and through them, hereby releases and forever discharges Align and
the Align Individuals, their parents, subsidiaries, affiliates, officers,
directors, stockholders, employees, agents, representatives, predecessors,
successors, assigns and attorneys and all other related persons, firms, and
corporations, whether herein named or referred to or not, from and concerning
any and all demands, actions, causes of action, suits at law, proceedings,
debts, dues, damages, costs, attorneys’ fees and claims of any kind and nature,
in law or equity, known or unknown, arising from or relating to (i) OrthoClear
or (ii) any or all of

 7
 

 

the claims, counterclaims, or defenses which have been
brought in the Actions, up to the date of the Closing.  In the event of a breach of this Agreement by
Align and the Align Individuals, Tran shall not be precluded from asserting any
claims, counterclaims, or defenses he might have against Align and the Align
Individuals.

(c)           Releases
by Align and the Align Individuals of OrthoClear, the OrthoClear Individuals
and Miller DDS:  Align and the Align
Individuals, for themselves, their corporate agents, successors, assigns,
trustees, attorneys, insurers, parents, subsidiaries, affiliates, officers and
directors, and anyone claiming by and through them, hereby releases and forever
discharge OrthoClear, the OrthoClear Individuals, and Miller DDS, their
parents, subsidiaries, affiliates, officers, directors, stockholders,
employees, agents, representatives, predecessors, successors, assigns and
attorneys and all other related persons, firms, and corporations, whether
herein named or referred to or not, from and concerning any and all demands,
actions, causes of action, suits at law, proceedings, debts, dues, damages,
costs, attorneys’ fees and claims of any kind and nature, in law or equity,
known or unknown, including, but not limited to, any claims, counterclaims, or
defenses which are or could have been brought in the Actions, up to the date of
the Closing.  In the event of a breach of
this Agreement by OrthoClear, the OrthoClear Individuals and Miller DDS, Align
shall not be precluded from asserting any claims, counterclaims, or defenses
they might have against OrthoClear, the OrthoClear Individuals and Miller DDS.

(d)           Releases
by Align and the Align Individuals of Tran: 
Align and the Align Individuals, for themselves, their corporate agents,
successors, assigns, trustees, attorneys, insurers, parents, subsidiaries,
affiliates, officers and directors, and anyone claiming by and through them,
hereby release and forever discharge Tran, his agents, representatives,

 8
 

 

predecessors, successors, assigns and attorneys and
all other person acting on his behalf, whether herein named or referred to or
not, from and concerning any and all demands, actions, causes of action, suits
at law, proceedings, debts, dues, damages, costs, attorneys’ fees and claims of
any kind and nature, in law or equity, known or unknown, arising from or
relating to (i) OrthoClear or (ii) any or all of the claims, counterclaims, or
defenses which have been brought in the Actions, up to the date of the
Closing.  In the event of a breach of
this Agreement by Tran, Align shall not be precluded from asserting any claims,
counterclaims, or defenses it might have against Tran.

7.             Non-Competition
Covenants:

(a)           Covenants:  Each of Chishti, Wen, Kawaja, Riepenhausen,
Breeland and Tunnell (the “Covenantors”) agrees that, for the period from the
Effective Date through the fifth (5th) anniversary of the Effective Date (the “Non-Compete
Period”), Covenantors shall not directly or indirectly throughout the world
become employed by, become a director, officer, stockholder, equity owner, or
partner of, or otherwise enter into, conduct, or advise (any of the foregoing, “participate
in”), directly or indirectly, any business or endeavor that is engaged in the
field of removable aligner therapy and/or related software (the “Field”).  Covenantors shall not be in violation of this
Agreement solely by reason of investing in stock, bonds or other securities of
any company engaged in the Field (but without otherwise participating in such
company), if (i) such stock, bonds or other securities are listed on any
national securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended and (ii) such investment by
Covenantor does not exceed, in the case of any class of the capital stock of
any one issuer, five percent (5%) of the issued and outstanding shares of such
capital stock or, in the case of bonds or other securities, one percent (1%) of
the aggregate principal amount thereof

 9
 

 

issued and outstanding.  Notwithstanding the foregoing and only with
respect to Breeland and Tunnell, the restrictions set forth herein shall be
limited to the United States and within the United States, Breeland and Tunnell
shall be permitted to become employed by a company that is engaged in the
Field; provided however, that Breeland and Tunnell are permitted to work for a
company that competes in the Field, so long as Breeland and Tunnell are not
personally involved with those products. 

(b)           Consideration
and Materiality:  The covenants in
subparagraph (a) above are supported by the mutual covenants and consideration
set forth in this Agreement, as well the rights and obligations set forth in
the Intellectual Property Transfer Agreement referenced in Paragraph 2, to
which the covenants are material.

8.             Miscellaneous:

(a)           Reimbursement
of Expenses:  In the event that
OrthoClear, any OrthoClear employees or agents, or any former OrthoClear
employees or agents, except Tran (collectively, “OrthoClear Witnesses”) are
subpoenaed or otherwise required to produce documents or provide testimony in
connection with any ongoing or future litigation between Align and Tran, Align
shall either directly pay or reimburse OrthoClear, its successors, or
OrthoClear Witnesses for any and all reasonable attorneys’ fees, costs, and
other expenses directly related to and associated with responding to any such
subpoena or producing documents or providing testimony.  Nothing in this section shall be construed as
consent by any current or former OrthoClear Witness to produce any documents,
provide deposition or trial testimony, or to be deposed in any location other
than his or her principal residence.

(b)           Return/Destruction
of Confidential Information and Materials: 
Within ten (10) business days after the Closing, Align and OrthoClear
shall provide one another a certification

 10
 

 

that all confidential information and materials
received pursuant to any of the Actions, other than the materials that Align is
authorized to retain and use pursuant to the Intellectual Property Transfer
Agreement, have been destroyed or returned to the producing party. 

(c)           Fees
and Expenses:  Except as provided for
in subparagraph (a) or as otherwise agreed, the Parties shall bear their own
respective costs and expenses, including attorneys’ fees, incurred in
connection with the Actions and this Agreement.

(d)           No
Claims Filed:  As a material
inducement for the Parties to enter into this Agreement, the Parties warrant
that (i) they have not made any allegations to, and have not filed any
complaints, charges, or lawsuits with, any court or government agency relating
to any claims being released in this Agreement, except for the Actions; and
(ii) they have not heretofore assigned or transferred to any person not a party
to this Agreement any released matter or any part or portion thereof.

(e)           Breach
and Enforcement:  It is agreed and
understood that the parties to this Agreement (or any of their successors or
assigns) shall be entitled to pursue any and all remedies under law and/or in
equity arising out of any breach of this Agreement by another party.  The Parties further agree that, in any action
brought to enforce this Agreement, the non-prevailing party in a final
non-appealable judgment shall reimburse the prevailing party for its or their
reasonable attorneys’ fees and costs incurred in any such action resulting in
such final non-appealable judgment. 

(f)            No
Admission of Liability:  OrthoClear,
the OrthoClear Individuals, Miller DDS and Tran, by providing the
considerations described above and by entering into this Agreement, expressly
deny engaging in any unlawful conduct and disclaim any liability to Align or
the Align Individuals arising from or relating to any of the transactions,
occurrences, events, claims, or

 11
 

 

allegations in the Actions.  This Agreement shall not be admissible as
evidence of liability in any federal, state, or administrative proceeding,
except that any party may submit this Agreement to any appropriate court or
administrative agency for the purpose of the enforcement of this Agreement. 

(g)           Voluntary
Execution:  This Agreement is executed
freely, voluntarily and without any duress or undue influence on any party, and
with and upon the advice of counsel.  The
undersigned each warrant that they have taken the steps necessary to authorize
the execution of this Agreement; that they are authorized to sign this
Agreement; that they do not need to obtain any third party consents to enter
into this Agreement or to consummate any of the transactions contemplated
herein; and that they are not relying upon any representations or statements not
contained in this Agreement in entering into this Agreement. 

(h)           Nondisparagement:  Each of the Parties agrees to take reasonable
steps to ensure that neither they nor, in the case of Align and OrthoClear, any
of their employees, will make public statements disparaging another Party, or
accusing another Party of criminal or unethical conduct in connection with the
subject matter of any of the Actions.

(i)            Survivability:  This Agreement shall inure to the benefit of,
and be binding upon, the agents, parents, subsidiaries, affiliates, employees,
officers, directors, shareholders, attorneys, assigns, representatives, heirs,
successors, executors, administrators and/or the estates of the Parties. 

(j)            Construction
of the Agreement:  This Agreement
shall be construed as a whole in accordance with its fair meaning and in
accordance with the laws of the State of Delaware.  The terms of this Agreement have been
negotiated by the Parties, and the language of the Agreement

 12
 

 

shall not be construed in favor of or against any
particular party.  The headings used
herein are for reference only and shall not affect the construction of this
Agreement. 

(k)           Agreement
May be Executed in Counterparts: 
This Agreement may be signed using one or more counterparts.  Photographic or facsimile copies of such
signed counterparts may be used in lieu of the originals for any purpose and
shall be deemed to be the originals thereof. 
The several executed copies together shall be considered an original and
shall be binding upon the Parties.

9.             Entire
Agreement:  This Agreement, including
all the Exhibits and Certifications attached hereto, together with executed
versions of the other documents and agreements referenced in this Agreement,
constitute the entire agreement between the Parties with respect to the subject
matter hereof, and cancel and supersede all prior and contemporaneous
agreements, understandings, negotiations and discussions of the Parties,
whether oral or written, relating to the subject matter hereof.  This Agreement may not be amended except in a
writing signed by the Parties. 

10.           Attorney
Review:  By their signatures below,
the Parties warrant that they have obtained the advice of attorneys regarding
this Agreement, including the obligations and releases contained herein.  In entering into this Agreement, the Parties
represent that they have relied on the advice of their respective attorneys,
who are attorneys of their own choice, and that the terms of this Agreement
have been completely read and explained to them by their attorneys, and that
those terms are fully understood and voluntarily accepted by them. 

[SIGNATURE PAGE TO
FOLLOW]

 13
 

 

IN
WITNESS WHEREOF, each of the Parties hereto has executed this
Agreement as of the date indicated above.

 

	
  

  	
   

  	
   

  	
   

  
	
  ALIGN
  TECHNOLOGY, INC.

  	
   

  	
  ORTHOCLEAR HOLDINGS,
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ ROGER E. GEORGE

  	
   

  	
  /s/ PETER RIEPENHAUSEN

  	
   

  
	
  Name:Roger E. George

  	
   

  	
  Name: Peter
  Riepenhausen

  	
   

  
	
  Title: Vice
  President Corporate &

  	
   

  	
  Title: Chairman

  	
   

  
	
  Legal Affairs
  & General Counsel

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ORTHOCLEAR, INC.

  	
   

  	
  ORTHOCLEAR PAKISTAN PVT
  LTD.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ ZIA CHISHTI

  	
   

  	
  /s/ MUDASSAR RATHORE

  	
   

  
	
  Name: Muhammad
  Ziaullah Chishti

  	
   

  	
  Name: Mudassar Rathore

  	
   

  
	
  Title: Chief
  Executive Officer

  	
   

  	
  Title: Country Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  MUHAMMAD
  ZIAULLAH CHISHTI

  	
   

  	
  HUAFENG “CHARLIE” WEN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ ZIA CHISHTI

  	
   

  	
  /s/ C. WEN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  PETER
  RIEPENHAUSEN

  	
   

  	
  CHRISTOPHER KAWAJA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ PETER RIEPENHAUSEN

  	
   

  	
  /s/ CHRISTOPHER KAWAJA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JEFFREY TUNNELL

  	
   

  	
  JOE BREELAND

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ JEFFREY TUNNELL

  	
   

  	
  /s/ JOE BREELAND

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  

 

 14
 

 

 

	
  BAO TRAN

  	
   

  	
  ROSS J. MILLER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ BAO TRAN

  	
   

  	
  /s/ ROSS J. MILLER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ROSS J. MILLER, D.D.S., P.C.

  	
   

  	
  THOMAS M. PRESCOTT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ ROSS J. MILLER

  	
   

  	
  /s/ THOMAS M. PRESCOTT

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ROGER E. GEORGE

  	
   

  	
  ELDON M. BULLINGTON

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ ROGER E. GEORGE

  	
   

  	
  /s/ ELDON M. BULLINGTON

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  GIL LAKS

  	
   

  	
  PATRICIA WADORS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ GIL LAKS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  JULIE YEOMANS

  	
   

  	
  KELSEY WIRTH

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ JULIE YEOMANS

  	
   

  	
  /s/ KELSEY WIRTH

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  	
  Date:

  	
   October 13, 2006

  	
   

  	
   

  

 

 15

UNITED STATES INTERNATIONAL TRADE COMMISSION

WASHINGTON,
D.C.

Before the
Honorable Robert L. Barton, Jr.

	
  In the Matter of:

  	
   

  
	
   

  	
   

  
	
  CERTAIN INCREMENTAL DENTAL 

  	
  Inv. No. 337-TA-562

  
	
  POSITIONING ADJUSTMENT

  	
   

  
	
  APPLIANCES AND METHODS OF

  	
   

  
	
  PRODUCING SAME

  	
   

  

 

CONSENT
ORDER STIPULATION

WHEREAS,
the United States International Trade Commission instituted the above-captioned
investigation under Section 337 of the Tariff Act of 1930, as amended (19 U.S.C.
§ 1337), based upon the allegations contained in the Complaint filed by
Complainant Align Technology, Inc. (“Align”), which alleged unfair acts in the
importation into the United States, the sale for importation, and the sale
within the United States after importation of certain incremental dental
positioning adjustment appliances by or for Respondents OrthoClear, Inc.,
OrthoClear Holdings, Inc. and OrthoClear Pakistan Pvt, Ltd. (collectively
“OrthoClear”);

WHEREAS,
OrthoClear consents to the entry of an Consent Order by the International Trade
Commission pursuant to 19 C.F.R. § 1337 and to all the waivers and other
requirements of 19 C.F.R. § 210.21(c);

WHEREAS,
OrthoClear consents and agrees to all the terms set forth in the [Proposed]
Consent Order;

 

IT IS HEREBY STIPULATED by
OrthoClear as follows:

1.              OrthoClear
consents and agrees to seek to cause the Commission to enter a Consent Order
pursuant to the Joint Motion to Terminate the Investigation and this Consent
Order Stipulation.

2.              OrthoClear
consents and agrees to the exercise by the Commission of in rem
jurisdiction over the incremental dental positioning adjustment appliances
manufactured by or for OrthoClear referenced in the complaint and any other
articles manufactured in violation of the patents or trade secrets described
therein (the “Articles”).

3.              OrthoClear
consents and agrees to the exercise by the Commission of in personam
jurisdiction over OrthoClear.

4.              OrthoClear consents and agrees to the prohibition from
importation of the Articles into the United States for consumption (including
but not limited to withdrawal from a warehouse or foreign trade zone for
consumption) until the expiration of the last to expire of the following
patents: (i) U.S. Patent No. 6,685,469 (“the ‘469 patent”); (ii) U.S. Patent
No. 6,394,801 (“the ‘801 patent”); (iii) U.S. Patent No. 6,398,548 (“the ‘548
patent”); (iv) U.S. Patent No. 6,722,880 (“the ‘880 patent”); (v) U.S. Patent
No. 6,629,840 (“the ‘840 patent”); (vi) U.S. Patent No. 6,699,037 (“the ‘037 patent”);
(vii) U.S. Patent No. 6,318,994 (“the ‘994 patent”); (viii) U.S. Patent No.
6,729,876 (“the ‘876 patent”); (ix) U.S. Patent No. 6,602,070 (“the ‘070
patent”); (x) U.S. Patent No. 6,471,511 (“the ‘511 patent”); and (xi) U.S.
Patent No. 6,227,850 (“the ‘850 patent”) (collectively “the Patents-In-Suit”),
except under license of the patent owner or as provided by law.

 2

 

5.              OrthoClear
consents and agrees to not sell for importation, import into the United States,
or sell in the United States after importation the Articles, or knowingly aid,
abet, encourage, participate in, or induce the sale for importation into the
United States or sale in the United States after importation of the Articles.

6.              OrthoClear
consents and agrees that the Consent Order shall be applicable and binding upon
OrthoClear, its officers, directors, agents, servants, employees, successors
and assigns, and all persons, firms, or corporations acting or claiming to act
on its behalf or under its direction or authority.

7.              OrthoClear consents and agrees
that it shall be precluded from seeking judicial review or otherwise
challenging or contesting the validity of the Consent Order.

8.              OrthoClear consents and agrees
that it shall cooperate with and shall not seek to impede by litigation or other
means the Commission’s efforts to gather information under Subpart I of the
Commission’s Rules of Practice and Procedure, 19 C.F.R. Part 210.

9.              OrthoClear consents and agrees
that, in any administrative or judicial proceeding to enforce the Consent Order,
OrthoClear shall not seek to challenge and is precluded from making any
challenges to the validity or enforceability of the claims of the
Patents-In-Suit.

10.            OrthoClear consents and agrees that
it shall not seek to challenge and is precluded from making any challenges to
the status of the confidential proprietary information developed by Align and
used in the design and manufacture of Invisalign aligners as trade secrets.

 3
 

 

11.           OrthoClear consents and agrees that
upon conclusion of an enforcement proceeding under 19 C.F.R 210.75, the
Commission may revoke the Consent Order and direct that the Articles be
excluded from entry into the United States.

12.           OrthoClear consents and agrees that
the Consent Order shall not apply with respect to any claim of any intellectual
property right that has expired or been found or adjudicated invalid or
unenforceable by the Commission or a court or agency of competent jurisdiction,
provided that such finding or judgment has become final and nonreviewable.

13.            OrthoClear consents and agrees to
the termination of the above-captioned investigation and the dismissal of
OrthoClear as a named respondent in the above-captioned investigation provided.
OrthoClear consents and agrees that the modification, enforcement, and
revocation of the Consent Order shall be carried out pursuant to Subpart I of
the Commission’s Rules of Practice and Procedure, 19 C.F.R. Part 210.

14.            OrthoClear consents and agrees to
the service of copies of the Consent Order upon each party of record in the
above-captioned investigation and upon the Department of Health and Human
Services, the Department of Justice, the Federal Trade Commission, and the U.S.
Customs Service.

15.            OrthoClear consents
and agrees that this Consent Order Stipulation and the Consent Order are in the
public interest.

 4
 

 

IT IS SO STIPULATED.

Date: October 13, 2006

Respectfully submitted,

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  George A. Riley

  
	
   

  	
   

  	
  Mark E. Miller

  
	
   

  	
   

  	
  David R. Eberhart

  
	
   

  	
   

  	
  O’Melveny & Myers
  LLP

  
	
   

  	
   

  	
  Embarcardero Center
  West

  
	
   

  	
   

  	
  275 Battery Street,
  26th Floor

  
	
   

  	
   

  	
  San Francisco, CA 94111

  
	
   

  	
   

  	
  (415) 984-8700

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Paula Ambrosini

  
	
   

  	
   

  	
  O’Melveny & Myers
  LLP

  
	
   

  	
   

  	
  400 S. Hope Street,
  #1500

  
	
   

  	
   

  	
  Los Angeles, CA 90071

  
	
   

  	
   

  	
  (213) 430-6000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Petra Smeltzer

  
	
   

  	
   

  	
  O’Melveny & Myers
  LLP

  
	
   

  	
   

  	
  1625 Eye Street, NW

  
	
   

  	
   

  	
  Washington, DC 20006

  
	
   

  	
   

  	
  (202) 383-5300

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Counsel to OrthoClear, Inc.,
  OrthoClear Holdings, Inc., and OrthoClear Pakistan Pvt, Ltd.

  

 

 5

UNITED
STATES INTERNATIONAL TRADE COMMISSION

WASHINGTON, D.C.

Before the Honorable Robert L.
Barton, Jr.

	
  In the Matter of:

  	
   

  
	
   

  	
   

  
	
  CERTAIN INCREMENTAL DENTAL

  	
  Inv. No. 337-TA-562

  
	
  POSITIONING ADJUSTMENT

  	
   

  
	
  APPLIANCES AND METHODS OF

  	
   

  
	
  PRODUCING SAME

  	
   

  

 

[PROPOSED] CONSENT ORDER

On
February 9, 2006, the United States International Trade Commission instituted
the above-captioned investigation under Section 337 of the Tariff Act of 1930
(19 U.S.C. § 1337), as amended, based upon the Complaint filed by Complainant
Align Technology, Inc. (“Align”), which alleged unfair acts in the importation
into the United States, the sale for importation, and the sale within the
United States after importation of certain incremental dental positioning
adjustment appliances by Respondents OrthoClear, Inc., OrthoClear Holdings,
Inc. and OrthoClear Pakistan Pvt, Ltd. (collectively “OrthoClear”). See 71 Fed. Reg. 7995 (Feb. 15, 2006).

OrthoClear
has executed a stipulation which manifests OrthoClear’s consent to the entry of
this Consent Order and to the waivers and other requirements of 19 C.F.R. §
210.21(c).

 

IT IS HEREBY ORDERED THAT:

1.             The incremental
dental positioning adjustment appliances manufactured by or for OrthoClear
referenced in the complaint and any other articles manufactured in violation of
the patents or trade secrets described therein (the “Articles”) are hereby
prohibited from importation into the United States until the expiration of the
last to expire of the following patents: (i) U.S. Patent No. 6,685,469 (“the
‘469 patent”); (ii) U.S. Patent No. 6,394,801 (“the ‘801 patent”); (iii) U.S.
Patent No. 6,398,548 (“the ‘548 patent”); (iv) U.S. Patent No. 6,722,880 (“the
‘880 patent”); (v) U.S. Patent No. 6,629,840 (“the ‘840 patent”); (vi) U.S. Patent
No. 6,699,037 (“the ‘037 patent”); (vii) U.S. Patent No. 6,318,994 (“the ‘994
patent”); (viii) U.S. Patent No. 6,729,876 (“the ‘876 patent”); (ix) U.S.
Patent No. 6,602,070 (“the ‘070 patent”); (x) U.S. Patent No. 6,471,511 (“the
‘511 patent”); and (xi) U.S. Patent No. 6,227,850 (“the ‘850 patent”)
(collectively “the Patents-In-Suit”), except under license of the patent owner
or as provided by law.

2.             Upon entry of this
Consent Order, OrthoClear shall not sell for importation, import into the
United States, or sell in the United States after importation the Articles, or
knowingly aid, abet, encourage, participate in, or induce the sale for
importation into the United States or sale in the United States after
importation of the Articles.

3.             This Consent Order
shall be applicable and binding upon OrthoClear, its officers, directors,
agents, servants, employees, successors and assigns, and all persons, firms, or
corporations acting or claiming to act on its behalf or under its direction or
authority.

4.             OrthoClear shall be
precluded from seeking judicial review or otherwise challenging or contesting
the validity of this Consent Order.

 2
 

 

5.             OrthoClear shall
cooperate with and shall not seek to impede by litigation or other means the
Commission’s efforts to gather information under Subpart I of the Commission’s
Rules of Practice and Procedure, 19 C.F.R. Part 210.

6.              In any
administrative or judicial proceeding to enforce this Consent Order, OrthoClear
shall not seek to challenge and is precluded from making any challenges to the
validity or enforceability of the claims of the Patents-In-Suit. OrthoClear
also shall not seek to challenge and is precluded from making any challenges to
the status of the confidential proprietary information developed by Align and
used in the design and manufacture of Invisalign aligners as trade secrets.

7.             Pursuant to 19 C.F.R.
210.75(b)(4)(c), upon conclusion of an enforcement proceeding under 19 C.F.R
210.75, the Commission may revoke this Consent Order and direct that the
Articles be excluded from entry into the United States.

8.              This Consent Order
shall not apply with respect to any claim of any intellectual property right
that has expired or been found or adjudicated invalid or unenforceable by the
Commission or a court or agency of competent jurisdiction, provided that such
finding or judgment has become final and nonreviewable.

9.              This investigation
is hereby terminated. OrthoClear is hereby dismissed as a named respondent in
this investigation provided, however, that the modification, enforcement, and
revocation of this Consent Order shall be carried out pursuant to Subpart I of
the Commission’s Rules of Practice and Procedure, 19 C.F.R. Part 210.

 3
 

 

10.            The Secretary shall
serve copies of this Consent Order upon each party of record in this
investigation and upon the Department of Health and Human Services, the
Department of Justice, the Federal Trade Commission, and the U.S. Customs
Service.

	
  

  	
   

  
	
   

  	
  BY ORDER OF THE COMMISSION:

  

 

 4

UNITED STATES INTERNATIONAL TRADE
COMMISSION

WASHINGTON, D.C.

Before the Honorable Robert L.
Barton, Jr.

	
  In the Matter of:

  	
   

  
	
   

  	
   

  
	
  CERTAIN INCREMENTAL DENTAL

  	
  Inv.
  No. 337-TA-562

  
	
  POSITIONING ADJUSTMENT

  	
   

  
	
  APPLIANCES AND METHODS OF

  	
   

  
	
  PRODUCING SAME

  	
   

  

JOINT
MOTION TO TERMINATE INVESTIGATION

BASED UPON CONSENT ORDER

Complainant Align
Technology, Inc. (“Align”) and Respondents OrthoClear, Inc., OrthoClear
Holdings, Inc., and OrthoClear Pakistan Pvt, Ltd. (collectively “OrthoClear”)
(Align and OrthoClear, collectively, the “Parties”) hereby jointly move to
terminate the above-captioned investigation based upon the Consent Order
Stipulation and the [Proposed] Consent Order submitted concurrently herewith.
The Commission Investigative Staff supports this motion.

The Consent Order
Stipulation contains the waivers and other requirements set out in 19 C.F.R. §
210.21(c). In addition, the parties submit that termination of the
above-captioned investigation in accordance with the attached Consent Order
Stipulation and the [Proposed] Consent Order is in the public interest and will
also conserve the resources of this Court, the Parties, and the Commission
Investigative Staff.

Accordingly, the
parties respectfully request that the Administrative Law Judge issue an Initial
Determination terminating the above-captioned investigation on the basis of the
Consent Order Stipulation and the [Proposed] Consent Order.

 

Date: October 13,2006

Respectfully submitted,

	
  George L. Graff

  	
   

  	
  George A. Riley

  	
   

  	
  Anne Goalwin

  
	
  Paul, Hastings, Janofsky & Walker, LLP

  	
   

  	
  Mark E. Miller

  	
   

  	
  Vu Bui

  
	
  Park Avenue Tower

  	
   

  	
  David R. Eberhart

  	
   

  	
  Office of Unfair Import

  
	
  75 E. 55th Street,

  	
   

  	
  O’Melveny & Myers
  LLP

  	
   

  	
  Investigations

  
	
  First Floor New York,

  	
   

  	
  Embarcardero Center
  West

  	
   

  	
  U.S. International
  Trade

  
	
  NY 10022

  	
   

  	
  275 Battery Street,

  	
   

  	
  Commission

  
	
  (212) 318-6000

  	
   

  	
  26th Floor San
  Francisco,

  	
   

  	
  500 E Street, SW, Suite
  401

  
	
   

  	
   

  	
  CA 94111

  	
   

  	
  Washington, DC 20436

  
	
  Scott M. Flicker

  	
   

  	
  (415) 984-8700

  	
   

  	
  (202) 205-2579

  
	
  Patrick J. Togni

  	
   

  	
   

  	
   

  	
   

  
	
  Paul, Hastings, Janofsky
  & Walker, LLP

  	
   

  	
  Paula Ambrosini

  	
   

  	
  Commission Investigative 

  
	
  875 15th Street,

  	
   

  	
  O’Melveny & Myers
  LLP

  	
   

  	
  Attorneys

  
	
  N.W. Washington,

  	
   

  	
  400 S. Hope Street,
  #1500

  	
   

  	
   

  
	
  D.C. 20005

  	
   

  	
  Los Angeles, CA 90071

  	
   

  	
   

  
	
  (202) 551-1700

  	
   

  	
  (213) 430-6000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Thomas A. Counts

  	
   

  	
  Petra Smeltzer

  	
   

  	
   

  
	
  Paul, Hastings,
  Janofsky & Walker, LLP

  	
   

  	
  O’Melveny & Myers
  LLP

  	
   

  	
   

  
	
  55 Second Street

  	
   

  	
  1625 Eye Street, NW 

  	
   

  	
   

  
	
  Twenty-Fourth Floor

  	
   

  	
  Washington, DC 20006

  	
   

  	
   

  
	
  San Francisco, CA 94105

  	
   

  	
  (202) 383-5300

  	
   

  	
   

  
	
  (415) 856-7000

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Counsel to OrthoClear, Inc., 

  	
   

  	
   

  
	
  Counsel to Align 

  	
   

  	
  OrthoClear Holdings, Inc., 

  	
   

  	
   

  
	
  Technology, Inc.

  	
   

  	
  and OrthoClear Pakistan

  	
   

  	
   

  
	
   

  	
   

  	
  Pvt, Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 2
 

 

CERTIFICATE OF SERVICE

In
accordance with the Agreed Service Protocol in the above-captioned
investigation, I hereby certify that a copy of the foregoing Joint Motion to
Terminate Investigation was served as indicated, to the parties listed below,
this 13th day of October 2006:

	
  Counsel for Respondents OrthoClear, Inc.,

  	
   

  	
  By Hand (2 copies)

  
	
  OrthoClear Holdings, Inc. and
  OrthoClear

  	
   

  	
   

  
	
  Pakistan PVT, Ltd.

  	
   

  	
  The Honorable Robert L.
  Barton, Jr.

  
	
   

  	
   

  	
  Administrative Law
  Judge

  
	
   

  	
   

  	
  U.S. International
  Trade Commission

  
	
  BY ELECTRONIC MAIL

  	
   

  	
  500 E Street, S.W.,
  Room 317G

  
	
   

  	
   

  	
  Washington, DC 20436

  
	
  orthoclear@omm.com

  	
   

  	
   

  
	
   

  	
   

  	
  By Electronic Copy

  
	
  BY HAND DELIVERY NEXT DAY

  	
   

  	
   

  
	
   

  	
   

  	
  Kimberly Parke, Esq.

  
	
  Petra Smeltzer

  	
   

  	
  Attorney-Advisor to
  Judge Barton

  
	
  O’Melveny & Myers
  LLP

  	
   

  	
  U.S. International Trade
  Commission

  
	
  1625 Eye Street, NW

  	
   

  	
  500 E Street, S.W.,
  Room 317E

  
	
  Washington, DC
  20006-4001

  	
   

  	
  Washington, DC 20436

  
	
   

  	
   

  	
   

  
	
  Counsel for Complainant Align
  Technology, Inc.

  	
   

  	
  For the Investigative Staff
  Attorney

  
	
   

  	
   

  	
   

  
	
  BY ELECTRONIC MAIL

  	
   

  	
  BY ELECTRONIC MAIL

  
	
   

  	
   

  	
   

  
	
  align@paulhastings.com

  	
   

  	
  Anne Goalwin, Esq.

  
	
   

  	
   

  	
  Vu Bui, Esq.

  
	
  BY HAND DELIVERY

  	
   

  	
  Office of Unfair Import
  Investigations

  
	
   

  	
   

  	
  U.S. International
  Trade Commission

  
	
  Scott M. Flicker

  	
   

  	
  500 E Street, S.W.,
  Suite 401

  
	
  Paul, Hastings,
  Janofsky & 

  	
   

  	
  Washington, DC 20436

  
	
  Walker, LLP

  	
   

  	
   

  
	
  875 15th Street, N.W.

  	
   

  	
   

  
	
  Washington, D.C. 20005

  	
   

  	
   

  
	
  (202) 551-1700

  	
   

  	
   

  

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Kevin D. Edwards

  

 

 3

UNITED STATES INTERNATIONAL TRADE
COMMISSION

WASHINGTON, D.C.

Before the Honorable Robert L.
Barton, Jr.

	
  In the Matter of:

  	
   

  
	
   

  	
   

  
	
  CERTAIN INCREMENTAL DENTAL

  	
  Inv. No. 337-TA-562

  
	
  POSITIONING ADJUSTMENT

  	
   

  
	
  APPLIANCES AND METHODS OF

  	
   

  
	
  PRODUCING SAME

  	
   

  

 

MEMORANDUM OF POINTS AND AUTHORITIES
IN SUPPORT OF JOINT MOTION

TO TERMINATE INVESTIGATION BASED UPON CONSENT ORDER

Complainant
Align Technology, Inc. (“Align”) and Respondents OrthoClear, Inc., OrthoClear
Holdings, Inc., and OrthoClear Pakistan Pvt, Ltd. (collectively “OrthoClear”)
(collectively, the “Parties”) hereby submit the following memorandum of points
and authorities in support of the Joint Motion to Terminate Investigation Based
Upon Entry of a Consent Order (hereinafter “Joint Motion to Terminate”)
pursuant to Ground Rule 3.1. The Commission Investigative Staff supports this
motion.

The
Joint Motion to Terminate Investigation complies with the Commission’s
requirements for motions to terminate based upon a consent order, which are set
forth in Commission Rule 210.21(c). In addition, the parties submit that
resolution of this proceeding by the attached proposed Consent Order is in the
public interest.

For
the reasons articulated below, the parties respectfully request that the Administrative
Law Judge issue an Initial Determination terminating this investigation on the
basis of the Consent Order Stipulation and [Proposed] Consent Order.

 

I.              BACKGROUND

On
February 9, 2006, the United States International Trade Commission instituted
the above-captioned investigation under Section 337 of the Tariff Act of 1930,
as amended, based upon the complaint filed by Align, which alleged unfair acts
in the importation into the United States, the sale for importation and the
sale within the United States after importation of certain incremental dental
positioning adjustment appliances by OrthoClear. See
71 Fed. Reg. 7995 (Feb. 15, 2006).

The
Complaint alleges that OrthoClear is engaging in unlawful and unfair acts of
competition in violation of Section 337 by importing into the United States,
selling for importation into the United States and selling within the United
States after importation certain incremental dental positioning adjustment
appliances that infringe, or are made, produced, or processed by means of a
process covered by, valid claims of each of the following United States Letters
Patent: (i) U.S. Patent No. 6,685,469 (“the ‘469 patent”); (ii) U.S. Patent No.
6,394,801 (“the ‘801 patent”); (iii) U.S. Patent No. 6,398,548 (“the ‘548 patent”);
(iv) U.S. Patent No. 6,722,880 (“the ‘880 patent”); (v) U.S. Patent No.
6,629,840 (“the ‘840 patent”); (vi) U.S. Patent No. 6,699,037 (“the ‘037
patent”); (vii) U.S. Patent No. 6,318,994 (“the ‘994 patent”); (viii) U.S.
Patent No. 6,729,876 (“the ‘876 patent”); (ix) U.S. Patent No. 6,602,070 (“the
‘070 patent”); (x) U.S. Patent No. 6,471,511 (“the ‘511 patent”); and (xi) U.S.
Patent No. 6,227,850 (“the ‘850 patent”) (collectively “the Patents-In-Suit”).
(On July 20, 2006, the Commission determined not to review the July 12, 2006
Initial Determination of the Administrative Law Judge granting Align’s motion
for partial termination of the investigation as to U.S. Patent No. 6,540,807 on
July 12, 2006. See Order No. 10).

 2
 

 

The
Complaint also alleges that OrthoClear is engaging in unlawful and unfair acts
of competition in violation of Section 337 by misappropriation of Align’s trade
secrets in connection with OrthoClear’s importation into the United States,
selling for importation into the United States and selling within the United
States after importation the articles at issue in this proceeding.

II.            THE
JOINT MOTION COMPLIES WITH COMMISSION RULES GOVERNING TERMINATION OF AN
INVESTIGATION BY ENTRY OF CONSENT ORDER

Termination of an investigation under Section 337 is
governed by Commission Rule 210.21. That rule provides, inter alia,
that “any party may move at any time for an order to terminate an
investigation” on the basis of a consent order. Commission Rule 210.21(a)(2).
Specifically, the rule states that:

[A] proposal to terminate by consent order shall be
submitted as a motion to the administrative law judge with a stipulation that
incorporates a proposed consent order...At any time prior to the commencement
of the hearing, the motion may be filed by one or more respondents, and may be
filed jointly with other parties to the investigation... The administrative law
judge shall promptly file with the Commission an initial determination
regarding the motion for termination if the motion is granted...Pending disposition
by the Commission of a consent order stipulation, a party may not, absent good
cause shown, withdraw from the stipulation once it has been submitted pursuant
to this section.

Commission Rule 210.21 (c)(
1 )(ii).

The Joint Motion complies
with the Commission Rule that a request to terminate an investigation on the
basis of a consent order be accompanied by a Consent Order Stipulation that
incorporates a Proposed Consent Order. See, e.g., In the Matter
of Certain Chemical Mechanical Planarization Slurries and Precursors,
USITC Inv. No. 337-TA-566, Order No. 4: Initial

 3
 

 

Determination Terminating the Investigation by Entry
of a Consent Order, 2006 WL 1642253 (U.S.I.T.C.) at *1.

The Consent Order
Stipulation also contains all of the admissions, waivers, statements and other
requirements set forth in Commission Rule 210.21(c)(3). See id. (describing the respondent’s
admission of in rem jurisdiction
over the accused products subject to that investigation and in personam jurisdiction over the
respondent, in addition to meeting all of the requirements of Commission Rule
210.21(c)(i)(A) and (B)).

Likewise, the Proposed
Consent Order also contains a statement that OrthoClear will not import, sell
for importation, or sell within the United States after importation, the
accused articles. See Certain Modified
Vaccinia Ankara Viruses and Vaccines and Pharmaceutical Compositions Based
Thereon, USITC Inv. No. 337-TA-550, Order No. 10: Denying Respondent’s
Motion to Terminate and Entry of Consent Order, 2005 WL 3346206 (U.S.I.T.C), at
*4 (noting that, “[a]s the Staff correctly points out, a consent order is
essentially an agreement between the Commission and the respondent whereby the
respondent agrees to cease engaging in the allegedly unfair act. Staff Response
at 2. Thus, consent orders that have formed the basis for the termination of an
investigation have contained language pursuant to which the respondent agrees
to refrain from importing, selling for importation, or selling within[] the
United States after importation, the accused articles.”). See Proposed Consent Order at 1.

III.          TERMINATION OF THIS INVESTIGATION IS IN
THE PUBLIC INTEREST

The parties submit that
termination of this investigation in accordance with the attached Consent Order
Stipulation and Proposed Consent Order is in the public interest and will also
conserve the resources of this Court, the Parties, and the Staff. See, e.g., Certain Chemical

 4
 

 

Mechanical Planarization Slurries
and Precursors, at *2 (granting unopposed motion to terminate
investigation by entry of a consent order and noting that “[t]he public
interest generally favors settlement to avoid needless litigation and to
conserve public and private resources...[and that] [t]he public interest also
favors the recognition of presumptively valid patents and their exclusive
rights.”).

The parties also submit
that termination of this investigation will not negatively impact the public
health and welfare, competitive conditions in the U.S. economy, the production
of like or directly competitive articles in the United States, and U.S.
consumers. See Commission Rule
210.50(b)(2). As a result, termination of this investigation by the proposed
consent order is in the public interest.

IV.          CONCLUSION

Based on the foregoing,
the parties respectfully request that the Administrative Law Judge issue an
Initial Determination terminating this investigation on the basis of the
attached Consent Order Stipulation and [Proposed] Consent Order.

 5
 

 

Date: October 13, 2006

Respectfully submitted,

	
  George L. Graff

  	
   

  	
  George A. Riley

  	
   

  	
  Anne Goalwin

  
	
  Paul, Hastings, Janofsky &  

  	
   

  	
  Mark E. Miller

  	
   

  	
  VuBui

  
	
  Walker, LLP

  	
   

  	
  David R. Eberhart

  	
   

  	
  Office of Unfair Import

  
	
  Park Avenue Tower

  	
   

  	
  O’Melveny & Myers
  LLP

  	
   

  	
  Investigations

  
	
  75 E. 55th Street, First
  Floor

  	
   

  	
  Embarcardero Center
  West

  	
   

  	
  U.S. International
  Trade

  
	
  New York, NY 10022

  	
   

  	
  275 Battery Street,
  26th Floor

  	
   

  	
  Commission

  
	
  (212) 318-6000

  	
   

  	
  San Francisco, CA 94111

  	
   

  	
  500 E Street, SW, Suite
  401

  
	
   

  	
   

  	
  (415) 984-8700

  	
   

  	
  Washington, DC 20436

  
	
   

  	
   

  	
   

  	
   

  	
  (202) 205-2579

  
	
  Scott M. Flicker

  	
   

  	
   

  	
   

  	
   

  
	
  Patrick J. Togni Paul,

  	
   

  	
  Paula Ambrosini

  	
   

  	
  Commission Investigative
  Attorneys

  
	
  Hastings, Janofsky
  & 

  	
   

  	
  O’Melveny & Myers
  LLP

  	
   

  	
   

  
	
  Walker, LLP

  	
   

  	
  400 S. Hope Street,
  #1500

  	
   

  	
   

  
	
  875 15th Street, N.W.

  	
   

  	
  Los Angeles, CA 90071

  	
   

  	
   

  
	
  Washington, D.C. 20005

  	
   

  	
  (213) 430-6000

  	
   

  	
   

  
	
  (202) 551-1700

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Petra Smeltzer

  	
   

  	
   

  
	
  Thomas A. Counts

  	
   

  	
  O’Melveny & Myers
  LLP

  	
   

  	
   

  
	
  Paul, Hastings,
  Janofsky & 

  	
   

  	
  1625 Eye Street, NW

  	
   

  	
   

  
	
  Walker, LLP

  	
   

  	
  Washington, DC 20006

  	
   

  	
   

  
	
  55 Second Street

  	
   

  	
  (202) 383-5300

  	
   

  	
   

  
	
  Twenty-Fourth Floor

  	
   

  	
   

  	
   

  	
   

  
	
  San Francisco, CA 94105

  	
   

  	
  Counsel to OrthoClear, Inc., 

  	
   

  	
   

  
	
  (415) 856-7000

  	
   

  	
  OrthoClear Holdings, Inc.,  

  	
   

  	
   

  
	
   

  	
   

  	
  and OrthoClear Pakistan Pvt, 

  	
   

  	
   

  
	
  Counsel to Align 

  	
   

  	
  Ltd.

  	
   

  	
   

  
	
  Technology, Inc.

  	
   

  	
   

  	
   

  	
   

  

 

 6
 

 

CERTIFICATE
OF SERVICE

In accordance with the
Agreed Service Protocol in this investigation, I hereby certify that a copy of
the foregoing Joint Motion to Terminate Investigation was served as indicated,
to the parties listed below, this 13th day of October 2006:

	
  Counsel for Respondents OrthoClear, Inc.,

  	
   

  	
  By Hand (2 copies)

  
	
  OrthoClear Holdings, Inc. and
  OrthoClear

  	
   

  	
   

  
	
  Pakistan PVT, Ltd.

  	
   

  	
  The Honorable Robert L.
  Barton, Jr.

  
	
   

  	
   

  	
  Administrative Law
  Judge

  
	
   

  	
   

  	
  U.S. International
  Trade Commission

  
	
  BY ELECTRONIC MAIL

  	
   

  	
  500 E Street, S.W.,
  Room 317G

  
	
   

  	
   

  	
  Washington, DC 20436

  
	
  orthoclear@omm.com

  	
   

  	
   

  
	
   

  	
   

  	
  By Electronic Copy

  
	
  BY HAND DELIVERY NEXT DAY

  	
   

  	
   

  
	
   

  	
   

  	
  Kimberly Parke, Esq.

  
	
  Petra Smeltzer

  	
   

  	
  Attorney-Advisor to
  Judge Barton

  
	
  O’Melveny & Myers
  LLP

  	
   

  	
  U.S. International
  Trade Commission

  
	
  1625 Eye Street, NW

  	
   

  	
  500 E Street, S.W.,
  Room 317E

  
	
  Washington, DC
  20006-4001

  	
   

  	
  Washington, DC 20436

  
	
   

  	
   

  	
   

  
	
  Counsel for Complainant Align
  Technology, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  For the Investigative Staff
  Attorney

  
	
  BY ELECTRONIC MAIL

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  align@paulhastings.com

  	
   

  	
  BY ELECTRONIC MAIL

  
	
   

  	
   

  	
   

  
	
  BY HAND DELIVERY

  	
   

  	
  Anne Goalwin, Esq.

  
	
   

  	
   

  	
  Vu Bui, Esq.

  
	
  Scott M. Flicker

  	
   

  	
  Office of Unfair Import
  Investigations

  
	
  Paul, Hastings,
  Janofsky & Walker, LLP

  	
   

  	
  U.S. International
  Trade Commission

  
	
  875 15th Street, N.W.

  	
   

  	
  500 E Street, S.W.,
  Suite 401

  
	
  Washington, D.C. 20005

  	
   

  	
  Washington, DC 20436

  
	
  (202) 551-1700

  	
   

  	
   

  

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Kevin D. Edwards

  

 

 7

 

INTELLECTUAL
PROPERTY TRANSFER AGREEMENT

This INTELLECTUAL
PROPERTY TRANSFER AGREEMENT (this “Agreement”) is made and entered into
as of October 12, 2006 (the “Effective Date”), by and among OrthoClear
Holdings, Inc., a British Virgin Islands corporation, OrthoClear, Inc., a
Delaware corporation, and OrthoClear Pakistan PVT Ltd., a Pakistani corporation
(each an “OrthoClear Corporate Party”), Muhammad Ziaullah Chishti, an
individual(“Chishti”), and Huafeng Wen, an individual(“Wen”),
each being an “OrthoClear Individual Party”, and together with the
OrthoClear Corporate Parties, “OrthoClear” or the “OrthoClear Parties”),
and Align Technology, Inc., a Delaware corporation (“Align”) (each of
the foregoing being a “Party” and collectively, the “Parties”).

WHEREAS, the
OrthoClear Corporate Parties and Align are parties to those certain litigations
captioned (1) In the Matter of Certain
Incremental Dental Positioning Adjustment Appliances and Methods of Producing
Same, Investigation No. 337-TA-562, pending in the United States
International Trade Commission (the “ITC Investigation”), (2) Align Technology, Inc. v. OrthoClear, Inc., et al., Case No. CGC-05-438361, pending
in the Superior Court of the State of California, County of San Francisco, (3) Align Technology, Inc. v. OrthoClear, Inc.
and OrthoClear Holdings, Inc.,
Case No. CV 05-2948 (MMC), pending in the Northern District of California, San
Francisco Division, (4) Align Technology,
Inc. v. OrthoClear, Inc. and
OrthoClear Holdings, Inc., Case No. CV 06-3828 (SC) pending in the
Northern District of California, San Francisco Division, and (5) Align Technology, Inc. v. OrthoClear, Inc.,
Case No. 06 C 0023 S, which was dismissed from the Western District of
Wisconsin but is subject to reinstatement (collectively, the “Actions”);

WHEREAS, the
OrthoClear Individual Parties are parties to that certain litigation captioned Align Technology, Inc. v. OrthoClear, Inc., et al., Case No. CGC-05-438361, pending
in the Superior Court of the State of California, County of San Francisco;

WHEREAS, the
OrthoClear Corporate Parties are individually or collectively, the owners of
certain intellectual property rights;

WHEREAS, the
OrthoClear Individual Parties either participated in the development of, or
have had confidential access to, such intellectual property; and

WHEREAS, the
Parties have entered into a settlement of the Actions, the terms of which are
set forth in a settlement agreement effective as of October 12, 2006 (the “Settlement
Agreement”) pursuant to which the OrthoClear Corporate Parties, Chishti and
Wen have agreed to transfer and assign certain intellectual property rights to
Align.

NOW THEREFORE, for
the consideration set forth in the Settlement Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

 1
 

 

ARTICLE 1

DEFINITIONS

Section 1.1             Certain
Defined Terms.  As used in this
Agreement, the following terms shall have the meanings set forth below:

“Affiliate”
means, with respect to a Party, any entity that directly or indirectly
controls, is controlled by, or is under common control with, such Party, but
only for so long as such control continues. 
For purposes of this definition, “control” means the power to direct the
management and affairs of an entity, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise.  In case of a corporation, the direct or
indirect ownership of fifty percent (50%) or more of its outstanding voting
shares shall in any case be deemed to confer control, provided that, the direct
or indirect ownership of a lower percentage of such securities shall not
necessarily preclude the existence of control.

“Copyrights”
mean any and all copyrights in works of authorship of any type, including
Software, industrial designs, training materials and instruction manuals, web
pages, advertising, marketing and promotional materials, including, but not
limited to, (i) all registrations and applications for registration thereof throughout
the world, including the copyrights, copyright applications and copyright
registrations set forth on Schedule C hereto, (ii) all renewals, extensions,
continuations and restorations and reversions of such copyrights (whether
vested, contingent or inchoate and whether such renewals, extensions,
continuations, restorations and reversions are now in existence or come into
existence as a result of future legislation or the interpretation thereof) in
all countries of the world, and (iii) all moral and common law rights thereto
and all rights therein provided by international treaties and conventions.

“Domain Names”
mean any and all Internet domain names, including any and all goodwill
symbolized thereby including, but not limited to, all registrations and applications
for registration thereof throughout the world, including the domain names set
forth on Schedule D hereto.

“Intellectual
Property” means, collectively, Copyrights, Domain Names, Patents, Software,
Trademarks, and Trade Secrets.

“Patents”
mean any and all United States, foreign and international patents, patent
applications and statutory invention registrations including, but not limited
to, (i) the patents and patent applications set forth on Schedule A hereto,
(ii) reissues, continuations, continuations-in-part, divisions, extensions and
reexaminations thereof, (iii) all inventions disclosed therein, and (iv) all
rights therein provided by international treaties and conventions.

“Software”
means any and all computer software, programs and databases in any form,
including, but not limited to, the software set forth on Schedule E hereto and
any macros, applets or other information associated therewith, including links,
source code, object code, operating systems and specifications, data, databases,
database management code, utilities,

 2
 

 

graphical user
interfaces, menus, images, icons, forms, methods of processing, software
engines, platforms, and data formats, all versions, updates, corrections,
enhancements and modifications thereto, and all related documentation,
developer notes, comments and annotations.

“Trademarks”
mean any and all trademarks, service marks, collective marks, composite marks,
trade dress, logos, trade names, corporate names, symbols, slogans and other
indicia of source, origin or goodwill, including, but not limited to, (i) the
trademarks, trademark applications and trademark registrations set forth on
Schedule B hereto, (ii) the goodwill of the business symbolized thereby or
associated therewith, (iii) all common law rights thereto, (iv) all
registrations and applications for registration of the foregoing throughout the
world, including reissues, extensions and renewals thereof, and (v) all rights
therein provided by international treaties and conventions.

 “Trade Secrets” means any and all trade
secrets, know-how and other confidential or proprietary information regarding
the treatment of malocclusions including, all manufacturing and production
processes and techniques, research and development information, technology,
inventions, drawings, specifications, designs, plans, proposals, technical
data, and all rights thereto in any jurisdiction to limit the use or disclosure
thereof.  Trade Secrets does not does not
include confidential business information regarding finances, sales, marketing
strategic plans, regulatory filings other than the January and July 2006 FDA
submissions containing descriptions of the OrthoClear production process,
patient data, employees, customers, suppliers, contractors, and/or business
plans, or disk images or personal information intermingled or stored with such
confidential business information.

“Transferred
Intellectual Property” has the meaning set forth in Section 2.1 of this
Agreement.

ARTICLE 2

ASSIGNMENT

Section 2.1             Assignment.

(a)           Each
OrthoClear Corporate Party hereby assigns and transfers to Align its entire
right, title and interest, world-wide, in and, as pertinent, the goodwill
associated with, (i) all Intellectual Property individually or collectively
owned in whole or in part by any such OrthoClear Corporate Party and disclosed
in the ITC Investigation or any of the Actions, and (ii) all other Intellectual
Property individually or collectively owned in whole or in part by such
OrthoClear Corporate Party, with application to the correction of malocclusions,
including but not limited to processes for designing and manufacturing
removable plastic dental aligners or other activities using existing technology
claimed as proprietary by any of the OrthoClear Corporate Parties.

(b)           Each
OrthoClear Individual Party hereby assigns and transfers to Align its entire
right, title and interest, world-wide, in and, as pertinent, the goodwill
associated with, all Intellectual Property individually or collectively owned
in whole or in part by such OrthoClear Individual Party with application to the
correction of malocclusions.

 3
 

 

(c)           The
rights, titles and interests assigned pursuant to this Section 2.1 are herein
defined as the “Transferred Intellectual Property.”

Section 2.2             Registrant
Name Change Agreement.  Upon the
Effective Date, the OrthoClear Corporate Parties shall transfer to Align, or
provide to Align such registrant account information so that Align can effect
the transfer of, each Transferred Domain Name. 
Align will not remove the existing material pertaining to OrthoClear’s
operations or ongoing customer commitments from the website for at least 5 days
following the Effective Date.  The
OrthoClear Corporate Parties shall cooperate with Align to effectuate the
submission or filing of such registrant name change agreements or other forms
to or with the Registering Authority in accordance with the policies and rules
of the Registering Authority.

Section 2.3             Transfer
of Trade Secrets and Tangible Materials.

(a)           Within
thirty (30) days of the Effective Date, the OrthoClear Parties shall make
reasonable efforts to transfer and disclose to Align all of their Trade Secrets
relating to or embodying the Transferred Intellectual Property (“Transferred
Trade Secrets”).

(b)           Upon
the effectiveness of the Settlement Agreement and transfer of the settlement
funds by Align to OrthoClear, OrthoClear consents to the disclosure to Align of
all discovery materials produced by OrthoClear during discovery in the ITC
Investigation that describe or embody the Transferred Intellectual Property,
including, but not limited to, software, training materials, process manuals,
and the FDA January and July 2006 submissions containing descriptions of the
OrthoClear production process; provided, however, that Align shall return or
destroy, at OrthoClear’s option, all confidential discovery materials that
relate to OrthoClear’s finances, sales, marketing strategic plans, disk images,
personal information, regulatory filings other than the January and July 2006
FDA submissions containing descriptions of the OrthoClear production process,
patient data, employees, customers, suppliers, contractors, and/or business
plans.  Align shall provide OrthoClear
with a designation, by production number, of all ITC confidential discovery
material that Align is returning or destroying under this provision.

(c)           The
OrthoClear Corporate Parties hereby consent that all Transferred Intellectual
Property designated as OrthoClear’s Confidential Business Information under the
Revised Protective Order (June 1, 2006) entered in the ITC Investigation is
hereby deemed to be Align’s Confidential Business Information under that Order.

(d)           OrthoClear
shall make reasonable efforts to destroy, permanently, all copies of materials
relating to or embodying the Transferred Intellectual Property in any form in
which they have been retained after the Transferred Intellectual Property has
been delivered to Align; provided, however, that OrthoClear may retain an
archival copy of all business records. From and after the Effective Date, the
OrthoClear Parties and their Affiliates shall make no further use of the
Transferred Trade Secrets.

(e)           Within
thirty (30) days of the Effective Date, the OrthoClear Parties shall deliver to
Align copies of all prosecution files for the Transferred Intellectual
Property; provided, however, that OrthoClear may retain an archival copy of all
business records.

 4
 

 

Section 2.4             No
Assumed Liabilities.  Align shall not
assume and shall in no event be liable for any liabilities, debts or
obligations of any of the OrthoClear Parties, whether accrued, absolute,
matured, known or unknown, liquidated or unliquidated, contingent or otherwise.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Section 3.1             Mutual
Representations.  Each of Align and
the OrthoClear Corporate Parties hereby represents and warrants to the others
as follows:

(a)           Due
Authorization.  Such Party is a
corporation duly incorporated and in good standing (where such concept applies)
as of the Effective Date, and has taken all necessary actions on its part to
duly authorize the execution, delivery and performance of this Agreement.

(b)           Due
Execution.  This Agreement has been
duly executed and delivered by such Party and constitutes a legal, valid and
binding obligation of such Party, enforceable against such Party in accordance
with its terms.

(c)           No
Conflict.  Such Party’s execution,
delivery and performance of this Agreement does not: (i) violate, conflict with
or result in the breach of any provision of the charter or by-laws (or similar
organizational documents) of such Party; (ii) conflict with or violate any law,
rule, regulation or governmental order applicable to such Party or any of its
assets, properties or businesses; or (iii) conflict with, result in any breach
of, constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or
give to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of any agreement to which it is a party.

(d)           Litigation.  No action, claim or any litigation,
proceeding, arbitration, investigation or controversy, other than the Actions
and challenges to the trademark application and use with respect to “OrthoView,”
is pending or threatened against such Party that, if adversely determined,
could have a material and adverse effect on the Transferred Intellectual
Property or that Party’s ability to perform its obligations hereunder nor, to
the best of such Party’s knowledge, do facts exist that might give rise to any
such proceedings.

Section 3.2             OrthoClear
Individual Representations.  Each
OrthoClear Individual Party hereby represents and warrants to Align as follows:

(a)           Due
Execution.  This Agreement has been
duly executed and delivered by such Party and constitutes a legal, valid and
binding obligation of such Party, enforceable against such Party in accordance
with its terms.

(b)           No
Conflict.  Such Party’s execution,
delivery and performance of this Agreement does not: (i) conflict with or
violate any law, rule, regulation or 

 5
 

 

governmental order applicable to such Party or any of its assets,
properties or businesses; or (ii) conflict with, result in any breach of,
constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or
give to others any rights of termination, amendment, acceleration, suspension,
revocation or cancellation of any agreement to which it is a party.

(c)           Litigation.  No action, claim or any litigation,
proceeding, arbitration, investigation or controversy, other than (i) the
Actions and (ii) challenges to the trademark “OrthoView,” is pending or
threatened against such Party that, if adversely determined, could have a
material and adverse effect on the Transferred Intellectual Property or that
Party’s ability to perform its obligations hereunder nor, to the best of such
Party’s knowledge, no facts exist that might give rise to any such proceedings.

Section 3.3             Intellectual
Property.  Each of the OrthoClear
Parties hereby represents and warrants to Align that:

(a)           Accuracy
of Schedules.  Schedule A sets forth
a true and complete list of all Patents that relate to, embody or constitute
Transferred Intellectual Property. 
Schedule B sets forth a true and complete list of all Trademarks that
relate to, embody or constitute Transferred Intellectual Property.  Schedule C sets forth a true and complete
list of all copyright registrations and copyright applications that relate to,
embody or constitute Transferred Intellectual Property.  Schedule D sets forth a true and complete
list of all Domain Names relate to, embody or constitute Transferred
Intellectual Property.  Schedule E sets
forth a true and complete list of all Software that relates to, embodies, or
constitutes Transferred Intellectual Property.

(b)           Ownership.  Other than the claims asserted by Align in
the Actions and challenges to the trademark “OrthoView,” the OrthoClear
Parties, individually or collectively, are the exclusive owners of the entire
and unencumbered right, title and interest in and to the Transferred
Intellectual Property and are entitled to use all of the Transferred
Intellectual Property in a manner consistent with past practice and to assign
and transfer the Transferred Intellectual Property as provided for herein.

(c)           No Transfers.  Except as set forth on Schedule F, none of
the OrthoClear Parties or their Affiliates has assigned, licensed or otherwise
transferred or encumbered any of Transferred Intellectual Property in the period
between September 19, 2005 and the Effective Date.

(d)           Further Assurances.  The OrthoClear Parties shall, upon Align’s
reasonable request, execute all documents and provide all necessary information
and reasonable assistance as may be requested or necessary in connection with
recording Align’s ownership interest in, and in maintaining and prosecuting,
the Transferred Intellectual Property. 
In the event that Align has used commercially reasonable efforts, but
has not secured any OrthoClear Party signature on any document on which it is
entitled to have such signature under this Section, the OrthoClear Parties
hereby irrevocably designate and appoint Align and its duly authorized officers
and agents, as the OrthoClear Parties’ agents and attorneys-in-fact to act for
and on their behalf and 

 6
 

 

instead of the OrthoClear
Parties, with full power of substitution, to execute and file any such document
and to do all other lawfully permitted acts to further the purposes of the
foregoing with the same legal force and effect as if executed by the necessary
OrthoClear Party or Parties.

(e)           Infringement.  To the knowledge of the OrthoClear Parties,
OrthoClear’s acquisition, use and/or disclosure of the Transferred Intellectual
Property does not infringe, misappropriate or conflict with any intellectual
property right of any third party, except for challenges to the trademark “OrthoView.”

(f)            Threatened Actions.  Other than the Actions and challenges to the
trademark application for “OrthoView,” no actions have been asserted, are
pending, or threatened against any of the OrthoClear Parties (i) based upon or
challenging or seeking to deny or restrict the use by such OrthoClear Party of
any of the Transferred Intellectual Property, (ii) challenging the ownership of
any OrthoClear Party in the Transferred Intellectual Property, or (iii)
alleging that the use of any of the Transferred Intellectual Property does or
may infringe or misappropriate the intellectual property rights of any third
party.  To the knowledge of the OrthoClear
Parties, no third party has misappropriated or is engaging in any activity that
infringes the Transferred Intellectual Property.

(g)           Validity.  The Transferred Intellectual Property is
valid and enforceable, and has not been adjudged invalid or unenforceable in
whole or part; provided, however, that this representation does not apply to
any rejections or refusals to register by and patent or trademark office in any
jurisdiction.  The consummation of the
transaction contemplated by this Agreement will not result in the termination
or impairment of any of Transferred Intellectual Property and the OrthoClear
Parties will take no action to challenge or impair its validity.

ARTICLE 4

CONFIDENTIALITY

Section 4.1             Confidentiality.  Following the Effective Date, the Transferred
Intellectual Property shall be considered the property of Align and the
OrthoClear Parties and their Affiliates shall not disclose any information
related to the Transferred Intellectual Property except as required to complete
the transactions contemplated hereby. 
The OrthoClear Parties further agree to maintain as confidential, to not
disclose to third parties, and to make reasonable efforts to ensure that their
Affiliates, agents and employees do not disclose to third parties, any of the
Transferred Intellectual Property that has not been publicly disclosed as of
the Effective Date, including but not limited to unpublished Patents, Trade
Secrets, and Copyrights.

ARTICLE 5

NON-COMPETITION

Section 5.1             Non-Competition.  The Non-Competition Covenants executed by
Chishti, Wen, Christopher Kawaja, Peter Riepenhausen, Joe Breeland and Jeffrey
Tunnell and contained in the Settlement Agreement are material provisions to
this Agreement.

 7
 

 

ARTICLE 6

MISCELLANEOUS

Section 6.1             Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by overnight courier service (with signature required), by facsimile,
by electronic mail or by registered or certified mail (postage prepaid, return
receipt requested) to the respective Parties at the following addresses:

	
  If to Align:

   

  881 Martin Avenue

  Santa Clara,
  California  95050

  Attention:  Roger George

  Tel. No.:   408-470-1000

  Fax No.:  408-470-1010

  Email: rgeorge@aligntech.com

  	
  If to OrthoClear
  Holdings, Inc.:

   

  Walkers BVI, Attention: Heidi de Vries

  The Mill Mall, PO Box 92, Wickhams Cay 1

  Road Town, Tortola, British Virgin Islands 

  Tel. No.: Tel: 284 494 4051

  

  Fax No.: 284 494 5535

  Email: heidi.devries@walkersglobal.com

   

  
	
  If to OrthoClear, Inc.:

  580 California Street,
  Suite 1725

  San Francisco, CA  94104

   

  Tel. No.: 415-362-4200 

  Fax No.: 415-362-4240

  Email:

  	
  If to OrthoClear
  Pakistan Private Ltd.:

  8-Aitchison Road

  1-km Thoker Niaz Baig,
  Raiwind Rd

  Lahore, Pakistan

  Tel. No.: 800-808-7173

  Fax No.: n/a

  
	
  If to Muhammad Ziaullah
  Chishti:

  c/o TRG

  1700 Pennsylvania Ave
  NW

  Washington, D.C. 20006

  Tel. No.: 415-370-8085

  Fax No.:

  Email:

   

  	
  If to Huafeng “Charlie”
  Wen:

  2117 Gossamer Ave.

  Redwood Shores, CA  94065

  

  Tel. No.: 650 868 4935

  Fax No.:

  Email:

   

  

Section 6.2             Governing
Law.  This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware.  The Parties unconditionally
and irrevocably consent to the exclusive jurisdiction of the state and federal
courts located in New Castle County, Delaware, and waive any objection with
respect thereto, for the purpose of any action, suit or proceeding arising out
of or relating to this Agreement or the transactions contemplated hereby.

Section 6.3             Amendment.  This Agreement may not be amended or modified
except by an instrument in writing signed by all parties hereto.

 8
 

 

Section 6.4             No
Waiver.  The failure of any of the
Parties to enforce at any time for any period the provisions of or any rights
deriving from this Agreement shall not be construed to be a waiver of such
provisions or rights or the right of such party thereafter to enforce such
provisions, and no waiver shall be binding unless executed in writing by all
Parties hereto.

Section 6.5             Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.  Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.

Section 6.6             Headings.  The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.

Section 6.7             Counterparts.  This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original
instrument and all of which taken together shall constitute one and the same
agreement.

Section 6.8             Entire
Agreement.  This Agreement, together
with the Settlement Agreement and the agreements referred to therein,
constitutes the entire agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both
written and oral, between the Parties with respect to such subject matter.

Section 6.9             Third
Party Beneficiaries.  Nothing in this
Agreement, either express or implied, is intended to or shall confer upon any
third party any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 9
 

 

IN WITNESS WHEREOF, each Party has caused this
Agreement to be executed as of the Effective Date.

 

	
  Align Technology, Inc.

  	
   

  	
  OrthoClear Holdings,
  Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name: Peter
  Riepenhausen

  	
   

  
	
  Title:

  	
   

  	
  Title: Chairman

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  OrthoClear, Inc.

  	
   

  	
  OrthoClear Pakistan PVT Ltd.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Name: Muhammad
  Ziaullah Chishti

  	
   

  	
  Name: Mudassar
  Rathore

  	
   

  
	
  Title: Chief
  Executive Officer

  	
   

  	
  Title: Country
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Muhammad
  Ziaullah Chishti

  	
   

  	
  Huafeng “Charlie” Wen

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 10

 

SCHEDULE A

Transferred Patents

	
  Patent/Application 

  Number

  	
   

  	
  Issue/Filing 

  Date

  	
   

  	
  Title

  	
   

  	
  Inventor

  	
   

  	
  Assignee of 

  Record

  
	
  US 5,820,368

  	
   

  	
  October 13, 1998

  	
   

  	
  Disposable
  Applicator for Forming and Retaining an Orthodontic Attachment

  	
   

  	
  Wolk

  	
   

  	
   

  
	
  PCT/US2005/039715

  	
   

  	
  11-02-05

  	
   

  	
  Methods and
  Apparatuses for 

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
   

  	
   

  	
   

  	
   

  	
  Manufacturing
  Dental 

  	
   

  	
  Liu

  	
   

  	
  OrthoClear
  Holdings

  
	
   

  	
   

  	
   

  	
   

  	
  Aligners

  	
   

  	
  Liu, Gang

  	
   

  	
  OrthoClear
  Holdings

  
	
  PCT/US2005/045351

  	
   

  	
  12-14-05

  	
   

  	
  Image Based
  Orthodontic Treatment Methods

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
  PCT/US2005/045351

  	
   

  	
  12-14-05

  	
   

  	
  Image Based
  Orthodontic Treatment Methods

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
  PCT/US2006/003753

  	
   

  	
  02-02-06

  	
   

  	
  Organizing,
  Storing, and 

  	
   

  	
  Wen

  	
   

  	
  OrthoClear Holdings

  
	
  

  	
   

  	
   

  	
   

  	
  Tracking Dental
  Devices

  	
   

  	
  Sawtelle

  	
   

  	
  OrthoClear
  Holdings

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Wolf

  	
   

  	
  OrthoClear
  Holdings

  
	
  PCT/US2006/007714

  	
   

  	
  03-03-06

  	
   

  	
  Variations of
  Dental Aligners

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Liu

  	
   

  	
  OrthoClear
  Holdings

  
	
  10/979,497

  	
   

  	
  11/02/04

  	
   

  	
  Meth. &
  Appar. for Mfg. and 

  	
   

  	
  Wen

  	
   

  	
  1. Kookie, Inc
  (11-01-2004)

  
	
  

  	
   

  	
   

  	
   

  	
  Constr. a Dental
  Aligner

  	
   

  	
   

  	
   

  	
  2. F: Kookie to
  OC Holdings 

  (6-20-05)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3. F: Wen to OC
  Holdings 

  (7-28-05)

  

 

 11
 

 

 

	
  10/979,504

  	
   

  	
  11-02-04

  	
   

  	
  Prod. an
  Adjustable Physical 

  	
   

  	
  Wen

  	
   

  	
  1. Kookie, Inc
  (11-01-2004)

  
	
  

  	
   

  	
   

  	
   

  	
  Dental Arch
  Model

  	
   

  	
   

  	
   

  	
  2. F: Kookie to
  OC Holdings (6-20-05)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3. F: Wen to OC
  Holdings (7-28-05)

  
	
  10/979,823

  	
   

  	
  11-02-04

  	
   

  	
  Meth. &
  Appar. for Mfg. and 

  	
   

  	
  Wen

  	
   

  	
  1. Kookie, Inc
  (11-01-2004)

  
	
   

  	
   

  	
   

  	
   

  	
  Constr. a Phys.
  Dental Arch Model

  	
   

  	
   

  	
   

  	
  2. F: Kookie to
  OC Holdings (6-20-05)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3. F: Wen to OC
  Holdings (7-28-05)

  
	
  10/979,824

  	
   

  	
  11-02-04

  	
   

  	
  Prod. a Base for
  Physical 

  	
   

  	
  Wen

  	
   

  	
  1. Kookie, Inc
  (11-01-2004)

  
	
  

  	
   

  	
   

  	
   

  	
  Dental Arch
  Model

  	
   

  	
   

  	
   

  	
  2. F: Kookie to
  OC Holdings (6-20-05)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3. F: Wen to OC
  Holdings (7-28-05)

  
	
  11/013,147

  	
   

  	
  12-14-04

  	
   

  	
  Tooth Movement
  Tracking System

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,160

  	
   

  	
  12-14-04

  	
   

  	
  System and
  Methods for Casting Physical Tooth 

  	
   

  	
  Liu

  	
   

  	
  OrthoClear
  Holdings (7-27-2005)

  
	
  

  	
   

  	
   

  	
   

  	
  Model

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/012,924

  	
   

  	
  12-14-04

  	
   

  	
  Accurately Prod.
  a Base for Physical Dental Arch Model

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-26-2005)

  
	
  11/013,145

  	
   

  	
  12-14-04

  	
   

  	
  Fabricating a
  Base Compatible with Physical Tooth Models

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  

 

 12
 

 

 

	
  11/013,146

  	
   

  	
  12-14-04

  	
   

  	
  Image Base
  Orthodontic Treatment Viewing System

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,152

  	
   

  	
  12-14-04

  	
   

  	
  Base for
  Physical Dental Arch Model

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,153

  	
   

  	
  12-14-04

  	
   

  	
  Image Based
  Dentition Record Digitization

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,154

  	
   

  	
  12-14-04

  	
   

  	
  Preventing
  Interference Between Tooth Models

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,155

  	
   

  	
  12-14-04

  	
   

  	
  Accurately
  Predicting and Preventing Interference b/w Tooth Models

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,156

  	
   

  	
  12-14-04

  	
   

  	
  Prod.
  Non-Interfering Tooth 

  	
   

  	
  Liu

  	
   

  	
  OrthoClear
  Holdings (7-27-2005)

  
	
   

  	
   

  	
   

  	
   

  	
  Models on a Base

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,157

  	
   

  	
  12-14-04

  	
   

  	
  Prod. Accurate
  base for a Dental Arch Model

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,158

  	
   

  	
  12-14-04

  	
   

  	
  Prod. a Phys.
  Tooth model Compatible w/ a Phys. Dental Arch Model

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/013,159

  	
   

  	
  12-14-04

  	
   

  	
  Prod. a Base for
  Accurately Receiving Dental Tooth Models

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/050,050

  	
   

  	
  02-03-05

  	
   

  	
  Intelligent
  Tracking of Dental Devices

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  

 

 13
 

 

 

	
  11/050,126

  	
   

  	
  02-03-05

  	
   

  	
  Methods for
  Prod. Non-Interfering Tooth Models

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/050,051

  	
   

  	
  02-03-05

  	
   

  	
  Storage System
  for Dental Devices

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/074,298

  	
   

  	
  03-07-05

  	
   

  	
  Disposable
  Dental Aligner

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/074,300

  	
   

  	
  03-07-05

  	
   

  	
  Fluid Permeable
  Dental Aligner

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/074,301

  	
   

  	
  03-07-05

  	
   

  	
  Dental Aligner
  for Providing Accurate Dental Treatment

  	
   

  	
  Liu

  Wen

  	
   

  	
  OrthoClear
  Holdings (7-27-2005)

  OrthoClear Holdings (7-28-2005)

  
	
  11/074,299

  	
   

  	
  03-07-05

  	
   

  	
  Prod. Phys.
  Dental Arch Model 

  	
   

  	
  Liu

  	
   

  	
  OrthoClear
  Holdings (7-27-2005)

  
	
   

  	
   

  	
   

  	
   

  	
  Having
  Individually Adjust. Tooth Models

  	
   

  	
  Wen

  	
   

  	
  OrthoClear Holdings
  (7-28-2005)

  
	
  11/074,297

  	
   

  	
  03-07-05

  	
   

  	
  Prod. Wrinkled
  Dental Aligner 

  	
   

  	
  Liu

  	
   

  	
  OrthoClear
  Holdings (7-27-2005)

  
	
  

  	
   

  	
   

  	
   

  	
  for Dental
  Treatment

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (7-28-2005)

  
	
  11/107,584

  	
   

  	
  04/15/05

  	
   

  	
  System for
  Organizing Dental Aligners

  	
   

  	
  Wen

  	
   

  	
   

  
	
  11/205,496

  	
   

  	
  08/16/05

  	
   

  	
  System for
  Organizing Dental Aligners

  	
   

  	
  Liu

  	
   

  	
  OrthoClear
  Holdings (1-12-2005) (OTITC021325)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Lui, Gang

  	
   

  	
  OrthoClear
  Holdings (1-14-2005) (OTITC021325)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Liang

  	
   

  	
  OrthoClear
  Holdings (1-12-2005) (OTITC021325)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Waqas

  	
   

  	
  OrthoClear
  Holdings (1-20-2005) (OTITC021325)

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings (1-10-2005) (OTITC021325)

  

 

 14
 

 

 

	
  60/673,851

  	
   

  	
  04/22/05

  	
   

  	
  Computer Aided
  Orthodontic 

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
  

  	
   

  	
   

  	
   

  	
  Treatment
  Planning

  	
   

  	
  Chishti

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Liu

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Mohammed

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Rizvi

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Bashir

  	
   

  	
   

  
	
  60/673,970

  	
   

  	
  04/22/05

  	
   

  	
  Sys. for
  Digitization and Registering a Subject’s Upper and Lower Arches

  	
   

  	
  Wen

  	
   

  	
   

  
	
  60/675,003

  	
   

  	
  04/25/05

  	
   

  	
  Method for
  Prescribing 

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
  

  	
   

  	
   

  	
   

  	
  Orthodontic Treatments

  	
   

  	
  Chishti

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Liu

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Mohammed

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Rizvi

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Bashir

  	
   

  	
   

  
	
  60/676,546

  	
   

  	
  04/29/05

  	
   

  	
  Digitization of
  Dental Arch 

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
   

  	
   

  	
   

  	
   

  	
  Model

  	
   

  	
  Liu

  	
   

  	
   

  
	
  60/676,278

  	
   

  	
  04/29/05

  	
   

  	
  Treatment of
  Teeth by Aligners

  	
   

  	
  Wen

  	
   

  	
   

  
	
  11/107,584

  	
   

  	
  04/15/05

  	
   

  	
  Dental Aligner
  Devices Having Snap-On Connectors

  	
   

  	
  Wen

  	
   

  	
   

  
	
  60/676,100

  	
   

  	
  04/29/05

  	
   

  	
  Non-Uniform
  & Multi-Layer 

  	
   

  	
  Wen

  	
   

  	
  OrthoClear
  Holdings

  
	
  

  	
   

  	
   

  	
   

  	
  Dental Aligners
  and Methods

  	
   

  	
  Liu

  	
   

  	
   

  

 

 15
 

 

 

	
  60/731,371

  	
   

  	
  10/27/05

  	
   

  	
  Method for
  Generating Digital Dental Arch Model

  	
   

  	
  Liu (“et al.”)

  	
   

  	
  OrthoClear
  Holdings

  
	
  11/258,465

  	
   

  	
   

  	
   

  	
  Multi-Layer
  Casting Methods and Devices

  	
   

  	
   

  	
   

  	
   

  
	
  11/405,972

  	
   

  	
   

  	
   

  	
  Digitization of
  Target Dental Arch Model

  	
   

  	
   

  	
   

  	
   

  
	
  60/798,237

  	
   

  	
   

  	
   

  	
  Visualization
  and Manipulation of Digital Models

  	
   

  	
   

  	
   

  	
   

  
	
  11/404,332

  	
   

  	
   

  	
   

  	
  Treatment of
  Teeth by Aligners

  	
   

  	
   

  	
   

  	
   

  
	
  11/404,643

  	
   

  	
   

  	
   

  	
  Computer Aided
  Orthodontic Treatment Planning

  	
   

  	
   

  	
   

  	
   

  
	
  PCT/US06/14124

  	
   

  	
   

  	
   

  	
  Computer Aided
  Orthodontic Treatment Planning

  	
   

  	
   

  	
   

  	
   

  
	
  PCT/US06/14125

  	
   

  	
   

  	
   

  	
  Treatment of
  Teeth by Aligners

  	
   

  	
   

  	
   

  	
   

  

 

 16
 

 

 

SCHEDULE B

Transferred Trademarks

	
  Country

  	
   

  	
  Mark

  	
   

  	
  Registration or 

  Application
Number

  	
   

  	
  Registered

  Owner

  
	
  Argentina

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  2668283

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Australia

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  1111114

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Brazil

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  8337330

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Chile

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  734707

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Hong Kong

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  3630378

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Iceland

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  06000696

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  New Zealand

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  74716110

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Peru

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  06276902

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Singapore

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  06008634

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  Switzerland

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  548034

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  USA

  	
   

  	
  ORTHOVIEW

  	
   

  	
  78564205

  	
   

  	
  OrthoClear, Inc.

  
	
  USA

  	
   

  	
  ORTHOCLEAR

  	
   

  	
  78749870

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  USA

  	
   

  	
  OC 10

  	
   

  	
  78748754

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  USA

  	
   

  	
  OC 4x4

  	
   

  	
  78748746

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  USA

  	
   

  	
  ORTHOCLEAR FT

  	
   

  	
  78748731

  	
   

  	
  OrthoClear Holdings, Inc.

  
	
  USA

  	
   

  	
  THE NEXT GENERATION IN INVISIBLE ORTHODONTICS

  	
   

  	
  78793414

  	
   

  	
  OrthoClear Holdings, Inc.

  

 

 17
 

 

SCHEDULE C

Transferred Copyrights

None 

 18
 

 

SCHEDULE D

Transferred Domain Names 

orthoclear.com

orthoclear.net

orthoclearcalculator.com

yourorthoviewonline.com

yourorthoview.com

ocorders.com

 19
 

 

SCHEDULE E

Transferred Software

OrthoTreat

OCModeller

OCPrescrption

Case
Creator

Big
Brother

BiteSetter

OrthoView

OrthoView
3D

Donkey
Modeller

All software
developed for and/or related to the Microscribe for estimating root positions
and capturing tooth positions from the epoxy models for input into BiteSetter

All software
developed for and/or related to the scanning of the epoxy tooth models

All software
developed for and/or related to the manipulation of individual digital tooth
models either post-scanning (e.g.,
using RapidForm) or during treatment (i.e.,
shaving a digital tooth model that is undergoing IPR)

All software
developed for and/or related to the ArchFixer, ToothFixer, WaxSetup and
MidCourseCorrection plugins

 20
 

 

Schedule F

Patents, Trademarks, Copyrights and
Software transferred in the period between 

September 19, 2005 and the Effective Date

None

 21

 

ORTHOCLEAR HOLDINGS, INC.

c/o Walkers (BVI) Limited

Walkers Chambers

PO Box 92

Road Town

British
Virgin Islands

October 12, 2006

Align Technology Inc.

Re:       Certification  for Settlement

Gentlemen/Ladies:

As
Chairman of the Board of OrthoClear Holdings, Inc. I certify that the requisite
approvals of its shareholders and board have been obtained to discontinue,
worldwide, all design, manufacture, marketing and sales of removable dental
aligners and that as of my signature to this letter, OrthoClear Holdings, Inc.
and its subsidiaries have discontinued, worldwide, all design, manufacture,
marketing and sales of removable dental aligners.

Signed
this 12th day of October, 2006 at Villeneuve-Loubet, France.

	
  /s/ Peter Riepenhausen

  	
   

  
	
  Peter Riepenhausen

  
	
  Chairman

  
	
  OrthoClear Holdings. Inc.

  

 

 

MARK E. MCKEEN (SB # 130950)
markmckeen@paulhastings.com

THOMAS A. COUNTS (SB # 148051) tomcounts@paulhastings.com

PETER C. MEIER (SB # 179019) petermeier@paulhastings.com

RICHARD E. ELDER (SB # 205389) richardelder@paulhastings.com

T. LEE KISSMAN (SB # 233434) leekissman@paulhastings.com

PAUL, HASTINGS, JANOFSKY & WALKER LLP

55 Second Street

Twenty-Fourth Floor

San Francisco, CA  94105-3441

Telephone:  (415) 856-7000

Facsimile:  (415) 856-7100

Attorneys for Plaintiff ALIGN TECHNOLOGY, INC.

GEORGE A. RILEY (SB
# 118304) griley@omm.com

DARIN W. SNYDER
(SB # 136003) dsnyder @omm.com

ROBERT D. TRONNES
(SB # 209835) rtronnes@omm.com

O’MELVENY &
MYERS LLP

Embarcadero Center
West

275 Battery Street

San Francisco,
CA  94111-3305

Telephone:  (415) 984-8700

Facsimile:  
(415) 984-8701

Attorneys for
Defendants

ORTHOCLEAR, INC.
and

ORTHOCLEAR HOLDINGS, INC.

IN THE UNITED STATES
DISTRICT COURT

FOR THE NORTHERN DISTRICT
OF CALIFORNIA

SAN FRANCISCO DIVISION

	
  ALIGN TECHNOLOGY, INC.

  	
   

  	
  CASE NO. C-06-3828 SC

  
	
   

  	
   

  	
   

  
	
  Plaintiff,

  	
   

  	
  STIPULATION AND [PROPOSED] ORDER

  
	
   

  	
   

  	
  OF DISMISSAL

  
	
  vs.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ORTHOCLEAR, INC. and

  	
   

  	
  Judge: Hon. Samuel Conti

  
	
  ORTHOCLEAR HOLDINGS, INC.,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Defendants.

  	
   

  	
   

  

 

 

WHEREAS, the parties have
resolved any and all claims for relief stated in this action;

IT IS HEREBY STIPULATED
by the parties and ORDERED by the Court that:

1.  This action is hereby dismissed with
prejudice.

2.  Each of the parties shall bear its own costs,
expenses and attorney fees.

3.  Pursuant to stipulation and in order to
effectuate the terms of the Settlement Agreement, OrthoClear, Inc. and
OrthoClear Holdings, Inc. are ordered to provide to Align Technology, Inc. the
names of OrthoClear’s patients in the United States, Hong Kong and Canada, and
further pursuant to stipulation, OrthoClear, Inc. and OrthoClear Holdings, Inc.
are

 1
 

 

authorized to provide such other reasonably accessible
patient information as the parties may agree would reasonably assist Align
Technology Inc. in verifying and providing treatment for former OrthoClear
cases pursuant to Paragraph 4 of the Settlement Agreement.

IT IS SO STIPULATED, THROUGH COUNSEL OF RECORD.

	
  DATED:  October 13, 2006

  	
  PAUL, HASTINGS, JANOFSKY & WALKER LLP

  
	
   

  	
  THOMAS A. COUNTS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  THOMAS A COUNTS

  
	
   

  	
   

  	
   

  
	
   

  	
  Attorneys for Plaintiff, Counterclaim Defendant and

  
	
   

  	
  Counterclaimant

  
	
   

  	
  ALIGN TECHNOLOGY, INC.

  
	
   

  	
   

  	
   

  
	
  DATED:  October 13, 2006

  	
  O’MELVENY & MYERS LLP

  
	
   

  	
  DARIN W. SNYDER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  DARIN W. SNYDER

  
	
   

  	
   

  	
   

  
	
   

  	
  Attorneys for Defendants

  
	
   

  	
  ORTHOCLEAR, INC. and ORTHOCLEAR HOLDINGS,

  
	
   

  	
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PURSUANT TO STIPULATION, IT IS SO ORDERED.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
  , 2006.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Honorable
  Samuel Conti

  
	
   

  	
   

  	
  U.S. District
  Court Magistrate Judge

  
					

 

 2

 

	
  ATTORNEY OR PARTY WITHOUT ATTORNEY(Name
  and Address):

  	
   

  	
  TELEPHONE NO.: 

  	
   

  	
  FOR
  COURT USE ONLY

  
	
  Mark E. McKeen (SB#
  130950) 

  Thomas A. Counts (SB#
  148051) 

  Paul, Hastings, Janofsky
  & Walker LLP

  55 Second Street, 24th
  Floor 

  San Francisco, CA 94105 

  ATTORNEY FOR (Name): Plaintiff

  	
   

  	
  (415) 856-7000

  	
   

  	
   

  
	
  Insert name of court and name of judicial district
  and branch court, if any: 

   

  San Francisco County Superior Court

  	
   

  	
   

  	
   

  	
   

  
	
  PLAINTIFF/PETITIONER: ALIGN TECHNOLOGY, INC. 

   

  DEFENDANT/RESPONDENT:ORTHOCLEAR, IINC., et al.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  REQUEST
  FOR DISMISSAL

  o Personal Injury, Property Damage, or Wrongful Death 

       o Motor Vehicle         o Other 

  o Family Law 

  o Eminent Domain 

  x Other (specify): Breach of Contract, Trade Secret
  Misappropriation

  	
   

  	
   

  	
   

  	
  CASE NUMBER: 

  

  CGC 05-438361

  

 

— A conformed copy will not be returned by the clerk unless a method of return is provided with the document.—

	
  1. TO THE CLERK: Please dismiss this action as follows:

  
	
  a- (1) x
  With prejudice

  	
   

  	
  (2) o
  Without prejudice

  
	
   

  	
   

  	
   

  
	
  b. (1) o Complaint

  	
   

  	
  (2) o
  Petition

  
	
      (3) o  Cross-complaint filed by (name):

  	
   

  	
  on (date):

  
	
      (4) o  Cross-complaint filed by (name):

  	
   

  	
  on (date):

  
	
      (5) x
  Entire action of all parties and all causes of action

  	
   

  	
   

  
	
      (6) o  Other (specify):*

  	
   

  	
   

  
					

 

Date: October    ,
2006

	
  Thomas A. Counts

  	
   

  	
   

  
	
  (TYPE OR PRINT NAME OF x ATTORNEY o PARTY WITHOUT ATTORNEY)

  	
   

  	
  (SIGNATURE)

  
	
  *   If dismissal requested is of specified parties only, of specified
  causes of action only specified cross-complaints so state and identify the
  parties, causes of action, or cross-complaints to be dismissed.

  	
   

  	
  Attorney Or party without attorney for:

  x Plaintiff/Petitioner        o Defendant/Respondent
o Cross-complainant

  

2. TO THE CLERK: Consent to the above dismissal is hereby given.**

Date: October    , 2006

	
  Darin W. Snyder

  	
   

  	
   

  
	
  (TYPE OR PRINT NAME OF x ATTORNEY o PARTY WITHOUT ATTORNEY)

  	
   

  	
  (SIGNATURE)

  
	
  **If a cross-complaint—or Response (Family Law) seeking affirmative
  relief—is on file, the attorney for cross-complainant (respondent) must sign
  this consent if required by Code of Civil Procedure section 581 (i) or (j).

  	
   

  	
  Attorney Or party without attorney for:

  oPlaintiff/Petitioner        x Defendant/Respondent
x Cross-complainant

  

 

(To be completed by clerk)

3. o Dismissal entered as requested on (date):

4. o Dismissal entered on (date):                                      as
to only (name):

5. o Dismissal not
entered as requested for the following reasons (specify):

 

6.
o a. Attorney or party without attorney
notified on (date):

        
b. Attorney or party without attorney not notified. Filing party failed to
provide

         o a copy to
conform                 o means to return conformed copy

	
  Date:

  	
   

  	
  Clerk, by

  	
   

  	
  , Deputy    

  
	
  Form Adopted by the

  	
   

  	
  REQUEST FOR DISMISSAL

  	
  Code
  of Civil Procedure, § 581 et seq.

  
	
  Judicial Council of California

  	
   

  	
   

  	
   

  	
   Cal. Rules of Court, rules 383,1233

  
	
  982(a)(5) [Rev. January 1, 1997]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  American LegalNet, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  www.USCourtForms.com

  

 

 

ALIGN TECHNOLOGY, INC. vs. ORTHOCLEAR, et al.

San
Francisco Superior Court Case No. CGC 05-438361

REQUEST FOR
DISMISSAL 

(Additional Party)

TO
THE CLERK: Consent to the above dismissal is hereby given. 

Dated:
October     , 2006

 

	
  Bonnie Margaret Ross, Esq.

  	
   

  	
   

  
	
  Robinson & Wood, Inc.

  	
   

  	
  Attorney for Cross-Complainant Bao Tran

  

 

 

MARK E. MCKEEN
(SB# 130950) markmckeen@paulhastings.com

THOMAS A. COUNTS
(SB# 233434) thomascounts@paulhastings.com

PETER C. MEIER
(SB# 179019) petermeier@paulhastings.com

ILSE C. SCOTT (SB#
233433) ilsescott@paulhastings.com

PAUL, HASTINGS,
JANOFSKY & WALKER LLP

55 Second Street

Twenty-Fourth
Floor

San Francisco,
CA  94105-3441

Telephone:  (415) 856-7000

Facsimile: 
(415) 856-7100

Attorneys for
Plaintiff, Counterclaim Defendant

and
Counterclaimant

ALIGN TECHNOLOGY, INC.

GEORGE A. RILEY
(SB# 118304) griley@omm.com

DARIN W. SNYDER
(SB# 136003) dsnyder@omm.com

MICHELLE L.
DAVIDSON (SB# 218559) mdavidson@omm.com

O’MELVENY &
MYERS LLP

Embarcadero Center
West

275 Battery Street

San Francisco, CA
94111-3305

Telephone: (415)
984-8700

Facsimile: (415) 984-8701

Attorneys for
Defendants and Counterclaimants

ROSS J. MILLER, an
individual, and ROSS J. MILLER DDS,

A Professional Dental Corporation

UNITED STATES
DISTRICT COURT 

NORTHERN DISTRICT
OF CALIFORNIA 

SAN FRANCISCO
DIVISION

	
  ALIGN TECHNOLOGY, INC.,

  	
   

  	
  CASE NO. C 05-3418 MMC (JL)

  
	
   

  	
   

  	
   

  
	
  Plaintiff, Counterclaim

  	
   

  	
  STIPULATION AND [PROPOSED]

  
	
  Defendant and

  	
   

  	
  ORDER OF DISMISSAL

  
	
  Counterclaimant,

  	
   

  	
   

  
	
   

  	
   

  	
  Judge:        Hon.
  Maxine M. Chesney

  
	
  vs.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ROSS J. MILLER, an individual, and

  	
   

  	
   

  
	
  ROSS J. MILLER DDS, A

  	
   

  	
   

  
	
  PROFESSIONAL DENTAL

  	
   

  	
   

  
	
  CORPORATION, a corporation,

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Defendants,

  	
   

  	
   

  
	
  Counterclaimants and

  	
   

  	
   

  
	
  Counterclaim
  Defendants.

  	
   

  	
   

  

 

 

WHEREAS, the parties have resolved any and all claims
for relief stated in this action; 

IT IS HEREBY STIPULATED by the parties and ORDERED by
the Court that  

1.  This action
is hereby dismissed with prejudice.

2.  Each of the
parties shall bear its own costs, expenses and attorney fees. 

IT IS SO STIPULATED, THROUGH COUNSEL OF RECORD.

 

	
  Dated:

  	
  October 13, 2006

  	
  PAUL, HASTINGS, JANOFSKY & WALKER LLP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  THOMAS A. COUNTS

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attorneys for Plaintiff, Counterclaim Defendant

  
	
   

  	
   

  	
  and Counterclaimant Align Technology, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  October 13, 2006

  	
  O’MELVENY & MYERS LLP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  DARIN W. SNYDER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attorneys for Defendants and Counterclaimants Ross

  
	
   

  	
   

  	
  J. Miller, an individual, and Ross J. Miller DDS, A

  
	
   

  	
   

  	
  Professional Dental Corporation

  

 

PURSUANT TO STIPULATION, IT IS SO ORDERED.

 

	
  DATE: 

  	
   

  	
  , 2006.

  	
   

  
	
   

  	
  The Honorable Maxine M.
  Chesney

  United States District Judge

  

 

 1

 

MARK E. MCKEEN (SB# 130950) markmckeen@paulhastings.com

THOMAS A. COUNTS (SB# 148051) tomcounts@paulhastings.com

PETER C. MEIER (SB# 179019) petermeier@paulhastings.com

RICHARD E. ELDER (SB# 205389) richardelder@paulhastings.com

T. LEE KISSMAN (SB #233434) leekissman@paulhastings.com

PAUL, HASTINGS, JANOFSKY & WALKER LLP

55 Second Street

Twenty-Fourth Floor

San Francisco, CA 94105-3441

Telephone: (415) 856-7000

Facsimile: (415) 856-7100

 

Attorneys for Plaintiff

ALIGN TECHNOLOGY, INC.

 

GEORGE A. RILEY (SB # 118304) griley@omm.com

DARIN W. SNYDER (SB # 136003) dsnyder @omm.com

ROBERT D. TRONNES (SB # 209835) rtronnes@omm.com

O’MELVENY & MYERS LLP

Embarcadero Center West

275 Battery Street

San Francisco, CA 94111-3305

Telephone: (415) 984-8700

Facsimile: (415) 984-8701

 

Attorneys for Defendants

ORTHOCLEAR, INC. and

ORTHOCLEAR HOLDINGS, INC.

 

UNITED STATES DISTRICT COURT

 

NORTHERN DISTRICT OF
CALIFORNIA

 

SAN FRANCISCO DIVISION

 

 

	
  ALIGN TECHNOLOGY, INC.,

  	
  CASE NO. CV-05-2948 MMC (JCS)

  
	
   

  	
   

  
	
   

  	
  Plaintiff,

  	
  STIPULATION AND [PROPOSED]

  
	
   

  	
  ORDER OF DISMISSAL

  
	
  vs.

  	
   

  
	
   

  	
   

  
	
  ORTHOCLEAR, INC. and

  	
  Judge:            Hon.
  Maxine M. Chesney

  
	
  ORTHOCLEAR HOLDINGS, INC.,

  	
   

  
	
   

  	
   

  
	
   

  	
  Defendants.

  	
   

  

 

 

WHEREAS, the
parties have resolved any and all claims for relief stated in this action;

IT IS HEREBY
STIPULATED by the parties and ORDERED by the Court that

1. This action is
hereby dismissed with prejudice.

2. Each of the
parties shall bear its own costs, expenses and attorney fees.

IT IS SO STIPULATED, THROUGH COUNSEL OF RECORD.

 

	
  Dated: October 13, 2006

  	
  PAUL, HASTINGS, JANOFSKY & WALKER LLP

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  THOMAS A. COUNTS

  
	
   

  	
   

  
	
   

  	
  Attorneys for Plaintiff Align Technology, Inc.

  
	
   

  	
   

  
	
  Dated: October 13, 2006

  	
  O’MELVENY & MYERS LLP

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  DARIN W. SNYDER

  
	
   

  	
   

  
	
   

  	
  Attorneys for Defendants OrthoClear, Inc. and

  
	
   

  	
  OrthoClear Holdings, Inc.

  

 

 

PURSUANT TO STIPULATION, IT IS SO ORDERED.

 

	
  DATE: 

  	
   

  	
  , 2006

  
	
   

  
	
   

  	
   

  
	
   

  	
  Hon. Maxine M.
  Chesney

  
	
   

  	
  U.S. District
  Court Magistrate Judge

  
				

 

 1

IN THE
UNITED STATES PATENT AND TRADEMARK OFFICE

	
  In the Reexamination of:

  	
  Art Unit: 3993

  
	
   

  	
   

  
	
  Chishti et al.

  	
   

  
	
   

  	
   

  
	
  Reexamination Control No.: 90/007,797

  	
   

  
	
   

  	
   

  
	
  Patent No. 6,722,880

  	
   

  
	
   

  	
   

  
	
  Issue Date: April 20, 2004

  	
   

  
	
   

  	
   

  
	
  Issued To: Align Technology, Inc.

  	
   

  

 

REQUEST
FOR WITHDRAWAL OF PETITION TO DIRECTOR UNDER 37 C.F.R. §§

1.515(c) AND 1.181 SEEKING REVIEW OF DENIAL OF REQUEST FOR

REEXAMINATION

Mail Stop Ex Parte Reexam

Central Reexamination Unit

Office of Patent Legal Administration

United States Patent and Trademark Office

P.O. Box 1450

Alexandria, VA 22313-1450

 

REEXAMINATION CONTROL NO. 90/007,797

ATTORNEY DOCKET NO.
HOLLAND-5

Dear Sir or Madam:

The undersigned
respectfully requests withdrawal of the Petition to Director under 37 C.F.R. §§
1.515(c) and 1.181 Seeking Review of Denial of Request for Reexamination. The
Petition to the Director sought de novo review
of the denial of the Request for Reexamination of all claims (claims 1 through
21) of U.S. Patent No. 6,722,880 to Chishti et al., issued
on April 20, 2004 and entitled “Method and System for Incrementally Moving
Teeth.”

The Request for
Reexamination of U.S. Patent No. 6,722,880 was filed on November 4, 2005,
and was assigned control number 90/007,797. The Patent Office denied the Request
on December 23, 2005.  The Petition to
the Director requesting review of the reexamination denial was filed on January
23, 2006.

Since no action
has been taken on the Petition to the Director subsequent to January 23, 2006,
the undersigned respectfully requests that the Petition be withdrawn to
conserve the resources of Patent Office.

Please charge any
necessary fees for this Withdraw of Petition to Deposit Account No. 03-1952.

 

	
  

  	
  Respectfully submitted:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 ii

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