Document:

Exhibit
10.4

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

BETWEEN

MICHAEL T. BENNETT AND SPIRIT FINANCE CORPORATION

THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the “Agreement”), dated as of October 16, 2006 (“Effective
Date”), is by and between SPIRIT FINANCE
CORPORATION, a Maryland corporation (the “Company”), and MICHAEL T. BENNETT (the “Executive”):

W I T N E S S E T H :

WHEREAS, the Company entered into an Employment
Agreement with Executive dated as of April 5, 2005 (the “Original Employment
Agreement”) for the employment of the Executive as the Company’s Senior Vice
President - Operations; and

WHEREAS, the Company and the Executive desire to amend
and restate the Original Employment Agreement in its entirety subject to the
terms and conditions set forth below, and the Executive has agreed to such
employment in the capacities and on the terms and conditions set forth below.

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

Section
1.  Employment.

(a)           Positions.  The Executive shall be employed by the
Company during the Term (defined below) as its Senior Vice President –
Operations, Chief Compliance Officer and Secretary.

(b)           Duties.  The Executive’s principal employment duties
and responsibilities shall be those duties and responsibilities customary for
the positions of Senior Vice President – Operations, Chief Compliance Officer
and Secretary and such other executive duties and responsibilities as the Chief
Executive Officer or the Board of Directors of the Company (the “Board”) shall
from time to time reasonably assign to the Executive.  The Executive shall report directly to the
Chief Executive Officer.

(c)           Extent of Services.  Except for illnesses and vacation periods, the
Executive shall devote substantially all of his business time and attention and
his best efforts to the performance of his duties and responsibilities under
this Agreement.  Notwithstanding the
foregoing, Executive (i) shall be permitted to continue to manage, operate
and devote time and attention to those properties and businesses he owned,
operated or controlled at the time Executive first joined the Company;
(ii) may make any investment where he is not obligated or required to, and
shall not in fact, devote any substantial managerial efforts; (iii) may
participate in charitable, academic or community activities, and in trade or
professional organizations; or (iv) may hold directorships in other
companies consistent with the Company’s conflict of interest policies and
corporate governance guidelines as in effect from time to time (the activities
in clauses (i) through 

 

 

(iv) above are
collectively referred to herein as the “Excluded Businesses”); provided that
none of the Excluded Businesses individually or in the aggregate interfere with
the performance of the Executive’s duties under this Agreement.

Section 2.  Term.  This
Agreement shall be effective as of the Effective Date and, unless terminated
earlier as provided herein, shall continue in full force and effect thereafter
until October 16, 2009 (the “Term”); provided, that on each annual anniversary
of the Effective Date the Term shall be automatically extended for one
additional year unless either party gives the other party at least 90 days
prior written notice of non-extension or the Agreement is sooner terminated
pursuant to Section 7.  For purposes of
this Agreement, “Term” shall mean the actual duration of the Executive’s
employment hereunder, taking into account any extensions pursuant to this
Section 2 or early termination of employment pursuant to Section 7.

Section 3.  Base Salary.  The
Company shall pay the Executive a base salary annually (the “Base Salary”),
which shall be payable in periodic installments according to the Company’s
normal payroll practices.  The initial
Base Salary shall be no less than $275,000. 
The Board or the Compensation Committee of the Board (the “Compensation
Committee”) shall review the Base Salary at least once a year to determine
whether the Base Salary should be increased effective January 1 of any
year during the Term.  The amount of the
increase shall be determined before March 31 of each year and shall be
retroactive to January 1.  The Base
Salary, including any increases, shall not be decreased during the Term.  For purposes of this Agreement, the term “Base
Salary” shall mean the amount established and adjusted from time to time
pursuant to this Section 3.

Section 4.  Annual Incentive Bonus.  The Executive shall be entitled to receive an
annual cash incentive bonus (the “Incentive Bonus”) for each fiscal year during
the Term of this Agreement consistent with a bonus policy adopted by the
Compensation Committee (the “Bonus Policy”). 
If the Executive or the Company, as the case may be, satisfies the
threshold performance criteria contained in such Bonus Policy for a fiscal
year, he shall receive an annual Incentive Bonus equal to at least 40% of the
Executive’s Base Salary.  If the
Executive or the Company, as the case may be, satisfies the target performance
criteria contained in the Bonus Policy for a fiscal year, he shall receive an
annual Incentive Bonus equal to at least 75% of the Executive’s Base
Salary.  If the Executive or the Company,
as the case may be, satisfies the maximum target performance criteria contained
in the Bonus Policy for a fiscal year, he shall receive an annual Incentive
Bonus equal to at least 110% of the Executive’s Base Salary (the “Maximum
Target Bonus”).  If the Executive or the
Company, as the case may be, fails to satisfy the threshold performance
criteria contained in the Bonus Policy for a fiscal year, the Compensation
Committee may determine whether any Incentive Bonus shall be payable to the
Executive for that year.  As of the
Effective Date, the Bonus Policy shall contain both individual and/or Company
goals established by the Compensation Committee.  The Board or the Compensation Committee shall
review the Bonus Policy at least once a year to determine whether the Maximum
Target Bonus should be increased effective January 1 of any year during
the Term, or whether any additional changes should be made to the Bonus Policy
effective January 1 of any year.  The
annual Incentive Bonus, if any, shall be paid to the Executive no later than 30 days
after the date the Compensation Committee determines whether the criteria in
the Bonus Policy for such fiscal year were satisfied and the amount of the
actual bonus, but no later 

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than March 15th of each year. 
For purposes of this Agreement, the term “Incentive Bonus” shall mean
the amount established pursuant to this Section 4.

Section
5.  Stock Based Awards.

(a)           2003 Stock Option and Incentive Plan Option Grants.  The Company has established the 2003 Stock
Option and Incentive Plan (the “Stock Option Plan”).  The Executive shall be eligible to receive
restricted share grants, grants of stock options and other awards under the
Stock Option Plan as determined by the Compensation Committee.

Section
6.  Benefits.

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

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

(c)           Employee Benefits.

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

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

(d)           Other Benefits.

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

(ii)           Country
Club Dues.  The Company shall
reimburse Executive for the monthly country club membership dues actually
incurred by the Executive for one country club membership maintained by the
Executive provided such membership dues are approved in advance by the
Compensation Committee.

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(iii)          Directors
and Officers Insurance. 
During the Term and for a period that ends 12 months after termination
of employment, the Executive shall be entitled to director and officer
insurance coverage for his acts and omissions while an officer and director of
the Company on a basis no less favorable to him than the coverage provided to
any other current officers and directors during the time the Executive is a
director or officer, provided, however, that all insurance policies providing
such director and officer coverage shall provide coverage for any claim made
related to any time the Executive was a director or officer of the Company or
any subsidiary, except for any period prior to the date of this Agreement for
which no coverage need be provided or any period after which customary tail
coverage shall lapse.

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

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

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

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

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

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

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

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

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

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

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

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

(vi)          on and after the occurrence of a
Change of Control (as defined herein):

(A)          a change in duties, responsibilities,
status or positions (including, without limitation, the appointment of a
co-Senior Vice President – Operations or a change in Executive’s status to
co-Senior Vice President – Operations) with the Company that does not represent
a promotion from or maintaining of Executive’s duties, responsibilities, status
or position as in effect immediately prior to the Change of Control, or any
removal of Executive from or any failure to reappoint or reelect Executive to
such positions, except in connection with the termination of Executive’s
employment for Cause, disability, retirement or death;

(B)           the failure by the Company to
continue in effect any of the benefit plans, including but not limited to
ongoing stock option and equity awards in annual amounts that have a fair
market value on the date of grant equal to or higher than the average fair
market value of such grants made during the two fiscal years prior to the
Change of Control (measured as of the respective dates of grant), in which
Executive is participating at the time of the Change of Control of the Company
(unless Executive is permitted to participate in any substitute benefit plan
with substantially the same terms and to the same extent and with the same
rights as Executive had with respect to the benefit plan that is discontinued)
other than as a result of the normal expiration of any such benefit plan in
accordance with its terms as in effect at the time of the Change of Control, or
the taking of any action, or the failure to act, by the Company which would
adversely affect Executive’s continued participation in any of such benefit
plans on 

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at least as favorable a
basis to Executive as was the case on the date of the Change of Control or
which would materially reduce Executive’s benefits in the future under any of
such benefit plans or deprive Executive of any material benefits enjoyed by
Executive at the time of the Change of Control; 
provided, however, that any such action or inaction on the part of the
Company, including any modification, cancellation or termination of any
benefits plan, undertaken in order to maintain such plan in compliance with any
federal, state or local law or regulation governing benefits plans, including,
but not limited to, the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), shall not constitute Good Reason for the purposes of this
Agreement; or

(C)           any failure by the Company to obtain
from any successor to the Company an agreement reasonably satisfactory to
Executive to assume and perform this Agreement, as contemplated by Section
17(e), which has not been cured within 15 days after the notice of the failure
has been given by Executive to the Company;

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

Section
8.  Effects of Termination.

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

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

(ii)           the prorated amount of the Maximum
Target Bonus for the year in which the termination of employment occurs, pro
rated for the portion of such year during which the Executive was employed
prior to the effective date of his termination and subtracting all Incentive
Bonus payments received by Executive during such year that relate only to such
year;

(iii)          the amount equal to two times the sum
of (A) Base Salary in effect on the date of termination, plus (B) the
average of the actual annualized bonus received by Executive during the
previous two years.  For purposes of this
section, actual annualized bonus shall mean the sum of the annual cash
Incentive Bonus, plus the fair market value, measured as of the grant date, of
the annual long-term incentive awards the Company has granted to or agreed to
grant to (if 

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such grant has not yet
been made) the Executive during the applicable fiscal year.  If the applicable fiscal year was less than a
full year, the prorated bonus received for that year shall be annualized so
that the amount used in the formula above is equal to the bonus the Executive would
have received if the Executive had been with the Company for a full fiscal
year.  The sum of the amount payable
under clauses (ii) and (iii) hereof is referred to herein as his “Severance
Payment”;

(iv)          the Severance Payment shall be made in
a single, lump sum cash payment six months following the effective date of the
Executive’s termination of employment in accordance with Section 409A(a)(2)(B)
of the Code.

(v)           the Company shall allow the Executive
to continue to participate during the 24 month period following termination
(the “Severance Period”) in any and all of the employee benefit and welfare
plans and programs of the Company, excluding any 401(k) plan, in which the
Executive was entitled to participate immediately prior to his termination, to
the same extent and upon the same terms as the Executive participated in such
plans prior to his termination; provided that the Executive’s continued
participation is permissible pursuant to the terms of such plans and otherwise
practicable under the general terms and provisions of such benefit plans and
programs.  During the Severance Period,
the Company shall pay for the Executive’s continued participation in said
employee benefit and welfare plans, including, but not limited to, premiums for
group health, dental, accident, directors and officers insurance, group life
insurance, and his country club allowance, but excluding any 401(k) plan
or disability insurance.  To the extent
that continued participation is neither permissible nor practicable, the
Company shall take such actions as may be necessary to provide the Executive
with substantially comparable benefits (without additional cost to the
Executive, including any additional taxes) outside the scope of such plans
including, without limitation, reimbursing the Executive for his costs in
obtaining such coverage, such as COBRA premiums paid by the Executive and/or
his eligible dependents, provided such costs are consistent with the policies
of the Company unless such costs are determined in good faith to be
unreasonable by the Compensation Committee. 
If the Executive engages in regular employment after his termination of
employment (whether as an executive or as a self-employed person but
excluding his management or operation of the Excluded Businesses), any employee
benefit and welfare benefits received by the Executive in consideration of such
employment which are the same type as the employee benefit and welfare benefits
provided by the Company will relieve the Company of its obligation under this
Section 8(a)(v) to provide such type of benefits;

(vi)          the Executive’s stock options awarded
under the Stock Option Plan (or any other or successor plan) shall immediately
become 100% vested and he shall have a two-year period following the
effective date of his termination of employment in which to exercise his vested
stock options, including those stock options that vested upon his termination
of employment; and

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

(b)           Termination on Death or Permanent Disability.  Upon a
termination of employment due to the Executive’s death or Permanent Disability,
the Company shall have no further liability or further obligation to the
Executive except as follows:  the
Executive (and his estate or designated beneficiaries under any
Company-sponsored employee benefit plan in the event of his death) shall be
entitled to receive:

(i)            within 30 days of such termination
of employment any Base Salary, Incentive Bonus, expense reimbursements and all
other compensation related payments that are payable as of his date of death or
Permanent Disability and that are related to his period of employment preceding
his date of death;

(ii)              
within 30 days after such termination of employment, the prorated
amount of the Maximum Target Bonus for the year in which the Executive’s death
occurs, prorated for the portion of the year during which the Executive was
employed prior to his death or Permanent Disability, and subtracting out all
Incentive Bonus payments related to that year received by the Executive during
such year;

(iii)          within 30 days of such termination of
employment, a severance payment in an amount equal to the Executive’s Base
Salary at the time of termination;

(iv)          all non-vested bonus and long-term
incentive awards previously granted to the executive, including but not limited
to restricted stock, deferred share awards and stock options, shall earn and
fully vest and become nonforfeitable.  In
the case of death, the Executive’s personal representative shall have a one-year
period following the Executive’s death in which to exercise his vested stock
options, including those stock options that vested on death; and

(v)           the group health plan then provided
to senior executives of the Company shall be continued following the date of
termination pursuant to the Executive’s COBRA continuation rights.  The Company shall provide for the cost of
such coverage for a period of two years and, during such period, if Executive
is precluded from participating in such group health plan by its terms or
applicable law, the Company shall pay to the Executive in cash the premiums or
other contributions that the Company would otherwise pay as of the date of the
Executive’s termination to continue the Executive’s participation in the group
health plan for two years. Notwithstanding the foregoing, the continuation
period for group health benefits under Section 4980B of the Code by reason of
the Executive’s termination of employment with the Company shall be measured
from his actual date of termination of employment.

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

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

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

Section
9.  Change of Control.

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

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

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

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

(iv)          the members of the Board of the
Company at the beginning of any consecutive 24-calendar-month period commencing
on or after the date hereof (the “Incumbent Directors”) cease for any reason
other than death to constitute at least a majority of the members of the
Board;  provided that any director whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the members of the Board then
still in office who were members of the Board at the beginning of such
24-calendar-month period, shall be deemed to be an Incumbent Director; or

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

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

Section
10.  Excess Parachute Excise Tax.

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

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

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

(b)           In the event that the Internal
Revenue Service claims that any payment or benefit received under this
Agreement constitutes as “excess parachute payment”, within the meaning of
Section 280G(b)(1) of the Code, Executive shall notify the Company in
writing of such claim.  Such notification
shall be given as soon as practicable but no later than 10 business days after
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  Executive shall not pay such claim
prior to the expiration of the 30 day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such 

 12
 

 

 

claim is due).  If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall (1) give the Company any information reasonably requested
by the Company relating to such claim; (2) take such action in connection
with contesting such claim as the Company shall reasonably request in writing
from time to time, including without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company
and reasonably satisfactory to Executive; (3) cooperate with the Company
in good faith in order to effectively contest such claim; and (4) permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including, but not limited to, additional interest and penalties and related
legal, consulting or other similar fees) incurred in connection with such
contest and shall indemnify and hold Executive harmless, on an after-tax
basis, for and against any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
any payment of costs and expenses.

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

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

 13
 

 

 

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

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

Section 11.  Confidential Information.  At any time during or after Executive’s
employment with the Company, Executive shall not, without the prior written
consent of the Company, use, divulge, disclose or make accessible to any other
person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries (“Confidential Information”), pursuant to the policies set forth
in the Company’s employee handbook and compliance manual, as amended from time
to time.  The Company acknowledges that
prior to his employment with the Company, the Executive has lawfully acquired
extensive knowledge of the industries and businesses in which the Company
engages in business and the Company’s customers, and that the provisions of
this Section 11 are not intended to restrict the Executive’s use of such
previously acquired knowledge.  Upon
termination of the Executive’s employment with the Company for any reason, the
Executive shall return to the Company all Company property and all written
Confidential Information in the possession of the Executive.

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

Section 12.  Noncompetition and Nonsolicitation.  During the Term and for a period of 12
calendar months after the termination of the Executive’s employment (the “Non-compete
Period”), the Executive shall not, directly or indirectly, either as a
principal, agent, employee, employer, stockholder, partner or in any other
capacity whatsoever: (a) engage or assist others engaged, in whole or in
part, in any business which is engaged in a business or enterprise that is
substantially similar to and in competition with the business of the Company
that the Company was engaged in, or a planned business of the Company that had
been proposed in writing to senior officers of the Company or the Board and had
not been rejected by the Company or the 

 14
 

 

 

Board, during the period of the Executive’s employment with the
Company; or (b) without the prior consent of the Board, employ or solicit
the employment of, or assist others in employing or soliciting the employment
of, any individual employed by the Company (other than the Executive’s personal
assistant or Executive’s secretary) at any time while the Executive was also so
employed; provided, however, that the provisions of this Section 12 shall
not apply in the event the Company materially breaches this Agreement.  For purposes of this Section 12, a business
shall be in competition with the Company only if a significant portion of its
business is to originate mortgage loans to or purchase real estate from and
lease such real estate back to operators of single-tenant retail, distribution
or service companies in the United States. 
Notwithstanding any other provision of this Agreement, in the event the
Executive’s employment is terminated “For Cause,” the Non-Compete Period shall
be 12 calendar months.

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

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

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

 15
 

 

 

Section
14.  Disputes.

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

(b)           Arbitration.  Excluding only requests for equitable relief
by the Company under Section 14(a), in the event that there is any claim
or dispute arising out of or relating to this Agreement or the breach hereof,
and the parties hereto shall not have resolved such claim or dispute within
60 days after written notice from one party to the other setting forth the
nature of such claim or dispute, then such claim or dispute shall be settled if
mutually agreed by binding arbitration in Maricopa County, Arizona, in
accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association (“Rules”), by an arbitrator mutually agreed upon by the
parties hereto or, in the absence of such agreement, by an arbitrator selected
according to such Rules.  Notwithstanding
the foregoing, if either the Company or the Executive shall request, such
mutually agreeable arbitration shall be conducted by a panel of three
arbitrators, one selected by the Company, one selected by the Executive and the
third selected by agreement of the first two arbitrators, or, in the absence of
such agreement, in accordance with such Rules. 
Judgment upon the award rendered by such arbitrator(s) shall be entered
in any Court having jurisdiction thereof upon the application of either
party.  The parties agree to use their
reasonable best efforts to have such arbitration completed as soon as is
reasonably practicable.  Notwithstanding
anything herein to the contrary, except as provided in paragraph (c) below
the losing party shall pay the reasonable costs and expenses (including
reasonable attorney fees and expenses) of the prevailing party with respect to
such arbitration, except the Executive, if he is the losing party, shall not be
required to pay such expenses and costs if the claim relates to statutory
discrimination claims that he would not otherwise be required to pay if such
claim had been brought in a court of competent jurisdiction.

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

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

 16
 

 

 

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

Section
17.  General.

(a)           Notices.  All notices and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if sent by overnight
courier or by certified mail, return receipt requested, postage prepaid or sent
by written telecommunication or facsimile, to the relevant address set forth
below, or to such other address as the recipient of such notice or
communication shall have specified in writing to the other party hereto, in
accordance with this Section 17(a).

to the Company:

Spirit Finance
Corporation

14631 N. Scottsdale Road

Suite 200

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

Attention:  President

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

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

(b)           Severability.  If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired. 
It is the intent of both parties for all payments made in connection
with this Agreement to comply with Section 409A of the Code and all provisions
of this Agreement shall be construed accordingly.

 17
 

 

 

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

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

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

(f)            Entire Agreement.  This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter hereof
and may not be amended except by a written instrument hereafter signed by the
Executive and a duly authorized representative of the Board (other than the
Executive).

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

(h)           Construction.  The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict 

 18
 

 

 

construction shall be
applied against any party.  The headings
of sections of this Agreement are for convenience of reference only and shall
not affect its meaning or construction. 
Whenever any word is used herein in one gender, it shall be construed to
include the other gender, and any word used in the singular shall be construed
to include the plural in any case in which it would apply and vice versa.

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

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

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

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

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

 19
 

 

 

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

 

 

	
   

  	
  SPIRIT FINANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Christopher
  H. Volk

  
	
   

  	
   

  	
  Christopher H.
  Volk, President and Chief

  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Michael T.
  Bennett

  
	
   

  	
  Michael T.
  Bennett

  

 

 20Exhibit
10.5

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

BETWEEN

JEFFREY M. FLEISCHER AND SPIRIT FINANCE CORPORATION

THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the “Agreement”), dated as of October 16, 2006 (“Effective
Date”), is by and between SPIRIT FINANCE
CORPORATION, a Maryland corporation (the “Company”), and JEFFREY M. FLEISCHER (the “Executive”):

W I T N E S S E T H :

WHEREAS, the Company entered into an Employment
Agreement with Executive dated as of December 15, 2003 (the “Original
Employment Agreement”) for the employment of the Executive as the Company’s Senior
Vice President - Acquisitions; and

WHEREAS, the Company and the Executive desire to amend
and restate the Original Employment Agreement in its entirety subject to the
terms and conditions set forth below, and the Executive has agreed to such
employment in the capacities and on the terms and conditions set forth below.

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

Section
1.  Employment.

(a)           Positions.  The Executive shall be employed by the
Company during the Term (defined below) as its Senior Vice President –
Acquisitions, Assistant Secretary and Assistant Treasurer.

(b)           Duties.  The Executive’s principal employment duties
and responsibilities shall be those duties and responsibilities customary for
the positions of Senior Vice President – Acquisitions, Assistant Secretary and
Assistant Treasurer and such other executive duties and responsibilities as the
Chief Executive Officer or the Board of Directors of the Company (the “Board”)
shall from time to time reasonably assign to the Executive.  The Executive shall report directly to the Chief
Executive Officer.

(c)           Extent of Services.  Except for illnesses and vacation periods,
the Executive shall devote substantially all of his business time and attention
and his best efforts to the performance of his duties and responsibilities
under this Agreement.  Notwithstanding
the foregoing, Executive (i) shall be permitted to continue to manage,
operate and devote time and attention to those properties and businesses he
owned, operated or controlled at the time of the Company’s 2003 private
offering of common stock (the “144A Offering”) that were not transferred
to or purchased by the Company in connection with the 144A Offering;
(ii) may make any investment where he is not obligated or required to, and
shall not in fact, devote any substantial managerial efforts; (iii) may
participate in charitable, academic or community activities, and in trade or
professional organizations; or (iv) may hold directorships in other
companies consistent 

 

 

with the Company’s
conflict of interest policies and corporate governance guidelines as in effect
from time to time (the activities in clauses (i) through (iv) above are
collectively referred to herein as the “Excluded Businesses”); provided that
none of the Excluded Businesses individually or in the aggregate interfere with
the performance of the Executive’s duties under this Agreement.

Section 2.  Term.  This
Agreement shall be effective as of the Effective Date and, unless terminated
earlier as provided herein, shall continue in full force and effect thereafter
until October 16, 2009 (the “Term”); provided, that on each annual anniversary
of the Effective Date the Term shall be automatically extended for one
additional year unless either party gives the other party at least 90 days
prior written notice of non-extension or the Agreement is sooner terminated
pursuant to Section 7.  For purposes of
this Agreement, “Term” shall mean the actual duration of the Executive’s
employment hereunder, taking into account any extensions pursuant to this
Section 2 or early termination of employment pursuant to Section 7.

Section 3.  Base Salary.  The
Company shall pay the Executive a base salary annually (the “Base Salary”),
which shall be payable in periodic installments according to the Company’s
normal payroll practices.  The initial
Base Salary shall be no less than $275,000. 
The Board or the Compensation Committee of the Board (the “Compensation
Committee”) shall review the Base Salary at least once a year to determine
whether the Base Salary should be increased effective January 1 of any
year during the Term.  The amount of the
increase shall be determined before March 31 of each year and shall be
retroactive to January 1.  The Base
Salary, including any increases, shall not be decreased during the Term.  For purposes of this Agreement, the term “Base
Salary” shall mean the amount established and adjusted from time to time
pursuant to this Section 3.

Section 4.  Annual Incentive Bonus.  The Executive shall be entitled to receive an
annual cash incentive bonus (the “Incentive Bonus”) for each fiscal year during
the Term of this Agreement consistent with a bonus policy adopted by the
Compensation Committee (the “Bonus Policy”). 
If the Executive or the Company, as the case may be, satisfies the
threshold performance criteria contained in such Bonus Policy for a fiscal
year, he shall receive an annual Incentive Bonus equal to at least 40% of the
Executive’s Base Salary.  If the
Executive or the Company, as the case may be, satisfies the target performance
criteria contained in the Bonus Policy for a fiscal year, he shall receive an
annual Incentive Bonus equal to at least 75% of the Executive’s Base
Salary.  If the Executive or the Company,
as the case may be, satisfies the maximum target performance criteria contained
in the Bonus Policy for a fiscal year, he shall receive an annual Incentive
Bonus equal to at least 110% of the Executive’s Base Salary (the “Maximum
Target Bonus”).  If the Executive or the
Company, as the case may be, fails to satisfy the threshold performance
criteria contained in the Bonus Policy for a fiscal year, the Compensation Committee
may determine whether any Incentive Bonus shall be payable to the Executive for
that year.  As of the Effective Date, the
Bonus Policy shall contain both individual and/or Company goals established by
the Compensation Committee.  The Board or
the Compensation Committee shall review the Bonus Policy at least once a year
to determine whether the Maximum Target Bonus should be increased effective
January 1 of any year during the Term, or whether any additional changes
should be made to the Bonus Policy effective January 1 of any year.  The annual Incentive Bonus, if any, shall be
paid to the Executive no later than 30 days after the date the
Compensation Committee determines whether the criteria in the 

 2
 

 

 

Bonus Policy for such fiscal year were satisfied and the amount of the
actual bonus, but no later than March 15th of
each year.  For purposes of this
Agreement, the term “Incentive Bonus” shall mean the amount established
pursuant to this Section 4.

Section
5.  Stock Based Awards.

(a)           2003 Stock Option and Incentive Plan Option Grants.  The Company has established the 2003 Stock
Option and Incentive Plan (the “Stock Option Plan”).  The Executive shall be eligible to receive
restricted share grants, grants of stock options and other awards under the Stock
Option Plan as determined by the Compensation Committee.

Section
6.  Benefits.

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

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

(c)           Employee Benefits.

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

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

(d)           Other Benefits.

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

(ii)           Country
Club Dues.  The Company shall
reimburse Executive for the monthly country club membership dues actually
incurred by the Executive for one country club membership maintained by the
Executive provided such membership dues are approved in advance by the
Compensation Committee.

 3
 

 

 

(iii)          Directors
and Officers Insurance. 
During the Term and for a period that ends 12 months after termination
of employment, the Executive shall be entitled to director and officer
insurance coverage for his acts and omissions while an officer and director of
the Company on a basis no less favorable to him than the coverage provided to
any other current officers and directors during the time the Executive is a
director or officer, provided, however, that all insurance policies providing
such director and officer coverage shall provide coverage for any claim made
related to any time the Executive was a director or officer of the Company or
any subsidiary, except for any period prior to the date of this Agreement for
which no coverage need be provided or any period after which customary tail
coverage shall lapse.

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

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

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

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

 4
 

 

 

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

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

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

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

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

 5
 

 

 

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

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

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

(vi)          on and after the occurrence of a
Change of Control (as defined herein):

(A)          a change in duties, responsibilities,
status or positions (including, without limitation, the appointment of a co-Senior
Vice President – Acquisitions or a change in Executive’s status to co-Senior
Vice President – Acquisitions) with the Company that does not represent a
promotion from or maintaining of Executive’s duties, responsibilities, status
or position as in effect immediately prior to the Change of Control, or any
removal of Executive from or any failure to reappoint or reelect Executive to
such positions, except in connection with the termination of Executive’s employment
for Cause, disability, retirement or death;

(B)           the failure by the Company to
continue in effect any of the benefit plans, including but not limited to
ongoing stock option and equity awards in annual amounts that have a fair
market value on the date of grant equal to or higher than the average fair
market value of such grants made during the two fiscal years prior to the
Change of Control (measured as of the respective dates of grant), in which
Executive is participating at the time of the Change of Control of the Company
(unless Executive is permitted to participate in any substitute benefit plan
with substantially the same terms and to the same extent and with the same
rights as Executive had with respect to the benefit plan that is discontinued) other
than as a result of the normal expiration of any such benefit plan in
accordance with its terms as in effect at the time of the Change of Control, or
the taking of any action, or the failure to act, by the Company which would
adversely affect Executive’s continued participation in any of such benefit
plans on 

 6
 

 

 

at least as favorable a
basis to Executive as was the case on the date of the Change of Control or
which would materially reduce Executive’s benefits in the future under any of
such benefit plans or deprive Executive of any material benefits enjoyed by
Executive at the time of the Change of Control; 
provided, however, that any such action or inaction on the part of the
Company, including any modification, cancellation or termination of any benefits
plan, undertaken in order to maintain such plan in compliance with any federal,
state or local law or regulation governing benefits plans, including, but not
limited to, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
shall not constitute Good Reason for the purposes of this Agreement; or

(C)           any failure by the Company to obtain
from any successor to the Company an agreement reasonably satisfactory to
Executive to assume and perform this Agreement, as contemplated by Section
17(e), which has not been cured within 15 days after the notice of the failure
has been given by Executive to the Company;

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

Section
8.  Effects of Termination.

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

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

(ii)           the prorated amount of the Maximum
Target Bonus for the year in which the termination of employment occurs, pro
rated for the portion of such year during which the Executive was employed
prior to the effective date of his termination and subtracting all Incentive
Bonus payments received by Executive during such year that relate only to such
year;

(iii)          the amount equal to two times the sum
of (A) Base Salary in effect on the date of termination, plus (B) the
average of the actual bonus received by Executive during the previous two
years.  For purposes of this section,
actual bonus shall mean the sum of the annual cash Incentive Bonus, plus the
fair market value, measured as of the grant date, of the annual long-term
incentive awards the Company has granted to or agreed to grant to (if such
grant has not yet been

 7
 

 

 

made) the Executive
during the applicable fiscal year.  The
sum of the amount payable under clauses (ii) and (iii) hereof is referred
to herein as his “Severance Payment”;

(iv)          the Severance Payment shall be made in
a single, lump sum cash payment six months following the effective date of the
Executive’s termination of employment in accordance with Section 409A(a)(2)(B)
of the Code.

(v)           the Company shall allow the Executive
to continue to participate during the 24 month period following termination
(the “Severance Period”) in any and all of the employee benefit and welfare
plans and programs of the Company, excluding any 401(k) plan, in which the
Executive was entitled to participate immediately prior to his termination, to
the same extent and upon the same terms as the Executive participated in such
plans prior to his termination; provided that the Executive’s continued
participation is permissible pursuant to the terms of such plans and otherwise
practicable under the general terms and provisions of such benefit plans and
programs.  During the Severance Period,
the Company shall pay for the Executive’s continued participation in said
employee benefit and welfare plans, including, but not limited to, premiums for
group health, dental, accident, directors and officers insurance, group life
insurance, and his country club allowance, but excluding any 401(k) plan
or disability insurance.  To the extent
that continued participation is neither permissible nor practicable, the
Company shall take such actions as may be necessary to provide the Executive
with substantially comparable benefits (without additional cost to the
Executive, including any additional taxes) outside the scope of such plans
including, without limitation, reimbursing the Executive for his costs in
obtaining such coverage, such as COBRA premiums paid by the Executive and/or
his eligible dependents, provided such costs are consistent with the policies
of the Company unless such costs are determined in good faith to be
unreasonable by the Compensation Committee. 
If the Executive engages in regular employment after his termination of
employment (whether as an executive or as a self-employed person but
excluding his management or operation of the Excluded Businesses), any employee
benefit and welfare benefits received by the Executive in consideration of such
employment which are the same type as the employee benefit and welfare benefits
provided by the Company will relieve the Company of its obligation under this
Section 8(a)(v) to provide such type of benefits;

(vi)          the Executive’s stock options awarded
under the Stock Option Plan (or any other or successor plan) shall immediately
become 100% vested and he shall have a two-year period following the
effective date of his termination of employment in which to exercise his vested
stock options, including those stock options that vested upon his termination
of employment; and

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

 8
 

 

 

(b)           Termination on Death or Permanent Disability.  Upon a
termination of employment due to the Executive’s death or Permanent Disability,
the Company shall have no further liability or further obligation to the
Executive except as follows:  the
Executive (and his estate or designated beneficiaries under any
Company-sponsored employee benefit plan in the event of his death) shall be
entitled to receive:

(i)            within 30 days of such termination
of employment any Base Salary, Incentive Bonus, expense reimbursements and all
other compensation related payments that are payable as of his date of death or
Permanent Disability and that are related to his period of employment preceding
his date of death;

(ii)              
within 30 days after such termination of employment, the prorated
amount of the Maximum Target Bonus for the year in which the Executive’s death
occurs, prorated for the portion of the year during which the Executive was
employed prior to his death or Permanent Disability, and subtracting out all
Incentive Bonus payments related to that year received by the Executive during
such year;

(iii)          within 30 days of such termination of
employment, a severance payment in an amount equal to the Executive’s Base
Salary at the time of termination;

(iv)          all non-vested bonus and long-term
incentive awards previously granted to the executive, including but not limited
to restricted stock, deferred share awards and stock options, shall earn and
fully vest and become nonforfeitable.  In
the case of death, the Executive’s personal representative shall have a one-year
period following the Executive’s death in which to exercise his vested stock
options, including those stock options that vested on death; and

(v)           the group health plan then provided
to senior executives of the Company shall be continued following the date of
termination pursuant to the Executive’s COBRA continuation rights.  The Company shall provide for the cost of
such coverage for a period of two years and, during such period, if Executive
is precluded from participating in such group health plan by its terms or
applicable law, the Company shall pay to the Executive in cash the premiums or
other contributions that the Company would otherwise pay as of the date of the
Executive’s termination to continue the Executive’s participation in the group
health plan for two years. Notwithstanding the foregoing, the continuation
period for group health benefits under Section 4980B of the Code by reason of
the Executive’s termination of employment with the Company shall be measured
from his actual date of termination of employment.

(c)           By the Company for Cause or By the Executive Without
Good Reason.  In
the event that the Executive’s employment is terminated by the Company for
Cause or by the Executive without Good Reason, the Company shall pay the
Executive his Base Salary, Incentive Bonus, expense reimbursements and all
other compensation related payments that are payable as of his termination of
employment date and that are related 

 9
 

 

 

to his period of
employment preceding his termination date. 
The Executive shall be entitled to exercise his vested stock options,
determined as of his termination date, pursuant to the terms of the option
grant.  All unvested options and unvested
restricted Common Shares shall be forfeited on his termination date.

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

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

Section
9.  Change of Control.

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

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

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

(iii)          the complete liquidation of the
Company or the sale or disposition of all or substantially all of the Company’s
assets, such that after the transaction, the holders of the voting shares of
the Company immediately prior to the 

 10
 

 

 

transaction is less than
50% of the voting securities of the acquiror or the parent of the acquiror;

(iv)          the members of the Board of the
Company at the beginning of any consecutive 24-calendar-month period commencing
on or after the date hereof (the “Incumbent Directors”) cease for any reason
other than death to constitute at least a majority of the members of the
Board;  provided that any director whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the members of the Board then
still in office who were members of the Board at the beginning of such
24-calendar-month period, shall be deemed to be an Incumbent Director; or

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

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

Section
10.  Excess Parachute Excise Tax.

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

(i)            Subject to the provisions of this
Section 10 hereof, all determinations required to be made under this
Section 10, including whether an Excise Tax is payable by Executive and
the amount of such Excise Tax and whether a Gross-Up Payment is required
and the amount of such Gross-Up 

 11
 

 

 

Payment, shall be made by
the nationally recognized firm of certified public accountants (the “Accounting
Firm”) used by the Company prior to the Change of Control (or, if such
Accounting Firm shall be a nationally recognized firm of certified public
accountants, as selected by Executive). 
The Accounting Firm shall be directed by the Company or Executive to
submit its preliminary determination and detailed supporting calculations to
both the Company and Executive within 15 calendar days after the date of
termination of employment, if applicable, and any other such time or times as
may be requested by the Company or Executive. 
If the Accounting Firm determines that any Excise Tax is payable by
Executive, the Company shall pay the required Gross-Up Payment to, or for
the benefit of, Executive within five business days after receipt of such
determination and calculations.  If the
Accounting Firm determines that no Excise Tax is payable by Executive, it
shall, at the same time as it makes such determination, furnish Executive with
an opinion that he has substantial authority not to report any Excise Tax on
his/her federal, state, local income or other tax return.  Any determination by the Accounting Firm as
to the amount of the Gross-Up Payment shall be binding upon the Company
and Executive absent a contrary determination by the Internal Revenue Service
or a court of competent jurisdiction; provided, however, that no such
determination shall eliminate or reduce the Company’s obligation to provide any
Gross-Up Payment that shall be due as a result of such contrary
determination or the Executive’s obligation to repay any amounts as a result of
such contrary determination.

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

(b)           In the event that the Internal
Revenue Service claims that any payment or benefit received under this
Agreement constitutes as “excess parachute payment”, within the meaning of
Section 280G(b)(1) of the Code, Executive shall notify the Company in
writing of such claim.  Such notification
shall be given as soon as practicable but no later than 10 business days after
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid.  Executive shall not pay such claim
prior to the expiration of the 30 day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is due).  If the Company notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall (1) give the Company any information reasonably requested
by the Company relating to such claim; (2) take such action in connection
with contesting such claim as the Company shall reasonably 

 12
 

 

 

request in writing from
time to time, including without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company and
reasonably satisfactory to Executive; (3) cooperate with the Company in
good faith in order to effectively contest such claim; and (4) permit the
Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and expenses
(including, but not limited to, additional interest and penalties and related
legal, consulting or other similar fees) incurred in connection with such contest
and shall indemnify and hold Executive harmless, on an after-tax basis,
for and against any Excise Tax or other tax (including interest and penalties
with respect thereto) imposed as a result of such representation and any
payment of costs and expenses.

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

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

(c)           The Company and Executive shall each
provide the Accounting Firm access to and copies of any books, records and
documents in the possession of the Company or Executive, as the case may be,
reasonably requested by the Accounting 

 13
 

 

 

Firm, and otherwise
cooperate with the Accounting Firm in connection with the preparation and
issuance of the determination contemplated by this Section 10.

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

Section 11.  Confidential Information.  At any time during or after Executive’s
employment with the Company, Executive shall not, without the prior written
consent of the Company, use, divulge, disclose or make accessible to any other
person, firm, partnership, corporation or other entity any confidential or
proprietary information pertaining to the business of the Company or any of its
subsidiaries (“Confidential Information”), pursuant to the policies set forth
in the Company’s employee handbook and compliance manual, as amended from time
to time.  The Company acknowledges that
prior to his employment with the Company, the Executive has lawfully acquired
extensive knowledge of the industries and businesses in which the Company
engages in business and the Company’s customers, and that the provisions of
this Section 11 are not intended to restrict the Executive’s use of such
previously acquired knowledge.  Upon
termination of the Executive’s employment with the Company for any reason, the
Executive shall return to the Company all Company property and all written
Confidential Information in the possession of the Executive.

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

Section 12.  Noncompetition and Nonsolicitation.  During the Term and for a period of 12
calendar months after the termination of the Executive’s employment (the “Non-compete
Period”), the Executive shall not, directly or indirectly, either as a
principal, agent, employee, employer, stockholder, partner or in any other
capacity whatsoever: (a) engage or assist others engaged, in whole or in
part, in any business which is engaged in a business or enterprise that is
substantially similar to and in competition with the business of the Company
that the Company was engaged in, or a planned business of the Company that had
been proposed in writing to senior officers of the Company or the Board and had
not been rejected by the Company or the Board, during the period of the
Executive’s employment with the Company; or (b) without the prior consent
of the Board, employ or solicit the employment of, or assist others in
employing or soliciting the employment of, any individual employed by the
Company (other than the 

 14
 

 

 

Executive’s personal assistant or Executive’s secretary) at any time
while the Executive was also so employed; provided, however, that the
provisions of this Section 12 shall not apply in the event the Company
materially breaches this Agreement.  For
purposes of this Section 12, a business shall be in competition with the
Company only if a significant portion of its business is to originate mortgage
loans to or purchase real estate from and lease such real estate back to
operators of single-tenant retail, distribution or service companies in the
United States.  Notwithstanding any other
provision of this Agreement, in the event the Executive’s employment is
terminated “For Cause,” the Non-Compete Period shall be 12 calendar months.

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

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

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

Section
14.  Disputes.

(a)           Equitable Relief.  The Executive acknowledges and agrees that
upon any breach by the Executive of his obligations under Section 11, 12
or 13 hereof, the 

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Company will have no
adequate remedy at law, and accordingly will be entitled to specific
performance and other appropriate injunctive and equitable relief.

(b)           Arbitration.  Excluding only requests for equitable relief
by the Company under Section 14(a), in the event that there is any claim
or dispute arising out of or relating to this Agreement or the breach hereof,
and the parties hereto shall not have resolved such claim or dispute within
60 days after written notice from one party to the other setting forth the
nature of such claim or dispute, then such claim or dispute shall be settled if
mutually agreed by binding arbitration in Maricopa County, Arizona, in
accordance with the Employment Dispute Resolution Rules of the American Arbitration
Association (“Rules”), by an arbitrator mutually agreed upon by the parties
hereto or, in the absence of such agreement, by an arbitrator selected
according to such Rules.  Notwithstanding
the foregoing, if either the Company or the Executive shall request, such
mutually agreeable arbitration shall be conducted by a panel of three
arbitrators, one selected by the Company, one selected by the Executive and the
third selected by agreement of the first two arbitrators, or, in the absence of
such agreement, in accordance with such Rules. 
Judgment upon the award rendered by such arbitrator(s) shall be entered
in any Court having jurisdiction thereof upon the application of either party.  The parties agree to use their reasonable
best efforts to have such arbitration completed as soon as is reasonably
practicable.  Notwithstanding anything
herein to the contrary, except as provided in paragraph (c) below the
losing party shall pay the reasonable costs and expenses (including reasonable
attorney fees and expenses) of the prevailing party with respect to such
arbitration, except the Executive, if he is the losing party, shall not be
required to pay such expenses and costs if the claim relates to statutory
discrimination claims that he would not otherwise be required to pay if such
claim had been brought in a court of competent jurisdiction.

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

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

Section 16.  Cooperation in Future Matters.  The Executive hereby agrees that for a period
of 12 months following his termination of employment he shall cooperate
with the Company’s reasonable requests relating to matters that pertain to the
Executive’s employment by the Company, including, without limitation, providing
information or limited consultation as to such matters, participating in legal
proceedings, investigations or audits on behalf of the 

 16
 

 

 

Company, or otherwise making himself reasonably available to the
Company for other related purposes.  Any
such cooperation shall be performed at scheduled times taking into
consideration the Executive’s other commitments, and the Executive shall be
compensated at a reasonable hourly or per diem rate to be agreed upon by the
parties to the extent such cooperation is required on more than an occasional
and limited basis.  The Executive shall
not be required to perform such cooperation to the extent it conflicts with any
requirements of exclusivity of services for another employer or otherwise, nor
in any manner that in the good faith belief of the Executive would conflict
with his rights under or ability to enforce this Agreement.

Section
17.  General.

(a)           Notices.  All notices and other communications
hereunder shall be in writing or by written telecommunication, and shall be
deemed to have been duly given if delivered personally or if sent by overnight
courier or by certified mail, return receipt requested, postage prepaid or sent
by written telecommunication or facsimile, to the relevant address set forth
below, or to such other address as the recipient of such notice or
communication shall have specified in writing to the other party hereto, in
accordance with this Section 17(a).

to the Company:

Spirit Finance
Corporation

14631 N. Scottsdale Road

Suite 200

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

Attention:  President

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

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

(b)           Severability.  If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired. 
It is the intent of both parties for all payments made in connection
with this Agreement to comply with Section 409A of the Code and all provisions
of this Agreement shall be construed accordingly.

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

 17
 

 

 

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

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

(f)            Entire Agreement.  This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter hereof
and may not be amended except by a written instrument hereafter signed by the
Executive and a duly authorized representative of the Board (other than the
Executive).

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

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

 18
 

 

 

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

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

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

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

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

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

 

	
   

  	
  SPIRIT FINANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Christopher
  H. Volk

  
	
   

  	
   

  	
  Christopher H.
  Volk, President and Chief

  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jeffrey M.
  Fleischer

  
	
   

  	
  Jeffrey M.
  Fleischer

  

 

 20

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