Exhibit 10.4

 

EMPLOYEE AND DIRECTOR

 

INCENTIVE RESTRICTED SHARE PLAN

 

OF

 

AMERICAN REALTY CAPITAL TRUST V, INC.

 

SECTION 1.          PURPOSES OF THE PLAN AND DEFINITIONS

 

1.1           Purposes. The purposes of the Employee and Director Incentive
Restricted Share Plan (this “Plan”) of American Realty Capital Trust V, Inc.
(the “Company”) are to:

 

(1)         provide incentives to selected Persons chosen to receive share-based
awards because of their ability to improve operations and increase profits of
the Company;

 

(2)         encourage the Advisor and other selected Persons to accept positions
with or continue to provide services to the Company, the Advisor and Affiliates
of the Company, as applicable; and

 

(3)         increase the interest of Directors in the Company’s welfare through
their participation in the growth in value of the Company’s Shares.

 

To accomplish these purposes, this Plan provides a means whereby the Advisor and
Affiliates of the Company, employees and officers of the Company, the Advisor
and Affiliates of the Company, Directors, and other enumerated Persons may
receive Awards.

 

1.2           Definitions. For purposes of this Plan, the following terms have
the following meanings:

 

“Advisor” means the Person or Persons, if any, appointed, employed or contracted
with by the Company to be responsible for directing or performing the day-to-day
business affairs of the Company, including any Person to whom the Advisor
subcontracts substantially all such functions. The initial Advisor is American
Realty Capital Advisors V, LLC.

 

“Advisory Agreement” shall mean that agreement dated April 4, 2013, by and
among, the Company, the Advisor and American Realty Capital Operating
Partnership V, L.P.

 

“Affiliate” means any Person (other than an Advisor), whose employees, directors
or officers are eligible to receive Awards under this Plan. The determination of
whether a Person is an Affiliate shall be made by the Board acting in its sole
and absolute discretion.

 

“Applicable Laws” means the requirements relating to the administration of
Awards under state corporation laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Shares are listed or
quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under this Plan. 

 

“Articles of Incorporation” means the articles of incorporation of the Company,
as the same may be amended from time to time.

 

“Award” means any award of Restricted Shares under this Plan.

 

“Award Agreement” means, with respect to each Award, the written agreement
executed by the Company and the Participant or other written document approved
by the Board setting forth the terms and conditions of the Award.

 

“Board” means the Board of Directors of the Company.

 

 

 

 

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

 

“Committee” means the Board or a duly appointed committee of the Board to which
the Board has delegated its powers and functions hereunder.

 

“Company” means American Realty Capital Trust V, Inc.

 

“Director” means a person elected or appointed and serving as a member of the
Board in accordance with the Articles of Incorporation and the Maryland General
Corporation Law.

 

“Director Shares” has the meaning set forth in Section 6.

 

“Effective Date” has the meaning set forth in Section 15.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.

 

“Fair Market Value” means with respect to Shares:

 

(i)          If the Shares are listed on any established stock exchange or a
national market system, their Fair Market Value shall be the closing sales price
for the Shares, or the mean between the high bid and low asked prices if no
sales were reported, as quoted on such system or exchange (or, if the Shares are
listed on more than one exchange, then on the largest such exchange) for the
date the value is to be determined (or if there are no sales or bids for such
date, then for the last preceding business day on which there were sales or
bids), as reported in The Wall Street Journal.

 

(ii)         If the Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, or if there is no secondary trading
market for the Shares, their Fair Market Value shall be determined in good faith
by the Board. 

 

“Grant Date” has the meaning set forth in Section 5.1(c).

 

“Non-Employee Director” means a person who is a Director of the Company, but who
is not also an employee or officer of the Company or the Advisor.

 

“Participant” means an eligible person who is granted an Award.

 

“Person” means an individual, a corporation, partnership, trust, association, or
any other entity.

 

“Plan” means this Employee and Director Incentive Restricted Share Plan.

 

“Restricted Shares” means an Award granted under Section 5.2.

 

“Retainer” has the meaning set forth in Section 6.3.

 

“Rule 16b-3” means Rule 16b-3 adopted under Section 16(b) or any successor rule,
as it may be amended from time to time, and references to paragraphs or clauses
of Rule 16b-3 refer to the corresponding paragraphs or clauses of Rule 16b-3 as
it exists at the Effective Date or the comparable paragraph or clause of Rule
16b-3 or successor rule, as that paragraph or clause may thereafter be amended.

 

“Section 16(b)” means Section 16(b) of the Exchange Act.

 

“Section 409A of the Code” means the nonqualified deferred compensation rules
under Section 409A of the Code and any applicable Treasury regulation or other
official guidance promulgated thereunder.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time.

 

 

 

 

“Shares” means shares of common stock of the Company, $0.01 par value per share.

 

“Termination” means that a Participant has ceased, for any reason and with or
without cause, to be an employee or Director of, or a consultant to, the
Company, the Advisor or any Affiliate of the Company. However, the term
“Termination” shall not include a transfer of a Participant from the Company to
the Advisor or any Affiliate of the Company or the Advisor or vice versa, or
from any such Affiliate to another, or a leave of absence duly authorized by the
Company unless the Board has provided otherwise.

 

SECTION 2.          ELIGIBLE PERSONS

 

Every Person who, at or as of the Grant Date, is:

 

(a)          a full-time employee of the Advisor, the Company or any Affiliate
of the Company;

 

(b)          an officer of the Company, the Advisor or any Affiliate of the
Company;

 

(c)          a Director of the Company;

 

(d)          a director of the Advisor or any Affiliate of the Company; or

 

(e)          a Person that the Board designates as eligible for an Award because
such Person: 

 

(i)          performs bona fide consulting or advisory services for the Company,
the Advisor or any Affiliate of the Company pursuant to a written agreement
(other than services in connection with the offer or sale of securities in a
capital-raising transaction), and

 

(ii)         has a direct and significant effect on the financial development of
the Company or any Affiliate of the Company,

 

shall be eligible to receive Awards hereunder.

 

Non-Employee Directors are only eligible to receive Awards under Section 6.

 

SECTION 3.          SHARES SUBJECT TO THIS PLAN

 

The total number of Shares that may be issued pursuant to Awards shall not
exceed 5.0% of the Company’s outstanding Shares on a fully diluted basis at any
time and in any event will not exceed 3,400,000 Shares. The number of Shares
reserved for issuance under this Plan is subject to adjustment in accordance
with the provisions for adjustment in Section 5.1. If any Shares awarded under
this Plan are forfeited for any reason, the number of forfeited Shares shall
again be available for purposes of granting Awards under this Plan.

 

SECTION 4.          ADMINISTRATION

 

4.1           Administration. This Plan shall be administered by the Committee.

 

4.2           Committee’s Powers. Subject to the express provisions of this
Plan, the Committee shall have the authority, in its sole discretion:

 

(a)          to adopt, amend and rescind administrative and interpretive rules
and regulations relating to this Plan;

 

(b)          to determine the eligible Persons to whom, and the time or times at
which, Awards shall be granted;

 

(c)          to determine the number of Shares that shall be the subject of each
Award;

 

 

 

 

(d)          to determine the terms and provisions of each Award (which need not
be identical) and any amendments thereto, including provisions defining or
otherwise relating to:

 

(i)          the extent to which the transferability of Shares issued or
transferred pursuant to any Award is restricted;

 

(ii)         the effect of Termination on an Award;

 

(iii)        the effect of approved leaves of absence; and

 

(iv)        to construe the respective Award Agreements and this Plan. 

 

(e)           to make determinations of the Fair Market Value of Shares;

 

(f)            to waive any provision, condition or limitation set forth in an
Award Agreement;

 

(g)           to delegate its duties under this Plan to such agents as it may
appoint from time to time; and

 

(h)           to make all other determinations, perform all other acts and
exercise all other powers and authority necessary or advisable for administering
this Plan, including the delegation of those ministerial acts and
responsibilities as the Committee deems appropriate.

 

The Committee may correct any defect, supply any omission or reconcile any
inconsistency in this Plan, in any Award or in any Award Agreement in the manner
and to the extent it deems necessary or desirable to implement this Plan, and
the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in
this Section 4.2 shall be final and conclusive. Notwithstanding any provision in
this Plan to the contrary, Awards will be made to Non-Employee Directors only
under Section 6 of this Plan. In addition, except as provided in Section 5.1(b)
herein, the Committee may not in any manner exercise discretion under this Plan
with respect to any Awards made to Non-Employee Directors.

 

4.3           Term of Plan. No Awards shall be granted under this Plan after 10
years from the Effective Date of this Plan.

 

SECTION 5.          CERTAIN TERMS AND CONDITIONS OF AWARDS

 

5.1           All Awards. All Awards shall be subject to the following terms and
conditions:

 

(a)           Changes in Capital Structure. If the number of outstanding Shares
is increased by means of a share dividend payable in Shares, a share split or
other subdivision or by a reclassification of Shares, then, from and after the
record date for such dividend, subdivision or reclassification, the number and
class of Shares subject to this Plan shall be increased or adjusted, as
applicable, in proportion to such increase in outstanding Shares. If the number
of outstanding Shares is decreased by means of a reverse share split or other
combination or by a reclassification of Shares, then, from and after the record
date for such combination or reclassification, the number and class of Shares
subject to this Plan shall be decreased or adjusted, as applicable, in
proportion to such decrease in outstanding Shares.

 

(b)           Certain Corporate Transactions. In the event of any change in the
capital structure or business of the Company by reason of any recapitalization,
reorganization, merger, consolidation, split-up, subdivision, combination,
exchange of Shares or any similar change affecting the Company’s capital
structure or business, then the aggregate number and kind of Shares which
thereafter may be issued under this Plan shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, Participants under this Plan, and any such adjustment determined
by the Committee in good faith shall be binding and conclusive on the Company
and all Participants and employees and their respective heirs, executors,
administrators, successors and assigns.

 

 

 

 

(c)           Grant Date. Each Award Agreement shall specify the date as of
which it shall be effective (the “Grant Date”).

 

(d)           Vesting. Each Award shall vest, and any restrictions thereunder
shall lapse, as the case may be, at such times and in such amounts as may be
specified by the Committee in the applicable Award Agreement.

 

(e)           Nonassignability of Rights. Awards shall not be transferable other
than with the consent of the Committee or by will or the laws of descent and
distribution.

 

(f)           Termination from the Company, the Advisor or any Affiliate of the
Company or Termination of the Advisory Agreement. The Committee shall establish,
in respect of each Award when granted, the effect of a Termination or
termination of the Advisory Agreement on the rights and benefits thereunder and
in so doing may, but need not, make distinctions based upon the cause of
termination (such as retirement, death, disability or other factors) or which
party effected the termination (the employer, the employee or the Advisor).

 

(g)           Minimum Purchase Price. Notwithstanding any provision of this Plan
to the contrary, if authorized but previously unissued Shares are issued under
this Plan, such Shares shall not be issued for a consideration which is less
than as permitted under Applicable Laws, and in no event, shall such
consideration be less than the par value per Share multiplied by the number of
Shares to be issued.

 

(h)          Other Provisions. Each Award Agreement may contain such other
terms, provisions and conditions not inconsistent with this Plan, as may be
determined by the Committee.

 

5.2           Restricted Shares. Restricted Shares shall be subject to the
following terms and conditions:

 

(a)           Grant. The Committee may grant one or more Awards of Restricted
Shares to any Participant. Each Award of Restricted Shares shall specify the
number of Shares to be issued to the Participant, the date of issuance and the
restrictions imposed on the Shares including the conditions of release or lapse
of such restrictions. Upon the issuance of Restricted Shares, the Participant
may be required to furnish such additional documentation or other assurances as
the Committee may require to enforce restrictions applicable thereto.

 

(b)           Restrictions. Except as specifically provided elsewhere in this
Plan or the Award Agreement regarding Restricted Shares, Restricted Shares may
not be sold, assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until the restrictions have
lapsed and the rights to the Shares have vested. The Committee may in its sole
discretion provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or in part, based on service,
performance or such other factors or criteria as the Committee may determine. 

 

(c)           Dividends. Unless otherwise determined by the Committee, cash
dividends with respect to Restricted Shares shall be paid to the recipient of
the Award of Restricted Shares on the normal dividend payment dates, and
dividends payable in Shares shall be paid in the form of Restricted Shares
having the same terms as the Restricted Shares upon which such dividend is paid.
Each Award Agreement for Awards of Restricted Shares shall specify whether and,
if so, the extent to which the Participant shall be obligated to return to the
Company any cash dividends paid with respect to any Restricted Shares which are
subsequently forfeited.

 

(d)           Forfeiture of Restricted Shares. Except to the extent otherwise
provided in the applicable Award Agreement, when a Participant’s Termination
occurs, the Participant shall automatically forfeit all Restricted Shares still
subject to restriction.

 

SECTION 6.          DIRECTOR SHARES

 

6.1           Automatic Grant. Without further action of the Board or the
Committee, Non-Employee Directors shall receive an Award of 1,333 Restricted
Shares on each of (i) the date of such Non-Employee Director’s initial election
to the Board and (ii) on the date of each annual stockholders’ meeting
thereafter and, in each case, notwithstanding Section 5.1(c), each such date
will be the Grant Date of such Award.

 

 

 

 

6.2           Vesting. Notwithstanding the provisions of Section 5.1(d), Awards
of Restricted Shares made to Non-Employee Directors shall vest over a five-year
period following the first anniversary of the Grant Date in increments of 20%
per annum.

 

6.3           Election. The Company shall pay to each individual who is a
Non-Employee Director an annual fee in the amount set from time to time by the
Board (the “Retainer”). Each Non-Employee Director shall be entitled to receive
his or her Retainer exclusively in cash, exclusively in unrestricted Shares
(“Director Shares”) or any portion in cash and Director Shares. Each
Non-Employee Director shall be given the opportunity, during the month in which
the Non-Employee Director first becomes a Non-Employee Director, and during each
December thereafter, to elect among these choices for the balance of the
calendar year (in the case of the election made during the month the
Non-Employee Director first becomes a Non-Employee Director) and for the ensuing
calendar year (in the case of a subsequent election made during any December).
If the Non-Employee Director chooses to receive at least some of his or her
Retainer in Director Shares, the election shall also indicate the percentage of
the Retainer to be paid in Director Shares. If a Non-Employee Director makes no
election during his or her first opportunity to make an election, the
Non-Employee Director shall be assumed to have elected to receive his or her
entire Retainer in cash.

 

6.4           Issuance. The Company shall make the first issuance of Director
Shares to electing Directors on the first business day following the last day of
the full calendar quarter following such election. Subsequent issuances of
Director Shares shall be made on the first business day of each subsequent
calendar quarter and shall be made to all persons who are Non-Employee Directors
on that day except any Non-Employee Director whose Retainer is to be paid
entirely in cash. The number of Shares issuable to those Non-Employee Directors
on the relevant date indicated above shall equal:

 

(% x R/4)/P, where: 

 

% = the percentage of the Non-Employee Director’s Retainer that the Non-Employee
Director elected or is deemed to have elected to receive in the form of Director
Shares, expressed as a decimal;

 

R = the Non-Employee Director’s Retainer for the year during which the issuance
occurs; and

 

P = the Fair Market Value.

 

Director Shares shall not include any fractional Shares. Fractions shall be
rounded to the nearest whole Share (with one-half being rounded upward).

 

SECTION 7.          SECURITIES LAWS

 

Nothing in this Plan or in any Award or Award Agreement shall require the
Company to issue any Shares with respect to any Award if, in the opinion of
counsel for the Company, that issuance could constitute a violation of any
Applicable Laws. As a condition to the grant of any Award, the Company may
require the Participant (or, in the event of the Participant’s death, the
Participant’s legal representatives, heirs, legatees or distributees) to provide
written representations concerning the Participant’s (or such other person’s)
intentions with regard to the retention or disposition of the Shares covered by
the Award and written covenants as to the manner of disposal of such Shares as
may be necessary or useful to ensure that the grant or disposition thereof will
not violate the Securities Act, any other law or any rule of any applicable
securities exchange or securities association then in effect. The Company shall
not be required to register any Shares under the Securities Act or register or
qualify any Shares under any state or other securities laws.

 

SECTION 8.          EMPLOYMENT OR OTHER RELATIONSHIP

 

Nothing in this Plan or any Award shall in any way interfere with or limit the
right of the Company, the Advisor or any Affiliate of the Company to terminate
any Participant’s employment or status as a consultant, advisor or Director at
any time, nor confer upon any Participant any right to continue in the employ
of, or as a Director, consultant or advisor of, the Company, the Advisor or any
Affiliate of the Company. Nothing in this Plan shall interfere with the
Company’s ability to terminate the Advisory Agreement in accordance with its
terms.

 

 

 

 

SECTION 9.          AMENDMENT, SUSPENSION AND TERMINATION OF THIS PLAN

 

The Board may at any time amend, suspend or discontinue this Plan, provided that
such amendment, suspension or discontinuance meets the requirements of
Applicable Laws, including without limitation, any applicable requirements for
stockholder approval. Notwithstanding the above, an amendment, suspension or
discontinuation shall not be made if it would impair the rights of any
Participant under any Award previously granted, without the Participant’s
consent, except to conform this Plan and Awards granted to the requirements of
Applicable Laws. The provisions of this Plan relating to Awards for Non-Employee
Directors may not be amended more than once each six months. Notwithstanding any
provision of the Plan to the contrary, if the Board determines that any Award
may be subject to Section 409A of the Code, the Board may adopt such amendment
to the Plan and the applicable Award Agreement or adopt other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions that the Board determines are necessary or
appropriate, without the consent of the Participant, to (a) exempt the Award
from Section 409A of the Code and/or preserve the intended tax treatment of the
benefits provided with respect to the Award, or (b) comply with the requirements
of Section 409A of the Code. 

 

SECTION 10.         LIABILITY AND INDEMNIFICATION OF THE BOARD

 

No person constituting, or member of the group constituting, the Board shall be
liable for any act or omission on such person’s part, including but not limited
to the exercise of any power or discretion given to such member under this Plan,
except for those acts or omissions resulting from such member’s gross negligence
or willful misconduct. The Company shall indemnify each present and future
person constituting, or member of the group constituting, the Board against, and
each person or member of the group constituting the Board shall be entitled
without further act on his or her part to indemnity from the Company for, all
expenses (including the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation)
reasonably incurred by such person in connection with or arising out of any
action, suit or proceeding to the fullest extent permitted by law and by the
Articles of Incorporation and Bylaws of the Company.

 

SECTION 11.         SEVERABILITY

 

If any provision of this Plan is held to be illegal or invalid for any reason,
that illegality or invalidity shall not affect the remaining portions of this
Plan, but such provision shall be fully severable and this Plan shall be
construed and enforced as if the illegal or invalid provision had never been
included in this Plan. Such an illegal or invalid provision shall be replaced by
a revised provision that most nearly comports to the substance of the illegal or
invalid provision. If any of the terms or provisions of this Plan or any Award
Agreement conflict with the requirements of Applicable Laws, those conflicting
terms or provisions shall be deemed inoperative to the extent they conflict with
Applicable Law.

 

SECTION 12.         SECTION 409A OF THE CODE

 

Awards granted under the Plan are intended to be exempt from Section 409A of the
Code. To the extent that the Plan is not exempt from the requirements of Section
409A of the Code, the Plan is intended to comply with the requirements of
Section 409A of the Code and shall be limited, construed and interpreted in
accordance with such intent. Notwithstanding the foregoing, in no event
whatsoever shall the Company be liable for any additional tax, interest or
penalty that may be imposed on a Participant by Section 409A of the Code or any
damages for failing to comply with Section 409A of the Code.

 

SECTION 13.         WITHHOLDING

 

The Company shall have the right to deduct from any payment to be made to a
Participant, or to otherwise require, prior to the issuance or delivery of any
Shares or the payment of any cash hereunder, payment by the Participant of, any
federal, state or local taxes required by law to be withheld. Upon the vesting
of Restricted Shares, or upon making an election under Section 83(b) of the
Code, a Participant shall pay all required withholding to the Company. The Board
may permit any such statutory withholding obligation with regard to any
Participant to be satisfied by reducing the number of Shares otherwise
deliverable or by delivering Shares already owned.

  

 

 

 

SECTION 14.         GOVERNING LAW

 

This Plan shall be governed and construed in accordance with the laws of the
State of Maryland (regardless of the law that might otherwise govern under
applicable principles of conflict of laws).

 

SECTION 15.         EFFECTIVE DATE AND PROCEDURAL HISTORY

 

This Plan was originally approved by the Company’s Board on March 22, 2013 (the
“Effective Date”). It was approved in that form by the holders of the Company’s
voting Shares on March 22, 2013.