Document:

AMERICAN REALTY CAPITAL TRUST IV, INC.

 

2012 STOCK OPTION PLAN

 

Adopted by Board of Directors: ________,
2012

 

Approved by Stockholders: ________,
2012

 

 

 

 

    	 

    	 

    

TABLE OF CONTENTS

 

	 	 	Page
	 	 	 
	1.	Purpose of the Plan.	1
	 	 	 
	2.	Definitions.	1
	 	 	 
	3.	Effective Date/Expiration of Plan.	3
	 	 	 
	4.	Administration.	3
	 	 	 
	5.	Shares; Adjustment Upon Certain Events.	4
	 	 	 
	6.	Awards and Terms of Options.	6
	 	 	 
	7.	Effect of Termination of Service.	10
	 	 	 
	8.	Nontransferability of Options.	10
	 	 	 
	9.	Rights as a Stockholder.	11
	 	 	 
	10.	Determinations.	11
	 	 	 
	11.	Termination, Amendment and Modification.	11
	 	 	 
	12.	Non-Exclusivity.	11
	 	 	 
	13.	Use of Proceeds.	12
	 	 	 
	14.	General Provisions.	12
	 	 	 
	15.	Issuance of Stock Certificates; Legends and Payment of Expenses.	13
	 	 	 
	16.	Listing of Shares and Related Matters.	14
	 	 	 
	17.	Governing Law.	14

 

 

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AMERICAN REALTY CAPITAL TRUST IV, INC.

 

2012 STOCK OPTION PLAN

 

Adopted by Board of Directors: ___________,
2012

 

Approved by Stockholders: _______________,
2012

 

		1.	Purpose of the Plan.

 

The purpose of this
American Realty Capital Trust IV, Inc. 2012 Stock Option Plan is to enhance the Company’s profitability and value for the
benefit of stockholders to enable the Company to attract, retain and motivate directors, officers, advisors, consultants and
other personnel, affiliates, personnel of affiliates, and any joint venture affiliates who are important to the success of
the Company and to create and strengthen a mutuality of interest between the Potential Participants and the stockholders of the
Company by granting such Potential Participants options to purchase Common Stock of the Company.

 

		2.	Definitions.

 

(a)     “Acquisition
Event” means a merger or consolidation in which the Company is not the surviving entity, or any transaction that
results in the acquisition of all or substantially all of the Company’s outstanding Common Stock by a single person or entity
or by a group of persons and/or entities in concert, or the sale or transfer of all or substantially all of the Company’s
assets.

 

(b)     “Act”
means the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.

 

(c)     “Board”
means the Board of Directors of the Company.

 

(d)     “Cause”
has the meaning set forth in Section 7(b).

 

(e)     “Change
of Control” has the meaning set for in Section 6(d).

 

(f)     “Code”
means the Internal Revenue Code of 1986, as amended.

 

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

 

(h)     “Common
Stock” means the voting common stock of the Company, par value $.01, any common stock into which the common stock
may be converted and any common stock resulting from any reclassification of the common stock.

 

(i)     “Company”
means American Realty Capital Trust IV, Inc., a Maryland corporation.

 

(j)     “Company
Voting Securities” has the meaning set forth in Section 6(d)(i).

 

    	 

    	 

    

(k)     “Corporate
Transaction” has the meaning set forth in Section 6(d)(i).

 

(l)     “Disability”
means a permanent and total disability, as determined by the Committee in its sole discretion, provided that in no event shall
any disability that is not permanent and total disability within the meaning of Section 22(e)(3) of the Code be treated as a Disability.  A
Disability shall be deemed to occur at the time of the determination by the Committee of the Disability.

 

(m)     “Effective
Date” has the meaning set forth in Section 3.

 

(n)     “Fair
Market Value” means, for purposes of this Plan, unless otherwise required by any applicable provision of the Code
or any regulations issued thereunder, as of any date and except as provided below, the last sales price reported for the Common
Stock on the applicable date: (i) as reported on the principal national securities exchange in the United States on which it is
then traded or The NASDAQ Stock Market; or (ii) if not traded on any such national securities exchange or The NASDAQ Stock Market,
as quoted on an automated quotation system sponsored by FINRA or if the Common Stock shall not have been reported or quoted on
such date, on the first day prior thereto on which the Common Stock was reported or quoted; provided, that the Committee may modify
the definition of Fair Market Value to reflect any changes in the trading practices of any exchange on which the Common Stock is
listed or traded.  If the Common Stock is not readily tradable on a national securities exchange, The NASDAQ Stock Market
or any automated quotation system sponsored by FINRA, its Fair Market Value shall be set in good faith by the Committee and in
a manner that complies with Section 409A of the Code.  For purposes of the grant of any Option, the applicable date shall
be the date on which the Stock Option is granted.

 

(o)     “FINRA”
means the Financial Industry Regulatory Authority, Inc.

 

(p)     “Incumbent
Board” has the meaning set forth in Section 6(d)(ii).

 

(q)     “Option”
means the right to purchase the number of Shares granted in the Option agreement at a prescribed purchase price on the
terms specified in the Plan and the Option agreement.  No Option awarded under this Plan is intended to be an “incentive
stock option” within the meaning of Section 422 of the Code.

 

(r)      ”Participant”
means a Potential Participant who is granted an Option under the Plan, which Option has not expired or been cancelled.

 

(s)     “Person”
means an individual, entity or group within the meaning of Section 13d-3 or 14d-1 of the Act.

 

(t)     “Plan”
means this American Realty Capital Trust IV, Inc. 2012 Stock Option Plan, as amended from time to time.

 

(u)     “Potential
Participants” means the directors, officers, advisors, consultants and other personnel of the Company, American Realty
Capital Advisors IV, LLC (the “Advisor”), American Realty Capital Properties IV, LLC (the “Property
Manager”), and affiliates, personnel of the Advisor, the Property Manager and affiliates, and any joint venture affiliates
of the Company.

 

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(v)     “Purchase
Price” means the purchase price per Share.

 

(w)     “Securities
Act” means the Securities Act of 1933, as amended.

 

(x)     “Share”
means a share of Common Stock.

 

(y)     “Termination
of Service” means termination of the relationship with the Company so that an individual is no longer a Potential
Participant.

 

3.     Effective
Date/Expiration of Plan.

 

The Plan will become
effective on __________, 2012, subject to the receipt of stockholder approval (the “Effective Date”).
No Option shall be granted under the Plan on or after the tenth anniversary of the Effective Date, but Options previously granted
may extend beyond that date.

 

4.     Administration.

 

(a)     Duties
of the Committee. The Plan shall be administered by the Committee.  The Committee shall have full authority to interpret
the Plan and to decide any questions and settle all controversies and disputes that may arise in connection with the Plan; to establish,
amend, and rescind rules for carrying out the Plan, to administer the Plan, subject to its provisions; to prescribe the form or
forms of instruments evidencing Options and any other instruments required under the Plan (which need not be uniform) and to change
such forms from time to time; and to make all other determinations and to take all such steps in connection with the Plan and the
Options as the Committee, in its sole discretion, deems necessary or desirable; provided , that all such determinations
shall be in accordance with the express provisions, if any, contained in the Plan or Option agreement.  The Committee
shall not be bound to any standards of uniformity or similarity of action, interpretation or conduct in the discharge of its duties
hereunder, regardless of the apparent similarity of the matters coming before it.  The determination, action or conclusion
of the Committee in connection with the foregoing shall be final, conclusive and binding on all parties.

 

(b)     Advisors.
The Committee may designate the Secretary of the Company, other officers or employees of the Company or competent professional
advisors to assist the Committee in the administration of the Plan, and may grant authority to such persons (other than professional
advisors) to grant an Option or to execute Option agreements or other documents on behalf of the Committee, provided that no Participant
may grant an Option or execute any Option agreement granting Options to such Participant.  The Committee may employ such
legal counsel, consultants and agents as it may deem desirable for the administration of the Plan, and may rely upon any opinion
received from any such counsel or consultant and any computation received from any such consultant or agent.  Expenses
incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company.

 

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(c)     Indemnification.
To the maximum extent permitted by law, no officer, member or former officer or member of the Committee or the Board shall be liable
for any action or determination made in good faith with respect to the Plan or any Option granted under it.  To the maximum
extent permitted by applicable law or the Certificate of Incorporation or By-Laws of the Company, as may be amended from time to
time, and to the extent not covered by insurance, each officer, member or former officer or member of the Committee or of the Board
shall be indemnified and held harmless by the Company against any cost or expense (including reasonable fees of counsel reasonably
acceptable to the Company) or liability (including any sum paid in settlement of a claim with the approval of the Company), and
advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act
or omission to act in connection with the Plan, except to the extent arising out of such officer’s, member’s or former
officer’s or member’s own fraud or bad faith.  Such indemnification shall be in addition to any rights of
indemnification the officers, members or former officers or members may have as directors under applicable law or under the Certificate
of Incorporation or By-Laws of the Company or otherwise.

 

(d)     Meetings
of the Committee. The Committee shall select one of its members as a Chairman and shall adopt such rules and regulations, as
it shall deem appropriate, concerning the holding of its meetings and the transaction of its business.  Any member of
the Committee may be removed at any time either with or without cause by resolution adopted by the Board, and any vacancy on the
Committee may at any time be filled by resolution adopted by the Board.  All determinations by the Committee shall be
made by the affirmative vote of a majority of its members.  Any such determination may be made at a meeting duly called
and held at which a majority of the members of the Committee were in attendance in person or through telephonic communication.  Any
determination set forth in writing and signed by all of the members of the Committee shall be as fully effective as if it had been
made by a vote of such members at a meeting duly called and held.

 

5.     Shares;
Adjustment Upon Certain Events.

 

(a)     Shares
to be Delivered; Fractional Shares .  Shares to be issued under the Plan shall be made available, at the discretion
of the Board, either from authorized but unissued Shares or from issued Shares reacquired by the Company and held in treasury.  No
fractional Shares will be issued or transferred upon the exercise of any Option.  In lieu thereof, the Company shall
pay a cash adjustment equal to the same fraction of the Fair Market Value of one Share on the date of exercise.

 

(b)     Number
of Shares. Subject to adjustment as provided in this Section 5, the maximum aggregate number of Shares authorized for issuance
under the Plan shall be 500,000 Shares.  If an Option is for any reason canceled, or expires or terminates unexercised,
the Shares covered by such Option shall again be available for the grant of Options, within the limits provided by the preceding
sentence.  In addition, if Common Stock has been exchanged by a Participant as full or partial payment to the Company
of the Purchase Price or if the number of shares of Common Stock otherwise deliverable has been reduced for full or partial payment
to the Company of the Purchase Price, the number of shares of Common Stock exchanged or reduced shall again be available under
the Plan.

 

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(c)     Adjustments;
Recapitalization, etc.   The existence of the Plan and the Options granted hereunder shall not affect in any way
the right or power of the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization
or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue
of bonds, debentures, preferred or prior preference stocks ahead of or affecting Common Stock, the dissolution or liquidation of
the Company or any sale or transfer of all or part of its assets or business or any other corporate act or proceeding.  If
and whenever the Company takes any such action, however, the following provisions, to the extent applicable, shall govern:

 

(i)     If
and whenever the Company shall effect a stock split, reverse stock split, stock dividend, subdivision, recapitalization or combination
of Shares or other changes in the Company’s Common Stock, (x) the Purchase Price per Share and the number and class of Shares
and/or other securities with respect to which outstanding Options thereafter may be exercised, and (y) the total number and class
of Shares and/or other securities that may be issued under this Plan, shall be appropriately adjusted by the Committee.  The
Committee may also make such other adjustments as it deems necessary to take into consideration any other event (including, without
limitation, accounting changes) if the Committee determines that such adjustment is appropriate to avoid distortion in the operation
of the Plan.

 

(ii)     Subject
to Section 5(c)(iii), if the Company merges or consolidates with one or more corporations, then from and after the effective date
of such merger or consolidation, upon exercise of an Option theretofore granted, the Participant shall be entitled to purchase
under such Option, in lieu of the number of Shares as to which such Option shall then be exercisable but on the same terms and
conditions of exercise set forth in such Option, the number and class of Shares and/or other securities or property (including
cash) to which the Participant would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately
prior to such merger or consolidation, the Participant had been the holder of record of the total number of Shares receivable upon
exercise of such Option (whether or not then exercisable).  In connection with any event described in this Section 5(c)(ii),
the Committee may provide, in its sole discretion, for the cancellation of any outstanding Options and payment in cash or other
property in exchange therefor.

 

(iii)     In
the event of an Acquisition Event, the Committee may, in its discretion, and without any liability to any Participant, terminate
all outstanding Options as of the consummation of the Acquisition Event by delivering notice of termination to each Participant
at least 20 days prior to the date of consummation of the Acquisition Event; provided, however, that, during the period from
the date on which such notice of termination is delivered to the consummation of the Acquisition Event, each Participant shall
have the right to exercise in full all the Options that are then outstanding (without regard to limitations on exercise otherwise
contained in the Options), but any such exercise shall be contingent upon and subject to the occurrence of the Acquisition Event;
provided, however, that if the Acquisition Event does not take place within a specified period after giving such notice for
any reason whatsoever, the notice and exercise pursuant thereto shall be null and void.  If the Acquisition Event does
take place after giving such notice, any Option not exercised prior to the date of the consummation of such Acquisition Event shall
be forfeited simultaneous with the consummation of the Acquisition Event.  If an Acquisition Event occurs and the Committee
does not terminate the outstanding Options pursuant to the foregoing provisions, then the provisions of Section 5(c)(ii) shall
apply.

 

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(iv)     If,
as a result of any adjustment made pursuant to the preceding paragraphs of this Section 5, any Participant shall become entitled
upon exercise of an Option to receive any securities other than Common Stock, then the number and class of securities so receivable
thereafter shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock set forth in this Section 5, as determined by the Committee in its discretion.

 

(v)     Except
as hereinbefore expressly provided, the issuance by the Company of shares of stock of any class, or securities convertible or exercisable
into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants
to subscribe therefor, or upon conversion of shares or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect to the number and class of Shares and/or other securities
or property subject to Options theretofore granted or the Purchase Price per Share. Notwithstanding anything else herein, the Committee:  (A)
shall not make any adjustments to any Awards that would cause an Award to be subject to Section 409A of the Code without the consent
of the affected Participant; and (B) shall adjust any Award that is subject to Code Section 409A only in a manner that is in compliance
with the requirements of Code Section 409A.

 

6.     Awards
and Terms of Options.

 

(a)     Grant.
All Options issued hereunder shall be issued in accordance with Section V.K.6. of the Statement of Policy Regarding Real Estate
Investment Trusts, as revised and adopted by NASAA membership on May 7, 2007.

 

(b)     Purchase
Price.  The Purchase Price deliverable upon the exercise of an Option shall equal 100% of the Fair Market Value on
the last business day preceding the Annual Date of Grant.  Notwithstanding the foregoing, but subject to Section 6(a),
the Purchase Price for all Options granted under the Plan before the termination of the Company’s initial public offering
will be equal to (i) until the later of the end of the escrow period or the acquisition of the first property, $9.00 and (ii) thereafter
through the end of the offering period, net asset value per Share on such date of exercise.

 

(c)     Exercisability.  
Except as otherwise provided herein, any Option granted to a Participant shall vest and become exercisable on the second anniversary
of the date of grant, subject to the Participant’s continued service a s a Potential Participant through such date.  No
Option shall be exercisable after the expiration of ten (10) years from the date of grant.

 

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(d)     Acceleration
of Exercisability on Change of Control.   Except as otherwise provided in the Participant’s Option agreement,
all  Options granted and not previously exercisable shall become exercisable immediately upon a Change of Control (as defined
herein).  For this purpose, a “Change of Control” shall be deemed to have occurred upon:

 

(i)     an
acquisition by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of 33% or more of
either (A) the then outstanding Shares or (B) the combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Company Voting Securities”); excluding,
however, the following: (w) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself acquired directly from the Company; (x) any acquisition
by the Company; (y) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company; or (z)
any acquisition by any entity pursuant to a reorganization, merger, consolidation or similar corporate transaction (in each case,
a “Corporate Transaction”), if, pursuant to such Corporate Transaction, the conditions described in clauses
(A), (B) and (C) of paragraph (iii) of this Section are satisfied; or

 

(ii)     a
change in the composition of the Board such that the individuals who, as of the Effective Date hereof, constitute the Board (the
Board as of the date hereof shall be hereinafter referred to as the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided that for purposes of this subsection any individual who becomes
a member of the Board subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders,
was approved by a vote of at least a majority of those individuals who are members of the Board and who are also members of the
Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of
the Incumbent Board; but, provided further, that any such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Act) or
other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or

 

(iii)     the
approval by the stockholders of the Company of a Corporate Transaction or, if consummation of such Corporate Transaction is subject,
at the time of such approval by stockholders, to the consent of any government or governmental agency, the obtaining of such consent
(either explicitly or implicitly by consummation); excluding, however, such a Corporate Transaction pursuant to which (A) all or
substantially all of the individuals and entities who are the beneficial owners, respectively, of the outstanding Shares and Company
Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 60%
of, respectively, the outstanding shares of common stock of the entity resulting from such Corporate Transaction and the combined
voting power of the outstanding voting securities of such entity entitled to vote generally in the election of directors, in substantially
the same proportions as their ownership, immediately prior to such Corporate Transaction, of the outstanding Shares and Company
Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the
Company or the entity resulting from such Corporate Transaction and any Person beneficially owning, immediately prior to such Corporate
Transaction, directly or indirectly, 33% or more of the outstanding Shares or Company Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 33% or more of, respectively, the outstanding shares of Common Stock of the entity resulting
from such Corporate Transaction or the combined voting power of the then outstanding securities of such entity entitled to vote
generally in the election of directors, and (C) individuals who were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; notwithstanding
the foregoing, no Change of Control will occur if two-thirds (2/3rds) of the Incumbent Board approves the Corporate Transaction;
or

 

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(iv)     the
approval of the stockholders of the Company of (A) a complete liquidation or dissolution of the Company, or (B) the sale or other
disposition of all or substantially all of the assets of the Company; excluding; however, such a sale or other disposition to a
entity with respect to which, following such sale or other disposition, (x) more than 60% of, respectively, the then outstanding
shares of common stock of such entity and the combined voting power of the then outstanding voting securities of such entity entitled
to vote generally in the election of directors will be then beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners respectively, of the outstanding Shares and Company Voting Securities
immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior
to such sale or other disposition, of the outstanding Shares and Company Voting Securities, as the case may be, (y) no Person (other
than the Company and any employee benefit plan (or related trust) of the Company or such entity and any Person beneficially owning,
immediately prior to such sale or other disposition, directly or indirectly, 33% or more of the outstanding Shares or Company Voting
Securities, as the case may be) will beneficially own, directly or indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of such entity and the combined voting power of the then outstanding voting securities of such entity entitled
to vote generally in the election of directors, and (z) individuals who were members of the Incumbent Board will constitute at
least a majority of the members of the board of directors of such entity.

 

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(e)     Exercise
of Options.

 

(i)     A
Participant may elect to exercise an Option by giving written notice to the Committee of such election and of the number of Shares
such Participant has elected to purchase pursuant to the Option, accompanied by payment in full of the aggregate Purchase Price
for the number of Shares for which the Option is being exercised.

 

(ii)     Shares
purchased pursuant to the exercise of an Option shall be paid for at the time of exercise as follows:

 

(A)     in
cash or by check, bank draft or money order payable to the order of the Company;

 

(B)     if
so permitted by the Committee: (x) through the delivery of unencumbered Shares (including Shares being acquired pursuant to the
Option then being exercised), provided such Shares (or such Option) have been owned by the Participant for such period as may be
required by applicable accounting standards to avoid a charge to earnings; or (y) through a combination of Shares and cash as provided
above, provided, that, if the Shares delivered upon exercise of the Option is an original issue of authorized Shares, at least
so much of the Purchase Price as represents the par value of such Shares shall be paid in cash or by a combination of cash and
Shares;

 

(C)     to
the extent permitted by applicable law, if the Common Stock is traded on a national securities exchange, the NASDAQ Stock Market
or quoted on a national quotation system sponsored by FINRA, through the delivery of irrevocable instructions to a broker to deliver
promptly to the Company an amount equal to the aggregate Purchase Price; or

 

(D)     on
such other terms and conditions as may be acceptable to the Committee and in accordance with applicable law.  The Company
will not issue shares in certificated form.  The Company’s transfer agent maintains a stock ledger that contains
the name and address of each stockholder and the number of shares that the stockholder holds.  The Company shall provide
the Participant, pursuant to the Company’s Articles of Amendment and Restatement, with a notice containing information about
the Shares purchased, in lieu of issuance of a share certificate.

 

(iii)     REIT
Status.   Notwithstanding anything herein to the contrary, no Option granted under this Plan may be exercised if
such exercise would jeopardize the Company’s status as a “real estate investment trust” as defined under the
Code.

 

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7.     Effect
of Termination of Service.

 

(a)     Death,
Disability, or Retirement. Except as otherwise provided in the Participant’s Option agreement or in this Plan, upon a
Termination of Service, all outstanding Options then exercisable and not exercised by the Participant prior to such Termination
of Service shall remain exercisable by the Participant to the extent not theretofore exercised for the following time periods (subject
to Section 6(c)):

 

(i)     in
the event of the Participant’s death, such Options shall remain exercisable (by the Participant’s estate or by the
person given authority to exercise such Options by the Participant’s will or by operation of law) for a period of one (1)
year from the date of the Participant’s death; and

 

(ii)     in
the event the Participant retires at or after age 65 (or, with the consent of the Committee, before age 65), or, if the Participant’s
services terminate due to Disability, such Options shall remain exercisable for one (1) year from the date of the Participant’s
Termination of Service.

 

(b)     Cause.  Upon
the Termination of Service of a Participant for Cause (as defined herein) or if it is discovered after a Termination of Service
that such Participant had engaged in conduct that would have justified a Termination of Service for Cause, all outstanding Options
(whether vested or unvested) shall immediately be canceled, provided that upon any such termination the Committee may, in its discretion,
require the Participant to promptly pay to the Company (and the Company shall have the right to recover) any gain the Participant
realized as a result of the exercise of any Option that occurred within one (1) year prior to such Termination of Service or the
discovery of conduct that would have justified a Termination of Service for Cause.  Termination of Service shall be deemed
to be for “Cause” for purposes of this Section 7(b) if the Participant shall have committed fraud or any felony in
connection with the Participant’s duties as a director of the Company or willful misconduct or any act of disloyalty, dishonesty,
fraud or breach of trust, confidentiality or fiduciary duties as to the Company or the commission of any other act which causes
or may reasonably be expected to cause economic or reputational injury to the Company or any other act or failure to act that constitutes
“cause” for removal of a director under applicable Maryland law.

 

(c)     Other
Termination.  In the event of a Termination of Service for any reason other than as provided in Sections 7(a) and
7(b), except as otherwise provided in the Participant’s Option agreement, all outstanding Options then exercisable
and not exercised by the Participant prior to such Termination of Service shall remain exercisable (to the extent exercisable by
such Participant immediately before such termination) for a period of three (3) months after such termination, but not beyond the
original stated term of the Option.

 

8.     Nontransferability
of Options.

 

No Option shall be
transferable by the Participant otherwise than by will or under applicable laws of descent and distribution, and during the lifetime
of the holder may be exercised only by the holder or his or her guardian or legal representative.  In addition, no Option
shall be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and no Option shall
be subject to execution, attachment or similar process.  Upon any attempt to transfer, assign, negotiate, pledge or hypothecate
any Option, or in the event of any levy upon any Option by reason of any execution, attachment or similar process contrary to the
provisions hereof, such Option shall immediately be cancelled.  Notwithstanding the foregoing, the Committee may determine
at the time of grant or thereafter, that an Option that is otherwise non transferable is transferable in whole or in part and in
such circumstances, and under such conditions, as specified by the Committee.

 

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9.     Rights
as a Stockholder.

 

A holder of an Option
shall have no rights as a stockholder with respect to any Shares covered by such holder’s Option until such holder shall
have become the holder of record of such Shares, and no adjustments shall be made for dividends in cash or other property or distributions
or other rights in respect to any such Shares, except as otherwise specifically provided for in this Plan.

 

10.     Determinations.

 

Each determination,
interpretation or other action made or taken pursuant to the provisions of this Plan by the Committee shall be final, conclusive
and binding for all purposes and upon all persons, including, without limitation, the holders of any Options and the Potential
Participants and their respective heirs, executors, administrators, personal representatives and other successors in interest.

 

11.     Termination,
Amendment and Modification.

 

Notwithstanding any
other provision of this Plan, the Board or the Committee may at any time, and from time to time, amend, in whole or in part, any
or all of the provisions of this Plan, or suspend or terminate it entirely, retroactively or otherwise; provided, however, that,
unless otherwise required by law or specifically provided herein, the rights of a Participant with respect to Options granted prior
to such amendment, suspension or termination, may not be impaired without the consent of such Participant; provided further, that
no amendment may be made without stockholder approval if stockholder approval is required under applicable law.

 

The Committee may
amend the terms of any Option theretofore granted, prospectively or retroactively, but, subject to Section 5 or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall impair the rights of any holder without the holder’s
consent.

 

12.     Non-Exclusivity.

 

Neither the adoption
of the Plan by the Board shall be construed as creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the granting or issuance of Options, Shares and/or other
incentives otherwise than under the Plan, and such arrangements may be either generally applicable or limited in application.

 

    	11

    	 

    

13.     Use
of Proceeds.

 

The proceeds of the
sale of Shares subject to Options under the Plan are to be added to the general funds of the Company and used for its general corporate
purposes as the Board shall determine.

 

14.     General
Provisions.

 

(a)     Right
to Terminate Services.  Neither the adoption of the Plan nor the grant of Options shall impose any obligations on
the Company to retain any Participant as a director nor shall it impose any obligation on the part of any Participant to remain
a director.

 

(b)     Purchase
for Investment.   If the Board determines that the law so requires, the holder of an Option granted hereunder shall,
upon any exercise or conversion thereof, execute and deliver to the Company a written statement, in form satisfactory to the Company,
representing and warranting that such Participant is purchasing or accepting the Shares then acquired for such Participant’s
own account and not with a view to the resale or distribution thereof, that any subsequent offer for sale or sale of any such Shares
shall be made either pursuant to (i) a registration statement on in appropriate form under the Securities Act, which registration
statement shall have become effective and shall be current with respect to the Shares being offered and sold, or (ii) a specific
exemption from the registration requirements of the Securities Act, and that in claiming such exemption the holder will, prior
to any offer for sale or sale of such Shares, obtain a favorable written opinion, satisfactory in form and substance to the Company,
from counsel approved by the Company as to the availability of such exception.

 

(c)     Trusts,
etc.   Nothing contained in the Plan and no action taken pursuant to the Plan (including, without limitation, the
grant of any Option thereunder) shall create or be construed to create a trust of any kind, or a fiduciary relationship, between
the Company and any Participant or the executor, administrator or other personal representative or designated beneficiary of such
Participant, or any other persons.  Any reserves that may be established by the Company in connection with the Plan shall
continue to be part of the general funds of the Company, and no individual or entity other than the Company shall have any interest
in such funds until paid to a Participant.  If and to the extent that any Participant or such Participant’s executor,
administrator, or other personal representative, as the case may be, acquires a right to receive any payment from the Company pursuant
to the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.

 

(d)     Notices.
Each Participant shall be responsible for furnishing the Committee with the current and proper address for the mailing to such
Participant of notices and the delivery to such Participant of agreements, Shares and payments.  Any notices required
or permitted to be given shall be deemed given if directed to the person to whom addressed at such address and mailed by regular
United States mail, first class and prepaid.  If any item mailed to such address is returned as undeliverable to the
addressee, mailing will be suspended until the Participant furnishes the proper address.

 

(e)     Severability
of Provisions.  If any provisions of the Plan shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions of the Plan, and the Plan shall be construed and enforced as if such provisions had not been
included.

 

    	12

    	 

    

(f)     Payment
to Minors, Etc.   Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable
of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing
to provide for the care of such person, and such payment shall fully discharge the Committee, the Company and their employees,
agents and representatives with respect thereto.

 

(g)     Readings
and Captions.  The headings and captions herein are provided for reference and convenience only.  They
shall not be considered part of the Plan and shall not be employed in the construction of the Plan.

 

(h)     Other
Benefits.  No award under this Plan shall be deemed compensation for purposes of computing benefits under any retirement
plan of the Company or its subsidiaries nor affect any benefits under any other benefit plan now or subsequently in effect under
which the availability or amount of benefits is related to the level of compensation.

 

(i)     409A.  To
the extent applicable, the Plan is intended to comply with the applicable requirements of Section 409A of the Code and shall be
limited, construed and interpreted in a manner so as to comply therewith.  To the extent that any Option is subject to
Section 409A of the Code, it shall be paid in a manner that will comply with Section 409A of the Code, including proposed, temporary
or final regulations or any other guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect
thereto.

 

15.     Issuance
of Stock Certificates; Legends and Payment of Expenses.

 

(a)     Uncertificated
Shares .  Upon any exercise of an Option and payment of the exercise price as provided in such Option, Shares as
to which such Option has been exercised shall be issued by the Company in the name of the person or persons exercising such Option
along with a notice to the Participant containing information about the Shares purchased, in lieu of issuance of a share certificate,
and the Company’s transfer agent maintains a stock ledger that contains the name and address of each stockholder and the
number of shares that the stockholder holds.  The Company will not issue shares in certificated form.

 

(b)     Legends.
Certificates for Shares issued upon exercise of an Option shall bear such legend or legends as the Committee, in its discretion,
determines to be necessary or appropriate to prevent a violation of, or to perfect an exemption from, the registration requirements
of the Securities Act or to implement the provisions of any agreements between the Company and the Participant with respect to
such Shares.

 

(c)     Payment
of Expenses.  The Company shall pay all issue or transfer taxes with respect to the issuance or transfer of Shares,
as well as all fees and expenses necessarily incurred by the Company in connection with such issuance or transfer and with the
administration of the Plan.

 

(d)     Section
16(b) of the Act. All elections and transactions under the Plan by persons subject to Section 16 of the Act involving Shares
are intended to comply with any applicable condition under Rule 16b-3, provided, however, noncompliance with the requirements of
Rule 16b-3 shall not affect the validity of an Option granted under this Plan.  To the extent any provision of the Plan
or action by the Committee fails to so comply, it shall be deemed null and void.  The Committee may establish and adopt
written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Act, as it may deem necessary or
proper for the administration and operation of the Plan and the transaction of business thereunder.

 

    	13

    	 

    

16.     Listing
of Shares and Related Matters.

 

If at any time the
Board shall determine in its sole discretion that the listing, registration or qualification of the Shares covered by the Plan
upon any national securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with the award or sale of Shares under the Plan, no Shares
will be delivered unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained,
or otherwise provided for, free of any conditions not acceptable to the Board.

 

17.     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).

 

    	14PROMISSORY NOTE AND SUPPLEMENT

TO MASTER LOAN AGREEMENT

 

This Non-revolving Credit Facility Supplement
(alternately, “Note” or “Supplement”) to a Master Loan Agreement dated May 1, 2012
(“MLA”) is established as of May 1, 2012 between the undersigned Borrower and Lender identified herein.

 

1.          PROMISE
TO PAY. For value received, the undersigned (collectively, “Borrower”) as principals jointly and severally
promise to pay to the order of Farm Credit West, PCA (“Lender”), a corporation organized and existing
under the laws of the United States of America, with its office at 2031 Knoll Drive, Ventura, CA 93003-7301 or at
such other place as may be designated in writing by Lender, the principal sum of $13,000,000.00 (Thirteen Million Dollars
and Zero Cents) (“Commitment”), or so much of that sum as may be advanced by Lender from time to time, together
with interest on the unpaid principal balance as specified in Section 3 below. All defined terms used in this Supplement shall
have the same meaning as set forth in the MLA. All Indebtedness owed hereunder shall be payable only in lawful money of the United
States of America.

 

1.1       NON-REVOLVING
CREDIT FACILITY. On the terms and conditions in the MLA and this Supplement, Lender agrees to make Loan advances to Borrower
during the period set forth below in the aggregate principal amount not to exceed at any one time outstanding the Commitment or
the borrowing base or other guidelines where applicable, whichever is less. Amounts borrowed and later repaid may not be reborrowed.

 

1.2      TERM.
The term of the Commitment shall be from the date of this Supplement up to but not including the Maturity Date, or such later date
as Lender may in its sole discretion authorize in writing. Borrower may draw funds only during the term of the Commitment.

 

1.3      ONGOING
REQUIREMENTS AND REPRESENTATIONS.  At the time of any draw request or draw by Borrower or advance of Loan funds by Lender,
Borrower shall not be in default. Any request for or acceptance of a draw by Borrower constitutes an ongoing representation and
warranty by Borrower that Borrower continues to comply with the conditions and requirements set forth in this Agreement, the Security
Instruments or any Loan Document in connection herewith, and that title to the Property defined in the Security Instruments has
not been transferred without Lender’s written consent. If a default occurs, one of Lender’s remedies includes Lender’s
right to immediately terminate Borrower’s right to make draws hereunder, with or without notice to Borrower.

 

1.4      PROCEDURE
FOR DRAWING FUNDS. All draws requested hereunder shall comply with applicable procedures established by Lender from time to
time. Lender’s records shall be conclusive evidence of draw requests. Each advance of Loan funds hereunder may be made upon
a verbal, written, or telecopied request from Borrower to Lender. Lender may rely on any verbal request for a draw as fully as
if such request were in writing. Upon fulfillment of the applicable conditions for making a draw, Lender shall disburse the amount
of the requested draw to Borrower in such manner as Lender and Borrower may from time to time agree.

 

2.         PAYMENTS.*

 

Seventy-One (71) Monthly interest
only payments in the amount billed, beginning on June 1, 2012. One (1) installment of interest in the amount billed
and principal to be paid on May 1, 2018.

 

*See 11.2 below for Additional Repayment
Terms.

 

Payments, other than those required as
specified in this Section or elsewhere herein, may be made at any time and in any amount during the term of this Note, unless limited
or prohibited herein or unless otherwise required by Lender in writing. This Loan is due and payable in full on May 1, 2018
(“Maturity Date”), at which time Borrower shall pay the unpaid principal balance and all accrued interest in
full. 

 

    	MLA Supplement -Non-revolving Credit	Page 1 of 4

    	 

    

 

At Lender’s option, a change in the
interest rate or an advance may either increase or decrease one or more of the following: the amount of each installment due, the
amount of the final installment (resulting in a final installment due at the Maturity Date which may be greater than any previous
installments) or the total number of installments due.

 

3.          INTEREST.

 

3.1      INITIAL
INTEREST RATE. The interest rate applicable to the Note is a Variable Interest Rate (“Variable Interest Rate”)
and shall change in accordance with Sections 3.2 through 3.3 below. Interest shall accrue at the variable interest rate as established
by Lender for the interest rate group to which this Note is assigned.

 

Interest will be charged on the
entire unpaid principal balance of this Note, including payments not made when due and any other sums owing hereunder. Interest
charged hereunder, including any acceleration interest rate, all late charges, default interest and other charges, and all other
amounts charged hereunder, shall not be limited by the laws of any state, including any state laws relating to a legal rate or
other interest rate, but shall be governed solely by applicable federal laws.

 

Interest will be calculated on
the basis of a 365-day year and the actual number of days in each month. Interest charges will begin on the date Lender
disburses principal and continue until the Indebtedness is paid in full with interest. The initial interest rate in effect on this
date is 3.50% per annum (“Initial Interest Rate”).

 

		3.2	CHANGE IN INTEREST RATE AND INTEREST RATE GROUP. The Variable Interest Rate applicable to
this Note may be adjusted automatically as of the first day of any month to the rate then made applicable to the Note’s assigned
interest rate group under the provisions of Lender's Variable Interest Rate plan in effect at that time.

 

In adjusting the rate, Lender
considers certain standard factors set forth in the plan, including but not limited to, changes in its costs of funds, operating
expenses, earnings requirements to meet certain capital objectives, credit risk factors, and the competitive environment, which
factors may change during the term of the Loan.

 

Borrower understands and agrees
that (a) the interest rate group to which this Note is assigned may be changed at any time to any other interest rate group based
on Lender's evaluation of the change in Borrower's credit quality, quality of collateral, costs of servicing the loan, and other
factors which are set forth in Lender's interest rate plan in effect at that time; and (b) the interest rate group may be automatically
adjusted to the highest interest rate group if a default shall occur under this Note or under any other note or agreement between
Borrower and Lender.

 

		3.3	NOTICE. If Lender changes Borrower’s Variable Interest Rate, Lender will give Borrower
notice of such rate change to the extent required by and in accordance with the then applicable law.

 

4.          INTEREST
FOR OVERDUE PAYMENTS.  Any interest or other sum owed hereunder which is not paid when due shall be added to the outstanding
principal balance of the Loan and such combined amount shall thereafter bear interest at the same rate as the principal portion
of the Loan.

 

5.          DEFAULT
AND REMEDIES. Borrower is in default on this Supplement under the circumstances described in the MLA governing this Supplement.
If a default occurs, Lender shall have all the Remedies described in the MLA.

 

6.          SECURITY.
The security given by Borrower to Lender includes, without limitation, the following:

6.1       This
Note is secured by a real estate Deed of Trust recorded on 06/01/2010, Instrument #20100601-00080212-0, in the official
records of Ventura County, State of California.

6.2       By
signing below, the undersigned individually and collectively certify that there have been NO CHANGES in the ownership, condition,
or location of any collateral previously pledged to Lender, which is also pledged as Collateral for this Note.

 

    	MLA Supplement -Non-revolving Credit	Page 2 of 4

    	 

    

 

7.          PREPAYMENT;
REAMORTIZATION; REFINANCE; INTEREST RATE CONVERSION. A payment, in any amount, made in advance of the scheduled payment date
is a “prepayment.” If Borrower, in making a prepayment, intends the prepayment to be applied to reduce the principal
balance of the Note, Borrower must so inform Lender in writing accompanying the prepayment. Unless agreed to in writing otherwise,
Lender may apply all prepayments in such manner as Lender, in its sole discretion, may determine. Borrower may make a full or partial
prepayment on any business day without paying a prepayment fee.

 

Upon the making of a partial prepayment,
Borrower may request to have the amount of future installments reamortized over the remaining term of the Loan, but only if Borrower
so notifies Lender at the time Borrower makes the partial prepayment and only if, upon Lender’s approval of the request,
Borrower pays to Lender any fees and costs that Lender may charge for such reamortization.

 

Lender may from time to time offer other
loan or interest rate products for which Borrower qualifies. Borrower acknowledges that it may not refinance or convert this Note
to another loan or interest rate product with Lender unless Borrower qualifies for such loan or product and pays to Lender any
fees and costs that Lender may charge for such refinance or conversion.

 

8.          LEGAL
ENTITY STATUS. If any Borrower is a legal entity, by signing below, the undersigned representatives of such entity certify
that there have been NO CHANGES in: the entity’s owners, directors, officers, partners, managers, trustees or beneficiaries;
or in the entity’s lawful powers to borrow or encumber entity assets to secure its debts; or in the authority of any person
signing below to act for and bind the entity; or in the entity’s Articles, Bylaws, Partnership Agreement, Management or Operating
Agreement, Declaration of Trust, or other applicable legal documents creating or sustaining the entity since the execution of the
last statement to Lender.

 

9.          REIMBURSEMENT
OF CHARGES. If any farm credit bank or any other provider of financing or funding to Lender shall assess against Lender any
fee, cost, charge, or other amount with respect to the Indebtedness, Borrower shall reimburse Lender on demand for the amount thereof,
regardless of whether such assessment arose from actions taken by Borrower.

 

10.         REAL
ESTATE SECURED NOTE. This Note is secured by a Security Instrument which describes how and under what conditions all amounts
owed under this Note may become immediately due and payable. One of those conditions relates to any transfer of the property covered
by the Security Instrument and to certain other transfers. Refer to each Security Instrument for the specific conditions and requirements.
When the Security Instrument is a Deed of Trust, the Deed of Trust provides as follows:

 

DUE ON SALE OR TRANSFER.
In the event the herein-described Property, (including any existing or subsequently acquired or created Water Asset), or any part
thereof, or any interest therein, is transferred or agreed to be transferred, without Beneficiary's prior written consent, all
Indebtedness, irrespective of the maturity dates, at the option of the holder hereof, and without demand or notice, shall immediately
become due and payable. As used herein, “transferred” means sold, conveyed, alienated, exchanged, transferred by gift,
further encumbered, pledged, hypothecated, made subject to an option to purchase, or otherwise disposed of, directly or indirectly,
or in trust, voluntarily or involuntarily, by Trustor or by operation of law or otherwise. Failure to exercise such option shall
not constitute a waiver of the right to exercise this option in the event of subsequent transfer or subsequent agreement to transfer.

 

If Trustor is an entity other
than a natural person (such as a corporation or other organization), then all Indebtedness, irrespective of the maturity date,
at the option of Beneficiary, and without demand or notice, shall become immediately due and payable if: (a) a beneficial interest
in Trustor is transferred; (b) there is a withdrawal or removal of a general partner of a partnership or a manager of a limited
liability company; (c) there is a transfer in the aggregate of more than 25% of the voting stock of Trustor, if Trustor is a corporation,
or there is a transfer in the aggregate of more than 25% of the partnership interests or membership interests, if Trustor is a
partnership, limited liability company or similar entity; or (d) Trustor is dissolved or its existence as a legal entity is terminated

 

    	MLA Supplement -Non-revolving Credit	Page 3 of 4

    	 

    

 

11.         SPECIAL
REPRESENTATIONS, WARRANTIES, CONDITIONS AND COVENANTS.

 

11.1         DISBURSMENT
INSTRUCTIONS. Initial disbursement of funds to pay-off Farm Credit West, PCA Loan #8309256-101, indexed under Windfall Investors,
LLC, balance of funds, if any, to be disbursed as requested.

 

11.2         ADDITIONAL
REPAYMENT TERMS. Borrower understands and agrees that, in addition to the required payments detailed in item 2 of this Note,
as sole member of Windfall Investors, LLC, Borrower is required to remit to Lender a minimum
$175,000.00 per lot sold on the real property located at the Northeast corner of Creston Road and Camp 8 Road in Creston, San Luis
Obispo County, California and bearing APN numbers 035-361-002 and 003, and 035-381-002 and 011 and owned by Windfall
Investors LLC . Upon receipt, Lender shall apply any such proceeds as a special principal
payment on the Commitment.

 

REPRESENTATIVES OF LENDER ARE NOT AUTHORIZED
TO MAKE ANY ORAL AGREEMENTS OR ASSURANCES. DO NOT SIGN THIS AGREEMENT IF YOU BELIEVE THAT THERE ARE ANY AGREEMENTS OR UNDERSTANDINGS
BETWEEN YOU AND LENDER THAT ARE NOT SET FORTH IN WRITING IN THIS AGREEMENT OR IN OTHER LOAN DOCUMENTS PERTAINING TO THIS LOAN.

 

	Signature(s):	 	 
	 	 	 
	Limoneira Company, a Delaware Corporation	 	 
	 	 	 
	By:	/s/ Harold S. Edwards	 	By:	/s/ Joseph D. Rumley
	 	Harold S. Edwards, President 	 	 	Joseph D. Rumley, Secretary 

  

    	MLA Supplement -Non-revolving Credit	Page 4 of 4

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