SEC Filing - Limoneira Company

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 2010

REGISTRATION NO.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g) OF THE

SECURITIES EXCHANGE ACT OF 1934

Limoneira Company

(Name of registrant as specified in its charter)

Delaware		77-0260692
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1141 Cummings Road, Santa Paula, CA 93060

(Address of principal executive offices, including zip code)

(805) 525-5541

(Registrant’s telephone number, including area code)

Securities to be registered pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS TO BE SO REGISTERED		NAME OF EACH EXCHANGE ON WHICH EACH CLASS IS TO BE REGISTERED

None		None

Securities to be registered pursuant to Section 12(g) of the Act:

TITLE OF CLASS

Common Stock, $0.01 par value

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x (Do not check if a smaller reporting company)	Smaller reporting company	¨

TABLE OF CONTENTS

ITEM 1.	BUSINESS	3

ITEM 1A.	RISK FACTORS	14

ITEM 2.	FINANCIAL INFORMATION	23

ITEM 3.	PROPERTIES	38

ITEM 4.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	39

ITEM 5.	DIRECTORS AND EXECUTIVE OFFICERS	40

ITEM 6.	EXECUTIVE COMPENSATION	43

ITEM 7.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	51

ITEM 8.	LEGAL PROCEEDINGS	52

ITEM 9.	MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	52

ITEM 10.	RECENT SALES OF UNREGISTERED SECURITIES	56

ITEM 11.	DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED	57

ITEM 12.	INDEMNIFICATION OF DIRECTORS AND OFFICERS	61

ITEM 13.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	61

ITEM 14.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	61

ITEM 15.	FINANCIAL STATEMENTS AND EXHIBITS	62

EXPLANATORY NOTE

We are filing this General Form for Registration of Securities on Form 10 to register voluntarily our common stock, par value $0.01 per share, pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act.

Once this registration statement is deemed effective, we will be subject to the requirements of Regulation 13A under the Exchange Act, which will require us to file annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and we will be required to comply with all other obligations of the Exchange Act applicable to issuers filing registration statements pursuant to Section 12(g) of the Exchange Act.

During the pendency of this registration statement and before it is deemed effective, we anticipate that we will submit to our stockholders a proposal by our board of directors that we split our shares on a ten-for-one basis. Moreover, following the effectiveness of this registration statement and after addressing any comments from the Division of Corporation Finance of the Securities and Exchange Commission, which we refer to as the SEC, we expect that our common stock will be accepted for listing on the NASDAQ Stock Market under the ticker symbol “LMNR.”

All references to “we,” “us,” “our,” “our company,” “the company,” or “Limoneira” in this registration statement on Form 10 mean Limoneira Company, a Delaware corporation, and its wholly owned subsidiaries.

FORWARD-LOOKING STATEMENTS

This registration statement on Form 10 contains statements which, to the extent that they do not recite historical fact, constitute forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include the words "may," "will," could," "should," "would," "believe," "expect," "anticipate," "estimate," "intend," "plan" or other words or expressions of similar meaning. We have based these forward-looking statements on our current expectations about future events. The forward-looking statements include statements that reflect management’s beliefs, plans, objectives, goals, expectations, anticipations and intentions with respect to our financial condition, results of operations, future performance and business, including statements relating to our business strategy and our current and future development plans.

The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied in this prospectus include:

changes in laws, regulations, rules, quotas, tariffs, and import laws;

weather conditions, including freezes, that affect the production, transportation, storage, import and export of fresh produce;

market responses to industry volume pressures;

increased pressure from disease, insects and other pests;

disruption of water supplies or changes in water allocations;

product and raw materials supplies and pricing;

energy supply and pricing;

changes in interest and currency exchange rates;

availability of financing for land development activities;

political changes and economic crises;

international conflict;

acts of terrorism;

labor disruptions, strikes or work stoppages;

loss of important intellectual property rights; and

other factors disclosed in this registration statement.

In addition, this registration statement on Form 10 contains industry data related to our business and the markets in which we operate. This data includes projections that are based on a number of assumptions. If these assumptions turn out to be incorrect, actual results could differ from the projections.

We urge you to carefully review this registration statement on Form 10, particularly the section “Risk Factors,” for a complete discussion of the risks of an investment in our common stock.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Many factors discussed in this registration statement, some of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this registration statement as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

ITEM 1.

BUSINESS

Limoneira Company was incorporated in Delaware in 1990 as the successor to several businesses with operations in California since 1893. Our operations are described below. For detailed financial information with respect to our business and our operations, see our consolidated financial statements and the related notes to consolidated financial statements, which are included in this registration statement beginning on page F-1.

Overview

We are an agribusiness and real estate development company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 7300 acres of land, water resources and other assets to maximize long-term stockholder value. Our current operations consist of fruit production and marketing, real estate development and capital investment activities.

We are one of California’s oldest citrus growers and we believe we are the largest grower of lemons and avocados in the United States. In addition to growing lemons and avocados, we grow oranges and a variety of other specialty citrus and other crops. We have agricultural plantings throughout Ventura, Santa Barbara and Tulare Counties in California, which plantings consist of approximately 1839 acres of lemons, 1372 acres of avocados, 1062 acres of oranges and 403 acres of specialty citrus and other crops. We also operate our own packinghouse in Santa Paula, California, where we process and pack lemons that we grow as well as lemons grown by others.

Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own. Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the unadjudicated Fillmore, Santa Barbara and Paso Robles Basins (aquifers). We also use ground water and water from local water districts in Tulare County, which is in the San Joaquin Valley.

For more than 100 years, we have been making strategic investments in California agricultural and development real estate, and more recently, in Arizona real estate. As of the date of this registration statement, we have six active real estate development projects in California and two in Arizona. Our real estate developments range from apartments to luxury single-family homes and in California include approximately 200 completed units and another approximately 2,000 units in various stages of planning and entitlement. Our real estate developments in Arizona consist of two luxury homes in Paradise Valley, which is adjacent to Phoenix and Scottsdale.

Business Segments

We have three business segments: agribusiness, rental operations, and real estate development. The agribusiness segment includes our farming and lemon packing operations. The rental operations segment includes our housing, organic recycling, commercial and leased land operations. The real estate development segment includes our real estate projects and development.

Agribusiness

Our agribusiness segment includes our operations for farming and lemon packing. The agribusiness segment represented approximately 89%, 93% and 93% of our fiscal 2009, fiscal 2008 and fiscal 2007 consolidated revenues, respectively.

Farming

We are one of California’s oldest citrus growers and we believe we are the largest grower of lemons and avocados in the United States. In addition to growing lemons and avocados, we grow oranges and a variety of specialty citrus and other crops. We have agricultural plantings throughout Ventura, Santa Barbara and Tulare Counties in California, which consist of approximately 1839 acres of lemons, 1372 acres of avocados, 1062 acres of oranges and 403 acres of specialty citrus and other crops. We also operate our own packinghouse in Santa Paula, California, where we process and pack lemons we grow as well as lemons grown by others.

Lemons. We believe we are the largest lemon grower in the United States with approximately 1839 acres of lemons planted throughout Ventura County, California and Tulare County in the San Joaquin Valley in Central California. In California, the lemon growing area stretches from the Coachella Valley to Fresno and Monterey Counties, with the majority of the growing areas being located in the coastal areas from Ventura County to Monterey County. Ventura County is California’s top lemon producing county. Approximately 87% of our lemons are grown in Ventura County and approximately 13% are grown in Tulare County in Central California’s San Joaquin Valley.

There are over fifty varieties of lemons, with the Lisbon, Eureka and Genoa being the predominant varieties marketed on a worldwide basis. California grown lemons are available 12 months of the year, with peak production periods occurring from January through August. Approximately 92% of our lemon plantings are of the Lisbon and Eureka varieties and approximately 8% are of other varieties. The storage life of fresh lemons is limited and generally ranges from one to 18 weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain.

With an average annual production of approximately 750,000 tons of lemons, California accounts for approximately 87% of the United States lemon crop, with Arizona producing a vast majority of the rest. Between 50% and 70% percent of the United States lemon crop is utilized in the fresh market, with the remainder going to the processed market for products such as juice, oils and essences. Most lemons are consumed as either a cooking ingredient, a garnish, or as juice in lemonade or other carbonated beverages or drinks. Demand for lemons is typically highest in the summer, although California producers through various geographical zones are typically able to harvest lemons year round.

Most of our lemons, including our packinghouse branded lemons, are marketed and sold under the Sunkist brand to the food service industry, wholesalers and retail operations throughout North America, Asia and certain other countries primarily through Sunkist Growers, Inc., which we refer to as Sunkist, an agricultural marketing cooperative of which we are a member. As an agricultural cooperative, Sunkist coordinates the sales and marketing of our lemons and we process orders through our packinghouse for direct shipment to customers worldwide.

Avocados. We believe we are the largest avocado grower in the United States with approximately 1372 acres of avocados planted throughout Ventura and Santa Barbara counties. In California, the growing area stretches from San Diego County to Monterey County, with the majority of the growing areas located approximately 100 miles north and south of Los Angeles County.

Over the last 70 years, the avocado has transitioned from a single specialty fruit to an array of 10 varieties ranging from the green-skinned Zutanos to the black-skinned Hass, which is the predominant avocado variety marketed on a worldwide basis. California grown avocados are available year round, with peak production periods occurring between February and September. Other avocado varieties have a more limited picking season and typically command a lower price. Because of superior eating quality, the Hass avocado has contributed greatly to the avocado’s growing popularity through its retail, restaurant and other food service uses. Approximately 98% of our avocado plantings are of the Hass variety. The storage life of fresh avocados is limited and generally ranges from one to four weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain.

We provide all of our avocado production to Calavo Growers, Inc., which we refer to as Calavo, a packing and marketing company listed on NASDAQ under the symbol CVGW. Calavo’s customers include many of the largest retail and food service companies in the United States and Canada. Our marketing relationship with Calavo dates back to 2003. Calavo receives fruit from our orchards at its packinghouse located in Santa Paula. Calavo’s proximity to our agricultural operations enables us to keep transportation and handling costs to a minimum. Our avocados are packed by Calavo, sold and distributed under its own brands to its customers primarily in the United States and Canada.

Primarily due to differing soil conditions, the care of avocado trees is intensive and during our 70 year history of growing avocados, growing techniques have changed dramatically. The need for more production per acre to compete with foreign sources of supply has required us to take an important lead in the practice of dense planting (typically four times the number of avocado trees per acre versus traditional avocado plantings) and mulching composition to help trees acclimate under conditions that more closely resemble those found in the more natural climate of the tropics.

Oranges. While we are primarily known for our high quality lemons, we also grow oranges. We have approximately 1062 acres of oranges planted throughout Tulare County in the San Joaquin Valley in Central California. In California, the growing area stretches from Imperial County to Yolo County.

For many decades, the Valencia variety of oranges were grown in Ventura County primarily for export to the Pacific Rim. Throughout the late 20th century, developing countries began producing the larger, seedless Navel variety of oranges that successfully competed against the smaller Valencia variety of oranges. California grown Valencia oranges are available March to October, with peak production periods occurring between June and September. California grown Navel oranges are available October to June, with peak production periods occurring between January and April. Approximately 19% of our orange plantings are of the Valencia variety and approximately 81% are of the Navel variety.

Navel oranges comprise most of California’s orange crop, accounting for approximately 75% over the past three growing seasons. Valencia oranges account for a vast majority of the remainder. While California produces approximately 24% of the nation’s oranges, its crop accounts for approximately 80% of those going to the fresh market. The share of California’s crop going to fresh market, as opposed to the processed market (i.e. juices, oils and essences) varies by season, depending on the quality of the crop.

Sunkist markets and sells our oranges under the Sunkist brand to the food service industry, wholesalers and retail operations throughout the world. As an agricultural cooperative, Sunkist coordinates the sales and marketing of our oranges and orders are processed by a packinghouse for direct shipment to customers. We typically partner with outside packers to process and ship our oranges. Approximately 70% of our oranges are sold to retail outlets and approximately 30% are sold to the food service industry.

Specialty Citrus and Other Crops. A few decades ago in response to an ever changing marketplace, we began growing specialty citrus varieties and other crops that we believed would appeal to changing North American and worldwide demand. As a result, we currently have approximately 403 acres of specialty citrus and other crops planted such as pummelos, Moro blood oranges, Cara Cara oranges, Satsuma mandarins, sweet Meyer lemons, proprietary seedless lemons, pink variegated lemons, Minneola tangelos, pistachios, cherries and Star Ruby grapefruit.

Acreage devoted to specialty citrus and other crops in California has been growing significantly over the past few decades, especially with the popularity of the Clementine, a type of mandarin orange. We grow Satsumas, a type of mandarin orange similar to Clementine oranges. All of our specialty citrus is marketed and sold under the Sunkist brand through Sunkist and packed and shipped through arrangements with other packers similar to our oranges. All of our specialty citrus, other than specialty lemons such as sweet Meyer lemons, pink variegated lemons and proprietary seedless lemons, is marketed and sold by Sunkist to major retail operations in the United States.

We market our other specialty crops, such as pistachios and cherries, independently. All of our pistachios are harvested and sold to an independent roaster, packager and marketer of nuts. All of our cherries are harvested and sold to independent packers and shippers.

We have agricultural plantings on 13 properties located throughout Ventura, Santa Barbara and Tulare Counties in California. The following is a description of each such property.

Limoneira/Olivelands Ranch. The Limoneira/Olivelands Ranch is the original site of the company and consists of approximately 1,744 contiguous acres located just west of Santa Paula, California. The company’s headquarters, lemon packing operations and storage facilities are located on this property. There are approximately 1,189 acres of agricultural plantings on this property which consist of approximately 544 acres of lemons, 643 acres of avocados and 2 acres of specialty citrus and other crops. The company leases approximately 199 acres to third party agricultural tenants who grow a variety of row crops. The company also leases to Calavo office space located on this property.

Orchard Farm Ranch. The Orchard Farm Ranch consists of approximately 1,119 acres located just west of Santa Paula, California. There are approximately 805 acres of agricultural plantings on this property which consist of approximately 417 acres of lemons, 29 acres of avocados and 7 acres of specialty citrus and other crops planted by the company and approximately 352 acres leased to third party agricultural tenants who grow a variety of row crops. The Orchard Farm Ranch is directly adjacent to the Limoneira/Olivelands Ranch, which together comprise nearly 2,900 contiguous acres approximately eight miles from the Pacific Ocean.

Teague McKevett Ranch. The Teague McKevett Ranch consists of approximately 523 acres located just east of Santa Paula, California. There are approximately 414 acres of agricultural plantings on this property which consist of approximately 213 acres of lemons and 181 acres of avocados planted by the company and approximately 20 acres leased to third party tenants who grow a variety of row crops. As described in “Real Estate Development” below, the Teague McKevett Ranch comprises all of East Area 1.

La Cuesta Ranch. The La Cuesta Ranch consists of approximately 222 acres located between Santa Paula, California and Ojai, California. The company has approximately 126 acres of agricultural plantings on this property which consist of approximately 87 acres of lemons, 27 acres of avocados and 12 acres of specialty citrus and other crops.

San Cayetano Ranch. The San Cayetano Ranch consists of approximately 86 acres located between Santa Paula, California and Fillmore, California. The company has approximately 74 acres of agricultural plantings on this property which consist of approximately 6 acres of lemons and 68 acres of avocados.

Sawyer Ranch. The Sawyer Ranch consists of approximately 31 acres located between Santa Paula, California and Fillmore, California. The company leases this property and has approximately 29 acres of agricultural plantings consisting of approximately 12 acres of lemons and 17 acres of avocados.

La Campana Ranch. The La Campana Ranch consists of approximately 324 acres located between Santa Paula, California and Fillmore, California. The company has approximately 289 acres of agricultural plantings on this property which consists of approximately 107 acres of lemons and 182 acres of avocados.

Wilson Ranch. The Wilson Ranch consists of approximately 52 acres located between Santa Paula, California and Fillmore, California. The company has approximately 33 acres of avocado plantings on this property.

Limco Del Mar Ranch. The Limco Del Mar Ranch consists of approximately 208 acres located on the east end of Ventura, California. As described in “Real Estate Development” below, this property is owned by a limited partnership of which the company is the general partner and owns an interest of approximately 23%. This property has approximately 187 acres of agricultural plantings consisting of 118 acres of lemons and 69 acres of avocados. The company manages the agricultural operations on this property.

Rancho Refugio/Caldwell Ranch. The Rancho Refugio/Caldwell Ranch consists of approximately 449 acres located north of Santa Barbara on the California Coast. The company leases this property and has an option to purchase the property at any time prior to the expiration of the lease term in early 2012. This property is currently for sale and has approximately 209 acres of agricultural plantings consisting of approximately 92 acres of lemons, 115 acres of avocados and 2 acres of specialty citrus and other crops.

Porterville Ranch. The Porterville Ranch consists of approximately 669 acres located about 50 miles north of Bakersfield, California. The company has approximately 650 acres of agricultural plantings on this property which consist of approximately 145 acres of lemons, 376 acres of Navel oranges, 27 acres of Valencia oranges, and 102 acres of specialty citrus and other crops.

Jencks Ranch. The Jencks Ranch consists of approximately 101 acres located about 50 miles north of Bakersfield, California. This property is adjacent to our Porterville Ranch. The company has approximately 60 acres of agricultural plantings on this property which consists of approximately 53 acres of Navel oranges and 7 acres of Valencia oranges.

Ducor Ranch. The Ducor Ranch consists of approximately 1,027 acres located about 50 miles north of Bakersfield, California. The company has approximately 974 acres of agricultural plantings on this property which consist of approximately 97 acres of lemons, 431 acres of Navel oranges, 168 acres of Valencia oranges and 278 acres of specialty citrus and other crops.

Lemon Packing

We are the oldest continuous lemon packing operation in North America. We pack lemons grown by us as well as lemons grown by others. Lemons delivered to our packinghouse in Santa Paula are graded, sized, packed, and cooled and ripened for delivery to customers. Our ability to accurately estimate the size, grade, as well as the timing of the delivery of the annual lemon crop has a substantial impact on both our costs and the sales price we receive for the fruit.

A significant portion of the costs related to our lemon packing operation are fixed. Our strategy calls for optimizing fresh utilization and procuring a larger percentage of the California lemon crop.

We invest considerable time and research into refining and improving our lemon operations through innovation and are continuously in search of new techniques to refine how premium lemons are delivered to our consumers.

Rental Operations

Our rental operations segment includes our housing, organic recycling, commercial and leased land operations. The rental operations segment represented approximately 11%, 7% and 7% of our fiscal 2009, 2008, and 2007 consolidated revenues, respectively.

Housing

The company owns and maintains approximately 193 residential housing units located in Ventura and Tulare Counties that it leases to employees, former employees and non-employees. We expect to add approximately 74 new units in Santa Paula, California as a result of recently receiving approval from the Ventura County Planning Commission to build new residential housing units. These properties generate reliable cash flows which we use to partially fund the operating costs of our business and provide affordable housing for many of our employees and the community.

Commercial

The company owns several commercial office buildings and a multi-use facility consisting of a retail convenience store, gas station, car wash and a quick-serve restaurant. As with our housing units, these properties generate reliable cash flows which we use to partially fund the operations of our business.

Leased Land

As of October 31, 2009 the company leases approximately 586 acres of its land to third party agricultural tenants who grow a variety of row crops such as strawberries, raspberries, celery and cabbage. Our leased land business typically provides us with a profitable method to diversify the use of our land.

Organic Recycling

With the help of Agromin, a manufacturer of premium soil products and green waste recycler located in Oxnard, California, we have created and implemented an organic recycling program. Agromin provides green waste recycling for approximately 19 cities in Santa Barbara, Los Angeles and Ventura Counties. We worked with Agromin to develop two organic recycling facilities, one on our land in Ventura County and another in Los Angeles County, to receive green materials (lawn clipping, leaves, bark, plant materials) and convert such material into mulch that we spread throughout our agricultural properties to help curb erosion, improve water efficiency, reduce weeds and moderate soil temperatures. We receive a percentage of the gate fees collected from regional waste haulers and enjoy the benefits of the organic material.

Real Estate Development

Our real estate development segment includes our real estate development operations. The real estate devlopment segment represented less than 1% of our consolidated revenues in fiscal 2009 and did not generate any significant revenues during fiscal 2008 and fiscal 2007.

For more than 100 years, we have been making strategic real estate investments in California agricultural and developable real estate, and more recently, in Arizona. Our current real estate developments include developable land parcels, single- and multi- family affordable housing and luxury single-family homes with nearly 2,000 units in various stages of planning and development. The following is a summary of each of the strategic agricultural and development real estate investment properties in which we own an interest:

East Area I - Santa Paula, California. Santa Paula East Area I consists of 523 acres that we presently use as agricultural land and is located in Santa Paula approximately ten miles from Ventura and the Pacific Ocean. This property is also known as our Teague McKevett Ranch. We believe East Area 1 is an ideal location for a master planned community of commercial and residential properties designed to satisfy expected demand in a region that we believe will have few other developments in this coming decade. In 2008, after completing a process of community planning and environmental review, the citizens of Santa Paula voted to approve the annexation of East Area I into Santa Paula. This vote was a requirement of the Save Open-Space and Agricultural Resources, or SOAR, ordinance which mandates a public vote of the City of Santa Paula for land use conversion. We are currently in the process of obtaining final documentation to complete the entitlement and have executed a 30-year development agreement with Santa Paula. We expect to develop this property with financial and development partners, outside consultants and our own internal resources. If current U.S. economic conditions continue to deteriorate, however, we are prepared to continue using this land for agricultural purposes until attractive development opportunities present themselves.

East Area II - Santa Paula, California. We and our design associates are in the process of formulating plans for East Area II, a parcel of approximately 25 acres adjacent to East Area I, also a part of our Teague McKevett Ranch, that we believe is suited to commercial and/or industrial development along the south side of California Highway 126, a heavily traveled corridor that connects Highway 101 at Ventura on the west with Interstate 5 at Santa Clarita on the east. When completed, we expect that the development will contribute to the economic vitality of the region and allow residents to work and shop within close proximity to their homes.

The successful development of East Area II will be partly dependent on the success of East Area I described above. We expect that East Area II could accommodate large retailers, a medium or even a large employer, a complex of mixed business and retail or some combination of the foregoing. We are actively cultivating prospects to buy or become future tenants in East Area II and expect that development will closely follow the build-out of East Area I.

Windfall Farms - Creston, California. Windfall Farms is an approximately 720-acre former thoroughbred breeding farm and equestrian facility located in Creston, California, near Paso Robles. The property has paved roads, water wells, irrigation, piping, stables, homes, other out-buildings and a race track. Presently, parcels of at least 40 acres are available for sale. However, restrictions imposed by the California Land Conservation Act (also known as the Williamson Act) expire at the end of 2012, at which time 76 parcels as large as ten acres can be subdivided and resold, creating small agricultural parcels with home sites.

Santa Maria - Santa Barbara County, California. In early fiscal 2007, we invested in four entitled development parcels in Santa Barbara County, California, a county that, in our experience, entitles very few parcels. Located in Santa Maria, each of these parcels offers a residential and/or commercial development opportunity. A brief description of each parcel follows:

Centennial Square has been approved for 72 condominiums on 5 acres, is close to medical facilities, shopping and transportation, and includes one acre suitable for commercial development.

The Terraces at Pacific Crest is an approximately eight-acre parcel approved for 112 attached-housing units.

Sevilla is approved for 69 single-family homes adjacent to shopping, transportation, schools, parks, and medical facilities, with a parcel of approximately three-acres zoned for commercial use.

Eastridge is approved for 120 single family homes on approximately 37 acres. Approximately three acres are zoned for commercial use. We have recently partnered with a developer to develop this property.

Donna Circle and Cactus Wren - Paradise Valley, Arizona. We have partnered with an Arizona home developer, to construct two luxury homes in Paradise Valley, Arizona. The first home was completed in December 2008 and listed for sale. In June 2009, the company decided not to sell the home and instead executed a two year lease agreement with a third party. The agreement contains an option to extend the lease an additional year and the third-party may purchase the home during the option period. The second home was completed in June 2009 and is listed for sale with a real estate broker.

Limco Del Mar Ranch - Ventura, California. We believe our Limco Del Mar Ranch, which we currently use for agricultural purposes, has long-term development potential. The Limco Del Mar Ranch is located on the east end of Ventura with southerly views of the Pacific Ocean. As described above in “Business Segments - Agribusiness - Farming,” this property is owned by a limited partnership of which we are the general partner and own an interest of approximately 23%. The company manages the agricultural operations on this property.

Competitive Strengths

Agribusiness

With agricultural operations dating back to 1893, we are one of California’s oldest citrus growers and we believe we are the largest grower of lemons and avocados in the United States. Consequently, we have developed a body of experience with many crops, most significantly lemons, avocados and oranges. The following is a brief list of what we believe are our significant competitive strengths with respect to our agribusiness segment.

Our agricultural properties in Ventura County are located near the Pacific ocean, which provides an ideal environment for growing lemons, avocados and other row crops. Our agricultural properties in Tulare County, which is in the San Joaquin Valley in Central California, are also located in areas that are well-suited for growing citrus crops.

Historically, a high percentage of our crops go to the fresh market, which is commonly referred to as fresh utilization, relative to other growers and packers.

We have contiguous and nearby land resources that permit us to efficiently use our agricultural land and resources.

In all but one of our properties, we are not dependent on State or Federal water projects to support our agribusiness or real estate development operations.

We own approximately 90% of our agricultural land and can take a long view on fruit production practices.

We have a well-trained and retentive labor force with many employees remaining with the company for more than 30 years.

Our lemon packing operations allow us to enter into marketing alignments with successful companies in their respective products, such as Sunkist for lemons and other citrus crops and Calavo for avocados.

We have achieved GLOBALGAP Certification by successfully demonstrating our adherence to specific GLOBALGAP standards. GLOBALGAP is an internationally recognized set of farm standards dedicated to “Good Agricultural Practices” or GAP. We believe that GLOBALGAP Certification differentiates us from our competitors and serves as reassurance to consumers and retailers that food reaches acceptable levels of safety and quality, and has been produced sustainably, respecting the health, safety and welfare of workers, the environment, and in consideration of animal welfare issues.

In 2008, we entered into an operating lease agreement and completed the installation of a 5.5 acre, one-megawatt ground-based photovoltaic solar generator. This system provides us with a majority of the electricity required to operate our packinghouse and cold storage facilities located in Santa Paula, California. In 2009, we completed the installation of a one-megawatt solar array (which we also lease through an operating lease agreement), which provides us with a majority of the electricity required to operate four deep water well pumps at one of our ranches in Tulare County, which is in the San Joaquin Valley in Central California. These investments in ground-based solar projects are new and provide us with tangible and intangible non-revenue generating benefits. In addition to the cost-savings associated with the electricity generated by these investments, they support our sustainable agricultural practices, reduce our dependence on fossil-based electricity generation and lower our carbon footprint. Moreover, power that we generate and do not use is conveyed seamlessly back to the investor-owned utilities operating in these two markets. Finally, over time, we expect that our customers and the end consumers of our fruit will value the investments that we have made in renewable energy as a part of our farming and packing operations. We believe this dynamic may help us differentiate our products from similar commodities.

We have made various other investments in water rights, mutual water companies and cooperative memberships. We own shares in the following mutual water companies: Thermal Belt Mutual Water Co., Farmers Irrigation Co., Canyon Irrigation Co., San Cayetano Mutual Water Co. and the Middle Road Mutual Water Co. In 2007, we acquired additional water rights in the adjudicated Santa Paula Basin (aquifer). We are a member of the Sunkist, Fruit Growers Supply and certain other cooperatives. We pay Sunkist and certain other cooperatives annual assessments into revolving funds based on sales volume or other criteria, with such funds typically being held by the applicable cooperative for a period of five years at which time they are refunded to us. We also pay into revolving funds related to fruit that we have packed by outside packing houses, with such funds typically being refunded after a period of five years.

Rental Operations

With respect to our rental operations segment, we believe our competitive advantages are as follows:

Our housing and land rentals provide a consistent, dependable source of cash flow that helps to counter the volatility typically associated with an agricultural business.

Our housing rental business allows us to offer a unique benefit to our employees, which in turn helps to provide us with a dependable, long-term employee base.

Our organic recycling business provides us with a low cost, environmentally friendly solution to weed and erosion control.

Our leased land business allows us to partner with other producers that can serve as a typically profitable alternative to under-producing tree crop acreage.

Real Estate Development

With respect to our real estate development segment, we believe our competitive advantages are as follows:

Our real estate development activities are primarily focused in coastal areas north of Los Angeles and south of Santa Barbara, which we believe has a desirable climate for lifestyle families, retirees, and athletic and sports enthusiasts.

We have entitlements to build approximately 1,500 residential units in our Santa Paula East Area I development.

Several of our agricultural and real estate investment properties are unique and carry longer term development potential. These include Limco Del Mar and Windfall Farms, both as discussed above in “Business Segments - Real Estate Development.”

Our East Area II property has approximately 25 acres of land commercially zoned, which is adjacent to our East Area I property, and our Santa Maria properties have approximately 7 acres zoned for mixed use retail, commercial and light manufacturing.

Business Strategy

While each of our business segments has a separate business strategy, we are an agribusiness and real estate development company that generates annual cash flows to support investments in agricultural and real estate development activities. As our agricultural and real estate development investments are monetized we intend to seek to expand our agribusiness into new regions and markets and invest in cash producing residential, commercial and industrial real estate assets.

The following describes the key elements of our business strategy for each of our agribusiness, rental operations and real estate development business segments.

Agribusiness

With respect to our agribusiness segment, key elements of our strategy are:

Expand International Production and Marketing of Lemons. We estimate that we currently have approximately 5% of the fresh lemon market in the United States and a larger share of the United States lemon export market. We intend to explore opportunities to expand our international production and marketing of lemons. We have the ability to supply a wide range of customers and markets and, because we produce high quality lemons, we can export our lemons to international customers which many of our competitors are unable to supply.

Acquire Additional Lemon Producing Properties. To the extent attractive opportunities arise and our capital availability permits, we intend to consider the acquisition of additional lemon producing properties. In order to be considered, such properties would need to have certain characteristics to provide acceptable returns, such as an adequate source of water, a warm micro-climate and well-drained soils. We anticipate that the most attractive opportunities to acquire lemon producing properties will be in the San Joaquin Valley near our existing operations in Tulare County.

Increase the Volume of our Lemon Packing Operations. We regularly monitor our costs for redundancies and opportunities for cost reductions. In this regard, cost per carton is a function of throughput. We continually seek to acquire additional lemons from outside growers to pack through our plant. Growers are only added if their fruit is of good quality and can be cost effective for both Limoneira and the outside grower. Of most importance is the overall fresh utilization rate for our fruit, which is directly related to quality.

Explore the Construction of a New Lemon Packinghouse. Over the years new machinery and equipment along with upgrades have been added to our nearly 80 year old packinghouse and cold storage facilities. This, along with an aggressive and proactive maintenance program has allowed us to operate an efficient, competitive lemon packing operation. We are currently considering the construction of a new packinghouse that may have the potential to lower our packing costs by reducing labor and handling inputs.

Opportunistically Expand our Plantings of Avocados. We intend to opportunistically expand our plantings of avocados primarily because our profitability and cash flow realized from our avocados frequently offsets occasional losses in other crops we grow and helps to diversify our fruit production base.

Maintain and Grow our Relationship with Calavo. Our alignment with, and ownership stake in, Calavo comprises our current marketing strategy for avocados. Calavo has expanded its sourcing into other regions of the world, including Mexico, Chile, and Peru, which allows it to supply avocados to its retail and food service customers on a year-round basis. California avocados occupy a unique market window in the year-round supply chain and Calavo has experienced a general expansion of volume as consumption has grown. Thus, we intend to continue to have a strong and viable market for our California avocados as well as an equity participation in Calavo’s overall expansion and profitability.

Opportunistically Expand Our Plantings of Oranges, Specialty Citrus and Other Crops. Our plantings of oranges, specialty citrus and other crops have been profitable and have been pursued to diversify our product line. Agricultural land that we believe is not suitable for lemons is typically planted with other specialty citrus or other crops. While we intend to expand our orange, specialty citrus and other crops, we expect to do so on an opportunistic basis in locations that we believe offer a record of historical profitability.

Rental Operations

With respect to our rental operations segment, key elements of our strategy include:

Secure Additional Rental and Housing Units. Our housing, commercial and land rental operations provide us with a consistent, dependable source of cash flow that helps to fund our overall activities. Additionally, we believe our housing rental operation allows us to offer a unique benefit to our employees. Consequently, we intend to secure additional units through infill projects on existing sites and groupings of units on new sites within our owned acreage.

Opportunistically Lease Land to Third-Party Crop Farmers. We regularly monitor the profitability of our fruit-producing acreage to ensure acceptable per acre returns. When we determine that leasing the land to third-party row crop farmers would be more profitable than farming the land, we intend to seek to lease such land.

Opportunistically Expand our Income-Producing Commercial and Industrial Real Estate Assets. We intend to redeploy our future financial gains to acquire additional income-producing real estate investments and agricultural properties.

Real Estate

With respect to our real estate segment, key elements of our strategy include:

Selectively and Responsibly Develop Our Agricultural Land. We recognize that long-term strategies are required for successful real estate development activities. We thus intend to maintain our position as a responsible agricultural land owner and major employer in Ventura County while focusing our real estate development activities on those agricultural land parcels that we believe offer the best opportunities to demonstrate our long term vision for our community.

Opportunistically Increase Our Real Estate Holdings. We intend to redeploy our future financial gains to acquire additional income-producing real estate investments and agricultural properties.

Customers

During the fiscal year ended October 31, 2009, Sunkist marketed and sold nearly all of our lemon production and a majority of our orange production and Calavo marketed and sold all of our avocado production. We directly sell certain of our specialty citrus and other crops, which for the fiscal year ended October 31, 2009, accounted for less than 1% of our revenues. Sunkist and Calavo market and sell our fruit to a wide range of retail and food service customers throughout North America, Asia and certain other countries. While we are dependent on the success of Sunkist and Calavo, none of their respective customers to our knowledge account for more than 10% of the sales of either organization.

Seasonal Nature of Business

As with any agribusiness enterprise, our agribusiness operations are predominantly seasonal in nature. The harvest and sale of our lemons, avocados, oranges and specialty citrus and other crops occurs in all quarters, but is generally more concentrated during the second and third quarters. Our lemons are generally grown and marketed throughout the year. Our Navel oranges are sold January through April and our Valencia oranges are sold June through September. Our avocados are sold generally throughout the year with the peak months being March through July. Our specialty citrus is sold from November through June and our specialty crops, such as cherries, are sold in May and/or June and our pistachios are sold in September and/or October.

Competition

The lemon, avocado, orange and specialty citrus and other crop markets are intensely competitive but no single producer has any significant market power over any market segments as is consistent with the production of most agricultural commodities. Generally, there are a large number of global producers that sell through joint marketing organizations and cooperatives. Such fruit is also sold to independent packers, both public and private, who then sell to their own customer base. Customers are typically large retail chains, food service companies, industrial manufactures as well as distributors who sell and deliver to smaller customers in local markets throughout the world. In the purest sense, our largest competitors are other citrus and avocado producers in California, Mexico, Chile, Argentina and Florida, a number of which are also members of cooperatives such as Sunkist or have selling relationships with Calavo similar to that of Limoneira. In another sense, we compete with other fruits and vegetables for the share of consumer expenditures devoted to fresh fruit and vegetables: apples, pears, cherries, melons, pineapples and other tropical fruit. Avocado products compete in the supermarket with hummus products and other dips and salsas. U.S. producers of tree fruits and nuts generate approximately $18 billion of tree fruits and nuts each year, about 10% of which is exported. For our specific crops, the size of the U.S. market is approximately $300 million for lemons, approximately $300 to $400 million for avocados depending on the year, and approximately $1.5 to $2.0 billion for oranges, both fresh and juice. Competition in the various markets in which we operate is affected by reliability of supply, product quality, brand recognition and perception, price and the ability to satisfy changing customer preferences through innovative product offerings.

The sale and leasing of residential, commercial and industrial real estate is very competitive, with competition coming from numerous and varied sources throughout California. The degree of competition has increased due to the current economic climate which has caused an oversupply of comparable real estate available for sale or lease due to the decline in demand as a result of the current downturn in the housing market and/or the credit crisis. Our greatest direct competition for each of our current real estate development properties in Ventura and Santa Barbara Counties as well as Arizona will come from other residential and commercial developments in nearby areas. Windfall Farms will compete generally with the second home and life style real estate market which includes golf course communities, marinas, destination resorts and other equestrian facilities located in Southern California, so its competition will range over a greater area and range of consumer options.

Employees

At October 31, 2009 we had 207 employees, 55 of which were salaried and 152 of which were hourly. None of our employees are subject to a collective bargaining agreement. We believe our relations with our employees are good.

Research and Development

Our research and development programs concentrate on sustaining the productivity of our agricultural lands, product quality, and value-added product development. Agricultural research is directed toward sustaining and improving product yields and product quality by examining and improving agricultural practices in all phases of production (such as the development of specifically adapted plant varieties, land preparation, fertilization, pest and disease control, post-harvest handling, packing and shipping procedures), and includes on-site technical services and the implementation and monitoring of recommended agricultural practices. Research efforts are also directed towards integrated pest management. We conduct agricultural research at field facilities in California. We also sponsor research related to environmental improvements and the protection of worker and community health. The aggregate amounts we spent on research and development in each of the last three years have not been material in any of such years.

Environmental and Regulatory Matters

The California State Department of Food and Agriculture oversees the packing and processing of California lemons and conducts tests for fruit quality and packaging standards. All of our packages are stamped with the state seal which qualifies our fruit as meeting standards. Various states have instituted regulations providing differing levels of oversight with respect to weights and measures, as well as quality standards.

In addition, advertising of our products is subject to regulation by the Federal Trade Commission, and our operations are subject to certain health and safety regulations, including those issued under the Occupational Safety and Health Act.

As a result of our agricultural and real estate activities, we are subject to numerous environmental laws and regulations. These laws and regulations govern the treatment, handling, storage and disposal of materials and waste and the remediation of contaminated properties.

We seek to comply at all times with all such laws and regulations and to obtain any necessary permits and licenses, and we are not aware of any instances of material non-compliance. We believe our facilities and practices are sufficient to maintain compliance with applicable governmental laws, regulations, permits and licenses. Nevertheless, there is no guarantee that we will be able to comply with any future laws and regulations for necessary permits and licenses. Our failure to comply with applicable laws and regulations or obtain any necessary permits and licenses could subject us to civil remedies including fines, injunctions, recalls or seizures, as well as potential criminal sanctions.

ITEM 1A. RISK FACTORS

The risks and uncertainties described below are not the only ones we face. If any of the following risks occurs, our business, financial condition, results of operations or future prospects could be materially adversely affected.

Risks Related to Our Agribusiness

Adverse weather conditions, natural disasters, crop disease, pests and other natural conditions can impose significant costs and losses on our business.

Fresh produce is vulnerable to adverse weather conditions, including windstorms, floods, drought and temperature extremes, which are quite common but difficult to predict. Unfavorable growing conditions can reduce both crop size and crop quality. In extreme cases, entire harvests may be lost in some geographic areas. These factors can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition.

Citrus and avocado orchards are subject to damage from frost and freezes and this has happened periodically in the recent past. In some cases, the fruit is simply lost while in the case of extended periods of cold, the trees can also be damaged or killed.

Fresh produce is also vulnerable to crop disease and to pests, which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions. For example, the Mediterranean Fruit Fly and the Asian Citrus Psyillid. The costs to control these diseases and other infestations vary depending on the severity of the damage and the extent of the plantings affected. Moreover, there can be no assurance that available technologies to control such infestations will continue to be effective. These infestations can increase costs, decrease revenues and lead to additional charges to earnings which may have a material adverse effect on our business, results of operations and financial condition.

Our business is highly competitive and we cannot assure you that we will maintain our current market share.

Many companies compete in our different businesses. However, only a few well-established companies operate on an international, national and regional basis with one or several product lines. We face strong competition from these and other companies in all our product lines.

Important factors with respect to our competitors include the following:

Some of our competitors may have greater operating flexibility and, in certain cases, this may permit them to respond better or more quickly to changes in the industry or to introduce new products and packaging more quickly and with greater marketing support.

We cannot predict the pricing or promotional actions of our competitors or whether those actions will have a negative effect on us.

There can be no assurance that we will continue to compete effectively with our present and future competitors, and our ability to compete could be materially adversely affected by our debt levels and debt service requirements.

Our earnings are sensitive to fluctuations in market prices and demand for our products.

Excess supplies often cause severe price competition in our industry. Growing conditions in various parts of the world, particularly weather conditions such as windstorms, floods, droughts and freezes, as well as diseases and pests, are primary factors affecting market prices because of their influence on the supply and quality of product.

Fresh produce is highly perishable and generally must be brought to market and sold soon after harvest. Some items, such as avocados, oranges and specialty citrus, must be sold more quickly, while other items can be held in cold storage for longer periods of time. The selling price received for each type of produce depends on all of these factors, including the availability and quality of the produce item in the market, and the availability and quality of competing types of produce.

In addition, general public perceptions regarding the quality, safety or health risks associated with particular food products could reduce demand and prices for some of our products. To the extent that consumer preferences evolve away from products that we produce for health or other reasons, and we are unable to modify our products or to develop products that satisfy new consumer preferences, there will be a decreased demand for our products. However, even if market prices are unfavorable, produce items which are ready to be, or have been harvested must be brought to market promptly. A decrease in the selling price received for our products due to the factors described above could have a material adverse effect on our business, results of operations and financial condition.

Our earnings are subject to seasonal variability.

Our earnings may be affected by seasonal factors, including:

the seasonality of our supplies and consumer demand;

the ability to process products during critical harvest periods; and

the timing and effects of ripening and perishability.

Our lemons are generally grown and marketed throughout the year. Our Navel oranges are sold January through April and our Valencia oranges are sold June through September. Our avocados are sold generally throughout the year with the peak months being March through July. Our specialty citrus is sold from November through June, our cherries in the May/June time period and our pistachios in the September/October period.

Currency exchange fluctuation may impact the results of our operations.

We distribute our products both nationally and internationally. Our international sales are transacted in U.S. dollars. Our results of operations are affected by fluctuations in currency exchange rates in both sourcing and selling locations. In the past, periods of a strong U.S. dollar relative to other currencies has led international customers, particularly in Asia, to find alternative sources of fruit.

Increases in commodity or raw product costs, such as fuel, paper, and plastics, could adversely affect our operating results.

Many factors may affect the cost and supply of fresh produce, including external conditions, commodity market fluctuations, currency fluctuations, changes in governmental laws and regulations, agricultural programs, severe and prolonged weather conditions and natural disasters. Increased costs for purchased fruit have in the past negatively impacted our operating results, and there can be no assurance that they will not adversely affect our operating results in the future.

The price of various commodities can significantly affect our costs. Our fuel costs have increased substantially in recent years, and there can be no assurance that there will not be further increases in the future. In addition, the rising price of oil can have a significant impact on the cost of our herbicides and pesticides.

The cost of paper is also significant to us because some of our products are packed in cardboard boxes for shipment. If the price of paper increases and we are not able to effectively pass these price increases along to our customers, then our operating income will decrease. Increased costs for paper have in the past negatively impacted our operating income, and there can be no assurance that these increased costs will not adversely affect our operating results in the future.

The lack of sufficient water would severely impact our ability to produce crops or develop real estate.

The average rainfall in Ventura County is between 14 and 15 inches per year, with most of it falling in Fall and Winter. These amounts are substantially below amounts required to grow crops and therefore we are dependent on our rights to pump water from underground aquifers. Extended periods of drought in California may put additional pressure on the use and availability of water for agricultural uses and in some cases Governmental authorities have diverted water to other uses. As California has grown, there are increasing and multiple pressures on the use and distribution of water which many view as a finite resource. Lack of available potable water can also limit real estate development.

The use of herbicides, pesticides and other potentially hazardous substances in our operations may lead to environmental damage and result in increased costs to us.

We use herbicides, pesticides and other potentially hazardous substances in the operation of our business. We may have to pay for the costs or damages associated with the improper application, accidental release or the use or misuse of such substances. Our insurance may not be adequate to cover such costs or damages or may not continue to be available at a price or under terms that are satisfactory to us. In such cases, payment of such costs or damages could have a material adverse effect on our business, results of operations and financial condition.

Global capital and credit market issues affect our liquidity, increase our costs of borrowing and disrupt the operations of our suppliers and customers.

The global capital and credit markets have experienced increased volatility and disruption over the past year, making it more difficult for companies to access those markets. We depend in part on stable, liquid and well-functioning capital and credit markets to fund our operations. Although we believe that our operating cash flows and existing credit facilities will permit us to meet our financing needs for the foreseeable future, there can be no assurance that continued or increased volatility and disruption in the capital and credit markets will not impair our liquidity or increase our costs of borrowing. Our business could also be negatively impacted if our suppliers or customers experience disruptions resulting from tighter capital and credit markets or a slowdown in the general economy.

The current global economic downturn may have other impacts on participants in our industry, which cannot be fully predicted.

The full impact of the current global economic downturn on customers, vendors and other business partners cannot be anticipated. For example, major customers or vendors may have financial challenges unrelated to us that could result in a decrease in their business with us or, in extreme cases, cause them to file for bankruptcy protection. Similarly, parties to contracts may be forced to breach their obligations under those contracts. Although we exercise prudent oversight of the credit ratings and financial strength of our major business partners and seek to diversify our risk to any single business partner, there can be no assurance that there will not be a bank, insurance company, supplier, customer or other financial partner that is unable to meet its contractual commitments to us. Similarly, stresses and pressures in the industry may result in impacts on our business partners and competitors which could have wide ranging impacts on the future of the industry.

Terrorism and the uncertainty of war may have a material adverse effect on our operating results.

Terrorist attacks, such as the attacks that occurred in New York and Washington, D.C. on September 11, 2001, the subsequent response by the United States in Afghanistan, Iraq and other locations, and other acts of violence or war in the United States or abroad may affect the markets in which we operate and our operations and profitability. Further terrorist attacks against the United States or operators of United States-owned businesses outside the United States may occur, or hostilities could develop based on the current international situation. The potential near-term and long-term effect these attacks may have on our business operations, our customers, the markets for our products, the United States economy and the economies of other places we source or sell our products is uncertain. The consequences of any terrorist attacks, or any armed conflicts, are unpredictable, and we may not be able to foresee events that could have an adverse effect on our markets or our business.

We are subject to the risk of product contamination and product liability claims.

The sale of food products for human consumption involves the risk of injury to consumers. Such injuries may result from tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances, chemicals other agents, or residues introduced during the growing, storage, handling or transportation phases. While we are subject to governmental inspection and regulations and believe our facilities comply in all material respects with all applicable laws and regulations, we cannot be sure that consumption of our products will not cause a health-related illness in the future or that we will not be subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image. Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others. We maintain product liability insurance, however, we cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage.

We are subject to transportation risks.

An extended interruption in our ability to ship our products could have a material adverse effect on our business, financial condition and results of operations. Similarly, any extended disruption in the distribution of our products could have a material adverse effect on our business, financial condition and results of operations. While we believe we are adequately insured and would attempt to transport our products by alternative means if we were to experience an interruption due to strike, natural disasters or otherwise, we cannot be sure that we would be able to do so or be successful in doing so in a timely and cost-effective manner.

Events or rumors relating to the LIMONEIRA brand could significantly impact our business.

Consumer and institutional recognition of the LIMONEIRA trademarks and related brands and the association of these brands with high quality and safe food products are an integral part of our business. The occurrence of any events or rumors that cause consumers and/or institutions to no longer associate these brands with high quality and safe food products may materially adversely affect the value of the LIMONEIRA brand name and demand for our products.

We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects.

We currently depend heavily on the services of our key management personnel. The loss of any key personnel could materially and adversely affect our results of operations, financial condition, or our ability to pursue land development. Our success will also depend in part on our ability to attract and retain additional qualified management personnel.

Inflation can have a significant adverse effect on our operations.

Inflation can have a major impact on our farming operations. The farming operations are most affected by escalating costs and unpredictable revenues (due to an oversupply of certain crops) and very high irrigation water costs. High fixed water costs related to our farm lands will continue to adversely affect earnings. Prices received for many of our products are dependent upon prevailing market conditions and commodity prices. Therefore, it is difficult for us to accurately predict revenue, just as we cannot pass on cost increases caused by general inflation, except to the extent reflected in market conditions and commodity prices.

Risks Related to Our Indebtedness

We may be unable to generate sufficient cash flow to service our debt obligations.

To service our debt, we require a significant amount of cash. Our ability to generate cash, make scheduled payments or refinance our obligations depends on our successful financial and operating performance. Our financial and operating performance, cash flow and capital resources depend upon prevailing economic conditions and various financial, business and other factors, many of which are beyond our control. These factors include among others:

economic and competitive conditions;

changes in laws and regulations;

operating difficulties, increased operating costs or pricing pressures we may experience; and

delays in implementing any strategic projects.

If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital or restructure our debt. If we are required to take any actions referred to above, it could have a material adverse effect on our business, financial condition and results of operations. In addition, we cannot assure you that we would be able to take any of these actions on terms acceptable to us, or at all, that these actions would enable us to continue to satisfy our capital requirements or that these actions would be permitted under the terms of our various debt agreements.

Restrictive covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a variety of transactions, which could adversely restrict our financial and operating flexibility and subject us to other risks.

Our revolving credit and term loan facilities contain various restrictive covenants that limit our and our subsidiaries’ ability to take certain actions. In particular, these agreements limit our and our subsidiaries’ ability to, among other things:

incur additional indebtedness;

make certain investments or acquisitions;

create certain liens on our assets;

engage in certain types of transactions with affiliates;

merge, consolidate or transfer substantially all our assets; and

transfer and sell assets.

Our revolving credit facility with Rabobank contains a financial covenant that requires us to maintain compliance with a specified debt service coverage ratio on an annual basis. At October 31, 2009, we were not in compliance with such debt service coverage ratio and we may not be able to comply with such covenant in the future. Although this prior noncompliance with the covenant was waived by Rabobank and the next compliance measurement date of this covenant is October 31, 2010 (which will cover fiscal 2010), our failure to comply with this covenant in the future may result in the declaration of an event of default under our revolving credit facility with Rabobank.

Any or all of these covenants could have a material adverse effect on our business by limiting our ability to take advantage of financing, merger and acquisition or other corporate opportunities and to fund our operations. Any future debt could also contain financial and other covenants more restrictive than those imposed under our revolving credit and term loan facilities.

A breach of a covenant or other provision in any credit facility governing our current and future indebtedness could result in a default under that facility and, due to cross-default and cross-acceleration provisions, could result in a default under our other credit facilities. Upon the occurrence of an event of default under any of our credit facilities, the applicable lender(s) could elect to declare all amounts outstanding to be immediately due and payable and, with respect to our revolving credit facility, terminate all commitments to extend further credit. If we were unable to repay those amounts, our lenders could proceed against the collateral granted to them to secure the indebtedness. If the lenders under our current or future indebtedness were to accelerate the payment of the indebtedness, we cannot assure you that our assets or cash flow would be sufficient to repay in full our outstanding indebtedness.

Despite our relatively high current indebtedness levels and the restrictive covenants set forth in agreements governing our indebtedness, we and our subsidiaries may still incur significant additional indebtedness, including secured indebtedness. Incurring more indebtedness could increase the risks associated with our substantial indebtedness.

Subject to the restrictions in our credit facilities, we and our subsidiaries may incur significant additional indebtedness. If new debt is added to our and our subsidiaries' current debt levels, the related risks that we now face could increase.

Some of our debt is based on variable rates of interest, which could result in higher interest expenses in the event of an increase in the interest rates.

Our revolving credit facilities and a portion of our term loan facilities bear interest at variable rates which will generally change as interest rates change. We bear the risk that the rates we are charged by our lenders will increase faster than the earnings and cash flow of our business, which could reduce profitability, adversely affect our ability to service our debt, cause us to breach covenants contained in our revolving credit facility, any of which could materially adversely affect our business, financial condition and results of operations.

Risks Related to Our Real Estate Development Business

We are involved in a cyclical industry and are affected by changes in general and local economic conditions.

The real estate development industry is cyclical and is significantly affected by changes in general and local economic conditions, including:

employment levels;

availability of financing;

interest rates;

consumer confidence;

demand for the developed product, whether residential or industrial; and

supply of similar product, whether residential or industrial.

The process of project development and the commitment of financial and other resources occurs long before a real estate project comes to market. A real estate project could come to market at a time when the real estate market is depressed. It is also possible in a rural area like ours that no market for the project will develop as projected.

A prolonged recession in the national economy, or a further downturn in national or regional economic conditions, could continue to adversely impact our real estate development business.

The collapse of the housing market together with the crisis in the credit markets, have resulted in a recession in the national economy. At such times, potential home buyer and commercial real estate customers often defer or avoid real estate transactions due the substantial costs involved and uncertainties in the economic environment. Our future real estate sales, revenues, financial condition and results of operations could suffer as a result. Our business is especially sensitive to economic conditions in California and Arizona, where our properties are located.

There is no consensus as to when the current recession will end, and California and Arizona, as two of the hardest hit states, could take longer to recover than the rest of the nation. A prolonged recession will continue to have a material adverse effect on our business and results of operations.

Higher interest rates and lack of available financing can have significant impacts on the real estate industry.

Higher interest rates generally impact the real estate industry by making it harder for buyers to qualify for financing, which can lead to a decrease in the demand for residential, commercial or industrial sites. Any decrease in demand will negatively impact our proposed developments. Lack of available credit to finance real estate purchases can also negatively impact demand. Any downturn in the economy or consumer confidence can also be expected to result in reduced housing demand and slower industrial development, which would negatively impact the demand for land we are developing.

We are subject to various land use regulations and require governmental approvals for our developments that could be denied.

In planning and developing our land, we are subject to various local, state, and federal statutes, ordinances, rules and regulations concerning zoning, infrastructure design, subdivision of land, and construction. All of our new developments require amending existing general plan and zoning designations, so it is possible that our entitlement applications could be denied. In addition, the zoning that ultimately is approved could include density provisions that would limit the number of homes and other structures that could be built within the boundaries of a particular area, which could adversely impact the financial returns from a given project. In addition, many states, cities and counties (including Ventura County) have in the past approved various “slow growth” or “urban limit line” measures.

Third-party litigation could increase the time and cost of our development efforts.

The land use approval processes we must follow to ultimately develop our projects have become increasingly complex. Moreover, the statutes, regulations and ordinances governing the approval processes provide third parties the opportunity to challenge the proposed plans and approvals. As a result, the prospect of third-party challenges to planned real estate developments provides additional uncertainties in real estate development planning and entitlements. Third-party challenges in the form of litigation would, by their nature, adversely affect the length of time and the cost required to obtain the necessary approvals. In addition, adverse decisions arising from any litigation would increase the costs and length of time to obtain ultimate approval of a project and could adversely affect the design, scope, plans and profitability of a project.

We are subject to environmental regulations and opposition from environmental groups that could cause delays and increase the costs of our development efforts or preclude such development entirely.

Environmental laws that apply to a given site can vary greatly according to the site’s location and condition, present and former uses of the site, and the presence or absence of sensitive elements like wetlands and endangered species. Environmental laws and conditions may result in delays, cause us to incur additional costs for compliance, where a significant amount of our developable land is located, mitigation and processing land use applications, or preclude development in specific areas. In addition, in California, third parties have the ability to file litigation challenging the approval of a project, which they usually do by alleging inadequate disclosure and mitigation of the environmental impacts of the project. While we have worked with representatives of various environmental interests and wildlife agencies to minimize and mitigate the impacts of our planned projects, certain groups opposed to development may oppose our projects vigorously, so litigation challenging their approval could occur. Recent concerns over the impact of development on water availability and global warming increases the breadth of potential obstacles that our developments face.

Our developable land is concentrated entirely in California.

All of our developable land is in California and our business is especially sensitive to the economic conditions within California. Any adverse change in the economic climate of California, which is currently in a recession, or our region of that state, and any adverse change in the political or regulatory climate of California, or the counties where our land is located could adversely affect our real estate development activities. There is no consensus as to when the recession will end or how long it could take to recover from the recession. Ultimately, our ability to sell or lease lots may decline as a result of weak economic conditions or restrictive regulations.

If the downturn in the real estate industry or the instability of the mortgage industry and commercial real estate financing continues, it could have an adverse effect on our real estate business.

Our residential housing projects are currently in various stages of planning and entitlement, and therefore they have not been impacted by the current downturn in the housing market or the mortgage lending crisis. However, if the downturn in the housing market or the instability of the mortgage industry continues at the time these projects move into their development and marketing phases, our residential business could be adversely affected. Excess supply of homes available due to foreclosures or the expectation of deflation in house prices could also have a negative impact on our ability to sell our inventory when it becomes available.

We may encounter other risks that could impact our ability to develop our land.

We may also encounter other difficulties in developing our land, including:

Natural risks, such as geological and soil problems, earthquakes, fire, heavy rains and flooding, and heavy winds;

Shortages of qualified trades people;

Reliance on local contractors, who may be inadequately capitalized;

Shortages of materials; and

Increases in the cost of certain materials.

Risks Relating to Our Common Stock

There has been a limited public market for our shares and a more active market may not develop or be maintained, which could limit your ability to sell shares of our common stock.

Before this registration, there has been a limited public market for our shares of common stock. Although we intend to apply to list the common stock on the Nasdaq Stock Market, which we refer to as Nasdaq, a more active public market for our shares may not develop or be sustained after this registration. In particular, we cannot assure you that you will be able to resell our shares at or above the current market price.

The value of our common stock could be volatile.

The overall market and the price of our common stock may fluctuate greatly. The trading price of our common stock may be significantly affected by various factors, including:

quarterly fluctuations in our operating results;

changes in investors and analysts perception of the business risks and conditions of our business;

our ability to meet the earnings estimates and other performance expectations of financial analysts or investors;

unfavorable commentary or downgrades of our stock by equity research analysts;

fluctuations in the stock prices of our peer companies or in stock markets in general; and

general economic or political conditions.

Concentrated ownership of our common stock creates a risk of sudden change in our share price.

As of December 31, 2009, directors and members of our executive management team beneficially owned or controlled approximately 16% of our common stock. Investors who purchase our common stock may be subject to certain risks due to the concentrated ownership of our common stock. The sale by any of our large shareholders of a significant portion of that shareholder’s holdings could have a material adverse effect on the market price of our common stock. In addition, the registration of any significant amount of additional shares of our common stock will have the immediate effect of increasing the public float of our common stock and any such increase may cause the market price of our common stock to decline or fluctuate significantly.

Our charter documents contain provisions that may delay, defer or prevent a change of control.

Provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to stockholders. These provisions include the following:

division of our board of directors into three classes, with each class serving a staggered three-year term;

removal of directors by stockholders by a supermajority of two-thirds of the outstanding shares;

ability of the board of directors to authorize the issuance of preferred stock in series without stockholder approval; and

prohibitions on our stockholders that prevent them from acting by written consent and limitations on calling special meetings.

We could incur increased costs as a result of being a publicly traded company.

As a company with publicly traded securities, we could incur significant legal, accounting and other expenses not presently incurred. In addition, the Sarbanes-Oxley Act of 2002, which we refer to as SOX, as well as rules promulgated by the U.S. Securities and Exchange Commission, which we refer to as the SEC, and Nasdaq, require us to adopt corporate governance practices applicable to U.S. public companies. These rules and regulations may increase our legal and financial compliance costs.

If we do not timely satisfy the requirements of Section 404 of SOX, the trading price of our common stock could be adversely affected.

As a voluntary filer with the SEC, we are currently subject to Section 404 of SOX, as a non-accelerated filer. SOX requires us to document and test the effectiveness of our internal control over financial reporting in accordance with an established internal control framework and to report on our conclusion as to the effectiveness of our internal control over financial reporting. Our annual report for the fiscal year ending October 31, 2011 will include management's first report of internal control over financial reporting. Any delays or difficulty in satisfying the requirements of SOX could, among other things, cause investors to lose confidence in, or otherwise be unable to rely on, the accuracy of our reported financial information, which could adversely affect the trading price of our common stock.

ITEM 2.

FINANCIAL INFORMATION

Selected Financial Data

	2009			2008		2007		2006		2005
Net operating revenues	$	34,838,000		$	53,512,000	$	48,267,000	$	51,619,000	$	39,394,000
Loss (income) from continuing operations	$	(2,865,000	)	$	3,747,000	$	2,391,000	$	3,791,000	$	2,343,000
Basic net (loss) income from continuing operations per share of common stock	$	(2.78	)	$	3.13	$	1.92	$	3.57	$	2.00
Total assets	$	141,868,000		$	140,990,000	$	127,341,000	$	86,961,000	$	90,935,000
Long term debt	$	69,716,000		$	65,582,000	$	38,475,000	$	14,515,000	$	14,929,000
Redeemable preferred stock	$	3,000,000		$	3,000,000	$	3,000,000	$	3,000,000	$	3,000,000
Cash dividends declared per share of common stock	$	0.625		$	3.25	$	2.25	$	2.25	$	2.25

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the company’s financial condition and results of operations should be read in conjunction with the company’s consolidated financial statements and the notes to those statements included elsewhere in this registration statement on Form 10. The following discussion and analysis contains forward-looking statements. Forward-looking statements in this registration statement on Form 10 are subject to a number of risks and uncertainties, some of which are beyond the company’s control. The company’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which the company is not currently aware or which the company currently deems immaterial could also cause the company’s actual results to differ, including those discussed in the sections entitled “Forward-Looking Statements” and “Risk Factors” included elsewhere in this registration statement on Form 10.

Summary

We have three business segments: agribusiness, rental operations, and real estate development. Our agribusiness segment generates revenue from our farming and lemon packing operations, our rental operations segment generates revenues from our housing, organic recycling, and commercial and leased land operations, and our real estate development segment has not yet generated any significant revenues to-date.

From a general view, we see the company as a land and farming company that generates annual cash flows to support its progress into diversified real estate development activities. As real estate developments are monetized our agribusiness will then be able to expand more rapidly into new regions and markets.

We believe we are the largest producer of lemons and avocados in the United States and, as a result, our agribusiness segment is the largest of our three segments, representing approximately 89%, 93% and 93% of our fiscal 2009, fiscal 2008 and fiscal 2007 consolidated revenues, respectively. Our lemons are primarily marketed by Sunkist, with a vast majority of our domestic lemon and specialty citrus orders processed through the Sunkist network. Approximately 85% of our domestic lemon orders are repeat weekly/monthly customers and approximately 95% of those orders are FOB shipping dock. Approximately 70% of our lemons are shipped to food service and wholesale customers with the remaining 30% shipped to retail customers. Our export orders are placed through the Sunkist system with long-standing United States exporters. All orders placed through the Sunkist network are priced, invoiced and collected by Sunkist with payment to the company guaranteed by Sunkist beginning 24 hours after acceptance of our fruit by the customer. All commercial lemon by-products, such as juice, oils and essences, are processed by Sunkist with payment to us within approximately 12 to 18 months after the customer’s receipt of the product.

The industry average on-tree price for fresh lemons has ranged from a low of $14.90 per 40-pound box in 2004 to a high of $29.00 per 40-pound box in 2008. Fluctuations in price are a function of global supply and demand with weather conditions, such as unusually low temperatures, typically having the most dramatic effect on the amount of lemons supplied in any individual growing season.

We believe we have a competitive advantage by maintaining our own lemon packing operation, and though a significant portion of the costs related to our lemon packing operations are fixed. As a result, cost per carton is a function of fruit throughput. While we regularly monitor our costs for redundancies and opportunities for cost reductions, we also supplement the number of lemons we pack in our packinghouse with additional lemons from outside growers. Because the fresh utilization rate for our lemons, or percentage of lemons we harvest and pack that go to the fresh market, is directly related to the quality of lemons we pack and, consequently, the price we receive per 40-pound box, we only pack lemons from outside growers if we determine their lemons are of good quality.

Our avocado producing business is important to us yet nevertheless faces some constraints on growth as there is little additional land that can be cost-effectively acquired to support new avocado orchards in Southern California. Also, avocado production is cyclical as avocados typically bear fruit on a bi-annual basis with large crops in one year followed by smaller crops the next year. While our avocado production remains volatile, the profitability and cash flow realized from our avocados frequently offsets occasional losses in other crops we grow and helps to diversify our fruit production base.

In addition to growing lemons and avocados, we also grow oranges and specialty citrus and other crops, typically utilizing land not suitable for growing high quality lemons. We regularly monitor the demand for the fruit we grow in the ever-changing marketplace to identify trends. For instance, while per capita consumption of oranges in the United States has been decreasing since 2000 primarily as a result of consumers increasing their consumption of mandarin oranges and other specialty citrus, the international market demand for U.S. oranges has increased. As a result, we have focused our orange production on high quality late season Navel and Valencia oranges primarily for export to Japan, China and Korea, which are typically highly profitable niche markets. We produce our specialty citrus and other crops in response to consumer trends we identify and believe that we are a leader in the niche production and sale of certain of these high margin fruits. Because we carefully monitor the respective markets of specialty citrus and other crops, we believe that demand for the types and varieties of specialty citrus and other crops that we grow will continue to increase throughout the world.

Our rental operations segment represented approximately 11%, 7% and 7% of our fiscal 2009, fiscal 2008 and fiscal 2007 consolidated revenues, respectively. Our rental housing units generate reliable cash flows which we use to partially fund the operations of all three of our business segments, and provide affordable housing to many of our employees, including our agribusiness employees, a unique employment benefit that helps us maintain a dependable, long-term employee base. In addition, our leased land business provides us with a typically profitable diversification.

Our real estate development segment has not yet generated any significant revenues to-date. We recognize that long-term strategies are required for successful real estate development activities. We plan to redeploy any financial gains into other income producing real estate as well as additional agricultural properties.

Recent Developments

Dividend Payment

On January 4, 2010, the company paid a $0.3125 per share dividend in the aggregate approximate amount of $0.4 million to stockholders of record on December 15, 2009.

Windfall Investors, LLC

In September of 2005, the Company, along with Windfall, LLC, formed Windfall Investors, LLC, which we refer to as Windfall Investors, to acquire Windfall Farms, an approximately 720 acre former equestrian breeding and training farm located near Paso Robles, California. Initially, the company owned 15% of the equity interests in Windfall Investors and Windfall, LLC, the managing partner, held 85% of the equity interests in Windfall Investors. Windfall Investors purchased Windfall Farms for $12.0 million, which was financed using a $9.8 million secured long-term loan from Farm Credit West, which we refer to as the Windfall term loan, and $2.3 million from an $8.0 million unsecured revolving line of credit also with Farm Credit West, which we refer to as the Windfall revolving line of credit. In 2008, the Windfall revolving line of credit was increased to $10.5 million. The company and the equity holders of Windfall initially guaranteed, jointly and severally, the indebtedness outstanding under the Windfall term loan and Windfall revolving line of credit.

Subsequent to October 31, 2009 the managing partner of Windfall Investors resigned its position and assigned all of its rights and interest in Windfall Investors to the company and the company released Windfall, LLC and its equity holders from certain liabilities associated with Windfall Investors. Pursuant to its terms, the guarantee will remain in effect for the entire term of the Windfall term loan and Windfall revolving line of credit. Should Windfall Investors be in default at any time during that term, Farm Credit West could declare the outstanding balance due and payable. The maximum amount of potential future payment for us due to a default by Windfall Investors under the term of the guarantee is $20.3 million. Conditions of default include, among other things, failure to make scheduled payments, declaration of bankruptcy, material adverse change in financial condition and breach of any term or representation in the loan agreements.

Beginning in fiscal 2010 the results of operations and all of the assets and liabilities of Windfall Investors will be included in the consolidated financial statements of the Company. In addition, the audited financial statements of Windfall Investors for the year ended December 31, 2008 are included in this Form 10 beginning on page F-56. The outstanding debt on the Windfall Investors balance sheet at October 31, 2009 consisted of approximately $9.2 million under the Windfall term loan, and approximately $10.0 million under the Windfall revolving line of credit. The Windfall term loan has monthly principal and interest payments of $63,000 through October 2011. We expect that in November 2011, the interest rate for the Windfall term loan will be renegotiated and quarterly principal and interest payments will continue through October 2035. The Windfall revolving line of credit has monthly interest only payments and matured in November, 2009 and the maturity date of the Windfall revolving line of credit was subsequently extended by Farm Credit West until March 1, 2010. The company is in the process of refinancing the Windfall revolving line of credit on a long-term basis through amendment to the Windfall revolving line of credit agreement or alternatively through its existing facility with Rabobank.

Results of Operations

Selected Results for Fiscal Years 2009, 2008 and 2007

Selected results of operations for the fiscal years ended October 31, 2009, 2008 and 2007 were as follows:

	Year Ended October 31
	2009			2008			2007
Revenues:
Agriculture	$	31,033,000		$	49,794,000		$	44,751,000
Rental		3,766,000			3,718,000			3,516,000
Other		39,000			—			—
Total revenues		34,838,000			53,512,000			48,267,000
Costs and expenses:
Agriculture		27,281,000			34,805,000			32,036,000
Rental		2,061,000			2,236,000			2,073,000
Other		318,000			991,000			1,160,000
Selling, general and administrative		6,469,000			8,292,000			9,627,000
Asset impairments		6,203,000			1,341,000			—
Loss on sale of assets		10,000			11,000			56,000
Total cost and expenses		42,342,000			47,676,000			44,952,000
Operating (loss) income		(7,504,000	)		5,836,000			3,315,000
Other income (expense):
Gain on sale of stock in Calavo Growers, Inc.		2,729,000			—			—
Other income (loss), net		256,000			403,000			(34,000	)
Interest income		225,000			902,000			2,300,000
Interest expense		(692,000	)		(1,419,000	)		(2,102,000	)
Total other income (expense)		2,518,000			(114,000	)		164,000

(Loss) income from continuing operations before income taxes and equity (losses) earnings		(4,986,000	)		5,722,000			3,479,000
Income tax benefit (provision)		2,291,000			(2,128,000	)		(1,177,000	)
Equity in (losses) earnings of investments		(170,000	)		153,000			89,000
(Loss) income from continuing operations		(2,865,000	)		3,747,000			2,391,000
Loss from discontinued operations, net of income taxes		(12,000	)		(252,000	)		(245,000	)
Net (loss) income		(2,877,000	)		3,495,000			2,146,000
Preferred dividends		(262,000	)		(262,000	)		(262,000	)
Net (loss) income applicable to common stock	$	(3,139,000	)	$	3,233,000		$	1,884,000

Per common share basic:
Continuing operations	$	(2.78	)	$	3.13		$	1.92
Discontinued operations		(0.01	)		(0.23	)		(0.22	)
Basic net (loss) income per share	$	(2.79	)	$	2.90		$	1.70

Per common share-diluted:
Continuing operations	$	(2.78	)	$	3.12		$	1.92
Discontinued operations		(0.01	)		(0.23	)		(0.22	)
Diluted net (loss) income per share	$	(2.79	)	$	2.89		$	1.70
Dividends per common share	$	0.63		$	3.25		$	2.25
Weighted-average shares outstanding-basic		1,124,000			1,113,000			1,107,000
Weighted-average shares outstanding-diluted		1,125,000			1,116,000			1,107,000

Fiscal Year Ended October 31, 2009 Compared to Fiscal Year Ended October 31, 2008

Revenues

For fiscal 2009 the company had revenues of $34.8 million compared to revenues of $53.5 million in fiscal 2008, a decline of approximately 35%. The decline in revenues primarily resulted from a decrease in fresh lemon cartons sold in 2009 compared to 2008 and reduced pricing for the lemons sold. In 2009 we sold approximately 1.3 million fresh cartons at an average price of $15.72 per carton compared to approximately 1.4 million fresh cartons sold in 2008 at an average price of $27.15 per carton. The decline in the number of cartons sold was primarily attributable to a decline in the food service market for lemons, which we believe was related to decreases in restaurant business because of pressures on consumers’ disposable income due to the recession in the United States. Current short and long term projections for lemon sales point to increased demand in the food service category which is the dominant category for lemon sales. The decline in pricing for fresh lemons was primarily attributable to a significant oversupply of product resulting from simultaneous production recoveries in California, Argentina, Chile and Spain from the damaging freezes in 2007. In 2009, we harvested 2.4 million pounds of avocados compared to 3.7 million pounds in 2008, with the decrease attributable to an unseasonable heat event experienced during bloom and set. Total avocado revenue however was slightly higher in 2009 compared to 2008 primarily because of the estimated crop insurance claim settlement we recorded in 2009 related to the unseasonable heat event experienced during bloom and set in 2008 which adversely impacted our 2009 avocado production. Revenue in our rental and real estate businesses was $3.8 million and $3.7 million in 2009 and 2008, respectively.

Costs and Expenses

For fiscal 2009 the company had agricultural costs and expenses of $27.3 million compared to expenses of $34.8 million in fiscal 2008. The $7.5 million decrease was attributable to lower fresh utilization and per carton sales prices for lemons in 2009 compared to 2008 resulting in $3.4 million lower payments to our affiliated growers in 2009 compared to 2008. Electricity costs related to our lemon packing operations were substantially lower in 2009 compared to 2008 as a direct result of the completion in late 2008 of our one-megawatt solar generator used to provide power for our lemon packing operations. Lower oil prices and pesticide costs in 2009 compared to 2008 also contributed to the decrease. Additionally, we recorded a $1.2 million non-cash write-off in connection with the removal of 133 acres of specialty crops in 2008. Other expenses, which are comprised of the costs related to our rental and real estate development businesses, were $2.4 million in 2009 compared to $3.2 million in 2008. This $0.8 million decrease was attributable to lower expenses in 2009 related to our East Area I project in Santa Paula, California. The majority of the cost for planning and entitlement related to this project were incurred in 2008 and prior years. Expenses related to our rental business decreased by $0.1 million from $2.2 million in 2008 to $2.1 million in 2009 primarily due to higher repair and maintenance costs incurred in 2008 related to our residential housing units. Depreciation expense in our agricultural, rental and real estate development businesses was $1.6 million, $0.4 million and $0.04 million, respectively in 2009 compared to $1.7 million, $0.4 million and $0.0 million, respectively in 2008.

Selling, General and Administrative expenses in 2009 were $6.5 million compared to $8.3 million in 2008. This $1.8 million net decrease was primarily the result of lower incentive costs in 2009 related to the Company’s management incentive bonus program, which we refer to as the MIP. In 2008 participants in the MIP were awarded incentive payments of $1.5 million compared to no awards earned in 2009. Additionally, the company spent $0.5 million less in 2009 compared to 2008 for consulting, travel, promotions and other costs. Partially offsetting these decreases were $0.2 million of higher legal, audit and compliance costs in 2009 compared to 2008.

In 2009 we recorded impairment charges related to certain of our real estate assets totaling $6.2 million compared to $1.3 million in 2008. As a result of the continuing downturn in the overall real estate market during the past year we reduced the basis in our Santa Maria development projects by $4.6 million to their appraised value of $18.8 million. Additionally, in 2009 we reduced the basis in our Paradise Valley luxury home developments by $1.6 million to their appraised value of $6.2 million. In 2008 we recorded an impairment charge of $1.3 million related to our Santa Maria development projects.

Other Income, Expense

The Company’s other income, expense consists of interest income, interest expense, gain on the sale of securities and other miscellaneous income/expense. Our interest income in 2009 was $0.2 million compared to $0.9 million in 2008. This decrease was the result of $0.7 million of interest income recognized during the first five months of 2008 on loans receivable from Templeton Santa Barbara, LLC, which we refer to as Templeton, prior to the consolidation of Templeton. Our interest expense was $0.7 million in 2009 compared to $1.4 million in 2008. This $0.7 million decrease was primarily the result of a lower cost of borrowing in 2009 as compared to 2008 as well as additional capitalization of interest related to real estate projects. During 2009 the weighted average interest rate on our debt was 3.96% compared to a weighted average interest rate of 5.22% in 2008. In 2009, other income, expense includes a $2.7 million profit on the sale of 335,000 shares of Calavo common stock that we sold in October, 2009. These shares were a part of the 1,000,000 shares of Calavo common stock that we purchased in 2005.

Income Taxes

The company recorded an income tax benefit of $2.3 million in 2009 on pre-tax losses from continuing operations of $5.0 million compared to an income tax provision of $2.1 million on pre-tax income from continuing operations of $5.7 million in 2008. Our effective tax rate for 2009 was 44.3% compared to 36.1% for 2008. The change in the effective tax rate from 2008 to 2009 was attributable to a change in the domestic production deduction related to our sales through the Sunkist cooperative and a change in certain unrecognized income tax benefits. Deferred income taxes result principally from differences between the financial and tax reporting expense items such as depreciation, state income taxes, vacation accruals and mark-to-market adjustments. Long term deferred tax liabilities net of long term deferred tax assets at October 31, 2009 were $8.8 million compared to $11.5 million at October 31, 2008. This decrease was primarily attributable to the deferred tax assets recorded in connection with the impairment charges related to our real estate projects mark-to-market adjustments related to available-for-sale securities and the minimum pension liability adjustment recorded in 2009.

Fiscal Year Ended October 31, 2008 Compared to Fiscal Year Ended October 31, 2007

Revenues

For fiscal 2008 the company had revenues of $53.5 million compared to revenues of $48.3 million in fiscal 2007, an increase of approximately 11%. The increase in revenues resulted from the company experiencing minimal impact from global climate conditions in 2007 that dramatically reduced lemon production in California, Argentina, Chile and Europe. This circumstance enabled the company to achieve over 70% fresh utilization at record sales prices for lemons in fiscal 2008. These same conditions, however, had the opposite effect on our avocado crops in both fiscal 2008 and fiscal 2007 with production falling to under 4 million pounds in fiscal 2008 and fiscal 2007 from a record 17.7 million pounds in fiscal 2006. Production of both Navel and Valencia orange varieties also declined in fiscal 2008 compared to fiscal 2007 resulting in a decrease in revenue for these varieties of $0.9 million. Specialty crop revenue increased nearly $0.7 million in fiscal 2008 compared to fiscal 2007. This increase was attributable to more production of Cara Cara Navel oranges, pluots, minneolas and Meyer lemons, and resulted from a larger number of planted acres becoming full bearing in 2008. Revenue for our rental and real estate development businesses was $3.7 million and $3.5 million in 2008 and 2007, respectively.

Costs and Expenses

For fiscal 2008 the company’s agricultural costs were $34.8 million compared to $32.0 million in 2007. This $2.8 million increase was attributable to a $1.2 million non-cash write-off in 2008 in connection with tree removals. Additionally, higher oil prices in fiscal 2008 directly impacted our cost of certain of the pesticides and herbicides used in our farming operations. Other expense consists of the costs and expenses related to our rental and real estate development businesses and were $3.2 million in 2008 and 2007.

Our selling, general and administrative costs in 2008 were $8.3 million compared to $9.6 million in 2007. This $1.3 million decrease was attributable to lower costs related to our stock compensation program in 2008. In 2008. The Company recorded compensation expense of $0.6 million related to its stock grant performance bonus program compared to $3.2 million of compensation expense related to this program in 2007. Partially offsetting this decrease in expense were increases in our legal and professional fees, primarily related to audit and tax work and consulting fees primarily related to company structure analysis work.

In 2008 we recorded a $1.3 million impairment charge to write down the carrying value of our Santa Maria development project to its then appraised value. This appraised value reflected the downturn in the economy in general and the housing market in particular.

Other income and expenses include interest income, interest expense and other miscellaneous income and expenses. Interest income for 2008 was $0.9 million compared to $2.3 million in 2007. The 2007 interest income included $1.9 million of interest income on loans to Templeton which represents a full year as compared to five months of interest income in 2008 prior to the consolidation of Templeton. Interest expense for 2008 was $1.4 million compared to $2.1 million in 2007. This reduction was primarily attributable to lower overall borrowing costs in 2008 compared to 2007. During 2008 our weighted average interest rate on our debt was 5.22% compared to a weighted average interest rate of 6.54% in 2007. Additionally, because of the changing nature of one of our real estate development projects, a greater portion of the interest cost associated with the debt incurred for that project was capitalized in 2008 as compared to 2007.

Income Taxes

The company recorded an income tax provision of $2.1 million in 2008 on pre-tax income from continuing operations of $5.7 million compared to a $1.2 million provision on pre-tax earnings from continuing operations of $3.5 million in 2007. Our effective tax rate for 2008 was 36.1% compared to 32.9% for 2007. The change in the effective tax rate from 2007 to 2008 was attributable to a change in the domestic production deduction related to our sales through Sunkist, dividend income exclusions and changes in certain unrecognized income tax benefits. Deferred income taxes result principally from differences between the financial and tax reporting expense items such as depreciation, state income taxes, vacation accruals and mark-to-market adjustments. Long term deferred tax liabilities net of long term deferred tax assets at October 31. 2008 were $11.5 million compared to $16.7 million at October 31, 2007. This decrease was primarily attributable to mark-to-market adjustments related to available-for-sale securities.

Segment Results of Operations

We evaluate the performance of our agribusiness, rental operations, and real estate development segments separately to monitor the different factors affecting financial results and each segment is subject to review and evaluation as we monitor current market conditions, market opportunities, and available resources.

Selected segment results of operations for the fiscal years ended October 31, 2009, 2008 and 2007 were as follows:

	2009			2008			2007
Revenues
Agribusiness	$	31,033,000		$	49,794,000		$	44,751,000
Rental operations		3,766,000			3,718,000			3,516,000
Real estate development		39,000			—			—
Total revenues		34,838,000			53,512,000			48,267,000
Costs and expenses
Agribusiness		27,281,000			34,805,000			32,036,000
Rental operations		2,061,000			2,236,000			2,073,000
Real estate development		318,000			991,000			1,160,000
Corporate and other		6,469,000			8,292,000			9,627.000
Impairment charges
Real estate development		6,203,000			1,341,000			—
Loss on sale of assets
Corporate and other		10,000			11,000			56,000
Total costs and expenses		42,342,000			47,676,000			44,952,000
Operating income (loss)
Agribusiness		3,752,000			14,989,000			12,715,000
Rental operations		1,705,000			1,482,000			1,443,000
Real estate development		(6,482,000	)		(2,332,000	)		(1,160,000	)
Corporate and other		(6,479,000	)		(8,303,000	)		(9,683,000	)
Total operating income (loss)	$	(7,504,000	)	$	5,836,000		$	3,315,000

Fiscal Year Ended October 31, 2009 Compared to Fiscal Year Ended October 31, 2008

Agribusiness

For fiscal 2009 agribusiness revenues were $31.0 million compared to agribusiness revenues of $49.8 million in fiscal 2008, a decline of approximately 38%. The decline in agribusiness revenues resulted primarily from lower lemon revenue. In 2009 we had $22.3 million of lemon revenue compared to $40.3 million in 2008. In 2009 we sold 1.3 million fresh cartons of lemons at an average selling price of $15.72 per carton compared to 1.4 million fresh cartons at an average price of $27.15 per carton in 2008. Somewhat offsetting this reduction in fresh lemon sales were substantially higher prices for lemon juice products. In 2009 our total lemon revenue includes sales of juice products at approximately $70 per ton compared to approximately $40 per ton in 2008.

For fiscal 2009 agribusiness operating expenses were $27.3 million compared to $34.8 million in fiscal 2008. The decrease was primarily due to lower fresh utilization and per carton sales prices in 2009 resulting in lower payments to our affiliated growers. Additionally, lower oil prices in 2009 resulting lower pesticide costs; lower electricity costs in 2009 for our lemon packinghouse attributable to the completion in late 2008 of our one-megawatt solar generator and a $1.2 million write-off in 2008 related to tree removals contributed the balance of the decrease. Depreciation expense related to our agribusiness segment was $1.6 million in 2009 compared to $1.7 million in 2008.

Rental Operations

For fiscal 2009 rental operations revenues were $3.8 million compared to rental operations revenues of $3.7 million in fiscal 2008. Revenues for our housing and commercial units were $2.1 for 2009 and 2008, which accounted for approximately 57% and 58% of this segments revenue, respectively, with our land leases accounting for the majority of the balance in each year. Costs for our rental segment in 2009 were $2.1 million compared to $2.2 million in 2008 and were primarily incurred in connection with repairs and maintenance of the 193 housing units. Depreciation expense in our rental segment was $0.4 million in 2009 and 2008.

Real Estate Development

For fiscal 2009 real estate revenues were $0.04 million of lease income related to certain of our other real estate investments. Our real estate development revenue in 2008 was $0.0 million.

Real estate development costs and expenses in 2009 were $0.3 million compared to $1.0 million in 2008. This reduction was primarily attributable to lower costs associated with our East Area 1 development project. The majority of the costs for planning and entitlement for this project were incurred in 2008 and prior years. Depreciation expense in our real estate development segment was $0.04 million in 2009 and $0 in 2008. Additionally, in 2009 we recorded a $6.2 million non-cash impairment charge to write down the carrying costs of our Santa Maria and Paradise Valley real estate projects to their appraised values reflecting the continuing economic downturn in 2009. In 2008 we recorded a $1.3 million non-cash impairment charge to write down the carrying cost of our Santa Maria real estate project to its then appraised values.

Corporate

Corporate operating expense includes selling, general and administrative and other costs not allocated to the operating segments. Corporate operating expenses in fiscal 2009 were $6.5 million compared to $8.3 million in 2008. This $1.8 million decrease was primarily attributable to lower employee incentive costs in 2009 and to a lesser extent, lower overall legal and professional costs in 2009 compared to 2008 primarily related to work done in 2008 related to Company organizational matters.

Fiscal Year Ended October 31, 2008 Compared to Fiscal Year Ended October 31, 2007

Agribusiness

For fiscal 2008 agribusiness revenues were $49.8 million compared to agribusiness revenues of $44.8 million in fiscal 2007, an increase of approximately 11%. The increase in agribusiness revenues resulted from a perfect storm of events that produced favorable results for the company’s agribusiness segment, particularly the company’s lemon operations. In 2007, devastating freezes destroyed lemon crops in California, Argentina, Chile and Europe, dramatically reducing global supplies. Our lemon operations were largely unaffected by the freeze which enabled us to generate operating profits in 2008 of approximately $14 million through sales of approximately 1.4 million cartons of fresh lemons at an average price of $27.15 per carton. In comparison, in 2007, the company’s previous best lemon year, the company generated operating profits of approximately $10 million through the sale of 1.5 million cartons of fresh lemons at an average price of $23.45 per carton.

In contrast, the perfect storm that benefited our lemon operations had a devastating affect on our avocado operations with the freeze destroying much of our avocado crop in 2007 and 2008. In 2008, we generated operating profits of $0.2 million on 3.7 million pounds of avocados, while in 2007 we generated operating profits of $0.1 million on approximately 4 million pounds of avocados.

In 2008, despite industry-wide surplus and resulting low prices, we enjoyed relatively favorable Valencia and Navel orange results. Our well-honed strategy of anticipating, and then targeting, undersupplied markets allowed us to maximize the price for our Navel varieties. Even so, operating profit of $0.9 million in 2008 for our orange operations was down considerably from our operating profit of $2.1 million in 2007.

Our specialty citrus operations enjoyed another year of solid growth in 2008 with improvements in all varieties yielding operating profit of $1.4 million before a $1.2 million non-cash write-off recorded in connection with the removal of approximately 166 acres of underperforming cherries and pluots and representing a 58% increase in operating profit over 2007.

For fiscal 2008 agribusiness operating expenses were $34.8 million compared to agribusiness operating expenses of $32.0 million in fiscal 2007. The change was primarily due to the company’s removal of 133 acres of cherries and pluots and replanting the acreage with lemons and oranges. Our non-cash orchard write-off in 2008 was $1.2 million.

Rental Operations

For fiscal 2008 our rental operations revenues were relatively flat compared to fiscal 2007. The 2008 revenues consisted of $2.1 million of housing and commercial revenue, $1.4 million of leased land revenue and $0.2 million of organic recycling revenue. For 2007 the revenues from housing and commercial, leased land and organic recycling were $2.1 million, $1.3 million and $0.1 million, respectively. Higher maintenance costs in 2008 compared to 2007 for our housing units resulted in an approximately $0.1 million decline in operating profit in our housing and commercial operations which was offset by an increase in leased land revenue in 2008 compared to 2007. During 2007 we increased our leased land acreage to 586 acres. Our organic recycling operations contributed a consistent, reliable revenue stream in both fiscal 2008 and fiscal 2007.

For fiscal 2008 housing and commercial operating expenses were $2.2 million compared to housing and commercial operating expenses of $2.1 million in fiscal 2007. The change was primarily due to an increase in maintenance expenses for our rental properties. During 2007 we increased the number of acres we lease to third party agricultural tenants from 509 in 2006 to 586 in 2007. Because of enjoying a full year of revenue on this increased acreage in 2008, our leased land operating profit was $1.4 million in 2008 compared to $1.2 million in 2007.

Real Estate Development

For fiscal 2008 and 2007 the real estate development segment had no revenue. Costs and expenses were $1.0 million in 2008 compared to $1.2 million in 2007. The costs in both years were attributable to the planning and entitlement costs associated with our East Area 1 development project. Additionally, during 2008 and 2007, we incurred costs of $1.8 million and $2.1 million, respectively that were capitalized into the carrying value of this project. In 2008, as a result of the down turn in the overall housing market we recorded a $1.3 million non-cash impairment charge to write down the carrying value of our real estate project in Santa Maria, California to its appraised value.

Corporate

Corporate operating expense includes selling, general and administrative costs not allocated to the operating segments. Corporate operating expense in fiscal 2008 were $8.3 million compared to $9.6 million in fiscal 2007. This $1.3 million decrease was primarily attributable to lower costs associated with our stock grant performance bonus program in 2008 partially offset by higher employee incentive costs and legal and consulting costs in 2008 compared to 2007. In 2008, we incurred costs of $0.6 million related to our stock grant performance bonus plan compared to costs of $3.2 million in 2007.

Liquidity and Capital Resources

Overview

Our liquidity and capital position fluctuates during the year depending on seasonal production cycles, weather events, and final demand for our products. Typically, our first and last fiscal quarters coincide with the fall and winter months during which we are growing crops that are harvested and sold in the spring and summer, our second and third quarters. To meet working capital demand, we utilize our revolving credit facility to fund agricultural inputs and farm management practices until sufficient returns from crops allow us to pay down amounts borrowed. Raw materials needed to propagate the various crops grown by us consist primarily of fertilizer, herbicides, insecticides, fuel and water and are readily available from local sources.

Accordingly, we have established well-defined priorities for our available cash, including investing in core business segments to achieve profitable future growth. To enhance shareholder value, we will continue to make investments in our real estate segments to secure land entitlement approvals, build infrastructure for our developments, ensure adequate future water supplies, and provide funds for general land development activities. Within our farming segment, we will make investments as needed to improve efficiency and add capacity to its operations when it is profitable to do so.

Cash Flows from Operating Activities

For fiscal 2009, the company’s operating activities used approximately $1.0 million compared to providing approximately $6.9 million in fiscal 2008. The decrease in cash provided by operating activities in 2009 was primarily due to lower income from continuing operations in 2009 compared to 2008. Additionally, certain decreases in our net long term deferred tax liabilities in 2009 resulted in a reduction in cash provided by operating activities of $2.2 million compared to an increase in cash from operating activities of $0.4 million in 2008. The primary causes for the decrease in our net long term deferred tax liabilities were long term deferred tax assets generated from the non-cash impairment charges recorded in 2009 related to certain of our real estate development projects, mark-to-market adjustments related to available-for-sale securities and adjustments recorded related to our pension plan. Significant non-cash charges reflected in fiscal 2009 operating cash flow include: (i) depreciation and amortization charges totaling $2.3 million, (ii) impairment of real estate development projects totaling $6.2 million, and (iii) stock compensation expense totaling $0.8 million.

Cash Flows from Investing Activities

Cash flows used in investing activities were approximately $1.5 million for fiscal 2009, compared to cash flows used in investing activities of $29.4 million for fiscal 2008. The change was primarily due to capital expenditures of $7.2 million for 2009 compared to $29.2 million for 2008. Our 2008 capital expenditures include the approximately $22 million cost to purchase approximately 63 acres of land that will be a part of our East Area 1 development project. Our cash flows from investing activities in fiscal 2009 include proceeds of $6.1 million from our sale of 335,000 shares of the 1,000,000 shares of Calavo common stock that we purchased in 2005.

We expect capital expenditures in 2010 to be approximately $3.7 million. As noted above, we are evaluating the construction within the next five years of a new packinghouse that has the potential to reduce our packing costs by reducing labor and handling inputs.

Cash Flows from Financing Activities

Cash flows provided by financing activities were approximately $3.0 million for fiscal 2009, compared to cash flows provided by financing activities of approximately $22.1 million for fiscal 2008. Net cash provided from the issuance and payments of debt was $4.1 million and $27.1 million in 2009 and 2008, respectively. The 2008 net cash provided from the issuance and payments of debt includes the $22 million of debt used to purchase the approximately 63 acres that will be a part of our East Area 1 development project. In addition, we used cash of $1.0 million and $3.9 million in fiscal 2009 and fiscal 2008, respectively, for dividends to holders of our common and preferred stock.

Transactions Affecting Liquidity and Capital Resources

We have a revolving credit facility with Rabobank, NA, which we refer to as Rabobank, that permits us to borrow up to $80.0 million and two term loans with Farm Credit West, FLCA, as successor by merger to Central Coast Federal Land Bank, which we refer to as Farm Credit, for an aggregate amount of approximately $10.0 million.

As of October 31, 2009, we had $69.7 million of long-term debt under credit facilities of which $0.5 million is payable in fiscal 2010. In addition, beginning in fiscal 2010 we will consolidate Windfall Investors which will result in an additional $19.2 million of debt being recorded by the company, of which $10.1 is payable in fiscal 2010. We anticipate being able to extend on a long-term basis with Farm Credit West, $10.0 million of Windfall Investors revolving line of credit debt that currently matures on March 1, 2010. In addition, as of October 31, 2009 our borrowing capacity under our existing credit facility with Rabobank was approximately $17.9 million.

We believe that the cash flows from operations and available borrow capacity from our existing credit facilities will be sufficient to satisfy our future capital expenditures, debt service, working capital needs and of other contractual obligations for fiscal 2010. In addition we have the ability to control the timing of our investing cash flows to the extent necessary based on our liquidity demands.

Rabobank Revolving Credit Facility

As of December 31, 2009, we had $61.7 million outstanding under our Rabobank revolving credit facility, $22.5 million of which bears interest at a variable rate equal to the one month London Interbank Offer Rate, or LIBOR, plus a spread of 1.5%. At December 31, 2009 the interest rate on $22.5 million outstanding balance was 1.73%. The variable interest rate resets on the first of each month.

Under the Rabobank revolving credit facility, the company has the option of fixing the interest rate on any portion of outstanding borrowings using interest rate swaps. The fixed interest rate is calculated using the two, three or five year LIBOR rates plus a spread of 1.5%. The Company has utilized interest rate swaps to fix interest rates on three separate outstanding balances under the Rabobank revolving credit facility, one for $22.0 million at 5.75% for a five year term, one for $10.0 million at 4.7% for a two year term and one for $10.0 million at 3.86% for a two year term. The five year interest rate swap matures in June 2013 and the two year interest rate swaps mature in November and December 2010. Interest is payable monthly and all outstanding principal is due in full in June 2013.

The Rabobank revolving credit facility is secured by certain of our agricultural properties and all of our equity interest in the San Cayetano Mutual Water Company, and subjects us to affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, requirements to maintain and repair any collateral, restrictions on the sale of assets, restrictions on the use of proceeds, prohibitions on the incurrence of additional debt, and restrictions on the purchase or sale of major assets. We also are subject to covenant that the company maintain a debt service coverage ratio (as defined in the Rabobank revolving credit facility) of less than 1.25 to 1.0 measured annually. We were unable to comply with the debt service coverage ratio for fiscal 2009 and in December 2009 received a waiver of such non-compliance from Rabobank for fiscal 2009. Under the terms of our agreement with Rabobank, the debt service coverage ratio is measured annually and as such the next compliance measurement date of this covenant is October 31, 2010 which will cover fiscal 2010. We currently anticipate to be in compliance with all covenants under our agreement with Rabobank for fiscal 2010.

Unless waived, our breach of any of these covenants would be an event of default under the Rabobank revolving credit facility, among other customary events of default. Upon the occurrence of an event of default, Rabobank would have the right to accelerate the maturity of any debt outstanding under the revolving credit facility and we would be subject to additional restrictions, prohibitions and limitations.

We have the ability to voluntarily prepay any amounts outstanding under the Rabobank revolving credit facility without penalty.

Farm Credit Term Loans

As of December 31, 2009, we had $7.1 million outstanding under our term loans with Farm Credit. The first loan with Farm Credit is a term loan in an original principal amount of approximately $9 million and bears interest at a variable rate currently at to 3.25%. Quarterly principal and interest payments are due through November 2022, when the note matures. This term loan is secured by certain of our agricultural properties and includes certain affirmative covenants including, among other customary covenants, financial reporting requirements and restrictions on the sale of assets.

The second loan with Farm Credit is a term loan in an original principal amount of $1.0 million and bears interest at a variable rate currently at 3.25%. Monthly principal and interest payments are due through May 2032, when the note matures. This term loan is secured by the same agricultural properties that are securing the first Farm Credit term loan and includes certain affirmative and restrictive covenants including, among other customary covenants, financial reporting requirements, restrictions on the sale of assets, and prohibitions on the incurrence of additional debt.

Windfall Invstors, LLC Revolving Line of Credit and Term Loan

As described in “Recent Developments - Windfall Investors, LLC” above and “Off-Balance Sheet Arrangements” below, we guaranteed, jointly and severally, with Windfall, all amounts outstanding under the Windfall revolving line of credit and the Windfall term loan. Beginning in fiscal 2010 the results of operations and all of the assets and liabilities of Windfall Investors will be included in the consolidated financial statements of the company.

The outstanding debt on the Windfall Investors balance sheet at October 31, 2009 consisted of approximately $9.2 million under the Windfall term loan, and approximately $10.0 million under the Windfall revolving line of credit. The Windfall term loan has monthly principal and interest payments of $63,000 through October 2011. We expect that in November 2011, the interest rate for the Windfall term loan will be renegotiated and quarterly principal and interest payments will continue through October 2035. The Windfall revolving line of credit has monthly interest only payments and matured in November, 2009 and the maturity date of the Windfall revolving line of credit was subsequently extended by Farm Credit West until March 1, 2010 and is currently being renegotiated.

In addition, the audited financial statements of Windfall Investors for the year ended December 31, 2008 are included in this Form 10 beginning on page F-56.

Interest Rate Swaps

We enter into interest rate swaps (derivatives) to minimize the risks and costs associated with our financing activities. Our interest rate swaps (derivatives) qualify for hedge accounting. Therefore, the fair value adjustments to the underlying debt are deferred and included in accumulated other comprehensive income (loss) in the consolidated balance sheets at October 31, 2009 and 2008. See Note 12 in the notes to the consolidated financial statements for the year ended October 31, 2009 included elsewhere in this registration statement for more information about our interest rate swaps (derivatives).

Contractual Obligations

The following table presents the company’s total contractual obligations at October 31, 2009 for which cash flows are fixed or determinable:

	Payments due by Period

Contractual Obligations:	Total		< 1 year		1-3 years		3-5 years		5+ years
Fixed rate debt (principal)	$	42,000,000		—		—	$	42,000,000		—
Variable rate debt (principal)	$	27,716,000	$	465,000	$	976,000	$	20,712,000	$	5,563,000
Operating lease obligations	$	10,176,000	$	1,620,000		3,023,000	$	2,192,000	$	3,341,000
Total contractual obligations	$	79,892,000	$	2,085,000	$	3,999,000	$	64,904,000	$	8,904,000
Interest payments on fixed and variable rate debt	$	12,727,000	$	2,725,000	$	5,449,000	$	2,165,000	$	2,388,000

Fixed Rate and Variable Rate Debt

Details of amounts included in long-term debt can be found above and in Note 11 in the notes to the consolidated financial statements for the year ended October 31, 2009 included elsewhere in this registration statement. The above table assumes that long-term debt is held to maturity.

Subsequent to October 31, 2009, as described above in “Recent Developments - Windfall Investors, LLC,” the company acquired all rights and interests in Windfall Investors and the results of operations and all of the assets and liabilities of Windfall Investors will be included in our consolidated financial statements beginning in fiscal 2010. Our total contractual obligations, including those of Windfall Investors as of October 31, 2009, would be $13.3 million for less than one year, $5.5 million for one to three years, $66.4 million for three to five years and $24.8 million for over five years. Interest payments on fixed and variable debt would be $3.5 for one year or less, $6.7 for one to three years, $3.3 for three to five year and $9.8 over five years.

Operating Lease Obligations

The company has numerous operating lease commitments with remaining terms ranging from less than one year to ten years. The company has installed a one mega-watt photovoltaic solar array on one of its agricultural properties located in Ventura County that produces the majority of the power to run its lemon packinghouse. The construction of this array was financed by Farm Credit Leasing and the company has a long term lease with Farm Credit Leasing for this array. Annual payments for this lease are $0.5 million, and at the end of ten years the company has an option to purchase the array for $1.1 million. The company entered into a similar transaction with Farm Credit Leasing for a second photovoltaic array at one of its agricultural properties located in the San Joaquin Valley to supply the majority of the power to operate four deep water well pumps located on company property. Annual lease payments for this facility range from $0.3 million to $0.8 million, and at the end of ten years the company has the option to purchase the array for $1.3 million. The company leases pollination equipment under a lease through 2013 with annual payments of $0.1 million. The company also leases machinery and equipment for its packing operations and land for its growing operations under leases with annual lease commitments that are individually immaterial.

Interest Payments on Fixed and Variable Debt

The above table assumes that our fixed rate and long term debt is held to maturity and the interest rates on our variable rate debt remains unchanged for the remaining life of the debt from those in effect at October 31, 2009.

Other Obligations and Commitments

As described in “Recent Developments - Windfall Investors LLC” above and “Off-Balance Sheet Arrangements” below, we guaranteed, jointly and severally, with Windfall, all amounts outstanding under the Windfall revolving line of credit and the Windfall term loan.

Off-Balance Sheet Arrangements

For fiscal 2009 and each prior applicable period, the results and operations and all of the assets and liabilities of Windfall Investors has been treated as an Off-Balance Sheet Arrangement. As described in “Recent Developments - Windfall Investors, LLC” above, beginning in fiscal 2010 the results of operations and all of the assets and liabilities of Windfall Investors will be included in the consolidated financial statements of the Company. In addition, the audited financial statements of Windfall Investors for the year ended December 31, 2008 are included in this Form 10 beginning on page F-56.

Critical Accounting Policies and Estimates

The preparation of our financial statements in accordance with generally accepted accounting principles requires us to develop critical accounting policies and make certain estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates and judgments on historical experience, available relevant data and other information that we believe to be reasonable under the circumstances. Actual results may materially differ from these estimates under different assumptions or conditions as new or additional information become available in future periods. We believe the following critical accounting policies reflect our more significant estimates and judgments used in the preparation of our consolidated financial statements.

Revenue Recognition - Sales of products and related costs are recognized when persuasive evidence of an arrangement exists, delivery has occurred, selling price can reasonably be determined, and collectability is reasonably assured. We accrue monthly revenue from the sales of certain of our agricultural products based on estimated proceeds provided by our sales and marketing partners. Historically, these estimates have not differed materially from actual results.

For citrus products processed through our packinghouse and sold by Sunkist on our behalf, we (i) have the general and physical inventory risk, (ii) have the discretion in supplier selection, and (iii) are involved in the determination of the product that is ultimately sold to the customer. In addition, Sunkist earns a fixed amount for its sales and marketing services. We record the revenues related to these citrus sales on a gross basis.

For avocados, oranges, specialty citrus and other specialty crops packed and sold by Calavo and other third-party packinghouses, Calavo and the other third-party packinghouses are the primary obligor in the arrangement; as such, we record the revenues related to these sales made by Calavo and other third-party packinghouses on a net basis.

For rental revenues, minimum rent revenues are generally recognized on a straight-line basis over the respective initial lease term. Contingent rental revenues are contractually defined as to the percentage of rent to be received and are tied to fees collected by our lessee. Our contingent rental arrangements generally require payment on a monthly basis with the payment based on the previous month’s activity. We accrue contingent rental revenues based upon estimates and adjust to actual as we receive payments. Organic recycling percentage rents range from 5% to 10%.

Capitalization of Costs - We capitalize the planning, entitlement and certain development costs associated with our various real estate development projects. Costs that are not properly capitalized are expensed as incurred. Based on potential changes in the nature of these projects, future costs incurred could not be properly capitalized and would be expensed as incurred. For fiscal 2009, we capitalized approximately $3.3 million of costs related to our real estate projects and expensed approximately $0.3 million of costs.

Income Taxes – Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Derivative Financial Instruments – We use derivative financial instruments for purposes other than trading to manage our exposure to interest rates as well as to maintain an appropriate mix of fixed and floating-rate debt. Contract terms of our hedge instruments closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria are recorded using hedge accounting. If a derivative instrument is a hedge, depending on the nature of the hedge, changes in the fair value of the instrument will be either offset against the change in the fair value of the hedged assets, liabilities or firm commitments through earnings or be recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value will be immediately recognized in earnings. Instruments that do not meet the criteria for hedge accounting, or contracts for which we have not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of change.

Impairment of Long-Lived Assets - We evaluate our long lived assets including our real estate development projects for impairment when events or changes in circumstances indicate the carrying value of these assets may not be recoverable. As a result of the economic downturn in recent years we recorded impairment charges of $6.2 million and $1.3 million in 2009 and 2008, respectively. These charges were based on independent, third-party appraisals provided to us and were developed using various facts, assumption and estimates. Future changes in these facts, assumptions and estimates could result in additional changes.

Defined Benefit Retirement Plan - As discussed in Note 15 to our consolidated financial statements, we sponsor a defined benefit retirement plan that was frozen in June, 2004, and no future benefits accrued to participants subsequent to that time. Ongoing accounting for this plan under FASB ASC 715 provides guidance as to, among other things, future estimated pension expense, minimum pension liability and future minimum funding requirements. This information is provided to us by third party actuarial consultants. In developing this data, certain estimates and assumptions are used including, among other things, discount rate, long term rates of return, and mortality tables. Changes in any of these estimates could materially affect the amounts recorded that are related to our defined benefit retirement plan.

Qualitative and Quantitative Disclosures about Market Risk

Interest Rate Risk

Borrowings under each of our Rabobank revolving credit facility and Farm Credit term loans are subject to variable interest rates. These variable interest rates subject us to the risk of increased interest costs associated with any upward movements in interest rates. Under each of our Rabobank revolving credit facility and Farm Credit term loans, our borrowing interest rate is a LIBOR-based rate plus a spread. At October 31, 2009 our total debt outstanding under the Robobank revolving credit facility and the Farm Credit term loans was approximately $61.7 million, $7.1 million and $1 million, respectively.

We manage our exposure to interest rate movements by utilizing interest rate swaps (derivatives). We fixed $42 million of our outstanding borrowings with three “fixed-to-floating” interest rate swaps as described in the following table:

	Notional Amount				Fair Value Net Liability
	2009		2008		2009		2008
Pay fixed-rate, receive floating-rate interest rate swap designated as cash flow hedge, maturing 2013	$	22,000,000	$	22,000,000	$	1,678,000	$	541,000

Pay fixed-rate, receive floating-rate interest rate swap designated as cash flow hedge, maturing 2010		10,000,000		10,000,000		287,000		96,000

Pay fixed-rate, receive floating-rate interest rate swap designated as cash flow hedge, maturing 2010		10,000,000		—		206,000		—

Total	$	42,000,000	$	32,000,000	$	2,171,000	$	637,000

Based on our level of borrowings at October 31, 2009, after taking into consideration the effects of our interest rate swaps (derivatives), a 1% increase in interest rates would increase our interest expense annually by $0.28 million for fiscal 2010 and decrease our interest expense an average of $0.1 million for the three subsequent fiscal years and decrease our net income by $0.17 million for fiscal 2010 and increase our net income an average of $0.06 million for the three subsequent fiscal years.

Subsequent to October 31, 2009, the managing partner of Windfall Investors resigned its position and assigned all of its rights and interest in Windfall Investors to the Company. Therefore, beginning in fiscal 2010 the results of operations and all of the assets and liabilities of Windfall Investors will be included in the consolidated financial statements of the company. Consequently, with respect to fiscal 2010 and based on the level of borrowings of both the company and Windfall Investors, after taking into consideration the effects of our interest rate swaps (derivatives), a 1% increase in interest rates would increase our interest expense annually by $0.38 million for fiscal 2010 and an average of $0.001 million for the three subsequent fiscal years and decrease our net income by $0.23 million for fiscal 2010 and an average of less than $0.001 million for the three subsequent fiscal years.

Commodity Sales Price Risk

Commodity pricing exposures include the potential impacts of weather phenomena and their effect on industry volumes, prices, product quality and costs. We manage our exposure to commodity price risk primarily through our regular operating activities, however, significant commodity price fluctuations, particularly for lemons, avocados and oranges could have a material impact on our results of operations.

ITEM 3.

PROPERTIES

Real Estate

We own our corporate headquarters in Santa Paula, California. We own approximately 5,867 acres of land in California with approximately 4,070 acres located in Ventura County and approximately 1797 acres located in Tulare County, which is in the San Joaquin Valley. We lease approximately 31 acres of land located in Ventura County and approximately 449 acres of land located in Santa Barbara County. We also have an interest in a partnership that owns approximately 208 acres of land in Ventura County. Our agricultural plantings consist of approximately 1839 acres of lemons, approximately 1372 acres of avocados, approximately 1062 acres of oranges and approximately 403 acres of specialty citrus and other crops.

We own our packing facility located in Santa Paula, California, where we process and pack our lemons as well as lemons for other growers. In 2008, we entered into an operating lease agreement and completed the installation of a 5.5 acre, one-megawatt ground-based photovoltaic solar generator, which provides the majority of the power to operate our packing facility. In 2009 we completed the installation of a one-megawatt solar array (which we also lease through an operating lease agreement), which provides us with a majority of the electricity required to operate four deep water well pumps at one of our ranches in the San Joaquin Valley.

Additionally, we own 193 residential units that we lease to our employees, former employees and outside tenants as well as several commercial office buildings and properties that are leased to various tenants.

Water Rights

Our water resources include water rights, usage rights and pumping rights to the water in aquifers under, and canals that run through, the land we own. Water for our farming operations is sourced from the existing water resources associated with our land, which includes rights to water in the adjudicated Santa Paula Basin (aquifer) and the unadjudicated Fillmore, Santa Barbara and Paso Robles Basins (aquifers). We also use ground water and water from local water districts the San Joaquin Valley. We believe our water resources are adequate for our current farming operations.

We believe water is a natural resource that is critical to economic growth in the Western United States and firm, reliable water rights are essential to the company’s sustainable business practices. Consequently, we have long been a private steward and advocate of prudent and efficient water management. We have made substantial investments in securing water and water rights in quantities that are sufficient to support and, we believe will exceed, our long-term business objectives. We strive to follow best management practices for the diversion, conveyance, distribution and use of water. In the future, we intend to continue to provide leadership in the area of, and seek innovation opportunities that promote, increased water use efficiency and the development of new sources of supply for our neighboring communities.

ITEM 4.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of our common stock as of December 31, 2009 by (i) each person who is known to us to be the beneficial owner of more than five percent of the outstanding shares of our common stock, (ii) each director and nominee for director, (iii) our chief executive officer and our other executive officers, which we collectively refer to as the named executive officers, and (iv) all of our directors and named executive officers as a group. The applicable percentage ownership is based on 1,126,288 shares of common stock outstanding as of December 31, 2009, plus, in the case of Mr. Michaelis, the number of shares of common stock to be issued upon the conversion of Series B Convertible Preferred Stock. All holders of shares of common stock are entitled to one vote per share on all matters submitted to a vote of holders of share of common stock.

The number of shares beneficially owned by each entity or individual is determined pursuant to Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under Rule 13d-3 of the Exchange Act, “beneficial ownership” includes any shares as to which the entity or individual has sole or shared voting power or investment power and also any shares that the entity or individual has the right to acquire within 60 days through the exercise of any stock option or other right. Unless otherwise indicated, each person has sole voting and investment power (or shares such powers with his or her spouse) with respect to the shares set forth in the following table.

	Common Stock Beneficially Owned(2)
Name and Address of Beneficial Owner(1)	Number		Percentage
5% Beneficial Owners
Calavo Growers, Inc.		172,857		15.3	%
Directors and Officers
John W. Blanchard(3)		13,639		1.2	%
Lecil E. Cole(4)		415		*
Don P. Delmatoff(5)		4,536		*
Peter W. Dinkler		4,163		*
Harold S. Edwards(6)		11,241		1.0	%
Gordon E. Kimball		1,103		*
John W.H. Merriman		111		*
Ronald L. Michaelis (7)		57,236		5.0	%
Allan M. Pinkerton(8)		62,349		5.5	%
Keith W. Renken(9)		200		*
Robert M. Sawyer(10)		3,588		*
Alan M. Teague(11)		17,671		1.6	%
Alex M. Teague(12)		6,803		*

Limoneira Company Officers and Directors as a Group (13 persons)(13)		183,055		15.7	%

Less than 1%.

(1)

Except as set forth in the footnotes to this table, the business address of each director and executive officer listed is c/o Limoneira Company, 1141 Cummings Road, Santa Paula, California 93060.

(2)

The information provided in this table is based on the company’s records and information supplied by officers and directors.

(3)

Shares are owned beneficially by Mr. Blanchard as a beneficiary of two trusts. Mr. Blanchard shares voting and investment power over these shares.

(4)

Mr. Cole disclaims beneficial ownership of any shares of our common stock that are owned by Calavo Growers, Inc.

(5)

Includes 1,524 restricted shares of which 762 vest in 2010 and 762 vest in 2011. Mr. Delmatoff has voting and regular dividend rights with respect to the restricted shares, but no right to dispose of such shares.

(6)

Includes 3,189 restricted shares of which 1,595 vest in 2010 and 1,594 vest in 2011. Mr. Edwards has voting and regular dividend rights with respect to the restricted shares, but no right to dispose of such shares. All shares are owned beneficially by Mr. Edwards as a beneficiary of a trust. Mr. Edwards shares voting and investment power over these shares.

(7)

Number of shares includes 18,488 shares issuable upon conversion of Series B Convertible Preferred Stock. Shares are owned beneficially by Mr. Michaelis as a beneficiary of a trust. Mr. Michaelis shares voting and investment power over these shares.

(8)

Shares are owned beneficially by Mr. Pinkerton as a beneficiary of a trust. Mr. Pinkerton shares voting and investment power over these shares.

(9)

Shares are owned beneficially by Mr. Renken as a beneficiary of a trust. Mr. Renken shares voting and investment power over these shares.

(10)

Shares are owned beneficially by Mr. Sawyer as a beneficiary of a trust. Mr. Sawyer shares voting and investment power over these shares.

(11)

Shares are owned beneficially by Mr. Teague through his interest in a limited partnership.

(12)

Includes 1,772 restricted shares of which 886 vest in 2010 and 886 vest in 2011. Mr. Teague has voting and regular dividend rights with respect to the restricted shares, but no right to dispose of such shares.

(13)

Amount of outstanding shares used to determine the percentage ownership includes 37,500 shares issuable upon conversion of Series B Convertible Preferred Stock.

There are no arrangements currently known to the Company, the operation of which may at a subsequent date result in a change of control.

ITEM 5.

DIRECTORS AND EXECUTIVE OFFICERS

Our board of directors is grouped into three classes: (1) Class I Directors, who will serve until the 2012 Annual Meeting, (2) Class II Directors, who will serve until the 2010 Annual Meeting, and (3) Class III Directors, who will serve until the 2011 Annual Meeting. Our board of directors currently consists of ten directors.

The name and age of each director and executive officer and the positions held by each of them as of October 31, 2009 are as follows:

Name	Age	Class	Position
Harold S. Edwards	44	Class I	Director, President and Chief Executive Officer
Don P. Delmatoff	61	—	Vice President of Finance & Administration, Chief Financial Officer and Secretary
Alex M. Teague	45	—	Senior Vice President
Peter Dinkler	64	—	Vice President of Lemon Packing
John W. Blanchard	66	Class I	Director
Lecil E. Cole	69	Class II	Director
Gordon E. Kimball	57	Class II	Director
John W.H. Merriman	57	Class I	Director
Ronald Michaelis	71	Class I	Director
Allan Pinkerton	66	Class III	Director
Keith W. Renken	75	Class II	Director
Robert M. Sawyer	60	Class III	Director
Alan M. Teague	71	Class III	Chairman, Director

John W. Blanchard. Mr. Blanchard has served as a director of the company since 1990. Mr. Blanchard retired in 2009 as the president and chief executive officer of Santa Paula Chamber of Commerce, which position he has held since 2007. Prior to that, he was employed as a realtor at Prudential California Realty in Camarillo, California from 2002 to 2007. Mr. Blanchard is also a director of Ventura County Fruit Exchange and is a trustee of Limoneira Foundation. He also serves on the boards of directors for several non-profit organizations. Mr. Blanchard attended Stanford University and graduated from the University of Southern California, where he earned his Bachelor of Arts degree in finance, and his Master of Business Administration degree.

Lecil E. Cole. Mr. Cole has served as a director of the company since 2006. Mr. Cole is currently chairman of the board of directors, chief executive officer and president of Calavo Growers, Inc., a NASDAQ listed company. He has held that position since February 1999. Mr. Cole has also been the president of Hawaiian Sweet Inc. since 1996. Prior to that, Mr. Cole was an executive of Safeway Stores from 1986 to 1996. Mr. Cole farms a total of 4,430 acres in California and Hawaii on which avocados, papayas and cattle are produced and raised.

Don P. Delmatoff. Mr. Delmatoff has served as vice president of finance & administration, chief financial officer and secretary of the company since 2004. Mr. Delmatoff previously served the Company as corporate controller, from 2000 to 2004. Mr. Delmatoff is a graduate of California State University at Long Beach, where he earned a Bachelor of Arts degree in Accounting.

Harold S. Edwards. Mr. Edwards has served as a director of the company since 2009. Mr. Edwards has been the president and chief executive officer of the company since November 2004. Previously, Mr. Edwards was the president of Puritan Medical Products, a division of Airgas Inc. Prior to that, Mr. Edwards held management positions with Fisher Scientific International, Inc., Cargill, Inc., Agribrands International and the Ralston Purina Company. Mr. Edwards is currently a member of the board of directors of Compass Group Diversified Holdings LLC, a NASDAQ listed company and Calavo Growers, Inc., also a NASDAQ listed company. Mr. Edwards is a graduate of Lewis and Clark College and The American Graduate School of International Management (Thunderbird) where he earned a Masters of Business Administration.

Gordon E. Kimball. Mr. Kimball has served as a director of the company since 1995. Mr. Kimball has been president of Kimball Engineering, Inc., which provides race car design and production services, since 1992. He is also managing partner of Kimball Ranches, a 110 acre avocado ranch near Santa Paula, California. Prior to that, Mr. Kimball designed Formula One race cars in England and Italy for McLaren International, Ferrari and Benetton Racing, from 1984 to 1991. Prior to that, he designed Indianapolis race cars for Parnelli Jones, Chaparral and Patrick Racing teams, from 1976 to 1983. Mr. Kimball is a director of Rincon Investment Company. Mr. Kimball graduated from Stanford University where he earned his Bachelor of Science and Master of Science degrees in mechanical engineering.

John W.H. Merriman. Mr. Merriman has served as a director of the company since 1991. Mr. Merriman currently serves as an SAS consultant at Wells Fargo Bank Risk Management, San Francisco, manager of Blanchard Equity, LLC., and president of Spyglass Ridge Association. Mr. Merriman served as a SAS consultant for Macys.com from 2006 to 2009 and Wells Fargo Bank Risk Management from 1996 to 2005. Mr. Merriman is a Vietnam War Veteran where he served in the United States Marine Corps as an IBM systems programmer. Mr. Merriman graduated from Computer Science School, Quantico, Virginia, in 1973. He majored in viticulture at Santa Rosa Junior College in 1978, and studied enology at Edmeades Vineyards in 1979.

Ronald Michaelis. Mr. Michaelis has served as a director of the company since 1997. Mr. Michaelis farmed for 40 years, and managed the last 20 years, the family citrus properties, growing from 20 to 1,500 acres. He owned and managed Michaelis Citrus Nursery, Inc., growing up to 300,000 trees annually. Mr. Michaelis’ past positions included director and president of Tulare County Lemon Association and Tulare County Fruit Exchange, director of Grand View Heights Association, Tulare-Kern County Citrus Exchange, Tulare County Farm Bureau and president of Tulare County Farm Bureau, president of Ronald Michaelis Ranches, Inc., Martin Michaelis Groves, Inc. and Michaelis Citrus Nursery, Inc., director and vice president of Teapot Dome Water district, and director and president of Strathmore Packing House. Mr. Michaelis currently is a director of Ventura County Fruit Exchange, and trustee of Limoneira Foundation. He is also active on many boards at Grand Avenue United Methodist Church. Mr. Michaelis attended Porterville College and California State Polytechnic University Pomona majoring in fruit production.

Allan M. Pinkerton. Mr. Pinkerton has served as a director of the company since 1990. Mr. Pinkerton is the owner and manager of Pinkerton Ranches, which engages in citrus and avocado production. He is currently a director of Saticoy Lemon Association, Ventura County Fruit Exchange, Alta Mutual Water Company and Farmers Irrigation Company. Mr. Pinkerton was formerly a director and the vice chairman of Sunkist Growers, Inc. and Fruit Growers Supply Company. Mr. Pinkerton graduated from California State Polytechnic University at Pomona, earning a Bachelor of Science degree in agricultural business management in 1966.

Keith W. Renken. Mr. Renken has served as a director of the Company since 2009. Mr. Renken retired in 1992 as a Senior Partner and Chairman, Executive Committee of Southern California, for the public accounting firm of Deloitte & Touche. He currently is an adjunct professor in the Marshall School of Business at the University of Southern California. He serves as a director of the boards of two public companies, East West Bancorp, Inc. since 2000 and the Willdan Group Inc. since 2006. Previously, Mr. Renken served as a director of 21st Century Insurance Group. Mr. Renken is a Certified Public Accountant in the states of Arizona and California, as well as a member of the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. He received a B.S. in Business Administration in 1957 from the University of Arizona and a M.S. in Business Administration from the University of Arizona in 1959.

Robert M. Sawyer. Mr. Sawyer has served as a director of the company since 1990. Mr. Sawyer is an attorney specializing in real estate, land use, environmental and water law, and currently of counsel to the Sacramento, California office of Best Best & Krieger LLP. He is a member of Ventura County Bar Association, the Sacramento County Bar Association and the Groundwater Resources Association of California. Mr. Sawyer was previously the corporate secretary of The Samuel Edwards Associates, from 1977 to 1981 and a director of The Samuel Edwards Associates, from 1981-1985. He is also a director of Ventura County Fruit Exchange, and a trustee of Limoneira Foundation, since 1985. Mr. Sawyer graduated from the University of California at Santa Cruz where he earned a Bachelor of Arts degree in 1972, and graduated from Northwestern School of Law of Lewis & Clark College where he earned his Juris Doctor degree in 1975.

Alan M. Teague. Mr. Teague has served as a director of the company since 1990. Mr. Teague has been the chairman of the board of directors of the company since 2004, and was previously chairman of the board of directors of the Company from 1988 to 1996. He is currently president of California Orchard Co. Mr. Teague was employed by Teague-McKevett Company and the McKevett Corporation since 1961, holding various position, and president of both firms since 1984 until the merger with the Company in 1995. Mr. Teague has been active in many political and civic organizations including the Santa Paula City Council from 1966 to 1974, and Mayor of the City of Santa Paula from 1970 to 1974. He is the founding chairman of Santa Clara Valley Agriculture Development Corp., Ventura County Community Foundation and Santa Paula Community Fund. Mr. Teague was formerly the president of Rancheros Visitadores, and former chairman of Ventura County Medical Resource Foundation. He is currently a director of Ventura County Fruit Exchange and Salinas Land Company, and trustee of the Limoneira Foundation. Mr. Teague attended the University of Arizona where he studied business administration.

Alex M. Teague. Mr. Teague has served as senior vice president of the company since 2004. Mr. Teague previously served the Company as vice president of agribusiness, from 2004 to 2005. Mr. Teague is currently a member of the board of directors of Ventura County Workforce Investment Board, Ventura County Community Foundation, Farm Worker Housing, Salinas Land Company and California Orchard Company. Mr. Teague is a graduate of University of Pacific, where he earned a Bachelor of Science degree in Administration.

Pete Dinkler. Mr. Dinkler has served as vice president, lemon packing since 1983. Mr. Dinkler is a graduate of California State University, Pomona, where he earned a Bachelor of Science degree in Agriculture and the UCLA Graduate School of Management.

Alex Teague is the son of Alan Teague. Otherwise there is no lineal family relationship between any other officer or director of the company.

Compensation Committee Interlocks and Insider Participation

During Fiscal 2009, Directors Merriman, Kimball, Michealis and Sawyer comprised the compensation committee. No member of our compensation committee during fiscal 2009 served as an officer, former officer or employee of the company. During fiscal 2009, none of our executive officers served as a member of the compensation committee of any other entity, one of whose executive officers served as a member of our board of directors or compensation committee, and none of our executive officers served as a member of the board of directors of any other entity, one of whose executive officers served as a member of our compensation committee. Information with respect to the related party transactions involving the members of our compensation committee is set forth below under “Item 7. Certain Relationships and Related Transactions, and Director Independence - Contracted Arrangements with Related Parties.”

ITEM 6.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The following Compensation Discussion and Analysis should be read in conjunction with the “Summary Compensation Table” and related tables that are presented elsewhere in this registration statement on Form 10.

Compensation Overview. Compensation for our executives and key employees is designed to attract and retain people who share our vision and values and who can consistently perform in such a manner that enables the company to achieve its strategic goals. The compensation committee believes that the total compensation package for each of the named executive officers is competitive with the market, thereby allowing us to retain executive talent capable of leveraging the skills of our employees and our unique assets in order to increase shareholder value.

In connection with becoming a public company, certain aspects of our compensation mix will likely change, primarily in connection with our adoption of the Limoneira Company 2010 Omnibus Incentive Plan, which we refer to as the 2010 Omnibus Incentive Plan, pursuant to which we intend to continue to award cash-based incentive bonuses and equity-based incentive bonuses but may do so in different forms, such as stock options. See “Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholders matters - Securities Authorized for Issuance under Equity Compensation Plans - Limoneira Company 2010 Omnibus Incentive Plan” for more information about the 2010 Omnibus Incentive Plan.

The Compensation Committee. Our compensation committee is currently composed of Directors Merriman, Renken, Michaelis and Sawyer. Our common stock is not currently listed on any national exchange, or quoted on any inter-dealer quotation service, that imposes independence requirements on our board of directors or any committee thereof. Our board of directors has evaluated the independence of the members of our compensation committee and determined that all of the members of our compensation committee qualify as “independent directors” within the meaning of NASDAQ Stock Market Marketplace Rule 4200(a)(15).

The Company’s “named executive officers” refers to those executive officers identified in the “Summary Compensation Table” below. Our named executive officers for 2009 were: Harold Edwards, President and Chief Executive Officer; Don Delmatoff, Vice President of Finance & Administration, Chief Financial Officer and Secretary; Alex Teague, Senior Vice President; and Peter Dinkler, Vice President of Lemon Packing.

General Objectives of the Compensation Plan. The compensation program for our named executive officers is designed to align management’s incentives with the interests of our stockholders and to be competitive with comparable employers. Our compensation philosophy recognizes the value of rewarding our named executive officers for their past performance and motivating them to continue to excel in the future. The compensation committee has developed and maintains a compensation program that rewards superior performance and seeks to encourage actions that drive our business strategy. Our compensation strategy is to provide a competitive opportunity for senior executives taking into account their total compensation packages, which include a combination of base salary, an annual cash-based incentive bonus, an annual equity-based incentive bonus and certain perquisites. At the named executive officer level, our incentive compensation arrangements are designed to reward the achievement of year-to-year operating performance goals.

The Role of Executives in Setting Compensation. During fiscal 2009, our compensation committee had the authority to determine our compensation philosophy and our board of directors had the primary authority to determine the compensation for our executive officers. Compensation recommendations regarding our executive officers (other than our President and Chief Executive Officer) were generally provided to the board of directors by our President and Chief Executive Officer and approved by the board of directors. Our President and Chief Executive Officer’s total compensation was recommended by the compensation committee and approved by our board of directors. In connection with the adoption of a compensation committee charter by our board of directors in January, 2010, the compensation committee will have the authority to determine the compensation of our executive officers in light of individual and corporate achievements.

Each named executive officer and other senior executive management team members participate in an annual performance review with our Chief Executive Officer to provide input about his contributions to our success for the period being assessed. During the first quarter of the fiscal year, the compensation committee establishes performance goals for non-equity and equity-based incentive compensation for each of the named executive officers and, at the end of that fiscal year, determines the level of attainment of those established goals.

Overall Compensation Plan Design. The compensation policies developed by the compensation committee are based on the philosophy that compensation should reflect both company performance, financially and operationally, and the individual performance of the executive. The compensation committee’s objectives when setting compensation for our named executive officers include:

Setting compensation levels that are sufficiently competitive such that they will motivate and reward the highest quality individuals to contribute to our goals, objectives and overall financial success.

Retaining executives and encouraging their continued quality service, thereby encouraging and maintaining continuity of the management team.

Incentivizing executives to appropriately manage risks while attempting to improve our financial results, performance and condition.

Aligning executive and stockholder interest. The compensation committee believes that the use of equity compensation as a key component of executive compensation is a valuable tool for aligning the interest of our named executive officers with those of our stockholders.

Obtaining tax deductibility whenever appropriate. The compensation committee believes that tax-deductibility for the Company is generally a favorable feature for an executive compensation program, from the perspectives of both the Company and the stockholders.

Benchmarking. In determining compensation levels for our executive officers and for purposes of determining any potential payments under our annual cash-based incentive bonus program, the compensation committee annually reviews available salary information of similar companies in our industry. Additionally, whenever available, the compensation committee compares other compensation and perquisites offered to our executive officers to those offered to equivalent officers with similar companies in our industry.

Elements of Compensation. The material elements of the compensation program for our named executive officers include: (i) base salary; (ii) annual cash-based incentive bonuses; (iii) annual equity-based incentive bonuses; and (iv) other compensation consisting of retirement and other benefits.

Base Salaries. We provide our named executive officers with a base salary to compensate them for services rendered during the fiscal year. The purpose of the base salary is to reflect job responsibilities, value to us and competitiveness of the market. Salaries for our named executive officers are determined by the compensation committee based on the following factors: nature and responsibility of the position and, to the extent available, salary norms for comparable positions; the expertise of the individual executive; the competitiveness of the market for the executive’s services; and the recommendations of our President and Chief Executive Officer.

Consistent with these objectives and this strategy, but recognizing that the company would, in each of its agribusiness, rental operations and real estate development business segments, be operating in a very challenging economic environment during fiscal 2009, no increases were awarded to the named executive officers other than the President and Chief Executive officer who was given a 7% salary increase. For fiscal 2010, the compensation committee will be reviewing the base salary of each of our named executive officers. The compensation committee believes that the base salary of each of the named executive officers is, particularly in light of each of their total compensation packages, competitive with the market.

Annual Performance Cash-Based Incentive Bonuses. Our practice is to award annual cash-based incentive bonuses based upon the achievement of performance objectives established at the beginning of each year. The President and Chief Executive Officer and the other named executive officers recommend to the compensation committee performance objectives that will best move the Company forward to achieve our short-term and long-term strategic goals and maximize stockholder value.

Per the terms of the Management Incentive Plan, cash bonuses are awarded to participants based on the achievement of both pre-determined operating results and individual participant goals. Payments that may be made under the program are based on a graduated scale beginning at 5% of a participant’s annual salary. Any bonuses earned under the program in respect of a fiscal year are paid in the following fiscal year. Incentive bonuses paid in 2009 for 2008 were based on achieving pre-tax earnings and cash provided from operations greater than 110% of the average for the preceding four years, which accounted for 60% of the bonus earned, and achievement of individual goals, which accounted for 40% of the bonus earned. Bonuses paid in 2009 to members of management, including our named executive officers ranged from 42% to 45% of their respective salaries.

Annual Performance Equity-Based Incentive Bonuses. It is our objective to have a substantial portion of each named executive officer’s compensation contingent upon overall corporate and segment performance as well as upon his own level of performance and contribution towards such corporate performance. Our compensation committee believes that stock-based annual incentives for the achievement of defined objectives create value for the company and aligns the executive’s compensation with the interests of our shareholders. Per the terms of the Limoneira Company Stock Grant Performance Bonus Plan, which we refer to as the Stock Grant Performance Bonus Plan, the compensation committee establishes the overall corporate and segment performance goals with a view towards establishing such goals that are challenging to achieve, and, at the end of that year, determines the level of attainment of those established goals and the contribution of each executive towards achieving them, with each executive’s contribution to the segment performance goals for the segment for which he has primary responsibility being of particular relevance. Based on such level of attainment and contribution, each of Messrs. Edwards, Teague and Delmatoff are eligible to receive a number of shares of our common stock not to exceed an aggregate fair market value of 133% of their then current base salary and Mr. Dinkler is eligible to receive a number of shares of our common stock not to exceed an aggregate fair market value of 25% of his then current base salary. In the event that such overall corporate and/or segment performance goals are not attained, the compensation committee, in its sole discretion, may nevertheless grant such shares for special achievements that fall outside of the established performance goals. See “Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters - Securities Authorized for Issuance Under Equity Compensation Plans - Limoneira Company Stock Grant Performance Bonus Plan” for more information about the Stock Grant Performance Bonus Plan.

Pursuant to a recommendation by the compensation committee and approval of the board of directors in fiscal 2008 and 2009, the company made loans to each of Mr. Edwards, Mr. Teague and Mr. Delmatoff in amounts sufficient to enable them to pay their income tax liabilities associated with grants of stock pursuant to our equity-based incentive bonus program. The company made three loans to each of Mr. Edwards, Mr. Teague and Mr. Delmatoff, each in connection with grants of stock for fiscal 2007 and 2008, in an aggregate principal amount of approximately $796,070 to Mr. Edwards, approximately $446,873 to Mr. Teague, and approximately $341,495 to Mr. Delmatoff. Each loan was evidenced by a promissory note that bore interest at the mid-term Applicable Federal Rate then in effect and all principal and interest was due and payable 24 months from the date of the applicable promissory note. Each promissory note was secured by a number of shares of our common stock having a value equal to 120% of the amount of the applicable loan on the day it was made. Based on the recommendation of our compensation committee, on December 15, 2009 the board of directors approved the forgiveness of approximately $341,174 of principal and accrued interest on the loans made to Mr. Edwards, approximately $199,823 of principal and accrued interest on the loans made to Mr. Teague, and approximately $145,745 of principal and accrued interest on the loans made to Mr. Delmatoff. Additionally, each of Mr. Edwards, Mr. Teague and Mr. Delmatoff received a payment of approximately $299,528, $175,431, and $127,955, respectively, relating to their federal, state and payroll taxes attributable to such loan forgiveness.. The unpaid principal and accrued balance of each loan made to Messrs. Edwards, Teague and Delmatoff that was not forgiven was satisfied by the delivery of a number of shares of our common stock with a value equal to each applicable unpaid balance, based upon a fair market value of $150.98 per share.

Retirement Plans. The compensation committee believes that retirement programs are important to the company as they contribute to the company’s ability to be competitive with its peers and reward our executive officers based on long-term performance of the company and, therefore, are an important piece of the overall compensation package for the named executive officers. For most of our employees, including our named executive officers, we provide a 401(k) plan; others are participants in our defined benefit pension plan.

Until April 28, 2004, our employees and executive officers were eligible to participate in a traditional defined benefit pension plan that was maintained by the company. At that time, plan participation and benefits payable under that plan were frozen and, since that time, no new participants have been added to that plan. The only named executive officers who are participants in our defined benefit pension plan are Harold Edwards, Don Delmatoff and Peter Dinkler. At normal retirement age, Harold Edwards’s anticipated monthly payment under this plan would be $81, Don Delmatoff’s anticipated monthly payment under this plan would be $450 and Peter Dinkler’s anticipated monthly payments would be $4,450.

The company sponsors a defined contribution retirement plan maintained under section 401(k) of the Internal Revenue Code. Under the terms of such plan, eligible employees may elect to defer, beginning after one month of employment, up to that amount of their annual earnings permitted to be deferred under the applicable provisions of the Internal Revenue Code. In addition to any deferral contributions made by our employees, the company contributes to the account of each eligible employee with at least one year of qualifying service a matching contribution of up to 4% such employee’s annual compensation plus such employee’s allocable share of any discretionary employer profit-sharing contribution. Participant deferral contributions and employer matching contributions are 100% vested at the time of contribution, and employer discretionary profit-sharing contributions vest at a rate of 20% per year of service beginning after two years of service, becoming 100% vested upon completion of six years of service. During 2009, there were no changes made to our defined contribution plan related to company contributions, contribution limitations, vesting schedules or eligibility requirements.

Nonqualified Deferred Compensation. None of our named executive officers participate in or have account balances in nonqualified defined contribution or other deferred compensation plans maintained by the company.

Change in Control Benefits. None of our named executive officers are covered by any plan or arrangement or have any agreement with us pursuant to which they would receive payments upon a change in control.

Separation or Severance Benefits. None of our named executive officers are covered by any plan or arrangement or have any agreement with us pursuant to which they would receive payments upon their separation of service or termination from employment with the company.

Perquisites and Other Personal Benefits. The compensation committee reviews annually the perquisites that named executive officers receive. The primary personal benefits for our named executive officers are health and welfare benefits, including, medical, dental, vision and life insurance, in which the named executive officers participate on the same terms as other company employees. In addition, company vehicles are provided to the named executive officers, as well as to other members of management.

Employment Agreements. As of the end of our 2009 fiscal year, the company was not party to any employment agreements with any of our named executive officers.

Summary Compensation Table

The following table sets forth information regarding the total compensation received or earned by our named executive officers during fiscal 2009. This table should be read in conjunction with the Compensation Discussion and Analysis, which sets forth the objectives and other information regarding our executive compensation program.

Name and Principal Position	Year	Salary ($)		Stock Awards ($)(1)		Non-Equity Incentive Plan Compensation		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2)		All Other Compensation ($)(3)		Total ($)

Harold Edwards, President and Chief Executive Officer(4)	2009	$	449,423	$	199,535	$	150,159	$	1,771	$	19,928	$	819,045

Don Delmatoff, Vice President of Finance & Administration, Chief Financial Officer and Secretary	2009	$	215,000	$	95,327	$	95,976	$	15,756	$	20,137	$	442,196

Alex Teague, Senior Vice President	2009	$	258,654	$	110,839	$	112,500	—		$	20,099	$	502,092

Peter Dinkler, Vice President of Lemon Packing	2009	$	110,742	$	9,257	$	47,841	$	161,778	$	9,607	$	339,225

(1)

The value of stock awards is the compensation expense recognized in our financial statements attributable to performance stock grants under our equity-based performance bonus program, calculated in accordance with SFAS 123(R). Shares granted during 2009 vested, in part, in 2009, with the remainder to vest, in part, in each of 2010 and 2011.

(2)	The change in pension value is based upon the change in the present value of the accrued benefit from 2008 to 2009. This change can be impacted by, among other things, changes in the assumptions used for the discount rate, long-term rate of return and mortality tables used.

(3)	All Other Compensation consists of, for each of our named executive officers, profit sharing and matching contributions under our 401(k) plan and personal usage of company vehicles.

(4)	Mr. Edwards does not receive any additional compensation for being a director of the Company.

Grants of Plan-Based Awards in Fiscal Year 2009

The following table provides information about grants of equity and non-equity plan-based awards to the named executive officers in the fiscal year ended October 31, 2009:

Name	Year	Grant Date	All Other Stock Awards: Number of Shares of Stock (#) (1) (2)		Grant Date Fair Value of Stock and Option Awards ($)

Harold Edwards	2009	12/24/08		4,784	$	598,478

Don Delmatoff	2009	12/24/08		2,286	$	285,979

Alex Teague	2009	12/24/08		2,658	$	332,516

Peter Dinkler	2009	12/24/08		221	$	27,647

(1)

On December 24, 2008, we granted our named executive officers, 4,784, 2,286, 2,658 and 221 shares, respectively, of restricted shares of our Common Stock at a grant date fair value per share of $125.10. The restricted stock vests, ratably, one-third on the date of grant, one-third on the first anniversary of the date of grant and one-third on the second anniversary of the date of grant. Upon termination of employment of any named executive officer, any unvested shares of such terminated officer on the date of his termination revert to the company.

(2)

All such shares, whether vested or unvested, are considered issued and outstanding on the date of grant, and our named executive officers have voting right with respect to, and receive any dividends on, such shares granted to them. Upon termination of employment, any dividends received by the terminated named executive officer on unvested shares are for the benefit of, and are to be repaid by such named executive officer, to the company.

Outstanding Equity Awards at 2009 Fiscal Year End

The following table summarizes the total outstanding equity awards as of October 31, 2009 for each named executive officer.

Name	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)(1)

Harold Edwards(2)		3,189	$	446,460

Don Delmatoff(3)		1,524	$	213,360

Alex Teague(4)		1,772	$	248,080

Peter Dinkler(5)		147	$	20,580

(1)	Based on a fair market value of our Common Stock on October 31, 2009, the last day of our fiscal 2009 year, of $140.00 per share.

(2)	On 12/24/08, we granted to Mr. Edwards 4,784 shares of restricted stock, 1/3 of which shares vested on the date of grant and 1/3 or which vest on each of 2/1/10 and 2/1/11.

(3)	On 12/24/08, we granted to Mr. Delmatoff 2,286 shares of restricted stock, 1/3 of which shares vested on the date of grant and 1/3 or which vest on each of 2/1/10 and 2/1/11.

(4)	On 12/24/08, we granted to Mr. Teague 2,658 shares of restricted stock, 1/3 of which shares vested on the date of grant and 1/3 or which vest on each of 2/1/10 and 2/1/11.

(5)	On 12/24/08, we granted to Mr. Dinkler 221 shares of restricted stock, 1/3 of which shares vested on the date of grant and 1/3 or which vest on each of 2/1/10 and 2/1/11.

Option Exercises and Stock Vested in 2009

The following table sets forth information about the exercise of stock options and vesting of restricted stock held by our named executive officers during 2009.

	Stock Awards
Name	Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)(1)

Harold Edwards		1,595	$	199,534

Don Delmatoff		762	$	95,326

Alex Teague		886	$	110,839

Peter Dinkler		74	$	9,257

(1)	Based on a fair market value of our Common Stock on December 24, 2008, the date of vesting, of $125.10 per share.

Pension Benefits in Fiscal Year 2009

The company’s defined benefit pension plan is a tax-qualified retirement plan that covers eligible employees of the company. Effective April 28, 2004, participation in such plan was frozen so that anyone who was hired by the company on or after April 29, 2004 is ineligible to participate in such plan. Under the plan, age 65 is considered normal retirement age. Participating employees may retire with benefits as early as age 55 provided they then have at least five years of qualifying service. Normal retirement benefits for a participant are calculated based on such participant’s highest average pay over any five consecutive calendar years of employment. The maximum benefit is payable to employees who retire at age 65 with 30 or more years of service and is equal to 65% of such highest average pay less 60% of the applicable participant’s estimated annual Social Security benefit. For participating employees who retire at age 65 with less than 30 years of service, their retirement benefit is equal to such maximum benefit amount multiplied by a fraction the numerator of which is total years of qualifying service and the denominator of which is 30. For participating employees who elect to retire prior to age 65, the benefits under the company’s defined benefit pension plan that would otherwise be payable to them at age 65 are actuarially reduced to account for the longer period they are expected to be receiving payments.

Benefits are paid in the form of a life annuity, with married employees having the option to elect to receive benefit payments in the form of a 50% joint and survivor annuity. Additionally, participating retiring employees may elect a 10-year certain and life optional form of payment, a contingent annuity with a 10-year certain and life optional form of payment or a 100%, 75% or 50% joint and survivor optional form of payment naming someone other than his or her spouse as joint annuitant.

Name	Plan Name	Number of Years Credited Service (#)		Present Value of Accumulated Benefit ($)(1)		Payments During Last Fiscal Year ($)

Harold Edwards	Limoneira Company Retirement Plan (2)		0.5	$	3,295		—

Don Delmatoff	Limoneira Company Retirement Plan (2)		4.33	$	49,898		—

Peter Dinkler	Limoneira Company Retirement Plan (2)		35.24	$	640,960		—

(1)

Liabilities shown in this column are computed using the projected unit credit method reflecting average salary and service as of the fiscal year end. The material assumptions used to determine these liabilities can be found in the fiscal year end FAS Disclosures Actuarial Valuation Report, except we assumed no pre-retirement decrements and that retirement occurs at the plan’s earliest unreduced retirement age.

(2)

The plan’s benefit formula is integrated with Social Security and is based on the participant’s years of service for the Company and “Final Average Compensation.” Compensation is limited to the applicable Internal Revenue Code section 401(a)(17) limit. The plan benefit is limited to the applicable Internal Revenue Code section 415(b) limit. Only employees hired before June 30, 2004 are eligible to participate in the plan. In addition, eligibility for the plan occurs no later than the completion of 500 Hours of Service in the first 12 months of employment. Effective June 30, 2004, the plan was frozen. Additional Benefit Service cannot be earned after June 30, 2004. Early retirement age is the first day of any month after age 55, provided the participant ha earned five years of vesting service at the time of retirement.

Director Compensation Table

The following table summarizes the compensation paid by us to directors who are not named executive officers for the fiscal year ended October 31, 2009:

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Total ($)

John W. Blanchard	$	23,000	$	20,000	$	43,000

Lecil E. Cole	$	26,000	$	20,000	$	46,000

Gordon E. Kimball	$	22,400	$	20,000	$	42,400

John W.H. Merriman	$	24,800	$	20,000	$	44,800

Ronald Michaelis	$	22,400	$	20,000	$	42,400

Allan M. Pinkerton	$	21,800	$	20,000	$	41,800

Robert M. Sawyer	$	21,800	$	20,000	$	41,800

Alan M. Teague	$	50,000	$	20,000	$	70,000

All of the members of the compensation committee are independent directors under the listing standards of the NASDAQ Stock Market and under the company’s corporate governance requirements. Other than our investment in Charlie Kimball Racing as described below and in “Item 7. Certain Relationships and Related Transactions, and Director Independence - Contractual Arrangements with Related Parties,” no member of the compensation committee has had any relationship with the company requiring the disclosure under Item 404 of Regulation S-K under the Exchange Act.

ITEM 7.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Policy for Approval of Related Person Transactions

Any transaction required to be disclosed pursuant to Item 404 of Regulation S-K, which we refer to as related party transactions, must be reviewed and approved for potential conflict of interest by our audit and finance committee, which is comprised entirely of independent directors. The company may not enter into or engage in any related party transaction with a related party without such approval. Details of related party transactions will be publicly disclosed as required by applicable law.

Contractual Arrangements with Related Parties

Calavo Growers, Inc. Office Lease

Since 2007, we have leased office space to Calavo and have received annual rental income from Calavo in the amount of $0.22 million for each of 2009, 2008 and 2007. Calavo is the beneficial owner of approximately 15.1% of our issued and outstanding common stock.

Calavo Growers, Inc. Marketing Agreement

We market our avocados through Calavo, which owns approximately 15.3% of our outstanding common stock and is an affiliate of our director Lecil E. Cole, pursuant to a marketing agreement. During the fiscal year ended October 31, 2009, Calavo paid us approximately $2.7 million with respect to avocados we marketed through Calavo.

Investment in Charlie Kimball Racing

Since 2007, we have made three investments of $100,000, for a total of $300,000, in Charlie Kimball Racing. Charlie Kimball is a formula car driver and the son of Gordon Kimball, one of our directors. Pursuant to the terms of the investments, each investment is to be used by Charlie Kimball to further his career goal of becoming a Formula One driver and winning the Formula One World Championship. The terms of the investments provide that each $100,000 investment will be repaid upon the first to occur of any of the following: (a) Charlie Kimball enters university as a full time student, which we refer to as the student trigger; (b) Charlie Kimball reaches the position of a full time salaried driver in the Formula One World Championship, which we refer to as the F1 trigger; and (c) we exercise the option to have our investment repaid, which may not occur prior to January 23, 2010, which we refer to as the investor trigger. For each $100,000 investment, we will be repaid the following amounts: (x) in the event of the student trigger, we will be repaid the amount of our investment; (y) in the event of the F1 trigger, we will be repaid twice our investment in three equal annual installments beginning 120 days following the day the F1 trigger occurs; and (z) in the event of the investor trigger, we will be repaid the amount of our investment within one year after the investor trigger is exercised with an additional $25,000 payment if Charlie Kimball is a professional (salaried) racing driver on the day the investor trigger is exercised.

Director Independence

Our common stock is not currently listed on any national exchange, or quoted on any inter-dealer quotation service, that imposes independence requirements on our board of directors or any committee thereof. Following the effectiveness of this registration statement and after addressing any comments from the Division of Corporation Finance of the SEC, we expect that our common stock will be accepted for listing on the NASDAQ Stock Market under the ticker symbol “LMNR.” The Rules of the NASDAQ Stock Market require that a majority of our board of directors be independent. Our board of directors has reviewed the materiality of any relationship that each of our directors has with the company, either directly or indirectly. Based on this review, our board of directors has determined that the following directors are “independent directors” within the meaning of NASDAQ Stock Market Marketplace Rule 4200(a)(15): John W. Blanchard, Gordon E. Kimball, John W. H. Merriman, Ronald L. Michaelis, Allan M. Pinkerton, Keith W. Renken and Robert M. Sawyer.

ITEM 8.

LEGAL PROCEEDINGS

We are from time to time involved in legal proceedings arising in the normal course of business. Other than proceedings incidental to our business, we are not a party to, nor is any of our property the subject of, any material pending legal proceedings and no such proceedings are, to our knowledge, threatened against us.

ITEM 9.

MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is currently quoted under the symbol “LMNR.PK” on the PinkSheets, a centralized quotation service that collects and publishes market maker quotes for over-the-counter securities. There is no assurance that our common stock will continue to be traded on the PinkSheets or that any liquidity exists for our stockholders.

Market Price

The following table shows the high and low per share price quotations of our common stock as reported by the PinkSheets for the periods presented. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions. The PinkSheets market is extremely limited and the prices quoted by brokers are not a reliable indication of the value of our common stock. Furthermore, since limited or no public information was available about our business, operating results or financial condition during the time the trades occurred, the trading prices set forth below might not reflect the historical value of our company on a per share basis, nor be an accurate indication of the prices at which shares may be traded in the future. On December 31, 2009, the last sale price of our common stock as reported by the Pink Sheets was $145.00 per share.

	High		Low
2010
First quarter ended January 31, 2010	$	154.95	$	135.00

2009
Fourth quarter ended October 31, 2009	$	160.00	$	127.00
Third quarter ended July 31, 2009	$	155.00	$	125.00
Second quarter ended April 30, 2009	$	150.00	$	102.00
First quarter ended January 31, 2009	$	175.00	$	115.00

2008
Fourth quarter ended October 31, 2008	$	280.00	$	144.00
Third quarter ended July 31, 2008	$	290.00	$	237.00
Second quarter ended April 30, 2008	$	259.00	$	205.00
First quarter ended January 31, 2008	$	300.00	$	200.00

Outstanding Options and Convertible Securities

As of December 31, 2009, there were no shares of our common stock subject to outstanding common stock options and 37,500 shares of our common stock issuable upon conversion of our outstanding preferred stock. Please see “Description of Securities” above for a more fulsome description of our options and convertible securities.

Holders

On December 31, 2009, there were approximately 384 holders of our common stock. The number of registered holders includes banks and brokers who act as nominees, each of whom may represent more than one shareholder.

Dividends

The following table presents cash dividends per share declared and paid in the periods shown.

	Dividend
2010
First Quarter Ended January 31, 2010	$	0.3125

2009
Fourth Quarter Ended October 31, 2009	$	0.3125
Third Quarter Ended April 30, 2009		-
Second Quarter Ended July 31, 2009		-
First Quarter Ended January 31, 2009	$	0.3125

2008
Fourth Quarter Ended October 31, 2008	$	2.3125
Third Quarter Ended April 30, 2008	$	0.3125
Second Quarter Ended July 31, 2008	$	0.3125
First Quarter Ended January 31, 2008	$	0.3125

We expect to continue to pay quarterly dividends at a rate similar to the fourth quarter of 2009, to the extent permitted by our business and other factors beyond management’s control.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of October 31, 2009 about our common stock that may be issued to employees and directors under our equity compensation plans.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity compensation plans approved by security holders(1)	—	—		100,000
Equity compensation plans not approved by security holders(2)	—	—	—

(1)	The plan in this category includes the Limoneira Company 2010 Omnibus Incentive Plan which was approved by the company’s board of directors on January 26, 2010 and will be submitted to the company’s stockholders for approval at the annual meeting in March of 2010.

(2)

The plan in this category includes the Limoneira Company Stock Grant Performance Bonus plan. Subject to the approval by our stockholders of the Limoneira Company 2010 Omnibus Incentive Plan, no further grants will be made under the Limoneira Company Stock Grant Performance Bonus plan and all outstanding awards granted under such plan will continue unaffected.

Summary of Equity-Based Incentive Plans

The following is a summary of the material terms of the 2010 Omnibus Incentive Plan and the Stock Grant Performance Bonus Plan. The 2010 Omnibus Incentive Plan was approved by our board of directors on January 26, 2010 and will be submitted to the company’s stockholders for approval at our annual meeting in March of 2010. Subject to the approval by our stockholders of the 2010 Omnibus Incentive Plan, no further grants will be made under the Stock Grant Performance Bonus Plan and all outstanding awards granted under such plan will continue unaffected. For more information we refer you to the full text of the Stock Grant Performance Bonus Plan and the 2010 Omnibus Incentive Plan, each of which is filed as an exhibit to this registration statement.

Limoneira Company Stock Grant Performance Bonus Plan

The purpose of the Stock Grant Performance Bonus Plan is to recognize outstanding performance by the chief executive officer, senior vice president, chief financial officer and certain other persons holding managerial positions with the company. The compensation committee establishes the overall corporate and segment performance goals with a view towards establishing such goals that are challenging to achieve, and, at the end of the year, determines the level of attainment of those established goals and the contribution of each participant towards achieving them. Based on such level of attainment and contribution, the Stock Grant Performance Bonus Plan authorizes (i) the issuance to our chief executive officer, senior vice president and chief financial officer of a number of our shares of common stock not to exceed an aggregate fair market value of 133% of their then current base salary, and (ii) the issuance to certain other persons holding managerial positions with the company of a number of our shares of common stock not to exceed an aggregate fair market value of 25% of their then current base salary. The fair market value of shares of common stock issued under the Stock Grant Performance Bonus Plan is established by using the most recent trading price of our common stock on the PinkSheets.

All awards granted pursuant to the Stock Grant Performance Bonus Plan vest in the grantee one-third as of the date of the issuance, one-third on the first anniversary of the grant date and one-third on the second anniversary of the date of the grant. If a grantee’s employment is terminated by the company, other than for cause, any unvested shares granted to the grantee shall immediately become fully vested. If a grantee’s employment with the company is terminated for cause or a grantee terminates his employment with the company, any shares granted to such employee that have not vested shall immediately be canceled.

All shares of common stock issued pursuant to the Stock Grant Performance Bonus Plan are subject to a right of first refusal by the company during the first two years following the issuance of such shares.

Limoneira Company 2010 Omnibus Incentive Plan

Overview. The purposes of the 2010 Omnibus Incentive Plan are to promote the interests of the company and its stockholders by (i) attracting and retaining employees and directors of, and consultants to, the company and its affiliates, as defined below; (ii) motivating such individuals by means of performance-related incentives to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of the company.

The 2010 Omnibus Incentive Plan authorizes the grant of nonqualified stock options, incentive stock options, stock appreciation rights, or SARs, restricted stock, restricted stock units, or RSUs, performance awards, other stock-based awards and performance compensation awards to any employee of, or consultant to, the company or any of its affiliates (including any prospective employee), or nonemployee director who is a member of the company’s board of directors or the board of directors of an affiliate of the company. The number of shares of common stock issuable pursuant to all awards granted under the 2010 Omnibus Incentive Plan shall not exceed 100,000. The number of shares issued or reserved pursuant to the 2010 Omnibus Incentive Plan (or pursuant to outstanding awards) is subject to adjustment as a result of mergers, consolidations, reorganizations, stock splits, stock dividends and other changes in our common stock. Shares subject to awards that have been expired or have been forfeited or cancelled, or settled in cash do not count as shares issued under the 2010 Omnibus Incentive Plan. However, (i) if shares are tendered or otherwise used in payment of the exercise price of any option, the total number of shares covered by the option being exercised shall count as shares issued under the 2010 Omnibus Incentive Plan; (ii) shares withheld by the company to satisfy a tax withholding obligation shall count as shares issued under the 2010 Omnibus Incentive Plan; and (iii) the number of shares covered by a SAR, to the extent it is exercised and settled in shares, and whether or not shares are actually issued to the participant upon exercise of the SAR, shall be considered issued or transferred pursuant to the 2010 Omnibus Incentive Plan. If, under the 2010 Omnibus Incentive Plan a participant has elected to give up the right to receive compensation in exchange for shares based on fair market value, shares will not count as shares issued under the 2010 Omnibus Incentive Plan.

Administration. The 2010 Omnibus Incentive Plan is administered by the company’s compensation committee. The compensation committee has the full power and authority to determine the individuals to whom awards may be granted under the 2010 Omnibus Incentive Plan, the type or types of awards to be granted to a participant, and the other terms and conditions applicable to awards. The compensation committee is also authorized to interpret the 2010 Omnibus Incentive Plan, to establish, amend and rescind any rules and regulations relating to the 2010 Omnibus Incentive Plan and to make any other determinations that it deems necessary or desirable for the administration of the 2010 Omnibus Incentive Plan. All designations, determinations, interpretations, and other decisions under or with respect to the 2010 Omnibus Incentive Plan or any award are within the sold discretion of the compensation committee, may be made at any time and are final, conclusive and binding upon all persons, including the company, any affiliate any participant, any holder or beneficiary of any award, and any stockholder.

Options. The compensation committee will determine the participants to whom options will be granted, the number of shares to be covered by each option, the exercise price thereof and the conditions and limitations applicable to the exercise of the option. Incentive stock options may be granted only to employees and are subject to certain other restrictions. To the extent an option intended to be an incentive stock option does not so qualify, it will be treated as a nonqualified option. Each option is exercisable at such times and subject to such terms and conditions as the compensation committee determines and payment of the exercise price may be in cash, shares or a combination thereof, as determined by the compensation committee, including an irrevocable commitment by a broker to pay over such amount from a sale of the shares issuable under an option.

Stock Appreciation Rights. The compensation committee will determine the participants to whom SARS will be granted, the number of shares to be covered by each SAR, the grant price and the conditions and limitations applicable to the exercise thereof. Generally, each SAR will entitle a participant upon exercise to an amount equal to the excess of the fair market value of a share on the date of exercise of the SAR over the grant price. The compensation committee will determine whether an SAR will be settled in cash, shares or a combination of cash and shares.

Restricted Stock and Restricted Stock Units. The compensation committee may award shares of restricted stock and RSUs. Restricted stock awards consist of shares of stock that are transferred to the participant subject to restrictions that may result in forfeiture if specified conditions are not satisfied. RSUs result in the transfer of shares of cash or stock to the participant only after specified conditions are satisfied. The compensation committee will determine the participants to whom shares of restricted stock and/or the number of restricted stock units to be granted to each participant, the duration of the period during which, and the conditions, if any, under which, the restricted stock and restricted stock units may be forfeited to the company.

Performance Awards. The compensation committee may award performance awards that consist of a right which is (i) denominated in cash or shares, (ii) valued, as determined by the compensation committee, in accordance with the achievement of such performance goals during performance periods established by the compensation committee, and (iii) payable at such time and in such form as determined by the compensation committee. Performance awards may be paid in a lump sum or in installments following the close of the applicable performance periods.

Other Stock-Based Awards. The compensation committee may grant participants other stock-based awards which will consist of any right which is (i) not an award described above and (ii) an award of shares or an award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares. The compensation committee will determine the terms and conditions of any such other stock-based award, including the price, if any, at which securities may be purchased pursuant to any other stock-based award granted under the 2010 Omnibus Incentive Plan.

Performance Criteria. The compensation committee has the authority to determine the performance criteria used to establish performance goals. The performance goals may vary from participant to participant, group to group, and period to period.

Transferability. Awards granted under the 2010 Omnibus Incentive Compensation Plan are not transferable other than by will or by the laws of descent and distribution.

Effectiveness of the 2010 Omnibus Incentive Plan; Amendment and Termination. The 2010 Omnibus Incentive Plan will become effective when it is approved by the company’s stockholders. The 2010 Omnibus Incentive Plan will remain available for the grant of awards until the tenth anniversary of the effective date. The board of directors may amend, alter or discontinue the 2010 Omnibus Incentive Plan in any respect at any time, but no amendment may diminish any of the rights of a participant under any awards previously granted, without his or her consent. In addition, stockholder approval is required for any amendment that (i) would materially increase the benefits accruing the participants under the plan, (ii) would materially increase the number of securities which may be issued under the plan, (iii) would materially modify the requirements for participation in the plan, or (iv) must otherwise be approved by the company’s stockholders in order to comply with applicable law or the rules of a national securities exchange upon which the shares are traded.

ITEM 10.

RECENT SALES OF UNREGISTERED SECURITIES

None.

ITEM 11.

DESCRIPTION OF REGISTRANT’S SECURITIES TO BE REGISTERED

General

Our certificate of incorporation authorizes us to issue 3,000,000 shares of common stock, par value $0.01 per share, 100,000 shares of Series B Convertible Preferred Stock, par value $100 per share and 20,000 shares of Series A Junior Participating Preferred Stock, par value $0.01 per share. The following description of our capital stock is a summary and is qualified by the provisions of our certificate of incorporation and bylaws, a copy of which are exhibits to this registration statement. This registration statement is registering only common stock, and the following is a summary of the material terms of all our capital stock.

Common Stock

We have 3,000,000 authorized shares of common stock, par value $0.01 per share. Holders of our common stock are entitled to one vote for each share held of record on each matter submitted to a vote of stockholders. Holders of our common stock do not have cumulative voting rights, which means that the holders of more than on-half of our outstanding shares of common stock can elect all of our directors, if they choose to do so. In this event, the holders of the remaining shares of common stock would not be able to elect any directors. Subject to the prior rights of any class or series of preferred stock which may from time to time be outstanding, if any, holders of our common stock are entitled to receive ratably, dividends when, as, and if declared by our board of directors out of funds legally available for that purpose and, upon our liquidation, dissolution or winding up, are entitled to share ratably in all assets remaining after payment of liabilities and payment of accrued dividends and liquidation preferences on any preferred stock. Holders of our common stock have no preemptive rights and have no rights to convert their common stock into any other securities. Our outstanding common stock is duly authorized and validly issued, fully paid and nonassessable. In the event we were to elect to sell additional shares of common stock, holders of our common stock would have no right to purchase additional shares. As a result, the common stockholders’ percentage equity interest would be diluted.

Preferred Stock

We have 100,000 authorized shares of preferred stock, par value $0.01 per share, of which 30,000 shares have been designated Series B Convertible Preferred Stock, par value $100 per share and 20,000 shares have been designated Series A Junior Participating Preferred Stock, par value $0.01 per share. We may issue preferred stock in one or more series and having the rights, privileges, and limitations, including voting rights, conversion rights, liquidation preferences, dividend rights and preferences and redemption rights, as may, from time to time, be determined by our board of directors. Preferred stock may be issued in the future in connection with acquisitions, financing, or other matters, as our board of directors deems appropriate. In the event that we determine to issue any shares of preferred stock, a certificate of designation containing the rights, privileges, and limitations of the series of preferred stock will be filed with the Delaware Secretary of State. The effect of this preferred stock designation power is that our board of directors alone, subject to federal securities laws, applicable blue sky laws, and Delaware law, may be able to authorize the issuance of preferred stock which could have the effect of delaying, deferring, or preventing a change in control without further action by our stockholders, and may adversely affect the voting and other rights of the holders of our common stock. The issuance of preferred stock with voting and conversion rights may also adversely affect the voting power of the holders of our common stock, including the loss of voting controls to others. Below is a description of each class of preferred stock outstanding as of December 31, 2009.

Series B Convertible Preferred Stock

On May 21, 1997, our board of directors authorized 30,000 shares of Series B Convertible Preferred Stock, par value $100.00 per share. As of December 31, 2009, there were 30,000 shares of our Series B Convertible Preferred Stock, par value $100 per share, issued and outstanding. Our Series B Convertible Preferred Stock has the following rights, preferences, privileges, and restrictions:

Conversion. Each share of our Series B Convertible Preferred Stock is convertible into common stock at a price of $80.00 per share of common stock. Shares of our Series B Convertible Preferred Stock may be converted into common stock at the option of the holder at any time.

Dividends. Holders of our Series B Convertible Preferred Stock are entitled to receive cumulative cash dividends at an annual rate of 8.75% of par value. Such dividends are payable quarterly on the first day of January, April, July and October in each year commencing July 1, 1997.

Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the company, the holders of shares of our Series B Convertible Preferred Stock are entitled to be paid out of the assets available for distribution, before any payment is made to the holders of our common stock or any other series or class of our shares ranking junior to the Series B Convertible Preferred Stock, an amount equal to $100.00 per share, plus an amount equal to all accrued and unpaid dividends.

Voting Rights. Each share of Series B Convertible Preferred Stock is entitled to one vote on all matters submitted to a vote of our stockholders.

Redemption. We may, at the option of our board of directors, redeem the Series B Convertible Preferred Stock, as a whole or in part, at any time or from time to time on or after August 1, 2017 and before July 31, 2027, at a redemption price equal to $100.00 per share plus accrued and unpaid dividends.

Series A Junior Participating Preferred Stock

On October 31, 2006, our board of directors authorized 20,000 shares of Series A Junior Participating Preferred Stock, par value $0.01 per share. As of December 31, 2009, there were no shares of our Series A Participating Preferred Stock issued and outstanding. Our Series A Junior Preferred Stock has the following rights, preferences, privileges, and restrictions:

Conversion. Shares of Series A Junior Participating Preferred Stock are not convertible.

Dividends. Holders of our Series A Junior Participating Preferred Stock are entitled to receive cash dividends equal to the greater of (a) $1.00 or (b) 100 times the aggregate per share amount of all cash dividends and 100 times the aggregate per share amount of all non-cash dividends, other than a dividend payable in our common stock, declared on our common stock. Such dividends are payable quarterly on the first day of January, April, July and October in each year commencing on the first quarterly dividend payment date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock.

Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the company, the holders of shares of our Series A Junior Participating Preferred Stock are entitled to be paid out of the assets available for distribution, before any payment is made to the holders of our common stock or any other series or class of our shares ranking junior to the Series A Junior Participating Preferred Stock, an amount equal to $100.00 per share, plus an amount equal to all accrued and unpaid dividends. Following the payment in full of such liquidation preference, no additional distributions may be made to the holders of shares of Series A Junior Participating Preferred Stock unless the holders of our common stock have received an amount per share equal to a specified quotient, and, upon payment in full to the holders of our common stock of an amount equal to such quotient, holders of Series A Junior Participating Preferred Stock and our common stock are entitled to receive their ratable and proportionate share of the remaining assets to be distributed in a specified ratio.

Voting Rights. Each share of Series A Junior Participating Preferred Stock is entitled to one vote on all matters submitted to a vote of our stockholders.

Redemption. Shares of Series A Junior Participating Preferred Stock are not redeemable.

Anti-Takeover Effects

Certificate of Incorporation and Bylaws.

Various provisions of our certificate of incorporation and bylaws, which are summarized in the following paragraphs, may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by stockholders.

No Cumulative Voting. The Delaware General Corporation Law, which we refer to as the DGCL, provides that stockholders are denied the right to cumulate votes in the election of directors unless our certificate of incorporation provides otherwise. Our certificate of incorporation does not expressly address cumulative voting.

No Stockholder Action by Written Consent: Calling of Special Meetings of Stockholders. Our certificate of incorporation prohibits stockholder action by written consent. Our bylaws provide that special meetings of our stockholders may be called only by our board of directors, a committee of the board of directors or one or more stockholders holding shares that in the aggregate are entitled to cast ten percent of the votes at that meeting.

Classified Board of Directors. Our certificate of incorporation divides our board of directors into three classes of directors who are elected for three-year terms. Therefore, the full board of directors is not subject to re-election at each annual meeting of our stockholders.

Limits on Ability of Stockholders to Elect and Remove Directors. Our board of directors has the sole right to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors. In addition, directors may only be removed by the action of the holders of at least two-thirds of the outstanding shares of our capital stock, voting together as a single class.

Authorized But Unissued Shares. Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without the approval of holders of common stock. We may use these additional shares for a variety of corporate purposes, including future offerings to raise additional capital, corporate acquisitions and employee benefit plans.

Supermajority Requirement for Amendment of Bylaws. Under our bylaws, the holders of at least two-thirds of the outstanding shares of our capital stock, voting together as a single class, must act to amend our bylaws by stockholder action. The board of directors also has the ability to amend the bylaws without stockholder consent.

Business Combinations and other Significant Corporate Transactions with Substantial Stockholders. Our certificate of incorporation requires the affirmative vote of 66 2/3% of the total voting power of all outstanding securities entitled to vote generally in the election of directors to approve certain business combinations and other significant corporate transactions if a substantial stockholder (as defined in our certificate of incorporation) or an affiliate of a substantial stockholder (as defined in our certificate of incorporation) is a party to the transaction. Two-thirds of the board of directors may, in all such cases, determine not to require such 66 2/3% affirmative vote.

Rights Agreement

On December 20, 2006, our board of directors adopted a stockholder rights plan and entered into a rights agreement with The Bank of New York, as rights agent. The purpose of the stockholder rights plan is to enhance the ability of our board of directors to protect our stockholders’ interests by encouraging potential acquirers to negotiate with our board of directors prior to attempting a takeover bid and to provide our board of directors with adequate time to consider any and all alternatives to such a bid. The rights plan may discourage, delay or prevent a change in control of the company. It will not interfere with any merger or other business combination approved by our board of directors.

Under the stockholder rights plan, each of our stockholders of record on December 20, 2006 received a purchase right for each outstanding share of common stock that the stockholder owned, which we refer to as rights. The holder of a right does not have the powers and privileges of a stockholder with respect to the right. The rights trade with our common stock and become exercisable only under the circumstances described below.

In general, the rights will become exercisable when the first of the following events happens:

ten calendar days after a public announcement that a person or group has acquired beneficial ownership of 20% or more of our outstanding shares of common stock; or

ten business days, or a later date if determined by our board of directors, after the beginning of, or an announcement of an intention to make, a tender offer or exchange offer that would result in a person or group beneficially owning 20% or more of our outstanding shares of common stock.

If the rights become exercisable, the holder of a right will be able to purchase one one-hundredth of a Series A Junior Participating Preferred Share at an exercise price of $1,200.00 per one one-hundredth of a preferred share, subject to adjustment to prevent dilution.

Once a person or group acquires 20% or more of our outstanding shares of common stock, all holders of rights except that person or group may, upon payment of the exercise price, and in lieu of acquiring preferred shares, purchase, with respect to each right, a number of shares of common stock having a market value equal to two times the $1,200.00 exercise price. In other words, each right will entitle the holder of the right to acquire shares of common stock at a 50% discount to the then prevailing market price of our shares of common stock.

In addition, if at any time following the public announcement that a person or group has acquired beneficial ownership of 20% or more of our outstanding shares of common stock:

we enter into a merger or other business combination transaction in which we are not the surviving entity;

we enter into a merger or other business combination transaction in which we are the surviving entity, but all or part of our shares of common stock are exchanged for securities of another entity, cash or other property; or

we sell or otherwise transfer 50% or more of our assets, cash flow or earning power;

then each holder of a right, other than rights held by the person or group who triggered the event, will be entitled to receive, upon exercise, shares of common stock of the acquiring company equal to two times the $1,200.00 exercise price of the right, effectively a 50% discount to the market price of such shares.

At any time after a person or group has acquired beneficial ownership of 20% or more of our outstanding shares of common stock and prior to such person or group acquiring 50% or more of our outstanding shares of common stock, our board of directors may, at its option, exchange all or any part of the then outstanding and exercisable rights for our shares of common stock at an exchange ratio of one share of common stock for each right.

We may redeem all, but not less than all, of the rights at a price of $.01 per right at any time before the earlier of:

at any time until 10 days following the time at which any person or group has acquired beneficial ownership of 20% or more of our outstanding shares of common stock; or

the expiration date of the rights agreement.

The rights will expire at the close of business on December 19, 2016, unless we redeem or exchange them before that date.

The above description of our rights plan is not intended to be a complete description. For a full description of the rights plan, you should read the rights agreement. The rights agreement is included as an exhibit to this registration statement on Form 10.

Transfer Agent and Registrar.

The Transfer Agent and Registrar for our common stock is Bank of New York Mellon.

ITEM 12.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 102 of the DGCL allows a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase or redemption in violation of Delaware corporate law or obtained an improper personal benefit.

Section 145 of the DGCL provides for the indemnification of officers, directors and other corporate agents in terms sufficiently broad to indemnify such persons under circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. Our certificate of incorporation and bylaws provide for indemnification of our officers, directors, employees and agents to the extent and under the circumstances permitted under the DGCL.

Our certificate of incorporation includes a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director, except for liability:

for breach of duty of loyalty;

for acts or omissions not in good faith or involving intentional misconduct or knowing violation of law;

under Section 174 of the Delaware General Corporation Law (unlawful payment of dividends or unlawful stock purchase or redemption); or

for transactions from which the director derived improper personal benefit.

Our bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by the Delaware General Corporation Law. We are also expressly authorized to carry directors’ and officers’ insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and officers.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders.

There is currently pending no material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

ITEM 13.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See “Item 15 – Financial Statements and Exhibits” contained in this registration statement on Form 10.

ITEM 14.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 15.

FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

Please see the following financial statements set forth below beginning on page F-1 of this registration statement on Form 10.

Page		Description

F-1		Report of Independent Registered Public Accounting Firm

F-2		Consolidated Statements of Operations for the Years Ended October 31, 2009, 2008 and 2007

F-3		Consolidated Balance Sheets at October 31, 2009 and 2008

F-4		Consolidated Statements of Stockholders’ Equity for the Years Ended October 31, 2009, 2008 and 2007

F-6		Consolidated Statements of Cash Flows for the Years Ended October 31, 2009, 2008 and 2007

F-8		Notes to Consolidated Financial Statements

F-58		Windfall Investors, LLC Independent Auditors’ Report

F-59		Windfall Investors, LLC Balance Sheet at December 31, 2008

F-60		Windfall Investors, LLC Statement of Income and Members’ Deficit for the Year Ended December 31, 2008

F-61		Windfall Investors, LLC Statement of Cash Flows for the Year Ended December 31, 2008

F-62		Windfall Investors, LLC Notes to Financial Statements

(b) Exhibits. The following documents are filed as exhibits hereto:

Exhibit No.		Description

3.1		Restated Certificate of Incorporation of Limoneira Company, dated July 5, 1990

3.2		Certificate of Merger of Limoneira Company and The Samuel Edwards Associates into Limoneira Company, dated October 31, 1990

3.3		Certificate of Merger of McKevett Corporation into Limoneira Company dated December 31, 1994

3.4		Certificate of Designation, Preferences and Rights of $8.75 Voting Preferred Stock, $100.00 Par Value, Series B of Limoneira Company, dated May 21, 1997

3.5		Amended Certificate of Designation, Preferences and Rights or $8.75 Voting Preferred Stock, $100.00 Par Value, Series B of Limoneira Company, dated May 21, 1997

3.6		Agreement of Merger Between Ronald Michaelis Ranches, Inc. and Limoneira Company, dated June 24, 1997

3.7		Certificate of Amendment of Certificate of Incorporation of Limoneira Company, dated April 22, 2003

3.8		Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock, $.01 Par Value, of Limoneira Company, dated November 21, 2006

3.9		Bylaws of Limoneira Company

3.10		Amendment of Bylaws of Limoneira Company, effective as of December 15, 2009

4.1		Specimen Certificate representing shares of Common Stock, par value $0.01 per share

4.2		Rights Agreement dated December 20, 2006 between Limoneira Company and The Bank of New York, as Rights Agent

10.1		Sunkist Growers, Inc. Commercial Packinghouse License Agreement dated as of October 1, 2008, by and among Sunkist Growers, Inc., Ventura County Fruit Exchange and Limoneira Company

10.2		Avocado Marketing Agreement effective February 8, 2003, by and between Calavo Growers, Inc. and Limoneira Company, as amended

10.3		Stock Purchase Agreement dated as of June 1, 2005, between Limoneira Company and Calavo Growers, Inc.

10.4		Standstill Agreement dated June 1, 2005, between Limoneira Company and Calavo Growers, Inc.

10.5		Standstill Agreement dated June 1, 2005 between Calavo Growers, Inc. and Limoneira Company

10.6		Lease Agreement dated as of February 15, 2005, between Limoneira Company and Calavo Growers, Inc.

10.7		Amended and Restated Line of Credit Agreement dated as of December 15, 2008, by and between Limoneira Company and Rabobank, N.A.

10.8		Amendment to Amended and Restated Line of Credit Agreement dated May 12, 2009, between Limoneira Company and Rabobank, N.A.

10.9		Revolving Equity Line of Credit Promissory Note and Loan Agreement dated October 28, 1997, between Limoneira Company and Farm Credit West, FLCA (as successor by merger to Central Coast Federal Land Bank Association)

10.10		Promissory Note and Loan Agreement dated April 23, 2007, between Farm Credit West, FLCA and Limoneira Company

10.11		Master Loan Agreement dated as of September 23, 2005, among Farm Credit West, PCA, Windfall Investors, LLC and Limoneira Company

10.12		Promissory Note and Loan Agreement dated as of September 23, 2005, among Farm Credit West, PCA, Windfall, LLC and Limoneira Company

10.13		Promissory Note and Supplement to Master Loan Agreement dated as of September 23, 2005, among Farm Credit West, PCA, Windfall LLC and Limoneira Company

10.14		Limoneira Company Management Incentive Plan 2008-2009

10.15		Limoneira Stock Grant Performance Bonus Plan

10.16		Limoneira Company 2010 Omnibus Incentive Plan

10.17		First Amendment to Lease and Option Agreement dated January 1, 1992, by and between Phila M. Caldwell and Gordon B. Crary, Jr., as Trustees of the Caldwell Survivor’s Trust UTA Dated 9/29/86 (T.I.N. ###-##-####), and the Caldwell Marital Trust UTA Dated 9/29/86 (T.I.N. 95-6915674) and the Santa Paula Land Company, Inc.

10.18		Lease and Option Agreement dated January 1, 1992, by and between Phila M. Caldwell and Gordon B. Crary, Jr., as Trustees of the Caldwell Survivor’s Trust UTA Dated 9/29/86 (T.I.N. ###-##-####), and the Caldwell Marital Trust UTA Dated 9/29/86 (T.I.N. 95-6915674) and the Santa Paula Land Company, Inc.

10.19		Guaranty of Lease dated July 30, 1992 by Limoneira Company

21.1		Subsidiaries of Limoneira Company

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	LIMONEIRA COMPANY

Date: February 12, 2010	By: /s/ Harold S. Edwards
	Harold S. Edwards
	President and Chief Executive Officer

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Limoneira Company

We have audited the accompanying consolidated balance sheets of Limoneira Company (the “Company”) as of October 31, 2009 and 2008, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended October 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Limoneira Company at October 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended October 31, 2009, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Los Angeles, California

February 12, 2010

F-1

Limoneira Company

Consolidated Statements of Operations

	Year Ended October 31
	2009			2008			2007

Revenues:
Agriculture	$	31,033,000		$	49,794,000		$	44,751,000
Rental		3,766,000			3,718,000			3,516,000
Other		39,000			–			–
Total revenues		34,838,000			53,512,000			48,267,000
Costs and expenses:
Agriculture		27,281,000			34,805,000			32,036,000
Rental		2,061,000			2,236,000			2,073,000
Other		318,000			991,000			1,160,000
Selling, general, and administrative		6,469,000			8,292,000			9,627,000
Asset impairments		6,203,000			1,341,000			–
Loss on sale of assets		10,000			11,000			56,000
Total cost and expenses		42,342,000			47,676,000			44,952,000
Operating (loss) income		(7,504,000	)		5,836,000			3,315,000
Other income (expense):
Gain on sale of stock in Calavo Growers, Inc.		2,729,000			–			–
Other income (loss), net		256,000			403,000			(34,000	)
Interest income		225,000			902,000			2,300,000
Interest expense		(692,000	)		(1,419,000	)		(2,102,000	)
Total other income (expense)		2,518,000			(114,000	)		164,000

(Loss) income from continuing operations before income taxes and equity (losses) earnings		(4,986,000	)		5,722,000			3,479,000
Income tax benefit (provision)		2,291,000			(2,128,000	)		(1,177,000	)
Equity in (losses) earnings of investments		(170,000	)		153,000			89,000
(Loss) income from continuing operations		(2,865,000	)		3,747,000			2,391,000
Loss from discontinued operations, net of income taxes		(12,000	)		(252,000	)		(245,000	)
Net (loss) income		(2,877,000	)		3,495,000			2,146,000
Preferred dividends		(262,000	)		(262,000	)		(262,000	)
Net (loss) income applicable to common stock	$	(3,139,000	)	$	3,233,000		$	1,884,000

Per common share-basic:
Continuing operations	$	(2.78	)	$	3.13		$	1.92
Discontinued operations		(0.01	)		(0.23	)		(0.22	)
Basic net (loss) income per share	$	(2.79	)	$	2.90		$	1.70

Per common share-diluted:
Continuing operations	$	(2.78	)	$	3.12		$	1.92
Discontinued operations		(0.01	)		(0.23	)		(0.22	)
Diluted net (loss) income per share	$	(2.79	)	$	2.89		$	1.70
Dividends per common share	$	0.63		$	3.25		$	2.25

Weighted-average shares outstanding – basic		1,124,000			1,113,000			1,107,000
Weighted-average shares outstanding – diluted		1,125,000			1,116,000			1,107,000

See accompanying notes.

F-2

Limoneira Company

Consolidated Balance Sheets

	October 31
	2009			2008

Current assets:
Cash and cash equivalents	$	603,000		$	90,000
Accounts receivable		3,735,000			2,846,000
Notes receivable – related parties		1,519,000			-
Notes receivable		-			1,300,000
Inventoried cultural costs		858,000			1,146,000
Prepaid expenses and other current assets		894,000			1,104,000
Income taxes receivable		–			1,191,000
Current assets of discontinued operations		9,000			16,000
Total current assets		7,618,000			7,693,000

Property, plant, and equipment, net		53,817,000			51,590,000
Real estate development		53,125,000			57,412,000
Assets held for sale		6,774,000			6,270,000
Equity in investments		1,635,000			1,698,000
Investment in Calavo Growers, Inc.		11,870,000			10,150,000
Notes receivable – related parties		284,000			1,456,000
Notes receivable		2,000,000			350,000
Other assets		4,307,000			3,914,000
Noncurrent assets of discontinued operations		438,000			457,000
Total assets	$	141,868,000		$	140,990,000

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	970,000		$	2,311,000
Growers payable		988,000			808,000
Accrued liabilities		2,764,000			3,818,000
Current portion of long-term debt		465,000			382,000
Current liabilities of discontinued operations		2,000			26,000
Total current liabilities		5,189,000			7,345,000
Long-term liabilities:
Long-term debt, less current portion		69,251,000			65,200,000
Deferred income taxes		8,764,000			11,541,000
Other long-term liabilities		6,903,000			2,118,000
Total long-term liabilities		84,918,000			78,859,000
Commitments and contingencies
Stockholders’ equity:
Series B Convertible Preferred Stock – $100.00 par value (100,000 shares authorized: 30,000 shares issued and outstanding at October 31, 2009 and 2008) (8.75% coupon rate)		3,000,000			3,000,000
Series A Junior Participating Preferred Stock – $.01 par value (20,000 shares authorized: 0 issued or outstanding at October 31, 2009 and 2008)		–			–
Common Stock – $.01 par value (3,000,000 shares authorized:
1,126,288 and 1,113,276 shares issued and outstanding at October 31 2009 and 2008, respectively)		11,000			11,000
Additional paid-in capital		34,820,000			34,211,000
Retained earnings		16,386,000			20,226,000
Accumulated other comprehensive loss		(2,456,000	)		(2,662,000	)
Total stockholders’ equity		51,761,000			54,786,000
Total liabilities and stockholders’ equity	$	141,868,000		$	140,990,000

See accompanying notes.

F-3

Limoneira Company

Consolidated Statements of Stockholders’ Equity

Accumulated

Series B Convertible

Additional

Other

Preferred Stock

Common Stock

Paid-In

Retained

Comprehensive

Amount

Capital

Earnings

Income (Loss)

Total

Balance at November 1, 2006

30,000

3,000,000

1,106,288

11,000

31,683,000

21,274,000

(3,427,000

)

52,541,000

Dividends – common

–

(2,491,000

)

–

(2,491,000

)

Dividends – preferred

–

(262,000

)

–

(262,000

)

Stock compensation expense

–

7,500

–

3,187,000

–

3,187,000

Repurchase of common stock

–

(450

)

–

(113,000

)

–

(113,000

)

Comprehensive income:

Net income

–

2,146,000

–

2,146,000

Minimum pension liability adjustment, net of tax provision of $857,000

–

1,286,000

Unrealized holding gain of security available-for-sale, net of tax provision of $5,239,000

–

7,920,000

Total comprehensive income

11,352,000

Balance at October 31, 2007

30,000

3,000,000

1,113,338

11,000

34,757,000

20,667,000

5,779,000

64,214,000

Dividends – common

–

(3,619,000

)

–

(3,619,000

)

Dividends – preferred

–

(262,000

)

–

(262,000

)

Stock compensation expense

–

4,524

–

600,000

–

600,000

Repurchase of common stock

–

(4,586

)

–

(1,146,000

)

–

(1,146,000

)

Comprehensive loss:

Net income

–

3,495,000

–

3,495,000

Minimum pension liability adjustment, net of tax

benefit of $253,000

–

(381,000

)

(381,000

)

Unrealized holding loss of security

available-for-sale, net of tax benefit of $5,083,000

–

(7,677,000

)

(7,677,000

)

F-4

Limoneira Company

Consolidated Statements of Stockholders’ Equity (continued)

																Accumulated
	Series B Convertible									Additional						Other
	Preferred Stock				Common Stock					Paid-In			Retained			Comprehensive
	Shares		Amount		Shares			Amount		Capital			Earnings			Income (Loss)			Total

Unrealized loss resulting from changes in fair values of derivative instruments, net of tax benefit of $254,000		–	$	–		–		$	–	$	–		$	–		$	(383,000	)	$	(383,000	)
Cumulative effect adjustment for uncertainty in income taxes		–		–		–			–		–			(55,000	)		–			(55,000	)
Total comprehensive loss																				(5,001,000	)
Balance at October 31, 2008		30,000		3,000,000		1,113,276			11,000		34,211,000			20,226,000			(2,662,000	)		54,786,000
Dividends – common		–		–		–			–		–			(701,000	)		–			(701,000	)
Dividends – preferred		–		–		–			–		–			(262,000	)		–			(262,000	)
Stock compensation expense		–		–		13,048			–		614,000			–			–			614,000
Repurchase of common stock		–		–		(36	)		–		(5,000	)		–			–			(5,000	)
Comprehensive loss:
Net loss		–		–		–			–		–			(2,877,000	)		–			(2,877,000	)
Minimum pension liability adjustment, net of tax benefit of $1,276,000		–		–		–			–		–			–			(1,915,000	)		(1,915,000	)
Unrealized holding gain of security available-for-sale, net of tax provision of $2,028,000		–		–		–			–		–			–			3,042,000			3,042,000
Unrealized loss resulting from changes in fair values of derivative instruments, net of tax benefit of $614,000		–		–		–			–		–			–			(921,000	)		(921,000	)
Total comprehensive loss																				(2,671,000	)
Balance at October 31, 2009		30,000	$	3,000,000		1,126,288		$	11,000	$	34,820,000		$	16,386,000		$	(2,456,000	)	$	51,761,000

See accompanying notes.

F-5

Limoneira Company

Consolidated Statements of Cash Flows

	Year Ended October 31
	2009			2008			2007

Operating activities
Net (loss) income from continuing operations	$	(2,865,000	)	$	3,747,000		$	2,391,000
Adjustments to reconcile net (loss) income from continuing operations to net cash (used in) provided by operating activities:
Depreciation and amortization		2,323,000			2,434,000			2,267,000
Loss on disposal/sale of fixed assets		10,000			11,000			56,000
Write-off of intangible asset		–			34,000			–
Impairments of real estate development		6,203,000			1,341,000			–
Orchard write-offs		69,000			1,172,000			383,000
Gain on sale of stock in Calavo Growers, Inc.		(2,729,000	)		–			–
Stock compensation expense		770,000			600,000			3,187,000
Equity in earnings (losses) of investments		170,000			(153,000	)		(89,000	)
Deferred income taxes		(2,226,000	)		407,000			164,000
Amortization of deferred financing costs		25,000			–			–
Changes in operating assets and liabilities:
Accounts and notes receivable		(1,211,000	)		(122,000	)		137,000
Inventoried cultural costs		288,000			32,000			(183,000	)
Prepaid expenses and other current assets		210,000			(467,000	)		473,000
Income taxes receivable		987,000			(1,186,000	)		(5,000	)
Other assets		(135,000	)		(29,000	)		28,000
Accounts payable and growers payable		(1,429,000	)		40,000			(475,000	)
Accrued liabilities		(1,054,000	)		(67,000	)		1,934,000
Other long-term liabilities		(403,000	)		(878,000	)		(602,000	)
Net cash (used in) provided by operating activities		(997,000	)		6,916,000			9,666,000

Investing activities
Capital expenditures		(7,159,000	)		(29,206,000	)		(8,919,000	)
Net proceeds from sale of fixed assets		26,000			19,000			4,000
Net proceeds from sale of stock in Calavo Growers, Inc.		6,079,000			–			–
Cash distributions from equity investments		79,000			623,000			362,000
Equity investment contributions		–			(30,000	)		(526,000	)
Issuance of notes receivable		(375,000	)		(540,000	)		(23,195,000	)
Collection of note receivable		–			–			4,264,000
Investments in mutual water companies and water rights		(30,000	)		(117,000	)		(1,561,000	)
Other		(100,000	)		(100,000	)		(131,000	)
Net cash used in investing activities		(1,480,000	)		(29,351,000	)		(29,702,000	)

Financing activities
Borrowings of long-term debt		27,921,000			62,093,000			27,470,000
Repayments of long-term debt		(23,787,000	)		(34,986,000	)		(3,510,000	)
Dividends paid – Common		(701,000	)		(3,619,000	)		(2,491,000	)
Dividends paid – Preferred		(262,000	)		(262,000	)		(262,000	)
Repurchase of common shares		(5,000	)		(1,146,000	)		(113,000	)
Payments of debt financing costs		(166,000	)		–			–
Net cash provided by financing activities		3,000,000			22,080,000			21,094,000
Net increase (decrease) in cash and cash equivalents		523,000			(355,000	)		1,058,000
Net cash used in discontinued operations		(10,000	)		(41,000	)		(576,000	)
Cash and cash equivalents at beginning of year		90,000			486,000			4,000
Cash and cash equivalents at end of year	$	603,000		$	90,000		$	486,000

F-6

Limoneira Company

Consolidated Statements of Cash Flows (continued)

	Year Ended October 31
	2009			2008		2007

Supplemental disclosures of cash flow information
Cash paid during the year for interest	$	3,000,000		$	2,548,000	$	2,557,000
Cash paid during the year for income taxes, net of (refunds)received	$	(987,000	)	$	2,935,000	$	131,000
Non-cash investing, financing, and other comprehensive income (loss) transactions:
Minimum pension liability adjustment, net of tax benefit	$	1,915,000		$	381,000	$	(1,286,000	)
Unrealized holding (gain) loss on security, net of tax benefit	$	(3,042,000	)	$	7,677,000	$	(7,920,000	)
Unrealized loss from derivatives, net of tax benefits	$	921,000		$	383,000	$	–
Write-off of intangible asset	$	–		$	34,000	$	–
Conversion of note receivable and interest from Templeton
Santa Barbara, LLC to controlling equity interest	$	–		$	22,656,000	$	–
Capital expenditures accrued but not paid at year-end	$	242,000		$	600,000	$	–

See accompanying notes.

F-7

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements

1. Business

Limoneira Company, a Delaware Company (the Company), engages primarily in growing citrus and avocados, picking and hauling citrus, packing lemons, and housing rentals and other real estate operations. The Company is also engaged in real estate development.

The Company markets its agricultural products primarily through Sunkist Growers, Inc. (Sunkist) and Calavo Growers, Inc. (Calavo).

Most of the Company’s citrus production is marketed and sold under the Sunkist brand to the food service industry, wholesalers and retail operations throughout North America, Asia, and certain other countries primarily through Sunkist, an agricultural marketing cooperative of which the Company is a member. As an agricultural cooperative, Sunkist coordinates the sales and marketing of the Company’s citrus products which are processed through the Company’s packinghouse.

The Company provides all of its avocado production to Calavo, a packing and marketing company listed on NASDAQ under the symbol CVGW. Calavo’s customers include many of the largest retail and food service companies in the United States and Canada. The Company’s avocados are packed by Calavo, sold and distributed under its own brands to its customers primarily in the United States and Canada.

2. Summary of Significant Accounting Policies

Principles of Consolidation – The consolidated financial statements include the accounts of the Company and the accounts of all the subsidiaries and investments in which a controlling interest is held by the Company. All significant intercompany transactions have been eliminated. The financial statements represent the consolidated financial position, results of operations and cash flows of Limoneira Company and its wholly owned subsidiaries: Limoneira Land Company, Limoneira Company International Division, LLC, Limoneira Mercantile, LLC, and Templeton Santa Barbara, LLC. All variable interest entities for which the Company is considered the primary beneficiary are consolidated. These variable interest entities are 6037 East Donna Circle, LLC and 6146 East Cactus Wren Road, LLC. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates – The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-8

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Income Taxes

Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income. A valuation allowance is established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.

Property, Plant, and Equipment

Property, plant, and equipment is stated at original cost, net of accumulated depreciation. Depreciation is computed using the straight-line method at rates based upon the estimated useful lives of the related assets as follows (in years):

Land improvements		10 – 20
Buildings and building improvements		10 – 50
Equipment		5 – 20
Orchards		20 – 40

F-9

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Capitalized Interest

Capitalized interest is recorded on non-bearing orchards, real estate development projects, and significant construction in progress using the average interest rate during the fiscal year. Interest of $2,252,000 and $1,292,000 was capitalized during the years ended October 31, 2009 and 2008, respectively, and is included in property, plant, and equipment and real estate development assets in the Company’s consolidated balance sheets.

Real Estate Development

Expenditures for real estate development projects are capitalized at cost and include, but are not limited to, land purchases, interest, professional fees, and construction costs. Capitalization of interest ceases when a project is substantially complete and available for sale. Other costs related to real estate development projects, but which are expensed as incurred, include campaign costs and certain consulting fees.

Marketable Securities

The Company considers investments not qualifying as cash equivalents, but are readily marketable, to be marketable securities. The Company classifies all marketable securities as available-for-sale. The Company’s investments in marketable securities are stated at fair value with unrealized gains (losses), net of tax, reported as a component of accumulated other comprehensive income (loss) in the Company’s consolidated statements of stockholders’ equity.

Equity in Investments

Investments in unconsolidated joint ventures in which the Company has significant influence but less than a controlling interest, or is not the primary beneficiary if the joint venture is determined to be a variable interest entity, are accounted for under the equity method of accounting and, accordingly, are adjusted for capital contributions, distributions, and the Company’s equity in net earnings or loss of the respective joint venture.

Intangible Assets

Intangible assets consist primarily of acquired water and mineral rights and a patent. The Company evaluates its indefinite-life intangible assets annually or whenever events or changes in circumstances indicate an impairment of the assets’ value may exist.

F-10

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Long-Lived Assets

The Company evaluates long-lived assets, including its definite-life intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. If the estimated undiscounted future cash flows from the use of an asset are less than the carrying value of that asset, a write-down is recorded to reduce the carrying value of the asset to its fair value. Assets held for sale are carried at the lower of cost or fair value less cost to sell.

The Company wrote down the carrying value of certain of its real estate development projects in fiscal years 2009 and 2008. See Note 5.

Fair Values of Financial Instruments

The fair values of financial instruments are based on level one indicators, or quoted market prices, where available, or are estimated using the present value or other valuation techniques. Estimated fair values are significantly affected by the assumptions used.

The carrying amounts of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, and growers payable, and accrued liabilities reported on the Company’s consolidated balance sheets approximate their fair values due to the short-term nature of the instruments.

Based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities, the fair value of long-term debt is approximately equal to its carrying amount as of October 31, 2009, and $278,000 greater than its carrying amount as of October 31, 2008.

Concentrations of Credit Risk

The Company grants credit in the course of its operations to cooperatives, companies and lessees of the Company’s facilities. The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. Accounts receivable are stated at their estimated fair values in the Company’s consolidated balance sheets.

F-11

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Sales to customers through the Sunkist network accounted for approximately 64% of the Company’s revenues during fiscal year 2009, approximately 75% during fiscal year 2008, and approximately 73% during fiscal year 2007.

The Company maintains its cash and cash equivalents in federally insured financial institutions. The account balances at these institutions periodically exceed Federal Deposit Insurance Corporation (FDIC) insurance coverage and, as a result, there is a concentration of risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes the risk is not significant.

Derivative Financial Instruments

The Company uses derivative financial instruments for purposes other than trading to manage its exposure to interest rates as well as to maintain an appropriate mix of fixed and floating-rate debt. Contract terms of a hedge instrument closely mirror those of the hedged item, providing a high degree of risk reduction and correlation. Contracts that are effective at meeting the risk reduction and correlation criteria are recorded using hedge accounting. If a derivative instrument is a hedge, depending on the nature of the hedge, changes in the fair value of the instrument will be either offset against the change in the fair value of the hedged assets, liabilities or firm commitments through earnings or be recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of an instrument’s change in fair value will be immediately recognized in earnings. Instruments that do not meet the criteria for hedge accounting, or contracts for which the Company has not elected hedge accounting, are valued at fair value with unrealized gains or losses reported in earnings during the period of change.

Comprehensive Income (Loss)

Comprehensive income (loss) is reported in the Company’s consolidated statements of stockholders’ equity as a component of retained earnings and consists of net income (loss) and other gains and losses affecting stockholders’ equity that, under U.S. GAAP, are excluded from net income (loss).

Basic and Diluted Net Income per Share

Basic net income per common share is calculated using the weighted-average number of common shares outstanding during the period without consideration of the dilutive effect of share-based compensation. Diluted net income per common share is calculated using the diluted weighted-average number of common shares. Diluted weighted-average shares include weighted-average shares outstanding plus the dilutive effect of share-based compensation calculated using the treasury stock method of 1,000 for fiscal year 2009, 3,000 for fiscal year 2008, and zero for fiscal year 2007. The Series B convertible preferred shares (see Note 18) are anti-dilutive for fiscal years 2009, 2008, and 2007.

F-12

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Revenue Recognition

Sales of products and related costs of products are recognized when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) selling price is fixed or determinable, and (iv) collectability is reasonably assured. Monthly revenue from the sales of certain of the Company’s agricultural products is accrued based on estimated proceeds provided by the Company’s sales and marketing partners. Historically, these estimates have not differed materially from actual results.

For citrus products processed through the Company’s packinghouse and sold by Sunkist on the Company’s behalf, the Company has (i) the general and physical inventory risk, (ii) the discretion in supplier selection, and (iii) is involved in the determination of the product that is ultimately sold to the customer. In addition, Sunkist earns a fixed amount from the Company for its sales and marketing services. The Company records the revenues related to these citrus sales on a gross basis.

For avocados, oranges, specialty citrus and other specialty crops packed and sold by Calavo and other third-party packinghouses, Calavo and the other third-party packinghouses are the primary obligor in the arrangement; as such, the Company records the revenues related to these sales made by Calavo and other third-party packinghouses on a net basis.

For rental revenue, minimum rent revenues are generally recognized on a straight-line basis over the respective initial lease term. Contingent rental revenues are contractually defined as to the percentage of rent to be received by the Company and are tied to fees collected by the lessee. The Company’s contingent rental arrangements generally require payment on a monthly basis with the payment based on the previous month’s activity. The Company accrues contingent rental revenues based upon estimates and adjusts to actual as the Company receives payments. Organic recycling percentage rents range from 5% to 10%.

Advertising Expense

Advertising costs are expensed as incurred. Such costs in fiscal years 2009, 2008 and 2007 were $57,000, $153,000, and 110,000, respectively.

Cultural Costs

Costs of bringing crops to harvest are inventoried when incurred. Such costs are expensed when the crops are sold. Costs during the current year related to the next year’s crop are inventoried and carried in inventory until the matching crop is harvested and sold.

F-13

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Leases

The Company records rent expense for its operating leases on a straight-line basis from the lease commencement date as defined in the lease agreement until the end of the base lease term.

Recently Adopted Accounting Pronouncements

In October 2009, the Company adopted Financial Accounting Standards Board Accounting Standard Codification (FASB ASC) 105 (SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). FASB ASC 105 (SFAS No. 168) established the FASB Accounting Standards Codification (the Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial standards in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. FASB ASC 105 (SFAS No. 168) is effective for financial statements issued for interim and annual periods after September 15, 2009. On the effective date of FASB ASC 105 (SFAS No. 168), all then-existing non-SEC accounting and reporting standards are superseded, with the exception of certain as the promulgations listed in FASB ASC 105 (SFAS No. 168). The adoption of FASB ASC 105 (SFAS No. 168) had no effect on the Company’s consolidated financial statements, since the purpose of the Codification is not to create new accounting and reporting guidance. Rather, the Codification is meant to simplify user access to all authoritative U.S. GAAP. References to U.S. GAAP in our financial statements have been updated, as appropriate, to cite the Codification of FASB ASC 105 (SFAS No. 168).

F-14

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

In October 2009, the Company adopted FASB ASC 855 (SFAS No. 165, Subsequent Events). FASB ASC 855 (SFAS No. 165) established accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In addition, FASB ASC 855 (SFAS 165) requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. FASB ASC 855 (SFAS No. 165) is effective for fiscal years and interim periods ending after June 15, 2009. The adoption of FASB ASC 855 (SFAS No. 165) did not have a material impact on the Company’s consolidated financial statements.

In November 2008, the Company adopted FASB ASC 820 (SFAS No. 157, Fair Value Measurements), for its financial assets and liabilities. FASB ASC 820 (SFAS No. 157) provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820 (SFAS No. 157) defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820 (SFAS No. 157) also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available.

The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

FASB ASC 820 (SFAS No. 157) requires the use of observable market inputs (quoted market prices) when measuring fair value and requires a Level 1 quoted price to be used to measure fair value whenever possible.

F-15

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

The Company’s adoption of FASB ASC 820 (SFAS No. 157) did not have a material impact on its financial position, results of operations or liquidity.

In accordance with FASB ASC 820 (FSP FAS No. 157-2, Effective Date of FASB Statement No. 157), the Company elected to defer, until November 2009, the adoption of FASB ASC 820 (SFAS No. 157) for all nonfinancial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis. The adoption of FASB ASC 820 (SFAS No. 157) for those assets and liabilities within the scope of FASB ASC 820 (FSP FAS No. 157-2) is not expected to have a material impact on the Company’s financial position, results of operations, or liquidity.

In November 2008, the Company adopted FASB ASC 825 (SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115), which permits entities to choose to measure many financial instruments and certain other items at fair value. The Company already records its marketable securities at fair value in accordance with FASB ASC 320 (SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities). The adoption of FASB ASC 825 (SFAS No. 159) did not have an impact on the Company’s consolidated financial statements, as management did not elect the fair value option for any other financial instruments or certain other assets and liabilities.

In March 2008, the Company adopted FASB ASC 815 (SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities). FASB ASC 815 (SFAS No. 161) requires expanded disclosures regarding the location and amount of derivative instruments in an entity’s financial statements, how derivative instruments and related hedged items are accounted for under FASB ASC 815 (SFAS No. 161) and how derivative instruments and related hedged items affect an entity’s financial position, operating results and cash flows. The adoption of FASB ASC 815 (SFAS No. 161) did not have an impact on the Company’s consolidated financial statements and related disclosures.

F-16

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Recently Issued Accounting Standards

In August 2009, the FASB issued Accounting Standards Update No. 2009-5, Measuring Liabilities at Fair Value (ASU No. 2009-05). ASU No. 2009-05 amends ASC 820, Fair Value Measurements. Specifically, ASU No. 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following methods: 1) a valuation technique that uses a) the quoted price of the identical liability when traded as an asset or b) quoted prices for similar liabilities or similar liabilities when traded as assets and/or 2) a valuation technique that is consistent with the principles of ASC 820. ASU No. 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to adjust to include inputs relating to the existence of transfer restrictions on that liability. ASU No. 2009-05 is effective for the first reporting period after its issuance, which will require the Company to adopt these provisions in the first quarter of fiscal 2010. The Company does not believe that the adoption of ASU No. 2009-05 will have a material impact on its consolidated financial statements.

In June 2009, the FASB issued Financial Accounting Standard No. 166, Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140 (SFAS No. 166). SFAS No. 166 clarifies the information that an entity must provide in its financial statements surrounding a transfer of financial assets and the effect of the transfer on its financial position, financial performance, and cash flows. This Statement is effective as of the beginning of the annual period beginning after November 15, 2009. The Company does not believe that the adoption of SFAS No. 166 will have a material impact on its consolidated financial statements.

In June 2009, the FASB issued Financial Accounting Standard No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS No. 167). SFAS No. 167 clarifies and improves financial reporting by entities involved with variable interest entities. This Statement is effective as of the beginning of the annual period beginning after November 15, 2009. The Company does not believe that the adoption of SFAS No. 167 will have a material impact on its consolidated financial statements.

In December 2008, the FASB issued FASB ASC 810 (SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51), which changes the accounting and reporting for minority interests. Minority interests will be re-characterized as noncontrolling interests and will be reported as a component of equity separate from the parent’s equity, and purchases or sales of equity interests that do not result in a change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. The Company will adopt FASB ASC 810 (SFAS No. 160) no later than the first quarter of fiscal 2010. The Company does not believe that the adoption of FASB ASC 810 (SFAS No. 160) will have a material impact on its consolidated financial statements.

F-17

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

In December 2008, the FASB issued FASB ASC 805 (SFAS No. 141R (revised 2008), Business Combinations), which replaces SFAS No. 141. The statement retains the purchase method of accounting for acquisitions, but requires a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair value, and requires the expensing of acquisition-related costs as incurred. The Company will adopt FASB ASC 805 (SFAS No. 141R) no later than the first quarter of fiscal 2010 and it will apply prospectively to business combinations completed on or after that date.

In April 2008, the FASB issued FASB ASC 350-30 (FSP FAS No. 142-3, Determination of the Useful Life of Intangible Assets). FASB ASC 350-30 (FSP FAS No. 142-3) amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB ASC 350 (SFAS No. 142). This change is intended to improve the consistency between the useful life of a recognized intangible asset under FASB ASC 350 (SFAS No. 142) and the period of expected cash flows used to measure the fair value of the asset under FASB ASC 805 (SFAS No. 141R) and other generally accepted accounting principles. The requirement for determining useful lives must be applied prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. FASB ASC 350-30 (FSP FAS No. 142-3) is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, which will require the Company to adopt these provisions in the first quarter of fiscal 2010. The Company does not believe that the adoption of FASB ASC 350-30 (FSP FAS No. 142-3) will have a material impact on its consolidated financial statements.

3. Fair Value Measurements

Under the FASB ASC 820 (SFAS No. 157) hierarchy, an entity is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The following table sets forth the Company’s financial assets and liabilities as of October 31, 2009, that are measured on a recurring basis during the period, segregated by level within the fair value hierarchy:

F-18

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

3. Fair Value Measurements (continued)

	Level 1		Level 2		Level 3		Total
Assets at fair value:
Available- for -sale securities	$	11,870,000	$	–	$	–	$	11,870,000
Liabilities at fair value:
Derivatives		–		2,171,000		–		2,171,000

Available-for-sale securities consist of marketable securities in Calavo Growers, Inc. common stock. The Company currently own approximately 4.6% of Calavo’s outstanding common stock. These securities are measured at fair value by quoted market prices. Calavo’s stock price at October 31, 2009 and 2008, equaled $17.85 per share and $10.15 per share. See Note 7.

Derivatives consist of interest rate swaps whose fair values are estimated using industry-standard valuation models. Such models project future cash flows and discount the future amounts to a present value using market-based observable inputs. See Note 12.

4. Property, Plant, and Equipment

Property, plant, and equipment consist of the following at October 31:

	2009			2008

Land	$	25,186,000		$	24,064,000
Land improvements		11,810,000			11,810,000
Buildings and building improvements		13,503,000			11,752,000
Equipment		21,329,000			21,087,000
Orchards		21,372,000			18,375,000
Construction in progress		1,171,000			3,186,000
		94,371,000			90,274,000
Less accumulated depreciation		(40,554,000	)		(38,684,000	)
	$	53,817,000		$	51,590,000

Depreciation expense was $2,310,000, $2,421,000 and $2,257,000 for fiscal years 2009, 2008, and 2007, respectively, and amortization expense was $13,000, $13,000, and $10,000 for fiscal years 2009, 2008, and 2007, respectively.

F-19

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

5. Real Estate Development Assets/Assets Held for Sale

Real estate development assets consist of the following at October 31:

	2009		2008
East Areas 1 and 2:
Land and land development costs	$	37,788,000	$	35,604,000
Templeton Santa Barbara, LLC:
Land and land development costs		15,337,000		16,090,000
Arizona Development Projects:
Land and land development costs		–		5,718,000
Total included in real estate development asset	$	53,125,000	$	57,412,000

Assets held for sale consist of the following at October 31:

	2009		2008
Templeton Santa Barbara, LLC and Arizona Development Project:
Land and land development costs	$	6,774,000	$	6,270,000
Total included in assets held for sale	$	6,774,000	$	6,270,000

East Areas 1 and 2

In fiscal year 2005, the Company began capitalizing the costs of two real estate projects east of Santa Paula, California, for the development of 550 acres of land into residential units, commercial buildings, and civic facilities. The initial net book value of the land associated with this project was $8,253,000. During fiscal years 2009 and 2008, the Company capitalized $2,184,000 and $1,756,000, respectively, of costs related to these real estate development projects. Additionally, in relation to this project, the Company has incurred expenses of $110,000, $966,000, and $1,160,000 in fiscal years 2009, 2008, and 2007, respectively. During fiscal year 2008, the Company purchased a 63-acre parcel of land within the project boundary for $22,000,000, which is included in real estate development assets in the Company’s consolidated balance sheets at October 31, 2009 and 2008.

F-20

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

5. Real Estate Development Assets/Assets Held for Sale (continued)

Templeton Santa Barbara, LLC

In December 2006, the Company entered into an agreement with Templeton Santa Barbara, LLC (Templeton) whereby the Company provided a $20,000,000 loan to Templeton (the Bridge Loan). Templeton used these funds to purchase four residential development parcels in Santa Maria, California (Templeton project). The Company obtained the funds for the Bridge Loan through a term loan allowed under its credit arrangement with City National Bank (the Term Loan). The Term Loan matured on April 30, 2008 (see Note 11). Interest on the Bridge Loan was equal to the Prime rate plus 2%. The $20,000,000 principal balance on the Bridge Loan was due and payable on March 31, 2008, with the remaining outstanding balance due on October 31, 2009. Under the terms of the agreement with Templeton, the Company had the option to participate in the Templeton project as a 20% equity partner or participate as a lender receiving a preferred interest rate.

In December 2008, the Company amended its credit arrangement with City National Bank to extend the maturity date of the Term Loan issued to the Company under that credit arrangement from December 31, 2007 to April 30, 2008. The Company then entered into an agreement (the Agreement) with Templeton to extend the due date of the $20,000,000 Bridge Loan issued to Templeton by the Company from December 31, 2007 to March 31, 2008. Interest payable to the Company by Templeton during the extension period was at a rate of Prime plus 2%. The Agreement called for Templeton to exercise its “best efforts” to sell and/or refinance the Templeton project using the proceeds from the Bridge Loan. The Agreement also prioritized the use of all funds received upon the sale or refinance of the Templeton project as well as defined the Company’s participation in the ultimate disposition of the Templeton project.

At March 31, 2008, Templeton was unable to meet its obligation under the terms of the Agreement with the Company. As a result, the Company assumed a 75% controlling interest in the Templeton project and began consolidating all of the activities of the Templeton project beginning in April 2008. The $2,656,000 interest recognized on the Bridge Loan balance at March 31, 2008, was capitalized into the development costs associated with the Templeton project. The Term Loan was repaid by the Company in fiscal 2008 with proceeds from the Rabobank credit facility (see Note 11). Templeton’s minority interest basis in the Templeton project was zero at October 31, 2008. Templeton assigned its remaining 25% interest in the Templeton project to the Company in March 2009.

F-21

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

5. Real Estate Development Assets/Assets Held for Sale (continued)

The Company wrote down the carrying value of its Templeton project by $4,659,000 in fiscal year 2009 and $1,341,000 in fiscal year 2008 based on the results of independent appraisals which indicated that the fair value of the land and land development costs related to the Templeton project was less than its carrying value at October 31, 2009 and 2008, respectively.

In October 2008, the Company received an offer from a third party to purchase one of the four real estate development parcels within the Templeton project. The net carrying value (inclusive of impairment charges) related to this particular real estate development parcel was $6,270,000 and was recorded in assets held for sale in the Company’s consolidated balance sheet at October 31, 2008. The sale of this real estate development parcel fell out of escrow during fiscal 2009 and is no longer being held for sale. As such, the net carrying value (inclusive of impairment charges) of this real estate development parcel is included in real estate development assets in the Company’s consolidated balance sheet at October 31, 2009.

In September 2009, another of the four real estate development parcel within the Templeton project went into escrow. The net carrying value (inclusive of impairment charges) related to this particular real estate development parcel is $3,476,000 and is recorded in assets held for sale in the Company’s Consolidated Balance Sheet at October 31, 2009.

The three real estate development parcels not included in assets held for sale are included in real estate development assets in the Company’s October 31, 2009 and 2008 Consolidated Balance Sheets.

Arizona Development Projects

In fiscal year 2007, the Company and Bellagio Builders, LLC, an Arizona limited liability company, formed a limited liability company, 6037 East Donna Circle, LLC (Donna Circle), with the sole business purpose of constructing and marketing an approximately 7,500 square foot luxury home in Paradise Valley, Arizona (Donna Circle project). In February 2007, Donna Circle obtained an unsecured, non-revolving line of credit for $3,200,000 with Mid-State Bank (the DC Line). The DC Line called for monthly, interest only payments with all unpaid principal due at maturity in February 2009. The interest rate for the DC Line was 7%. All principal and interest under the DC Line was guaranteed by the Company. As such, the Company was required to consolidate the activities of the Donna Circle project since the Company was the primary beneficiary in Donna Circle (which is deemed to be variable interest entity).The DC Line was repaid by the Company in fiscal year 2008 with proceeds from the Rabobank credit facility (see Note 11).

F-22

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

5. Real Estate Development Assets/Assets Held for Sale (continued)

Donna Circle used proceeds of $1,368,000 from the DC Line to purchase property in Paradise Valley, Arizona, for the construction of a luxury home. Additionally, Donna Circle used proceeds of $1,621,000 from borrowings for site preparation, architect fees, and construction of the project. Total capitalized costs of $2,989,000 are included in real estate development assets in the Company’s consolidated balance sheet at October 31, 2008.

In December 2008, the Donna Circle project was completed (after incurring an additional $407,000 of capitalized costs during fiscal 2009) and the property was listed for sale with a real estate broker. As such, the real estate development assets related to the Donna Circle project were classified by the Company as assets held for sale at that time. In June 2009, the Company decided not to sell Donna Circle and instead, executed a two-year lease agreement for the Donna Circle property with a third party (Renters) whereby the Company is to receive approximately $7,600 a month in rental fees for a 24-month period (beginning in July 2009). Based on the terms of the lease agreement, the Renters have the option to extend the lease for 12 months (after the initial 24-month rental period) at $8,000 per month and may purchase the home during the option period for approximately $3,800,000. As such, the Company reclassified its capitalized real estate development assets from asset held for sale to property, plant, and equipment in the Company’s consolidated balance sheet at October 31, 2009, as the Donna Circle property is being held and used by the Company to generate rental income. The Company recognized $39,000 in rental income related to its Donna Circle property in fiscal year 2009. Such amounts are included in other revenues in the Company’s consolidated statement of operations for the year ended October 31, 2009.

The net carrying value related to Donna Circle is $2,750,000 at October 31, 2009, consisting of capitalized land costs with a basis of $1,121,000 and capitalized building costs of $1,629,000, net of (a) fiscal year 2009 depreciation expense on the capitalized building costs of $43,000 and (b) a fiscal year 2009 impairment charge of $603,000 (which was allocated pro-rata between the Company’s basis in the capitalized land and building costs for the Donna Circle property). The fiscal 2009 impairment charge was the result of an independent appraisal which indicated that the fair value of the Donna Circle project was less than its carrying value at October 31, 2009.

In fiscal year 2007, the Company and Bellagio Builders, LLC, an Arizona limited liability company, formed a limited liability company, 6146 East Cactus Wren Road, LLC (Cactus Wren) with the sole business purpose of constructing and marketing an approximately 9,500 square-foot luxury home in Paradise Valley, Arizona (Cactus Wren project). In March 2007, Cactus Wren obtained an unsecured, non-revolving line of credit for $3,900,000 with Mid-State Bank (the CW Line). The CW Line called for monthly, interest only payments with all unpaid principal due at maturity in March 2009. The interest rate for the CW Line was 7%. All principal and interest under the CW Line was guaranteed by the Company. As such, the Company was required to consolidate the activities of the Cactus Wren project since the Company was the primary beneficiary in Cactus Wren (which is deemed to be variable interest entity).The CW Line was repaid by the Company in fiscal year 2008 with proceeds from the Rabobank credit facility (see Note 11).

F-23

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

5. Real Estate Development Assets/Assets Held for Sale (continued)

Cactus Wren used proceeds of $1,640,000 from the CW Line to purchase property in Paradise Valley, Arizona, for the construction of a luxury home. Additionally, Cactus Wren used proceeds of $2,599,000 from borrowings for site preparation, architect fees, and construction of the project. Total capitalized costs of $2,729,000 are included in real estate development assets in the Company’s consolidated balance sheet at October 31, 2008.

In June 2009, the Cactus Wren project was completed (after incurring an additional $1,510,000 of capitalized costs during fiscal year 2009) and the property was listed for sale with a real estate broker. The property remains unsold at October 31, 2009. As such, the real estate development assets related to the Cactus Wren project is classified by the Company as assets held for sale in the Company’s consolidated balance sheet at October 31, 2009.

The net carrying value related to Cactus Wren is $3,298,000 at October 31, 2009, consisting of capitalized land and land development costs, net of a fiscal year 2009 impairment charge of $941,000. The fiscal year 2009 impairment charge was the result of an independent appraisal which indicated that the fair value of the Cactus Wren project was less than its carrying value at October 31, 2009.

6. Equity Investments

Limco Del Mar, Ltd.

The Company has a 1.3% interest in Limco Del Mar, Ltd. (Del Mar) as a general partner and a 22.1% interest as a limited partner. Based on the terms of the partnership agreement, the Company may be removed without cause from the partnership upon the vote of the limited partners owning an aggregate of 50% or more interest in the partnership. Since the Company has significant influence, but less than a controlling interest, the Company’s investment in Del Mar is accounted for using the equity method of accounting.

F-24

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

6. Equity Investments (continued)

The Company provided Del Mar with farm management, orchard land development, and accounting services, which resulted in cash receipts of $134,000, $136,000, and $128,000 in fiscal years 2009, 2008, and 2007, respectively. The Company also performed contract lemon packing services for Del Mar in the amount of $425,000, $415,000, and $528,000 in fiscal years 2009, 2008, and 2007, respectively. Fruit proceeds due to Del Mar were $125,000 and $354,000 at October 31, 2009 and 2008, respectively.

Vista Pointe, LLC

The Company and Priske Jones, Inc. each owned a 50% interest in Vista Pointe, LLC, which was formed in 1996 for the purpose of developing 9 estate lots and 28 single-family homes in Santa Paula, CA. Since the Company had significant influence, but less than a controlling interest, the Company’s investment in Vista Pointe, LLC was accounted for using the equity method of accounting. In fiscal 2009, the 10-year liability period for construction defects expired, and Vista Pointe, LLC was liquidated. Prior to its liquidation, Vista Pointe, LLC distributed $7,000 to the Company during fiscal year 2009. The remaining $6,000 equity investment balance was written off by the Company during fiscal year 2009.

Windfall Investors, LLC

In September 2005, the Company, along with Windfall, LLC (Windfall), formed a partnership, Windfall Investors, LLC (Investors). Also, in September of 2005, Investors purchased a 724-acre ranch in Creston, California (the Ranch), for $12,000,000.

The Company and Windfall each made initial capital contributions to Investors of $300 (15% ownership interest) and $1,700 (85% ownership interest), respectively. To fund the purchase of the Ranch, Investors secured a long-term loan from Farm Credit West (the Bank) for $9,750,000 (term loan). The remaining $2,250,000 of the purchase was provided from an $8,000,000 revolving line of credit (revolving line of credit) provided to Investors by the Bank under an agreement entered into between Investors and the Bank in September 2005. In May 2008, the Bank agreed to increase the total line of credit available to Investors from $8,000,000 to $10,500,000. The total indebtedness outstanding under the term loan and the revolving line of credit are guaranteed, jointly and severally, by the Company and Windfall. At October 31, 2009 and 2008, there was $19,186,000 and $18,056,000, respectively, outstanding under the term loan and the revolving line of credit.

F-25

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

6. Equity Investments (continued)

In fiscal 2008, the Company and Windfall amended its Operating Agreement for Investors. Effective January 1, 2007, net profits or net losses from operation of the Ranch’s equestrian facilities were agreed to be shared by the Company and Windfall 0% and 100%, respectively. Net profits or net losses from the sale or disposition of the Ranch were agreed to be shared by the Company and Windfall 15% and 85%, respectively.

The Company has a variable interest in Investors (which is deemed to be a variable interest entity). However, the Company is not required to consolidate Investors since the Company is not the primary beneficiary of Investors due to the Company not being required to absorb a majority of Investor’s expected losses or receive a majority of Investor’s expected residual returns.

Since the Company has significant influence, but less than a controlling interest, the Company accounts for its investment in Investors using the equity method of accounting. See Note 21 for details on the subsequent event transaction related to Investors.

Romney Property Partnership

In May 2007, the Company and an individual formed the Romney Property Partnership (Romney) for the purpose of owning an office building and adjacent lot in Santa Paula, California. The Company paid $489,000 in 2007 for 75% interest in Romney and contributed an additional $30,000 to the partnership during fiscal 2008. The terms of the partnership agreement affirm the status of the Company as a noncontrolling investor in the partnership since the Company cannot exercise unilateral control over the partnership. Since the Company has significant influence, but less than a controlling interest, the Company’s investment in Romney is accounted for using the equity method of accounting. Net profits, losses, and cash flows of Romney are shared by the Company and the individual 75% and 25%, respectively.

F-26

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

6. Equity Investments (continued)

The following are condensed (unaudited) financial statements of the equity method investees for the years ended October 31, 2009, 2008, and 2007, respectively:

			Vista
	Del Mar		Pointe			Investors			Romney			Total
2009
Assets	$	1,656,000	$	–		$	12,435,000		$	680,000		$	14,771,000

Liabilities	$	–	$	–		$	19,492,000		$	–		$	19,492,000
Equity (deficit)		1,656,000		–			(7,057,000	)		680,000			(4,721,000	)
Total liabilities and equity	$	1,656,000	$	–		$	12,435,000		$	680,000		$	14,771,000

Revenues	$	846,000	$	–		$	660,000		$	16,000		$	1,522,000
Expenses		735,000		10,000			1,948,000			19,000			2,712,000
Net income (loss)	$	111,000	$	(10,000	)	$	(1,288,000	)	$	(3,000	)	$	(1,190,000	)

2008
Assets	$	1,857,000	$	10,000		$	12,616,000		$	683,000		$	15,166,000

Liabilities	$	–	$	–		$	18,385,000		$	–		$	18,385,000
Equity (deficit)		1,857,000		10,000			(5,769,000	)		683,000			(3,219,000	)
Total liabilities and equity (deficit)	$	1,857,000	$	10,000		$	12,616,000		$	683,000		$	15,166,000

Revenues	$	2,430,000	$	–		$	968,000		$	21,000		$	3,419,000
Expenses		698,000		2,000			2,879,000			19,000			3,598,000
Net income (loss)	$	1,732,000	$	(2,000	)	$	(1,911,000	)	$	2,000		$	(179,000	)

2007
Assets	$	2,781,000	$	12,000		$	13,056,000		$	652,000		$	16,501,000

Liabilities	$	–	$	–		$	16,914,000		$	–		$	16,914,000
Equity (deficit)		2,781,000		12,000			(3,858,000	)		652,000			(413,000	)
Total liabilities and equity (deficit)	$	2,781,000	$	12,000		$	13,056,000		$	652,000		$	16,501,000

Revenues	$	2,172,000	$	–		$	1,638,000		$	12,000		$	3,822,000
Expenses		648,000		2,000			3,424,000			11,000			4,085,000
Net income (loss)	$	1,524,000	$	(2,000	)	$	(1,786,000	)	$	1,000		$	(263,000	)

F-27

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

6. Equity Investments (continued)

Limoneira Company’s investment and equity in (losses) earnings of the equity method investees are as follows:

				Vista
	Del Mar			Pointe			Investors			Romney			Total

Investment balance October 31, 2006	$	1,352,000		$	13,000		$	(1,036,000	)	$	–		$	329,000
Equity earnings (losses)		357,000			–			(268,000	)		–			89,000
Cash distribution		(362,000	)		–			–			–			(362,000	)
Investment contributions		37,000			–			–			489,000			526,000
Investment balance October 31, 2007		1,384,000			13,000			(1,304,000	)		489,000			582,000
Equity earnings (losses)		405,000			–			(252,000	)		–			153,000
Cash distribution		(623,000	)		–			–			–			(623,000	)
Investment contributions		–			–			–			30,000			30,000
Investment balance October 31, 2008		1,166,000			13,000			(1,556,000	)		519,000			142,000
Equity earnings (losses)		26,000			(6,000	)		(186,000	)		(4,000	)		(170,000	)
Cash distribution		(72,000	)		(7,000	)		–			–			(79,000	)
Investment balance October 31, 2009	$	1,120,000		$	–		$	(1,742,000	)	$	515,000		$	(107,000	)

The Company’s equity method investment balances in Del Mar, Vista Pointe and Romney are included in equity in investments in the Company’s consolidated balance sheets at October 31, 2009 and 2008, respectively.

The Company is required to record a negative equity method investment balance (which is subsequently reclassified to other-long term liabilities) for Investors since the Company has guaranteed Investor’s outstanding indebtedness under its term loan and revolving line of credit. The Company’s negative equity method investment balance for Investors is included in other long-term liabilities in the Company’s consolidated balance sheets at October 31, 2009 and 2008, respectively.

F-28

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

7. Investment in Calavo Growers, Inc.

In June 2005, the Company entered into a stock purchase agreement with Calavo. Pursuant to this agreement, the Company purchased 1,000,000 shares, or approximately 6.9%, of Calavo’s common stock for $10,000,000 and Calavo purchased 172,857 shares, or approximately 15.1%, of the Company’s common stock for $23,450,000. Under the terms of the agreement, the Company received net cash consideration of $13,450,000. The Company has classified its marketable securities investment as available-for-sale.

In fiscal year 2009, the Company sold 335,000 shares of Calavo stock for a total of $6,079,000; recognizing a total gain of $2,729,000 which was recorded in other income (expense) in the Company’s consolidated statement of operations for the year ended October 31, 2009. Additionally, the changes in the fair value of the available-for-sale securities result in unrealized holding gains or losses for the remaining shares held by the Company. In fiscal year 2009, the Company recorded a total unrealized holding gain of $5,070,000 due to the increase in the market value of the Company’s remaining 665,000 shares of Calavo common stock at October 31, 2009. In fiscal year 2008, the Company recorded a total unrealized holding loss of $12,760,000 due to the decrease in the market value of its 1,000,000 shares of Calavo common stock at October 31, 2008.

8. Notes Receivable

In fiscal year 2004, the Company sold a parcel of land in Morro Bay, California. The sale was recognized under the installment method and the resulting gain on sale of $161,000 was deferred. In connection with the sale, the Company recorded a note receivable of $4,263,000. Principal of $2,963,000 and interest was paid in April 2005 and $112,000 of the deferred gain was recognized as income at that time. The remaining $49,000 balance of the deferred gain is included in accrued liabilities in the Company’s consolidated balance sheets at October 31, 2009 and 2008. The remaining principal balance of $1,300,000 and the related accrued interest was initially payable in April 2009 and was recorded in current notes receivable in the Company’s consolidated balance sheet at October 31, 2008. However, the Company and the buyer of the Morro Bay land executed a note extension agreement in March 2009. Based on the terms of the note extension agreement, the remaining principal balance of $1,300,000 and the related accrued interest is now required to be paid in full on April 1, 2014, and is being recorded in noncurrent notes receivable in the Company’s consolidated balance sheet at October 31, 2009. Interest continues to accrue at 7.0% on the principal balance of the note.

F-29

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

8. Notes Receivable (continued)

In connection with the lease of a retail facility, the Company recorded a note receivable in May 2007 of $350,000. The note bears interest at the Prime rate plus 2.00%, payable monthly. This note is unsecured and matures in May 2012. The note receivable balance was $350,000 at October 31, 2009 and 2008, respectively and is being recorded in noncurrent notes receivable in the Company’s consolidated balance sheets.

In connection with Company’s stock grant program (see Note 18), the Company has recorded total notes receivable and accrued interest from related parties of $1,803,000 and $1,456,000 at October 31, 2009 and 2008, respectively. These notes were issued in connection with payments made by the Company on behalf of its employees for payroll taxes on stock compensation. These notes bear interest at the mid-term applicable federal rate then in effect, with principal and accrued interest due and payable within 24 months from the date of the note. A portion of the notes receivable and accrued interest balance related to three employees (the Officers) became due in November and December 2009. As such, the total $1,519,000 notes receivable and accrued interest due to be paid by the Officers within one year at October 31, 2009 is recorded in current notes receivable – related parties in the Company’s consolidated balance sheet at October 31, 2009. The remaining $284,000 notes receivable and accrued interest balance from employees that are not due to be paid within one year at October 31, 2009 is recorded in noncurrent notes receivable – related parties in the Company’s consolidated balance sheet at October 31, 2009. See Note 21 for details on the subsequent event related to these Officers notes receivable balances.

9. Other Assets

Other assets at October 31 are comprised of the following:

	2009		2008

Investments in mutual water companies	$	1,205,000	$	1,175,000
Acquired water and mineral rights		1,536,000		1,536,000
Definite-lived intangibles and other assets		1,052,000		628,000
Revolving funds and memberships		514,000		575,000
	$	4,307,000	$	3,914,000

F-30

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

9. Other Assets (continued)

Investments in Mutual Water Companies

The Company’s investments in various not-for-profit mutual water companies provide the Company with the right to receive a proportionate share of water from each of the not-for-profit mutual water companies that have been invested in and do not constitute voting shares and/or rights. Since the Company does not have the ability to control or exercise significant influence over the operating and financial policies of each of these not-for-profit mutual water companies, the Company is accounting for such investments at historical cost.

Acquired Water and Mineral Rights

Acquired water and mineral rights are indefinite-life intangible assets not subject to amortization. No impairments were identified for these indefinite-life intangible assets for the years ended October 31, 2009 and 2008, respectively.

In July 2007, the Company entered into an agreement to purchase 300 membership shares from a member of the Santa Paula Basin Pumpers Association (SPBPA) for $1,500,000. The $1,500,000 acquisition price resulted from a bargained exchange transaction that was conducted at arm’s length. As such, the Company recorded its SPBPA acquired water rights at its acquisition price and is included in other assets in the Company’s consolidated balance sheets. The Company’s acquisition of the 300 membership shares of SPBPA constitutes a purchase of water rights with an indefinite life as the water rights go into perpetuity. The Company also acquired other water rights from an unrelated third party in the amount of $12,000, which is being accounted for consistently with the SPBPA acquired water rights.

The Company’s ownership of mineral rights consists of oil and gas deposits located within the Company’s Ventura County property boundaries. Similar to its acquired water rights, the Company’s acquired mineral rights have an indefinite life as the mineral rights go into perpetuity. The $24,000 acquisition price resulted from a bargained exchange transaction that was conducted at arm’s length. As such, the Company recorded its acquired mineral rights at its acquisition price and is included in other assets in the Company’s consolidated balances sheets.

Definite-Lived Intangibles and Other Assets

In fiscal 2003, the Company paid $150,000 to obtain certain propagation rights (Patent) for an agricultural variety. During fiscal years 2005 and 2006, the Company incurred an additional $72,000 in costs related to the Patent. The Patent was issued in fiscal year 2007 and is being amortized over its legal life of 17 years. The gross carrying value of the Patent was $222,000 as of October 31, 2009 and 2008, respectively. The related accumulated amortization was $34,000 and $21,000 at October 31, 2009 and 2008, respectively. The Company recorded amortization expense of $13,000 for fiscal years 2009 and 2008, respectively.

F-31

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

9. Other Assets (continued)

The Company expects to amortize $13,000 each year for fiscal years 2010 through 2014 related to its Patent. The remaining amounts in other assets consist primarily of deferred borrowing costs (see Note 11), amounts invested in the racing career of Charlie Kimball (see Note 13), deferred rent asset (See Note 17) and prepaid pollination equipment (see Note 17).

Revolving Funds and Memberships

Revolving funds and memberships represent the Company’s investments in various cooperative associations. The Company pays to Sunkist and certain other cooperatives an annual assessment based on sales volume or other criteria. These funds are typically held for five years at which time they are refunded to the Company. Revolving funds related to the Company’s fruit packed at outside packinghouses are withheld from payments made to the Company during the year and also refunded, typically in five years.

10. Discontinued Operations

In December 2005, Limoneira Company International Division, LLC entered into an agreement whereby it acquired substantially all of the assets, liabilities, and operations of Movin’ Mocha (Mocha), a California general partnership. The initial purchase price of $1,000,000 was payable $500,000 at closing, $250,000 on the first anniversary of the closing and $250,000 on the second anniversary of the closing. Mocha owned and operated coffee houses and coffee carts in seven locations in the Modesto-Fresno corridor. Additionally, Mocha owned and operated a bakery facility.

In October 2006, the Company decided, that because of continuing operational losses in its retail coffee and coffee distribution businesses, it would exit the coffee business. In connection with that decision, the Company approved a plan to exit the retail coffee and coffee distribution business. Sales and operating losses for fiscal year 2009 were $8,000 and $22,000, respectively. Sales and operating losses for fiscal year 2008 were $181,000 and $418,000, respectively. Sales and operating losses for fiscal 2007 were $1,101,000 and $408,000, respectively. During fiscal year 2007, as a result of an arbitration agreement, the Company finalized the purchase of Mocha with a cash payment of $650,000. The remaining balances due on the purchase price, plus interest, were paid in full and the retail coffee and coffee distribution business incurred an additional charge to income of $75,000 related to the final settlement. Additionally, in fiscal year 2007 the Company wrote down the carrying value of a retail building by $100,000. In fiscal year 2008, the Company ceased operations in all of Mocha’s retail facilities, sold the business along with certain assets, and then proceeded to sell or dispose of all of the remaining assets. At October 31, 2008 the purchaser of one of Mocha’s retail buildings was in default on a note to the Company and the Company initiated the process of foreclosure procedures.

F-32

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

10. Discontinued Operations (continued)

As a result, the retail coffee and coffee distribution business incurred a charge to income of $86,000 in fiscal year 2008. The foreclosure was finalized in fiscal year 2009, at which time the ownership rights to the building reverted back to the Company.

The assets and liabilities of the coffee business at October 31 are comprised of the following:

	2009		2008

Cash	$	4,000	$	1,000
Accounts receivable		3,000		14,000
Prepaid expenses		2,000		1,000
Deferred taxes		277,000		301,000
Notes receivable		161,000		156,000
Total assets	$	447,000	$	473,000
Accounts payable	$	2,000	$	5,000
Accrued liabilities		–		21,000
Total liabilities	$	2,000	$	26,000

F-33

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

11. Long-Term Debt

Long-term debt at October 31 is comprised of the following:

	2009		2008
Rabobank revolving credit facility secured by property with a net book value of $7,618,000. The interest rate is variable based on the one-month London Interbank Offered Rate plus 1.50%. Interest is payable monthly and the principal is due in full in June 2013.	$	61,671,000	$	57,123,000
Central Coast Federal Land Bank Association loan secured by property with a net book value of $11,674,000. The interest rate is variable and was 3.25% at October 31, 2009. The loan is payable in quarterly installments through November 2022.		7,094,000		7,483,000
Central Coast Federal Land Bank Association loan secured by property with a net book value of $11,674,000. The interest rate is variable and was $3.25% at October 31, 2009. The loan is payable in monthly installments through May 2032.		951,000		976,000
Subtotal		69,716,000		65,582,000
Less current portion		465,000		382,000
Total long-term debt, less current position	$	69,251,000	$	65,200,000

In October 2001, the Company entered into a credit arrangement with City National Bank whereby it could borrow up to $10,000,000 on an unsecured line of credit, which was renewed in March 2004 and May 2006, and increased to $15,000,000 in March 2007. There were no amounts outstanding at October 31, 2008, under this arrangement. Additionally, the credit arrangement allowed for an additional $5,000,000 to be made available to the Company for equipment acquisition loans. Loans for equipment expenditures were payable in 16 substantially equal quarterly installments. There were no amounts outstanding at October 31, 2008, under this arrangement. The credit arrangement also allowed for a $20,000,000 term loan, with interest payable monthly and principal payable in full on April 30, 2008. This credit arrangement expired in fiscal year 2008.

F-34

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

11. Long-Term Debt (continued)

In August 2008, the Company entered into a credit arrangement with Rabobank whereby it could borrow up to $80,000,000 on a secured line of credit. The initial agreement was superseded by amended agreements in December 2008 and May 2009. All outstanding amounts due under the credit arrangement with City National Bank were repaid with proceeds from the Rabobank credit facility and the City National Bank credit facility which was allowed to expire.

In fiscal year 2009, the Company incurred $124,000 of costs to Rabobank and other third parties in conjunction with finalizing its debt agreement with Rabobank. Such costs were capitalized and are being amortized using the straight-line method over the terms of the amended Rabobank credit agreement. Included in other assets in the Company’s consolidated balance sheet was $101,000 of capitalized deferred borrowing costs at October 31, 2009. Accumulated amortization related to the capitalized deferred borrowing costs was $23,000 as of October 31, 2009. The amortization of the deferred borrowing costs is recorded as interest expense in the Company’s consolidated statement of operations for the year ended October 31, 2009.

The Company, under the terms of the Rabobank credit arrangement, is subject to an annual financial covenant. At October 31, 2009, the Company was out of compliance with its annual financial covenant for which a covenant waiver was received from Rabobank for the year ended October 31, 2009. Under the terms of the credit arrangement with Rabobank, the financial covenant is not subsequently measured again until October 31, 2010. The Company anticipates being in compliance with its annual financial covenant at October 31, 2010.

In January 2009, the Company and Farm Credit West (FCW) entered into an agreement whereby FCW agreed to convert the fixed interest portion of the two Central Coast Federal Land Bank Association loans to variable rates. The Company incurred $42,000 of costs to FCW for this rate conversion. Such costs were capitalized and are being amortized using the straight-line method over the terms of the FCW credit agreement. Included in other assets in the consolidated balance sheet was $40,000 of capitalized deferred borrowing costs at October 31, 2009. Accumulated amortization related to the capitalized deferred borrowing costs was $2,000 as of October 31, 2009. The amortization of the deferred borrowing costs is recorded as interest expense in the consolidated statement of operations for the year ended October 31, 2009

F-35

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

11. Long-Term Debt (continued)

Principal payments on the Company’s long-term debt are due as follows:

2010	$	465,000
2011		480,000
2012		496,000
2013		62,183,000
2014		529,000
Thereafter		5,563,000
Total	$	69,716,000

Beginning in fiscal year 2004, the Company utilizes standby letters of credit to satisfy workers’ compensation insurance security deposit requirements. At October 31, 2009, these outstanding letters of credit totaled $472,000.

12. Derivative Instruments and Hedging Activities

The Company enters into interest rate swaps to minimize the risks and costs associated with its financing activities. Derivative financial instruments designated for hedging at October 31 are as follows:

	Notional Amount				Fair Value Net Liability
	2009		2008		2009		2008
Pay fixed-rate, receive floating-rate interest rate swap designated as cash flow hedge, maturing 2013	$	22,000,000	$	22,000,000	$	1,678,000	$	541,000
Pay fixed-rate, receive floating-rate interest rate swap designated as cash flow hedge, maturing 2010		10,000,000		10,000,000		287,000		96,000
Pay fixed-rate, receive floating-rate interest rate swap designated as cash flow hedge, maturing 2010		10,000,000		–		206,000		–
Total	$	42,000,000	$	32,000,000	$	2,171,000	$	637,000

F-36

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

12. Derivative Instruments and Hedging Activities (continued)

These interest rate derivatives qualify as cash flow hedges. Therefore, the fair value adjustments to the underlying debt are deferred and included in accumulated other comprehensive income (loss) in the Company’s consolidated balance sheets at October 31, 2009 and 2008.

13. Related-Party Transactions

The Company rents certain of its residential housing assets to its employees, including its agribusiness employees. The Company records the rental income generated from these employees in rental revenues in the Company’s consolidated statements of operations.

A member of the Company’s Board of Directors is currently a Director of a mutual water company in which the Company is an investor. The mutual water company provided water to the Company, for which the Company paid $267,000 and $228,000 in fiscal years 2009 and 2008, respectively. Water payments due to the mutual water company were $51,000 and $54,000 at October 31, 2009 and 2008, respectively.

The Company has invested in the career of Charlie Kimball, a Formula 1 racing driver, who is related to a member of the Company’s Board of Directors. Recorded in other assets in the Company’s consolidated balance sheets are total investments made to Charlie Kimball of $300,000 and $200,000 as of October 31, 2009 and 2008, respectively.

The amount invested by the Company is to be used by Charlie Kimball to further his career goal of becoming a Formula One driver. The terms of the investments provide that each $100,000 investment will be repaid to the Company upon the first to occur of any of the following: (a) Charlie Kimball enters university as a full-time student, which the Company refers to as the student trigger; (b) Charlie Kimball reaches the position of a full-time salaried driver in the Formula One World Championship, which the Company refers to as the F1 trigger; and (c) the Company exercises the option to have its investment repaid, which may not occur prior to January 23, 2010, which is referred to as the investor trigger. For each $100,000 investment, the Company will be repaid the following amounts: (x) in the event of the student trigger, the Company will be repaid the amount of its investment; (y) in the event of the F1 trigger, the Company will be repaid twice its investment in three equal annual installments beginning 120 days following the day the F1 trigger occurs; and (z) in the event of the investor trigger, the Company will be repaid the amount of its investment within one year after the investor trigger is exercised with an additional $25,000 payment if Charlie Kimball is a professional (salaried) racing driver on the day the investor trigger is exercised.

F-37

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

13. Related Party Transactions (continued)

In fiscal years 2009, 2008, and 2007, the Company recorded dividend income of $350,000, $350,000, and $320,000, respectively, on its investment in Calavo; which is included in other income (loss), net in the Company’s consolidated statements of operations. Sales of the Company’s avocados by Calavo totaled $4,026,000, $3,502,000, and $3,185,000 for fiscal years 2009, 2008 and 2007, respectively. Such amounts are included in agriculture revenues in the Company’s consolidated statements of operations. There were no amounts that were receivable by the Company from Calavo at October 31, 2009 or 2008. Additionally, the Company leases office space to Calavo and received annual rental income of $229,000, $220,000, and $220,000 in fiscal years 2009, 2008, and 2007, respectively. Such amounts are included in rental revenues in the Company’s consolidated statements of operations.

14. Income Taxes

The components of the provisions for income taxes (from continuing operations) for fiscal years 2009, 2008, and 2007 are as follows:

	2009			2008		2007
Current:
Federal	$	459,000		$	1,347,000	$	663,000
State		225,000			528,000		208,000
Total current provision		684,000			1,875,000		871,000

Deferred:
Federal		(2,306,000	)		182,000		230,000
State		(669,000	)		71,000		76,000
Total deferred (benefit) provision		(2,975,000	)		253,000		306,000
Total (benefit) provision	$	(2,291,000	)	$	2,128,000	$	1,177,000

The income tax provision differs from the amount which would result from the statutory federal income tax rate primarily as a result of dividend exclusions, the domestic production activities deduction, and state income taxes.

Deferred income taxes reflect the net of temporary differences between the carrying amount of the assets and liabilities for financial reporting and income tax purposes.

F-38

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

The components of deferred income tax assets (liabilities) at October 31, 2009 and 2008, are as follows:

	2009			2008
Current deferred income tax assets:
Labor accruals	$	196,000		$	150,000
Property taxes		(201,000	)		(191,000	)
State income taxes		65,000			175,000
Prepaid insurance		93,000			(6,000	)
Total current deferred income tax assets:		153,000			128,000

Noncurrent deferred income tax liabilities:
Depreciation		(2,986,000	)		(2,926,000	)
Amortization		(2,000	)		(1,000	)
Impairment of real estate development		3,005,000			534,000
Derivative instruments		865,000			254,000
Pension		1,736,000			(30,000	)
Other		171,000			312,000
Calavo stock		(2,076,000	)		(57,000	)
Book and tax basis difference of acquired assets		(9,477,000	)		(9,627,000	)
Total noncurrent deferred income tax liabilities		(8,764,000	)		(11,541,000	)
Deferred tax asset related to loss on discontinued operations		277,000			301,000
Net deferred income tax liabilities	$	(8,334,000	)	$	(11,112,000	)

The current deferred income tax asset is being recorded in prepaid expenses and other current assets in the Company’s consolidated balance sheets at October 31, 2009 and 2008. The deferred tax asset related to loss on discontinued operations is included in noncurrent assets of discontinued operations in the Company’s consolidated balance sheets at October 31, 2009 and 2008.

The income tax provision differs from that computed using the federal statutory rate applied to income before taxes as follows for fiscal years 2009, 2008, and 2007:

F-39

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

14. Income Taxes (continued)

	2009						2008						2007
	Amount			%			Amount			%			Amount			%

Provision at statutory rates	$	(1,753,000	)		(34.0	)%	$	2,006,000			34.0	%	$	1,218,000			34.0	%
State income tax, net of federal benefit		(299,000	)		(5.6	)%		387,000			6.6	%		211,000			5.9	%
Dividend exclusion		(83,000	)		(1.6	)%		(94,000	)		(1.6	)%		(93,000	)		(2.6	)%
Production deduction		(127,000	)		(2.5	)%		(204,000	)		(3.5	)%		(33,000	)		(0.9	)%
Change in unrecognized tax benefits		(144,000	)		(2.8	)%		11,000			0.2	%		–			–
Other nondeductible items		115,000			2.2	%		22,000			0.4	%		(126,000	)		(3.5	)%
Total income tax (benefit) provision	$	(2,291,000	)		(44.3	)%	$	2,128,000			36.1	%	$	1,177,000			32.9	%

On November 1, 2007, the Company adopted the provisions related to uncertain tax positions. The Company recorded a cumulative effect adjustment of $55,000 including interest and penalties, which was accounted for as an adjustment to the beginning balance of retained earnings.

A tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of fiscal years 2009 and 2008 are as follows:

	2009			2008
Unrecognized tax benefits at the beginning of the year	$	164,000		$	164,000
Increases in tax positions taken in the prior year		–			–
Decreases in tax positions taken in the prior year		–			–
Increases in tax positions for current year		–			–
Settlements		–			–
Lapse in statute of limitations		(126,000	)		–
Unrecognized tax benefits at the end of the year	$	38,000		$	164,000

Approximately $33,000 of the unrecognized tax liabilities at October 31, 2009, if recognized, would affect the effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company files income tax returns in the U.S. and California. The Company is no longer subject to U.S. income tax examinations for the fiscal years prior to fiscal year October 31, 2006, and is no longer subject to state income tax examinations for years prior to October 31, 2005. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There was $10,000 of accrued interest and penalties associated with uncertain tax positions as of October 31, 2009.

F-40

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

15. Retirement Plans

Effective December 31, 1991, the Company merged the Limoneira Hourly and Piece Rated Pension Plan and their salaried plan, into the Sunkist Retirement Plan, Plan L (the Plan). All participants became members of the Plan at that time, and all assets became part of the Sunkist Retirement Plan L Trust. Until January 2006, the Plan was administered by the Sunkist Retirement Investment Board. Since January 2006, the Plan has been administered by City National Bank and Mercer Human Resource Consulting.

The Plan is a noncontributory, defined benefit, single employer pension plan, which provides retirement benefits for all eligible employees of the Company. Since Limoneira Company’s Defined Benefit Pension Plan is a single employer plan within the Sunkist Master Trust, its liability was not commingled with that of the other plans holding assets in the Master Trust. Limoneira Company has an undivided interest in its assets. Benefits paid by the Plan are calculated based on years of service, highest five-year average earnings, primary Social Security benefit, and retirement age.

The Plan is funded consistent with the funding requirements of federal law and regulations. There were funding contributions of $300,000 and $1,200,000, respectively, for fiscal years 2009 and 2008. Plan assets are invested in a group trust consisting primarily of stocks (domestic and international), bonds, real estate trust funds, short-term investment funds and cash. The weighted-average asset allocations at October 31, 2009 and 2008, by asset category, are as follows:

	2009			2008
Asset category:
Equity		51	%		49	%
Fixed income		47			47
Cash		2			4
Total		100	%		100	%

The investment policy has been established to provide a total investment return that will, over time, maintain purchasing power parity for the Plan’s variable benefits and keep the Company’s plan funding at a reasonable level. The primary asset classes utilized to attain these objectives are equity securities, fixed income securities and all other, with target allocations of 60%, 35%, and 5%, respectively.

F-41

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

15. Retirement Plans (continued)

The following tables set forth the Plan’s net periodic cost, changes in benefit obligation and Plan assets, funded status, amounts recognized in the Company’s consolidated balance sheets, additional year-end information and assumptions used in determining the benefit obligations and periodic benefit cost.

The net periodic pension costs for the Company’s Defined Benefit Pension Plan for fiscal years 2009 and 2008 were as follows:

	2009			2008

Service cost	$	87,000		$	85,000
Interest cost		888,000			847,000
Expected return on plan assets		(1,026,000	)		(969,000	)
Recognized actuarial loss		21,000			358,000
Net periodic pension cost	$	(30,000	)	$	321,000

Following is a summary of the Plan’s funded status as of October 31, 2009 and 2008:

	2009			2008
Change in benefit obligation:
Benefit obligation at beginning of year	$	11,175,000		$	13,963,000
Service cost		87,000			85,000
Interest cost		888,000			847,000
Benefits paid		(957,000	)		(884,000	)
Actuarial loss (gain)		3,852,000			(2,836,000	)
Benefit obligation at end of year	$	15,045,000		$	11,175,000

Change in plan assets:
Fair value of plan assets at beginning of year	$	11,250,000		$	13,794,000
Actual return on plan assets		1,666,000			(2,860,000	)
Employer contributions		300,000			1,200,000
Benefits paid		(957,000	)		(884,000	)
Fair value of plan assets at end of year	$	12,259,000		$	11,250,000

Funded status:
(Unfunded) funded status at end of year	$	(2,786,000	)	$	75,000

F-42

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

15. Retirement Plans (continued)

	2009			2008
Amounts recognized in statements of financial position:
Noncurrent assets	$	–		$	75,000
Current liabilities		–			–
Noncurrent liabilities		(2,786,000	)		–
Net amount recognized in statement of financial position	$	(2,786,000	)	$	75,000

Additional year-end information:
Accumulated benefit obligation	$	15,045,000		$	11,175,000
Projected benefit obligation		15,045,000			11,175,000
Fair value of plan assets		12,259,000			11,250,000

Weighted-average assumptions as of October 31, 2009 and 2008, used to determine benefit obligations:
Discount rate		5.75	%		8.25	%
Expected long-term return on plan assets		7.50	%		7.50	%

Weighted-average assumption used to determine net periodic benefit cost:
Discount rate		8.25	%		6.25	%
Expected long-term return on plan assets		7.50	%		7.50	%

The Company expects to contribute $1,200,000 to the Plan in fiscal year 2010. Additionally, the following benefit payments are expected to be paid as follows:

2010	$	857,000
2011		882,000
2012		894,000
2013		915,000
2014		942,000
2015-2019		5,267,000
Total	$	9,757,000

F-43

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

15. Retirement Plans (continued)

Effective June 30, 2004, the Company froze the Plan and no additional benefit will accrue to participants subsequent to that date. Freezing the Plan resulted in a curtailment gain and related reduction in the projected benefit obligation of $840,000.

Additionally in 2004, the Company replaced its existing qualified cash or deferred compensation plan maintained under Section 401(k) of the Internal Revenue Code (IRC) with a new plan also maintained under Section 401(k) of the IRC. Under this new plan, the Company, beginning in January 2005, began contributing an amount equal to 4% of an employees’ annual earnings beginning after one year of employment. Employees may elect to defer up to 100% of their annual earnings subject to IRC limits. The Company makes additional “dollar for dollar” matching contribution on these deferrals up to 4% of an employee’s annual earnings. Employees are 100% vested in the Company’s contribution after six years of employment. Participants vest in any matching contribution at a rate of 20% per year beginning after one year of employment. During fiscal years 2009 and 2008, the Company contributed to the new plan and recognized expenses of $486,000 and $463,000, respectively.

16. Rental Operating Leases

The Company rents certain of its assets under net operating lease agreements ranging from one month to 20 years. The cost of the land subject to such leases was $1,658,000 at October 31, 2009. The total cost and accumulated depreciation of buildings, equipment, and building improvements subject to such leases was $7,870,000 and $3,185,000, respectively, at October 31, 2009. The Company recognized rental income from its rental operating lease activities of $3,557,000 in fiscal year 2009, $3,550,000 in fiscal year 2008, and $3,358,000 in fiscal year 2007. The Company also recognized contingent rental income related to its organic recycling business of $209,000 in fiscal year 2009, $168,000 in fiscal year 2008, and $158,000 in fiscal year 2007. Such amounts are included in rental revenues in the Company’s consolidated statements of operations. The future minimum lease payments to be received by Company related to these net operating lease agreements as of October 31, 2009, are as follows:

2010	$	1,549,000
2011		1,431,000
2012		1,329,000
2013		438,000
2014		400,000
Thereafter		2,020,000
Total	$	7,167,000

F-44

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

17. Commitments and Contingencies

Operating Leases

The Company has entered into three operating leases for agricultural land totaling 480 acres for purposes of expanding the Company’s production of citrus and avocados. One lease provides for an adjustment to rent for inflation. The Company also has operating leases for pollinating equipment, packinghouse equipment, and photovoltaic generators (see below). Total lease expense for fiscal years 2009, 2008 and 2007 was $1,681,000, $449,000, and $377,000, respectively. In addition, the Company has made prepayments for the lease of the pollination equipment totaling $159,000. These prepayments are included in other assets in the Company’s consolidated balance sheets at October 31, 2009 and 2008, respectively, and will be expensed over the last year of the lease based on the terms of the arrangement with the lessor.

During fiscal year 2008, the Company entered into a contract with Perpetual Power, LLC (Perpetual) to install a 1,000 KW photovoltaic generator in order to provide electrical power for the Company’s lemon packinghouse operations. The facility became operational in October 2008. Farm Credit West provided financing for the generator and upon completion of the construction Perpetual sold the generator to Farm Credit West. The Company then signed a 10-year operating lease agreement with Farm Credit West. During the 10-year lease term, Perpetual will warrant that the generator is free from defects in material and workmanship. At the end of the 10 year lease term, the Company will have an option to purchase the generator from Farm Credit West.

Additionally in fiscal year 2008, the Company entered into a contract with Perpetual to install a second 1,000 KW photovoltaic generator in order to provide electrical power for the Company’s farming operations in Ducor, California. Farm Credit West provided the financing for the generator and when construction was completed, Perpetual sold the generator to Farm Credit West. The Company then entered into a 10-year operating lease agreement with Farm Credit West for this facility. The generator in Ducor, California became operational in December 2008. Included in other assets in the Company’s consolidated balance sheet at October 31, 2009, is $195,000 of deferred rent asset related to the Company’s Ducor solar lease as the minimum lease payments exceed the straight-line rent expense during the earlier terms of the lease.

F-45

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

17. Commitments and Contingencies (continued)

Minimum future lease payments are as follows:

2010	$	1,620,000
2011		1,561,000
2012		1,462,000
2013		1,339,000
2014		853,000
Thereafter		3,341,000
Total	$	10,176,000

Litigation

The Company is from time to time involved in various lawsuits and legal proceedings that arise in the ordinary course of business. At this time, the Company is not aware of any pending or threatened litigation against it that it expects will have a material adverse effect on its business, financial condition, liquidity, or operating results. Legal claims are inherently uncertain, however, and it is possible that the Company’s business, financial condition, liquidity and/or operating results could be adversely affected in the future by legal proceedings.

18. Stockholders’ Equity

Series B Convertible Preferred Stock:

In 1997, in connection with the acquisition of Ronald Michaelis Ranches, Inc., the Company issued 30,000 shares of Series B Convertible Preferred Stock at $100 par value (the Series B Stock).

Dividends: The holders of shares of Series B Stock shall be entitled to receive cumulative cash dividends at an annual rate of 8.75% of par value. Such dividends are payable quarterly on the first day of January, April, July, and October in each year commencing July 1, 1997.

Voting Rights: Each share of Series B Stock shall be entitled to one vote on all matters submitted to a vote of the stockholders of the Company

Redemption: The Company, at the option of the Board of Directors, may redeem the Series B Stock, as a whole or in part, at any time or from time to time on or after July 1, 2017 and before June 30, 2027, at a redemption price equal to the par value thereof, plus accrued and unpaid dividends thereon to the date fixed for redemption.

F-46

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

18. Stockholders’ Equity (continued)

Conversion: The holders of Series B Stock shall have the right, at their option, to convert such shares into shares of Common Stock of the Company at any time prior to redemption. The conversion price shall initially be $80.00 per share of Common Stock. Pursuant to the terms of the Certificate of Designation, Preferences and Rights of the Series B Stock, the conversion price shall be adjusted to reflect any dividends paid in Common Stock of the Company, the subdivision of the Common Stock of the Company into a greater number of shares of Common Stock of the Company, or upon the advice of legal counsel.

The Company is not mandatorily required to redeem the Series B Stock and the redemption of the Series B Stock is within the control of the Company. The Series B Stock is not redeemable at a fixed date or at the option of the Series B Stock shareholders. In addition, the Series B Stock is redeemable upon the occurrence of an event that is solely within the control of the Company. Lastly, any potential settlement of the Series B Stock between the Company and the Series B Stock shareholders would be required to be settled in cash. As such, the Company has recorded its $3,000,000 equity contribution related to its Series B Stock in stockholders’ equity in the Company’s consolidated balance sheets.

Series A Junior Participating Preferred Stock:

On October 31, 2006, the Company authorized 20,000 shares of Series A Junior Participating Preferred Stock at $.01 par value (the Series A Stock). Additionally, on October 31, 2006, the Company declared a dividend to be distributed on December 20, 2006, to each holder of record of the Company’s Common Stock the right to purchase one one-hundredth of a share of Series A Stock. If a triggering event occurs, the Board of Directors has the option to allow rights holders to exercise their rights (see Shareholder Rights Agreement below).

Dividends: The holders of shares of Series A Stock shall be entitled to receive cash dividends in an amount per share equal to the greater of (a) $1.00 or (b) 100 times the aggregate per share amount of all cash dividends and 100 times the aggregate per share amounts of all non-cash dividends, other than a dividend payable in Common Stock, declared on the Common Stock. Such dividends are payable quarterly on the fifteenth day of January, April, July and October in each year commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of shares of the Series A Stock.

F-47

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

18. Stockholders’ Equity (continued)

Voting Rights: Each share of Series A Stock shall be entitled to one hundred votes on all matters submitted to a vote of the stockholders of the Company.

Redemption: The shares of Series A Stock shall not be redeemable.

Conversion: The shares of Series A Stock shall not be convertible.

Stock Option Plan/Stock Grant Program:

In 2002, the Company adopted a stock grant program for key employees, which replaced its stock option and stock appreciation rights plan for key employees. As of October 31, 2009 and 2008, there were no stock options outstanding. There are currently 5,143 shares outstanding that are subject to repurchase by the Company with an estimated repurchase price value of $156,000 at October 31, 2009. The Company has determined that the terms of the shares outstanding subject to repurchase constitute a liability due to the repurchase right. This repurchase obligation is included in other long-term liabilities in the Company’s consolidated balance sheet at October 31, 2009.

In August 2007, the Company adopted a stock grant performance bonus program (the Program) for senior management. In fiscal 2008, 3,750 shares of common stock were granted to senior management in recognition of the achievement of certain performance goals during fiscal year 2007. In fiscal year 2007, 7,500 shares of common stock were granted to senior management in recognition of performance in years prior to fiscal year 2007. All shares granted under the Program were fully vested as of the date of issuance. In fiscal year 2007, the Company recognized compensation expense of $3,187,000 in connection with the grants. This expense was included in selling, general and administrative expense in the Company’s consolidated statement of operations during fiscal year 2007. A mark-to-market reduction of expenses of approximately $78,000 was recorded in fiscal year 2008 for the shares granted in fiscal year 2008 but having been authorized in fiscal year 2007.

Shares issued under the Program are subject to a right-of-first refusal by the Company during the first two years following issuance of such shares. The Company, upon request by the grantee, in its sole discretion, may repurchase from the grantee a number of shares granted that, when multiplied by the repurchase price will enable the grantee to pay the state and federal income tax liabilities associated with the compensation to the employee in connection with the grant. Alternatively, the Company, in its sole discretion, can make loans to the grantees in amounts sufficient to pay the income tax liabilities associated with the grants. Each loan is evidenced by a promissory note bearing interest at the mid-term applicable federal rate then in effect, with principal and accrued interest due and payable within 24 months from the date of the note. The notes are secured by delivery to the Company of a share certificate having a value equal to 120% of the amount of the loan.

F-48

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

18. Stockholders’ Equity (continued)

On an ongoing basis, the Board of Directors establishes performance goals during the first quarter of a fiscal year, and at the end of that fiscal year, a determination is made as to the level of attainment of those established goals. Based on that level of attainment, up to 3,750 shares may be granted. In lieu of not attaining the performance goals, the Board of Directors, in its sole discretion, may grant the shares for special achievements that fall outside of the established performance goals. Additionally, the Board of Directors may in the future amend the Program to, among other things, increase or decrease the shares available to be granted under the Program, terminate the Program, or include additional participants in the Program.

During fiscal year 2008, the Company adopted a compensation program for its Board of Directors providing for, among other things, stock-based compensation. In fiscal year 2009, 1,086 shares were granted to the Board of Directors and the Company recognized $168,000 of expense in connection with these grants. In fiscal year 2008, 774 shares were granted to the Board of Directors and the Company recognized $180,000 of expense in connection with these grants.

Additionally in fiscal year 2008, the Company adjusted its stock grant performance bonus program to include additional members of management. In December 2008, 11,962 shares were issued to management, with one-third of the shares vesting as of the December 2008 issue date and the remaining shares vesting in fiscal years 2009, 2010, and 2011. In fiscal year 2009, the Company recognized $446,000 of expense in connection with the vesting of these shares. In fiscal year 2008, the Company recognized $498,000 of expense in connection with the program for the achievement of certain performance goals during fiscal year 2008.

F-49

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

18. Stockholders’ Equity (continued)

Shareholder Rights Agreement:

During fiscal year 2007, the Company entered into a shareholder rights agreement with The Bank of New York acting as rights agent. In connection with this agreement, on October 31, 2006, the Company’s Board of Directors adopted a resolution creating a series of 20,000 shares of Preferred Stock designated as Series A Junior Participating Preferred Stock, $.01 Par Value. There were no shares of this stock issued and/or outstanding at October 31, 2008 and 2007, respectively. Also in connection with this agreement, on October 31, 2006, the Company’s Board of Directors authorized and declared a dividend distribution of one “Right” (as defined by the agreement) for each share of common stock outstanding on December 20, 2006. Each “Right” represents the right to purchase one one-hundredth of a share of the above referenced Junior Preferred Stock. If a triggering event (as defined by the agreement) occurs, the Board of Directors has the option to allow rights holders to exercise their rights under the agreement.

19. Segment Information

During fiscal year 2009, the Company operated and tracked results in three reportable operating segments; agri-business, rental operations, and real estate development. The reportable operating segments of the Company are strategic business units with different products and services, distribution processes and customer bases. The agri-business segment includes farming and citrus packing operations. The rental operations segment includes housing and commercial rental operations, leased land, and organic recycling. The real estate development segment includes real estate development operations. The Company measures operating performance, including revenues and earnings, of its operating segments and allocates resources based on its evaluation. The Company does not allocate selling, general and administrative expense, other income (expense), interest expense, income tax expense and assets, or specifically identify them to its operating segments. Revenues from Sunkist represent $22,252,000 of the Company’s agri-business revenues for fiscal year 2009.

Segment information for year ended October 31, 2009:

	Agri-business		Rental Operations		Real Estate Development			Corporate and Other			Total

Revenues	$	31,033,000	$	3,766,000	$	39,000		$	–		$	34,838,000
Costs and expenses		27,281,000		2,061,000		318,000			6,469,000			36,129,000
Impairment charges		–		–		6,203,000			–			6,203,000
Loss on sale of assets		–		–		–			10,000			10,000
Operating income (loss)	$	3,752,000	$	1,705,000	$	(6,482,000	)	$	(6,479,000	)	$	(7,504,000	)

F-50

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

19. Segment Information (continued)

Segment information for year ended October 31, 2008:

	Agri-business		Rental Operations		Real Estate Development			Corporate and Other			Total

Revenues	$	49,794,000	$	3,718,000	$	–		$	–		$	53,512,000
Costs and expenses		34,805,000		2,236,000		991,000			8,292,000			46,324,000
Impairment charges		–		–		1,341,000			–			1,341,000
Loss on sale of assets		–		–		–			11,000			11,000
Operating income (loss)	$	14,989,000	$	1,482,000	$	(2,332,000	)	$	(8,303,000	)	$	5,836,000

Segment information for year ended October 31, 2007:

	Agri-business		Rental Operations		Real Estate Development			Corporate and Other			Total

Revenues	$	44,751,000	$	3,516,000	$	–		$	–		$	48,267,000
Costs and expenses		32,036,000		2,073,000		1,160,000			9,627,000			44,896,000
Impairment charges		–		–		–			–			–
Loss on sale of assets		–		–		–			56,000			56,000
Operating income (loss)	$	12,715,000	$	1,443,000	$	(1,160,000	)	$	(9,683,000	)	$	3,315,000

The following table sets forth revenues by category, by segment for fiscal years 2009, 2008 and 2007:

	2009		2008		2007

Lemons	$	22,252,000	$	40,290,000	$	35,345,000
Avocados		4,026,000		3,502,000		3,185,000
Navel oranges		1,933,000		2,412,000		3,184,000
Valencia oranges		688,000		663,000		776,000
Specialty citrus and other crops		2,134,000		2,927,000		2,261,000
Agri-business revenues		31,033,000		49,794,000		44,751,000

Rental operations		2,130,000		2,140,000		2,095,000
Leased land		1,427,000		1,410,000		1,263,000
Organic recycling		209,000		168,000		158,000
Rental operations revenues		3,766,000		3,718,000		3,516,000

Real estate operations		39,000		–		–
Real estate revenues		39,000		–		–
Total revenues	$	34,838,000	$	53,512,000	$	48,267,000

F-51

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

20. Fruit Growers Supply Cooperative

Limoneira Company is a member of Fruit Growers Supply (FGS), a cooperative. FGS sells supplies to non-members. The profits made by these transactions are allocated to all members based on carton purchases. The profits are then distributed to the members through a dividend five to seven years after they are allocated. Limoneira Company currently has been allocated $1,227,000 for future payments; however, the allocation of profits is subject to approval by the FGS Board of Directors and members may receive amounts less than those originally allocated. The Company will record the amounts ultimately disbursed by FGS as reductions of carton purchases when received. The Company received dividends of $123,000 and $62,000 in fiscal years 2009 and 2008, respectively.

21. Subsequent Events

On November 15, 2009, the Company and Windfall entered into an agreement whereby Windfall irrevocably assigned to the Company its entire 85% interest in Investors. In conjunction with obtaining Windfall’s 85% interest in Investors, the Company agreed to release Windfall and its individual members from any and all liabilities including any losses with respect to Windfall’s previous interest in Investors and any secured and unsecured financing for Investors. The Company has accounted for its acquisition of Windfall’s 85% interest in Investors utilizing the business combination guidance noted in FASB ASC 805, Business Combinations.

F-52

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

21. Subsequent Events (continued)

The following unaudited pro forma condensed consolidated balance sheet presented below illustrates the combined balance sheet of the Company as if the acquisition of the Company’s interest in Investors as described above occurred at October 31, 2009:

	Limoneira Company 10/31/2009			Windfall Investors, LLC 10/31/2009			Pro Forma Adjustments			Pro Forma Balance Sheet
Assets
Current assets	$	7,618,000		$	500,000		$	–		$	8,118,000
Property, plant and equipment, net		53,817,000			–			–			53,817,000
Real estate development		53,125,000			11,890,000			5,634,000	(1)		70,649,000
Assets held for sale		6,774,000			–			–			6,774,000
Equity in investments		1,635,000			–			–			1,635,000
Investment in Calavo Growers, Inc.		11,870,000			–			–			11,870,000
Notes receivable		2,284,000			–			–			2,284,000
Other assets		4,307,000			45,000			–			4,352,000
Non-current assets of discontinued operations		438,000			–			–			438,000
Total assets	$	141,868,000		$	12,435,000		$	5,634,000		$	159,937,000

Liability and stockholders’ equity
Current liabilities	$	5,189,000		$	10,468,000		$	–		$	15,657,000
Long-term liabilities		84,918,000			9,024,000			(1,423,000	)(2)		92,519,000
Stockholders’ equity:
Series B Convertible Preferred Stock		3,000,000			–			–			3,000,000
Series A Junior Participating Preferred Stock		–			–			–			–
Common stock		11,000			–			–			11,000
Additional paid-in capital		34,820,000			–			–			34,820,000
Retained earnings		16,386,000			(7,057,000	)		7,057,000	(3)		16,386,000
Accumulated other comprehensive income (loss)		(2,456,000	)		–			–			(2,456,000	)
Total stockholders’ equity		51,761,000			(7,057,000	)		7,057,000			51,761,000
Total liabilities and stockholders’ equity	$	141,868,000		$	12,435,000		$	5,634,000		$	159,937,000

Pro forma adjustments to the condensed consolidated Balance Sheet at October 31, 2009, include:

(1)	Adjustment to reflect the estimated fair value on October 31, 2009, of the real estate development assets acquired.

(2)	Adjustments to eliminate Limoneira Company’s equity in losses (net of income taxes) of Windfall Investors, LLC as of October 31, 2009.

(3)	Adjustments to eliminate Windfall Investors, LLC accumulated deficits as of October 31, 2009.

F-53

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

21. Subsequent Events (continued)

The following unaudited pro forma condensed consolidated statement of operations presented below illustrates the results of operations of the Company as if the acquisition of Investors on November 15, 2009, had occurred at November 1, 2008:

	Year Ended October 31, 2009
	Limoneira Company Year Ending 10/31/2009			Windfall Investors, LLC 12 months ended 10/31/2009			Pro Forma Adjustments			Pro Forma Statement of Operations

Revenues	$	35,188,000		$	660,000		$	–		$	35,848,000
Costs and expenses		39,613,000			848,000			–			40,461,000
Operating (loss) income		(4,425,000	)		(188,000	)		–			(4,613,000	)

Other income (expense):
Other income (loss), net		(94,000	)		–			–			(94,000	)
Interest income		225,000			–			–			225,000
Interest expense		(692,000	)		(1,100,000	)		–			(1,792,000	)
Total other expense		(561,000	)		(1,100,000	)		–			(1,661,000	)

Loss from continuing operations before income taxes and equity earnings		(4,986,000	)		(1,288,000	)		–			(6,274,000	)
Income tax benefit		2,291,000			–			515,000	(1)		2,806,000
Equity in earnings (losses) of investments		(170,000	)		–			186,000	(2)		16,000
(Loss) income from continuing operations		(2,865,000	)		(1,288,000	)		701,000			(3,452,000	)
Loss from discontinued operations, net of income taxes		(12,000	)		–			–			(12,000	)
Net (loss) income		(2,877,000	)		(1,288,000	)		701,000			(3,464,000	)
Preferred dividends		(262,000	)		–			–			(262,000	)
Net (loss) income applicable to common stock	$	(3,139,000	)	$	(1,288,000	)	$	701,000		$	(3,726,000	)

Basic net loss per share	$	(2.79	)							$	(3.31	)
Diluted net loss per share	$	(2.79	)							$	(3.31	)
Weighted-average shares outstanding-basis		1,124,000									1,124,000
Weighted-average shares outstanding-diluted		1,125,000									1,125,000

Pro forma adjustments to the condensed consolidated statement of operations for the year ended October 31, 2009 include:

(1)

Adjustment to reflect the tax benefit of the Windfall Investors, LLC pre-tax net loss based on Limoneira Company’s tax structure and an estimated tax rate of 40%.

(2)

Adjustment to eliminate Limoneira Company’s equity in losses of Windfall Investors, LLC for the year ended October 31, 2009.

F-54

LIMONEIRA COMPANY

Notes to Consolidated Financial Statements (continued)

21. Subsequent Events (continued)

Other Subsequent Events

At October 31, 2009, the Company had recorded notes receivable and accrued interest related to three employees (the Officers) totaling $1,707,000; of which $1,519,000 was recorded in current notes receivable – related parties and $188,000 was recorded in noncurrent notes receivable –related parties in the Company’s consolidated balance sheet. These notes were issued in connection with payments made by the Company on behalf of the Officers for payroll taxes on stock compensation. Subsequent to October 31, 2009, the Officers notes receivable and accrued interest were paid down by $1,020,000 through the exchange of Company shares that were held by the Officers to the Company. The remaining Officers notes receivable and accrued interest of $687,000 was forgiven by the Company resulting in compensation expense recorded in fiscal year 2010.

The revolving line of credit for Investors matured in November 2009 and the maturity date was subsequently extended by Farm Credit West until March, 1, 2010. The Company is in the process of refinancing the revolving line of credit on a long-term basis through amendment to the Farm Credit West agreement or alternatively through its existing facility with Rabobank.

On January 4, 2010, the Company paid a $0.3125 per share dividend in the aggregate amount of $352,000 to stockholders of record on December 15, 2009.

In December 2009, the Company’s Board of Directors approved the Limoneira Company 2010 Omnibus Incentive Plan. The purposes of the 2010 Omnibus Incentive Plan are to promote the interests of the Company and its stockholders by (i) attracting and retaining employees and directors of, and consultants to, the Company and its affiliates, as defined; (ii) motivating such individuals by means of performance-related incentives to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of the Company. The 2010 Omnibus Incentive Plan will become effective when it is approved by the Company’s stockholders.

In February 2010, the Company and HM Manager, LLC formed a limited liability company, HM East Ridge, LLC, for the purpose of developing one of the four Templeton land parcels. The Company made a capital contribution of land into HM Eastridge, LLC. Since the Company has significant influence, but less than a controlling interest, the Company plans on accounting for its investment in HM Eastridge, LLC using the equity method of accounting.

The Company has evaluated events subsequent to October 31, 2009, to assess the need for potential recognition or disclosure in this report. Such events were evaluated through February 12, 2010, the date these consolidated financial statements were issued. Based upon this evaluation, it was determined that no other subsequent events occurred that require recognition or disclosure in the consolidated financial statements.

F-55

Windfall Investors, LLC

Financial Statements

Year Ended December 31, 2008

F-56

WINDFALL INVESTORS, LLC

FINANCIAL STATEMENTS

YEAR ENDED DECEMBER 31, 2008

TABLE OF CONTENTS

		PAGE

Independent Auditors’ Report		F-58

Balance Sheet		F-59

Statement of Income and Members’ Deficit		F-60

Statement of Cash Flows		F-61

Notes to Financial Statements		F-62-F-66

F-57

Independent Auditors’ Report

Board of Directors

Windfall Investors, LLC

Santa Paula, CA 93060

We have audited the accompanying balance sheet of Windfall Investors, LLC as of December 31, 2008, and the related statements of income and members’ deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Windfall Investors, LLC as of December 31, 2008, and the results of their operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Glenn, Burdette, Phillips & Bryson

Certified Public Accountants

A Professional Corporation

San Luis Obispo, California

January 29, 2010

F-58

WINDFALL INVESTORS, LLC

BALANCE SHEET

DECEMBER 31, 2008

ASSETS

Current Assets
Cash and cash equivalents	$	17,409
Trade receivables, net		106,730
Inventory		52,270
Prepaid expenses and other current assets		28,023
Deferred crop costs		45,100
Current portion of note receivable		8,989
Total current assets		258,521

Property, Plant, and Equipment, Net		12,321,390

Other Assets, Net		66,744

Total Assets	$	12,646,655

LIABILITIES AND MEMBERS’ DEFICIT

Current Liabilities
Accounts payable	$	144,164
Accrued liabilities		6,839
Deposits		2,550
Lines of credit		8,956,814
Current portion of notes payable		135,150
Total current liabilities		9,245,517

Long-Term Liabilities
Notes payable, net of current portion		9,262,778
Total long-term liabilities		9,262,778

Members' Deficit		(5,861,640	)

Total Liabilities and Members' Deficit	$	12,646,655

The accompanying notes are an integral part of these financial statements.

F-59

WINDFALL INVESTORS, LLC

STATEMENT OF INCOME AND MEMBERS’ DEFICIT

YEAR ENDED DECEMBER 31, 2008

Revenues	$	823,253

Cost of Revenues		252,251

Gross Profit		571,002

Operating Expenses		1,575,655

Loss from operations		(1,004,653	)

Other Income (Expense)
Interest expense		(1,105,267	)
Loss from sale of assets		(74,688	)
Other income, net		195,922
Total other income (expense)		(984,033	)

Net loss before provision for income taxes		(1,988,686	)

Provision for income taxes		6,800

Net Loss		(1,995,486	)

Members' Deficit - Beginning of Year		(3,866,154	)

Members' Deficit - End of Year	$	(5,861,640	)

The accompanying notes are an integral part of these financial statements.

F-60

WINDFALL INVESTORS, LLC

STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2008

Cash Flows From Operating Activities
Net loss	$	(1,995,486	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		175,585
Bad debt expense		536,004
Impairment of other assets		43,226
Loss on sale of assets		74,688
Change in assets and liabilities:
Increase in trade receivables		(98,700	)
Increase in inventory		(13,918	)
Decrease in prepaid expenses and other current assets		74,279
Increase in deferred crop costs		(45,100	)
Decrease in accounts payable		(104,957	)
Increase in accrued liabilities		3,599
Increase in deposits		2,550
Total adjustments		647,256
Net cash used by operating activities		(1,348,230	)

Cash Flows From Investing Activities
Purchases of fixed assets		(73,272	)
Purchases of other assets		(75,000	)
Proceeds from sale of other assets		52,925
Net cash used by investing activities		(95,347	)

Cash Flows From Financing Activities
Changes in note receivable		(5,383	)
Repayments under notes payable		(120,603	)
Advances on lines of credit, net		1,582,634
Net cash provided by financing activities		1,456,648

Net increase in cash		13,071

Cash and Cash Equivalents - Beginning of Year		4,338

Cash and Cash Equivalents - End of Year	$	17,409

Schedule of Payments for Interest and Taxes
Payments for interest	$	1,105,267
Payments for income taxes	$	6,800

The accompanying notes are an integral part of these financial statements.

F-61

WINDFALL INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2008

Note 1 - Summary of Significant Accounting Policies

A.	Nature of Business

Windfall Investors, LLC (the Company) is a farming operation located in Paso Robles, California. The Company also provides services for horse training and boarding.

Inventory

Inventories are stated at lower of cost (first-in, first-out) or market.

C.	Property, Plant and Equipment

Property, plant and equipment are stated at cost with depreciation provided on the straight-line basis over the estimated useful lives ranging from five to thirty-nine years.

D.	Income Taxes

The Company has been formed as a Limited Liability Company (LLC) with taxation treatment as a partnership. As such, income or losses will be passed through the Company to its members for purposes of income taxation. Under current California law, an LLC is subject to an annual $800 LLC tax as well as an LLC fee based on gross receipts. The LLC fee for the year ended December 31, 2008 was $6,800.

On July 13, 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation 48 (FIN 48), Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109 (SFAS 109, Accounting for Income Taxes). FIN 48 clarifies SFAS 109 to indicate a criterion that an individual tax position would have to meet for some or all of the income tax benefit to be recognized in the financial statements. Originally effective for fiscal years beginning after December 15, 2006, the FASB subsequently issued two deferrals for nonpublic enterprises, including pass-through entities and not-for-profit organizations, the most recent being FASB Staff Position 48-3 (FSP 48-3) in December 2008. FSP 48-3 deferred the effective date of FIN 48 until years beginning after December 15, 2008.

E.	Fair Value Measurements

In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and states that a fair value measurement should be determined based on assumptions that market participants would use in pricing the asset or liability. The Company has adopted this standard.

F-62

WINDFALL INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2008

PAGE 2

Note 1 - Summary of Significant Accounting Policies (Continued)

F.	Concentrations

The Company maintains cash balances at a financial institution covered under Federal Deposit Insurance Corporation (FDIC). As of October 3, 2008, the FDIC increased coverage up to $250,000 and fully insured non-interest bearing accounts. The Company did not have any uninsured cash at December 31, 2008.

Approximately 38% of the Company’s accounts receivables at December 31, 2008 were from two customers.

Approximately 28% of the Company’s sales during the year ended December 31, 2008 were from three customers.

G.	Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

H.	Allowance for Doubtful Accounts

It is the policy of management to review the outstanding accounts receivable at year-end, as well as historical bad debt write-offs, and establish an allowance for doubtful accounts for estimated uncollectible amounts. The Company has not recorded an allowance for doubtful accounts as of December 31, 2008.

I.	Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Company has no cash equivalents at December 31, 2008.

J.	Revenue and Cost Recognition

The Company’s revenue is recognized on the accrual basis as earned based on date of delivery. Expenditures are recorded on the accrual basis whereby expenses are recorded when incurred, rather than when paid.

K.	Deferred Crop Costs

Costs associated with the following year’s crop are deferred at year-end and are reversed into cost of sales the following year.

F-63

WINDFALL INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2008

PAGE 3

Note 1 - Summary of Significant Accounting Policies (Continued)

L.	Other Assets

Other assets include horses and related costs that are used for training and breeding, which are amortized on a straight-line basis over seven years, and loan costs, which are amortization over term of the loan. Amortization expense for the year ended December 31, 2008 totaled $28,275.

Note 2 - Stock in Credit Association

The Company holds stock in the farm credit association with which the Company has loans. The farm credit association requires that borrowers invest in the credit association in order to obtain a loan. The investment is offset dollar for dollar by a stock loan from the credit association, which is adjusted by the association as the outstanding loan balance is paid down.

Note 3 - Note Receivable

The Company advances from time to time amounts under a note receivable arrangement with a related party. The note receivable does not bear interest and is due upon demand. The balance outstanding on the note was $8,989 as of December 31, 2008 and has been classified as current in the financial statements.

Note 4 - Inventory

Inventory consists of finished goods at December 31, 2008.

Note 5 - Property, Plant and Equipment

Property, plant and equipment are summarized by major classification as follows:

	2008

Land	$	11,025,220
Buildings and building improvements		1,125,815
Irrigation		105,336
Farming and transportation equipment		412,205
Office equipment		3,432
		12,672,008
Accumulated depreciation		(350,618	)

	$	12,321,390

Depreciation expense totaled $147,310 for the year ended December 31, 2008.

F-64

WINDFALL INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2008

PAGE 4

Note 6 - Lines of Credit

The Company has a two revolving lines of credit with Farm Credit West with a total credit line of $10,500,000. The lines of credit are unsecured and are guaranteed by a member of the Company. The lines of credit allow for borrowings based on either a fixed rate of interest (6.67% at December 31, 2008) or a variable rate of interest based on the prime rate less .75% (2.25% at December 31, 2008). Total outstanding on the lines of credit as of December 31, 2008 was $8,956,814. The lines of credit mature on March 1, 2010.

Note 7 - Notes Payable

Notes payable at December 31, 2008 consist of the following:

Note payable to Farm Credit West, with a fixed interest rate of 6.73%; due October 2035, with monthly payments of $63,092, including interest; secured by real property of the Company and guaranteed by members of the Company.	$	9,391,753

Note payable to a related party due upon demand; secured by related party accounts receivable		6,175


Total notes payable	$	9,397,928
Less current portion of notes payable		135,150

Notes payable, net of current portion	$	9,262,778

The aggregate maturities of long-term debt are as follows for the year ending December 31:

Year Ending December 31,
2009	$	135,150
2010		137,927
2011		147,502
2012		157,741
2013		168,690
Thereafter		8,650,918

	$	9,397,928

F-65

WINDFALL INVESTORS, LLC

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2008

PAGE 5

Note 8 - Related Party Transactions

In March of 2005, Windfall, LLC, a member of Windfall Investors, LLC, formed Creston Ag., LLC for the purpose of providing agricultural-related labor and management services to the agricultural industry. During 2008, Creston Ag., LLC provided labor and payroll tax services to the Company totaling $305,122. As discussed in Note 7, the amount due to Creston Ag., LLC at December 31, 2008 was $6,175 and is secured by a note receivable from the Creston Ag., LLC totaling $8,989 at December 31, 2008 (see Note 8).

The Company has also made advances to a related party, Templeton Enterprises, which totaled $11,612 at December 31, 2008, and are included in accounts receivable.

F-66

AVOCADO MARKETING AGREEMENT

This avocado marketing agreement is being entered into by and between CALAVO GROWERS, INC. (Calavo), whose mailing address is 2530 Red Hill Avenue, Santa Ana, California, 92705-5542, and Limoneira Co. (Grower), whose mailing address is 1141 Cummings Rd and whose social security or federal tax identification number is 77-0260692.

This agreement shall be effective 2/8/03 , and shall continue in effect until terminated at any time by either party upon written notice to the other.

Grower shall deliver California avocados to Calavo and deliveries will be acknowledged by the issuance of Calavo receipt forms.

Calavo agrees to receive, handle, market and sell the avocados in such markets and at such prices and at such terms as Calavo shall determine. Title will pass to Calavo upon delivery to Calavo’s facility. Calavo will apply its grades and standards in the handling of the avocados and Grower agrees to be bound by Calavo’s grades and standards.

Calavo will pay Grower for delivered avocados by variety, size and grade on a pooled basis on approximately the 15th (fifteenth) day of the month following delivery. Calavo will deduct from its payment to Grower any advances on picking and hauling, Marketing Order assessments and other normal or mandatory deductions that are customary in the industry.

Grower warrants that the avocados have been grown and harvested in conformity with all applicable federal, state and local laws and regulations.

Grower warrants that he is the owner of the avocados.

This Agreement constitutes the entire agreement between Calavo and Grower and may not be modified expect by both parties’ written agreement.

This Agreement is made under the laws of the State of California and may be terminated at any time by either party upon written notice.

Any dispute under this Agreement shall be resolved by arbitration in Santa Ana, California pursuant to the rules, then obtaining, of the American Arbitration Association and the prevailing party shall be entitled to reasonable attorney’s fees and all costs.

GROWER		CALAVO GROWERS, INC.

Executed at:	Santa Paula
	(City)

This Date:	2/8/03	By:

By:		Date:

JUNE 1, 2005

Harold S. Edwards

President & CEO

Limoneira Company

1141 Cummings Road

Santa Paula, CA 93060

Lecil E. Cole

Chairman and CEO

Calavo Growers, Inc.

2530 Red Hill Avenue

P.O. Box 26081

Santa Ana, CA 92705-5542

Re: Letter Agreement Regarding Fruit Commitment

Dear Messrs. Edwards and Cole:

This Letter Agreement sets forth the mutual understanding and contractual agreement between Limoneira Company, a Delaware corporation (“Limoneira”), and Calavo Growers, Inc., a California corporation (“Calavo”), with respect to the marketing of Limoneira’s avocados by Calavo. Calavo agrees to pay to Limoneira quarterly for Limoneira’s avocados marketed through Calavo $.04 per pound over and above the normal pool price paid by Calavo to growers. Limoneira shall be entitled to verify from time to time the pack-outs reported by Calavo on Limoneira fruit by picking the fruit from a specific orchard block, delivering half of the fruit to Calavo and half to another packer, then comparing the pack-outs reported by each. If the pack-outs reported by Calavo are more than 3% below those reported by the other packer, Limoneira may terminate this Agreement and the Avocado Marketing Agreement described below. In addition to the $.04 per pound allowance provided for above, Calavo shall pay to Limoneira a “haul credit” not less than that paid by Calavo to other growers, and in no event less than $.015 per pound.

This Agreement shall renew annually upon the execution and delivery by Limoneira and Calavo of an Avocado Marketing Agreement in the form of that attached heroto as Exhibit A. Such Marketing Agreement may be modified from time to time by mutual agreement of the parties.

CALAVO GROWERS, INC.		LIMONEIRA COMPANY

By:	/s/ Lecil E. Cole	By	/s/ Harold S. Edwards

Name & Title:	Lecil E. Cole		Name & Title:	Harold S. Edwards
CEO			CEO

Unassociated Document

Exhibit 10.3

STOCK PURCHASE AGREEMENT

between

LIMONEIRA COMPANY

and

CALAVO GROWERS, INC.

June 1, 2005

TABLE OF CONTENTS


	Page
ARTICLE 1 DEFINITIONS		1

ARTICLE 2 PURCHASE AND SALE OF LIMCO SHARES		5

ARTICLE 3 PURCHASE AND SALE OF CALAVO SHARES		6

ARTICLE 4 PURCHASE AND SALE OF MISSION SHARES		6

ARTICLE 5 OFFICE LEASE		6

ARTICLE 6 FRUIT COMMITMENT AGREEMENT		7

ARTICLE 7 JOINT DEVELOPMENT OF PACKING HOUSE		7

ARTICLE 8 STANDSTILL AGREEMENTS		7

ARTICLE 9 THE INITIAL CLOSING AND THE MISSION CLOSING		8
9.1 Initial Closing and Initial Closing Date		8
9.2 Deliveries by Limco at the Initial Closing		8
Limco Shares		8
Office Lease		8
Avocado Marketing Letter Agreement		8
Certificates		8
Certificate of Public Official		8
Standstill Agreements		8
Other Documents		8
9.3 Deliveries by Calavo at the Initial Closing		8
Purchase Price		8
Calavo Shares		8
Office Lease		9
Avocado Marketing Letter Agreement		9
Standstill Agreements		9
Certificates		9
Certificate of Public Official		9
Other Documents		9
9.4 Mission Closing and Mission Closing Date		9

ARTICLE 10 REPRESENTATIONS AND WARRANTIES OF LIMCO		9
10.1 Organization and Qualification of Limco		10
10.2 Capitalization of Limco and Subsidiaries		10
10.3 Subsidiaries		10
10.4 Power and Authority		10
10.5 Investment		11


	Page
10.6 No Violation or Conflict		11
10.7 Financial Statements		11
10.8 Absence of Certain Changes or Events		11
10.9 Title to Assets		12
10.10 Material Contracts		12
10.11 Compliance with Applicable Laws		12
10.12 Litigation and Liabilities		12
10.13 Brokers, Finders, Investment Bankers and Financial Advisors		12
10.14 Labor Relations		12
10.15 Environmental Matters		13
10.16 Intellectual Property		14
10.17 Permits		14
10.18 Liabilities and Disclosure		14
10.19 Changes		14
10.20 Tax Returns and Payments		14
10.21 Insurance Policies		14
10.22 Employee Benefit Plans		15
10.23 Foreign Corrupt Practices Act		17
10.24 Sarbanes-Oxley Compliance		17
10.25 Transferability of the Limco Shares		17

ARTICLE 11 REPRESENTATIONS AND WARRANTIES OF CALAVO		17
11.1 Organization and Qualification of Calavo		17
11.2 Capitalization of Calavo and Subsidiaries		18
11.3 Subsidiaries		18
11.4 Power and Authority		18
11.5 Investment		18
11.6 No Violation or Conflict		19
11.7 Financial Statements and Reductions		19
11.8 Absence of Certain Changes or Events		19
11.9 Title to Assets		19
11.10 Material Contracts		20
11.11 Compliance with Applicable Laws		20
11.12 Litigation and Liabilities		20
11.13 Brokers, Finders, Investment Bankers and Financial Advisors		20
11.14 Labor Relations		20
11.15 Environmental Matters		20
11.16 Intellectual Property		22
11.17 Permits		22
11.18 Liabilities and Disclosure		22
11.19 Changes		22
11.20 Tax Returns and Payments		22
11.21 Insurance Policies		22
11.22 Employee Benefit Plans		23
11.23 Exchange Act Reports		25


	Page
11.24 Foreign Corrupt Practices Act		25

ARTICLE 12 COVENANTS OF LIMCO		25
12.1 Conduct of Business Prior to Initial Closing		25
12.2 Access		27
12.3 Reasonable Efforts Regarding Mission Shares		27
12.4 Reasonable Efforts		27

ARTICLE 13 COVENANTS OF CALAVO		27
13.1 Conduct of Business Prior to Initial Closing		27
13.2 Access		28
13.3 Reasonable Efforts		28

ARTICLE 14 CONDITIONS PRECEDENT TO LIMCO’S OBLIGATION TO CLOSE		28
14.1 General		28
14.2 Representations and Warranties		29
14.3 Investigations Fail to Disclose Material Adverse Change or Condition		29
14.4 Covenants and Agreements		29
14.5 No Adverse Changes		29
14.6 No Proceedings		29
14.7 Certificates		29

ARTICLE 15 CONDITIONS PRECEDENT TO CALAVO’S OBLIGATION TO CLOSE		29
15.1 General		29
15.2 Investigations Fail to Disclose Material Adverse Change or Condition		29
15.3 Representations and Warranties		29
15.4 Covenants and Agreements		29
15.5 No Adverse Changes		30
15.6 No Proceedings		30
15.7 Certificates		30

ARTICLE 16 RIGHTS OF FIRST REFUSAL		30
16.1 Limco Shares		30
16.2 Calavo Shares		30

ARTICLE 17 PUBLIC DISCLOSURE		31

ARTICLE 18 TERMINATION		31
18.1 Termination		31
18.2 Effect of Termination		32

ARTICLE 19 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS		32
19.1 Survival		32

iii


	Page
19.2 Indemnification		32
19.2.1 Limco		32
Calavo		32
Notice/Defense		32
Waiver of Breach; Indemnification Limitations		33

ARTICLE 20 MISCELLANEOUS		33
20.1 Notices		33
20.2 Entire Agreement		34
20.3 Waivers and Amendments		34
20.4 Governing Law		35
20.5 No Assignment		35
20.6 Counterparts		35
20.7 Headings		35
20.8 Benefit to Parties		35
20.9 Validity		35
20.10 Exhibits and Schedules		35
20.11 Further Assurances		35
20.12 Transaction Expenses		35

STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made and entered into as of June 1, 2005, by and between LIMONEIRA COMPANY, a Delaware corporation (“Limco”), and CALAVO GROWERS, INC., a California corporation (“Calavo”).

RECITALS

A. Limco is engaged primarily in the business of growing and marketing avocados, citrus fruits and other specialty crops.

B. Calavo is engaged in the business of marketing fresh avocados and processed avocado products throughout the U.S.A.

C. Limco and Calavo desire to form a strategic alliance by each purchasing shares of common stock of the other as provided herein and by carrying out the further transactions and activities provided for herein.

AGREEMENT

NOW, THEREFORE, as the parties agree as follows:

ARTICLE 1

DEFINITIONS

In addition to the meanings ascribed to certain terms elsewhere in this Agreement, for purposes of this Agreement:

“Accredited Investor” has the meaning set forth in Regulation D promulgated under the Securities Act.

“Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under Securities Exchange Act.

“Basis” means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence.

“Calavo Shares” shall mean the 1,000,000 shares of newly-issued common stock, $.001 par value per share, of Calavo to be purchased by Limco as provided in Article 3 hereof.

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code §4980B and of any similar state law.

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

“Confidential Information” means any information concerning the business and affairs of either party not already generally available to the public.

“Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in ERISA §3(3)) and any other material employee benefit plan, program or arrangement of any kind.

“Employee Pension Benefit Plan” has the meaning set forth in ERISA §3(2).

“Employee Welfare Benefit Plan” has the meaning set forth in ERISA §3(1).

“Environmental, Health, and Safety Requirements” shall mean all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety, and pollutions or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or by products, asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as now or hereafter in effect.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means each entity which is treated as a single employer with Limco or Calavo for purposes of Code §414.

“Fiduciary” has the meaning set forth in ERISA §3(21).

“Financial Statements” has the meaning set forth in Sections 10.7 and 11.7 below.

“GAAP” means United States generally accepted accounting principles as in effect from time to time.

“Initial Closing” has the meaning set forth in Article 9 below.

“Initial Closing Date” has the meaning set forth in Article 9 below.

“Intellectual Property” means (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names, and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including software and source codes, ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including data and related documentation), (g) all other proprietary rights, (h) all web domain names and websites and all registrations and applications associated therewith, and all its derivatives, and (i) all copies and tangible embodiments thereof (in whatever form or medium).

“Knowledge” means actual knowledge after reasonable inquiry of internal personnel deemed appropriate by the Party making the inquiry.

“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by either Limco or Calavo.

“Leases” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties and other agreements with respect thereto, pursuant to which Limco or Calavo holds any Leased Real Property.

“Liability” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due).

“Limco Shares” means the 172,857shares of newly issued common stock, $.01 par value per share, of Limco to be purchased by Calavo as provided in Article 2 hereof.

“Material Adverse Change or Condition” means any occurrence or condition or series of related occurrences or conditions not disclosed in the Financial Statements or Most Recent Financial Statements of either party or, in the case of Calavo, Calavo’s Securities Exchange Act reports that would individually or cumulatively reduce by Five Hundred Thousand Dollars ($500,000) or more the results of operations, financial condition or value of the assets, or properties of either party.

“Mission” means Mission Produce, Inc., a California corporation.

“Mission Closing” has the meaning set forth in Article 9 below.

“Mission Shares” means the 547,452 shares of common stock of Mission which Limco has the right to put to Calavo as provided in Article 4 hereof, if Limco does not sell them to Mission.

“Most Recent Financial Statements” has the meaning set for in Sections 10.7 and 11.7 below.

“Most Recent Fiscal Month End” has the meaning set forth in Sections 10.7 and 11.7 below.

“Multiemployer Plan” has the meaning set forth in ERISA §3(37).

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“Party” means either Limco or Calavo as the case may be.

“PBGC” means the Pension Benefit Guaranty Corporation.

“Person” means any individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, a limited liability company, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).

“Prohibited Transaction” has the meaning set forth in ERISA §406 and Code §4975.

“Reportable Event” has the meaning set forth in ERISA §4043.

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

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

“Security Interest” means any mortgage, pledge, lien, encumbrance, charge or other security interest, other than (a) mechanic’s, materialmen’s, and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other liens arising in the Ordinary Course of Business and not incurred in connection with the borrowing of money.

“Subsidiary” means (i) any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors or (ii) any limited liability company with respect to which a person owns a majority of the voting power and/or interest in profits and losses.

“Tax” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“Tax Return” means any return, declaration, report, claims for refund, information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

ARTICLE 2

PURCHASE AND SALE OF LIMCO SHARES

Limco agrees to sell and Calavo agrees to purchase the Limco Shares, free and clear of all liens, encumbrances or claims of others, for the cash purchase price of $23,450,000. Such purchase price shall be paid by Calavo at the Initial Closing by means of a wire transfer of immediately available funds to an account designated by Limco.

ARTICLE 3

PURCHASE AND SALE OF CALAVO SHARES

Calavo agrees to sell and Limco agrees to purchase the Calavo Shares, free and clear of all liens, encumbrances or claims of others, for the purchase price of $10,000,000. Such purchase price shall be paid by Limco at the Initial Closing by means of a wire transfer of immediately available funds to an account designated by Calavo.

ARTICLE 4

PURCHASE AND SALE OF MISSION SHARES

Calavo and Limco acknowledge and agree that the Mission Shares are subject to certain rights of first refusal set forth in a Shareholder Agreement dated June 5, 1990 and may not be sold unless both the issuer, Mission and its shareholders waive or fail to exercise their respective rights of first refusal and the merger or other business combination transaction have not been agreed to by Calavo and Mission. Mission has entered into an agreement to repurchase the Mission Shares from Limco on or before June 15, 2005. In the event that Mission fails to repurchase the Mission Shares and subject to the condition that the rights of first refusal with respect to the Mission Shares are either waived or not exercised in a timely fashion, and subject to the terms and conditions of Section 9.4, Limco agrees to sell and Calavo agrees to purchase the Mission Shares, free and clear of all liens, encumbrances or claims of others, for a cash purchase price of $5,474,520. Such purchase price shall be paid by Calavo to Limco at the Mission Closing by means of a wire transfer of immediately available funds to an account designated by Limco. Limco represents and warrants to Calavo that (i) Limco owns the Mission Shares free and clear of all liens, security interests and other encumbrances, and has the right to sell the Mission Shares to Calavo on the terms described in this Agreement, subject to the rights of first refusal set forth in the Shareholder Agreement dated June 5, 1990, and (ii) to Limco’s knowledge, the Mission Shares constitute 20.7% of the outstanding capital stock of Mission Produce, Inc.

ARTICLE 5

OFFICE LEASE

On or before the Initial Closing Date, Limco and Calavo shall execute and deliver to each other a Lease Agreement in the form of that attached hereto as Exhibit 5 hereof, pursuant to which Calavo agrees to lease from Limco approximately 9,490 square feet of office space in Limco’s Ranch Headquarters for a period of ten years at an initial annual gross rental of $207,226.

ARTICLE 6

FRUIT COMMITMENT AGREEMENT

At the Initial Closing, Limco and Calavo shall execute and deliver to each other a letter agreement, to be in form and substance reasonably satisfactory to each Party, regarding the marketing of Limco’s avocados by Calavo.

ARTICLE 7

JOINT DEVELOPMENT OF PACKING HOUSE

Following the Initial Closing, Limco and Calavo shall use their good faith reasonable efforts to maximize avocado packing efficiencies for both parties by consolidating their fruit packing operations. Possible opportunities to be considered will include:

	(1)	Cross dock and storage arrangement in Limco’s existing facilities

	(2)	Investment in Limco’s existing vacant orange packing house

	(3)	Investment in an addition to Limco’s existing lemon packing facility

	(4)	Investment in a new consolidated facility for both parties at Limco

Any such joint investment that is agreed to by Calavo and Limco shall provide a reasonable rate of return to the party or parties providing land equipment and/or capital.

ARTICLE 8

STANDSTILL AGREEMENTS

Calavo, together with its executive officers and directors (collectively “Calavo Affiliates”), shall execute and deliver at the Initial Closing, one or more counterparts of a “Standstill Agreement” in the form of Exhibit 8A hereof, pursuant to which (i) Calavo agrees that it will not, without the prior written approval of Limco’s Board of Directors, purchase or enter into any transaction whereby Calavo will acquire cumulatively twelve and six tenths percent (12.6%) of the capital stock of Limco in addition to the Limco Shares being acquired hereunder and (ii) Calavo and the Calavo Affiliates agree that they will not, individually or collectively, themselves or together with any third party or parties form a “group” as defined in the Securities Exchange Act for the purpose of acquiring voting control and/or beneficial ownership of a majority of Limco’s capital stock. Limco, together with its executive officers and directors (collectively “Limco Affiliates”), shall execute and deliver at the Initial Closing, one or more counterparts of a “Standstill Agreement” in the form of Exhibit 8B hereof, pursuant to which (i) Limco agrees that it will not, without the prior written approval of Calavo’s Board of Directors, purchase or enter into any transaction whereby Limco will acquire cumulatively twelve and six tenths percent (12.6%) of the capital stock of

Calavo in addition to the Calavo Shares being acquired hereunder and (ii) Limco and the Limco Affiliates agree that they will not, individually or collectively, themselves or together with any third party or parties form a “group” as defined in the Securities Exchange Act for the purpose of acquiring voting control and/or beneficial ownership of a majority of Calavo’s capital stock.

ARTICLE 9

THE INITIAL CLOSING AND THE MISSION CLOSING

9.1 Initial Closing and Initial Closing Date. Subject to the conditions to closing set forth herein, the consummation of the transactions contemplated by this Agreement (other than the sale of the Mission Shares) shall be effected at a closing (the “Initial Closing”) at 10:00 a.m., Pacific Daylight Savings Time, on a date, agreed to by Calavo and Limco that is not more than 5 days following the satisfaction or waiver of the Initial Closing conditions described in Articles 14 and 15. The Initial Closing shall take place at the Ranch Headquarters of Limco at 1141 Cummings Road, Santa Paula, California 93060. The Initial Closing may also take place at such other time and place as Limco and Calavo may mutually agree. All transactions effected at the Initial Closing, unless otherwise specifically agreed in writing, shall be effective on and as of the Initial Closing Date.

9.2 Deliveries by Limco at the Initial Closing. At the Initial Closing, Limco shall deliver to Calavo:

(a) Limco Shares. The purchase price for the Calavo Shares and one or more certificates evidencing the Limco Shares duly executed and issued in the name of Calavo; together with a completed and signed form of Notice of Transaction Pursuant to Corporations Code Section 25102(f). The Limco Shares will be “restricted securities” under federal and state securities laws and will be issued with a legend restricting any form of transfer for a period of one year from issuance and thereafter only pursuant to an exemption from registration and an opinion of counsel reasonably acceptable to Limco that an exemption from registration is available with respect to the proposed transfer. Such legend shall also reference Limco’s right of first refusal provided for in Article 16 hereof.

(b) Office Lease. A duly executed counterpart of the Office Lease in the form of Exhibit 5 hereof.

(c) Avocado Marketing Letter Agreement. A duly executed counterpart of the avocado marketing letter agreement referred to in Article 6.

(d) Certificates. A copy of the resolutions adopted by Limco’s Board of Directors authorizing and approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, certified by an officer of Limco; a certificate of incumbency of Limco in form and substance reasonably satisfactory to Calavo or its counsel; and the Certificate of the Chief Executive Officer of Limco described in Section 15.7.

(e) Certificate of Public Official. A certificate, dated not more than five (5) days prior to the Initial Closing Date, of the Secretary of the State of Delaware certifying that Limco is a corporation in good standing as a domestic corporation and has paid all corporation taxes payable in that jurisdiction.

(f) Standstill Agreements. Duly executed counterparts of the two Standstill Agreements in the form of Exhibits 8A and 8B hereof, executed by the Persons described in Articles 8 above.

(g) Other Documents. The Certificate of Incorporation and Bylaws of Limco, as amended to date, and all other documents and instruments which, in the reasonable opinion of Calavo or its counsel, will be necessary to effectuate the terms and conditions of this Agreement, the obligations of Limco hereunder, and the consummation of the transaction contemplated hereby.

9.3 Deliveries by Calavo at the Initial Closing. At the Initial Closing, Calavo shall deliver to Limco:

(a) Purchase Price. The purchase price for the Limco Shares.

(b) Calavo Shares. One or more certificates, evidencing the Calavo Shares, duly executed and issued in the name of Limco, together with a completed and signed Form D. The Calavo shares will be “restricted securities” under federal and state securities laws and will be issued with a legend restricting any form of transfer for a period of one year from issuance and thereafter only pursuant to an exemption from registration and an opinion of counsel,

reasonably acceptable to Calavo that an exemption from registration is available with respect to the proposed transactions. Such legend shall also reference Calavo’s right of first refusal provided in Article 16 hereof.

(d) Avocado Marketing Letter Agreement. A duly executed counterpart of the avocado marketing letter agreement referred to in Article 6.

(e) Standstill Agreements. Duly executed counterparts of the two Standstill Agreements in the form of Exhibits 8A and 8B hereof, executed by the Persons described in Article 8 above.

(f) Certificates. A copy of the resolutions adopted by Calavo’s Board of Directors authorizing and approving the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, certified by an officer of Calavo; a certificate of incumbency of Calavo in form and substance reasonably satisfactory to Limco or its counsel; and the Certificate of the Chief Executive Officer of Calavo described in Section 14.7.

(g) Certificate of Public Official. A Certificate, dated not more than five (5) days prior to the Initial Closing Date, of the California Secretary of State certifying that Calavo is in good standing as a domestic corporation of that state and has paid all corporation taxes payable in that state.

(h) Other Documents. The Articles of Incorporation and Bylaws of Calavo, as amended to date, and any and all other documents and instruments which, in the reasonable opinion of counsel to Limco, will be necessary to effectuate the terms and conditions of this Agreement and the obligations of Calavo hereunder.

9.4 Mission Closing and Mission Closing Date. Calavo and Mission may reopen their negotiations regarding a possible acquisition of Mission by Calavo or other business combination transaction between those two entities. In order to facilitate such potential negotiations, Limco and Calavo have agreed that if Mission fails to repurchase the Mission Shares from Limco, Calavo and Limco may postpone the sale of the Mission Shares by Limco to Calavo for a limited period of time. Accordingly, Limco may, in its sole discretion, postpone the closing for the purchase and sale of the Mission Shares (the “Mission Closing”) to a date not later than 180 days following the Initial Closing Date designated by Limco to Calavo in writing not less than 75 days in advance (the “Mission Closing Date”). In the event that Calavo and Mission enter into a binding agreement prior to the Mission Closing Date for a merger or other business combination of such entities and/or their affiliates, either prior or subsequent to Limco’s designation of the Mission Closing Date, Limco may, at its sole election, either proceed with the Mission Closing on the sale of the Mission Shares to Calavo for a cash purchase price of $5,474,520 or dispose of the Mission Shares through the merger or other business combination of Calavo and Mission. At the Mission Closing, (i) Limco shall deliver to Calavo one or more certificates representing the Mission Shares, duly endorsed or accompanied by executed instruments of transfer sufficient to transfer title to the Mission Shares to Calavo beneficially and of record and free and clear of all liens and encumbrances other than the obligations thereafter imposed upon Calavo by the Shareholder Agreement dated June 5, 1990, and (ii) Calavo shall deliver to Limoniera the purchase price for the Mission Shares in the amount of $5,474,520, by wire transfer to an account designated by Limco.

ARTICLE 10

REPRESENTATIONS AND WARRANTIES OF LIMCO

Limco makes the following representations and warranties to Calavo, subject to and qualified by any fact or facts disclosed in the Schedules that are provided to Calavo as required in this Agreement. Disclosure of an item in a Schedule corresponding to a particular Section in this Agreement shall, should the existence of the item or its

contents be relevant to any other Section, be deemed to be disclosed in that other Section whether or not an explicit cross-reference appears as long as it is reasonably apparent that such disclosure applies to any such other Section.

10.1 Organization and Qualification of Limco. Limco is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own or lease and to operate its properties and to carry on its business as now being conducted. The copies of the Certificate of Incorporation, as amended to date, certified by the Delaware Secretary of state, and of the Bylaws of Limco, certified by the Secretary of Limco to be delivered to Calavo at the Initial Closing, will be complete and correct as of the Initial Closing Date.

10.2 Capitalization of Limco and Subsidiaries. The authorized capital stock of Limco consists of 3,000,000 shares of Common Stock, par value $.01 per share of which 975,171 shares are issued and outstanding, and 100,000 shares of Preferred Stock, par value $100.00 per share, of which no shares of Series A and 30,000 shares of Series B are issued and outstanding. There are no treasury shares. Except as set forth in Schedule 10.2 hereto, there are no outstanding options, warrants, scripts, rights to subscribe to or commitments or agreements of any character whatsoever relating to or securities or rights convertible into or exchangeable for, shares of capital stock or other securities or interest in profits of Limco or any Limco Subsidiary, and there are no contracts, commitments, understandings, arrangements or restrictions by which Limco or any Limco Subsidiary is now or in the future would be bound to issue any additional shares of capital stock, other securities or interests in profits. All issued and outstanding shares of capital stock of Limco and each Limco corporate Subsidiary are duly authorized, validly issued, fully paid and nonassessable. All voting rights in Limco and each Limco Subsidiary are vested exclusively in common stock. On the Initial Closing Date, the Limco Shares will be newly issued and free of all liens and encumbrances. On the Initial Closing Date, the stock ownership of Limco’s Subsidiaries will be as set forth in Schedule 10.3 hereto and will be free of all liens and encumbrances. None of the Limco Common Stock or Preferred Stock is entitled to any preemptive right; and Limco’s Certificate of Incorporation and Bylaws do not provide Limco with a right of first refusal to purchase any Limco Common Stock or restrict the sale or other transfer of any Limco Common Stock.

10.3 Subsidiaries. Schedule 10.3 hereto lists each corporation, limited liability company and other entity, which Limco controls directly or indirectly or in which Limco has an ownership interest, direct or indirect, of record or beneficially, whether in capital stock or other equity security, each of which is referred to in this Agreement as a Subsidiary. Except as set forth in Schedule 10.3. Limco does not own, directly or indirectly, any capital stock or other equity securities of any corporation or have any direct or indirect equity or ownership interest in any business entity including, without limitation, business vehicles in the nature of joint ventures and partnerships. Each Limco Subsidiary is duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization, and has the power and authority to own its properties and to carry on its business as now conducted. Each Limco Subsidiary is duly licensed, authorized or qualified to transact business in, and is in good standing in each jurisdiction in which the properties owned or leased or the activities conducted by it makes such licensing, authorization or qualification necessary, except where the failure to be so licensed, authorized qualified or the failure to be in such good standing would not have a material adverse effect on the business, financial condition or operations of Limco and its Subsidiaries taken as a whole. Schedule 10.3 hereto lists, for each Limco Subsidiary, its form of organization, if it is a corporation, the number of shares of capital stock or other equity securities authorized, issued and outstanding, and the holders of record and beneficially of all issued capital stock or other equity securities.

10.4 Power and Authority. Limco has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Limco and the consummation by Limco of the transactions contemplated hereby have been duly authorized by the Board of Directors of Limco and no other corporate proceedings on the part of Limco are necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by Limco and, assuming this Agreement constitutes a valid and binding obligation of Calavo, constitutes a valid and binding obligation of Limco, enforceable against Limco in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights in general and except to the extent that the availability of equitable

remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.

10.5 Investment. Limco understands that the Calavo Shares have not been, and will not be, registered under the Securities Act or under any state securities law, and are being offered and sold in reliance upon federal and state exemptions for a transaction not involving any public offering. Limco (1) is acquiring the Calavo Shares solely for its own account for investment purposes, and not with a view to the distribution thereof, (2) is a sophisticated investor with knowledge and experience in business and financial matters, (3) has received certain information concerning Calavo and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Calavo Shares, (4) is able to bear the economic risk and lack of liquidity inherent in holding the Calavo Shares, and (5) is an Accredited Investor. Limco’s representations and warranties in this Section 10.5 shall not be construed as prohibiting it from selling or otherwise transferring the Calavo Shares at any time subsequent to the first anniversary of the Initial Closing in compliance with applicable federal and state securities laws and regulation and in compliance with the right of first refusal contained in Section 16.2

10.6 No Violation or Conflict. Neither the execution and delivery of this Agreement by Limco nor the consummation of the transactions contemplated hereby nor compliance by Limco with any of the provisions hereof will violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any lien upon any of the properties or assets of Limco or any Limco Subsidiary under any of the terms, conditions or provisions of (i) the Certificate or Articles of Incorporation or the Bylaws of Limco or any Limco Subsidiary, or (ii) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Limco or any Limco Subsidiary is a party or to which they or any of their respective properties or assets may be subject, or (iii) statute, regulation, judgment, ruling, order, writ, injunction, decree, rule or regulation applicable to Limco or any Limco Subsidiary or any of their respective properties or assets, except for such violations, conflicts, breaches, defaults, terminations, accelerations or creations of liens which, individually or in the aggregate, would not have any material adverse effect on the business, operations or financial conditions of Limco and the Limco Subsidiaries taken as a whole.

10.7 Financial Statements. Except as set forth in Schedule 10.7, the consolidated audited financial statements of Limco and the Limco Subsidiaries for the fiscal year ended October 31, 2004, consisting of the consolidated balance sheet as of such date and the related statements of operations, changes in stockholders’ equity and cash flows for the year then ended (the “Financial Statements”), which Financial Statements and the opinion of Deloitte and Touche thereon dated February 8, 2005, have been furnished to Calavo, present fairly in all material respects, the financial position of Limco as of such date and the results of operations and cash flows for the year then ended, in accordance with GAAP, applied on a consistent basis throughout such period. Except as set forth in Schedule 10.7, the Financial Statements, and all accompanying exhibits and schedules were true complete and correct in all respects as of the dates thereof, were prepared in accordance with GAAP, applied on a consistent basis throughout such period, except as otherwise stated therein, and presented fairly the financial position as at the date of, and the results of operations for the periods covered by, such statements of Limco and the Limco Subsidiaries. The unaudited consolidated and consolidating balance sheets and statements of income changes in stockholders equity and cash flow (the “Most Recent Financial Statements”) of Limco as of and for the months ending April 30, 2005 (“Most Recent Fiscal Month”) have not been prepared in accordance with GAAP, but nevertheless present fairly, in all material respects, the financial condition of Limco as of such date and the result of operations of Limco for such periods and are consistent with the books and records of Limco. Limco’s management has disclosed, based on its most recent evaluation to Limco’s auditors and the audit committee of Limco’s Board of Directors, (i) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Limco’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involved management or other employees who have a significant role in Limco’s internal control over financial reporting.

10.8 Absence of Certain Changes or Events. Except as and to the extent contemplated by this Agreement, since the date of the Most Recent Financial Statements, Limco has conducted its business only in the ordinary course, and there has not been, with respect to Limco, (a) any material adverse change in or to such business, (b) any material damages, destruction or loss (whether covered by insurance or not), (c) any material change by Limco in accounting

methods, principles or practices; or (d) any commitment, agreement or understanding respecting any employee of Limco which has or would have the effect of increasing such employee’s compensation or benefits other than in accordance with past Limco policies.

10.9 Title to Assets. Limco owns and has title to its properties and assets as reflected in the Financial Statements, subject to no material liens, mortgages, pledges, encumbrances or charges of any kind, except as disclosed in the Financial Statements or as disclosed in Schedule 10.9, and except for non-delinquent liens for current taxes and assessments. All leases by which Limco or its Subsidiaries lease real or personal property are in good standing and are valid and effective in accordance with their respective terms, and there exists no material default or other occurrence or condition which would result in a material default or termination of any of those leases.

10.10 Material Contracts. Set forth in Schedule 10.10 is a true and correct list of (i) all plans, contracts or understandings providing for bonuses, pensions, options, deferred compensation, retirement payments, royalty payments, profit sharing or similar understandings with respect to any present or former officer, director or consultant, (ii) any contract or agreement with any labor union, (iii) any contract for the future purchase, acquisition or sale of products or rights to products or performance of services over a period of more than three months from the date hereof not made in the ordinary course of business, (iv) all leases of real property, including all amendments and modifications, (v) any contract containing covenants limiting the freedom of Limco or any of the Limco Subsidiaries to compete in any line of business or with any person; and (vi) every other contract to which Limco or any of its Subsidiaries is a party which could reasonably be expected to result in annual payments by or to Limco or any of its Subsidiaries in excess of Two Hundred Thousand Dollars ($200,000) or cumulative payments by or to or any of the Limco Subsidiaries in excess of Two Hundred Thousand Dollars ($200,000), except for contracts entered into in the ordinary course of business which are terminable upon less than thirty (30) days’ notice by either party thereto without penalty or liability (collectively, “Material Contracts”). Limco heretofore has delivered or made available to Calavo true and correct copies of all Material Contracts. Neither Limco nor any of its Subsidiaries is in default or breach, and no event has occurred or shall occur by reason of the transactions contemplated herein which would constitute a default or breach, where such default or breach would entitle another party thereto to accelerate or terminate such Material Contract or otherwise impose a material penalty or forfeiture thereunder (whether with or without notice, lapse of time or the happening or occurrence of any other event), under any Material Contract. All Material Contracts are valid and binding agreements, and to the knowledge of Limco, there are no facts or circumstances which make a default under any Material Contract by any party thereto likely to occur subsequent to the date hereof.

10.11 Compliance with Applicable Laws. Except as set forth in Schedule 10.11, and except for possible violations which individually or in the aggregate do not, and insofar as reasonably can be foreseen, in the future will not, have a material adverse effect on Limco, Limco and the Limco Subsidiaries are in compliance with all requirements of law, federal, state or local, and of all governmental bodies or agencies having jurisdiction over it or the conduct of its business. Limco is not presently charged with, nor to its knowledge, is Limco under any investigation or the subject of any threatened proceeding with respect to any violation of any statute, law, ordinance, rule or regulation relating to Limco.

10.12 Litigation and Liabilities. Except as disclosed in Schedule 10.12, there are no actions, suits, investigations or proceedings pending or, to the knowledge of Limco threatened against Limco or any Limco Subsidiary; nor, to the knowledge of Limco, are there any facts or circumstances that could reasonably be expected to result in a claim for damages that, if adversely determined, would be reasonably likely to result in any claims against or obligations or liabilities of Limco or any of the Limco Subsidiaries that, alone or in the aggregate, would have any material adverse effect on Limco.

10.13 Brokers, Finders, Investment Bankers and Financial Advisors. No broker, finder, investment banker or financial advisor is entitled to any brokerage, finder’s or other fee or commission from Limco in connection with the transactions contemplated by this Agreement based upon arrangement made by or on behalf of Limco.

10.14 Labor Relations. To Limco’s knowledge, it has not engaged in any unfair labor practice, and has not illegally discriminated on the bases of age or sex in its employment conditions or practices. Except as set forth in Schedule 10.14, there are no unfair labor practice grievances or age or sex discrimination complaints pending, or, to Limco’s knowledge, threatened against Limco before any governmental entity and, to the knowledge of Limco, no basis therefore.

10.15 Environmental Matters.

(a) There is no civil, criminal or administrative action, suit, claim, notice of violation or proceeding pending or, to Limco’s knowledge, threatened against Limco respecting the storage, use, release or burial of a hazardous substance (for the purposes of this Agreement, as defined under any applicable federal, state or local statute, rule, regulation or other law and whether solid, liquid or gaseous) on, from or under premises occupied by Limco.

(b) To Limco’s knowledge, it has no liability (absolute, accrued, contingent or otherwise), including, without limitation, clean-up obligations or liabilities to third parties for personal injuries or other torts, for any contamination of air, soil or water with hazardous substances.

(c) Limco is, to its knowledge, operating its business in material compliance with all Environmental Health and Safety Requirements.

10.16 Intellectual Property. Schedule 10.16 hereto contains an accurate and complete list of all intellectual property (the “Intellectual Property”) owned by or licensed to Limco, together with registration data where applicable and descriptive identification as appropriate. Limco owns or has the right to use all of the Intellectual Property used in or necessary for the conduct of its business as now conducted, without any known material infringement upon, or conflict with the rights of, or claim of ownership or other rights by, any other person. Limco has received no written notice of any claimed infringement or conflict with respect to any of the foregoing.

10.17 Permits. Limco and each Limco Subsidiary hold licenses, certificates, permits, franchises and rights from all appropriate persons, governmental entities and public authorities necessary for the conduct of their respective businesses as now conducted, except where the failure to obtain the same would not have a material adverse effect on the business operations or financial condition of Limco. Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated herein will result in the termination of any license, certificate, permit, franchise or right held by Limco or any Limco Subsidiary.

10.18 Liabilities and Disclosure. Limco has no material liabilities of any nature, whether accrued, absolute, contingent or otherwise (including, without limitation, liabilities as guarantor or otherwise with respect to obligations of others), except as stated or adequately reserved against in the Financial Statements, disclosed in the Schedules hereto, or incurred in the ordinary course of business after April 30, 2005. There is, to Limco’s knowledge, no fact which, in its reasonable judgment and belief, does or might materially and adversely affect the business, prospects, condition, affairs or operations of Limco or any Limco Subsidiary or any of their properties or assets which has not been set forth in this Agreement or the Schedules.

10.19 Changes. Except as set forth on Schedule 10.19, since the Most Recent Financial Statements, there has not been any material adverse change in the business, financial conditions, results of operations or prospects of Limco or any Limco Subsidiary, except such changes which could not, individually or in the aggregate, have a material adverse effect on the business, financial condition or results of operations of Limco or and Limco Subsidiaries.

10.20 Tax Returns and Payments. Except as set forth in Schedule 10.20, Limco and its Subsidiaries have timely filed all federal, state, and local tax returns which were required to be filed by or with respect to Limco or any of the Limco Subsidiaries, and have paid or, where payment is not yet required, have established adequate tax reserves for the payment of all Taxes with respect to the periods covered by such returns. Nether Limco nor any of the Limco Subsidiaries have consented to any waiver or extension of any statute of limitations relating to the assessment or collection of any federal, state or local Tax. There are no deficiency assessments against Limco or any of the Limco Subsidiaries.

10.21 Insurance Policies. Schedule 10.21 sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which Limco has been a party, a named insured, or otherwise the beneficiary of coverage at any time from fiscal year 2003 to the date hereof:

(a) the name of the insurer, the name of the policyholder, and the name of each covered insured;

(b) the policy number and the period of coverage;

(c) the scope (including an indication of whether the coverage was on a claims made, occurrence, or other basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; and

(d) a description of any retroactive premium adjustment or other loss-sharing arrangements. With respect to each such insurance policy: (1) the policy is legal, valid, binding, enforceable, and in full force and effect; (2) the policy will continue to be legal, valid, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (3) neither Limco nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no

event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (4) no party to the policy has repudiated any provision thereof. Schedule 10.21 also describes any self-insurance arrangements affecting any of Limco’s properties or operations.

10.22 Employee Benefit Plans.

(a) Schedule 10.22 contains a true and complete list of all of the following agreements, arrangements, practices, or plans, whether written or oral, which are presently in effect with respect to Limco and under which Limco continues to have liability or obligations thereunder: (i) “employee pension benefit plans” and “employee benefit plans” as defined respectively in Section 3(2) and 3(3) of ERISA, including “multiemployer” plans as defined in Section 3(37) of ERISA, or a “multiple employer” plan within the meaning of Section 4063 or 4064 of ERISA; and (ii) any other pension, profit sharing, supplemental unemployment, retirement, deferred compensation, stock purchase, stock option, incentive, bonus, vacation, severance, disability, hospitalization, medical insurance or other employee benefit plans, practice, policies, arrangements, or programs for the benefit of any employee, former employee, director, or agent of Limco or any Limco Subsidiary, whether or not any of the foregoing is funded, whether formal or informal, and whether or not subject to ERISA. (The plans or programs described in clauses (i) and (ii) are herein collectively referred to as the “Limco Plans.”) Limco has delivered or made available to Calavo true and complete copies of all (a) Limco Plans, related trust arrangements and funding arrangements and any amendments thereto, (b) the most recent summary plan descriptions, together with the most recent summary material modifications required under ERISA with respect to each Limco Plan, (c) the most recent annual reports (series 5500 and schedules thereto) required under ERISA with respect to each Limco Plan, (d) the two most recent actuarial valuations, if applicable, prepared for any Limco Plan, (e) the most recent IRS determination letters with respect to each Limco Plan, and (f) all material employer communications relating to each such Limco Plan.

(b) Limco and its Subsidiaries are in material compliance with the requirements prescribed by any and all statutes, orders, governmental rules or regulations applicable to the Limco Plans, and all reports and disclosures relating to the Limco Plans required to be filed with or furnished to governmental agencies, participants or beneficiaries prior to the Initial Closing Date have been or will be filed or furnished in a timely manner and in accordance with applicable law.

(c) Except as described in Schedule 10.22, neither Limco nor any Limco Subsidiary has ever contributed or been required to contribute to any multiemployer plan as defined in Section 3(37) of ERISA.

(d) Neither Limco, any Limco Subsidiary nor any other “disqualified person” or “party in interest” (as defined in Section 4975 of the Code and Section 3 of ERISA), has engaged in any “prohibited transaction” as such term is defined in Section 4975 of the Code or Section 406 of ERISA, which could subject any of the Limco Plans (or their related trusts), Limco, any Limco Subsidiary or any officer, director, or employee of Limco or any Limco Subsidiary or any trustee, administrator or any other fiduciary of any of the Limco Plans to tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA.

(e) Except as set forth in Schedule 10.22, there are no material actions, audits, suits or claims pending (other than routine claims for benefits) or, to the best knowledge of Limco , threatened, against any of the Limco Plans or any fiduciary of any of the Limco Plans or against the assets of any of the Limco Plans.

(f) Except as set forth in Schedule 10.22, Limco and its Subsidiaries have no obligation or liability to any retired or former employee under any disability (long or short term), hospitalization, medical, dental or life insurance plans (whether insured or self-insured) or other employee welfare plan as defined in ERISA Section 3(1) maintained by Limco and its Subsidiaries, other than as required by COBRA.

(g) Each “group health plan” (within the meaning of Section 5000(b)(1) of the Code) maintained by Limco or any of its affiliates has, as of the first day of each group health plan’s first plan year beginning on or after July 1, 1986, been administered in compliance with the continuation coverage requirements contained in and as provided under Section 4980B of the Code and any regulations promulgated or proposed thereunder.

(h) Except as set forth in Schedule 10.22, no payment which will be or may be made by Limco to any employee, former employee, director or agent thereof will or could be characterized as an “excess parachute payment: within the meaning of Section 280G(b)(1) of the Code and by reason of the transactions contemplated herein.

(i) Limco, to its knowledge, (i) is in compliance with all applicable federal and state laws, rules and regulations respecting employment, employment practices, terms and conditions of employment and wages and hours, in each case, with respect to employees and former employees of Limco, (ii) has withheld all amounts

required by law to be withheld from the wages, salaries and other payments to employees and former employees of Limco, and (iii) is not liable for any arrears of wages or any taxes or any penalty to comply with any of the foregoing, except for such noncompliance, failure to withhold or liability which would not individually or in the aggregate have a material adverse effect on Limco and its Subsidiaries taken as a whole.

(j) Except as set forth in Schedule 10.22, neither the execution of this Agreement nor the performance of the transactions contemplated herein will (either alone or upon the occurrence of an additional event) constitute an event under any Limco Plan that will or may result in any payment, acceleration, vesting or increase in benefits with respect to any employee, former employee, or director of Limco.

(k) Limco has made, and makes, no representations or warranties respecting the adequacy of estimates of or reserves (if any) for post-retirement medical benefits for employees.

10.23 Foreign Corrupt Practices Act. Neither Limco nor any Limco Subsidiary has made or offered or agreed to offer anything of value to any foreign government official, political party or candidate for governmental office nor have they taken any action which would cause Limco or any Limco Subsidiary to be in violation of Sections 103b or 104 of the Foreign Corrupt Practices Act of 1977, as amended.

10.24 Sarbanes-Oxley Compliance. Inasmuch as Limco is not a reporting company under the Securities Exchange Act, it is not obligated to comply with the Sarbanes-Oxley Act of 2002. Limco is not required by applicable laws and regulations to register its Common Stock under Section 12(g) of the Securities Exchange Act.

10.25 Transferability of the Limco Shares. Subject to compliance with the right of first refusal granted to Limco in Section 16.1: beginning on the first anniversary of the Initial Closing Date, Calavo shall have the same right and ability as other stockholders of Limco to sell the Limco Shares on the Pink Sheets (or on any stock exchange, Nasdaq market or OTC Bulleting Board on which Limco’s Common Stock is then traded) in accordance with the terms and conditions of Rule 144 under the Securities Act; and beginning on the second anniversary of the Initial Closing Date, the Limco Shares will be freely transferable by Calavo in accordance with Rule 144(k) under the Securities Act.

ARTICLE 11

REPRESENTATIONS AND WARRANTIES OF CALAVO

Calavo makes the following representations and warranties to Limco, subject to and qualified by any fact or facts disclosed in the Schedules that are provided to Limco as required in this Agreement. Disclosure of an item in a Schedule corresponding to a particular Section in this Agreement shall, should the existence of the item or its contents be relevant to any other Section, be deemed to be disclosed in that other Section whether or not an explicit cross-reference appears as long as it is reasonably apparent that such disclosure applies to any such other Section.

11.1 Organization and Qualification of Calavo. Calavo is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California and has the requisite corporate power and authority to own or lease and to operate its properties and to carry on its business as now being conducted. The copies of the Articles of Incorporation, as amended to date, certified by the California Secretary of State, and of the Bylaws of the Calavo,

certified by the Secretary of the Calavo to be delivered to Limco at the Initial Closing, will be complete and correct as of the Initial Closing Date.

11.2 Capitalization of Calavo and Subsidiaries. The authorized capital stock of Calavo consists of One Hundred Million (100,000,000) shares of Common Stock, ($.001) par value per share, of which Thirteen Million Five Hundred Seven Thousand (13,507,000) shares are issued and outstanding, and there are no treasury shares. Except as set forth in Schedule 11.2 hereto, there are no outstanding options, warrants, scripts, rights to subscribe to or commitments or agreements of any character whatsoever relating to or securities or rights convertible into or exchangeable for, shares of capital stock or other securities or interest in profits of Calavo or any Calavo Subsidiary, and there are no contracts, commitments, understandings, arrangements or restrictions by which Calavo or any Calavo Subsidiary is now or in the future would be bound to issue any additional shares of capital stock, other securities or interests in profits. All issued and outstanding shares of capital stock of Calavo and each corporate Calavo Subsidiary are duly authorized, validly issued, fully paid and nonassessable. All voting rights in Calavo and each Calavo Subsidiary are vested exclusively in common stock. On the Initial Closing Date, the Calavo Shares will be newly-issued, and free of all liens and encumbrances. On the Initial Closing Date, the stock ownership of Calavo’s Subsidiaries will be as set forth in Schedule 11.3 hereto and will be free of all liens and encumbrances. None of the Calavo Common Stock is entitled to any preemptive right; and Calavo’s Articles of Incorporation and Bylaws do not provide Calavo with a right of first refusal to purchase any Calavo Common Stock or restrict the sale or other transfer of any Calavo Common Stock.

11.3 Subsidiaries. Schedule 11.3 hereto lists each corporation, which Calavo controls directly or indirectly or in which Calavo has an ownership interest, direct or indirect, of record or beneficially, whether in capital stock or other equity security, each of which is referred to in this Agreement as a Subsidiary. Except as set forth in Schedule 11.3, Calavo does not own, directly or indirectly, any capital stock or other equity securities of any corporation or have any direct or indirect equity or ownership interest in any business entity including, without limitation, business vehicles in the nature of joint ventures and partnerships. Each Calavo Subsidiary is duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization, and has the power and authority to own its properties and to carry on its business as now conducted. Each Calavo Subsidiary is duly licensed, authorized or qualified to transact business in, and is in good standing in each jurisdiction in which the properties owned or leased or the activities conducted by it makes such licensing, authorization or qualification necessary, except where the failure to be so licensed, authorized qualified or the failure to be in such good standing would not have a material adverse effect on the business, financial condition or operations of Calavo and its Subsidiaries taken as a whole. Schedule 11.3 hereto lists, for each Calavo Subsidiary, its form of organization, if it is a corporation, the number of shares of capital stock or other equity securities authorized, issued and outstanding, and the holders of record and beneficially of all issued capital stock or other equity securities.

11.4 Power and Authority. Calavo has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Calavo and the consummation by Calavo of the transactions contemplated hereby have been duly authorized by the Board of Directors of Calavo and no other corporate proceedings on the part of Calavo are necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by Calavo and, assuming this Agreement constitutes a valid and binding obligation of Limco, constitutes a valid and binding obligation of Calavo, enforceable against Calavo in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights in general and except to the extent that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought.

11.5 Investment. Calavo understands that the Limco Shares have not been, and will not be, registered under the Securities Act or under any state securities law, and are being offered and sold in reliance upon federal and state exemptions for a transaction not involving any public offering. Calavo (1) is acquiring the Limco Shares solely for its own account for investment purposes, and not with a view to the distribution thereof, (2) is a sophisticated investor with knowledge and experience in business and financial matters, (3) has received certain information concerning Limco and has had the opportunity to obtain additional information as desired in order to evaluate the merits and the risks inherent in holding the Limco Shares, (4) is able to bear the economic risk and lack of liquidity inherent in holding the Limco Shares, and (5) is an Accredited Investor. Calavo’s representations and warranties in

this Section 11.5 shall not be construed as prohibiting it from selling or otherwise transferring the Limco Shares at any time subsequent to the first anniversary of the Initial Closing in compliance with applicable federal and state securities laws and regulations and in compliance with the right of first refusal contained in Section 16.1.

11.6 No Violation or Conflict. Neither the execution and delivery of this Agreement by Calavo nor the consummation of the transactions contemplated hereby nor compliance by Calavo with any of the provisions hereof will violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any lien upon any of the properties or assets of Calavo or any Calavo Subsidiary under any of the terms, conditions or provisions of (i) the Articles of Incorporation or the Bylaws of Calavo or any Calavo Subsidiary, or (ii) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Calavo or any Calavo Subsidiary is a party or to which they or any of their respective properties or assets may be subject, or (iii) statute, regulation, judgment, ruling, order, writ, injunction, decree, rule or regulation applicable to Calavo or any Calavo Subsidiary or any of their respective properties or assets, except for such violations, conflicts, breaches, defaults, terminations, accelerations or creations of liens which, individually or in the aggregate, would not have any material adverse effect on the business, operations or financial conditions of Calavo and the Calavo Subsidiaries taken as a whole.

11.7 Financial Statements and Reductions. Except as set forth in Schedule 11.7, the consolidated audited financial statements of Calavo and the Calavo Subsidiaries for the fiscal year ended October 31, 2004, consisting of the consolidated balance sheet as of such date and the related statements of income, shareholders’ equity and cash flows for the year then ended (the “Financial Statements”), which Financial Statements and the opinion of Deloitte and Touche thereon dated January 12, 2005, have been furnished to Limco, present fairly, in all material respects, the consolidated financial position of Calavo and the Calavo Subsidiaries at October 31, 2004, and the results of their operations and cash flows for the year then ended, in accordance with GAAP, applied on a consistent basis throughout such period. Except as set forth in Schedule 11.7, the Financial Statements, and all accompanying exhibits and schedules were true, complete and correct in all material respects as of the dates thereof, were prepared in accordance with GAAP, applied on a consistent basis throughout such period, except as otherwise stated therein, and presented fairly the financial position as at the date of, and the results of operations for the periods covered by, such statements of the Calavo and the Calavo Subsidiaries. The Most Recent Financial Statements of Calavo as of and for the Most Recent Fiscal Month have not been prepared in accordance with GAAP, but nevertheless present fairly in all material respects, the financial condition of Calavo as of such date and the results of operations of Calavo for such periods and are consistent with the books and records of Calavo. Calavo’s management has disclosed, based on its most recent evaluation to Calavo’s auditors and the audit committee of Calavo’s Board of Directors, (i) all significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Calavo’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Calavo’s internal control over financial reporting.

11.8 Absence of Certain Changes or Events. Except as and to the extent contemplated by this Agreement, since the date of the Most Recent Financial Statements, Calavo has conducted its business only in the ordinary course, and there has not been, with respect to Calavo, (a) any material adverse change in or to such business, (b) any material damage, destruction or loss (whether covered by insurance or not), (c) any material change by Calavo in accounting methods, principles or practices; or (d) any commitment, agreement or understanding respecting any employee of Calavo which has or would have the effect of increasing such employee’s compensation or benefits other than in accordance with past Calavo policies.

11.9 Title to Assets. Calavo owns and has title to its properties and assets as reflected in the Financial Statements, subject to no material liens, mortgages, pledges, encumbrances or charges of any kind, except as disclosed in the Financial Statements or as disclosed in Schedule 11.9, and except for non-delinquent liens for current taxes and assessments. All leases by which Calavo or its Subsidiaries lease real or personal property are in good standing and are valid and effective in accordance with their respective terms, and there exists no material default or other occurrence or condition which would result in a material default or termination of any of those leases.

11.10 Material Contracts. Set forth in Schedule 11.10 is a true and correct list, with respect to Calavo and the Calavo Subsidiaries, of (i) all plans, contracts or understandings providing for bonuses, pensions, options, deferred compensation, retirement payments, royalty payments, profit sharing or similar understandings with respect to any present or former officer, director or consultant, (ii) any contract or agreement with any labor union, (iii) any contract for the future purchase, acquisition or sale of products or rights to products or performance of services over a period of more than three months from the date hereof not made in the ordinary course of business, (iv) all leases of real property, including all amendments and modifications, (v) any contract containing covenants limiting the freedom of Calavo or any of the Calavo Subsidiaries to compete in any line of business or with any person; and (vi) every other contract to which Calavo or any of its Subsidiaries is a party which could reasonably be expected to result in annual payments by or to Calavo or any of its Subsidiaries in excess of Two Hundred Thousand Dollars ($200,000) or cumulative payments by or to Calavo or any of its Subsidiaries in excess of Two Hundred Thousand Dollars ($200,000), except for contracts entered into in the ordinary course of business which are terminable upon less than thirty (30) days’ notice by either party thereto without penalty or liability (collectively, “Material Contracts”). Calavo heretofore has delivered or made available to Limco true and correct copies of all Material Contracts. Neither Calavo nor any of its Subsidiaries is in default or breach, and no event has occurred or shall occur by reason of the transactions contemplated herein which would constitute a default or breach, where such default or breach would entitle another party thereto to accelerate or terminate such Material Contract or otherwise impose a material penalty or forfeiture thereunder (whether with or without notice, lapse of time or the happening or occurrence of any other event), under any Material Contract. All Material Contracts are valid and binding agreements, and to the knowledge of Calavo, there are no facts or circumstances which make a default under any Material Contract by any party thereto likely to occur subsequent to the date hereof.

11.11 Compliance with Applicable Laws. Except as set forth in Schedule 11.11, and except for possible violations which individually or in the aggregate do not, and insofar as reasonably can be foreseen, in the future will not, have a material adverse effect on Calavo, Calavo and its Subsidiaries are in compliance with all requirements of law, federal, state or local, and of all governmental bodies or agencies having jurisdiction over it or the conduct of its business. Except as set forth in Schedule 11.11, Calavo is not presently charged with, nor to its knowledge, is Calavo under any investigation or the subject of any threatened proceeding with respect to any violation of any statute, law, ordinance, rule or regulation relating to Calavo.

11.12 Litigation and Liabilities. Except as disclosed in Schedule 11.12, there are no actions, suits, investigations or proceedings pending or, to the knowledge of Calavo, threatened against Calavo or any Calavo Subsidiary; nor, to the knowledge of Calavo, are there any facts or circumstances that could reasonably be expected to result in a claim for damages that, if adversely determined, would be reasonably likely to result in any claims against or obligations or liabilities of Calavo or any of the Calavo Subsidiaries that, alone or in the aggregate, would have any material adverse effect on Calavo.

11.13 Brokers, Finders, Investment Bankers and Financial Advisors. No broker, finder, investment banker or financial advisor is entitled to any brokerage, finder’s or other fee or commission from Calavo in connection with the transactions contemplated by this Agreement based upon arrangement made by or on behalf of Calavo.

11.14 Labor Relations. To Calavo’s knowledge, it has not engaged in any unfair labor practice, and has not illegally discriminated on the basis of age or sex in its employment conditions or practices. Except as set forth in Schedule 11.14, there are no unfair labor practice grievances or age or sex discrimination complaints pending, or, to Calavo’s knowledge, threatened against Calavo before any governmental entity and, to the knowledge of Calavo, there is no basis therefor.

11.15 Environmental Matters.

(a) There is no civil, criminal or administrative action, suit, claim, notice of violation or proceeding pending or, to Calavo’s knowledge, threatened against Calavo respecting the storage, use, release or burial of a hazardous substance (for the purposes of this Agreement, as defined under any applicable federal, state or local statute, rule, regulation or other law and whether solid, liquid or gaseous) on, from or under premises occupied

by Calavo; provided that the receding representation and warranty shall not be applicable to the real property in Santa Paula, California that Calavo leases from Limco.

(b) To Calavo’s knowledge, it has no liability (absolute, accrued, contingent or otherwise), including, without limitation, clean-up obligations or liabilities to third parties for personal injuries or other torts, for any contamination of air, soil or water with hazardous substances.

(c) Calavo is, to its knowledge, operating its business in material compliance with all Environmental Health and Safety Requirements.

11.16 Intellectual Property. Schedule 11.16 hereto contains an accurate and complete list of all intellectual property (the “Intellectual Property”) owned by or licensed to Calavo, together with registration data where applicable and descriptive identification as appropriate. Calavo owns or has the right to use all of the Intellectual Property used in or necessary for the conduct of its business as now conducted, without any known material infringement upon, or conflict with the rights of, or claim of ownership or other rights by, any other person. Calavo has received no written notice of any claimed infringement or conflict with respect to any of the foregoing.

11.17 Permits. Calavo and each Calavo Subsidiary hold licenses, certificates, permits, franchises and rights from all appropriate persons, governmental entities and public authorities necessary for the conduct of their respective businesses as now conducted, except where the failure to obtain the same would not have a material adverse effect on the business operations or financial condition of Calavo. Neither the execution or delivery of this Agreement nor the consummation of the transactions contemplated herein will result in the termination of any license, certificate, permit, franchise or right held by Calavo or any Calavo Subsidiary.

11.18 Liabilities and Disclosure. Calavo has no material liabilities of any nature, whether accrued, absolute, contingent or otherwise (including, without limitation, liabilities as guarantor or otherwise with respect to obligations of others), except as stated or adequately reserved against in the Financial Statements, disclosed in the Schedules hereto or incurred in the ordinary course of business after April 30, 2005. There is, to the Calavo’s knowledge, no fact which, in its reasonable judgment and belief, does or might materially and adversely affect the business, prospects, condition, affairs or operations of Calavo or any Calavo Subsidiary or any of their properties or assets which has not been set forth in this Agreement or the Schedules.

11.19 Changes. Except as set forth on Schedule 11.19, since the Most Recent Financial Statements, there has not been any material adverse change in the business, financial condition, results of operations or prospects of Calavo or any Calavo Subsidiary, except such changes which could not, individually or in the aggregate, have a material adverse effect on the business, financial condition or results of operations of Calavo or any Calavo Subsidiary.

11.20 Tax Returns and Payments. Except as set forth in Schedule 11.20, Calavo and its Subsidiaries have timely filed all federal, state, and local tax returns which were required to be filed by or with respect to Calavo or any of the Calavo Subsidiaries, and have paid or, where payment is not yet required, have established adequate tax reserves for the payment of all Taxes with respect to the periods covered by such returns. Neither Calavo nor any of the Calavo Subsidiaries have consented to any waiver or extension of any statute of limitations relating to the assessment or collection of any federal, state or local Tax. There are no deficiency assessments against Calavo or any of the Calavo Subsidiaries.

11.21 Insurance Policies. Schedule 11.21 sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which Calavo has been a party, a named insured, or otherwise the beneficiary of coverage at any time from fiscal year 2003 to the date hereof:

(a) the name of the insurer, the name of the policyholder, and the name of each covered insured;

(b) the policy number and the period of coverage;

(d) a description of any retroactive premium adjustment or other loss-sharing arrangements. With respect to each such insurance policy that has not terminated: (1) the policy is legal, valid, binding, enforceable, and in full force

and effect; (2) the policy will continue to be legal, valid, enforceable, and in full force and effect on identical terms following the consummation of the transactions contemplated hereby; (3) neither Calavo nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (4) no party to the policy has repudiated any provision thereof. Schedule 11.21 also describes any self-insurance arrangements affecting any of Calavo’s properties or operations.

11.22 Employee Benefit Plans.

(a) Schedule 11.22 contains a true and complete list of all of the following agreements, arrangements, practices, or plans, whether written or oral, which are presently in effect with respect to Calavo and under which Calavo continues to have liability or obligations thereunder: (i) “employee pension benefit plans” and “employee benefit plans” as defined respectively in Section 3(2) and 3(3) of ERISA, including “multiemployer” plans as defined in Section 3(37) of ERISA, or a “multiple employer” plan within the meaning of Section 4063 or 4064 of ERISA; and (ii) any other pension, profit sharing, supplemental unemployment, retirement, deferred compensation, stock purchase, stock option, incentive, bonus, vacation, severance, disability, hospitalization, medical insurance or other employee benefit plans, practice, policies, arrangements, or programs for the benefit of any employee, former employee, director, or agent of Calavo or any Calavo Subsidiary, whether or not any of the foregoing is funded, whether formal or informal, and whether or not subject to ERISA. (The plans or programs described in clauses (i) and (ii) are herein collectively referred to as the “Calavo Plans.”) Calavo has delivered or made available to Limco true and complete copies of all (a) Calavo Plans, related trust arrangements and funding arrangement and any amendments thereto, (b) the most recent summary plan descriptions, together with the most recent summary material modifications required under ERISA with respect to each Calavo Plan, (c) the most recent annual reports (series 5500 and schedules thereto) required under ERISA with respect to each Calavo Plan, (d) the two most recent actuarial valuations, if applicable, prepared for any Calavo Plan, (e) the most recent IRS determination letters with respect to each Calavo Plan, and (f) all material employer communications relating to each such Calavo Plan.

(b) Calavo and its Subsidiaries are in material compliance with the requirements prescribed by any and all statutes, orders, governmental rules or regulations applicable to the Calavo Plans, and all reports and disclosures relating to the Calavo Plans required to be filed with or furnished to governmental agencies,

participants or beneficiaries prior to the Initial Closing Date have been or will be filed or furnished in a timely manner and in accordance with applicable law.

(c) Except as described in Schedule 11.22, neither Calavo nor any Calavo Subsidiary has ever contributed or been required to contribute to any multiemployer plan as defined in Section 3(37) of ERISA.

(d) Neither Calavo, any Calavo Subsidiary nor any other “disqualified person” or “party in interest” (as defined in Section 4975 of the Code and Section 3 of ERISA), has engaged in any “prohibited transaction” as such term is defined in Section 4975 of the Code or Section 406 of ERISA, which could subject any of the Calavo Plans (or their related trusts), Calavo, any Calavo Subsidiary or any trustee, administrator or any other fiduciary of any of the Calavo Plans to tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA.

(e) Except as set forth in Schedule 11.22, there are no material actions, audits, suits or claims pending (other than routine claims for benefits) or, to the knowledge of Calavo , threatened, against any of the Calavo Plans or any fiduciary of any of the Calavo Plans or against the assets of any of the Calavo Plans.

(f) Except as set forth in Schedule 11.22, Calavo and its Subsidiaries have no obligation or liability to any retired or former employee under any disability (long or short term), hospitalization, medical, dental or life insurance plans (whether insured or self-insured) or other employee welfare plan as defined in ERISA Section 3(1) maintained by the Calavo Group, other than as required by COBRA.

(g) Each “group health plan” (within the meaning of Section 5000(b)(1) of the Code) maintained by Calavo or any of its affiliates has, as of the first day of each group health plan’s first plan year beginning on or after July 1, 1986, been administered in compliance with the continuation coverage requirements contained in and as provided under Section 4980B of the Code and any regulations promulgated or proposed thereunder.

(h) Except as set forth in Schedule 11.22, no payment which will be or may be made by Calavo to any employee, former employee, director or agent thereof will or could be characterized as an “excess parachute payment: within the meaning of Section 280G(b)(1) of the Code and by reason of the transactions contemplated herein.

(i) Calavo, to its knowledge, (i) is in compliance with all applicable federal and state laws, rules and regulations respecting employment, employment practices, terms and conditions of employment and wages and hours, in each case, with respect to employees and former employees of Calavo, (ii) has withheld all amounts required by law to be withheld from the wages, salaries and other payments to employees and former employees of Calavo, and (iii) is not liable for any arrears of wages or any taxes or any penalty to comply with any of the foregoing, except for such noncompliance, failure to withhold or liability which would not individually or in the aggregate have a material adverse effect on Calavo and its Subsidiaries taken as a whole.

(j) Except as set forth in Schedule 11.22, neither the execution of this Agreement nor the performance of the transactions contemplated herein will (either alone or upon the occurrence of an additional event) constitute an event under any Calavo Plan that will or may result in any payment, acceleration, vesting or increase in benefits with respect to any employee, former employee, or director of Calavo.

(k) Calavo has made, and makes, no representations or warranties respecting the adequacy of estimates of or reserves (if any) for post-retirement medical benefits for employees.

11.23 Exchange Act Reports. As of their respective dates, all reports filed by Calavo with the Securities and Exchange Commission, after October 31, 2003 under the Securities Exchange Act conformed in all material respects with the requirements of the Securities Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the Commission thereunder.

11.24 Foreign Corrupt Practices Act. Neither Calavo nor any Calavo Subsidiary has made or offered or agreed to offer anything of value to any foreign government official, political party or candidate for governmental office, nor have they taken any action which would cause Calavo or any Calavo Subsidiary to be in violation of Sections 103b or 104 of the Foreign Corrupt Practices Act of 1977, as amended.

ARTICLE 12

COVENANTS OF LIMCO

12.1 Conduct of Business Prior to Initial Closing. Except as set forth in Schedule 12.1, between the date of this Agreement and the Initial Closing Date, Limco and each Limco Subsidiary will do the following, unless Calavo shall otherwise consent in writing:

(a) Conduct Limco’s business only in the ordinary and usual course and refrain from changing or introducing any method of management or operations except in the ordinary course of business and consistent with prior practices;

(b) Except for the possible sale of the Mission Shares to Mission and the repurchase of 6,906 shares of Limco common stock from Mission as described in Article 4 above, refrain from making any purchase, sale or disposition of any asset or property other than in the ordinary course of business, from purchasing

any capital asset costing more than Five Hundred Thousand Dollar ($500,000) and from mortgaging, pledging, subjecting to a lien or otherwise encumbering any of Limco’s properties or assets;

(c) Refrain from amending, modifying, extending or terminating any real property or equipment lease, except as otherwise provided in this Agreement;

(d) Refrain from incurring any contingent liability as a guarantor or otherwise with respect to the obligations of others, and from incurring any other contingent or fixed obligation or liabilities except those that are usual and normal in the ordinary course of business;

(e) Except in accordance with past practice refrain from declaring, setting aside or paying any dividend, making any other distribution in respect of its capital stock or making any direct or indirect redemption, purchase or other acquisition of its stock;

(f) Refrain from taking any action which would accelerate payment or other obligations of Limco to its employees, and from making any change in the compensation payable or to become payable to any of its officers, directors, employees or agents, except as contemplated by this Agreement;

(g) Refrain from paying any loans from its officers or directors or making any other payments to any of them, except normal salary payments in amount not exceeding those theretofore paid;

(h) Use reasonable efforts to prevent any change with respect to its management and supervisory personnel and banking arrangements except as contemplated by this Agreement;

(i) Not amend, change or terminate any Material Contract;

(j) Not change the Certificate of Incorporation or Bylaws of Limco or any Limco Subsidiary; and

(k) Not issue any capital stock at less than the fair market value of such stock on the date of its issuance, except pursuant to a stock option or warrant that is outstanding as of the date of this Agreement or except for an option that is subsequently granted pursuant to an employee stock plan with an exercise price of at least the fair market value of such capital stock as of the grant date; and

(l) Not take any action which would cause the acceleration of any payments or other obligations of Limco under any of such contracts without the prior consent of Calavo.

12.2 Access. Limco shall afford to Calavo and to the authorized officers, employees and agents of Calavo, complete access at all reasonable times, from the date hereof to the Initial Closing Date, to their officers, employees, agents, properties, books, records and contracts, and shall furnish Calavo all financial, operating and other data and information as Calavo, through its officers, employees or agents, may reasonably request, provided such requests for access and information do not unreasonably interfere with the operations of Limco or any of the Limco Subsidiaries.

12.3 Reasonable Efforts Regarding Mission Shares. After providing notice to Calavo pursuant to Section 9.4 hereof designating the Misison Closing Date, Limco shall deliver to Mission a letter signed by Limco setting forth the purchase price and all relevant terms for the purchase of the Mission Shares by Calavo, and notifying Mission that the option periods with respect to the rights of first refusal for the Mission Share have commenced. Calavo and Limco shall agree upon the date that such letter shall be delivered to Mission, but such date shall not be so late as to cause the Mission Closing Date to be more than 180 days following the Initial Closing Date.
12.4 Reasonable Efforts. Limco shall use its reasonable efforts to cause all of the representations and warranties set forth in Article 9 to be true and correct on and as of the Initial Closing Date; to perform all of the covenants set forth in this Article 11; and to cause all of the conditions set forth in Article 15 to occur on or before the Closing Date.

ARTICLE 13

COVENANTS OF CALAVO

13.1 Conduct of Business Prior to Initial Closing. Except as set forth in Schedule 13.1, between the date of this Agreement and the Closing Date, Calavo and each Calavo Subsidiary will do the following, unless Limco shall otherwise consent in writing:

(a) Conduct Calavo’s business only in the ordinary and usual course and refrain from changing or introducing any method of management or operations except in the ordinary course of business and consistent with prior practices;

(b) Refrain from making any purchase, sale or disposition of any asset or property other than in the ordinary course of business, from purchasing any capital asset costing more than Five Hundred Thousand Dollars ($500,000) and from mortgaging, pledging, subjecting to a lien or otherwise encumbering any of Calavo’s properties or assets; provided, however, that no provision of this Agreement shall be construed as requiring Limco’s consent to a merger between Calavo and Mission or other transaction between Calavo and Mission or as prohibiting Calavo from engaging in such merger or other transaction;

(c) Refrain from amending, modifying, extending or terminating any real property or equipment lease, except as otherwise provided in this Agreement;

(e) Except in accordance with past practice, refrain from declaring, setting and or paying any dividend, making any other distribution in respect of its capital stock or making any direct or indirect redemption, purchase or other acquisition of its stock;

(f) Refrain from taking any action which would accelerate payment or other obligations of Calavo to its employees, and from making any change in the compensation payable or to become payable to any of its officers, directors, employees or agents, except as contemplated by this Agreement;

(g) Refrain from paying any loans from its officers or directors or making any other payments to any of them, except normal salary payments in amount not exceeding those theretofore paid;

(h) Use reasonable efforts to prevent any change with respect to its management and supervisory personnel and banking arrangements except as contemplated by this Agreement;

(i) Not amend, change or terminate any Material Contract;

(j) Not change the Articles of Incorporation or Bylaws of Calavo or any Calavo Subsidiary;

(k) Not issue any capital stock as less than the fair market value of such stock on the date of its issuance, except pursuant to a stock option or warrant that is outstanding as of the date of this Agreement or except for an option that is subsequently granted pursuant to an employee stock plan with an exercise price of at least the fair market value of such capital stock as of the grant date; and

(l) Not take any action which would cause the acceleration of any payments or other obligations of Calavo under any of such contracts without the prior consent of Limco.

13.2 Access. Calavo shall afford to Limco and to the authorized officers, employees and agents of Limco, complete access at all reasonable times, from the date hereof to the Initial Closing Date, to their officers, employees, agents, properties, books, records and contracts, and shall furnish Limco all financial, operating and other data and information as Limco, through its officers, employees or agents, may reasonably request, provided such requests for access and information do not unreasonably interfere with the operations of Calavo or any of the Subsidiaries.

13.3 Reasonable Efforts. Calavo shall use its reasonable efforts to cause all of the representations and warranties set forth in Article 11 to be true and correct on and as of the Initial Closing Date; to perform all of the covenants set forth in this Article 13; and to cause all of the conditions set forth in Article 14 to occur on or before the Initial Closing Date.

ARTICLE 14

CONDITIONS PRECEDENT TO LIMCO’S OBLIGATION TO CLOSE

14.1 General. The obligation of Limco to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Initial Closing Date, of each and every one of the following conditions all or any of which may be waived, in whole or in part, by Limco for the purpose of consummating such transaction, but without prejudice to any other right or remedy which Limco may have hereunder as a result of any

misrepresentation by, or breach of any covenant or warranty of, Calavo contained in this Agreement or any certificate, Schedule, document or instrument furnished by Calavo hereunder.

14.2 Representations and Warranties. The representations and warranties made by Calavo in this Agreement and in any certificate, schedule, document or instrument furnished to Limco at or prior to the Initial Closing shall be true and correct in all respects on the Initial Closing Date with the same force and effect as though such representations and warranties had been made on and as of such date, (i) except for changes contemplated by this Agreement, (ii) except that any representation or warranty that, by its express terms, speaks only as of a specified earlier date need only be accurate as of such earlier date, and (iii) except where the failure of such representations and warranties to be accurate, individually or in the aggregate, has not had a Material Adverse Change or Condition with respect to Calavo and would not be reasonably expected to have a Material Adverse Change or Conditions with respect to Calavo..

14.3 Investigations Fail to Disclose Material Adverse Change or Condition. Investigations by Limco and its representatives shall not have disclosed any Material Adverse Change or Condition with respect to Calavo.

14.4 Covenants and Agreements. Calavo shall have duly performed in all material respects all of the material covenants and agreements to be performed by it hereunder on or prior to the Initial Closing Date.

14.5 No Adverse Changes. Since the date of this Agreement, Calavo shall not have suffered any Material Adverse Change or Condition including any delisting of Calavo’s common stock on the NASDAQ Securities Market.

14.6 No Proceedings. No preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, nor any statute, rule, regulation or executive order promulgated or enacted by and governmental authority, shall be in effect which would prevent or hinder the consummation of the transactions contemplated under this Agreement or which challenges the validity or enforceability of this Agreement or any term or provision hereof.

14.7 Certificates. Limco shall have received a Certificate of Calavo, dated the Initial Closing Date, signed by its Chief Executive Officer, to the effect that, Sections 14.2, 14.4 and 14.5 have been fulfilled and such other certificates and documents as Limco may reasonably request and as provided in Article 9 hereof.

ARTICLE 15

CONDITIONS PRECEDENT TO CALAVO’S OBLIGATION TO CLOSE

15.1 General. The obligation of Calavo to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction, on or before the Initial Closing Date, of each and every one of the following conditions all or any of which may be waived, in whole or in part, by Calavo for the purpose of consummating such transaction, but without prejudice to any other right or remedy which Calavo may have hereunder as a result of any misrepresentation by, or breach of any covenant or warranty of, Limco contained in this Agreement or any certificate, Schedule, document or instrument furnished by Limco hereunder.

15.2 Investigations Fail to Disclose Material Adverse Change or Condition. Investigations by Calavo and its representatives shall not have disclosed any Material Adverse Change or Condition with respect to Limco.

15.3 Representations and Warranties. The representations and warranties made by Limco in this Agreement and in any certificate, schedule, document or instrument furnished to Calavo at or prior to the Initial Closing shall be true and correct in all respects on the Initial Closing Date with the same force and effect as though such representations and warranties had been made on and as of such date, (i) except for changes contemplated by this Agreement, (ii) except that any representation or warranty that, by its express terms, speaks only as of a specified earlier date need only be accurate as of such earlier date, and (iii) except where the failure of such representations and warranties to be accurate, individually or in the aggregate, has not had a Material Adverse Change or Conditions with respect to Limco and would not be reasonably expected to have a Material Adverse Change or Conditions with respect to Limco.

15.4 Covenants and Agreements. Limco shall have duly performed in all material respects all of the material covenants and agreements to be performed by it hereunder on or prior to the Initial Closing Date.

15.5 No Adverse Changes. Since the date of this Agreement, Limco shall not have suffered any Material Adverse Change or Conditions, including, without limitation, the cessation of trading of Limco’s Common Stock on the Pink Sheets.

15.6 No Proceedings. No preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, nor any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, shall be in effect which would prevent or hinder the consummation of the transactions contemplated under this Agreement or which challenges the validity or enforceability of this Agreement or any term or provision hereof.

15.7 Certificates. Calavo shall have received a Certificate of Limco, dated the Initial Closing Date, signed by its Chief Executive Officer, to the effect that, the conditions specified in this Sections 15.3, 15.4 and 15.5 have been fulfilled and such other certificates and documents as Calavo may reasonably request and as provided in Article 9 hereof.

ARTICLE 16

RIGHTS OF FIRST REFUSAL

16.1 Limco Shares. Calavo shall not sell, transfer, assign, encumber or in any way dispose of any of the Limco Shares or any right or interest therein without first giving written notice to Limco in the manner provided in Article 20 hereof of Calavo’s intent to dispose of the Limco Shares. Unless Calavo proposed to sell the Limco Shares on the Pink Sheets or other public market on which Limco’s Common Stock is then traded, such notice shall specifically set forth the identity of the proposed transferee, the number of Limco Shares to be transferred, the price per share or other consideration for the Limco Shares and all terms and conditions of the proposed transaction, including the terms of payment. For a period of sixty (60) days, following receipt of Calavo’s notice, Limco shall have the option to purchase all, but not less than all, the Limco Shares identified, at the same price and on the same terms as set forth in Calavo’s written notice. If Limco elects to exercise its option, it shall notify Calavo in writing within such period and shall pay the purchase price in the same manner as designated in Calavo’s notice. Any sale of all or substantially all of the assets of Calavo or a “change in control” of Calavo by the acquisition of a majority of its voting stock by any third party or group shall be deemed a “sale” of the Limco Shares for purposes of triggering the right of refusal provided herein. Upon the occurrence of such any event, Calavo shall so notify Limco in writing. For a period of 60 days following receipt of such notice, Limco shall have the right to repurchase all, but not less than all, the Limco Shares at a price per share, payable in cash, equal to the average price per share over the 60-day period preceding Calavo’s notice at which Limco’s shares traded in the “pink sheets” or other public market. If Calavo proposes to sell a specified number of the Limco Shares on the Pink Sheets or other public market on which Limco’s Common Stock is then traded, for a period of 30 days following receipts of such notice Limco shall have the right to repurchase all or some of the specified Limco shares at a price per share, payable in cash, equal to the average price per share over the 60-day period preceding Calavo’s notice at which Limco’s shares traded in the “pink sheets” or other public market. Limco’s option is subject to any and all legal restrictions on the ability of a corporation to repurchase its own shares. In order to facilitate Limco’s right of first refusal, Calavo agrees that it will not assign any of the Limco Shares to a nominee title holder. Calavo shall be entitled to sell or otherwise transfer any and all Limco Shares that Limco does not purchase under the right of first refusal granted by this Section 16.1, and any such sold or transferred shares shall cease to be subject to the right of first refusal contained in this Section 16.1

16.2 Calavo Shares. Limco shall not sell, transfer, assign, encumber or dispose of any of the Calavo Shares or any right or interest therein without first giving written notice to Calavo in the manner provided in Article 20 hereof of Limco’s intent to dispose of the Calavo Shares. Unless Limco proposes to sell the Calavo Shares on the Nasdaq market or other public market on which Calavo’s Common Stock is then traded, such notice shall specifically set forth the identity of the proposed transferee, the number of Calavo Shares to be transferred, the price per share or other consideration for the Calavo Shares and all terms and conditions of the proposed transaction, including the terms of payment. For a period of sixty (60) days, following receipt of Limco’s notice, Calavo shall have the option to purchase all, but not less than all, the Calavo Shares identified, at the same price and on the same terms as set forth in Limco’s written notice. If Calavo elects to exercise its option, it shall notify Limco in writing within such period and shall pay the purchase price in the same manner as designated in Limco’s notice. Any sale of all or substantially all of the assets of Limco or a “change in control” of Limco by the acquisition of a majority of its voting stock by any third party or group shall be deemed a “sale” of the Calavo Shares for purposes of triggering the right of refusal provided herein. Upon the occurrence of such any event, Limco so shall notify Calavo in writing.

For a period of 60 days following receipt of such notice, Calavo shall have the right to repurchase all, but not less than all, the Calavo Shares at a price per share, payable in cash, equal to the average price per share over the 60-day period preceding Limco’s notice at which Calavo’s shares traded on the Nasdaq market or other public market. If Limco proposes to sell a specified number of the Calavo Shares on the Nasdaq market or other public market on which Calavo’s Common Stock is then traded, for a period of 30 days following receipts of such notice Calavo shall have the right to repurchase all or some of the specified Calavo Shares at a price per share, payable in cash, equal to the average price per share over the 60-day period preceding Limco’s notice at which Calavo’s shares traded on the Nasdaq market or other public market. Calavo’s option is subject to any and all legal restrictions on the ability of a corporation to repurchase its own shares. In order to facilitate Calavo’s right of first refusal, Limco agrees that it will not assign any of the Calavo Shares to a nominee title holder. Limco shall entitled to sell or otherwise transfer any and all Calavo Shares that Calavo does not purchase under the right of first refusal granted by this Section 16.2, and any such sold or transferred shares shall cease to be subject to the right of first refusal contained in this Section 16.2

ARTICLE 17

PUBLIC DISCLOSURE

Limco and Calavo shall consult with each other, and to the extent practicable, agree before issuing any press release or otherwise making any public statement with respect to the transactions contemplated by this Agreement and will not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with the NASDAQ Stock Market. Calavo agrees to report the execution of this Agreement on a Form 8-K by the date prescribed by the Securities Exchange Act and to report the closing of the transactions contemplated by the Initial Closing on a Form 8-K by the date prescribed by the Securities Exchange Act.

ARTICLE 18

TERMINATION

18.1 Termination. This Agreement may be terminated at any time prior to the Initial Closing Date:

(a) By mutual agreement of Limco and Calavo; or

(b) By Calavo, at any time after August 1, 2005, if the Initial Closing has not occurred by such date and the failure of the Initial Closing to occur is not caused by a breach of this Agreement by Calavo; or

(c) By Limco, at any time after August 1, 2005, if the Initial Closing has not occurred by such date and the failure of the Initial Closing to occur is not caused by a breach of this Agreement by Limco.

18.2 Effect of Termination. In the event of the termination of this Agreement pursuant to clause (a), (b) or (c) of Section 18.1, this Agreement shall forthwith become void and have no effect, without any further liability or obligation on the part of either party to the other party. However, if the Initial Closing does not occur because of the intentional breach of this Agreement by either Calavo or Limco, (i) the breaching party shall reimburse the non-breaching party for its legal fees, accounting fees and other out-of-pocket expenses that have been incurred by the non-breaching party in connection with this Agreement, payable within ten days after receipt from the non-breaching party of documentation of such expenses in reasonable detail, and (ii) the breaching party shall be liable to the non-breaching party for damages incurred by the non-breaching party as a result of the breaching party’s intentional breach of this Agreement. The non-breaching party shall not, however, be entitled to obtain an award of punitive damages.

ARTICLE 19

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS

19.1 Survival. All representations and warranties contained in or made pursuant to this Agreement (including Exhibits and Schedules hereto) or in any certificate, document or statement delivered pursuant hereto (the “Ancillary Documents”) shall be deemed made by the parties on the respective dates of their execution of this Agreement (except for representations and warranties that specifically speak as of an earlier date) and shall be deemed remade on the Initial Closing Date, and all representations and warranties (as they may be supplemented) and all covenants, indemnities and agreements shall survive the Initial Closing and any investigation conducted by any party for a period of two (2) years (unless a claims for indemnity has been timely made within such period as set forth below). Except as provided in Section 19.2.4, Calavo’s investigation of Limco and its Subsidiaries and their business, assets and liabilities shall in no manner be construed as relieving Limco from liability under this Agreement for a breach of any representation or warranty made in this Agreement, and Limco’s investigation of Calavo and its subsidiaries and their business, assets and liabilities shall in no manner be construed as relieving Calavo from liability under this Agreement for a breach of any representation or warranty of Calavo made in this Agreement.

19.2 Indemnification.

19.2.1 Limco.

After the Initial Closing and subject to Sections 19.2.3, and 19.2.4, Limco shall indemnify, defend and hold Calavo, its shareholders, directors, officers, employees and agents harmless from, and reimburse Calavo for, any damage, loss, fee, liability, cost or expense (including, without limitation, the reasonable fees and expenses of counsel and others) resulting or arising from, or incurred in connection with or based upon: (i) the inaccuracy as of the Initial Closing Date of any representation or warranty of Limco which is contained in or made pursuant to this Agreement or any Ancillary Documents and, (ii) Limco’s breach of or failure to perform any of its covenants or agreements contained in or made pursuant to this Agreement or any Ancillary Document.

19.2.2 Calavo. After the Initial Closing and subject to Sections 19.2.3 and 19.2.4, Calavo shall indemnify and hold Limco, and its directors, officers, employees and affiliates harmless from, and reimburse for any damage, loss, fee liability, cost or expense (including, without limitation, the reasonable fees and expenses of counsel and others) resulting or arising from, or incurred in connection with or based upon, (i) the inaccuracy as of the Initial Closing Date of any representation or warranty of Calavo which is contained in or made pursuant to this Agreement or any Ancillary Document; and (ii) Calavo’s breach of or failure to perform, comply with or fulfill any covenant or agreement of Calavo contained in or made pursuant to this agreement or any Ancillary Document.

19.2.3 Notice/Defense. Upon discovery of any breach or claim hereunder or upon receipt of any notice of any claim or suit subject to indemnification under Section 19.2.1 or 19.2.2 above, the party seeking indemnification (“Indemnified Party”) shall promptly give notice thereof (and in no event later than thirty days after receipt of actual notice thereof) to the party or parties from whom indemnification is sought (“Indemnifying Party”) at the notice address pursuant to Article 20 stating in reasonable detail the representation, warranty or other claims with respect to which indemnity is demanded, the facts or alleged facts giving rise thereto, and the amount of liability or asserted liability with respect to which indemnity is sought, and in the case of a claim asserted against the party seeking indemnity, the Indemnified Party shall thereafter tender to the Indemnifying Party the defense of such claims at the sole cost and expense of the Indemnifying Party. Despite such a tender of defense, the party seeking indemnification shall in any

case have a right to participate in the defense of any such tendered claim or suit; provided that such participation shall be at such party’s sole cost and expense after the Indemnifying Party has accepted such tender of defense, and that the Indemnifying Party shall have control of the defense. In the event that the Indemnifying Party does not promptly and affirmatively accept such tender of defense of any claim or suit, then the Indemnifying Party shall thereafter additionally become liable for all costs incurred by the party seeking indemnification (including reasonable attorneys’ fees) in enforcing such indemnification claim and/or defending against such claim or suit which is subject to indemnification. No party which is entitled to indemnification under Section 19.2.1 or 19.2.2 shall settle or compromise any such third party claim without the prior written consent of the party from which it seeks or may seek indemnification, which consent shall not be unreasonably withheld. The Indemnifying Party shall not settle the claim or suit without the written consent of the Indemnified Party, which shall not be unreasonably withheld; provided, however, that the Indemnified Party shall not be required to give its consent unless the third-party claimant delivers to the Indemnified Party an unconditional release of all liability with respect to the claim or legal proceeding. Any party seeking indemnification under Section 19.2.1 or 19.2.2 shall take all reasonable actions in the defense of third party claims for which indemnification is sought. If notice is not given to the Indemnifying Party as specified, or if any claim or suit be compromised or settled in any manner without the prior written consent (which consent shall not be unreasonably withheld) of the Indemnifying Party, then no liability shall be imposed upon the Indemnifying Party hereunder with respect to such claim.

19.2.4 Waiver of Breach; Indemnification Limitations.

(a)Notwithstanding anything to the contrary in this Agreement, the completion of the Initial Closing shall conclusively evidence the waiver by each party, for all purposes, of any occurring prior to the Initial Closing by the other party of any representation, warranty, covenant or agreement and of any right to indemnification with respect to such breach, if (but only if ) such breach was expressly disclosed by the breaching party in writing to the non-breaching party prior to the Initial Closing and if the non-breaching party nevertheless elected to complete the Initial Closing.

(b) Notwithstanding anything to the contrary in this Agreement, no claim shall be made by Calavo or Limco for indemnification unless and until the aggregate indemnified damages, losses, fees, liabilities, costs and expenses incurred by the indemnified party exceed Five Hundred Thousand Dollars ($500,000), in which event the indemnified party shall be entitled to full indemnification for its aggregate indemnified damages, losses, fees, liabilities, costs and expenses in excess of Five Hundred Thousand Dollars ($500,000). The indemnified damages, losses, fees, liabilities, cots and expenses of an indemnified party pursuant to this Article 19 shall be net of any insurance proceeds actually received by the indemnified party with respect to the indemnified amounts and shall be net of any tax benefits actually realized by the indemnified party as a result of payments made by the indemnified party in connection with the indemnified losses.

(c) This Article 19 sets forth the sole and exclusive remedies of Calavo and Limco to obtain monetary damages and reimbursement form the other party after the Initial Closing for a breach of any representation, warranty or covenant that is contained in this Agreement or in an exhibit, schedule or other document that is delivered at or prior to the Initial Closing pursuant to this Agreement.

ARTICLE 20

MISCELLANEOUS

20.1 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, sent by facsimile, or sent by certified, registered or express mail, postage prepaid, and shall be deemed given when so delivered personally, telegraphed or sent by facsimile, or if mailed, three (3) days after the date of deposit with the U.S. Postal Service, postage and applicable charges prepaid, addressed as follows:


		If to Limco:

		Limoneira Company

		1141 Cummings Road


		Santa Paula, CA 93060

		Attn: Harold S. Edwards

		President & CEO

		Facsimile: (805)525-8211

		With a copy to:

		Lawrence E. Stickney, Esq.
		Walker, Wright, Tyler & Ward
		626 Wilshire Blvd., Suite 900
		Los Angeles, CA 90017
		Facsimile: (213) 623-5160

		If to Calavo:

		Calavo Growers, Inc.
		1141 A Cummings Road
		Santa Paula, CA 93060
		Attn: Lecil E. Cole, Chairman & CEO
		Facsimile: (805) 921-3245

		With a Copy to:

		Marc L. Brown, Esq.
		Troy & Gould, APC
		1801 Century Park East
		Suite 1600
		Los Angeles, CA 90067
		Facsimile: (310) 789-1469

20.2 Entire Agreement. Except for the obligations of the parties under a Confidentiality Agreement dated March 29, 2005 between Limco and Calavo (the “Confidentiality Agreement”), this Agreement, including the Exhibits and Schedules hereto, sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of every kind and nature between them, and no party hereto shall be bound by any covenant, condition, definition, warranty or representation other than as expressly provided for in this Agreement or as may be on a date subsequent to the date hereof duly set forth in writing signed by the party hereto which is to be bound thereby.

20.3 Waivers and Amendments. This Agreement may be amended, modified, superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. Except as otherwise expressly set forth in Article 19 or elsewhere in this Agreement, the rights and remedies herein

provided are cumulative and are not exclusive of any rights or remedies which any party may have in equity. The rights and remedies of any party arising out of or otherwise in respect of any inaccuracy in or breach of any representation, warranty, covenant or agreement contained in this Agreement shall in no way be limited by the fact that the act, omission, occurrence or other sate of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement contained in this Agreement (or in any other agreement between the parties) as to which there is no inaccuracy or breach.

20.4 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California applicable to agreements made and to be performed entirely within such State.

20.5 No Assignment. Neither party to this Agreement may assign any right hereunder, nor delegate any obligation, without the prior written consent of the other party.

20.6 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

20.7 Headings. The headings in the Agreement are intended solely for convenience of reference and shall be given no effect in the interpretation of this Agreement.

20.8 Benefit to Parties. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except as provided in Article 19 with respect to indemnification, this Agreement is intended solely for the benefit of Calavo and Limco and their respective permitted successors and assigns and it is not the intention of the parties to confer third-party beneficiary rights upon any other person.

20.9 Validity. In the event that any provision of this Agreement shall be held invalid, the same shall not affect in any respect whatsoever the validity of the remainder of this Agreement.

20.10 Exhibits and Schedules. The Exhibits and Schedules attached hereto are part of this Agreement as if set forth in full herein. Any material or information disclosed or set forth in this Agreement or in any Exhibit or Schedule delivered in connection herewith shall be deemed set forth at each relevant portion of this Agreement without the necessity of repetition thereof if the other portion of this Agreement to which such disclosed material or information applies are reasonably apparent from the disclosed material or information.

20.11 Further Assurances. If, at any time, either of the parties hereto shall consider or be advised that any further assignments or assurances in law are necessary or desirable to assure itself the benefit of this Agreement according to the terms hereof or the title to any property or rights transferable hereunder, the other party shall execute and make all such reasonable, proper assurances and assignments and do all things reasonably necessary and proper to vest title in such property or right in such party and otherwise carry out the terms of this Agreement.

20.12 Transaction Expenses.

Subject to the provisions of Articles 18 and 19, whether or not the transactions contemplated herein are consummated and, regardless of whether this Agreement is terminated, each party hereto shall pay all of the costs and expenses incurred by it in connection with this Agreement or in consummating the transactions contemplated hereby, including, without limitation, disbursements and expenses of its attorneys, accountant and advisors.

IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement as of the date first above written.


		LIMONEIRA COMPANY

		By:		/s/ Harold Edwards

		Its:		Chief Executive Officer

		By:		/s/ Don Delmatoff

		Its:		Chief Financial Officer

		CALAVO GROWERS, INC.

		By:		/s/ Lecil Cole

		Its:		Chief Executive Officer

		By:		/s/ Arthur Bruno

		Its:		Chief Financial Officer

Unassociated Document

Exhibit 10.4

STANDSTILL AGREEMENT

This STANDSTILL AGREEMENT, dated as of June 1, 2005 (this “AGREEMENT”), is entered into by and among LIMONEIRA COMPANY, a Delaware corporation (“LIMONEIRA”), CALAVO GROWERS, INC., a California corporation (“CALAVO”), and the other parties who are signatories below (“CALAVO AFFILIATIES”). Calavo and the Calavo Affiliates are sometimes referred to herein individually as an “INVESTOR” and collectively, as the “INVESTORS”.

WHEREAS, Calavo and Limoneira have entered into a Stock Purchase Agreement, dated June 1, 2005 (the “STOCK PURCHASE AGREEMENT”);

WHEREAS, as a condition to the consummation of the transactions provided for in the Stock Purchase Agreement, Limoneira desires that the Investors make certain representations, warranties, covenants and agreements as set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and in the Stock Purchase Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. Definitions. Capitalized terms used herein but not otherwise defined herein shall have the meaning ascribed thereto in the Stock Purchase Agreement.

2. Representations and Warranties of Each Investor. To induce Limoneira to enter into this Agreement and the Stock Purchase Agreement and to consummate the transactions contemplated hereby and thereby, each Investor

represents and warrants (as to himself or itself only and not with respect to any other Investor) to Limoneira as follows:

2.1 Binding Agreement. The execution, delivery and performance of this Agreement by such Investor and the consummation by such Investor of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or partnership action (if applicable) on the part of such Investor. This Agreement has been duly executed and delivered by such Investor, and, assuming the valid authorization, execution and delivery hereof by Limoneira, is a valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting or relating to the enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity.)

2.2 Execution; No Violations. The execution and delivery of this Agreement by such Investor does not, and the consummation by such Investor of the transaction contemplated hereby will not: (a) violate or conflict with any organizational documents of such Investor (if applicable) or any agreement, order, injunction, decree, or judgment to which such Investor is a party or by which such Investor is bound; or (b) violate any law, rule or regulation applicable to such Investor.

2.3 Governmental and Other Consents. No consent, approval or authorization of, or designation, registration, declaration or filing with, any governmental entity or third Person is required on the part of such Investor in connection with the execution or delivery of this Agreement or the consummation by it of the transactions contemplated hereby.

2.4 Share Ownership. Calavo does not own directly or indirectly any voting securities of Limoneira, or any securities convertible into or exchangeable or exercisable for any voting securities of Limoneira, or which, upon redemption thereof could result in Calavo or any of its Affiliates receiving any voting securities of Limoneira, or options, warrants, contractual rights or other rights of any kind to acquire or vote any voting securities of Limoneira (collectively, the “VOTING SECURITIES”), except those securities acquired pursuant to the Stock Purchase Agreement (the “LIMONEIRA SHARES”).

3. Standstill Arrangements.

3.1 Acquisition of Additional Voting Securities. Calavo hereby covenants and agrees that prior to the Termination Date (as hereinafter defined), neither it nor any of its Subsidiaries will, without the prior approval of the Board of Directors of Limoneira, directly or indirectly, purchase or otherwise acquire (other than pursuant to a stock split or stock dividend) or make any proposal, other than a confidential proposal to the Board of Directors of Limoneira, to or agree to acquire, or become or agree to become the beneficial owner of, more than 4.943% of the outstanding Voting Securities, other than (i) the Limoneira Shares or (ii) any Voting Securities issued as dividends on or otherwise issued in exchange or in consideration of or with respect to the Limoniera Shares (the “DIVIDEND SHARES”) or shares issued as dividends on the Dividend Shares or in exchange for or in respect of the Dividend Shares.

3.2 Prohibited Actions. Each Investor hereby agrees (as to himself or itself only and not with respect to any other Investor) that, prior to the Termination Date, such Investor will not, without the prior approval of the Board of Directors of Limoneira, directly or indirectly , solicit, request, advise, assist or encourage others to, take any of the following actions:

(a) form, join in or in any other way participate in a “partnership, limited partnership, syndicate or other group” within the meaning of Section 13(d)(3) of the Exchange Act with respect to Voting Securities or deposit any Voting Securities in a voting trust or similar arrangement or subject any Voting Securities to any voting agreement or pooling arrangement, other than with one or more Affiliates of such Investor with respect to the Limoneira Shares;

(b) solicit proxies or written consents of stockholders with respect to Voting Securities under any circumstances, or make, or in any way participate in, any “solicitation” of any “proxy” to vote any Voting Securities (other than a solicitation conducted by Limoneira), or become a “participant” in any election contest with respect to Limoneira (as such terms are defined or used in Rule 14a-1 under the Exchange Act) other than an election contest related to election of members of the Board of Directors elected solely by the holders of the Limoneira Shares;

(c) seek to call, or request the call of, a special meeting of the stockholders of Limoneira unless first presented to the Limoneira Board of Directors or seek to make, or make, a stockholder proposal at any meeting of the stockholders of Limoneira that has not first been presented to the Limoneira Board of Directors;

(d) commence, or announce any intention to commence, any tender offer for any Voting Securities;

(e) make, announce any intention or desire to make, or facilitate the making of, any proposal (other than a confidential proposal to Limoneira) or bid with respect to the acquisition of any substantial portion of the assets of Limoneira or of the assets or stock of any of its subsidiaries or of all or any portion of the outstanding Voting Securities, or recapitalization or liquidation involving Limoneira or any of its subsidiaries;

(f) knowingly arrange, or in any way knowingly participate in, any financing for any transaction referred to in clauses 3(a) through 3(e) above; or

(g) make any request, or otherwise seek (in any fashion that would require public disclosure by Limoneira, such Investor or their respective Affiliates) to obtain any waiver or amendment of any provision of this Agreement or take any action restricted hereby.

4. Termination. This Agreement shall terminate with respect to a particular Investor on the date that such Investor and its Affiliates no longer own Voting Securities representing at least 5% of the outstanding Voting Securities of Limoneira (the “TERMINATION DATE”).

5. Remedies. Each party hereto hereby acknowledges and agrees that irreparable harm would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to specific performance hereunder, including, without limitation, an injunction or injunctions to prevent and enjoin breaches of the provisions of this Agreement and to enforce specifically the terms and provision hereof in any state or federal court in the State of California, in addition to any other remedy to which they may be entitled at law or in equity. Any requirements of the securing or posting of any bond with such remedy are waived. All rights and remedies under this Agreement are cumulative, not exclusive, and shall be in addition to all rights and remedies available to either party at law or in equity. No party hereto shall be responsible for a breach by another party if the non-breaching party does not participate in the breach.

6. Jurisdiction; Venue. The parties hereto hereby irrevocably and unconditionally consent to and submit to the jurisdiction of the courts of the State of California and of the United States of America located in the State of California for any actions, suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby, and further agree that service of any process, summons, notice or document by U.S. certified mail to the respective

addresses set forth in Section 10 hereof shall be effective service of process for any such action, suit or proceeding brought against any party in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement, or the transactions contemplated hereby, in the courts of the State of California of the United States of America located in the State of California, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in any inconvenient forum.

7. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and may be amended only by an agreement in writing executed by the parties hereto.

8. Headings. Descriptive headings are for convenience only and shall not control of affect the meaning or construction of any provision of this Agreement.

9. Number; Gender. Whenever the singular number is used herein, the same shall include the plural where appropriate, and words or any gender shall include each other gender where appropriate.

10. Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein and all legal process in regard hereto shall be validly given, made or served, if in writing and sent by U.S. certified mail, return receipt requested:


		if to Limoneira:		Limoneira Company
				1141 Cummings Road
				Santa Paula, CA 93060
				Attention: Harold S. Edwards, CEO

		with a copy to:		Lawrence E. Stickney, Esq.


				Walker, Wright, Tyler & Ward
				626 Wilshire Blvd., Suite 900
				Los Angeles, CA 90017

		if to Calavo:		Calavo Growers, Inc.
				1141 A Cummings Road
				Santa Paula, CA 93060
				Attention: Lecil E. Cole, Chairman

		with a copy to:		Marc L. Brown, Esq.
				Troy & Gould, APC
				1801 Century Park East
				Suite 1600
				Los Angeles, CA 90067

11. Enforceability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be the intention of the parties that the parties would have executed the remaining terms, provisions, covenants and restrictions without including any of such which may be hereafter declared invalid, void or unenforceable. In addition, the parties agree to use their best efforts to agree upon and substitute a valid and enforceable term, provision, covenant or restriction for any of such that is held invalid, void or unenforceable by a court of competent jurisdiction.

12. Law Governing. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California without regard to any conflict of laws provisions thereof.

13. Binding Effect; No Assignment. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the parties hereto. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto, or their respective heirs, successors, executors, administrators and assigns any rights,

remedies, obligations or liabilities under or by reason of this Agreement. No party to this Agreement may assign its rights or delegate its obligations hereunder (whether voluntarily, involuntarily, or by operation of law) without the prior written consent of the other parties. Any such attempted assignment shall be null and void.

14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

15. Section Headings. The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written hereinabove.


Limoneira:	LIMONEIRA COMPANY

	By:	/s/ Harold S. Edwards

		Name: Harold S. Edwards
		Title: President and CEO

Calavo:	CALAVO GROWERS, INC.

	By:	/s/ Lecil E. Cole

		Name: Lecil E. Cole
		Title: Chairman, President and CEO

Calavo Affilitates:		/s/ Lecil E. Cole

		Name: Lecil E. Cole

		/s/ Arthur J. Bruno

		Name: Arthur J. Bruno


				/s/ Fred J. Ferrazzano

				Name: Fred J. Ferrazzano

				/s/ John M. Hunt

				Name: John M. Hunt

				/s/ George H. Barnes

				Name: George H. Barnes

				/s/ J. Link Leavens

				Name: J. Link Leavens

				/s/ Alva V. Snider

				Name: Alva V. Snider

				/s/ Michael D. Hause

				Name: Michael D. Hause

				/s/ Dorcas H. McFarlane

				Name: Dorcas H. McFarlane

				/s/ Scott Van Der Kar

				Name: Scott Van Der Kar

Unassociated Document

Exhibit 10.5

STANDSTILL AGREEMENT

This STANDSTILL AGREEMENT, dated as of June 1, 2005 (this “AGREEMENT”), is entered into by and among CALAVO GROWERS, INC., a California corporation (“CALAVO”), LIMONEIRA COMPANY, a Delaware corporation (“LIMONEIRA”), and the other parties who are signatories below (“LIMONEIRA AFFILIATIES”). Limoneira and the Limoneira Affiliates are sometimes referred to herein individually as an “INVESTOR” and collectively, as the “INVESTORS”.

WHEREAS, Calavo and Limoneira have entered into a Stock Purchase Agreement, dated June 1, 2005 (the “STOCK PURCHASE AGREEMENT”);

WHEREAS, as a condition to the consummation of the transactions provided for in the Stock Purchase Agreement, Calavo desires that the Investors make certain representations, warranties, covenants and agreements as set forth in this Agreement.

1. Definitions. Capitalized terms used herein but not otherwise defined herein shall have the meaning ascribed thereto in the Stock Purchase Agreement.

2. Representations and Warranties of Each Investor. To induce Calavo to enter into this Agreement and the Stock Purchase Agreement and to consummate the transactions contemplated hereby and thereby, each Investor

represents and warrants (as to himself or itself only and not with respect to any other Investor) to Calavo as follows:

2.1 Binding Agreement. The execution, delivery and performance of this Agreement by such Investor and the consummation by such Investor of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or partnership action (if applicable) on the part of such Investor. This Agreement has been duly executed and delivered by such Investor, and, assuming the valid authorization, execution and delivery hereof by Calavo, is a valid and binding obligation of such Investor, enforceable against such Investor in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting or relating to the enforcement of creditors’ rights generally and by general principles of equity (whether applied in a proceeding at law or in equity.)

2.4 Share Ownership. Limoneira does not own directly or indirectly any voting securities of Calavo, or any securities convertible into or exchangeable or exercisable for any voting securities of Calavo, or which, upon redemption thereof could result in Limoneira or any of its Affiliates receiving any voting securities of Calavo, or options, warrants, contractual rights or other rights of any kind to acquire or vote any voting securities of Calavo (collectively, the “VOTING SECURITIES”), except those securities acquired pursuant to the Stock Purchase Agreement (the “CALAVO SHARES”).

3. Standstill Arrangements.

3.1 Acquisition of Additional Voting Securities. Limoneira hereby covenants and agrees that prior to the Termination Date (as hereinafter defined), neither it nor any of its Subsidiaries will, without the prior approval of the Board of Directors of Calavo, directly or indirectly, purchase or otherwise acquire (other than pursuant to a stock split or stock dividend) or make any proposal, other than a confidential proposal to the Board of Directors of Calavo, to or agree to acquire, or become or agree to become the beneficial owner of, more than 12.6% of the outstanding Voting Securities, other than (i) the Calavo Shares or (ii) any Voting Securities issued as dividends on or otherwise issued in exchange or in consideration of or with respect to the Calavo Shares (the “DIVIDEND SHARES”) or shares issued as dividends on the Dividend Shares or in exchange for or in respect of the Dividend Shares.

3.2 Prohibited Actions. Each Investor hereby agrees (as to himself or itself only and not with respect to any other Investor) that, prior to the Termination Date, such Investor will not, without the prior approval of the Board of Directors of Calavo, directly or indirectly , solicit, request, advise, assist or encourage others to, take any of the following actions:

(b) solicit proxies or written consents of stockholders with respect to Voting Securities under any circumstances, or make, or in any way participate in, any “solicitation” of any “proxy” to vote any Voting Securities (other than a solicitation conducted by Calavo), or become a “participant” in any election contest with respect to Calavo (as such terms are defined or used in Rule 14a-1 under the Exchange Act) other than an election contest related to election of members of the Board of Directors elected solely by the holders of the Calavo Shares;

(c) seek to call, or request the call of, a special meeting of the stockholders of Calavo unless first presented to the Calavo Board of Directors or seek to make, or make, a stockholder proposal at any meeting of the stockholders of Calavo that has not first been presented to the Calavo Board of Directors;

(d) commence, or announce any intention to commence, any tender offer for any Voting Securities;

(e) make, announce any intention or desire to make, or facilitate the making of, any proposal (other than a confidential proposal to Calavo) or bid with respect to the acquisition of any substantial portion of the assets of Calavo or of the assets or stock of any of its subsidiaries or of all or any portion of the outstanding Voting Securities, or recapitalization or liquidation involving Calavo or any of its subsidiaries;

(f) knowingly arrange, or in any way knowingly participate in, any financing for any transaction referred to in clauses 3(a) through 3(e) above; or

(g) make any request, or otherwise seek (in any fashion that would require public disclosure by Calavo, such Investor or their respective Affiliates) to obtain any waiver or amendment of any provision of this Agreement or take any action restricted hereby.

8. Headings. Descriptive headings are for convenience only and shall not control of affect the meaning or construction of any provision of this Agreement.

9. Number; Gender. Whenever the singular number is used herein, the same shall include the plural where appropriate, and words or any gender shall include each other gender where appropriate.


		if to Limoneira:		Limoneira Company
				1141 Cummings Road
				Santa Paula, CA 93060
				Attention: Harold S. Edwards, CEO

		with a copy to:		Lawrence E. Stickney, Esq.


				Walker, Wright, Tyler & Ward
				626 Wilshire Blvd., Suite 900
				Los Angeles, CA 90017

		if to Calavo:		Calavo Growers, Inc.
				1141 A Cummings Road
				Santa Paula, CA 93060
				Attention: Lecil E. Cole, Chairman

		with a copy to:		Marc L. Brown, Esq.
				Troy & Gould, APC
				1801 Century Park East
				Suite 1600
				Los Angeles, CA 90067

12. Law Governing. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California without regard to any conflict of laws provisions thereof.

14. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

15. Section Headings. The headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written hereinabove.


Calavo:	CALAVO GROWERS, INC.

	By:	/s/ Lecil E. Cole

		Name: Lecil E. Cole
		Title: Chairman, President and CEO

Limoneira:	LIMONEIRA COMPANY

	By:	/s/ Harold S. Edwards

		Name: Harold S. Edwards
		Title: President and CEO

Limoneira Affiliates:		/s/ Harold S. Edwards

		Name: Harold S. Edwards

		/s/ Alex M. Teague

		Name: Alex M. Teague


				/s/ G. Ronald Hendren

				Name: G. Ronald Hendren

				/s/ Don P. Delmatoff

				Name: Don P. Delmatoff

				/s/ Allan M. Pinkerton

				Name: Allan M. Pinkerton

				/s/ John W. Blanchard

				Name: John W. Blanchard

				/s/ Gordon E. Kimball

				Name: Gordon E. Kimball

				/s/ Robert M. Sawyer

				Name: Robert M. Sawyer

				/s/ Samuel R. Edwards

				Name: Samuel R. Edwards

				/s/ Robert A. Proctor

				Name: Robert A. Proctor

				/s/ Ronald L. Michaelis

				Name: Ronald L. Michaelis

				/s/ Alan M. Teague

				Name: Alan M. Teague

				/s/ John W.H. Merriman

				Name: John W.H. Merriman

				/s/ John M. Dickenson

				Name: John M. Dickenson

Unassociated Document

Exhibit 10.6

LEASE AGREEMENT

(OFFICE SPACE)

THIS LEASE AGREEMENT, made and entered into this 15th day of February, 2005, by and between LIMONEIRA COMPANY, a Delaware corporation (hereinafter referred to as “Landlord”), and CALAVO GROWERS, INC., a California corporation (hereinafter referred to as “Tenant”);

WITNESSETH:

ARTICLE I

DEMISED PREMISES

1.01 Landlord demises and leases to Tenant, and Tenant rents from Landlord, those certain premises (the “Premises”) in the City of Santa Paula, County of Ventura, and State of California, described as follows: the first and second floors of the east wing and three offices in the center building of the Limoneira Ranch Headquarters located at 1141 Cummings Road, Santa Paula, California 93060 (the “Limoneira Headquarters Building”), containing approximately 9,490 square feet, as depicted on Exhibit A attached hereto, together with the improvements and fixtures described on Exhibit B hereto, all of which are to be purchased and installed by Landlord at its sole expense.

ARTICLE II

TERM

2.01 The term of this Lease shall commence on February 15, 2005, and shall continue thereafter for a period of ten (10) years. Tenant shall have options to extend this Lease for two additional terms of five (5) years each. Each such option may be exercised by written notice from Tenant to Landlord given not less than ninety (90) days prior to expiration of the then current Lease term, provided that an Event of Default (as defined below) does not exist under this Lease at the time it delivers its written notice.

ARTICLE III

RENT

3.01 During the first year of the term of this Lease, Tenant shall pay rent to Landlord annual rental of Two Hundred Seven Thousand Two Hundred Twenty-Six Dollars and Sixty Cents ($207,226.60) in monthly installments of Seventeen Thousand Two Hundred Sixty-Eight Dollars and Eighty-Eight Cents ($17,268.88) per month on or before the tenth (10th) day of each calendar month for the current calendar month. The payment of said rent shall begin on the commencement date as provided in Section 2.01 hereof. Said rent shall be paid at the office of Landlord, located at 1141 Cummings Road, Santa Paula, California 93060, or at such other place as may be designated in writing from time to time by Landlord. Rent shall be adjusted annually commencing in February, 2007, effective as of the fifteenth day of February to reflect to increase in the “CPI” as of that month over the CPI for February, 2005. No such increase shall be in excess of five percent (5%) in any year. CPI for purposes of this Lease shall mean the

Consumer Price Index for all Urban Consumers for the Los Angeles, Orange and Riverside County areas. In the event that such Index is no longer published at the time of a scheduled rent adjustment, Landlord and Tenant shall agree upon and utilize the most comparable index then being published.

ARTICLE IV

USE OF PREMISES

4.01 Tenant shall occupy and use the Demised Premises for the operation of its corporate offices, or (subject to Landlord’s prior written approval not to be unreasonably withheld, delayed or conditioned) any other lawful purpose.

ARTICLE V

PAYMENT OF TAXES AND UTILITY CHARGES

5.01 Taxes. Landlord shall pay all City and County real property taxes on the land and building comprising the Limoneira Headquarters Building, including the Premises. Nothing contained in this Lease shall require Tenant to reimburse Landlord for or pay for any franchise, estate, inheritance, succession, capital levy or transfer tax of Landlord, or any income, excess profits or revenue tax or any other tax, assessment, charge or levy upon the rent payable by Tenant under this Lease. Tenant shall pay any and all taxes assessed or imposed, and which become payable during the Lease term, upon Tenant’s fixtures, furniture, appliances and personal property located or installed in the Premises, but not including any of the items listed on Exhibit B hereto installed by Landlord for Tenant’s use.

5.02 Utility Charges. Landlord shall pay for all charges for electricity, water, gas and other utility services used on the Premises during the term of this Lease and shall provide janitorial services to the Premises comparable to those it provides for its own corporate offices. Landlord shall also provide all maintenance for the Premises as set forth in Article VI hereof; provided that such services shall not in any event be less than those customarily provided by landlords of comparable leased space in Ventura County, California.

ARTICLE VI

SERVICES

6.01 Landlord shall maintain the public and common areas of the Limoneira Headquarters Building, including, without limitation, lobbies, stairs, elevators, corridors and restrooms, windows, plumbing and electrical equipment, and the structure itself in reasonable good order and condition except for damage occasioned by the act of Tenant, its employees, agents, contractors or invitees, which damage shall be repaired by Landlord at Tenant’s expense to the extent such expense is reasonable under the circumstances.

6.02 Landlord shall furnish the Premises with (1) electricity for lighting and the operation of customary office machines and equipment, (2) heat and air conditioning to the extent reasonably required for the comfortable occupancy by Tenant in its use of the Premises, subject to any applicable policies or regulations adopted by any utility or

governmental agency, (3) water for drinking and lavatory purposes, (4) lighting replacement (for building standard lights), (5) restroom supplies, (6) window washing with janitor service. Landlord may establish reasonable measures to conserve energy, including but not limited to, automatic switching off of lights after hours. Landlord shall not be in default hereunder or be liable for any damages directly or indirectly resulting from, nor shall the rent herein reserved be abated by reason of (i) the installation, use or interruption of use of any equipment in connection with the furnishing of any of the foregoing services, except to the extent resulting from Landlord’s gross negligence or willful misconduct, (ii) failure to furnish or delay in furnishing any such services when such failure or delay is caused by accident or any condition beyond the reasonable control of Landlord or by the making of repairs or improvements to the Premises or to the Limoneira Headquarters Building, or (iii) the limitation, curtailment, rationing or restrictions on use of water, electricity, gas or any other form of energy serving the Premises or the Limoneira Headquarters Building imposed by any governmental authority.

6.03 Whenever heat-generating equipment or lighting other than building standard lights are used in the Premises by Tenant which affect the temperature otherwise maintained by the air conditioning system, Landlord shall have the right, after notice to Tenant, to install supplementary air conditioning facilities in the Premises or otherwise modify the ventilating and air conditioning system serving the Premises, and the reasonable cost of such facilities and modifications shall be borne by Tenant. Tenant shall also pay the cost of providing all cooling energy to the Premises in excess of that

required for normal office use or during hours requested by Tenant when air conditioning is not otherwise furnished by Landlord. If there is installed in the Premises lighting requiring power in excess of that required for normal office use in the Limoneira Headquarters Building or if there is installed in the Premises equipment requiring power in excess of that required for normal desk-top office equipment or normal copying equipment, Tenant shall pay for the cost of such excess power, together with the reasonable cost of installing any additional risers or other facilities that may be reasonably necessary to furnish such excess power to the Premises.

6.04 In the event that Landlord, at Tenant’s request, provides services to Tenant that are not otherwise provided for in this Lease, Tenant shall pay Landlord’s reasonable charges for such services upon billing therefor.

6.05 Landlord shall provide to Tenant, without charge, paved parking areas for use by Tenant’s officers, directors, employees and invitees. Such parking will be in an asphalt paved parking areas east of the Lemon Packing House. Landlord reserves the right to relocate such parking areas from time to time, provided that such access shall at all times be reasonably proximate to the Premises.

ARTICLE VII

INSURANCE BY TENANT – INDEMNITY

7.01 Public Liability Insurance. Tenant agrees that, at its own cost and expense, it shall procure and continue in force, in the name of Landlord and Tenant,

general liability insurance against any and all claims for injuries to persons occurring in, upon or about the Demised Premises. During the term of this Lease, such insurance shall be in an amount not less than One Million Dollars ($1,000,000) for injury to or death of any one person in one accident, and not less than Three Million Dollars ($3,000,000) for injuries to or death of all persons in any one accident and to the limit of not less than Five Hundred Thousand Dollars ($500,000) in respect to property damage. Such policy shall name Landlord as an additional insured.

7.02 Tenant shall also procure at its costs and expense and keep in effect during the term of this Lease insurance against damage by fire and other perils included within “all-risk” coverage (but excluding earthquake, flood and acts of terrorism) in an amount not less than the full replacement cost of all of the leasehold improvements in the Premises and Tenant’s trade fixtures, furnishings and equipment in the Premises. A copy of each policy of insurance shall be delivered to Landlord by Tenant prior to commencement of the term of this Lease and upon each renewal of such insurance. In the event Tenant shall fail to procure such insurance, or to deliver to Landlord such policies, Landlord may, at its option upon no less than five (5) days prior written notice from Landlord, procure the same for the account of Tenant, and the cost thereof shall be paid to Landlord within (5) days after delivery to Tenants of bills therefor. Each insurance policy required to be maintained by Tenant under this Article VII shall provide that it is primary insurance and not excess over or contributory with any other valid, existing and applicable insurance in force for or on behalf of any of the parties required to be named as additional insured thereunder, shall be issued by insurance companies

licensed to do business in the State of California and otherwise reasonably acceptable to Landlord, and shall provide that such insurance may not be cancelled or amended without thirty (30) days’ prior written notice to Landlord

7.03 Subrogation. Landlord and Tenant shall each obtain from its respective insurers under all policies of fire insurance, and to the extent obtainable, theft, public liability, workers’ compensation and other insurance maintained by either of them at any time during the term hererof insuring or covering the Limoneira Headquarters Building or any portion thereof or operations therein, a waiver of all rights of subrogation which the insurer of one party might have against the other party, and Landlord and Tenant shall each indemnify the other against and reimburse the other for any and all loss or expense, including reasonable attorney’s fees, resulting from the failure to obtain such waiver.

7.04 Indemnification. Tenant hereby waives all claims against Landlord for the theft, loss or damage to any property, fixtures or improvements or injury of death of any person in, upon or about the Premises arising at any time and from any cause other than to the extent arising by reason of the gross negligence or willful misconduct of Landlord, its employees or contractors, and Tenant shall indemnify, defend and hold Landlord harmless from any and all loss, cost, damage or liability arising from the use or occupancy of the Premises or the Limoneira Headquarters Building by Tenant or Tenant’s failure to perform its obligations under this Lease, except to the extent such is caused by the gross negligence or willful misconduct of Landlord, its contractors or employees. The foregoing indemnity obligation of Tenant shall include reasonable

attorneys’ fees, investigation costs and all other reasonable costs and expense incurred by Landlord from the first notice that injury, death or damage has occurred or that any claim or demand is to be made or may be made. The provisions of this Article shall survive the termination of this Lease.

ARTICLE VIII

REPAIRS, MAINTENANCE AND RECONSTRUCTION

8.01 Except as hereinafter provided, Landlord during the entire term of this Lease and any extension thereof, shall keep the entire Premises and all improvement therein, in good condition and repair.

8.02 Tenant shall not have the right, without the consent of Landlord, not to be unreasonably withheld, delayed or conditioned, to make any alterations or additions to the Premises if the reasonable expected cost thereof exceeds twenty-five thousand dollars ($25,000). Upon the expiration of this Lease, any then existing alterations, additions and improvements made by Tenant to or upon the Premises, except Tenant’s signs, shall become the property of Landlord.

8.03 At the termination of this Lease, Tenant shall surrender the Premises to Landlord in good condition and repair, subject only to the consequences and effect of reasonable wear and tear; provided, however, that Tenant shall be under no obligation to repair or restore any portion of said building or other improvements which may be damaged or destroyed by reason of fire, earthquake, the elements or other casualty.

8.04 In the event the Limoneira Headquarters Building shall be damaged by fire, earthquake, the elements or other casualty, the following provision shall apply: if the Limoneira Headquarters Building shall be totally destroyed or partially destroyed from causes covered by insurance to an extent exceeding twenty-five per cent (25%) of the then full replacement costs (excluding foundations), and Landlord has not commenced the repair, reconstruction or restoration of the building within sixty (60) days after the date of such destruction, either Tenant or Landlord shall have the right to terminate this Lease by giving written notice of its election to terminate to the other party within ninety (90) days, but not before sixty (60) days from the date of such destruction. If neither party shall elect to terminate this Lease within such 90-day period, Landlord shall promptly commence repair, reconstruction and restoration of said building and prosecute the same diligently to completion, in which event this Lease shall continue in full force and effect.

8.05 Upon any termination of this Lease under any of the provisions of this Article VIII, Tenant shall surrender possession of the Premises within sixty (60) days after receipt of such written notice of termination, whereupon the parties shall be released thereby from any further obligations to the other except for items which have theretofore accrued and are then unpaid, and such termination shall be deemed to relate back to the date of destruction, provided that if the Premises or any portion thereof shall be kept open for business after the date of destruction and prior to the surrender of possession of the Premises, the termination date shall be the date that Tenant shall discontinue the conduct of its business in the Premises. In the event of any termination, as herein provided,

Tenant shall forthwith surrender the Premises to Landlord, and upon such surrender Landlord shall refund to Tenant any unearned rent paid by Tenant, calculated at a daily rate based on the regular monthly rate and shall pay to Tenant and unexpired taxes and insurance premiums.

8.06 In the event of repair, reconstruction and restoration under any of the conditions of this Article VIII, Tenant shall not be entitled to any damages by reason of any inconveniences or loss sustained by Tenant. During any such period of repair, reconstruction and restoration, all rent paid in advance shall be apportioned, and the monthly rental thereafter accruing shall be equitably and proportionately prorated and adjusted according to the nature, extent and duration of the damage sustained and according to the suitability of the Premises for the use and occupancy of Tenant in the conduct of its business, until the Premises shall have been repaired, reconstructed or restored by Landlord. The full rental shall again become payable at such time after the completion of such work of repair, reconstruction and restoration and when Tenant shall use the restored part of the Premises in the carrying on of its business, or within thirty (30) days after the completion of such work, whichever shall first occur.

ARTICLE IX

ENTRY BY LANDLORD

9.01 Landlord may enter the Premises at reasonable hours to (a) inspect the same; (b) exhibit the same to prospective purchasers, lenders or tenants, provided, however, that Landlord shall only exhibit the Premises to prospective tenants during the

final twelve (12) months of Tenant’s occupancy of the Premises; (c) determine whether Tenant is complying with all its obligations hereunder; (d) supply janitor service and any other service to be provided by Landlord to Tenant hereunder; (e) make repairs required of Landlord under the terms hereof or repairs to any adjoining space or utility services or make repairs, alterations or improvements to any other portion of the Building; provided that no entry by Landlord shall unreasonably interfere with Tenant’s use or occupancy of the Premises. Tenant hereby waives any claim for damages for any inconvenience to or interference with Tenant’s business or any loss of occupancy or quiet enjoyment of the Premises occasioned by such entry, except to the extent that such damages result from Landlord’s unreasonable interference with Tenant’s use or occupancy of the Premises or Landlord’s gross negligence or willful misconduct Landlord shall at all time have and retain a key with which to unlock all of the doors in, on or about the Premises (excluding Tenant’s vaults, safes and similar areas designated in writing by Tenant in advance); and Landlord shall have the right to use any and all means which Landlord may deem proper to open Tenant’s doors in an emergency in order to obtain entry to the Premises, and any entry to the Premises obtained by Landlord in an emergency shall not be construed or deemed to be a forcible or unlawful entry into or a detainer of the Premises or an eviction, actual or contructive, of Tenant from the Premises or any portion thereof.

ARTICLE X

EVENTS OF DEFAULT

10.01 Default. The following events shall constitute Events of Default under this Lease:

(a) Tenant’s failure to pay when due any rent or other sum payable hereunder and the continuation of such failure for a period of fifteen (15) days after Tenant receives written notice from Landlord that the same is due, provided that if Tenant has failed three or more times in any twelve-month period to pay any rent or other sum within such fifteen (15) day period, such grace period shall thereafter be reduced to three (3) days;

(b) Tenant’s failure to perform any of the other terms, covenants, agreements or conditions contained herein and, if the failure is curable, the continuation of such failure for a period of thirty (30) days after notice by Landlord or beyond the time reasonably necessary for cure if the failure is of a nature to require more than thirty (30) days to remedy, provided that if Tenant has failed to perform the same obligation three or more times in any twelve-month period and notice of such failure has been given by Landlord in each instance, no cure period shall thereafter be applicable hereunder;

(c) The bankruptcy or insolvency of Tenant, transfer by Tenant in fraud of creditors, an assignment by Tenant for the benefit of creditors, or the commencement of any proceedings of any kind by or against Tenant under any provision of the Federal Bankruptcy Act or under any other insolvency, bankruptcy or reorganization act unless, in the event any such proceeding such involuntary, Tenant is discharged from the same within ninety (90) days thereafter;

(d) the appointment of a receiver for all or a substantial part of the assets of Tenant;

(e) the abandonment of the Premises; or

(f) the levy upon Tenant’s interest in this Lease or any estate of Tenant hereunder by any attachment or execution and the failure to have such attachment or execution vacated within thirty (30) days thereafter.

ARTICLE XI

TERMINATION UPON DEFAULT

11.01 In any notice given pursuant to Article X above, Landlord in its sole discretion may elect to declare a forfeiture of this Lease as provided in Section 1161 of the California Code of Civil Procedure, and provided that Landlord’s notice state such an election, Tenant’s right to possession shall terminate and this Lease shall terminate, unless on or before the date specified in such notice, all arrears of rent and all other sums payable by Tenant under this Lease and all costs and expenses incurred by or on behalf of Landlord hereunder, including reasonable attorneys’ fees shall be paid by Tenant and all other breaches of this Lease by Tenant at the time existing shall have been fully remedied to the satisfaction of Landlord. Upon such termination, Landlord may, at its option and without any further notice or demand, in addition to any other rights and remedies given hereunder or by law, exercise its remedies relating hereto in accordance with the following provisions:

(i) In the event of any such termination of this Lease, Landlord may then or at any time thereafter by judicial process, re-enter the Premises and remove therefrom all persons and property and again repossess and enjoy the Premises, without prejudice to any other remedies that Landlord may have by reason of Tenant’s default or of such termination.

(ii) In the event of any such termination of this Lease, and in addition to any other rights and remedies Landlord may have, Landlord shall have all of the rights and remedies of a landlord provided by Section 1951.2 of the California Civil Code. The amount of damages which Landlord may recover in event of such termination shall include, without limitation, (1) the worth at the time of award (computed by discounting such amount a the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent) of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of rental loss that Tenant proves could be reasonable avoided, (2) all reasonable legal expenses and other related costs incurred by Landlord following Tenant’s default, (3) all reasonable costs incurred by Landlord in restoring the Premises to good order and condition, or in remodeling, and (4) all costs (including, without limitation, any brokerage commissions) incurred by Landlord in reletting the Premises.

(iii) After terminating this Lease, Landlord may remove any and all personal property of Tenant located in the Premises and place such property in a public or private warehouse or elsewhere at the sole cost and expense of Tenant. In the event that

Tenant shall not immediately pay the cost of storage of such property after the same has been stored for a period of thirty (30) days or more, Landlord may sell any or all thereof at a public or private sale in such manner and such times and places as Landlord in its sole discretion may deem proper, without notice to or demand upon Tenant. Tenant waives all claims for damages that may be caused by Landlord’s removing or storing or selling the property as herein provided, and Tenants shall indemnify and hold Landlord free and harmless from and against any and all losses, costs and damages, including without limitation all costs of court and attorneys’ fees of Landlord occasioned thereby, except for those arising by reason of Landlord’s gross negligence or willful misconduct.

11.02 In the event of the occurrence of any of the events specified in Section 10.01(c) of this Lease, if Landlord shall not choose the exercise, or by law shall not be able to exercise, its rights hereunder to terminate this Lease, then, in addition to any other rights of Landlord hereunder or by law, (1) Landlord may discontinue the services provided pursuant to Article VI of this Lease, unless Landlord has received compensation in advance for such services in the amount of Landlords’ reasonable estimate of the compensation required with respect to such services, and (2) neither Tenant, as debtor-in-possession, nor any trustee or other person (collectively, the “Assuming Tenant”) shall be entitled to assume this Lease unless on or before the date of such assumption, the Assuming Tenant (a) cures, or provides adequate assurance that the Assuming Tenants will promptly cure, any existing default under this Lease, (b) compensates, or provides adequate assurance that the Assuming Tenant will promptly compensate, Landlord for any pecuniary loss (including, without limitation, attorneys’ fees and disbursement)

resulting from such default, and (c) provides adequate assurance of future performance under this Lease. For purposes of this Section 11.02, “adequate assurance” of such cure, compensation of future performance shall be effected by the establishment of an escrow fund for the amount at issue or by bonding.

ARTICLE XII

CONTINUATION AFTER DEFAULT

12.01 If an Event of Default exists under this Lease and Tenant has abandoned the Premises, Landlord shall also have the remedy described in California Civil Code Section 1951.4 (Landlord may continue this Lease in effect after Tenant has breached this Lease and abandoned the Premises and recover rent as it becomes due; provided, however that Tenants has the right to sublet or assign this Lease, subject only to reasonable limitations). Acts of maintenance or preservation or efforts to relet the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord’s interest under this Lease shall not constitute a termination of Tenant’s right to possession.

12.02 The remedies provided for in this Lease are in addition to any other remedies available to Landlord at law or in equity by statute or otherwise.

ARTICLE XIII

ASSIGNMENT AND SUBLEASE

13.01 Tenants shall not have the right at any time to sublease, sublet or assign all or any portion of the Premises or its interest in this Lease. Any such assignment or subleasing shall be void unless Landlord shall first agree in writing to such assignment or subletting, which agreement Landlord shall not unreasonably withhold, delay or condition.

ARTICLE XIV

ENCUMBRANCES BY LANDLORD

14.01 Tenant agrees that, except as hereinafter provided with respect to Tenant’s right to possession of the Premises, Tenant’s rights under this Lease are and shall always be subordinate to the lien of any mortgage or trust deed now or hereafter placed from time to time upon the Limoneira Headquarters Building of which the Premises are a part in favor of a bank, savings and loan association, insurance company or other financial institution. Tenant shall, upon written demand from Landlord, execute such other and further instruments or assurances subordinating this Lease to the lien or liens of any such mortgage or mortgages or trust deeds except as hereinafter limited with respect to Tenant’s right to possession. Tenant’s possession and right of use under this Lease in and to the Premises shall not, however, be disturbed by any mortgagee, trustee under a trust deed, owner or holder of a note secured by a mortgage or trust deed now existing or hereafter placed on the Limoneira Headquarters Building unless and until Tenant shall breach any of the provisions of this Lease and the Lease term or Tenant’s right to

possession shall have been lawfully terminated in accordance with the provisions of this Lease. If any mortgagee or trustee under a trust deed elects to have Tenant’s interest in this Lease superior to any such interest by notice to Tenant, then this Lease shall be deemed superior to any such mortgage or trust deed whether this Lease was executed before or after such mortgage or trust deed.

ARTICLE XV

TERMINATION – ABATEMENT

15.01 If, without Tenant’s fault, the operation on the Premises of the business then being conducted on the Premises is substantially impaired or prevented for more than ninety (90) days by the deprivation or limitation of any access thereto or therefrom, by any governmental taking or action, Tenant may terminate this Lease by giving Landlord at least thirty (30) days’ written notice; provided that, in the event of any such acquisition or taking, such notice may be given at any time not later than ninety (90) days after physical possession of the Premises is taken or the judgment in the condemnation proceeding becomes final, whichever occurs later; and if the taking is total, the rent shall immediately abate, or if only partial, but is sufficient in Tenant’s reasonable judgment to prevent or substantially impair operation of the business then located on the Premises, the rent shall abate when physical possession of the Premises is taken. Neither the existence nor exercise of any right under this Lease to terminate, nor any abatement of rent, shall waive, limit or affect in any way Tenant’s rights, then accrued or thereafter to accrue, in any proceeding, settlement or award for condemnation or for damages resulting from any other of the events specified in this Article XV.

ARTICLE XVI

EMINENT DOMAIN

16.01 In the event the entire Premises shall be appropriated or taken under the power of eminent domain by any public or quasi-public authority, this Lease shall terminate and expire as of the date of such taking and the parties hereto shall thereupon be released from any liability thereafter accruing hereunder.

16.02 In the event more than ten percent (10%) of the ground floor area of the Premises is taken under the power of eminent domain by any public or quasi-public authority, Tenant shall have the right to terminate this Lease as of the date of such taking upon giving to Landlord notice, in writing, of such election within thirty (30) days after such appropriation or taking. In the event of such termination, both parties shall thereupon be released from any liability thereafter accruing hereunder. Landlord agrees immediately after it received notice of the intention of any such authority to appropriate or take to give to Tenant notice, in writing, thereof.

16.03 This Lease is not terminated by Tenant in accordance with the foregoing provisions, there shall be no abatement of rent and this Lease shall remain in full force and effect and Landlord shall receive and retain any amount awarded as compensation for the taking of fixtures and equipment owned by Landlord or for the expense of removing or repairing the same or for improvements constructed by Landlord at its own cost.

16.04 If this Lease is terminated in the manner hereinabove provided, each party shall be entitled to any award made to it in such proceedings, but the rent for the last month of Tenant’s occupancy shall be prorated and Landlord agrees to refund to Tenant any rent paid in advance.

XVII

ATTORNEYS’ FEES

17.01 If as a result of any breach or default in the performance of any of the provisions of this Lease, Landlord uses the services of an attorney in order to secure compliance with such provision or recover damages therefor, or to terminate this Lease or evict Tenants, Tenant shall reimburse Landlord upon demand for any and all reasonable attorneys’ fees and expenses so incurred by Landlord, provided that if Tenant shall be the prevailing party in any legal action brought by Landlord against Tenant, Tenant shall be entitled to recover reasonable attorneys’ fees and expenses incurred by Tenant.

ARTICLE XVIII

HOLDING OVER

18.01 Any holding over after the expiration of the term of this Lease with the consent of Landlord shall be deemed a tenancy from month-to-month at a rental equal to one hundred twenty percent (120%) of the monthly rental being paid by Tenant as of the last month of the term of this Lease. All other conditions and agreements of this Lease shall be applicable to such holding over.

ARTICLE XIX

MISCELLANEOUS

19.01 Notices. Whenever under this Lease a provision is made for any demand, notice or declaration of any kind or where it is deemed desirable or necessary by either party to give or serve any such notice, demand or declaration to the other, it shall be in writing sent by registered or certified mail with postage prepaid, if to Tenant, addressed to Tenant at 1141 A Cummings Road, Santa Paula, California 93060 and if to Landlord, addressed to Landlord at 1141 Cummings Road, Santa Paula, California 93060 and either party may, by like notice, at any time and from time to time, designate a different address to which notices shall be sent. Such notices, demands or declarations shall be deemed sufficiently served or given for all purposes hereunder at the time they shall be mailed by United States registered or certified mail as aforesaid.

19.02 Waiver. One or more waivers of any covenant, term or condition of this Lease by either party shall not be construed by the other party as a waiver of a subsequent breach of the same covenant, term or condition. The consent or approval of either party to or of any act by the other party of a nature requiring consent or approval shall not be deemed to waiver or render unnecessary consent to or approval of any subsequent similar act.

19.03 Relationship of Parties. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent or of partnership or of joint venture or of any association whatsoever

between Landlord and Tenant, it being expressly understood and agreed that none of the provisions contained in this Lease nor any act or acts of the parties hereto shall be deemed to create any relationship between Landlord and Tenant other than the relationship of Landlord and Tenant.

19.04 Governing Laws. The laws of the State of California shall govern the validity, performance and enforcement of this Lease.

19.05 Savings Clause. The invalidity or unenforcibility of any provision of this Lease shall not affect or impair the validity of any other provision.

19.06 Margin Headings. The Paragraph titles herein are for convenience only and do not define, limit or construe the contents of such Paragraph.

19.07 Covenant to Bind Successors. It is agreed that the provisions, covenants and conditions of this Lease shall be binding on the legal representatives, heirs, successors and assigns of the respective parties hereto.

19.08 Entire Agreement. This Lease and the Exhibits attached hereto and forming a part hereof, set forth all of the covenants, promises, agreements, conditions and understandings between Landlord and Tenant governing the Premises. There are no covenants, promises, agreements, conditions and understandings, either oral or written, between them other than those herein set forth. Except as herein provided, no subsequent

alterations, amendments, changes or additions to this Lease shall be binding upon Landlord or Tenant unless and until reduced to writing and signed by both parties.

IN WITNESS WHEREOF, the parties hereto have executed this Lease Agreement as of the day and year first above written.


		LANDLORD

		LIMONEIRA COMPANY

		By		/s/ Harold Edwards


		By		/s/ Don Delmatoff


		TENANT

		CALAVO GROWERS INC.

		By		/s/ Lecil Cole


		By		/s/ Arthur Bruno

LIMONEIRA COMPANY

2010 OMNIBUS INCENTIVE PLAN

Section 1. Purpose. The purposes of this Limoneira Company 2010 Omnibus Incentive Plan are to promote the interests of Limoneira Company and its stockholders by (i) attracting and retaining employees and directors of, and consultants to, the Company and its Affiliates, as defined below; (ii) motivating such individuals by means of performance-related incentives to achieve longer-range performance goals; and (iii) enabling such individuals to participate in the long-term growth and financial success of the Company.

Section 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

“Affiliate” shall mean any entity (i) that, directly or indirectly, is controlled by, controls or is under common control with, the Company or (ii) in which the Company has a significant equity interest, in either case as determined by the Committee.

“Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award, Other Stock-Based Award or Performance Compensation Award made or granted from time to time hereunder.

“Award Agreement” shall mean any written agreement, contract, or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

“Board” shall mean the Board of Directors of the Company.

“Cause” as a reason for a Participant’s termination of employment or service shall have the meaning assigned such term in the employment, severance or similar agreement, if any, between the Participant and the Company or an Affiliate. If the Participant is not a party to an employment, severance or similar agreement with the Company or an Affiliate in which such term is defined, then unless otherwise defined in the applicable Award Agreement, “Cause” shall mean: (i) the intentional engagement in any acts or omissions constituting dishonesty, breach of a fiduciary obligation, wrongdoing or misfeasance, in each case, in connection with a Participant’s duties or otherwise during the course of a Participant’s employment or service with the Company or an Affiliate; (ii) the commission of a felony or the indictment for any felony, including, but not limited to, any felony involving fraud, embezzlement, moral turpitude or theft; (iii) the intentional and wrongful damaging of property, contractual interests or business relationships of the Company or an Affiliate; (iv) the intentional and wrongful disclosure of secret processes or confidential information of the Company or an Affiliate in violation of an agreement with or a policy of the Company or an Affiliate; (v) the continued failure to substantially perform the Participant’s duties for the Company or an Affiliate; (vi) current alcohol or prescription drug abuse affecting work performance; (vii) current illegal use of drugs; or (viii) any intentional conduct contrary to the Company’s or an Affiliate’s written policies or practices.

“Change of Control” shall mean the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company to any “person” or “group” (as such terms are used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) any person or group is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than fifty percent (50%) of the total voting power of the voting stock of the Company, including by way of merger, consolidation or otherwise or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (together with any new directors whose election by such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the directors of the Company, then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved, but excluding any director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) cease for any reason to constitute a majority of the Board, then in office.

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

“Committee” shall mean a committee of the Board designated by the Board to administer the Plan and composed of not less than two directors, each of whom is required to be a “Nonemployee Director” (within the meaning of Rule 16b-3) and an “outside director” (within the meaning of Section 162(m) of the Code) to the extent Rule 16b-3 and Section 162(m) of the Code, respectively, are applicable to the Company and the Plan. If at any time such a committee has not been so designated, the Board shall constitute the Committee.

“Company” shall mean Limoneira Company, a Delaware corporation, together with any successor thereto.

“Covered Employee” shall mean a “covered employee” as defined in Code Section 162(m)(3).

“Effective Date” shall have the meaning ascribed to it in Section 16(a).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Existing Plan” shall mean the Limoneira Company Stock Grant Performance Bonus Plan.

“Fair Market Value” shall mean (i) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (ii) with respect to the Shares, as of any date, (1) the closing sale price (excluding any “after hours” trading) of the Shares as reported on the Nasdaq Stock Market for such date (or if not then trading on the Nasdaq Stock Market, the closing sale price of the Shares on the stock exchange or over-the-counter market on which the Shares are principally trading on such date), or, if there were no sales on such date, on the closest preceding date on which there were sales of Shares or (2) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee.

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“Good Reason” as a reason for a Participant’s termination of employment or service shall have the meaning assigned such term in the employment, severance or similar agreement, if any, between the Participant and the Company or an Affiliate. If the Participant is not a party to an employment, severance or similar agreement with the Company or an Affiliate in which such term is defined, then unless otherwise defined in the applicable Award Agreement, for purposes of this Plan, the Participant shall not be entitled to terminate his or her employment or service for Good Reason.

“Incentive Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto. Incentive Stock Options may be granted only to Participants who meet the definition of “employees” under Section 3401(c) of the Code.

“Negative Discretion” shall mean the discretion authorized by the Plan to be applied by the Committee to eliminate or reduce the size of a Performance Compensation Award; provided that the exercise of such discretion would not cause the Performance Compensation Award to fail to qualify as “performance-based compensation” under Section 162(m) of the Code. By way of example and not by way of limitation, in no event shall any discretionary authority granted to the Committee by the Plan including, but not limited to, Negative Discretion, be used to (a) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained, or (b) increase a Performance Compensation Award above the maximum amount payable under Section 4(a) or Section 11(d)(vi) of the Plan. In no event shall Negative Discretion be exercised by the Committee with respect to any Option or Stock Appreciation Right (other than an Option or Stock Appreciation Right that is intended to be a Performance Compensation Award under Section 11 of the Plan).

“Nonqualified Stock Option” shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is not intended to be an Incentive Stock Option.

“Option” shall mean an Incentive Stock Option or a Nonqualified Stock Option.

“Other Stock-Based Award” shall mean any right granted under Section 10 of the Plan.

“Participant” shall mean any employee of, or consultant to, the Company or its Affiliates, or nonemployee director who is a member of the Board or the board of directors of an Affiliate, eligible for an Award under Section 5 of the Plan and selected by the Committee to receive an Award under the Plan.

“Performance Award” shall mean any right granted under Section 9 of the Plan.

“Performance Compensation Award” shall mean any Award designated by the Committee as a Performance Compensation Award pursuant to Section 11 of the Plan.

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“Performance Criteria” shall mean the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan. The Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels of performance of the Company (or an Affiliate, division or operational unit of the Company) and shall be limited to the following: return on net assets, return on stockholders’ equity, return on assets, return on capital, revenue, average revenue per subscriber, stockholder returns, profit margin, earnings per Share, net earnings, operating earnings, free cash flow, earnings before interest, taxes, depreciation and amortization, number of subscribers, growth of subscribers, operating expenses, capital expenses, subscriber acquisition costs, Share price, enterprise value, equity market capitalization or sales or market share. To the extent required under Section 162(m) of the Code, the Committee shall, within the first ninety (90) days of a Performance Period (or, if longer, within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period.

“Performance Formula” shall mean, for a Performance Period, one or more objective formulas applied against the relevant Performance Goals to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

“Performance Goals” shall mean, for a Performance Period, one or more goals established by the Committee for the Performance Period based upon the Performance Criteria. The Committee is authorized at any time during the first ninety (90) days of a Performance Period, or at any time thereafter (but only to the extent the exercise of such authority after the first ninety (90) days of a Performance Period would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “performance-based compensation” under Section 162(m) of the Code), in its sole discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code in order to prevent the dilution or enlargement of the rights of Participants, (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company; or (b) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company, or the financial statements of the Company, or in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions.

“Performance Period” shall mean the one or more periods of time of at least one (1) year in duration, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.

“Person” shall mean any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated organization, government or political subdivision.

“Plan” shall mean this Limoneira Company 2010 Omnibus Incentive Plan.

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“Restricted Stock” shall mean any Share granted under Section 8 of the Plan.

“Restricted Stock Unit” shall mean any unit granted under Section 8 of the Plan.

“Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

“SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall include the Staff thereof.

“Shares” shall mean the common stock of the Company, $0.01 par value, or such other securities of the Company (i) into which such common stock shall he changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction or (ii) as may be determined by the Committee pursuant to Section 4(b) of the Plan.

“Stock Appreciation Right” shall mean any right granted under Section 7 of the Plan.

“Substitute Awards” shall have the meaning specified in Section 4(c) of the Plan.

Section 3. Administration. a) The Plan shall be administered by the Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant and designate those Awards which shall constitute Performance Compensation Awards; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award (subject to Section 162(m) of the Code with respect to Performance Compensation Awards) shall be deferred either automatically or at the election of the holder thereof or of the Committee (in each case consistent with Section 409A of the Code); (vii) interpret, administer or reconcile any inconsistency, correct any defect, resolve ambiguities and/or supply any omission in the Plan, any Award Agreement, and any other instrument or agreement relating to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (ix) establish and administer Performance Goals and certify whether, and to what extent, they have been attained; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

(b) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any stockholder.

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(c) The mere fact that a Committee member shall fail to qualify as a “Nonemployee Director” or “outside director” within the meaning of Rule 16b-3 and Section 162(m) of the Code, respectively, shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan.

(d) No member of the Committee shall be liable to any Person for any action or determination made in good faith with respect to the Plan or any Award hereunder.

(e) With respect to any Performance Compensation Award granted to a Covered Employee under the Plan, the Plan shall be interpreted and construed in accordance with Section 162(m) of the Code.

(f) The Committee may delegate to one or more officers of the Company (or, in the case of awards of Shares, the Board may delegate to a committee made up of one or more directors) the authority to grant awards to Participants who are not executive officers or directors of the Company subject to Section 16 of the Exchange Act or Covered Employees.

Section 4. Shares Available for Awards.

(a) Shares Available.

(i) Subject to adjustment as provided in Section 4(b), the aggregate number of Shares with respect to which Awards may be granted from time to time under the Plan shall in the aggregate not exceed, at any time, 100,000 Shares; provided, that the aggregate number of Shares with respect to which Incentive Stock Options may be granted under the Plan shall be 80,000. The maximum number of Shares with respect to which Options and Stock Appreciation Rights may be granted to any Participant in any fiscal year shall be 20,000 and the maximum number of Shares which may he paid to a Participant in the Plan in connection with the settlement of any Award(s) designated as “Performance Compensation Awards” in respect of a single Performance Period shall be 50,000 or, in the event such Performance Compensation Award is paid in cash, the equivalent cash value thereof.

(ii) Shares covered by an Award granted under the Plan shall not be counted unless and until they are actually issued and delivered to a Participant and, therefore, the total number of Shares available under the Plan as of a given date shall not be reduced by Shares relating to prior Awards that have expired or have been forfeited or cancelled, and upon payment in cash of the benefit provided by any Award, any Shares that were covered by such Award will be available for issue hereunder. Notwithstanding anything to the contrary contained herein: (A) if Shares are tendered or otherwise used in payment of the exercise price of an Option, the total number of Shares covered by the Option being exercised shall reduce the aggregate limit described in Section 4(a)(i); (B) Shares withheld by the Company to satisfy a tax withholding obligation shall count against the aggregate limit described in Section 4(a)(i); and (C) the number of Shares covered by a Stock Appreciation Right, to the extent that it is exercised and settled in Shares, and whether or not Shares are actually issued to the Participant upon exercise of the Stock Appreciation Right, shall be considered issued or transferred pursuant to the Plan. If, under this Plan, a Participant has elected to give up the right to receive compensation in exchange for Shares based on fair market value, such Shares will not count against the aggregate limit described in Section 4(a)(i).

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(b) Adjustments. Notwithstanding any provisions of the Plan to the contrary, in the event that the Committee determines in its sole discretion that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other corporate transaction or event affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall equitably adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, (ii) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award in consideration for the cancellation of such Award, which, in the case of Options and Stock Appreciation Rights shall equal the excess, if any, of the Fair Market Value of the Share subject to each such Option or Stock Appreciation Right over the per Share exercise price or grant price of such Option or Stock Appreciation Right.

(c) Substitute Awards. Awards may, in the discretion of the Committee, be made under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines (“Substitute Awards”). The number of Shares underlying any Substitute Awards shall be counted against the aggregate number of Shares available for Awards under the Plan.

(d) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

Section 5. Eligibility. Any employee of, or consultant to, the Company or any of its Affiliates (including any prospective employee), or nonemployee director who is a member of the Board or the board of directors of an Affiliate, shall be eligible to be selected as a Participant.

Section 6. Stock Options.

(a) Grant. Subject to the terms of the Plan, the Committee shall have sole authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, the exercise price thereof and the conditions and limitations applicable to the exercise of the Option. The Committee shall have the authority to grant Incentive Stock Options, or to grant Nonqualified Stock Options, or to grant both types of Options. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute. All Options when granted under the Plan are intended to be Nonqualified Stock Options, unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to Nonqualified Stock Options. No Option shall be exercisable more than ten years from the date of grant.

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(b) Exercise Price. The Committee shall establish the exercise price at the time each Option is granted, which exercise price shall be set forth in the applicable Award Agreement and which shall not be less than the Fair Market Value per Share on the date of grant.

(c) Exercise. Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement. The Committee may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal or state securities laws, as it may deem necessary or advisable.

(d) Payment. i) No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate exercise price therefore is received by the Company. Such payment may be made in cash, or its equivalent, or (x) by exchanging Shares owned by the optionee (which are not the subject of any pledge or other security interest and which have been owned by such optionee for at least six months), or (y) subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate exercise price or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate exercise price.

(ii) Wherever in this Plan or any Award Agreement a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial. ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

Section 7. Stock Appreciation Rights.

(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to determine the Participants to whom Stock Appreciation Rights shall be granted, the number of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof and the conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights with a grant price equal to or greater than the Fair Market Value per Share as of the date of grant are intended to qualify as “performance-based compensation” under Section 162(m) of the Code. In the sole discretion of the Committee, Stock Appreciation Rights may, but need not, be intended to qualify as performance-based compensation in accordance with Section 11 hereof. Stock Appreciation Rights may be granted in tandem with another Award, in addition to another Award, or freestanding and unrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may be granted either before, at the same time as the Award or at a later time No Stock Appreciation Right shall be exercisable more than ten years from the date of grant.

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(b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to receive an amount equal to the excess of the Fair Market Value of a Share on the date of exercise of the Stock Appreciation Right over the grant price thereof (which shall not be less than the Fair Market Value on the date of grant). The Committee shall determine in its sole discretion whether a Stock Appreciation Right shall be settled in cash, Shares or a combination of cash and Shares.

(c) Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine, at the grant of a Stock Appreciation Right, the term, methods of exercise, methods and form of settlement, and any other terms and conditions of any Stock Appreciation Right. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it shall deem appropriate.

Section 8. Restricted Stock and Restricted Stock Units.

(a) Grant. Subject to the provisions of the Plan, the Committee shall have sole authority to determine the Participants to whom Shares of Restricted Stock and Restricted Stock Units shall be granted, the number of Shares of Restricted Stock and/or the number of Restricted Stock Units to be granted to each Participant, the duration of the period during which, and the conditions, if any, under which, the Restricted Stock and Restricted Stock Units may be forfeited to the Company, and the other terms and conditions of such Awards.

(b) Transfer Restrictions. Shares of Restricted Stock and Restricted Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered, except, in the case of Restricted Stock, as provided in the Plan or the applicable Award Agreements. Unless otherwise directed by the Committee, (i) certificates issued in respect of Shares of Restricted Stock shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company, or (ii) Shares of Restricted Stock shall be held at the Company’s transfer agent in book entry form with appropriate restrictions relating to the transfer of such Shares of Restricted Stock. Upon the lapse of the restrictions applicable to such Shares of Restricted Stock, the Company shall, as applicable, either deliver such certificates to the Participant or the Participant’s legal representative or the transfer agent shall remove the restrictions relating to the transfer of such Shares.

(c) Payment. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of a Share. Restricted Stock Units shall be paid in cash, Shares, other securities or other property, as determined in the sole discretion of the Committee, upon the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement. Dividends paid on any Shares of Restricted Stock shall be paid directly to the Participant, withheld by the Company subject to vesting of the Restricted Stock pursuant to the terms of the applicable Award Agreement, or may be reinvested in additional Shares of Restricted Stock or in additional Restricted Stock Units, as determined by the Committee in its sole discretion.

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Section 9. Performance Awards.

(a) Grant. The Committee shall have sole authority to determine the Participants who shall receive a “Performance Award”, which shall consist of a right which is (i) denominated in cash or Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such Performance Goals during such Performance Periods as the Committee shall establish, and (iii) payable at such time and in such form as the Committee shall determine.

(b) Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the Performance Goals to be achieved during any Performance Period, the length of any Performance Period, the amount of any Performance Award and the amount and kind of any payment or transfer to he made pursuant to any Performance Award.

(c) Payment of Performance Awards. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period as set forth in the Award Agreement on the date of grant.

Section 10. Other Stock-Based Awards.

(a) General. The Committee shall have authority to grant to Participants an “Other Stock-Based Award”, which shall consist of any right which is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Committee to he consistent with the purposes of the Plan; provided that any such rights must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of any such Other Stock-Based Award, including the price, if any, at which securities may be purchased pursuant to any Other Stock-Based Award granted under this Plan.

(b) Dividend Equivalents. In the sole discretion of the Committee, an Award (other than Options or Stock Appreciation Rights), whether made as an Other Stock-Based Award under this Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other securities or other property on a current or deferred basis; provided, that in the case of Awards with respect to which any applicable Performance Criteria have not been achieved, dividend equivalents may be paid only on a deferred basis, to the extent the underlying Award vests.

Section 11. Performance Compensation Awards.

(a) General. The Committee shall have the authority, at the time of grant of any Award described in Sections 6 through 10 of the Plan (other than Options and Stock Appreciation Rights), to designate such Award as a Performance Compensation Award in order to qualify such Award as “performance-based compensation” under Section 162(m) of the Code.

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(b) Eligibility. The Committee will, in its sole discretion, designate within the first ninety (90) days of a Performance Period (or, if longer, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period. Designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance, Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 11. Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.

(c) Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) is/are to apply to the Company and the Performance Formula. Within the first ninety (90) days of a Performance Period (or, if longer, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence of this Section 11(c) and record the same in writing.

(d) Payment of Performance Compensation Awards. ii) Unless otherwise provided in the applicable Award Agreement, a Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period.

(ii) Limitation. A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that: (1) the Performance Goals for such period are achieved; and (2) the Performance Formula as applied against such Performance Goals determines that all or some portion of such Participant’s Performance Award has been earned for the Performance Period.

(iii) Certification. Following the completion of a Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply Negative Discretion, if and when it deems appropriate.

(iv) Negative Discretion. In determining the actual size of an individual Performance Award for a Performance Period, the Committee may reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Formula in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate.

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(v) Timing of Award Payments. The Awards granted for a Performance Period shall be paid to Participants as soon as administratively possible following completion of the certifications required by this Section 11; provided that in no event shall any Award granted for a Performance Period be paid later than the fifteenth day of the third month following the end of such Performance Period.

(vi) Maximum Award Payable. Notwithstanding any provision contained in the Plan to the contrary, the maximum Performance Compensation Award payable to any one Participant under the Plan for a Performance Period is 50,000 Shares or, in the event the Performance Compensation Award is paid in cash, the equivalent cash value thereof on the last day of the Performance Period to which such Award relates. Furthermore, any Performance Compensation Award that has been deferred shall not (between the date as of which the Award is deferred and the payment date) increase (i) with respect to Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Committee or (ii) with respect to a Performance Compensation Award that is payable in Shares, by an amount greater than the appreciation of a Share from the date such Award is deferred to the payment date.

Section 12. Amendment and Termination.

(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that if an amendment to the Plan that (i) would materially increase the benefits accruing to Participants under the Plan, (ii) would materially increase the number of securities which may be issued under the Plan, (iii) would materially modify the requirements for participation in the Plan or (iv) must otherwise be approved by the stockholders of the Company in order to comply with applicable law or the rules of the Nasdaq Stock Market, or, if the Shares are not traded on the Nasdaq Stock Market, the principal national securities exchange upon which the Shares are traded or quoted, such amendment will be subject to stockholder approval and will not be effective unless and until such approval has been obtained; and provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would impair the rights of any Participant or any holder or beneficiary of any Award previously granted shall not be effective without the written consent of the affected Participant, holder or beneficiary.

(b) Amendments to Awards. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would impair the rights of any Participant or any holder or beneficiary of any Award previously granted shall not be effective without the written consent of the affected Participant, holder or beneficiary.

(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make equitable adjustments in the terms and conditions of, and the criteria included in, all outstanding Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

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(d) Repricing. Except in connection with a corporate transaction or event described in Section 4(b) hereof, the terms of outstanding Awards may not be amended to reduce the exercise price of Options or the grant price of Stock Appreciation Rights, or cancel Options or Stock Appreciation Rights in exchange for cash, other awards or Options or Stock Appreciation Rights with an exercise price or grant price, as applicable, that is less than the exercise price of the original Options or grant price of the original Stock Appreciation Rights, as applicable, without stockholder approval.

Section 13. Change of Control.

(a) Except as otherwise provided in an Award Agreement or by the Committee in a written resolution at the date of grant, to the extent outstanding Awards granted under this Plan are not assumed, converted or replaced by the resulting entity in the event of a Change of Control, all outstanding Awards that may be exercised shall become fully exercisable, all restrictions with respect to outstanding Awards shall lapse and become vested and non-forfeitable, and any specified Performance Goals with respect to outstanding Awards shall be deemed to be satisfied at target.

(b) Except as otherwise provided in an Award Agreement or by the Committee in a written resolution at the date of grant or thereafter, to the extent outstanding Awards granted under this Plan are assumed, converted or replaced by the resulting entity in the event of a Change of Control, (i) any outstanding Awards that are subject to Performance Goals shall be converted by the resulting entity as if target performance had been achieved as of the date of the Change of Control, (ii) each Performance Award or Performance Compensation Award with service requirements shall continue to vest with respect to such requirements during the remaining period set forth in the Award Agreement, and (iii) all other Awards shall continue to vest (and/or the restrictions thereon shall continue to lapse) during the remaining period set forth in the Award Agreement.

(c) Except as otherwise provided in an Award Agreement or by the Committee in a written resolution at the date of grant or thereafter, to the extent outstanding Awards granted under this Plan are either assumed, converted or replaced by the resulting entity in the event of a Change of Control, if a Participant’s employment or service is terminated without Cause by the Company or an Affiliate or a Participant terminates his or her employment or service with the Company or an Affiliate for Good Reason (if applicable), in either case, during the two year period following a Change of Control, all outstanding Awards held by the Participant that may be exercised shall become fully exercisable and all restrictions with respect to outstanding Awards shall lapse and become vested and non-forfeitable.

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(d) Notwithstanding anything in this Plan or any Award Agreement to the contrary, to the extent any provision of this Plan or an Award Agreement would cause a payment of deferred compensation that is subject to Section 409A of the Code to be made upon the occurrence of (i) a Change of Control, then such payment shall not be made unless such Change of Control also constitutes a “change in ownership”, “change in effective control” or “change in ownership of a substantial portion of the Company’s assets” within the meaning of Section 409A of the Code or (ii) a termination of employment or service, then such payment shall not be made unless such termination of employment or service also constitutes a “separation from service” within the meaning of Section 409A of the Code. Any payment that would have been made except for the application of the preceding sentence shall be made in accordance with the payment schedule that would have applied in the absence of a Change of Control or termination of employment or service, but disregarding any future service or performance requirements.

Section 14. General Provisions.

(a) Nontransferability.

(i) Each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s legal guardian or representative.

(ii) No Award may be sold, assigned, alienated, pledged, attached or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and any such purported sale, assignment, alienation, pledge, attachment, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute a sale, assignment, alienation, pledge, attachment, transfer or encumbrance.

(b) No Rights to Awards. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

(c) Share Certificates. Shares or other securities of the Company delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(d) Withholding. iii) A Participant may he required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes.

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(ii) Without limiting the generality of clause (i) above, a Participant may satisfy, in whole or in part, the foregoing withholding liability by delivery of Shares owned by the Participant (which are not subject to any pledge or other security interest and which have been owned by the Participant for at least six (6) months) with a Fair Market Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise issuable pursuant to the exercise of the option a number of Shares with a Fair Market Value equal to such withholding liability.

(e) Award Agreements. Each Award hereunder shall he evidenced by an Award Agreement which shall he delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including but not limited to the effect on such Award of the death, disability or termination of employment or service of a Participant and the effect, if any, of such other events as may he determined by the Committee.

(f) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, restricted stock, Shares and other types of Awards provided for hereunder (subject to stockholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases.

(g) No Right to Employment. The grant of an Award shall not he construed as giving a Participant the right to be retained in the employ of, or in any consulting relationship to, or as a director on the Board or board of directors, as applicable, of, the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or any applicable employment contract or agreement.

(h) No Rights as Stockholder. Subject to the provisions of the applicable Award, no Participant or holder or beneficiary of any Award shall have any fights as a stockholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stock hereunder, the applicable Award shall specify if and to what extent the Participant shall not be entitled to the rights of a stockholder in respect of such Restricted Stock.

(i) Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware, applied without giving effect to its conflict of laws principles.

(j) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall he stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

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(k) Other Laws. The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal securities laws.

(l) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

(m) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall he canceled, terminated, or otherwise eliminated.

(n) Deferrals. In the event the Committee permits a Participant to defer any Award payable in the form of cash, all such elective deferrals shall be accomplished by the delivery of a written, irrevocable election by the Participant on a form provided by the Company. All deferrals shall be made in accordance with administrative guidelines established by the Committee to ensure that such deferrals comply with all applicable requirements of Section 409A of the Code.

(o) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

Section 15. Compliance with Section 409A of the Code.

(a) To the extent applicable, it is intended that this Plan and any grants made hereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Participants. This Plan and any grants made hereunder shall be administered in a manner consistent with this intent.

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(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries shall have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Affiliates.

(c) If, at the time of a Participant’s separation from service (within the meaning of Section 409A of the Code), (i) the Participant shall be a specified employee (within the meaning of Section 409A of the Code and using the identification methodology selected by the Company from time to time) and (ii) the Company shall make a good faith determination that an amount payable hereunder constitutes deferred compensation (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six- (6-) month delay rule set forth in Section 409A of the Code in order to avoid taxes or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it, with interest, on the earlier of the first business day of the seventh month or death.

(d) Notwithstanding any provision of this Plan and grants hereunder to the contrary, in light of the uncertainty with respect to the proper application of Section 409A of the Code, the Company shall amend this Plan and grants hereunder as the Company deems necessary or desirable to avoid the imposition of taxes or penalties under Section 409A of the Code. In any case, a Participant shall he solely responsible and liable for the satisfaction of all taxes and penalties that may he imposed on a Participant or for a Participant’s account in connection with this Plan and grants hereunder (.including any taxes and penalties under Section 409A of the Code), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise hold a Participant harmless from any or all of such taxes or penalties.

Section 16 Term of the Plan.

(a) Effective Date. The Plan shall be effective as of the date of its approval by the Board (the “Effective Date”), subject to approval of the Plan by the stockholders of the Company. No grants will be made under the Existing Plan on or after the date the Plan is first approved by the stockholders of the Company, except that outstanding awards granted under the Existing Plan will continue unaffected following the Effective Date.

(b) Expiration Date. No grant will be made under this Plan more than ten (10) years after the Effective Date, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of this Plan.

* * *

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List of Subsidiaries of Limoneira Company		State of Incorporation/Organization

Limoneira Land Company, Inc.		California
Limoneira Company International Division, LLC		California
Limoneira Mercantile, L.L.C.		California
Limoneira Company Nursery Division, Inc.		California
Windfall Investors, LLC		California
Templeton Santa Barbara, LLC		California
6037 East Donna Circle Drive LLC		Arizona
6146 East Cactus Wren Road LLC		Arizona
Rockville Enterprises Inc.		Delaware