EXHIBIT 10.14

 

RIGHT OF FIRST OFFER AGREEMENT

 

THIS RIGHT OF FIRST OFFER AGREEMENT (this “Agreement”) is made as of March 24, 2014 by and between Farmland Partners Operating Partnership, LP, a Delaware limited partnership (the “Operating Partnership”), and Pittman Hough Farms LLC, a Colorado limited liability company (the “Offeror”).

 

R E C I T A L S

 

WHEREAS, Farmland Partners Inc., a Maryland corporation and the sole member of the sole general partner of the Operating Partnership (the “Company”), and the Operating Partnership intend to engage in various related transactions (collectively, the “IPO Transactions”) pursuant to which, among other things, (i) the Company will effect an initial public offering of shares of its common stock, $0.01 par value per share (the “Common Stock”), and (ii) the Operating Partnership will acquire an indirect 100% fee simple interest in a portfolio of 38 farms and three grain storage facilities in exchange for units of limited partnership in the Operating Partnership (“OP Units”);

 

WHEREAS, Paul A. Pittman, the Executive Chairman, President and Chief Executive Officer of the Company, owns a 75% controlling interest in the Offeror;

 

WHEREAS, the Offeror owns 100% of the equity interests in PH Land LLC, an Illinois limited liability company (“PH Land”), and Cottonwood Valley Farms, LLC, a Nebraska limited liability company (“Cottonwood Valley” and PH Land, each a “Property Owner” and, collectively, the “Property Owners”);

 

WHEREAS, each Property Owner owns a 100% fee simple interest in the respective property listed next to such Property Owner’s name on Exhibit A hereto (each, a “Property” and, collectively, the “Properties”); and

 

WHEREAS, in order to facilitate the IPO Transactions and minimize potential conflicts of interest for the Company and the Operating Partnership with respect to the Offeror’s continuing interest in the Properties, the Offeror desires to grant to the Operating Partnership a right of first offer relating to the sale of all or any portion of the Properties or the Offeror’s direct or indirect interests therein, on the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and conditions set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I
 DEFINITIONS

 

For purposes of the Agreement, the following terms have the meanings set forth below:

 

“Affiliate” means, with respect to any Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the specified Person.  For the purposes of this definition, “control” (including, with correlative

 











 

meanings, the terms “controlled by” and “under common control with”) as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

 

“Business Day” means any day that is not a Saturday, Sunday or legal holiday in the State of New York.

 

“Person” means an individual, partnership, corporation, limited liability company, joint venture, association, trust, unincorporated organization or other entity, or a government or agency or political subdivision thereof.

 

“Transfer” means a sale, transfer, assignment, conveyance or any other disposition, whether voluntary or involuntary, by operation of law or otherwise.  For purposes of this Agreement, a “Transfer” shall not include (i) a lease of all or any portion of the Properties or (ii) Transfers for estate planning purposes.

 

ARTICLE II
 GRANT OF RIGHT OF FIRST OFFER

 

2.1                               Grant of Right of First Offer.  The Offeror hereby grants to the Operating Partnership a right of first offer to acquire all of Offeror’s direct or indirect right, title and interest in each of the Properties, on the terms and subject to the conditions set forth herein (the “Right of First Offer”).

 

2.2                               Effectiveness of Right of First Offer.  This Agreement and the Right of First Offer granted hereby shall become effective automatically, without further action by the Operating Partnership or the Offeror, on the date of the closing of the IPO Transactions (the “IPO Closing”).  Notwithstanding the foregoing, in the event the IPO Closing has not occurred prior to January 1, 2015, this Agreement shall become null and void and no party shall have any liability to the other parties hereunder with respect to the transactions contemplated hereby.

 

2.3                               Term of Right of First Offer.  This Agreement and the Right of First Offer granted hereunder shall remain in effect and be binding on the Offeror and each of its successors and assigns until the earliest of (i) the date on which all of the Offeror’s direct or indirect interests in the Properties have been transferred to the Operating Partnership pursuant to this Agreement or to a third party in a manner consistent with this Agreement, (ii) the date on which Paul A. Pittman is no longer an executive officer or director of the Company and (iii) December 31, 2017 (the “ROFO Term”).

 

2.4                               Consents.  The consummation of the transactions contemplated by this Agreement is subject to any consents required under any unaffiliated third-party financing arrangements of the Offeror or the Property Owners and/or mortgages on the Properties, whether already or hereafter existing, and any other consents required to be obtained prior to the transfer of the Properties.

 

2.5                               Subordination.  The Right of First Offer granted by this Agreement and the rights of the Operating Partnership hereunder are and shall be subordinate to any unaffiliated third-

 

2











 

party financing arrangements of the Offeror or the Property Owners and/or mortgages on the Properties, whether already or hereafter existing.

 

2.6                               Transfer to an Affiliate.  Notwithstanding anything herein to the contrary, the Right of First Offer shall not apply to the Transfer of all or any portion of the Properties, or any or all of the Offeror’s direct or indirect interests in the Properties (the “Interests”), to an Affiliate of the Offeror; provided, however, that no such Transfer shall be permitted unless such Affiliate first executes a joinder to this Agreement, in form and substance reasonably satisfactory to the Operating Partnership, after which such Affiliate shall be deemed to be an “Offeror” hereunder.

 

ARTICLE III
 PROCEDURES FOR RIGHT OF FIRST OFFER

 

3.1                               Right of First Offer Notice.  Subject to Section 3.2 hereof, if at any time during the ROFO Term, the Offeror intends to Transfer or offer to Transfer any of the Interests or any portion of the Properties to a Person other than an Affiliate of the Offeror (subject to Section 2.6 hereof), then the following procedures shall apply:

 

(a)                                 The Offeror shall first deliver written notice (the “ROFO Notice”) to the Operating Partnership of the Offeror’s intention to Transfer or offer to Transfer any or all of the Interests and/or all or any portion of the Properties, which shall specify the Interests and/or the Properties being offered (the “Offered Assets”).

 

(b)                                 The Operating Partnership shall have 30 days following the delivery of the ROFO Notice to deliver a written proposal (the “Proposal”) to the Offeror, which shall specify the proposed purchase price (the “Proposed Purchase Price”), the form of consideration and other material terms and conditions of the proposed purchase of the Offered Assets.

 

(c)                                  The Offeror shall have 10 days following the delivery of the Proposal to provide written notice (the “Offeror Election Notice”) to the Operating Partnership of its election to either (i) sell the Offered Assets to the Operating Partnership on the terms specified in the Proposal or (ii) seek an offer to purchase the Offered Assets from one or more third-party purchasers that are not Affiliates of the Offeror (each, a “Third Party Transferee”).  If the Offeror fails to deliver the Offeror Election Notice in accordance with the provisions of this Section 3.1(c), then the Offeror shall be deemed to have elected not to sell the Offered Assets to the Operating Partnership on the terms specified in the Proposal.

 

(d)                                 If, in accordance with the provisions of Section 3.1(c) hereof, the Offeror elects to sell the Offered Assets to the Operating Partnership, the Operating Partnership shall be obligated to purchase the Offered Assets at a closing as set forth in Article IV hereof, subject to a material adverse change not affecting the Offered Assets at or before such closing.

 

(e)                                  If, in accordance with the provisions of Section 3.1(c) hereof, the Offeror elects not to sell the Offered Assets to the Operating Partnership on the terms specified in the Proposal, the Offeror may, within a period of 270 days following the delivery of the ROFO Notice (the “Marketing Period”), consummate the sale of the Offered Assets to one or more Third Party Transferees at a price not less than 90% of the Proposed Purchase Price and on such

 

3











 

other economic terms and conditions as are no more favorable to such Third Party Transferees than those specified in the Proposal.

 

(f)                                   If the Operating Partnership fails to timely submit the Proposal in accordance with Section 3.1(b) hereof, the Offeror shall have the right to consummate the sale of the Offered Assets to one or more Third Party Transferees during the Marketing Period.

 

(g)                                  If the Offeror does not complete the sale of the Offered Assets during the Marketing Period in accordance with the terms of this Agreement, the Offered Assets shall be deemed no longer to be Offered Assets, and no sale of the Properties or the Interests previously deemed to be Offered Assets shall be made otherwise than in accordance with the terms of this Agreement.

 

3.2                               Public Auctions.  If the Offeror intends to offer to Transfer any of the Properties pursuant to a public auction, the provisions of Section 3.1 hereof shall not apply; provided that the Offeror shall, not less than 30 days in advance of such public auction, provide written notice to the Operating Partnership of the time and place of such public auction.

 

3.3                               Inspection and Information.  At any time after the delivery of the ROFO Notice and prior to the delivery of the Offeror Election Notice, the Offeror hereby agrees to (i) use its reasonable best efforts to permit the Operating Partnership and the Operating Partnership’s agents to enter upon the Offered Assets subject to the ROFO Notice (the “Subject Properties”), subject to the rights of any tenants of the Subject Properties, at reasonable times to make such inspections and tests as are reasonable and customary in connection with the examination of agricultural properties, and (ii) permit the Operating Partnership and its agents to review all books, records and other documentation reasonably requested by the Operating Partnership with respect to the Subject Properties, which are in the Offeror’s possession and control or may be reasonably obtained by the Offeror.  The Operating Partnership hereby agrees to repair any damage (excepting normal wear and tear) it or its agents may cause to the Subject Properties as a result of any such inspections or tests or any other related damage caused by the Operating Partnership or its agents, and further agrees to indemnify, defend and hold harmless the Offeror from and against any and all claims, losses, damages and expenses, including, without limitation, reasonable attorneys’ fees, suffered by the Offeror as a direct result of the entry by the Operating Partnership or the Operating Partnership’s agents upon, or acts upon, the Subject Properties in connection with any such inspections or tests or any other directly related damage caused by the Operating Partnership or its agents.

 

ARTICLE IV
 CLOSING

 

4.1                               Closing Date.  The closing of a purchase of the Offered Assets (the “Closing”) by the Operating Partnership pursuant to Article III shall take place, subject to closing conditions set forth in a purchase and sale agreement between the Offeror and the Operating Partnership or one of its Affiliates for the sale of the Offered Assets, on a date mutually agreed upon by the Operating Partnership and the Offeror, which date shall be no later than 60 days after the date on which the Proposal was delivered to the Offeror.

 

4











 

4.2                               Deliverables by the Offeror.  At the Closing, the Offeror, members of the Offeror and/or the Property Owners (as applicable) shall acknowledge, execute, deliver and/or file (as the case may be) any and all documents, agreements and instruments reasonably necessary or appropriate to convey full right, marketable title and interest in and to the Offered Assets to be purchased by the Operating Partnership, free and clear of all liens, security interests, adverse claims or restrictions of any kind and nature (except in the case of a sale of any Property, those liens set forth on the title policy to be acquired by the Operating Partnership upon the acquisition of such Property) and shall deliver to the Operating Partnership a certificate of membership interest(s), assignment of membership interest(s) or grant deed(s), as applicable, representing the Offered Assets sold to the Operating Partnership.

 

ARTICLE V
 MISCELLANEOUS

 

5.1                               Amendment; Waiver.  This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.  No waiver of any provisions of this Agreement shall be valid unless in writing and signed by the party against whom enforcement is sought.

 

5.2                               Entire Agreement; Counterparts; Applicable Law.  This Agreement (a) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof, (b) may be executed in one or more counterparts, each of which will be deemed an original and all of which, including, without limitation, validity, interpretation and effect, shall constitute but one and the same instrument and (c) shall be governed in all respects, including, without limitation, validity, interpretation and effect, by the laws of the State of Colorado without giving effect to the conflict of law provisions thereof.

 

5.3                               Severability.  If any provision of this Agreement, or the application thereof, is for any reason held to any extent to be invalid or unenforceable, the remainder of this Agreement and application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.  The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision and to execute any amendment, consent or agreement deemed necessary or desirable by the Operating Partnership to effect such replacement.

 

5.4                               Binding Effect.  This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit of, the parties and their respective permitted successors and permitted assigns.

 

5.5                               Equitable Remedies.  The parties hereto agree that irreparable damage would occur if any provision of this Agreement was not performed in accordance with its specific terms or was otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any federal or state court located in the State of Colorado (as to

 

5











 

which the parties agree to submit to jurisdiction for the purposes of such action), this being in addition to any other remedy to which they are entitled at law or in equity.

 

5.6                               Notices.  All notices and other communications under this Agreement shall be in writing and shall be deemed to have been delivered when (i) delivered personally, (ii) five Business Days after being mailed by certified mail, return receipt requested and postage prepaid, (iii) one (1) Business Day after being sent by a nationally recognized overnight courier or (iv) transmitted by facsimile if confirmed within 24 hours thereafter by a signed original sent in the manner provided in clause (i), (ii) or (iii) to the parties at the following addresses (or at such other address for a party as shall be specified by notice from such party):

 

(a)                                 if to the Operating Partnership:

 

Farmland Partners Operating Partnership, LP

8670 Wolff Court, Suite 240

Westminster, CO 80031

Facsimile: (720) 398-3238

Attention: Paul A. Pittman

 

(b)                                 if to the Offeror:

 

Pittman Hough Farms LLC

8670 Wolff Court, Suite 240

Westminster, CO 80031

Facsimile: (720) 398-3238

Attention: Paul A. Pittman

 

[Signature page follows]

 

6











 

IN WITNESS WHEREOF, each of the parties hereto has executed and delivered this Agreement as of the date first set forth above.

 

 

	
 
    	
OPERATING PARTNERSHIP:
    
	
 
    	
 
    
	
 
    	
FARMLAND PARTNERS OPERATING PARTNERSHIP, LP,   a Delaware limited partnership
    
	
 
    	
 
    
	
 
    	
By: FARMLAND PARTNERS OP GP, LLC, a Delaware   limited liability company, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
FARMLAND PARTNERS INC., its
    
	
 
    	
 
    	
sole member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
 
    	
Name:
    	
Paul A. Pittman
    
	
 
    	
 
    	
Title:
    	
Executive Chairman, President and Chief   Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
OFFEROR:
    
	
 
    	
 
    
	
 
    	
PITTMAN HOUGH FARMS LLC, a Colorado limited   liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
Name:
    	
Paul A. Pittman
    
	
 
    	
Title:
    	
Manager
    
					


 

Signature Page to Right of First Offer Agreement (Pittman Hough Farms LLC)

 











 

EXHIBIT A

 

PROPERTIES

 

	
Property Owner
    	
 
    	
County, State
    	
 
    	
Tax PINs of Parcels
    	
 
    	
Acres
    
	
PH   Land LLC
    	
 
    	
Fulton, IL
    	
 
    	
24-26-22-200-001

24-26-23-300-001

24-26-23-300-007

24-26-23-400-008

24-26-23-403-016

24-26-24-300-001

24-26-26-300-010

24-26-26-400-008

24-26-35-100-008

24-26-35-200-001

25-27-06-200-004

25-27-06-400-008

25-27-19-100-007

25-27-19-100-010

25-27-19-200-004

25-27-27-100-004

25-27-27-100-005

25-27-27-100-006

25-27-27-100-007

25-27-27-200-004

25-27-27-200-005

25-27-27-300-001

25-27-28-200-004

25-27-28-400-004

26-28-31-200-001

26-28-31-300-001

26-28-31-400-001

25-27-06-200-004

25-27-06-400-008
    	
 
    	
1,606
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cottonwood   Valley Farms, LLC
    	
 
    	
Butler,   NE
    	
 
    	
120043757

120043764

120043771

120043779

120043029

120039505

120044443

120044527
    	
 
    	
854