Document:

EXHIBIT 10.12

 

REPRESENTATION, WARRANTY AND INDEMNITY AGREEMENT

 

This REPRESENTATION, WARRANTY AND INDEMNITY AGREEMENT (this “Agreement”) is made and entered into as of March 24, 2014, and is effective as of the Closing Date (as defined herein), by and among Farmland Partners Inc., a Maryland corporation (the “REIT”), Farmland Partners Operating Partnership, LP, a Delaware limited partnership and a subsidiary of the REIT (the “Operating Partnership,” and collectively with the REIT, the “Acquirer”), Paul A. Pittman (“Pittman”) and Jesse J. Hough (“Hough” and, together with Pittman, the “Indemnifying Parties”). Capitalized terms used but not elsewhere defined in this Agreement shall have the meaning ascribed to such terms in Section 4.2 hereof.

 

RECITALS

 

WHEREAS, the REIT intends to engage in various related transactions (collectively, the “IPO Transactions”) pursuant to which, among other things, the REIT will effect an initial public offering (the “IPO”) of shares of its common stock, $0.01 par value per share (the “Common Stock”), after which the REIT will operate as a self-administered and self-managed real estate investment trust within the meaning of Section 856 of the Code;

 

WHEREAS, in connection with the IPO Transactions, the REIT intends to engage in certain formation transactions (the “Formation Transactions”) pursuant to which, among other things, FP Land LLC, a Delaware limited liability company (“FP Land”), will, pursuant to a merger agreement by and among the REIT, the Operating Partnership, Pittman Hough Farms LLC, a Colorado limited liability company controlled by Pittman (“Pittman Hough Farms”) and FP Land (the “Merger Agreement”), merge with and into the Operating Partnership (the “Merger”) and the limited liability company interests in FP Land (the “FP Land Interests”), 100% of which are owned by Pittman Hough Farms will be converted automatically into an aggregate of 1,945,000 units of limited partnership interest in the Operating Partnership (“OP Units”);

 

WHEREAS, FP Land is the direct or indirect owner of the properties described on Exhibit A hereto (each, a “Property,” and collectively, the “Properties”);

 

WHEREAS, the Indemnifying Parties, by way of their ownership interests in Pittman Hough Farms, will materially benefit from the consideration to be received by Pittman Hough Farms from the Acquirer pursuant to the Merger Agreement; and

 

WHEREAS, in order to induce the Acquirer to enter into the Merger Agreement, the Indemnifying Parties have agreed to provide certain representations, warranties and indemnities as set forth herein.

 

NOW, THEREFORE, for and in consideration of the foregoing and the representations, warranties, covenants and other terms contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

 

 

ARTICLE I

 

REPRESENTATION AND WARRANTIES

 

Except as disclosed in the Prospectus or in the schedules referenced in this Article I and attached hereto, the Indemnifying Parties represent and warrant to the Acquirer that, with respect to FP Land, its Subsidiaries and the Properties, as of the Closing Date:

 

1.1                               Organization; Authority.  (a) FP Land has been duly organized and is validly existing and in good standing under the Laws of the State of Delaware and has all requisite limited liability company power and authority to carry out the transactions contemplated by the Merger Agreement, and to own, lease and/or operate each Property owned, leased and/or operated by it and to carry on its business as presently conducted. FP Land, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its Properties make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Limited Liability Company Agreement of FP Land (the “LLC Agreement”),  a complete and accurate copy of which has been delivered to the Operating Partnership and its counsel, is in force and effect as of the date hereof, and has not been further modified or amended.

 

(b)                                 Schedule 1.1(b) sets forth as of the date hereof FP Land’s ownership interest in each Subsidiary. Each Subsidiary of FP Land has been duly organized and is validly existing and is in good standing under the Laws of its jurisdiction of organization, and has all requisite power and authority to own, lease and/or operate its Properties and other assets and to carry on its business as presently conducted. Each Subsidiary of FP Land, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its Properties and other assets make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. There are no rights to purchase, subscriptions, warrants, options, conversion rights or preemptive rights relating to the FP Land Interests or any equity interest in FP Land or any Subsidiary, or any other security convertible into or exchangeable for such equity interests.

 

1.2                               Due Authorization. Each agreement, document and instrument included in or contemplated by the Merger Agreement and executed and delivered by or on behalf of FP Land constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of FP Land, enforceable against FP Land in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.

 

1.3                               Consents and Approvals. Except as shall have been obtained or satisfied on or prior to the Closing Date, no consent, waiver, approval, authorization, order, license, permit or registration of, qualification, designation, declaration or filing with, any Person or Governmental Authority or under any applicable Laws is required to be obtained by FP Land or any Subsidiary in connection with the execution, delivery and performance of any of the agreements or documents included in or contemplated by the Merger Agreement and the transactions contemplated hereby and thereby.

 

1.4                               No Violation. None of the execution, delivery or performance of any agreement or document included in or contemplated by the Merger Agreement nor the transactions contemplated hereby and thereby does or will, with or without the giving of notice, lapse of time, or both, violate, conflict with, result in a breach of, or constitute a default under or give to others any right of termination, acceleration, cancellation or other right under, (A) the organizational documents of FP Land or any Subsidiary, (B) any agreement, document or instrument to which FP Land or such Subsidiary or any of

 

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their respective assets or properties (including the Properties) is bound or (C) any term or provision of any judgment, order, writ, injunction, or decree binding on FP Land or any Subsidiary.

 

1.5                               Capitalization. All of the issued and outstanding equity interests of FP Land and its Subsidiaries are duly authorized, validly issued and fully paid and are not subject to preemptive rights or appraisal, dissenters’ or other similar rights under the organizational documents of or any contract to which FP Land or its Subsidiaries is a party or otherwise bound.

 

1.6                               Licenses and Permits. All notices, licenses, permits, certificates and authorizations required for the continued use, occupancy, management, leasing and operation of the Properties have been obtained, are in full force and effect, are in good standing and (to the extent required in connection with the transactions contemplated by the Merger Agreement) are assignable to the Operating Partnership. Neither FP Land nor any Subsidiary nor, to the Knowledge of the Indemnifying Parties, any third party has taken any action that (or failed to take any action the omission of which) would result in the revocation of any such notice, license, permit, certificate or authorization where such revocation or revocations would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, nor has any of them received any written notice of violation from any Governmental Authority or written notice of the intention of any entity to revoke any of such notice, license, permit, certificate or authorization, that in each case has not been cured or otherwise resolved to the satisfaction of such Governmental Authority except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

1.7                               Litigation. Except for actions, suits or proceedings fully covered by policies of insurance, there is no action, suit or proceeding pending or, to the Knowledge of the Indemnifying Parties, threatened against FP Land, any Subsidiary or any Property, which, if adversely determined, would, individually or together with all such other actions, reasonably be expected to have a Material Adverse Effect. There is no action, suit or proceeding pending or, to the Knowledge of the Indemnifying Parties, threatened against FP Land or any Subsidiary which challenges or impairs the ability of FP Land to execute or deliver, or perform its obligations under the Merger Agreement or to consummate the transactions contemplated hereby and thereby. There is no judgment, decree, injunction, or order of a Governmental Authority outstanding against FP Land or any Subsidiary or, to the Knowledge of the Indemnifying Parties, any officer, director, managing member, or general partner of any of the foregoing in their capacity as such which would reasonably be expected to have a Material Adverse Effect. Neither FP Land nor any Subsidiary has received any written notice of any pending or threatened proceedings for the rezoning (i.e., as opposed to the current zoning) of any Property or any portion thereof which would substantially and materially impair the current or proposed use thereof.

 

1.8                               Compliance With Laws. FP Land and its Subsidiaries has conducted its business and maintained its respective Property in compliance with all applicable Laws, except for such failures that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither FP Land nor its Subsidiaries nor, to the Knowledge of the Indemnifying Parties, any third party has been informed in writing of any continuing violation of any such Laws or that any investigation has been commenced and is continuing or is contemplated respecting any such possible violation, except in each case for violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

1.9                               Properties.

 

(a)                                 Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (1) neither FP Land nor any Subsidiary, nor any other party to any material agreement affecting any Property (other than a Lease (as such term is hereinafter defined)

 

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relating to such Property, but including any agreement that constitutes a Permitted Lien), is in breach or default of any such agreement, (2) to the Knowledge of the Indemnifying Parties, no event has occurred or has been threatened in writing, which with or without the passage of time or the giving of notice, or both, would, individually or together with all such other events, constitute a default under any such agreement, or would, individually or together with all such other events, reasonably be expected to cause the acceleration of any material obligation of any party thereto or the creation of a Lien upon any asset of FP Land or any Subsidiary, except for Permitted Liens, or otherwise reasonably be expected to have a Material Adverse Effect and (3) all agreements affecting any Property required for the continued use, occupancy, management, leasing and operation of such Property are valid and binding and in full force and effect, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.

 

(b)                                 To the Knowledge of the Indemnifying Parties, as presently conducted, none of the operation of the Properties is in violation of any applicable zoning ordinance or other “land use” Law.

 

(c)                                  Each Subsidiary holds the lessor’s interest under the leases, licenses, tenancies, possession agreements and occupancy agreements with tenants of its respective Properties that will be in effect upon completion of the IPO (the “Leases”). Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (1) neither FP Land not any Subsidiary, nor, to the Knowledge of the Indemnifying Parties, any other party to any Lease, is in breach or default of any such Lease, (2) to the Knowledge of the Indemnifying Parties, no event has occurred or has been threatened in writing, which with or without the passage of time or the giving of notice, or both, would, individually or together with all such other events, constitute a default under any Lease, or would, permit termination, modification or acceleration under such Lease, and (3) to the Knowledge of the Indemnifying Parties, each of the Leases is valid and binding and, upon completion of the IPO, will be in full force and effect, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity. To the Knowledge of the Indemnifying Parties, no tenant under any of such Leases is presently the subject of any voluntary or involuntary bankruptcy or insolvency proceedings.

 

1.10                        Existing Loans. Schedule 1.10 lists, as of the date hereof, all secured loans encumbering the Properties or any direct or indirect interest in FP Land or any Subsidiary (the “Disclosed Loans”) and the outstanding aggregate balance of the Disclosed Loans as of the date set forth on Schedule 1.10. To the Knowledge of the Indemnifying Parties, no monetary default (beyond applicable notice and cure periods) by any party exists under any of the Disclosed Loans and the documents entered into in connection therewith (collectively, the “Disclosed Loan Documents”) and no non-monetary default (beyond applicable notice and cure periods) by any party exists under any of such Disclosed Loan Documents.

 

1.11                        Insurance. Each Property is covered by the public liability, casualty and other insurance as the Indemnifying Parties reasonably deem necessary and in all cases including such coverage as is required under the terms of any loan or Lease. Each of the insurance policies with respect to each Property is in full force and effect in all material respects and all premiums due and payable thereunder have been fully paid when due. To the Knowledge of the Indemnifying Parties, neither FP Land nor any Subsidiary has received from any insurance company any notices of cancellation or intent to cancel any insurance.

 

1.12                        Environmental Matters. Except for matters that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (A) FP Land and its Subsidiaries are in compliance with all Environmental Laws, (B) neither FP Land, or any Subsidiary has received any written notice from any Governmental Authority or third party alleging that FP Land, any Subsidiary or any Property is not in compliance with applicable Environmental Laws, and (C) there has not been a

 

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release of a hazardous substance on any Property that would require investigation or remediation under applicable Environmental Laws.

 

1.13                        Eminent Domain. There is no existing, or to the Knowledge of the Indemnifying Parties, proposed or threatened condemnation, eminent domain or similar proceeding, or private purchase in lieu of such a proceeding which would affect any Property.

 

1.14                        Taxes.

 

(a)                                 FP Land and each Subsidiary has timely and properly filed all Tax returns and reports required to be filed by it (after giving effect to any filing extension properly granted by a Governmental Authority having authority to do so), and all such returns and reports are accurate and complete in all material respects, and has paid (or had paid on its behalf) all Taxes required to be paid by it.

 

(b)                                 No deficiencies for any Taxes have been proposed, asserted, assessed or, to the Knowledge of the Indemnifying Parties, threatened against FP Land or any Subsidiary, and no requests for waivers of the time to assess any such Taxes are pending.

 

(c)                                  Neither FP Land nor any Subsidiary has requested or received any ruling from the IRS or comparable rulings from other taxing authorities or has entered into any “closing agreement” as described in Section 7121 of the Code or similar arrangement. There are no liens or encumbrances for Taxes on any Property, other than liens or encumbrances for Taxes not yet due and payable, and no action, proceeding or investigation has been instituted against FP Land or any Subsidiary that would give rise to any such liens or encumbrances.

 

(d)                                 There are no pending or, to the Knowledge of the Indemnifying Parties, threatened audits, assessments or other actions for or relating to any liability in respect of income or material non-income Taxes of FP Land or any Subsidiary, there are no matters under discussion with any Tax authority with respect to income or material non-income Taxes that are likely to result in an additional liability for Taxes with respect to FP Land or any Subsidiary and neither FP Land nor any Subsidiary is, or has ever been, a party to or bound by any Tax indemnity agreement, Tax sharing agreement, Tax allocation agreement or similar contract.

 

(e)                                  Since its formation, for U.S. federal income tax purposes, FP Land and each Subsidiary has been treated as a disregarded entity and not as a corporation or an association taxable as a corporation. Neither FP Land nor any Subsidiary holds any asset the disposition of which by the Acquirer could be subject to rules similar to Section 1374 of the Code. Neither FP Land nor any Subsidiary has ever owned, nor owns, any securities in an entity treated as a corporation for U.S. federal income tax purposes.

 

1.15                        Non-Foreign Status. Neither Pittman Hough Farms, FP Land nor any Subsidiary is a “foreign person” (as defined in the Code).

 

1.16                        Bankruptcy. No bankruptcy or similar insolvency proceeding has been filed, or is currently contemplated or, to the Knowledge of the Indemnifying Parties, threatened, with respect to FP Land or any Subsidiary.

 

1.17                        Employees. Neither FP Land nor any Subsidiary has or has ever had any employees. Neither FP Land nor any Subsidiary is delinquent in payments to any of its employees, consultants or independent contractors for any wages, salaries, commissions, bonuses, or other direct compensation for

 

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any service performed or amounts required to be reimbursed to such employees, consultants or independent contractors. FP Land and each Subsidiary has, to the extent applicable:

 

(a)                                 complied in all material respects with all applicable laws related to employment;

 

(b)                                 withheld and paid to the appropriate governmental entity or is holding for payment not yet due to such governmental entity all amounts required to be withheld from employees; and

 

(c)                                  no policy, practice, plan or program of paying severance or pay or any form of severance compensation in connection with the termination of employment service and no agreement pursuant to which it would be required to pay severance to any director, officer, employee or consultant.

 

1.18                        Contracts and Commitments. Except as set forth in the organizational documents of FP Land and each Subsidiary, as contemplated by the Merger Agreement, neither FP Land nor any Subsidiary is a party to any agreements for the sale of its assets, for the grant to any Person of any preferential right to purchase any such assets or the acquisition of any operating business, assets or capital stock of any other corporation, entity or business, other than in the ordinary course of business.

 

ARTICLE II

 

NATURE OF REPRESENTATIONS AND WARRANTIES

 

2.1                               Survival of Representations and Warranties. All representations and warranties contained in this Agreement shall survive after the effective time of the Merger Agreement until the first anniversary of the Closing Date (the “Expiration Date”). If written notice of a claim in accordance with Section 3.2 has been given prior to the Expiration Date, then the relevant representation or warranty shall survive, but only with respect to such specific claim, until such claim has been finally resolved. Any claim for indemnification not so asserted in writing by the Expiration Date may not thereafter be asserted and shall forever be waived. Notwithstanding the foregoing, claims for indemnification resulting from breaches of the representations in Section 1.14 may be asserted until the expiration of the applicable statute of limitations.

 

ARTICLE III

 

INDEMNIFICATION

 

3.1                               Indemnification of Acquirer. The Acquirer and its Affiliates and each of its directors, officers, employees, agents and representatives (each of which is an “Indemnified Party” and collectively, the “Indemnified Parties”), shall be indemnified and held harmless by the Indemnifying Parties, under the terms and conditions of this Agreement, from and against any and all Losses arising out of or relating to, asserted against, imposed upon or incurred by the Indemnified Parties in connection with or as a result of any breach of a representation or warranty contained in Article I of this Agreement (subject to the survival limitations set forth in Section 2.1 hereof) (collectively, the “Indemnified Losses”); provided, the Indemnified Parties shall only be entitled to indemnification for breaches of representations and warranties made pursuant to Article I of this Agreement to the extent that the Indemnified Losses with respect to such breaches exceed, in the aggregate, One Million Dollars ($1,000,000.00) (the “Deductible”). The Indemnifying Parties shall only be liable for Indemnified Losses (after giving effect to and only for amounts in excess of the Deductible) up to the Maximum Indemnity Amount.

 

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3.2                               Claims.

 

(a)                                 At the time when the Acquirer learns of any potential claim for Indemnified Losses under this Agreement (a “Claim”), it will promptly give written notice (a “Claim Notice”) to the Indemnifying Parties; provided that the failure to so notify the Indemnifying Parties shall not prevent recovery under this Agreement, except to the extent that the Indemnifying Parties shall have been materially prejudiced by such failure. Each Claim Notice shall describe in reasonable detail the facts known to the Indemnified Party giving rise to such Claim. The Indemnified Party shall deliver to the Indemnifying Parties, promptly after the Indemnified Party’s receipt thereof, copies of all notices and documents (including court papers) received by such Indemnified Party relating to a Third-Party Claim (as defined below); provided that failure to do so shall not prevent recovery under this Agreement, except to the extent that the Indemnifying Parties shall have been materially prejudiced by such failure. Any Indemnified Party may at its option demand indemnity under this Article III as soon as a Claim has been threatened by a third party, regardless of whether an actual Loss has been suffered, so long as the Indemnified Party shall in good faith determine that such claim is not frivolous and that the Indemnified Party may be liable for, or otherwise incur, a Loss as a result thereof.

 

(b)                                 The Indemnifying Parties shall be entitled, at their own expense, to elect to assume and control the defense of any Claim based on claims asserted by third parties (“Third-Party Claims”), through counsel chosen by the Indemnifying Parties and reasonably acceptable to the Indemnified Parties, if the Indemnifying Parties give written notice of their intention to do so to the Acquirer within twenty (20) days of the receipt of the applicable Claim Notice; provided, however, that the Indemnified Parties may at all times participate in such defense at their own expense. Without limiting the foregoing, in the event that the Indemnifying Parties exercise the right to undertake any such defense against a Third-Party Claim, the Indemnified Party shall cooperate with the Indemnifying Parties in such defense and make available to the Indemnifying Parties, at the Indemnifying Parties’ expense, all witnesses, pertinent records, materials and information in the Indemnified Party’s possession or under such Indemnified Party’s control relating thereto as is reasonably required by the Indemnifying Parties. No compromise or settlement of such Third-Party Claim may be effected by either the Indemnified Party, on the one hand, or the Indemnifying Parties, on the other hand, without the other party’s consent (which shall not be unreasonably withheld or delayed) unless (i) there is no finding or admission of any violation of Law and no effect on any other claims that may be made against such other party, (ii) each Indemnified Party that is party to such claim is released from all liability with respect to such claim, and (iii) there is no equitable order, judgment or term that in any manner affects, restrains or interferes with the business of the Indemnified Party that is party to such claim or any of its Affiliates. Notwithstanding the foregoing, if the compromise or settlement of such Third-Party Claim could reasonably be expected to adversely affect the status of the REIT as a real investment trust within the meaning of Section 856 of the Code, then the REIT shall make such decision to compromise or settle the Third-Party Claim without the need to obtain the Indemnifying Parties’ consent.

 

3.3                               Delivery of Indemnity Amounts. Upon resolution of any disputed Claim or portion of a Claim as evidenced by (x) a written agreement between the Acquirer and the Indemnifying Parties or (y) a final award of an arbitral tribunal in accordance with this Agreement, the Indemnifying Parties shall deliver the amount of the indemnification to the Indemnified Party. Indemnity payments may be made by the Indemnifying Parties in the form of cash or OP Units. To the extent indemnification is made through delivery by the Indemnifying Parties of OP Units, such OP Units shall be valued at an amount per OP Unit equal to the IPO Price. The Indemnifying Parties hereby authorize the REIT, as the sole parent of the general partner of the Operating Partnership, to take all such action as may be necessary to amend the partnership agreement of the Operating Partnership, and any exhibits or schedules thereto, to reflect the delivery of any OP Units by the Indemnifying Parties as an indemnification payment hereunder and to reflect that the Indemnifying Parties have no further right, title or interest with respect to any such OP Units. For purposes of this provision, if, at the time that any indemnification is due hereunder, OP Units are held by Pittman Hough Farms rather than the Indemnifying Parties, the Indemnifying Parties shall

 

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take such actions as may be necessary to effect the delivery of the OP Units by Pittman Hough Farms to the Indemnified Party or to cause Pittman Hough Farms to effect a distribution-in-kind of OP Units to the Indemnifying Parties of a number of OP Units sufficient to satisfy the Indemnifying Parties’ obligations hereunder.

 

3.4                               Exclusive Remedy. The sole and exclusive remedy for Indemnified Parties with respect to any and all claims relating to a breach of this Agreement (other than breaches arising out of or in connection with fraud) shall be indemnification in accordance with the terms of this Agreement. The Indemnifying Parties shall not be liable or obligated to make payments under this Agreement in excess of the Maximum Indemnity Amount (as defined herein).

 

3.5                               Characterization of Payments. Any indemnity payments shall constitute an adjustment of the consideration received by Pittman Hough Farms pursuant to the Merger Agreement for Tax purposes and shall be treated as such by all parties on their tax returns to the extent permitted by Law.

 

ARTICLE IV

 

GENERAL PROVISIONS

 

4.1                               Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given when (i) delivered personally, (ii) five (5) 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 twenty four (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): If to the REIT or the Operating Partnership, to: Farmland Partners Operating Partnership, LP, 8670 Wolff Court, Suite 240, Westminster, Colorado 80031, Attention: President; if to the Indemnifying Parties, to: Paul A. Pittman, 8670 Wolff Court, Suite 240, Westminster, Colorado 80031.

 

4.2                               Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

 

(a)                                 “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.

 

(b)                                 “Business Day” means any day that is not a Saturday, Sunday or legal holiday in the Commonwealth of Virginia.

 

(c)                                  “Closing Date” means the closing date of Merger in accordance with the Merger Agreement.

 

(d)                                 “Code” means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated or issued thereunder.

 

(e)                                  “Environmental Laws” means all federal, state and local Laws governing pollution or the protection of human health or the environment.

 

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(f)                                   “Formation Transactions” means the Merger and the other transactions contemplated by the Merger Agreement.

 

(g)                                  “GAAP” means generally accepted accounting principles, as in effect in the United States of America as of the date of determination.

 

(h)                                 “Governmental Authority” means any government or agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

 

(i)                                     “IPO Price” means the initial public offering price per share of Common Stock, as set forth in the final prospectus relating to the IPO filed by the REIT with the Securities and Exchange Commission.

 

(j)                                    “Knowledge” means actual current knowledge.

 

(k)                                 “Laws” means laws, statutes, rules, regulations, codes, orders, ordinances, judgments, injunctions, decrees and policies of any Governmental Authority, including, without limitation, zoning, land use or other similar rules or ordinances.

 

(l)                                     “Liens” means all pledges, claims, liens, charges, restrictions, controls, easements, rights of way, exceptions, reservations, leases, licenses, grants, covenants and conditions, encumbrances and security interests of any kind or nature whatsoever.

 

(m)                             “Losses” means charges, complaints, claims, actions, causes of action, losses, damages, Taxes, liabilities and expenses of any nature whatsoever, including without limitation, amounts paid in settlement, reasonable attorneys’ fees, costs of investigation, costs of investigative judicial or administrative proceedings or appeals therefrom and costs of attachment or similar bonds, as well as all collection costs and enforcement expenses incurred in retaking, holding, preparing for sale, selling or otherwise disposing of or realizing on collateral or otherwise exercising or enforcing any rights or remedies under pledge and security or other collateral documents, but does not include any diminution in value of the Acquirer.

 

(n)                                 “Material Adverse Effect” means with respect to FP Land, any Subsidiary or any Property, any material adverse change in any of the assets, business, condition (financial or otherwise), results of operation or prospects of FP Land, any Subsidiary or any Property.

 

(o)                                 “Maximum Indemnity Amount” means Five Million Dollars ($5,000,000.00).

 

(p)                                 “Permitted Liens” means (i) Liens, or deposits made to secure the release of such Liens, securing Taxes, the payment of which is not delinquent or the payment of which (including, without limitation, the amount or validity thereof) is being contested in good faith by appropriate proceedings for which adequate reserves have been made in accordance with GAAP; (ii) zoning, entitlement, building and other land use Laws imposed by governmental agencies having jurisdiction over the Properties; (iii) covenants, conditions, restrictions, easements for public utilities, encroachments, rights of access or other non-monetary matters that do not materially impair the use of the Properties for the purposes for which they are currently being used or proposed to be used in connection with the relevant Person’s business; (iv) Liens securing Disclosed Loans; (v) Liens arising under leases disclosed in full to the Acquirer and in effect as of the Closing Date; (vi) any exceptions contained in the title policies relating to the Properties as of the Closing Date, copies of which title policies were provided to the Acquirer and their counsel, none of which substantially and materially impair the use of the Properties

 

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for the purposes for which they are currently being used; and (vii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or incurred in the ordinary course of business that are not yet due and payable and which are not, in the aggregate, material to the business, operations and financial condition of the Properties so encumbered.

 

(q)                                 “Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity.

 

(r)                                    “Properties” shall have the meaning given in the Recitals.

 

(s)                                   “Subsidiary” means any corporation, partnership, limited liability company, joint venture, trust or other legal entity in which FP Land owns (either directly or through or together with another Subsidiary) either (i) a general partner, managing member or other similar interest, or (ii) outstanding capital stock or other equity interests of such corporation, partnership, limited liability company, joint venture or other legal entity. As used herein, “Subsidiary” or “Subsidiaries” refers to the Subsidiaries of FP Land, as set forth on Schedule 1.1(b), unless the context otherwise requires.

 

(t)                                    “Tax” means all federal, state, local and foreign income, withholding, gross receipts, license, property, sales, franchise, employment, payroll, goods and services, stamp, environmental, customs duties, capital stock, social security, transfer, alternative minimum, excise and other taxes, tariffs or governmental charges of any nature whatsoever, including estimated taxes, together with penalties, interest or additions to Tax with respect thereto, whether or not disputed.

 

4.3                               Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all of the parties hereto. Each party may rely on a facsimile or electronic pdf email signature of the other party as if it were an original signature.

 

4.4                               Entire Agreement; Third-Party Beneficiaries. This Agreement, including, without limitation, the exhibits hereto and thereto, constitute the entire agreement and supersede each prior agreement and understanding, whether written or oral, among the parties regarding the subject matter of this Agreement. This Agreement is not intended to confer any rights or remedies on any Person other than the parties hereto.

 

4.5                               Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law rules thereof.

 

4.6                               Assignment. This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit of, the parties hereto and their respective heirs, legal representatives, successors and assigns; provided, however, that this Agreement may not be assigned (except by operation of law) by any party without the prior written consent of the other parties, and any attempted assignment without such consent shall be null and void and of no force and effect, except that the Acquirer may assign its rights and obligations hereunder to an Affiliate.

 

4.7                               Jurisdiction. The parties hereto hereby:

 

(a)                                 submit to the exclusive jurisdiction of any state or federal court sitting in the City of Baltimore, Maryland, with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute, and

 

10

 

(b)           irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper.

 

4.8          Dispute Resolution. The parties intend that this Section 4.8 will be valid, binding, enforceable, exclusive and irrevocable and that it shall survive any termination of this Agreement.

 

(a)           Upon any dispute, controversy or claim arising out of or relating to this Agreement or the enforcement, breach, termination or validity thereof (“Dispute”), the party raising the Dispute will give written notice to the other parties to the Dispute describing the nature of the Dispute following which the parties to such Dispute shall attempt for a period of ten (10) Business Days from receipt by the parties of notice of such Dispute to resolve such Dispute by negotiation between representatives of the parties hereto who have authority to settle such Dispute. All such negotiations shall be confidential and any statements or offers made therein shall be treated as compromise and settlement negotiations for purposes of any applicable rules of evidence and shall not be admissible as evidence in any subsequent proceeding for any purpose. The statute of limitations applicable to the commencement of a lawsuit shall apply to the commencement of an arbitration hereunder, except that no defense based on the running of the statute of limitations will be available based upon the passage of time during any such negotiation. Regardless of the foregoing, a party shall have the right to seek immediate injunctive relief pursuant to clause (c) below without regard to any such ten (10) Business Day negotiation period.

 

(b)           Any Dispute (including the determination of the scope or applicability of this Agreement to arbitrate) that is not resolved pursuant to clause (a) above shall be submitted to final and binding arbitration in Denver, Colorado before one neutral and impartial arbitrator, in accordance with the laws of the State of Colorado for agreements made in and to be performed in Colorado. The arbitration shall be administered by JAMS, Inc. (“JAMS”) pursuant to its Comprehensive Arbitration Rules and Procedures, as in effect on the date hereof. The parties hereto shall appoint one arbitrator within fifteen (15) days of a demand for arbitration. If an arbitrator is not appointed within such 15-day period, the arbitrator shall be appointed by JAMS in accordance with its Comprehensive Arbitration Rules and Procedures, as in effect on the date hereof. The arbitrator shall designate the place and time of the hearing. The hearing shall be scheduled to begin as soon as practicable and no later than sixty (60) days after the appointment of the arbitrator (unless such period is extended by the arbitrator for good cause shown) and shall be conducted as expeditiously as possible. The award, which shall set forth the arbitrator’s findings of fact and conclusions of law, shall be filed with JAMS and mailed to the parties no later than thirty (30) days after the close of the arbitration hearing. The arbitration award shall be final and binding on the parties and not subject to collateral attack. Judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.

 

(c)           Notwithstanding the parties’ agreement to submit all Disputes to final and binding arbitration before JAMS, the parties shall have the right to seek and obtain temporary or preliminary injunctive relief in any court having jurisdiction thereof. Such courts shall have authority to, among other things, grant temporary or provisional injunctive relief in order to protect any party’s rights under this Agreement. Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies and to direct the parties to request that any court modify or vacate any temporary or preliminary relief issued by such court, and to award damages for the failure of any party to respect the arbitral tribunal’s orders to that effect.

 

(d)           The prevailing party shall be entitled to recover its costs and reasonable attorneys’ fees, and the non-prevailing party shall pay all expenses and fees of JAMS, all costs of the

 

11

 

stenographic record, all expenses of witnesses or proofs that may have been produced at the direction of the arbitrator, and the fees, costs and expenses of the arbitrator. The arbitrator shall allocate such costs and designate the prevailing party or parties for these purposes.

 

4.9          Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

 

4.10        Rules of Construction.

 

(a)           The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

 

(b)           The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” All terms defined in this Agreement shall have the defined meanings contained herein when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms, unless otherwise defined herein. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time, amended, qualified or supplemented, including (in the case of agreements and instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.

 

4.11        Equitable Remedies. The parties agree that irreparable damage would occur to the Acquirer in the event that 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 Acquirer shall be entitled to an injunction or injunctions to prevent breaches of this Agreement by the Indemnifying Parties and to enforce specifically the terms and provisions hereof in any federal or state court located in Baltimore, Maryland, this being in addition to any other remedy to which the Acquirer is entitled under this Agreement or otherwise at law or in equity.

 

4.12        Time of the Essence. Time is of the essence with respect to all obligations under this Agreement.

 

4.13        Headings. Headings of the Articles and Sections of this Agreement are for the convenience of the parties only, and shall be given no substantive or interpretive effect whatsoever.

 

[Signature Page Follows]

 

12

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective duly authorized officers, all as of the date first written above.

 

	
 
    	
ACQUIRER:
    
	
 
    	
 
    
	
 
    	
FARMLAND   PARTNERS INC., a Maryland 
    
	
 
    	
corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
 
    	
Name:
    	
Paul A. Pittman
    
	
 
    	
 
    	
Title:
    	
Executive   Chairman, President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FARMLAND   PARTNERS OPERATING 
    
	
 
    	
PARTNERSHIP, LP, a Delaware limited partnership
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
Farmland Partners OP GP, LLC, 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
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INDEMNIFYING PARTIES:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
 
    	
Name:   Paul A. Pittman
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jesse J. Hough
    
	
 
    	
 
    	
Name:   Jesse J. Hough
    
					

 

[Signature Page to Representation, Warranty and Indemnity Agreement]

 

 

Exhibit A

 

	
Property
    	
 
    	
County, State
    
	
Pella   Bins and Tracks
    	
 
    	
McDonough, IL
    
	
Pella   Bins and Tracks Grain Storage Facility
    	
 
    	
McDonough, IL
    
	
Kaufman
    	
 
    	
McDonough, IL
    
	
Cleer
    	
 
    	
Fulton, IL
    
	
Cleer   Grain Storage Facility
    	
 
    	
Fulton, IL
    
	
Big   Pivot
    	
 
    	
Mason, IL
    
	
Curless
    	
 
    	
Fulton, IL
    
	
Pumphouse   West
    	
 
    	
Schuyler, IL
    
	
Scripps
    	
 
    	
Schuyler, IL
    
	
Stelter
    	
 
    	
Mason, IL
    
	
Henninger
    	
 
    	
Schuyler, IL
    
	
John’s   Shop
    	
 
    	
McDonough, IL
    
	
Tazewell
    	
 
    	
Tazewell, IL
    
	
Bardolph
    	
 
    	
McDonough, IL
    
	
Symond
    	
 
    	
Mason, IL
    
	
Pella   Kelso
    	
 
    	
McDonough, IL
    
	
Duncantown
    	
 
    	
Fulton, IL
    
	
Dilworth
    	
 
    	
McDonough, IL
    
	
Weber
    	
 
    	
Schuyler, IL
    
	
Copes
    	
 
    	
Schuyler, IL
    
	
Smith
    	
 
    	
McDonough, IL
    
	
Busch
    	
 
    	
Mason, IL
    
	
Pumphouse   East
    	
 
    	
Schuyler, IL
    
	
Adair   FS
    	
 
    	
McDonough, IL
    
	
Ambrose
    	
 
    	
Mason, IL
    
	
Crabtree
    	
 
    	
Mason, IL
    
	
Heap
    	
 
    	
McDonough, IL
    
	
Table   Grove
    	
 
    	
Fulton, IL
    
	
McFadden   MD
    	
 
    	
McDonough, IL
    
	
Parr
    	
 
    	
Fulton, IL
    
	
Skien
    	
 
    	
Fulton, IL
    
	
Estep
    	
 
    	
Mason, IL
    
	
McFadden   SC
    	
 
    	
Schuyler, IL
    
	
Matulka
    	
 
    	
Butler,   NE
    
	
Matulka   Grain Storage Facility
    	
 
    	
Butler,   NE
    
	
Stanbra/Zeller
    	
 
    	
Butler,   NE
    
	
Zeagers
    	
 
    	
Butler,   NE
    
	
Kelly
    	
 
    	
Butler,   NE
    

 

 

Schedule 1.1(b)

 

Subsidiaries

 

	
 
    	
Subsidiary
    	
 
    	
FP Land Ownership Interest
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
PH   Farms LLC
    	
 
    	
100
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
Cottonwood   Valley Land, LLC
    	
 
    	
100
    	
%
    

 

 

Schedule 1.10

 

Existing Loans

 

	
Loan
    	
 
    	
Principal Outstanding as of
   December 31, 2013
    	
 
    	
Interest Rate
    	
 
    	
Maturity Date
    	
 
    
	
Multi-Property Loan
    	
 
    	
$
    	
34,500,000
    	
 
    	
2.80
    	
%
    	
March 2016
    	
 
    
	
John’s Shop
    	
 
    	
1,742,500
    	
 
    	
3.15
    	
 
    	
April 2043
    	
 
    
	
Matulka and Stanbra/Zeller
    	
 
    	
1,137,388
    	
 
    	
3.25
    	
 
    	
October 2032
    	
 
    
	
Zeagers
    	
 
    	
1,796,000
    	
 
    	
3.25
    	
 
    	
June 2016
    	
 
    
	
Tazewell
    	
 
    	
920,441
    	
 
    	
5.25
    	
 
    	
July 2030
    	
 
    
	
Merrill
    	
 
    	
787,285
    	
 
    	
4.90
    	
 
    	
December 2041
    	
 
    
	
Smith
    	
 
    	
688,000
    	
 
    	
4.00
    	
 
    	
April 2018
    	
 
    
	
Heap
    	
 
    	
528,748
    	
 
    	
4.95
    	
 
    	
September 2031
    	
 
    
	
Trone
    	
 
    	
469,732
    	
 
    	
3.15
    	
 
    	
November 2032
    	
 
    
	
Kelly
    	
 
    	
255,143
    	
 
    	
3.99
    	
 
    	
December 2027
    	
 
    
	
Secured Loan(1)
    	
 
    	
240,000
    	
 
    	
3.99
    	
 
    	
December 2021
    	
 
    
	
Total
    	
 
    	
$
    	
43,065,237
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(1)         Loan to be repaid prior to closing.EXHIBIT 10.13

 

	
 
    

AGREEMENT AND PLAN OF MERGER

 

by and among

 

FARMLAND PARTNERS INC.,

 

FARMLAND PARTNERS OPERATING PARTNERSHIP, LP,

 

PITTMAN HOUGH FARMS LLC

 

and

 

FP LAND LLC

 

Dated as of March 24, 2014

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    	
THE   MERGER
    	
2
    
	
 
    	
 
    
	
Section 1.1
    	
THE   MERGER
    	
2
    
	
Section 1.2
    	
EFFECTIVE   TIME
    	
2
    
	
Section 1.3
    	
EFFECT   OF THE MERGER
    	
2
    
	
Section 1.4
    	
ORGANIZATIONAL   DOCUMENTS
    	
2
    
	
Section 1.5
    	
CONVERSION   OF FP LAND INTERESTS
    	
3
    
	
Section 1.6
    	
CANCELLATION   AND RETIREMENT OF FP LAND INTERESTS
    	
3
    
	
Section 1.7
    	
FRACTIONAL   INTERESTS
    	
3
    
	
Section 1.8
    	
FURTHER   ACTION
    	
4
    
	
Section 1.9
    	
TAX   TREATMENT
    	
4
    
	
 
    	
 
    
	
ARTICLE II
    	
CLOSING
    	
4
    
	
 
    	
 
    
	
Section 2.1
    	
CONDITIONS   PRECEDENT
    	
4
    
	
Section 2.2
    	
TIME   AND PLACE
    	
6
    
	
Section 2.3
    	
DELIVERY   OF MERGER CONSIDERATION
    	
6
    
	
Section 2.4
    	
CLOSING   DELIVERIES
    	
7
    
	
Section 2.5
    	
CLOSING   COSTS
    	
7
    
	
Section 2.6
    	
TERM   OF THE AGREEMENT
    	
7
    
	
Section 2.7
    	
EFFECT   OF TERMINATION
    	
7
    
	
Section 2.8
    	
TAX   WITHHOLDING
    	
7
    
	
 
    	
 
    
	
ARTICLE III
    	
REPRESENTATIONS   AND WARRANTIES OF THE OPERATING PARTNERSHIP
    	
8
    
	
 
    	
 
    
	
Section 3.1
    	
ORGANIZATION;   AUTHORITY
    	
8
    
	
Section 3.2
    	
DUE   AUTHORIZATION
    	
8
    
	
Section 3.3
    	
CONSENTS   AND APPROVALS
    	
8
    
	
Section 3.4
    	
NO   VIOLATION
    	
9
    
	
Section 3.5
    	
VALIDITY   OF OP UNITS
    	
9
    
	
Section 3.6
    	
OPERATING   PARTNERSHIP AGREEMENT
    	
9
    
	
Section 3.7
    	
LIMITED   ACTIVITIES
    	
9
    
	
Section 3.8
    	
NO   OTHER REPRESENTATIONS OR WARRANTIES
    	
9
    
	
 
    	
 
    
	
ARTICLE IV
    	
REPRESENTATIONS   AND WARRANTIES OF FP LAND
    	
9
    
	
 
    	
 
    
	
Section 4.1
    	
ORGANIZATION;   AUTHORITY
    	
10
    
	
Section 4.2
    	
DUE   AUTHORIZATION
    	
10
    
	
Section 4.3
    	
CAPITALIZATION
    	
10
    
	
Section 4.4
    	
CONSENTS   AND APPROVALS
    	
11
    
	
Section 4.5
    	
NO   VIOLATION
    	
11
    
	
Section 4.6
    	
LICENSES   AND PERMITS
    	
11
    
	
Section 4.7
    	
COMPLIANCE   WITH LAWS
    	
11
    
	
Section 4.8
    	
INSURANCE
    	
12
    
	
Section 4.9
    	
ENVIRONMENTAL   MATTERS
    	
12
    
	
Section 4.10
    	
EMINENT   DOMAIN
    	
12
    
	
Section 4.11
    	
EXISTING   LOANS
    	
12
    
	
Section 4.12
    	
TAXES
    	
13
    
	
Section 4.13
    	
LITIGATION
    	
13
    
				

 

i

 

TABLE OF CONTENTS

(continued)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Section 4.14
    	
INSOLVENCY
    	
13
    
	
Section 4.15
    	
SECURITIES   LAWS MATTERS
    	
13
    
	
Section 4.16
    	
NO   BROKER
    	
14
    
	
Section 4.17
    	
OWNERSHIP   OF CERTAIN ASSETS
    	
14
    
	
Section 4.18
    	
NO   OTHER REPRESENTATIONS OR WARRANTIES
    	
14
    
	
Section 4.19
    	
SURVIVAL   OF REPRESENTATIONS AND WARRANTIES
    	
14
    
	
 
    	
 
    
	
ARTICLE V
    	
COVENANTS   AND OTHER AGREEMENTS
    	
14
    
	
 
    	
 
    
	
Section 5.1
    	
PRE-CLOSING   COVENANTS
    	
14
    
	
Section 5.2
    	
COMMERCIALLY   REASONABLE EFFORTS BY THE OPERATING PARTNERSHIP AND FP LAND
    	
15
    
	
Section 5.3
    	
TAX   MATTERS
    	
15
    
	
Section 5.4
    	
FACILITATION   OF THE MERGER
    	
17
    
	
Section 5.5
    	
EXCLUDED   ASSETS
    	
17
    
	
Section 5.6
    	
ALTERNATE   TRANSACTION
    	
17
    
	
 
    	
 
    
	
ARTICLE VI
    	
GENERAL   PROVISIONS
    	
17
    
	
 
    	
 
    
	
Section 6.1
    	
NOTICES
    	
17
    
	
Section 6.2
    	
DEFINITIONS
    	
18
    
	
Section 6.3
    	
COUNTERPARTS
    	
21
    
	
Section 6.4
    	
ENTIRE   AGREEMENT; THIRD-PARTY BENEFICIARIES
    	
21
    
	
Section 6.5
    	
GOVERNING   LAW
    	
21
    
	
Section 6.6
    	
ASSIGNMENT
    	
21
    
	
Section 6.7
    	
SEVERABILITY
    	
23
    
	
Section 6.8
    	
RULES   OF CONSTRUCTION
    	
23
    
	
Section 6.9
    	
TIME   OF THE ESSENCE
    	
23
    
	
Section 6.10
    	
DESCRIPTIVE   HEADINGS
    	
23
    
	
Section 6.11
    	
NO   PERSONAL LIABILITY CONFERRED
    	
23
    
	
Section 6.12
    	
AMENDMENTS
    	
24
    
				

 

ii

 

	
Schedule 4.1(b)
    	
List of Subsidiaries / List of Properties
    
	
Schedule 4.3
    	
Capitalization
    
	
Schedule 4.11
    	
Existing Loans
    
	
 
    	
 
    
	
Exhibit A
    	
Operating Partnership Agreement
    
	
Exhibit B
    	
Form of Lock-Up Agreement
    
	
Exhibit C
    	
Form of Tax Protection Agreement
    
	
Exhibit D
    	
Form of Right of First Offer Agreement   with Pittman Hough Farms
    
	
Exhibit E
    	
Form of Right of First Offer Agreement   with Paul A. Pittman
    
	
Exhibit F
    	
Form of Registration Rights Agreement
    
	
Exhibit G
    	
Form of Certificate of Merger
    

 

iii

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of March 24, 2014 (this “Agreement”), by and among Farmland Partners Inc., a Maryland corporation (the “REIT”), Farmland Partners Operating Partnership, LP, a Delaware limited partnership and a subsidiary of the REIT (the “Operating Partnership”), FP Land LLC, a Delaware limited liability company (“FP Land”) and Pittman Hough Farms LLC, a Colorado limited liability company and the sole and managing member of FP Land (“Pittman Hough Farms”). Certain capitalized terms used in this Agreement are defined in Section 6.2 of this Agreement.

 

RECITALS

 

WHEREAS, the REIT intends to engage in various related transactions (collectively, the “IPO Transactions”) pursuant to which, among other things, the REIT will effect an initial public offering (the “IPO”) of shares of its common stock, $0.01 par value per share (the “Common Stock”), after which the REIT will operate as a self-administered and self-managed real estate investment trust within the meaning of Section 856 of the Code;

 

WHEREAS, in connection with the IPO Transactions, the REIT intends to engage in certain formation transactions (the “Formation Transactions”) pursuant to which, among other things, FP Land will merge with and into the Operating Partnership (the “Merger”) and the limited liability company interests in FP Land (the “FP Land Interests”), 100% of which are owned by Pittman Hough Farms, will be converted automatically into an aggregate of 1,945,000 units of limited partnership interest in the Operating Partnership designated as Class A Units (“OP Units”);

 

WHEREAS, concurrently with the execution of this Agreement, Paul A. Pittman and Jesse J. Hough have entered into a representation, warranty and indemnity agreement ( the “Representation, Warranty and Indemnity Agreement”), pursuant to which they have made certain representations and warranties regarding the Properties owned directly or indirectly by FP Land, which are being acquired pursuant to this Agreement, and agreed to indemnify the REIT and the Operating Partnership for certain breaches of such representations and warranties for one year after the completion of the Formation Transactions; and

 

WHEREAS, in connection with the Merger, Pittman Hough Farms will enter into a tax protection agreement (the “Tax Protection Agreement”) with the REIT and the Operating Partnership, pursuant to which the REIT will agree to indemnify Pittman Hough Farms and its members against certain adverse tax consequences, which may affect the way in which the REIT conducts its business, including with respect to when and under what circumstances the REIT will sell properties in its initial portfolio or interests therein or repay debt during the restriction period set forth in the Tax Protection Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and other terms contained in this Agreement, the parties hereto, intending to be legally bound hereby, agree as follows:

 

1

 

ARTICLE 1

 

THE MERGER

 

Section 1.1.                                 THE MERGER. At the Effective Time (as defined below), and subject to the terms and conditions contained in this Agreement and in accordance with applicable Laws, FP Land shall be merged with and into the Operating Partnership whereby the separate existence of FP Land shall cease, the Operating Partnership shall continue its existence under Delaware law as the surviving entity (hereinafter sometimes referred to as the “Surviving Entity”) and the Operating Partnership’s name shall remain the same as it was immediately before the Effective Time.

 

Section 1.2.                                 EFFECTIVE TIME. Subject to and upon the terms and conditions of this Agreement, concurrently with or as soon as practicable after (i) the execution by the REIT and the Operating Partnership of the Underwriting Agreement and (ii) the satisfaction or waiver of the conditions set forth in Article II hereof, the Operating Partnership and FP Land shall file articles of merger or similar documents with respect to the Merger substantially in the form attached hereto as Exhibit G (the “Certificate of Merger”) as may be required by applicable Laws, with the Secretary of State of the State of Delaware providing that the Merger shall become effective upon filing or at such later date and time set forth in the Certificate of Merger with respect to such Merger that is not more than 30 days after the Certificate of Merger is accepted for record by the Secretary of State of Delaware (the “Effective Time”), together with any certificates and other filings or recordings related thereto, in such forms as are required by, and executed in accordance with the relevant provisions of applicable Laws.

 

Section 1.3.                                 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided in this Agreement, the Certificate of Merger and applicable Laws.

 

Section 1.4.                                 ORGANIZATIONAL DOCUMENTS; GENERAL PARTNER. At the Effective Time: (i) the certificate of limited partnership of the Operating Partnership, as in effect immediately prior to the Effective Time, shall be the certificate of limited partnership of the Surviving Entity until thereafter amended as provided therein or in accordance with the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”); (ii) the Amended and Restated Agreement of Limited Partnership of the Operating Partnership, as in effect immediately prior to the Effective Time (the “Operating Partnership Agreement”), shall be the agreement of limited partnership of the Surviving Entity until thereafter amended as provided therein or in accordance with the DRULPA; and (iii) the general partner of the Operating Partnership immediately prior to the Effective Time shall continue as the General Partner following the Effective Time until removed or replaced in accordance with the terms of the Operating Partnership Agreement.

 

Section 1.5.                                 CONVERSION OF FP LAND INTERESTS.

 

(a)                                 Under and subject to the terms and conditions of this Agreement, Pittman Hough Farms is irrevocably bound to accept and entitled to receive, as a result of and upon consummation of the Merger, OP Units as set forth in this Section 1.5.

 

(b)                                 At the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto, except as set forth in this Agreement, all FP Land Interests shall be cancelled and retired and cease to exist and shall be converted automatically into an aggregate of 1,945,000 OP Units (the “Merger Consideration”) and Pittman Hough Farms shall, upon receipt of such OP Units and the delivery of a counterpart signature page to the Operating Partnership Agreement and such other documents and instruments as may be required in the sole discretion of the Operating Partnership to effect Pittman Hough Farm’s admission as a limited partner of the Operating Partnership, be admitted as a

 

2

 

limited partner of the Operating Partnership in accordance with the DRULPA and the Operating Partnership Agreement.

 

Section 1.6.                                 CANCELLATION AND RETIREMENT OF FP LAND INTERESTS. From and after the Effective Time, all FP Land Interests converted into the Merger Consideration pursuant to Section 1.5(b) shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and Pittman Hough Farms shall thereafter cease to have any rights as a member of FP Land except the right to receive the Merger Consideration.

 

Section 1.7.                                 FRACTIONAL INTERESTS. No fractional OP Units, or cash in lieu of fractional OP Units, shall be issued in the Merger or the other Formation Transactions.

 

Section 1.8.                                 FURTHER ACTION. If, at any time after the Effective Time, the Surviving Entity shall determine or be advised that any deeds, bills of sale, assignments (including any intellectual property assignments), assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Entity the right, title or interest in, to or under any of the rights, properties or assets of FP Land acquired or to be acquired by the Surviving Entity as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the Surviving Entity shall be authorized to execute and deliver, in the name and on behalf of FP Land all such deeds, bills of sale, assignments (including any intellectual property assignments) and assurances and to take and do, in the name and on behalf of FP Land or any FP Land Interests all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Entity or otherwise to carry out this Agreement.

 

Section 1.9.                                 TAX TREATMENT. The parties intend and agree that the Merger for U.S. federal income tax purposes shall constitute a transfer of assets by Pittman Hough Farms to the Operating Partnership in exchange for OP Units under Section 721 of the Code and shall not establish or maintain a position on their respective U.S. federal income tax returns or otherwise that is inconsistent therewith.

 

ARTICLE 2

 

CLOSING

 

Section 2.1.                                 CONDITIONS PRECEDENT.

 

(a)                                 Condition to Each Party’s Obligations. The respective obligation of each party to effect the Merger and to consummate the other transactions contemplated hereby to occur on the Closing Date (as defined below) is subject to the satisfaction or written waiver (except as provided below) on or prior to the Effective Time of the following conditions:

 

(i)                                     Registration Statement. The registration statement on Form S-11filed by the REIT with the Securities and Exchange Commission (“SEC”) relating to the IPO must have been declared effective under the Securities Act and not be the subject of any stop order, other suspension of effectiveness or proceedings by the SEC seeking a stop order. This condition may not be waived by any party.

 

(ii)                                  No Injunction. No Governmental Authority of competent jurisdiction with respect to this Agreement, the IPO Transactions or the Formation Transactions, as the case may be, shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, judgment, injunction, stay or other order (whether temporary, preliminary or permanent), in any case which is in effect and which prevents or prohibits 

 

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consummation of any of the transactions contemplated in this Agreement nor shall any of the same brought by a Governmental Authority of such competent jurisdiction be pending or threatened that seeks any of the foregoing.

 

(iii)                               Operating Partnership Agreement. The Operating Partnership Agreement, in substantially the form attached hereto as Exhibit A, shall have been executed and delivered by the partners of the Operating Partnership and shall be in full force and effect and, except as contemplated by Section 2.4 or the other Formation Transaction Documentation, shall not have been amended or modified.

 

(b)                                 Conditions to the Obligations of the Operating Partnership. The obligations of the Operating Partnership to effect the Merger and to consummate the other transactions contemplated hereby to occur on the Closing Date are further subject to satisfaction of the following conditions (any of which may be waived by the Operating Partnership in whole or in part):

 

(i)                                     Representations and Warranties. The representations and warranties of FP Land and Pittman Hough Farms contained in this Agreement and of Messrs. Pittman and Hough contained in the Representation, Warranty and Indemnification Agreement shall be true and correct in all material respects at the Closing (as defined below) as if made again at that time (except to the extent that any representation or warranty speaks only as of an earlier date, in which case such representation or warranty must have been true and correct only as of that earlier date).

 

(ii)                                  Performance by FP Land and Pittman Hough Farms. FP Land and Pittman Hough Farms shall have performed in all material respects each of the agreements and covenants required by this Agreement to be performed or complied with by them on or prior to the Closing Date.

 

(iii)                               Offering Closing. Other than consummation of the transactions contemplated hereby, all conditions precedent to the closing of the Offering shall have been satisfied or irrevocably and unconditionally waived.

 

(iv)                              Consents, Etc. All necessary consents and approvals of Governmental Authorities or third parties (including lenders) for FP Land to consummate the transactions contemplated hereby shall have been obtained.

 

(v)                                 No FP Land Material Adverse Effect. There shall have not occurred between the date hereof and the Closing Date an FP Land Material Adverse Effect.

 

(vi)                              Formation Transactions. The Formation Transactions shall have been or shall be consummated substantially concurrently in accordance with the timing set forth in the respective Formation Transaction Documentation.

 

(vii)                           Lock-Up Agreement. Pittman Hough Farms shall have entered into the Lock-Up Agreement substantially in the form attached hereto as Exhibit B.

 

(viii)                        Tax Protection Agreement. Pittman Hough Farms and any of its members that will be a party to the Tax Protection Agreement that (1) owns, directly or indirectly, an interest in any Property specified in the Tax Protection Agreement or (2) has been provided an opportunity to guarantee debt as set forth in the Tax Protection Agreement shall have entered into the Tax Protection Agreement substantially in the form attached hereto as Exhibit C.

 

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(ix)                              Right of First Offer Agreements. Pittman Hough Farms and Paul A. Pittman shall have entered into the Right of First Offer Agreements, substantially in the forms attached hereto as Exhibits D and E, respectively.

 

(c)                                  Conditions to the Obligations of FP Land and Pittman Hough Farms. The obligations of FP Land and Pittman Hough Farms to effect the Merger and to consummate the other transactions contemplated hereby to occur on the Closing Date are further subject to satisfaction of the following conditions (any of which may be waived by FP Land and Pittman Hough Farms in whole or in part):

 

(i)                                     Representations and Warranties. The representations and warranties of the Operating Partnership contained in this Agreement shall be true and correct in all material respects at the Closing as if made again at that time (except to the extent that any representation or warranty speaks only as of an earlier date, in which case such representation or warranty must have been true and correct only as of that earlier date).

 

(ii)                                  Performance by the Operating Partnership. The Operating Partnership shall have performed in all material respects each of the agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

(iii)                               Registration Rights Agreement. The REIT shall have entered into the Registration Rights Agreement, substantially in the form attached hereto as Exhibit F.

 

(iv)                              Tax Protection Agreement. If FP Land (1) owns, directly or indirectly, an interest in any Property specified in the Tax Protection Agreement or (2) has any direct or indirect members that have been provided an opportunity to guarantee debt as set forth in the Tax Protection Agreement, the REIT and the Operating Partnership shall have entered into the Tax Protection Agreement substantially in the form attached hereto as Exhibit C.

 

Section 2.2.                                 TIME AND PLACE. Unless this Agreement shall have been terminated pursuant to Section 2.6, and subject to the satisfaction or waiver of the conditions in Section 2.1, the filing of the Certificate of Merger, the Effective Time and the closing of the Merger contemplated by Section 1.2 and the other transactions contemplated by this Agreement shall occur substantially concurrently with the receipt by the REIT of the proceeds from the Offering from the underwriters (the “Closing” or the “Closing Date”). The Closing shall take place at the offices of Morrison & Foerster LLP, 2000 Pennsylvania Avenue, NW Suite 6000, Washington, DC 20006-1888 or such other place as determined by the REIT in its sole discretion.

 

Section 2.3.                                 DELIVERY OF MERGER CONSIDERATION.

 

(a)                                 As soon as reasonably practicable after the Effective Time, the Surviving Entity (or its successor in interest) shall deliver to Pittman Hough Farms the Merger Consideration. The issuance of any OP Units and admission of Pittman Hough Farms as a limited partner of the Operating Partnership pursuant to Section 1.5(b) shall be evidenced by an entry to the Register (as defined in the Operating Partnership Agreement).  Although initially the OP Units will not be certificated, any certificates subsequently issued evidencing the OP Units will bear appropriate legends (i) indicating that the OP Units have not been registered under the Securities Act, (ii) indicating that the Operating Partnership Agreement will restrict the transfer of the OP Units and (iii) describing the ownership limitations and transfer restrictions imposed by the charter of the REIT with respect to shares of Common Stock.

 

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(b)                                 The Surviving Entity (or its successor in interest) shall not be liable to any holder of an FP Land Interest for any portion of the Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

 

Section 2.4.                                 CLOSING DELIVERIES. At the Closing, Pittman Hough Farms and Messrs. Pittman and Hough, as applicable, shall deliver the following to the Operating Partnership in addition to all other items required to be delivered to the Operating Partnership by FP Land:

 

(a)                                 any applicable Lock-Up Agreements;

 

(b)                                 signature pages of the Operating Partnership Agreement duly executed by Pittman Hough Farms, as limited partner.

 

(c)                                  signature pages to the Representation, Warranty and Indemnity Agreement;

 

(d)                                 signature pages to the Registration Rights Agreement;

 

(e)                                  signature pages to the Right of First Offer Agreements; and

 

(f)                                   any other document or instrument reasonably requested by the Operating Partnership or reasonably necessary or desirable to assign, transfer, convey, contribute and deliver the FP Land Interests, free and clear of all Liens and to effectuate the transactions contemplated hereby.

 

Section 2.5.                                 CLOSING COSTS. If the Closing occurs, the REIT and the Operating Partnership shall be solely responsible for all transaction costs and expenses of the REIT, the Operating Partnership and FP Land in connection with the Formation Transactions and the IPO, which include, but are not limited to, the underwriting discounts and commissions in connection with the IPO and the costs incurred by FP Land or Pittman Hough Farms on behalf of the REIT in connection with the Formation Transactions and the IPO.

 

Section 2.6.                                 TERMINATION OF THE AGREEMENT. Notwithstanding anything to the contrary contained herein, this Agreement may be terminated at any time prior to the Closing, as follows:

 

(a)                                 by mutual consent of all the parties;

 

(b)                                 by either party if the Closing has not occurred by June 30, 2014;

 

(c)                                  by the Operating Partnership if any of the conditions set forth in Sections 2.1(a) or 2.1(b) have not been satisfied or waived by the Operating Partnership; or

 

(d)                                 by the Operating Partnership pursuant to Section 2.7(b).

 

Section 2.7.                                 EFFECT OF TERMINATION. (a) In the event of termination of this Agreement for any reason, all obligations on the part of the REIT, the Operating Partnership, Pittman Hough Farms and FP Land under this Agreement shall terminate, except that the obligations set forth in Article VI shall survive.

 

(b)  If the Closing is not consummated because of a default by Pittman Hough Farms or FP Land under this Agreement, then the Operating Partnership may either (i) seek specific performance of this Agreement and in connection therewith FP Land shall reimburse the Operating Partnership for the actual out-of-pocket expenses incurred by the Operating Partnership in connection with seeking such 

 

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specific performance, or (ii) terminate this Agreement in full, and, except as expressly set forth elsewhere in this Agreement, no party hereto shall thereafter have any obligation under any provision of this Agreement.

 

Section 2.8.                                 TAX WITHHOLDING. The Operating Partnership shall be entitled to deduct and withhold from the consideration payable pursuant to this Agreement to any holder of an FP Land Interest such amounts as are required to be deducted and withheld with respect to the making of such payment under the Code or any provision of state, local or foreign tax law or regulation. To the extent that amounts are so withheld and paid over to the applicable Governmental Authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the FP Land Interest in respect of which such deduction and withholding was made.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF THE OPERATING PARTNERSHIP

 

The Operating Partnership hereby represents and warrants to FP Land as follows:

 

Section 3.1.                                 ORGANIZATION; AUTHORITY.

 

(a)                                 The Operating Partnership has been duly formed and is validly existing as a limited partnership in good standing under the Laws of the State of Delaware and has all requisite limited partnership power and authority to enter into this Agreement and the other Formation Transaction Documentation and to carry out the transactions contemplated hereby and thereby, and to own, lease and/or operate its property and to carry on its business as presently conducted and, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect.

 

Section 3.2.                                 DUE AUTHORIZATION. The execution, delivery and performance of this Agreement and the other Formation Transaction Documentation (including each agreement, document and instrument executed and delivered by or on behalf of the Operating Partnership pursuant to this Agreement or the other Formation Transaction Documentation) by the Operating Partnership has been duly and validly authorized by all necessary actions required of the Operating Partnership. This Agreement, the other Formation Transaction Documentation and each agreement, document and instrument executed and delivered by or on behalf of the Operating Partnership pursuant to this Agreement or the other Formation Transaction Documentation constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of the Operating Partnership, enforceable against the Operating Partnership in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.

 

Section 3.3.                                 CONSENTS AND APPROVALS. Except for the filing of the Certificate of Merger in accordance with Section 1.2 hereof or in connection with the Offering and the consummation of the other Formation Transactions or as shall have been obtained on or prior to the Closing Date, no consent, waiver, approval, authorization, order, license, permit or registration of, qualification, designation, declaration or filing with, any Person or Governmental Authority or under any applicable Laws is required to be obtained by the Operating Partnership in connection with the execution, delivery and performance of this Agreement and the transactions contemplated hereby, except for (a) those consents, waivers, approvals, authorizations, orders, licenses, permits, registrations, qualifications, designations, declarations or filings, the failure of which to obtain or to file would not, individually or in 

 

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the aggregate, reasonably be expected to have an OP Material Adverse Effect, or (b) those consents under the Organizational Documents of FP Land, the failure of which to obtain would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect.

 

Section 3.4.                                 NO VIOLATION. None of the execution, delivery or performance of this Agreement, the other Formation Transaction Documentation, any agreement contemplated hereby between the parties to this Agreement and the transactions contemplated hereby between the parties to this Agreement does or will, with or without the giving of notice, lapse of time, or both, violate, conflict with, result in a breach of, or constitute a default under or give to others any right of termination, acceleration, cancellation or other right under, (a) the Organizational Documents of the Operating Partnership, (b) any agreement, document or instrument to which the Operating Partnership or any of its respective assets are bound or (c) any term or provision of any judgment, order, writ, injunction or decree binding on the Operating Partnership, except for, in the case of clauses (b) or (c), any such breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have an OP Material Adverse Effect.

 

Section 3.5.                                 VALIDITY OF OP UNITS. Any OP Units to be issued pursuant to this Agreement will have been duly authorized by the Operating Partnership and, when issued against the consideration therefor, will be validly issued, free and clear of all Liens created by the Operating Partnership (other than any Liens created by the Operating Partnership Agreement).

 

Section 3.6.                                 OPERATING PARTNERSHIP AGREEMENT. Attached hereto as Exhibit A hereto is a true and correct copy of the Operating Partnership Agreement, as will be in effect immediately prior to the Effective Time.

 

Section 3.7.                                 LIMITED ACTIVITIES. Except for activities in connection with the Offering, the Formation Transactions or in the ordinary course of business, the Operating Partnership and the Operating Partnership Subsidiaries have not engaged in any material business or incurred any material obligations.

 

Section 3.8.                                 NO OTHER REPRESENTATIONS OR WARRANTIES. Other than the representations and warranties expressly set forth in this Article III and any other agreement entered into in connection with the Formation Transactions, the Operating Partnership shall not be deemed to have made any other representation or warranty in connection with this Agreement or the transactions contemplated hereby. All representations, warranties and covenants of the Operating Partnership contained in this Agreement shall expire at the Closing.

 

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES OF FP LAND AND PITTMAN HOUGH FARMS

 

Except as disclosed in the Offering Document or the schedules attached hereto, FP Land and Pittman Hough Farms hereby jointly and severally represent and warrant to the REIT and the Operating Partnership that as of the Closing Date:

 

Section 4.1.                                 ORGANIZATION; AUTHORITY.

 

(a)                                 FP Land has been duly formed, is validly existing and in good standing under the Laws of the State of Delaware, and has all requisite limited liability company power and authority to enter into this Agreement, each agreement contemplated hereby and the other Formation Transaction Documentation to which it is a party (including any agreement, document and instrument executed and 

 

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delivered by or on behalf of FP Land pursuant to this Agreement or the other Formation Transaction Documentation) and to carry out the transactions contemplated hereby and thereby, and to carry on its business as presently conducted. FP Land, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect.

 

(b)                                 Schedule 4.1(b) sets forth as of the date hereof with respect to FP Land (i) each direct or indirect Subsidiary of FP Land (each an “FP Land Subsidiary” and, collectively, the “FP Land Subsidiaries”), (ii) the direct or indirect ownership interest therein of FP Land, (iii) if not wholly owned by FP Land, the identity and ownership interest of each of the other owners of such Subsidiary, and (iv) each real property owned directly or indirectly, in whole or in part, by FP Land or such Subsidiary (each a “Property”). Each FP Land Subsidiary has been duly organized and is validly existing and is in good standing under the Laws of its jurisdiction of organization, and has all requisite power and authority to own, lease and/or operate its Property and to carry on its business as presently conducted. Each FP Land Subsidiary, to the extent required under applicable Laws, is qualified to do business and is in good standing in each jurisdiction in which the nature of its business or the character of its Property make such qualification necessary, other than such failures to be so qualified as would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect. Except as set forth on Schedule 4.01(b), neither FP Land nor any of the FP Land Subsidiaries owns any equity or ownership interest in any other Person.

 

(c)                                  The Operating Partnership has been provided complete and accurate copies of Organizational Documents, as amended through the date hereof, and such Organizational Documents are in full force and effect as of the date hereof and have not been further modified or amended.

 

Section 4.2.                                 DUE AUTHORIZATION. The execution, delivery and performance by FP Land of this Agreement and the other Formation Transaction Documentation (including any agreement, document and instrument executed and delivered by or on behalf of FP Land pursuant to this Agreement or the other Formation Transaction Documentation) to which it is a party have been duly and validly authorized by all necessary actions required of FP Land. This Agreement, the other Formation Transaction Documentation and each agreement, document and instrument executed and delivered by or on behalf of FP Land or any FP Land Subsidiary pursuant to this Agreement or the other Formation Transaction Documentation constitutes, or when executed and delivered will constitute, the legal, valid and binding obligation of FP Land or such FP Land Subsidiary, each enforceable against FP Land or such FP Land Subsidiary in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar Laws relating to creditors’ rights and general principles of equity.

 

Section 4.3.                                 CAPITALIZATION. Schedule 4.3 sets forth as of the date hereof the ownership of FP Land. All of the issued and outstanding equity interests of FP Land and each FP Land Subsidiary are duly authorized, validly issued and fully paid; and such interests are not subject to preemptive rights or appraisal, dissenters’ or other similar rights under the Organizational Documents of or any contract to which FP Land is a party or otherwise bound, except for such preemptive rights, transfer restrictions or appraisal, dissenters’ or other similar rights as would not prevent the Merger. There are no outstanding rights to purchase, subscriptions, warrants, options or any other security convertible into or exchangeable for equity interests in FP Land or the FP Land Subsidiaries. Except as set forth in the Organizational Documents, none of FP Land or any of the FP Land Subsidiaries is a party to any agreement for the sale of its material assets, for the grant to any Person of any preferential right to purchase any such material assets or the acquisition of any material operating business, material assets or capital stock of any other corporation, entity or business, other than the purchase or sale of assets in the ordinary course of business.

 

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Section 4.4.                                 CONSENTS AND APPROVALS. Except for the filing of the Certificate of Merger in accordance with Section 1.2 hereof or as shall have been obtained or satisfied on or prior to the Closing Date, no consent, waiver, approval, authorization, order, license, permit or registration of, or qualification, designation, declaration or filing with, any Person or any Governmental Authority or under any applicable Laws is required to be obtained by FP Land or the FP Land Subsidiaries in connection with the execution, delivery and performance of this Agreement, the other Formation Transaction Documentation to which FP Land or the FP Land Subsidiaries is a party and the transactions contemplated hereby and thereby, except for those consents, waivers, approvals, authorizations, orders, licenses, permits, registrations, qualifications, designations, declarations or filings, the failure of which to obtain or to file would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect.

 

Section 4.5.                                 NO VIOLATION. None of the execution, delivery or performance of this Agreement, any agreement contemplated hereby between or among any of the parties to this Agreement and the transactions contemplated hereby does or will, with or without the giving of notice, lapse of time or both, violate, conflict with, result in a breach of or constitute a default under or give to others any right of termination, acceleration, cancellation or other right under, (a) the Organizational Documents of FP Land or the FP Land Subsidiaries or (b) any agreement, document or instrument to which FP Land or the FP Land Subsidiaries is a party or by which the FP Land or the FP Land Subsidiaries or any of their respective assets or properties are bound by or (c) any term or provision of any judgment, order, writ, injunction or decree binding on FP Land or the FP Land Subsidiaries (or its assets or properties), except for, in the case of clauses (b) or (c), any such breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect.

 

Section 4.6.                                 LICENSES AND PERMITS. All notices, licenses, permits, certificates and authorizations required for the continued use, occupancy, management, leasing and operation of the Properties have been obtained or can be obtained without material cost, are in full force and effect, are in good standing and (to the extent required in connection with the transactions contemplated by the Formation Transaction Documentation) are assignable to the Operating Partnership, except in each case for items that, if not so obtained, obtainable and/or transferred, would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect. Neither FP Land, nor the FP Land Subsidiaries, nor, to the Knowledge of FP Land, any third party has taken any action that (or failed to take any action the omission of which) would result in the revocation of any such notice, license, permit, certificate or authorization where such revocation or revocations would, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect, nor has any one of them received any written notice of violation from any Governmental Authority or written notice of the intention of any entity to revoke any such notice, license, permit, certificate or authorization, that in each case has not been cured or otherwise resolved to the satisfaction of such Governmental Authority or other entity and except as would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect.

 

Section 4.7.                                 COMPLIANCE WITH LAWS. To the Knowledge of FP Land, FP Land and the FP Land Subsidiaries have conducted their respective businesses in compliance with all applicable Laws, except for such failures that would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect. Neither FP Land, nor the FP Land Subsidiaries, nor, to the Knowledge of FP Land, any third party are in violation of any Law or has been informed in writing of any continuing violation of any such Laws or that any investigation has been commenced and is continuing or is contemplated respecting any such possible violation, except in each case for violations that would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect. There has not been committed by FP Land or any FP Land Subsidiary or, to the Knowledge of FP Land, any other Person in occupancy of or involved with the operation or use of the Properties any act or 

 

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omission affording the federal government or any other Governmental Authority the right of forfeiture as against any Property or any part thereof.

 

Section 4.8.                                 INSURANCE. Each of FP Land and each FP Land Subsidiary has in place the public liability, casualty and other insurance coverage with respect to each Property owned, leased and/or managed by it as FP Land reasonably deems necessary and in all cases including such coverage as is required under the terms of any continuing loan or Lease. Each of the insurance policies with respect to each Property is in full force and effect in all material respects and all premiums due and payable thereunder have been fully paid when due. To the Knowledge of FP Land, neither FP Land nor the FP Land Subsidiaries have received from any insurance company any notices of cancellation or intent to cancel any insurance.

 

Section 4.9.                                 ENVIRONMENTAL MATTERS. Except for matters that would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect, to the Knowledge of FP Land, (A) FP Land and the FP Land Subsidiaries and each Property are in compliance with all Environmental Laws, (B) neither FP Land nor the FP Land Subsidiaries have received any written notice from any Governmental Authority or third party alleging that FP Land or any of the FP Land Subsidiaries or any Property is not in compliance with applicable Environmental Laws, and (C) there has not been a release of a hazardous substance on any of the Properties that would require investigation or remediation under applicable Environmental Laws. The representations and warranties contained in this Section 4.9 constitute the sole and exclusive representations and warranties made by FP Land concerning environmental matters.

 

Section 4.10.                          EMINENT DOMAIN. There is no existing or, to the Knowledge of FP Land, proposed or threatened condemnation, eminent domain or similar proceeding, or private purchase in lieu of such a proceeding which would affect any of the Properties, except for such proceedings that would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect.

 

Section 4.11.                          EXISTING LOANS. Schedule 4.11 lists, as of the date hereof, all secured loans presently encumbering the Properties or any direct or indirect interest in FP Land or any FP Land Subsidiary, and any unsecured loans relating thereto to be assumed by the Operating Partnership or any Subsidiary of the Operating Partnership at Closing (collectively, the “Existing Loans”). Except for matters that would not, individually or in the aggregate, reasonably be expected to have an FP Land Material Adverse Effect or that are otherwise disclosed on Schedule 4.11, no monetary default (beyond applicable notice and cure periods) by any party exists under any of the Existing Loans and the documents entered into in connection therewith (collectively, the “Existing Loan Documents”) and no non-monetary default (beyond applicable notice and cure periods) by any party exists under any of such Existing Loan Documents.

 

Section 4.12.                          TAXES.

 

(a)                                 To the Knowledge of FP Land, FP Land has timely and properly filed (or caused to be timely and properly filed) all Tax Returns required to be filed by it, if any, and each FP Land Subsidiary (after giving effect to any filing extension properly granted by a Governmental Authority having authority to do so), and all such Tax Returns required to be filed by FP Land or any FP Land Subsidiary, as the case may be, if any, are accurate and complete in all material respects.

 

(b)                                 To the Knowledge of FP Land, FP Land and each FP Land Subsidiary have paid (or have had paid on their behalf) all Taxes as required to be paid by them.

 

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(c)                                  To the Knowledge of FP Land, no income or material non-income Tax Returns, if any, filed by FP Land or any FP Land Subsidiary are the subject of a pending or ongoing audit.

 

(d)                                 To the Knowledge of FP Land, no deficiencies for any income or material non-income Taxes have been proposed, asserted or assessed against FP Land or any FP Land Subsidiary, and no requests for waivers of the time to assess any such Taxes are pending. Since its formation, for U.S. federal income tax purposes each of FP Land and each FP Land Subsidiary has been treated as a partnership or as a disregarded entity, and not as a corporation or an association taxable as a corporation.

 

Section 4.13.                          LITIGATION. Except for actions, suits or proceedings fully covered by policies of insurance, there is no action, suit or proceeding pending or, to the Knowledge of FP Land, threatened against or affecting FP Land, any of the FP Land Subsidiaries or any of the Properties, or any officer, director, principal, managing member, general partner or Affiliate of any of the foregoing, other than actions, suits or proceedings arising in the ordinary course of business from the ownership and operation which, if adversely determined, would not have an FP Land Material Adverse Effect. There is no action, suit, or proceeding pending or, to the Knowledge of FP Land, threatened against or affecting FP Land, any of the FP Land Subsidiaries or any officer, director, principal, managing member, general partner or Affiliate of any of the foregoing, which challenges or impairs the ability of FP Land or any FP Land Subsidiary to execute or deliver, or perform its obligations under this Agreement or any Formation Transaction Documentation or any other documents to be executed by it pursuant to this Agreement or any Formation Transaction Documentation or to consummate the transactions contemplated hereby or thereby. Except for matters fully covered by insurance, there is no judgment, decree, injunction, rule or order of a Governmental Authority outstanding against FP Land, any FP Land Subsidiary or any officer, director, principal, managing member or general partner of any of the foregoing in their capacity as such, which would reasonably be expected to have an FP Land Adverse Effect. None of FP Land, the FP Land Subsidiaries or any officer, director, principal, managing member, general partner or Affiliate of any of the foregoing has received any written notice of any pending or threatened proceedings for the rezoning (i.e., to change the current zoning) of any Property or any portion thereof which would impair the current or proposed use thereof in a manner that would result in an FP Land Material Adverse Effect.

 

Section 4.14.                          INSOLVENCY. No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or, to FP Land’s Knowledge, threatened against FP Land, any FP Land Subsidiary or any Property, nor are any such proceedings contemplated by FP Land.

 

Section 4.15.                          SECURITIES LAW MATTERS. Each of Pittman Hough Farms and FP Land acknowledges that: (i) the Operating Partnership intends the offer and issuance of any OP Units to Pittman Hough Farms to be exempt from registration under the Securities Act and applicable state securities laws by virtue of the status of such equity holder as an “accredited investor” (within the meaning of Rule 501(a) of Regulation D under the Securities Act) acquiring any OP Units in a transaction exempt from registration pursuant to Rule 506 of Regulation D under the Securities Act, and (ii) in issuing any OP Units pursuant to the terms of this Agreement, the Operating Partnership is relying on the representations made by Pittman Hough Farms to receive OP Units as consideration in the Merger, and that:

 

(a)                                 In deciding to engage in the transaction contemplated by this Agreement, including, acquiring OP Units, neither FP Land nor Pittman Hough Farms is relying upon any representations made to it by the Operating Partnership, or any of its partners, officers, employees or agents, that are not contained herein. Pittman Hough Farms is aware of the risks involved in investing in the OP Units. Pittman Hough Farms is knowledgeable, sophisticated and experienced in business and financial matters and fully understands the limitations on transfer imposed by the federal securities laws

 

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and as described in this Agreement. Pittman Hough Farms has received this Agreement, has reviewed it and has had an opportunity to ask questions of, and to receive answers from, the Operating Partnership and the REIT or a person or persons authorized to act on their behalf, concerning the terms and conditions of acquiring the OP Units and the financial condition, affairs and business of the Operating Partnership and the REIT. Pittman Hough Farms confirms that all documents, records and information pertaining to its acquisition of the OP Units have been made available or delivered to each such holder prior to the date hereof.

 

(b)                                 FP Land and Pittman Hough Farms understand and acknowledge that the offer and sale of OP Units have not been registered under the Securities Act or any state securities laws and are instead being offered and sold in reliance on an exemption from such registration requirements and that the Operating Partnership’s reliance on such exemption is predicated in part on the accuracy and completeness of the representations and warranties contained herein. The OP Units issuable to Pittman Hough Farms are being acquired by Pittman Hough Farms solely for its own account, for investment, and are not being acquired with a view to, or for resale in connection with, any distribution, subdivision or fractionalization thereof in violation of such laws, and each such holder does not have any present intention to enter into any contract, undertaking, agreement or arrangement with respect to any such resale.

 

(c)                                  Pittman Hough Farms is able to bear the economic risk of holding the OP Units for an indefinite period and is able to afford the complete loss of its acquisition of the OP Units.

 

(d)                                 Pittman Hough Farms understands that no federal agency (including the SEC) or state agency has made or will make any finding or determination as to the fairness of acquiring the OP Units (including as to the value of the consideration payable in OP Units).

 

(e)                                  Pittman Hough Farms understands that there is no established public, private or other market for the OP Units and it is not anticipated that there will be any public, private or other market for such OP Units in the foreseeable future.

 

(f)                                   Pittman Hough Farms understands that Rule 144 promulgated under the Securities Act is not currently available with respect to the sale of OP Units.

 

Section 4.16.                          NO BROKER. FP Land has not entered into, and it covenants that it will not enter into, any agreement, arrangement or understanding with any Person or firm which will result in the obligation of the Operating Partnership or any Affiliate to pay any finder’s fee, brokerage commission or similar payment in connection with the transaction contemplated by this Agreement (other than underwriting discounts, commissions and other fees and expenses to be paid by the REIT in connection with the Offering and any related financing transactions).

 

Section 4.17.                          OWNERSHIP OF CERTAIN ASSETS. Neither FP Land nor any of the FP Land Subsidiaries owns any loan assets or other securities of any person except for equity interests in other FP Land Subsidiaries.

 

Section 4.18.                          NO OTHER REPRESENTATIONS OR WARRANTIES. Other than the representations and warranties expressly set forth in this Article IV and the Representation, Warranty and Indemnity Agreement and any other agreement entered into by FP Land or Pittman Hough Farms in connection with the Formation Transactions, FP Land and Pittman Hough Farms shall not be deemed to have made any other representation or warranty in connection with this Agreement or the transactions contemplated hereby.

 

13

 

Section 4.19.                          SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The parties hereto agree and acknowledge that the representations and warranties set forth in this Article IV (other than those set forth in the Representation, Warranty and Indemnification Agreement) shall not survive the Closing.

 

ARTICLE 5

 

COVENANTS AND OTHER AGREEMENTS

 

Section 5.1.                                 PRE-CLOSING COVENANTS. During the period from the date hereof to the Closing Date (except (i) for the repayment of certain indebtedness as described in the notes to the audited financial statements of FP Land, (ii) as otherwise provided for or contemplated by this Agreement or (ii) in connection with the Formation Transactions), FP Land shall use commercially reasonable efforts to, and shall cause each of the FP Land Subsidiaries to, conduct its businesses and operate and maintain the Properties in the ordinary course of business consistent with past practice, pay its debt obligations as they become due and payable, and use commercially reasonable efforts to preserve intact its current business organizations and preserve its relationships with customers, tenants, suppliers, advertisers and others having business dealings with it, in each case consistent with past practice. In addition, and without limiting the generality of the foregoing, during the period from the date hereof to the Closing Date and except in connection with the Formation Transactions, FP Land shall not, and shall not permit any of the FP Land Subsidiaries to, without the prior written consent of the Operating Partnership, which consent may be withheld by the Operating Partnership in its sole discretion:

 

(a)                                 (i) other than distributions to the members of FP Land in connection with such members’ payment of any Taxes related to their ownership of the membership interest of FP Land or as otherwise contemplated by this Agreement, declare, set aside or pay any dividends or distributions in respect of any FP Land Interests, except in the ordinary course of business consistent with past practice and in accordance with the applicable governing document of FP Land, (ii) issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any FP Land Interests or make any other changes to the equity capital structure of FP Land or the FP Land Subsidiaries, or (iii) purchase, redeem or otherwise acquire any FP Land Interests or interests of the FP Land Subsidiaries or any other securities thereof;

 

(b)                                 issue, deliver, sell, transfer, dispose, mortgage, pledge, assign or otherwise encumber, or cause the issuance, delivery, sale, transfer, disposition, mortgage, pledge, assignment or otherwise encumbrance of, any limited liability company, partnership interests or other equity interests of FP Land or of the FP Land Subsidiaries or any other assets of FP Land or the FP Land Subsidiaries;

 

(c)                                  amend, modify or terminate any lease, contract or other instruments relating to the Property, except in the ordinary course of business consistent with past practice;

 

(d)                                 amend its certificate of formation and limited liability company agreement;

 

(e)                                  adopt a plan of liquidation, dissolution, merger, consolidation, restructuring, recapitalization or reorganization;

 

(f)                                   materially alter the manner of keeping FP Land’s or the FP Land Subsidiaries’ books, accounts or records or the accounting practices therein reflected;

 

(g)                                  make or change any material Tax elections; settle or compromise any claim, notice, audit report or assessment in respect of Taxes; change any annual Tax accounting period; adopt or

 

14

 

change any method of Tax accounting; file any amended Tax Return; enter into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing agreement relating to any Tax; surrender any right to claim a Tax refund; or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;

 

(h)                                 terminate or amend any existing insurance policies affecting any Property that results in a material reduction in insurance coverage for the Property;

 

(i)                                     knowingly cause or permit FP Land or any of the FP Land Subsidiaries to violate, or fail to use commercially reasonable efforts to cure any violation of, any applicable Laws;

 

(j)                                    take any action or fail to take any action the result of which would have an FP Land Material Adverse Effect; or

 

(k)                                 authorize, commit or agree to take any of the foregoing actions.

 

Section 5.2.                                 EFFORTS BY THE OPERATING PARTNERSHIP AND FP LAND. Each of the Operating Partnership and FP Land shall use its reasonable best efforts and cooperate with each other in (a) promptly determining whether any filings are required to be made or consents, approvals, waivers, permits or authorizations are required to be obtained (under any applicable Law or regulation or from any Governmental Authority or third party) in connection with the transactions contemplated by this Agreement, and (b) promptly making (or causing to be made) any such filings, in furnishing information required in connection therewith and in timely seeking to obtain any such consents, approvals, waivers, permits and authorizations.

 

Section 5.3.                                 CONSENT AND WAIVER OF RIGHTS UNDER ORGANIZATIONAL DOCUMENTS. As of the Closing, FP Land and Pittman Hough Farms waive and relinquish all rights and benefits otherwise afforded to FP Land (a) under its Organizational Documents including, without limitation, any rights of appraisal, rights of first offer or first refusal, buy/sell agreements, put, option or similar parallel exit or dissenter rights in connection with the Formation Transactions and the Offering, and any right to consent to or approve of the sale or contribution or other transaction undertaken by any equity holder of FP Land of their FP Land Interests to the REIT or any Affiliate thereof and any and all notice provisions related thereto and (b) for claims against the REIT or the Operating Partnership for breach by any of their respective present or former officers, directors, managing members, general partners or Affiliates of their fiduciary duties or similar obligations (including duties of disclosure) to any of their respective present or former shareholders, members, partners, equity interest holders or Affiliates or the terms of any applicable Organizational Documents. FP Land and Pittman Hough Farms acknowledge that the agreements contained herein and the transactions contemplated hereby and any actions taken in contemplation of the transactions contemplated hereby may conflict with, and may not have been contemplated by, the Organizational Documents of FP Land or other agreements among one or more holders of FP Land Interests or one or more of the members of FP Land. With respect to FP Land and each Property in which the FP Land Interests represent a direct or indirect interest, FP Land hereby expressly gives all consents (and any consents necessary to authorize the proper parties in interest to give all consents) and waivers it is entitled to give that are necessary or desirable to facilitate the contribution or other Formation Transactions relating to FP Land or such Property. In addition, FP Land and Pittman Hough Farms agree that if the transactions contemplated hereby occur, this Agreement shall be deemed to be an amendment to the Organizational Documents of FP Land to the extent the terms herein conflict with the terms thereof, including without limitation, terms with respect to allocations, distributions and the like such that any apparent conflict shall be resolved in favor of the terms hereof. In the event the transactions contemplated by this Agreement do not occur, nothing in this Agreement shall be deemed to be or construed as an amendment or modification of, or commitment of any kind to amend or modify, the

 

15

 

Organizational Documents of FP Land, which shall, in that event, remain in full force and effect without modification.

 

Section 5.4.                                 FACILITATION OF THE MERGER. From the date of this Agreement until the earlier to occur of the Closing or the termination of this Agreement in accordance with the terms set forth herein, each of FP Land and Pittman Hough Farms shall not take and shall not fail to take, nor agree or commit to take or fail to take, any action that would reasonably be expected to, individually or in the aggregate, prevent, materially delay or materially impede the consummation of the Merger, the IPO, the Formation Transactions or the other transactions contemplated by this Agreement.

 

Section 5.5.                                 IPO.  FP Land and Pittman Hough Farms hereby irrevocably and unconditionally waive any consent, condition or other similar right to approve or delay the closing of the IPO.

 

Section 5.6.                                 ALTERNATE TRANSACTION. In the event that the Operating Partnership determines that a structure change is necessary, advisable or desirable, the Operating Partnership may elect, in its sole and absolute discretion, to effect an Alternate Transaction (subject to the limitations in the definition thereof), without the need for the Operating Partnership to seek any further consent or action from FP Land or Pittman Hough Farms, and each of FP Land and Pittman Hough Farms shall, and it shall cause its partners and Subsidiaries to, enter into such agreements as shall be necessary to consummate an Alternate Transaction. In the event that an Alternate Transaction is used to effect the transactions contemplated by this Agreement, then the Operating Partnership may elect to terminate this Agreement without any liability or obligation to any Person.

 

ARTICLE 6

 

GENERAL PROVISIONS

 

Section 6.1.                                 NOTICES. All notices and other communications under this Agreement shall be in writing and shall be deemed given when (a) delivered personally, (b) five (5) Business Days after being mailed by certified mail, return receipt requested and postage prepaid, (c) one (1) Business Day after being sent by a nationally recognized overnight courier or (d) transmitted by facsimile if confirmed within twenty-four (24) hours thereafter by a signed original sent in the manner provided in clauses (a), (b) or (c) 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, Colorado 80031

Facsimile: (720) 398-3328

Attention: Chief Executive Officer

 

(b)                                 if to FP Land :

 

FP Land LLC

8670 Wolff Court Suite 240

Westminster, Colorado 80031

Facsimile: (720) 398-3328

Attention: Paul A. Pittman

 

16

 

Section 6.2.                                 DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings.

 

(a)                                 “Accredited Investor” has the meaning set forth under Regulation D of the Securities Act.

 

(b)                                 “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.

 

(c)                                  “Alternate Transaction” means any transaction structure, other than that contemplated by this Agreement, pursuant to which the REIT, the Operating Partnership or any of their Subsidiaries acquire all or a portion of the interests in FP Land or the assets held directly or indirectly by FP Land in a transaction pursuant to which each holder of FP Land Interests receives the number of OP Units that were to be received by such holder pursuant to this Agreement (or a portion thereof equal in value to the value of the portion of such assets acquired by the REIT, the Operating Partnership or any of their Subsidiaries pursuant to such Alternate Transaction); provided, that such structure will not (i) result in a breach of FP Land’s or any applicable FP Land Subsidiary’s governing documents and (ii) would not give rise to dissenters’ or appraisal rights by the members of FP Land, unless such rights have fully waived by all such members in the Consent Forms.

 

(d)                                 “Business Day” means any day that is not a Saturday, Sunday or legal holiday in the State of Delaware.

 

(e)                                  “Code” means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated or issued thereunder.

 

(f)                                   “Environmental Laws” means all federal, state and local Laws governing pollution or the protection of human health or the environment.

 

(g)                                  “Formation Transaction Documentation” means all of the agreements (including this Agreement) and related documents (substantially in the forms identified in Exhibits C, D and E attached hereto) pursuant to which all of the FP Land Interests are to be acquired by the Operating Partnership, directly or indirectly, as part of the Formation Transactions.

 

(h)                                 “Formation Transactions” means the transactions contemplated by this Agreement.

 

(i)                                     “FP Land Material Adverse Effect” means any material adverse change in the assets, business, condition (financial or otherwise), results of operation or prospects of FP Land, the FP Land Subsidiaries or the Properties, taken as a whole.

 

(j)                                    “Governmental Authority” means any government or agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

 

(k)                                 “IPO Closing Date” means the closing date of the IPO.

 

17

 

(l)                                     “Knowledge” means, (i) with respect to a representation of the Operating Partnership, the current, actual knowledge of the Operating Partnership’s General Partner’s officer, after reasonable due inquiry and (ii) with respect to FP Land or Pittman Hough Farms, the current, actual knowledge of FP Land’s and Pittman Hough Farms members and managers, after reasonable due inquiry.

 

(m)                             “Laws” means laws, statutes, rules, regulations, codes, orders, ordinances, judgments, injunctions, decrees and policies of any Governmental Authority, including, without limitation, zoning, land use or other similar rules or ordinances.

 

(n)                                 “Liens” means all pledges, claims, liens, charges, restrictions, controls, easements, rights of way, exceptions, reservations, leases, licenses, grants, covenants and conditions, encumbrances and security interests of any kind or nature whatsoever.

 

(o)                                 “Lock-Up Agreement” means that certain Lock-Up Agreement, by and between the underwriters and certain investors of the REIT and/or the Operating Partnership in the form attached hereto as Exhibit B.

 

(p)                                 “Offering Document” means the final prospectus filed by the REIT with the SEC in connection with the IPO.

 

(q)                                 “OP Material Adverse Effect” means any material adverse change in any of the assets, business, condition (financial or otherwise), results of operation or prospects of the Operating Partnership and each Operating Partnership Subsidiary, taken as a whole.

 

(r)                                    “Organizational Documents” means the certificate of formation, certificate of incorporation and bylaws, certificate of limited partnership and limited partnership agreement, limited liability company agreement or operating agreement, of FP Land or each FP Land Subsidiary, as applicable.

 

(s)                                   “Person” means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity.

 

(t)                                    “Registration Rights Agreement” means that certain Registration Rights Agreement, by and among the REIT, the Operating Partnership and Pittman Hough Farms in the form attached hereto as Exhibit E.

 

(u)                                 “Right of First Offer Agreements” means (i) that certain Right of First Offer Agreement by and between the Operating Partnership and Pittman Hough Farms in the form attached hereto as Exhibit D and (ii) that certain Right of First Offer Agreement by and between the Operating Partnership and Paul A. Pittman in the form attached hereto as Exhibit E.

 

(v)                                 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

(w)                               “Subsidiary” of any Person means any corporation, partnership, limited liability company, joint venture, trust or other legal entity of which such Person owns (either directly or through or together with another Subsidiary of such Person) either (i) a general partner, managing member or other similar interest, or (ii)(A) ten percent (10%) or more of the voting power of the voting capital stock or other equity interests, or (B) ten percent (10%) or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other legal entity.

 

18

 

(x)                                 “Tax” means all U.S. federal, state, local and foreign income, gross receipts, license, property, withholding, sales, franchise, employment, payroll, goods and services, stamp, environmental, customs duties, capital stock, social security, transfer, alternative minimum, excise and other taxes, tariffs or similar governmental charges, including estimated taxes, together with penalties, interest or additions to Tax with respect thereto, whether or not disputed.

 

(y)                                 “Tax Protection Agreement” means that certain Tax Protection Agreement by and among the REIT, the Operating Partnership and the other parties identified as signatories therein in the form attached hereto as Exhibit C.

 

(z)                                  “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

(aa)                          “Underwriting Agreement” means that certain underwriting agreement, by and among the REIT, the Operating Partnership and certain underwriters named therein, pursuant to which the REIT will issue and sell shares in the IPO.

 

Section 6.3.                                 COUNTERPARTS. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to each other party.

 

Section 6.4.                                 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement, the other Formation Transaction Documentation and the Representation, Warranty and Indemnity Agreement to which the parties hereto are a party, including, without limitation, the exhibits and schedules hereto and thereto, constitute the entire agreement and, supersede each prior agreement and understanding, whether written or oral, among the parties regarding the subject matter of this Agreement. This Agreement is not intended to confer any rights or remedies on any Person other than the parties hereto.

 

Section 6.5.                                 GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of any Laws that might otherwise govern under applicable principles of conflicts of laws thereof.

 

Section 6.6.                                 ASSIGNMENT. This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit of, the parties hereto and their respective heirs, legal representatives, successors and assigns; provided, however, that this Agreement may not be assigned (except by operation of law) by any party without the prior written consent of the other parties, and any attempted assignment without such consent shall be null and void and of no force and effect, except that the Operating Partnership may assign its rights and obligations hereunder to an Affiliate.

 

Section 6.7.                                 SEVERABILITY. Each provision of this Agreement will be interpreted so as to be effective and valid under applicable Law, but if any provision is held invalid, illegal or unenforceable under applicable Law in any jurisdiction, then such invalidity, illegality or unenforceability will not affect any other provision, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been included herein.

 

Section 6.8.                                 GUARANTY OF OBLIGATIONS.  Pittman Hough Farms hereby fully and irrevocably guarantees the performance of FP Land of all of its obligations hereunder and under the other Formation Transaction Documentation.

 

19

 

Section 6.9.                                 RULES OF CONSTRUCTION.

 

(a)                                 The parties hereto agree that they have had the opportunity to be represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any Law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.

 

(b)                                 The words “hereof,” “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” All terms defined in this Agreement shall have the defined meanings contained herein when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Unless explicitly stated otherwise herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time, amended, qualified or supplemented, including (in the case of agreements and instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.

 

Section 6.10.                          TIME OF THE ESSENCE. Time is of the essence with respect to all obligations under this Agreement.

 

Section 6.11.                          DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted for convenience only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

 

Section 6.12.                          NO PERSONAL LIABILITY CONFERRED. This Agreement shall not create or permit any personal liability or obligation on the part of any member, officer, director, partner, employee or shareholder of the REIT, Operating Partnership, Pittman Hough Farms or FP Land, other than as expressly provided herein.

 

Section 6.13.                          AMENDMENTS. This Agreement may be amended by appropriate instrument, without the consent of FP Land, at any time prior to the Effective Time; provided that no such amendment, modification or supplement shall be made that alters the amount or changes the form of the consideration to be delivered to FP Land without the prior written consent of FP Land.

 

[SIGNATURE PAGES FOLLOW]

 

20

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective duly authorized officers or representatives, all as of the date first written above.

 

 

	
 
    	
FARMLAND   PARTNERS INC.,
    
	
 
    	
a   Maryland corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
Name:
    	
Paul   A. Pittman
    
	
 
    	
Title:
    	
Executive   Chairman, President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FARMLAND PARTNERS OPERATING PARTNERSHIP, LP, a   Delaware limited partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
FARMLAND   PARTNERS OP GP, LLC, a Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
FARMLAND   PARTNERS INC.,
    
	
 
    	
 
    	
a   Maryland corporation
    
	
 
    	
Its:
    	
Sole   member
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
Name:
    	
Paul   A. Pittman
    
	
 
    	
Title:
    	
Executive   Chairman, President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
FP   LAND LLC,
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
Name:
    	
Paul   A. Pittman
    
	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
PITTMAN   HOUGH FARMS LLC,
    
	
 
    	
 
    	
a   Colorado limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul A. Pittman
    
	
 
    	
Name:
    	
Paul   A. Pittman
    
	
 
    	
Title:
    	
Manager
    
				

 

Signature Page to Merger Agreement

 

 

Schedule 4.1(b)

 

List of Subsidiaries/Properties

 

	
Subsidiary
    	
 
    	
Ownership
   Interest
    	
 
    	
Properties Owned
    	
 
    	
County, State
    
	
PH   Farms LLC
    	
 
    	
100
    	
%
    	
Pella   Bins and Tracks
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Pella   Bins and Tracks Grain Storage Facility
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Kaufman
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Cleer
    	
 
    	
Fulton, IL
    
	
 
    	
 
    	
 
    	
 
    	
Cleer   Gran Storage Facility
    	
 
    	
Fulton, IL
    
	
 
    	
 
    	
 
    	
 
    	
Big   Pivot
    	
 
    	
Mason, IL
    
	
 
    	
 
    	
 
    	
 
    	
Curless
    	
 
    	
Fulton, IL
    
	
 
    	
 
    	
 
    	
 
    	
Pumphouse   West
    	
 
    	
Schuyler, IL
    
	
 
    	
 
    	
 
    	
 
    	
Scripps
    	
 
    	
Schuyler, IL
    
	
 
    	
 
    	
 
    	
 
    	
Stelter
    	
 
    	
Mason, IL
    
	
 
    	
 
    	
 
    	
 
    	
Henninger
    	
 
    	
Schuyler, IL
    
	
 
    	
 
    	
 
    	
 
    	
John’s   Shop
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Tazewell
    	
 
    	
Tazewell, IL
    
	
 
    	
 
    	
 
    	
 
    	
Bardolph
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Symond
    	
 
    	
Mason, IL
    
	
 
    	
 
    	
 
    	
 
    	
Pella   Kelso
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Duncantown
    	
 
    	
Fulton, IL
    
	
 
    	
 
    	
 
    	
 
    	
Dilworth
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Weber
    	
 
    	
Schuyler, IL
    
	
 
    	
 
    	
 
    	
 
    	
Copes
    	
 
    	
Schuyler, IL
    
	
 
    	
 
    	
 
    	
 
    	
Smith
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Busch
    	
 
    	
Mason, IL
    
	
 
    	
 
    	
 
    	
 
    	
Pumphouse   East
    	
 
    	
Schuyler, IL
    
	
 
    	
 
    	
 
    	
 
    	
Adair   FS
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Ambrose
    	
 
    	
Mason, IL
    
	
 
    	
 
    	
 
    	
 
    	
Crabtree
    	
 
    	
Mason, IL
    
	
 
    	
 
    	
 
    	
 
    	
Heap
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Table   Grove
    	
 
    	
Fulton, IL
    
	
 
    	
 
    	
 
    	
 
    	
McFadden   MD
    	
 
    	
McDonough, IL
    
	
 
    	
 
    	
 
    	
 
    	
Parr
    	
 
    	
Fulton, IL
    
	
 
    	
 
    	
 
    	
 
    	
Skien
    	
 
    	
Fulton, IL
    
	
 
    	
 
    	
 
    	
 
    	
Estep
    	
 
    	
Mason, IL
    
	
 
    	
 
    	
 
    	
 
    	
McFadden   SC
    	
 
    	
Schuyler, IL
    

 

	
Subsidiary
    	
 
    	
Ownership
   Interest
    	
 
    	
Properties Owned
    	
 
    	
County, State
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cottonwood   Valley Land, LLC
    	
 
    	
100
    	
%
    	
Matulka
    	
 
    	
Butler,   NE
    
	
 
    	
 
    	
 
    	
 
    	
Matulka   Grain Storage Facility
    	
 
    	
Butler,   NE
    
	
 
    	
 
    	
 
    	
 
    	
Stanbra/Zeller
    	
 
    	
Butler,   NE
    
	
 
    	
 
    	
 
    	
 
    	
Zeagers
    	
 
    	
Butler,   NE
    
	
 
    	
 
    	
 
    	
 
    	
Kelly
    	
 
    	
Butler,   NE
    

 

 

Schedule 4.3

 

Capitalization

 

	
Owner
    	
 
    	
Ownership Interest
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Pittman Hough Farms LLC
    	
 
    	
100
    	
%
    

 

 

Schedule 4.11

 

Existing Loans

 

	
Loan
    	
 
    	
Principal Outstanding as of
   December 31, 2013
    	
 
    	
Interest  Rate
    	
 
    	
Maturity Date
    	
 
    
	
Multi-Property Loan
    	
 
    	
$
    	
34,500,000
    	
 
    	
2.80
    	
%
    	
March 2016
    	
 
    
	
John’s Shop
    	
 
    	
1,742,500
    	
 
    	
3.15
    	
 
    	
April 2043
    	
 
    
	
Matulka and Stanbra/Zeller
    	
 
    	
1,137,388
    	
 
    	
3.25
    	
 
    	
October 2032
    	
 
    
	
Zeagers
    	
 
    	
1,796,000
    	
 
    	
3.25
    	
 
    	
June 2016
    	
 
    
	
Tazewell
    	
 
    	
920,441
    	
 
    	
5.25
    	
 
    	
July 2030
    	
 
    
	
Merrill
    	
 
    	
787,285
    	
 
    	
4.90
    	
 
    	
December 2041
    	
 
    
	
Smith
    	
 
    	
688,000
    	
 
    	
4.00
    	
 
    	
April 2018
    	
 
    
	
Heap
    	
 
    	
528,748
    	
 
    	
4.95
    	
 
    	
September 2031
    	
 
    
	
Trone
    	
 
    	
469,732
    	
 
    	
3.15
    	
 
    	
November 2032
    	
 
    
	
Kelly
    	
 
    	
255,143
    	
 
    	
3.99
    	
 
    	
December 2027
    	
 
    
	
Secured Loan(1)
    	
 
    	
240,000
    	
 
    	
3.99
    	
 
    	
December 2021
    	
 
    
	
Total
    	
 
    	
$
    	
43,065,237
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(1)         Loan to be repaid prior to closing.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00228-of-00352.parquet"}]]