UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 2015
or
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
þ
¨
For the transition period from
from
to
Commission File Number: 0-261
Alico, Inc.
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
10070 Daniels Interstate Court Suite 100 Fort Myers, FL
(Address of principal executive offices)
59-0906081
(I.R.S. Employer
Identification No.)
33913
(Zip Code)
Registrant’s telephone number, including area code: 239-226-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of class:
COMMON CAPITAL STOCK, $1.00 Par value,
Non-cumulative
Name of each exchange on which registered:
NASDAQ
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that such registrant was required to file such reports), and
(2) has been subject to such filings requirements for the past 90 days. Yes þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 or Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definition of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act (Check one):
Large accelerated filer ¨
¨
Non-accelerated filer
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ No þ
Accelerated filer
Smaller Reporting Company
þ
¨
The aggregate market value of the voting and nonvoting common equity held by non-affiliates based on the closing price, as quoted
on the NASDAQ Global Market as of March 31, 2015 (the last business day of Alico’s most recently completed second fiscal quarter) was
$175,470,054. Solely for the purposes of this calculation, the registrant has elected to treat all executives, officers and greater than 10%
stockholders as affiliates of the registrant. There were 8,294,612 shares of common stock outstanding at December 4, 2015.
Portions of the Proxy Statement of Registrant for the 2016 Annual Meeting of Shareholders (to be filed with the Commission under
Regulation 14A within 120 days after the end of the Registrant's fiscal year), are incorporated by reference in Part III of this report.
Documents Incorporated by Reference:
ALICO, INC.
FORM 10-K
For the fiscal year ended September 30, 2015
Part I
Part II
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountants Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules
Signatures
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7
13
14
14
15
16
19
20
37
38
78
78
78
79
79
79
79
79
80
84
Cautionary Statement
This Annual Report on Form 10-K contains certain “forward-looking statements,” as such term is defined in Section 21E of the
Securities Exchange Act of 1934 (the “Exchange Act”). They are based on management’s current expectations and assumptions regarding
our business and performance, the economy and other future conditions and forecasts of future events, circumstances and results. These
forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking
statements often include words such as “may,” “will,” “could,” “should,” “would,” “believes,” “expects,” “anticipates”, “estimates”,
“projects,” “intends, “plans” and other words and terms of similar substance in connection with discussions of future operating or financial
performance. Such forward-looking statements include, but are not limited to, statements regarding future actions, business plans and
prospects, prospective products, trends, future performance or results of current and anticipated products, sales efforts, expenses, interest
rates, the outcome of contingencies, such as legal proceedings, plans relating to dividends, government regulations, the adequacy of our
liquidity to meet our needs for the foreseeable future and our expectations regarding market conditions.
As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in
circumstances. Our actual results may vary materially from those expressed or implied in our forward-looking statements. Should known or
unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from
past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.
We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or
otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Quarterly Reports on Form 10-
Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission ("SEC"). We provide in Item 1A, “Risk Factors,”
a cautionary discussion of certain risks and uncertainties related to our businesses. These are factors that we believe, individually or in the
aggregate, could cause our actual results to differ materially from expected and historical results. We note these factors for investors as
permitted by Section 21E of the Exchange Act. In addition, the operation and results of our business are subject to risks and uncertainties
identified elsewhere in this Annual Report on Form 10-K as well as general risks and uncertainties such as those relating to general
economic conditions. You should understand that it is not possible to predict or identify all such risks. Consequently, you should not
consider such discussion to be a complete discussion of all potential risks or uncertainties.
Item 1. Business.
Part 1
Alico, Inc. (“Alico”), together with its subsidiaries (collectively, the "Company", "we", "us" or "our") was incorporated under the
laws of the state of Florida in 1960. Our business and operations are described below. For detailed financial information with respect to
our business and our operations, see Management’s Discussion and Analysis of Financial Condition and Results of Operations which is
included in Item 7 in this Annual Report on Form 10-K, and the accompanying Consolidated and Combined Financial Statements and the
related Notes therein, which are included in Item 8. In addition, general information concerning our Company can be found on our website,
the internet address of which is www.alicoinc.com. All of our filings with the SEC including, but not limited to, the Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments thereto, are available free of charge on
our website as soon as reasonably practicable after such material is electronically filed or furnished with the SEC. In addition, you may
read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. To
obtain information on the operation of the Public Reference room, you may call the SEC at 1-800-SEC-0330. Our recent press releases and
information regarding corporate governance, including the charters of our audit, compensation, executive and nominating governance
committees, as well as our code of business conduct and ethics are also available to be viewed or downloaded electronically at
http://www.alicoinc.com. The information on our website is not part of this report or any other report we file with or furnish to the SEC.
Overview
Alico is an agribusiness and natural resources management company, backed by a legacy of achievement and innovation in citrus,
cattle and resource conservation. The Company owns approximately 121,000 acres of land in twelve Florida counties (Alachua, Charlotte,
Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Lee, Martin, Osceola and Polk) including approximately 90,000 acres of mineral
rights. Our principal lines of business are citrus groves, cattle ranching and conservation, and related support operations.
During the fiscal year ended September 30, 2015, the Company acquired three Florida citrus properties for total consideration of
approximately $363,000,000. These acquisitions make Alico one of the largest citrus producers in the United States, with total 2014-2015
production of approximately 10,500,000 boxes.
Our mission is to create value for our customers and stockholders by managing existing lands to their optimal current income and
total returns, opportunistically acquiring new agricultural assets and producing high quality agricultural products while exercising
responsible environmental stewardship.
We manage our land based upon its primary usage and review its performance based upon two primary classifications - Citrus
Groves and Ranch and Conservation. In addition, we operate an Agricultural Supply Chain Management business that is not tied directly to
our land holdings and Other Operations that include a citrus nursery, a leased mine and we lease oil extraction rights to third parties. We
present our financial results and the related discussion based upon our five business segments (Citrus Groves, Improved Farmland, Ranch
and Conservation, Agricultural Supply Chain Management and Other Operations).
Recent Developments
Orange-Co Acquisition
On December 2, 2014, we completed the acquisition of certain citrus and related assets of Orange-Co, LP (“Orange-Co”) pursuant
to an Asset Purchase Agreement, which we refer to as the "Orange-Co Purchase Agreement", dated as of December 1, 2014. The
acquisition included 51% of the ownership interests in Citree Holdings 1, LLC. The Company acquired Orange-Co to transform our citrus
business and meaningfully enhance the Company’s position in the citrus industry. The assets we purchased include approximately 21,000
acres of citrus groves in DeSoto and Charlotte Counties, Florida, which includes one of the largest contiguous citrus grove properties in the
state of Florida. Further discussion of the Orange-Co acquisition is contained in the Notes to the accompanying Consolidated and
Combined Financial Statements included in Item 8.
Sugarcane Disposition
On November 21, 2014, we sold approximately 36,000 acres of land used for sugarcane production and land leasing in in Hendry
County, Florida to Global Ag Properties USA LLC (“Global”) for approximately $97,900,000 in cash. We previously leased approximately
30,600 of these acres to United States Sugar Corporation (the "USSC Lease"). The USSC Lease was assigned
1
to Global in conjunction with the land sale. Net proceeds from the sugarcane land sale of approximately $97,126,000 were deposited with a
Qualified Intermediary in anticipation of the Orange-Co asset acquisition in a tax deferred like-kind exchange pursuant to Internal Revenue
Code Section 1031. As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and, as of November 21,
2014, the Improved Farmland segment was no longer material to our business. Further discussion of the sugarcane land sale is contained in
the Notes to the accompanying Consolidated and Combined Financial Statements included in Item 8.
Common Control Acquisition between the Company and 734 Citrus Holdings, LLC
Effective February 28, 2015, the Company completed the merger (the “Merger”) with 734 Citrus Holdings, LLC (“Silver Nip
Citrus”) pursuant to an Agreement and Plan of Merger with 734 Sub, LLC, a wholly-owned subsidiary of the Company, Silver Nip Citrus
and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. At the time of the Merger, the ownership of
Silver Nip Citrus was held by (i) 734 Agriculture, 74.89%, (ii) Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and (iii) an
entity controlled by Mr. Clay Wilson. 20.11%. Silver Nip Citrus entities include 734 Harvest, LLC, 734 Co-op Groves, LLC, 734 LMC
Groves, LLC and 734 BLP Groves, LLC. Further discussion of the Merger is contained in the Notes to the accompanying Consolidated and
Combined Financial Statements included in Item 8.
Water Storage Contract Approval
On December 11, 2014, the South Florida Water Management District (“SFWMD”) entered into a Dispersed Water Management
Program Northern Everglades Payment for Environmental Services Contract (the “Contract”) with the Company. The Contract term is
eleven years and allows up to one year for implementation (design, permitting, construction and construction completion certification) and
ten years of operation whereby the Company will provide water retention services. Payment for these services includes an amount not to
exceed $4,000,000 of reimbursement for implementation. In addition it provides for an annual fixed payment of $12,000,000 for operations
and maintenance costs as long as the project is in compliance with the Contract and subject to annual SFWMD Governing Board (the
“Board”) approval of funding. The Contract specifies that the Board has to approve the payments annually and there can be no assurance
that it will approve the annual fixed payments.
During the 2015 legislative session, the Governor of Florida vetoed the legislatively approved budget for dispersed water
management projects. Although SFWMD did not receive the state funds for the project payments for the next fiscal year (October 2015
through September 2016), it has options available to continue with the project.
As discussed above, the Contract between the Company and SFWMD provides that funding of the Contract is subject to the
SFWMD receiving funds for the project from the Florida Legislature and the SWFMD Governing Board budget appropriation.
The SFWMD budget process allows for amending the budget at any Governing Board meeting, which could allow for some
funding in fiscal year 2016. However, if no funds are provided and accommodation is not reached to delay work on the project until funds
are available, the SFWMD would be within its rights under the Contract to terminate.
Debt Refinancing
We entered into a First Amended and Restated Credit Agreement with Metropolitan Life Insurance Company and New England
Life Insurance Company (“Metlife Agreement”) under which they provided fixed rate and variable rate term loans in the initial aggregate
principal amount of $182,500,000 and revolving credit commitments of $25,000,000.
The Metlife Agreement amends and restates existing credit facilities, dated as of September 8, 2010 (as amended from time to
time, the “Prior Credit Agreement”) between the Company and Rabo AgriFinance, Inc. Under the Prior Credit Agreement, we had a
variable rate term loan in the initial principal amount of $40,000,000, of which $33,500,000 was outstanding at the date of refinancing and
$60,000,000 in undrawn revolving credit commitments.
Rabo AgriFinance, Inc. Credit Agreement
We entered into a Credit Agreement with Rabo AgriFinance, Inc. under which they have provided a $70,000,000 revolving
working capital line of credit for the Company.
Other Transactions
In September 2014, Silver Nip Citrus purchased a 1,500 acre citrus grove in Charlotte County, Florida for a purchase price of
approximately $17,130,000. The assets purchased included land and fruit inventory as well as irrigation and other
2
equipment. The purchase price was funded from Silver Nip Citrus’ cash and additional financing of $11,000,000 (see Note 5, “Debt” to the
accompanying Consolidated and Combined Financial Statements) in fixed rate term loans.
On July 1, 2014, Silver Nip Citrus sold a 2,800 acre parcel of land in Polk County, Florida for $5,623,000. This parcel was surplus
to the operations and was classified as held for sale. This sale was part of a like-kind exchange transaction intended to qualify for tax-
deferral treatment in accordance with Internal Revenue Code Section 1031 and the proceeds were used to purchase the 1,500 acre citrus
grove in Charlotte County, Florida.
The Land We Manage
We regularly review our land holdings to determine the best use of each parcel based upon our management expertise. Our total
return profile is a combination of operating income potential and long-term appreciation. Land holdings not meeting our total return criteria
are considered surplus to our operations and will be sold or exchanged for land considered to be more compatible with our business
objectives and total return profile.
Our land holdings and the operating activities in which we engage are categorized in the following table:
Citrus Groves
Citrus Groves
Improved Farmland
Leasable
Ranch and Conservation
Other Land
Total
Citrus Groves
Gross Acreage
Operating Activities
46,781 Citrus Cultivation
1,825 Leasing
70,962 Cattle Grazing; Sod and Native Plant Sales; Leasing; Conservation
1,870 Mining; Citrus Nursery
121,438
We own and manage Citrus Groves in DeSoto, Polk, Collier, Hendry, Charlotte, Highlands, Osceola, Martin, and Hardee Counties
and engage in the cultivation of citrus trees to produce citrus for delivery to the fresh and processed citrus markets. Citrus Groves total
approximately 46,800 gross acres or 38.5% of our land holdings.
Our citrus acreage is detailed in the following table:
Net Plantable
Producing
Developing
Fallow
Total
Plantable
Support
Gross
DeSoto County
Polk County
Collier County
Hendry County
Charlotte County
Highlands County
Osceola County
Martin County
Hardee County
Total
15,038
4,445
4,468
3,490
1,730
1,054
921
551
417
32,114
912
233
—
70
—
—
—
—
—
1,215
16,652
4,678
4,468
3,560
1,868
1,054
921
551
417
34,169
4,525
2,130
2,823
1,608
635
169
442
123
157
12,612
21,177
6,808
7,291
5,168
2,503
1,223
1,363
674
574
46,781
702
—
—
—
138
—
—
—
—
840
3
Of the approximately 46,800 gross acres of citrus groves we own and manage, approximately 12,600 acres are classified as
support acreage. Support acreage includes acres used for roads, barns, water detention, water retention and drainage ditches integral to the
cultivation of citrus trees but which are not capable of directly producing fruit. None of our citrus grove acreage is classified as available
for sale. The approximately 34,200 remaining acres are classified as net plantable acres. Net plantable acres are those that are capable of
directly producing fruit. These include acres that are currently producing, acres that are developing (acres that are planted in trees too
young to commercially produce fruit) and acres that are fallow.
Our Citrus Groves business segment cultivates citrus trees to produce citrus for delivery to the processed and fresh citrus markets.
Our sales to the processed market are approximately 92% of our citrus sales annually. We produce Early and Mid-Season varieties,
primarily Hamlin oranges, as well as a Valencia variety for the processed market. We deliver our fruit to the processors in boxes which
contain 90 pounds of oranges. Because the processors convert the majority of the citrus crop into orange juice, they generally do not buy
their citrus on a per box basis but rather on a pound solids basis, which is the measure of the soluble solids (sugars and acids) contained in
one box of citrus fruit. We produced approximately 62,200,000, 26,600,000 and 24,700,000 pound solids for each of the fiscal years ended
September 30, 2015, 2014 and 2013, respectively, on boxes delivered to processing plants of approximately 10,014,000, 4,146,000 and
3,867,000, respectively.
The average pound solids per box was 6.21, 6.44 and 6.40 for each of the fiscal years ended September 30, 2015, 2014 and 2013,
respectively.
We generally use multi-year contracts with citrus processors that include pricing structures based on a minimum (“floor”) price
with a price increase (“rise”) based on market conditions. Therefore, if pricing in the market is favorable relative to our floor price, we
benefit from the incremental difference between the floor and the final market price.
The majority of our citrus produced for the processed citrus market in fiscal year 2015-2016 will be under minimum price
contracts with a floor prices ranging from $1.60 to $2.00 per pound solids. We believe that other markets are available for our citrus
products; however, new arrangements may be less favorable than our current contracts.
Our sales to the fresh market constitute approximately 4% of our citrus sales annually. We produce numerous varieties to the fresh
fruit market including grapefruit, navel and other fresh varieties. Generally, our fresh fruit is sold to packing houses by the box and the
packing houses are responsible for the harvest and haul of these boxes. We produced approximately 466,000, 213,000 and 251,000 fresh
fruit boxes for each of the fiscal years ended September 30, 2015, 2014 and 2013, respectively. The majority of our citrus to be produced
for the fresh citrus market in fiscal year 2015-2016 is under fixed price contracts.
Revenues from our Citrus Groves operations were 91.2%, 60.0% and 43.0% of our total operating revenues for each of the fiscal
years ended September 30, 2015, 2014 and 2013, respectively.
Ranch and Conservation
We own and manage Ranch and Conservation land in Collier and Hendry Counties and engage in cattle production, sod and native
plant sales, land leasing for recreational and grazing purposes and conservation activities. Of our land holdings, Ranch and Conservation
totals approximately 70,962 gross acres or 58.4% of our total acreage.
Our Ranch and Conservation acreage is detailed in the following table as of September 30, 2015:
Hendry County
Collier County
Total
Acreage
66,940
4,022
70,962
We frequently lease the same acreage for more than one purpose. The portion of our Ranch and Conservation acreage that is
leased for each purpose is detailed in the table below:
Hendry County
Collier County
Grazing
Recreational
1,082
4,000
51,893
3,493
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Our cattle operation is engaged in the production of beef cattle and is located in Hendry and Collier Counties. The breeding herd
consisted of approximately 8,600 cows and bulls and we plan to increase the size of our herd in the near future to the extent practicable. We
primarily sell our calves to feed yards and yearling grazing operations in the United States. We also sell cattle through local livestock
auction markets and to contract cattle buyers in the United States. These buyers provide ready markets for our cattle. We believe that the
loss of any one or a few of these buyers would not have a material effect on our cattle operations. Revenues from our Ranch and
Conservation operations were 3.5%, 7.8% and 6.6% of total operating revenues for each of the fiscal years ended September 30, 2015, 2014
and 2013, respectively.
In the fourth quarter of fiscal year 2013, we granted an easement to the United States Department of Agriculture (“USDA”),
through its administering agency, The Natural Resources Conservation Service, on approximately 11,600 acres of our Ranch and
Conservation land located in Hendry County, resulting in a gain of approximately $20,300,000, which is recognized in other income, net in
the accompanying Consolidated and Combined Statements of Operations and Comprehensive Income.
Our Other Segments
In addition to owning and managing approximately 121,000 gross acres of land in Central and Southwest Florida, the Company
also engages in complimentary lines of business. Our Agricultural Supply Chain Management line of business includes activities related to
value-added services provided to Alico and other Florida growers including agricultural contracting for harvesting, hauling and marketing
and the purchase and resale of fruit. Our Other Operations lines of business also includes activities related to rock and sand mining, oil
exploration, a citrus nursery and other small lines of business.
Business Segments
Our operations include five business segments: Citrus Groves, Improved Farmland, Ranch and Conservation, Agricultural Supply
Chain Management and Other Operations.
•
•
•
•
•
Citrus Groves include activities related to planting, owning, cultivating and/or managing citrus groves in order to produce fruit for
sale to fresh and processed citrus markets.
Agricultural Supply Chain Management includes activities related to the purchase and resale of fruit, as well as, value-added
services which include contracting for the harvesting, marketing and hauling of citrus.
Improved Farmland includes activities related to owning and/or leasing improved farmland. Improved Farmland is acreage that
has been converted, or is permitted to be converted, from native pasture and which may have various improvements including
irrigation, drainage and roads. As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and, as
of November 21, 2014, the Improved Farmland segment was no longer material to our business.
Ranch and Conservation includes activities related to cattle grazing, sod, native plant and animal sales, leasing, management
and/or conservation of unimproved native pasture land.
Other Operations include activities related to a citrus nursery, rock mining royalties, oil exploration and other insignificant lines of
business.
Financial information and further discussion of our business segments are contained in the notes to the accompanying
Consolidated and Combined Financial Statements.
Our Strategy
Our core business strategy is to maximize stockholder value through continuously improving the return on our invested capital,
either by holding and managing our existing land through skilled agricultural production, leasing, or other opportunistic means of
monetization, disposing of under productive land or business units and/or acquiring new land or operations with appreciation potential.
Our objectives are to produce the highest quality agricultural products, create innovative land uses, opportunistically acquire and
convert undervalued assets, sell-under productive land not meeting our total return profile, generate recurring and sustainable profit with
the appropriate balance of risk and reward, and exceed the expectations of stockholders, customers, clients and partners.
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Our strategy is based on best management practices of our agricultural operations, environmental and conservation stewardship of
our land and natural resources. We manage our land in a sustainable manner and evaluate the effect of changing land uses while
considering new opportunities. Our commitment to environmental stewardship is fundamental to the Company’s core beliefs.
Competition
We are engaged in a variety of agricultural and nonagricultural activities, all of which are in highly competitive markets. Citrus is
grown domestically in several states including Florida, California, Arizona and Texas, as well as foreign countries, most notably Brazil.
Competition is impacted by several factors including quality, production, demand, brand recognition, market prices, weather, disease,
export/import restrictions and foreign currency exchange rates. Beef cattle are produced throughout the United States and domestic beef
sales also compete with imported beef. Forest and rock products are produced in many parts of the United States.
Environmental Regulations
Our operations are subject to various federal, state and local laws regulating the discharge of materials into the environment.
Management believes we are in compliance with all such rules including permitting and reporting requirements. Historically, compliance
with environmental regulations has not had a material impact on our financial position, results of operations or cash flows.
Management monitors environmental legislation and requirements and makes every effort to remain in compliance with such
regulations. In addition, we require lessees of our property to comply with environmental regulations as a condition of leasing.
Employees
As of September 30, 2015, we had 346 full-time employees. Our employees work in the following divisions:
Citrus Groves
Agricultural Supply Chain Management
Other Operations
Ranch and Conservation
Corporate, General, Administrative and Other
Total employees
Seasonal Nature of Business
245
41
27
3
30
346
Revenues from our agricultural business operations are seasonal in nature. The following table illustrates the seasonality of our
agri-business revenues:
Fiscal Year
Q1
Ending 12/31
Oct Nov Dec
Q2
Ending 3/31
Q3
Ending 6/30
Jan
Feb Mar Apr May
Jun
Q4
Ending 9/30
Jul Aug Sept
Harvest Early/Mid Varieties of Oranges
Harvest Valencia Oranges
Deliver Beef Cattle
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Capital resources and raw materials
Management believes that the Company will be able to meet its working capital requirements for at least the next 12 months, and
over the long term, through internally generated funds, cash flows from operations, our existing lines of credit and access to capital
markets. The Company has commitments that provide for lines of revolving credit that are available for our general and corporate use. Raw
materials needed to cultivate the various crops grown by the Company consist primarily of fertilizers, herbicides and fuel and are readily
available from local suppliers.
Available Information
We provide electronic copies of our SEC filings free of charge upon request. Any information posted on or linked from our
website is not incorporated by reference in this Annual Report on Form 10-K. The SEC also maintains a website at http://www.sec.gov,
which contains annual, quarterly and current reports, proxy and information statements and other information regarding issuers that file
electronically with the SEC.
Item 1A. Risk Factors.
Our business and results of operations are subject to numerous risks and uncertainties, many of which are beyond our
control. The following is a description of the known factors that we believe may materially affect our business, financial condition, results
of operations or cash flows. They should be considered carefully, in addition to the information set forth elsewhere in this Annual Report
on Form 10-K, including Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8,
Financial Statements and Supplementary Data, including the related Notes to the Consolidated and Combined Financial Statements in
making any investment decisions with respect to our securities. Additional risks or uncertainties that are not currently known to us that we
currently deem to be immaterial or that could apply to any company could also materially adversely affect our business, financial
condition, results of operations or cash flows.
Risks related to our Business
Our citrus groves are subject to damage and loss from disease including but not limited to citrus greening and citrus canker which
could negatively impact our business, financial condition, results of operations and cash flows.
Our citrus groves are subject to damage and loss from diseases such as citrus greening and citrus canker. Each of these diseases is
widespread in Florida and exists in our citrus groves and in the areas where our citrus groves are located. The success of our citrus business
is directly related to the viability and health of our citrus groves.
Citrus greening is one of the most serious citrus plant diseases in the world. Once a tree is infected, its productivity generally
decreases . While the disease poses no threat to humans or animals, it has devastated citrus crops throughout the United States and abroad.
Named for its green, misshapen fruit, citrus greening disease has now killed millions of citrus plants in the southeastern United States and
has spread across the entire country. Infected trees produce fruits that are green, misshapen and bitter, unsuitable for sale as fresh fruit or
for juice. Infected trees can die within a few years. At the present time, there is no known cure for citrus greening once trees are infected.
Primarily as a result of citrus greening, according to a forecast by the U.S. Department of Agriculture, Florida is expected to have its
smallest orange harvest in 52 years in the upcoming 2015-2016 harvest season.
Citrus canker is a disease affecting citrus species and is caused by a bacterium and is spread by contact with infected trees or by
windblown transmission. There is no known cure for citrus canker at the present time although some management practices including the
use of copper-based bactericides can mitigate its spread and lessen its effect on infected trees; however, there is no assurance that available
technologies to control such disease will be effective.
Both of these diseases pose a significant threat to the Florida citrus industry and to our citrus groves. While we use best
management practices to attempt to control diseases and their spread, there can be no assurance that our mitigation efforts will be
successful. These diseases can significantly increase our costs which could materially adversely affect our business, financial condition,
results of operations and cash flows. Our citrus groves produce a significant majority of our annual operating revenues and a significant
reduction in available citrus from our citrus groves could decrease our operating revenues and materially adversely affect our business,
financial condition, results of operations and cash flows.
7
Our agricultural products are subject to supply and demand pricing which is not predictable.
Agricultural operations traditionally provide almost all of our operating revenues with citrus being the largest portion and are
subject to supply and demand pricing. While according to Nielsen data consumer demand for orange juice has decreased significantly to its
lowest level in almost a decade, we have been able to offset the impact of such decline with higher prices based on a lower supply of
available oranges. However, there can be no assurance that we will be able to continue to do so if demand continues to decline. Although
our processed citrus is subject to minimum pricing we are unable to predict with certainty the final price we will receive for our products.
In some instances the harvest and growth cycle will dictate when such products must be marketed which may or may not be advantageous
in obtaining the best price. Excessive supplies tend to cause severe price competition and lower prices for the commodity affected. Limited
supply of certain agricultural commodities due to world and domestic market conditions can cause commodity prices to rise in certain
situations. We attempt to mitigate these risks by using contracts with citrus processors that include pricing structures based on a minimum
(“floor”) price and with a price increase (“rise”) if market prices exceed the floor price. As a result, our profitability may be subject to
significant variability.
Our citrus groves are geographically concentrated and the effects of adverse weather conditions could adversely affect our results of
operations and financial position.
Our citrus operations are concentrated in central and south Florida with our groves located in parcels in DeSoto, Polk, Collier,
Hendry, Charlotte, Highlands, Osceola, Martin and Hardee Counties. Because our groves are located in close proximity to each other, the
impact of adverse weather conditions may be material to our results of operations. Florida is particularly susceptible to the occurrence of
hurricanes. Depending on where any particular hurricane makes landfall, our properties could experience significant, if not catastrophic
damage. Hurricanes have the potential to destroy crops, affect cattle breeding and impact citrus production through the loss of fruit and
destruction of trees and/or plants either as a result of high winds or through the spread of windblown disease. Such damage could
materially affect our citrus and cattle operations and could result in a loss of operating revenues from those products for a multi-year period.
We seek to minimize hurricane risk by the purchase of insurance contracts, but the majority of our crops remain uninsured. In addition to
hurricanes, the occurrence of other natural disasters and climate conditions in Florida, such as tornadoes, floods, freezes, unusually heavy
or prolonged rain, droughts and heat waves, could have a material adverse effect on our operations and our ability to realize income from
our crops or cattle.
A significant and increasing portion of our revenues are derived from our citrus business and any adverse event affecting such business
could disproportionately harm our business.
Our revenues from our citrus business were approximately 91.2%, 60.0% and 42.9%, of our operating revenues in fiscal years
2015, 2014 and 2013, respectively. As a result of our recently announced acquisitions of three Florida citrus properties and the disposition
of our sugarcane lands, the percentage of our operating revenues derived from our citrus business has increased significantly. These
acquisitions resulted in our citrus division being one of the largest citrus producers in the United States and since we will not be as
diversified as we have been previously, we will be more vulnerable to adverse events or market conditions affecting our citrus business
which could have a significant impact on our overall business results.
We maintain a significant amount of indebtedness which could adversely affect our financial condition, results of operations or cash
flows and may limit our operational and financing flexibility and negatively impact our business.
In fiscal year 2015, we initially obtained $182,500,000 in aggregate principal amount of term loans and $25,000,000 in revolving
credit commitments from Metropolitan Life Insurance Company and New England Life Insurance Company as well as $70,000,000 in
aggregate principal amount of revolving credit commitments from Rabo AgriFinance, Inc. which we used in part to finance our recent
Orange-Co acquisition. Our new loan agreements, and other debt instruments we may enter into in the future, may have negative
consequences to us and could limit our business because we will use a substantial portion of our cash flows from operations to pay debt
service costs which will reduce the funds available to us for corporate and general expenses and it may make us more vulnerable to
economic downturns and adverse developments in our business. Our loan agreements require us to comply with various restrictive
covenants and some contain financial covenants that require us to comply with specified financial ratios and tests. Our failure to meet these
covenants could result in default under these loan agreements and would result in a cross-default under other loan agreements. In the event
of a default and our inability to obtain a waiver of the default, all amounts outstanding under loan agreements could be declared
immediately due and payable. Our new loan agreements also contain various covenants that limit our ability to engage in specified types of
transactions. We expect that we will depend primarily upon our citrus operations to provide funds to pay our corporate and general
expenses and to pay any amounts that may become due under any credit facilities and any other indebtedness we may incur and there are
factors beyond our control that could negatively affect our citrus business revenue stream. Our ability to make these payments depends on
our future performance, which will be affected by various financial, business, macroeconomic and other factors, many of which we cannot
control.
8
If we are unable to successfully develop and execute our strategic growth initiatives, or if they do not adequately address the challenges
or opportunities we face, our business, financial condition and prospects may be adversely affected.
Our success is dependent in part on our ability to identify, develop and execute appropriate strategic growth initiatives that will
enable us to achieve sustainable growth in the long term. The implementation of our strategic initiatives is subject to both the risks affecting
our business generally and the inherent risks associated with implementing new strategies. These strategic initiatives may not be successful
in generating revenues or improving operating profit and, if they are, it may take longer than anticipated. As a result and depending on
evolving conditions and opportunities, we may need to adjust our strategic initiatives and such changes could be substantial, including
modifying or terminating one or more of such initiatives. Termination of such initiatives may require us to write down or write off the
value of our investments in them. Transition and changes in our strategic initiatives may also create uncertainty in our employees,
customers and partners that could adversely affect our business and revenues. In addition, we may incur higher than expected or
unanticipated costs in implementing our strategic initiatives, attempting to attract revenue opportunities or changing our strategies. There is
no assurance that the implementation of any strategic growth initiative will be successful, and we may not realize anticipated benefits at
levels we project or at all, which would adversely affect our business, financial condition and prospects.
Our agricultural operations are subject to water use regulations restricting our access to water.
Our operations are dependent upon the availability of adequate surface and underground water. The availability of water is
regulated by the state of Florida through water management districts which have jurisdiction over various geographic regions in which our
lands are located. Currently, we have permits in place for the next 15 to 20 years for the use of underground and surface water which are
adequate for our agricultural needs.
Surface water in Hendry County, where much of our agricultural land is located, comes from Lake Okeechobee via the
Caloosahatchee River and a system of canals used to irrigate such land. The Army Corps of Engineers controls the level of Lake
Okeechobee and ultimately determines the availability of surface water even though the use of water has been permitted by the state of
Florida through the water management district. The Army Corps of Engineers decided in 2010 to lower the permissible level of Lake
Okeechobee in response to concerns about the ability of the levee surrounding the lake to restrain rising waters which could result from
hurricanes. Changes in availability of surface water use may result during times of drought, because of lower lake levels and could
materially adversely affect our agricultural operations, financial position, results of operations and cash flows.
Our recent acquisitions of three Florida citrus properties and the acquisition of additional agricultural assets and other businesses
could pose risks.
We seek to opportunistically acquire new agricultural assets from time to time that we believe would complement our business. In
fiscal year 2015, we acquired three Florida citrus properties, including Orange-Co and Silver Nip Citrus, that results in our citrus division
being one of the largest citrus producers in the United States. While we expect that our acquisitions will successfully complement our
business, we may fail to realize all of the anticipated benefits of these acquisitions which could reduce our anticipated results. We cannot
assure you that we will be able to successfully identify suitable acquisition opportunities, negotiate appropriate acquisition terms, obtain
any financing that may be needed to consummate such acquisitions or complete proposed acquisitions. Acquisitions by us could result in
accounting changes, potentially dilutive issuances of equity securities, increased debt and contingent liabilities, reduce the amount of cash
available for dividends, debt service payments, integration issues and diversion of management’s attention, any of which could adversely
affect our business, results of operations and financial condition. We may be unable to successfully realize the financial, operational, and
other benefits we anticipate from our acquisitions and our failure to do so could adversely affect our business, results of operation and
financial condition.
Dispositions of our assets may adversely affect our future results of operations.
We also routinely evaluate the benefits of disposing of certain of our assets which could include the exit from lines of business.
For example, in November of 2014 we sold significant sugarcane assets and we are no longer involved in the sugarcane business. While
such dispositions increase the amount of cash available to us, it could also result in a potential loss of significant operating revenues and
income streams that we might not be able to replace, makes our business less diversified and could ultimately have a negative impact on
our results of operations and cash flows.
If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable, we may face adverse consequences,
and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred
basis.
9
From time to time we dispose of properties in transactions that are intended to qualify as Section 1031 Exchanges. It is possible
that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable
and we could also be required to pay interest and penalties. As a result, we may be required to borrow funds in order to pay additional
property taxes, and the payment of such taxes could cause us to have less cash available. Moreover, it is possible that legislation could be
enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or not possible for
us to dispose of properties on a tax deferred basis.
We may undertake one or more significant corporate transactions that may not achieve their intended results, may adversely affect our
financial condition and our results of operations or result in unforeseeable risks to our business.
We continuously evaluate the acquisition or disposition of operating businesses and assets and may in the future undertake one or
more significant transactions. Any such acquisitive transaction could be material to our business and could take any number of forms,
including mergers, joint ventures and the purchase of equity interests. The consideration for such acquisitive transactions may include,
among other things, cash, common stock or equity interests in us or our subsidiaries, or a contribution of property or equipment to obtain
equity interests, and in conjunction with a transaction we might incur additional indebtedness. We also routinely evaluate the benefits of
disposing of certain of our assets. Such dispositions could take the form of asset sales, mergers or sales of equity interests.
These transactions may present significant risks such as insufficient assets to offset liabilities assumed, potential loss of significant
operating revenues and income streams, increased or unexpected expenses, inadequate return of capital, regulatory or compliance issues,
the triggering of certain financial covenants in our debt instruments (including accelerated repayment) and unidentified issues not
discovered in due diligence. In addition, such transactions could distract management from current operations. As a result of the risks
inherent in such transactions, we cannot guarantee that any such transaction will ultimately result in the realization of its anticipated
benefits or that it will not have a material adverse impact on our business, financial condition or results of operations. If we were to
complete such an acquisition, disposition, investment or other strategic transaction, we may require additional debt or equity financing that
could result in a significant increase in our amount of debt and our debt service obligations or the number of outstanding shares of our
common stock, thereby diluting holders of our common stock outstanding prior to such acquisition.
We are subject to the risk of product contamination and product liability claims.
The sale of agricultural products for human consumption involves the risk of injury to consumers. Such injuries may result from
tampering by unauthorized third parties, product contamination or spoilage, including the presence of foreign objects, substances,
chemicals, other agents, or residues introduced during the growing, storage, handling or transportation phases. While we are subject to
governmental inspection and regulations and believe our facilities comply in all material respects with all applicable laws and regulations,
we cannot be sure that our agricultural products will not cause a health-related illness in the future or that we will not be subject to claims or
lawsuits relating to such matters. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding
any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our
corporate and brand image. Moreover, claims or liabilities of this sort might not be covered by our insurance or by any rights of indemnity
or contribution that we may have against others. We maintain product liability insurance, however, we cannot be sure that we will not incur
claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage.
Changes in immigration laws could impact our ability to harvest our crops.
We engage third parties to provide personnel for our harvesting operations. The availability and number of such workers is subject
to decrease if there are changes in the U.S. immigration laws. The scarcity of available personnel to harvest our agricultural products could
cause harvesting costs to increase or could lead to the loss of product that is not timely harvested which could have a material adverse
effect to our citrus grove business, financial condition, results of operations and cash flows.
Changes in demand for our agricultural products can affect demand and pricing of such products.
The general public's demand for particular food crops we grow and sell could reduce prices for some of our products. To the
extent that consumer preferences evolve away from products we produce and we are unable to modify our products or develop products that
satisfy new customer preferences, there could be a decrease in prices for our products. Even if market prices are unfavorable, produce items
which are ready to be or have been harvested must be brought to market. Additionally, we have
10
significant investments in our citrus groves and cannot easily shift to alternative crops for this land. A decrease in the selling price received
for our products due to the factors described above could have a material adverse effect on our business.
Our citrus grove business is seasonal.
Our citrus groves produce the majority of our annual operating revenues and the citrus grove business is seasonal because it is tied
to the growing and picking seasons. Historically, the second and third quarters of our fiscal year generally produce the majority of our
annual revenues, and our working capital requirements are typically greater in the first and fourth quarters of our fiscal year coinciding with
our planting cycles. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may
be achieved for the full fiscal year or in future quarters. If our operating revenues in the second and third quarters are lower than expected,
it would have a disproportionately large adverse impact on our annual operating results.
We face significant competition in our agricultural operations.
We face significant competition in our agricultural operations both from domestic and foreign producers and do not have any
branded products. Foreign growers generally have an equal or lower cost of production, less environmental regulation and in some
instances, greater resources and market flexibility than us. Because foreign growers have greater flexibility as to when they enter the U.S.
market, we cannot always predict the impact these competitors will have on our business and results of operations. The competition we
face from foreign suppliers of orange juice is mitigated by a governmentally imposed tariff on orange imports. A change in the
government’s reduction in the orange juice tariff could adversely impact our results of operations.
Climate change, or legal, regulatory, or market measures to address climate change, may negatively affect our business and operations.
There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on
global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event that such
climate change has a negative effect on the productivity of our citrus groves, it could have an adverse impact on our business and results of
operations. The increasing concern over climate change also may result in more regional, federal, and/or global legal and regulatory
requirements to reduce or mitigate the effects of greenhouse gases. In the event that such regulation is enacted, we may experience
significant increases in our costs of operations. In particular, increasing regulation of fuel emissions could substantially increase the
distribution and supply chain costs associated with our products. As a result, climate change could negatively affect our business and
operations.
We benefit from reduced real estate taxes due to the agricultural classification of a majority of our land. Changes in the classification
or valuation methods employed by county property appraisers could cause significant changes in our real estate tax liabilities.
In the fiscal years ended September 30, 2015, 2014 and 2013, we paid approximately $4,054,000, $2,291,000 and $2,196,000 in
real estate taxes, respectively. These taxes were based upon the agricultural use (“Green Belt”) values determined by the county property
appraiser in which counties we own land, of $123,617,000, $74,105,000 and $69,687,000 for each of the fiscal years ended September 30,
2015, 2014 and 2013, respectively, which differs significantly from the fair values determined by the county property appraisers of
$652,891,000, $518,112,000 and $516,919,000. Changes in state law or county policy regarding the granting of agricultural classification
or calculation of Green Belt values or average millage rates could significantly impact our results of operations, cash flows and financial
position.
We manage our properties in an attempt to capture their highest and best use and customarily do not sell property until it no longer
meets our total return profile.
The goal for our land management program is to manage and selectively improve our lands for their most profitable use. We
continually evaluate our properties focusing on location, soil capabilities, subsurface composition, topography, transportation and
availability of markets for our crops, the climatic characteristics of each of the tracts, long-term capital appreciation and operating income
potential. While we are primarily engaged in agricultural activities, when land does not meet our total return profile, we may determine that
the property is surplus to our activities and place the property for sale or exchange.
11
Liability for the use of pesticides, herbicides and other potentially hazardous substances could increase our costs.
Our agricultural business involves the use of herbicides, fertilizers and pesticides, some of which may be considered hazardous or
toxic substances. We may be deemed liable and have to pay for the costs or damages associated with the improper application, accidental
release or the use or misuse of such substances. Our insurance may not be adequate to cover such costs or damages, or may not continue to
be available at a price or under terms that are satisfactory to us. In such cases, if we are required to pay significant costs or damages, it
could materially adversely affect our business, results of operations and financial condition.
Compliance with applicable environmental laws may substantially increase our costs of doing business which could reduce our profits.
We are subject to various laws and regulations relating to the operation of our properties, which are administered by numerous
federal, state and local governmental agencies. We face a potential for environmental liability by virtue of our ownership of real property. If
hazardous substances (including herbicides and pesticides used by us or by any persons leasing our lands) are discovered emanating from
any of our lands and the release of such substances presents a threat of harm to the public health or the environment, we may be held strictly
liable for the cost of remediation of these hazardous substances. In addition, environmental laws that apply to a given site can vary greatly
according to the site’s location, its present and former uses, and other factors such as the presence of wetlands or endangered species on the
site. Management monitors environmental legislation and requirements and makes every effort to remain in compliance with such
regulations. Furthermore, we require lessees of our properties to comply with environmental regulations as a condition of leasing. We also
purchase insurance for environmental liability when it is available; however, these insurance contracts may not be adequate to cover such
costs or damages or may not continue to be available at prices and terms that would be satisfactory. It is possible that in some cases the cost
of compliance with these environmental laws could exceed the value of a particular tract of land, make it unsuitable for use in what would
otherwise be its highest and best use, and/or be significant enough that it would materially adversely affect us.
Our business may be adversely affected if we lose key employees.
We depend to a large extent on the services of certain key management personnel. These individuals have extensive experience
and expertise in our business lines and segments in which they work. The loss of any of these individuals could have a material adverse
effect on our businesses. We do not maintain key-man life insurance with respect to any of our employees. Our success will be dependent
on our ability to continue to employ and retain skilled personnel in our business lines and segments.
Risks Related to our Common Stock
Our largest stockholder has effective control over the election of our Board of Directors and other matters.
734 Investors, LLC ("734 Investors") and its two controlling persons, Remy Trafelet and George Brokaw, together beneficially
own approximately 57.7% of our outstanding common stock as of December 1, 2015. Accordingly, by virtue of its ownership percentage,
734 Investors is able to elect all of our directors and officers, and has the ability to exert significant influence over our business and may
make decisions with which other stockholders may disagree, including, among other things, changes in our business plan, delaying,
discouraging or preventing a change of control of our Company or a potential merger, consolidation, tender offer, takeover or other
business combination. Additionally, potential conflicts of interest could exist when we enter into related party transactions with 734
Investors such as the Silver Nip Citrus merger we entered into on February 28, 2015. The terms of the merger were negotiated and
considered by a special committee comprised entirely of independent and disinterested members of our Board of Directors.
We are a “Controlled Company” under the NASDAQ Listing Rules and therefore are exempt from certain corporate governance
requirements, which could reduce the influence of independent directors.
We are a “Controlled Company” under NASDAQ listing rules, because more than 50% of the voting power of our outstanding
common stock is controlled by 734 Investors. As a consequence, we are exempt from certain NASDAQ requirements including the
requirement that:
•
•
Our Board of Directors be composed of a majority of independent
directors;
The compensation of our officers be determined by a majority of the independent directors or a compensation committee
composed solely of independent directors; and
12
•
Nominations to the Board of Directors be made by a majority of the independent directors or a nominations committee
composed solely of independent directors.
However, NASDAQ does require that our independent directors have regularly scheduled meetings at which only independent
directors are present. In addition, Internal Revenue Code Section 162(m) requires that a compensation committee of outside directors
(within the meaning of Section 162(m)) approve stock option grants to executive officers in order for us to be able to claim deductions for
the compensation expense attributable to such stock options. Notwithstanding the foregoing exemptions, we do have a majority of
independent directors on our Board of Directors and we do have an Audit Committee, a Compensation Committee and a Nominating and
Governance Committee composed primarily of independent directors.
Although we currently comply with certain of the NASDAQ listing rules that do not apply to controlled companies, our
compliance is voluntary, and there can be no assurance that we will continue to comply with these standards in the future. If in the future
our Board of Directors elects to rely on the exemptions permitted by the NASDAQ listing standards and reduce the number or proportion
of independent directors on our Board and its committees, the influence of independent directors would be reduced.
Sales of substantial amounts of our outstanding common stock by our largest stockholder could adversely affect the market price of our
common stock.
Our largest stockholder, 734 Investors, beneficially owns approximately 57.7% of our outstanding common stock as of December
1, 2015. Our common stock is thinly traded and our common stock prices can fluctuate significantly. As such, sales of substantial amounts
of our common stock into the public market by 734 Investors or perceptions that significant sales could occur, could adversely affect the
market price of our common stock.
Our common stock has low trading volume.
Although our common stock trades on the NASDAQ Global Market, it is thinly traded and our average daily trading volume is
low compared to the number of shares of common stock we have outstanding. The low trading volume of our common stock can cause our
stock price to fluctuate significantly as well as make it difficult for you to sell your common shares quickly. As a result of our stock being
thinly traded and/or our low stock price, institutional investors might not be interested in owning our common stock.
We may not be able to continue to pay or maintain our cash dividends on our common stock and the failure to do so may negatively
affect our share price.
We have historically paid regular quarterly dividends to the holders of our common stock which dividends were reduced
beginning in the third fiscal quarter of 2014 in order to retain cash which increases our flexibility to reinvest in our business and pursue
growth opportunities consistent with our mission. Our ability to pay cash dividends depends on, among other things, our cash flows from
operations, our cash requirements, our financial condition, the degree to which we are/or become leveraged, contractual restrictions binding
on us, provisions of applicable law and other factors that our Board of Directors may deem relevant. There can be no assurance that we will
generate sufficient cash from continuing operations in the future, or have sufficient cash surplus or net profits to pay dividends on our
common stock. Our dividend policy is based upon our directors’ current assessment of our business and the environment in which we
operate and that assessment could change based on business developments (which could, for example, increase our need for capital
expenditures) or new growth opportunities. Our Board of Directors may, in its discretion, decrease the level of cash dividends or entirely
discontinue the payment of cash dividends. The reduction or elimination of cash dividends may negatively affect the market price of our
common stock.
There can be no assurance that we will continue to repurchase shares of our common stock.
In September 2015, our Board of Directors authorized the repurchase of up to 50,000 additional shares of the Company’s common
stock from stockholders beginning September 17, 2015 and continuing through December 31, 2016. Our share repurchase program does not
obligate us to repurchase any specific number of shares and may be suspended from time to time or terminated at any time prior to its
expiration. There can be no assurance that we will repurchase shares in the future in any particular amounts or at all. A reduction in, or
elimination of, share repurchases could have a negative effect on our share price.
Item 1B. Unresolved Staff Comments.
None.
13
Item 2. Properties.
As of September 30, 2015, we owned approximately 121,000 acres of land located in twelve counties in Florida. Acreage in each
county and the primary classification with respect to the present use of these properties is shown in the following table:
Total
Hendry
Polk
Collier
DeSoto
Glades
Lee Alachua Charlotte
Hardee
Highlands
Martin Osceola
46,781
5,168 6,808
7,291 21,177
— —
—
2,503
574
1,223
674
1,363
46,781
5,168 6,808
7,291 21,177
— —
—
2,503
574
1,223
674
1,363
Citrus Groves
Citrus
Groves
Total
Citrus
Groves
Improved
Farmland:
Irrigated
1,825
1,825 —
—
—
— —
—
—
—
—
—
—
Ranch Land
and
Conservation
Commercial
Mining
Other
Total
70,962 66,940 —
— —
— —
957 —
—
—
—
—
121,438 74,890 6,808 11,313 21,177
4,022
—
—
—
2
526
1,342
— —
—
2
526 —
— —
2
526
—
—
—
385
385
—
—
—
—
2,503
—
—
—
—
574
—
—
—
—
1,223
—
—
—
—
674
—
—
—
—
1,363
Approximately 60,776 acres of the properties listed are encumbered by credit agreements totaling approximately $205,881,000 as
of September 30, 2015. For a more detailed description of the credit agreements and collateral please see Note 5, “Debt” in the
accompanying Notes to the Consolidated and Combined Financial Statements.
We currently collect mining royalties on approximately 526 acres of land located in Glades County, Florida. These royalties do not
represent a significant portion of our operating revenues or gross profits. We are seeking permits to develop an additional mine on
approximately 850 acres in Hendry County to be used as a sand mine. Approximately 2,800 acres in Collier County may be suitable for a
rock mine. We are not currently pursuing permits for the Collier County mine. The Hendry County parcel is currently classified as ranch
land, while the Collier County parcel is classified as citrus.
Item 3. Legal Proceedings.
On March 11, 2015, a putative stockholder class action lawsuit captioned Shiva Y. Stein v. Alico, Inc., et al., No. 15-CA-000645
(the “Stein lawsuit”), was filed in the Circuit Court of the Twentieth Judicial District in and for Lee County, Florida, against Alico, Inc.
(“Alico”), its current and certain former directors, 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus (“Silver Nip”), 734 Investors, LLC
(“734 Investors”), 734 Agriculture, LLC (“734 Agriculture”) and 734 Sub, LLC (“734 Sub”) in connection with the acquisition of Silver
Nip by Alico (the “Acquisition”). The complaint alleges that Alico’s directors at the time of the Acquisition, 734 Investors and 734
Agriculture breached fiduciary duties to Alico stockholders in connection with the Acquisition and that Silver Nip and 734 Sub aided and
abetted such breaches. The lawsuit seeks, among other things, monetary and equitable relief, costs, fees (including attorneys’ fees) and
expenses.
On May 6, 2015, a putative stockholder class action and derivative lawsuit captioned Ruth S. Dimon Trust v. George R. Brokaw,
et al., No. 15-CA-001162 (the “Dimon lawsuit”), was filed in the Circuit Court of the Twentieth Judicial District in and for Lee County,
Florida, against Alico, its current directors, Silver Nip, 734 Investors and 734 Agriculture in connection with the Acquisition of Silver Nip
by Alico. The complaint alleges claims for breach of fiduciary duty, gross mismanagement, waste of corporate assets and tortious
interference with contract against Alico’s directors, unjust enrichment against three of the directors and aiding and abetting breach of
fiduciary duty against Silver Nip, 734 investors and 734 Agriculture. The lawsuit seeks, among other things, rescission of the Acquisition,
an injunction prohibiting certain payments to Silver Nip stockholders, unspecified damages, disgorgement of profits, costs, fees (including
attorneys’ fees) and expenses.
On July 17, 2015, the plaintiffs in the Stein and Dimon lawsuits filed a stipulation and proposed order consolidating their cases for
all purposes under the caption, In re Alico, Inc. Shareholder Litigation, Master File No. 15-CA-000645 (the “Consolidated
14
Action”) and seeking the appointment of a lead plaintiff and lead and liaison counsel. The court entered that proposed order on July 21,
2015.
On October 16, 2015, the lead plaintiff in the Consolidated Action reported to the court that the parties reached an agreement in
principle to settle the Consolidated Action and other claims related to the Acquisition, and that they are in the process of formally
documenting their agreements. That process is ongoing and the settlement remains subject to final documentation and court approval
following notice to the relevant Alico shareholders. Once the parties have completed the settlement documentation, they will contact the
court to schedule a hearing at which they will request the court to preliminarily approve the settlement and to set a final settlement hearing
date.
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of
business. There are no current legal proceedings to which we are a party to or of which any of our property is subject to that we believe will
have a material adverse effect on our business financial position or results of operations.
Item 4. Mine Safety Disclosure.
Not Applicable
15
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Common Stock Prices
Our common stock is traded on the NASDAQ Global Market under the symbol ALCO. The high and low sales prices of our
common stock in each quarter in the fiscal years 2015 and 2014 are presented below:
2015 Price
2014 Price
High
Low
High
Low
$
$
$
$
51.83 $
58.10 $
52.74 $
48.94 $
34.67 $
43.80 $
44.52 $
37.16 $
39.15 $
38.48 $
37.68 $
38.30 $
38.10
37.61
37.15
37.94
Quarter Ended:
December 31
March 31
June 30
September 30
Holders
On October 31, 2015, our stock transfer records indicate there were approximately 262 holders of record of our common stock.
The number of registered holders includes banks and brokers who act as nominee, each of whom may represent more than one stockholder.
Dividend Policy
The declaration and amount of any actual cash dividend are in the sole discretion of our Board of Directors and are subject to
numerous factors that ordinarily affect dividend policy, including the results of our operations and financial position, as well as general
economic and business conditions.
The following table presents cash dividends per share of our common stock declared in fiscal years 2015, 2014, and 2013 and paid
in fiscal years 2016, 2015 and 2014:
Declaration Date
July 18, 2013
September 25, 2013
December 18, 2013
April 10, 2014
July 10, 2014
October 2, 2014
February 25, 2015
June 4, 2015
September 10, 2015
Record Date
September 30, 2013
December 31, 2013
March 31, 2014
June 30, 2014
September 30, 2014
December 31, 2014
March 31, 2015
June 30, 2015
September 30, 2015
Per Common Share
0.08
0.12
0.12
0.06
0.06
0.06
0.06
0.06
0.06
$
$
$
$
$
$
$
$
$
Payment Date
October 15, 2013
January 14, 2014
April 14, 2014
July 14, 2014
October 15, 2014
January 15, 2015
April 15, 2015
July 15, 2015
October 15, 2015
16
Stock Performance Graph
The graph below represents our common stock performance, comparing the value of $100 invested on September 30, 2010 in our
common stock, the S&P 500 Index, the S&P Agricultural Products Index and a Company-constructed peer group, which includes Forestar
Group, Inc., Limoneira Company, The St. Joe Company, Tejon Ranch Co. and Texas Pacific Land Trust.
(Includes reinvestment of dividends)
Base
Period
Sept 10
100
100
100
100
INDEXED RETURNS
Sept 11
84.84
101.15
84.89
69.88
Years Ending
Sept 13
181.34
157.17
135.18
108.59
Sept 12
136.48
131.69
100.92
94.50
Sept 14
169.41
188.18
179.13
127.80
Sept 15
181.42
187.02
154.04
104.88
Company Name / Index
Alico, Inc.
S&P 500 Index
S&P Agricultural Products Index
Peer Group
Equity Compensation Arrangements
Effective January 27, 2015, the Company’s Board of Directors adopted the 2015 Stock Incentive Plan (the “2015 Plan”) which
provides for up to 1,250,000 shares of the Company’s common stock to be available for issuance to provide a long-term incentive plan for
officers, employees, directors and/or consultants to directly link incentives to stockholders' value. The 2015 Plan was approved by
stockholders in February 2015. The adoption of the 2015 Plan supersedes the 2013 Incentive Equity Plan (the “2013 Plan”), which had
been in place since April 2013. The 2013 Plan provided for the issuance of up to 350,000 shares of the Company’s common stock to
Directors and Officers through March 2018.
17
The following table illustrates the common shares remaining available for future issuance under the 2015 Plan:
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities
remaining available for
future issuance under
equity plans
-
-
-
-
1,237,500
1,237,500
Plan Category:
Equity compensation plans approved by
security holders
Total
Recent Sale of Unregistered Securities
None.
Issuer Repurchases of Equity Securities
In fiscal year 2015, our Board of Directors authorized the repurchase of up to 170,000 shares of the Company’s common stock
beginning March 26, 2015 and continuing through December 31, 2016 (the “2015 Authorizations"). The stock repurchases under the 2015
Authorizations are made through open market transactions at times and in such amounts as our broker determined subject to the provisions
of SEC Rule 10b-18.
We adopted Rule 10b5-1 share repurchase plan under the Securities Exchange Act of 1934 (the “Plan”) in connection with share
repurchase authorizations. The Plan allows us to repurchase our shares of common stock at times when it otherwise might be prevented
from doing so under insider trading laws or because of self-imposed trading blackout periods. Because repurchases under the Plan are
subject to certain pricing parameters, there is no guarantee as to the exact number of common shares that will be repurchased under the
Plan or that there will be any repurchases pursuant to the Plan. Subject to applicable regulations, we may elect to amend or cancel the Plan
at our discretion.
Through September 30, 2015, we had purchased 91,554 common shares and had available to purchase an additional 78,446
common shares in accordance with the fiscal year 2015 Authorizations.
The following table describes our purchases of our common stock during the fourth quarter of 2015 for the 2015 Authorizations.
Total Number of
Shares Purchased
Average Price
Paid Per Share
Total Shares
Purchased As Part of
Publicly Announced
Plan or Program
Maximum
Number of Shares
that May Yet Be
Purchased Under the
Plan or Program
—
24,128 $
47,426 $
—
41.57
41.76
—
24,128
47,426
—
125,872
78,446
Date:
July 2015
August 2015
September 2015
We do not anticipate that any purchases under our Board of Directors’ authorizations will be made from any officer, director or
control person.
We purchased zero, 9,907, 10,093 and 71,554 shares of common stock in the open market during the first, second, third and fourth
quarters of fiscal year 2015, respectively, at a weighted average price of $43.83 per common share.
18
Item 6. Selected Financial Data.
The following tables present selected historical consolidated and combined financial information as of and for each of the fiscal
years in the five-year period ended September 30, 2015. The Consolidated and Combined Financial Statements as of and for the fiscal
years ended September 30, 2015 and 2014 include combined financial statement balances with Silver Nip Citrus, as result of our common
control acquisition in February 2015.
The selected historical financial data presented below should be reviewed in conjunction with our Consolidated and Combined
Financial Statements and the accompanying Notes thereto, included elsewhere in this Annual Report on Form 10-K.
(in thousands, except per share amounts)
Selected Statement of Operations Information:
Operating revenues
Income from operations
Net income attributable to common stockholders
Basic earnings per common share
Diluted earnings per common share
Cash dividends declared per common share
Selected Balance Sheet Information:
Cash and cash equivalents
Property and equipment, net
Total assets
Current portion of long-term debt
Long-term debt, net of current portion
Total Alico, Inc. equity
Noncontrolling interest
2015
2014
September 30,
2013
2012
2011
$
$
$
$
$
$
$
$
$
$
$
$
$
153,119 $
19,059 $
15,764 $
1.96 $
1.96 $
0.24 $
7,360 $
381,667 $
460,580 $
4,511 $
201,370 $
172,792 $
4,807 $
103,983 $
9,914 $
9,033 $
1.23 $
1.23 $
0.24 $
101,661 $
11,935 $
19,646 $
2.69 $
2.67 $
0.36 $
127,187 $
23,742 $
18,489 $
2.51 $
2.51 $
0.20 $
31,020 $
126,833 $
257,580 $
3,196 $
61,604 $
161,851 $
— $
24,583 $
131,071 $
198,840 $
2,000 $
34,000 $
142,736 $
— $
13,328 $
122,834 $
185,083 $
3,267 $
36,633 $
127,846 $
— $
98,592
15,237
7,097
0.96
0.96
0.12
1,336
128,780
180,035
3,279
53,879
110,662
—
During the fiscal year ended September 30, 2011, we utilized cash to reduce our outstanding debt by $18,510,000 resulting in a
reduction in total assets and long-term obligations.
During the fiscal year ended September 30, 2012, we utilized cash from operating and investing activities to reduce our
outstanding debt by approximately $17,258,000, resulting in a reduction in long-term debt obligations. Net income includes a gain on sale
of real estate of approximately $9,113,000 on the sale of land and impairment charges of $1,918,000 on assets held for sale.
During the fiscal year ended September 30, 2013, net income includes the gain on sale of assets of approximately $20,300,000
related to the closing of the Conservation Easement in fiscal 2013.
During the fiscal year ended September 30, 2014, net income includes the gain on sale of assets of approximately $4,820,000
related to the Polk County land sale and property and equipment sold to USSC and gain on settlement of contingent consideration of
$6,000,000.
During the fiscal year ended September 30, 2015, net income includes the gain on sale of assets of approximately $16,517,000
related to the sale of real estate, approximately $8,373,000 of interest expense, $1,051,000 loss on extinguishment of debt related to the
refinancing of our debt obligations, $1,145,000 gain on bargain purchase related to acquisition of citrus business and impairment charges
of approximately $541,000 on assets held for sale.
19
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying Consolidated and Combined
Financial Statements and related Notes thereto.
Cautionary Statement Regarding Forward-Looking Information
We provide forward-looking information in this Annual Report on Form 10-K, particularly in this Management’s Discussion and
Analysis and Results of Operations, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any
statements in this Annual Report on Form 10-K that are not historical facts are forward-looking statements. Forward-looking statements
include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements
relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and
projections about our business based, in part, on assumptions made by our management. Factors which may cause future outcomes to
differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules;
weather conditions that affect production, transportation, storage, demand, import and export of fresh product and their by-products,
increased pressure from disease, insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply
of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates;
availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures
including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip Citrus merger; seasonality; labor
disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments;
government restrictions on land use; changes in agricultural land values; changes in dividends; and market and pricing risks due to
concentrated ownership of stock. These assumptions are not guarantees of future performance and involve risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted
in the forward-looking statements due to numerous factors, including those Risks Factors included in Part I, Item 1A and elsewhere in this
Annual Report on Form 10-K.
Introduction
Alico, Inc. (“Alico”), together with its subsidiaries (collectively, the “Company", "we", "us" or "our”), is a holding company with
assets and related operations in agriculture, land management and natural resources. During the fiscal year ended September 30, 2015, the
Company acquired three Florida citrus properties for total consideration of approximately $363,000,000. These acquisitions make Alico
one of the largest citrus producers in the United States, with total 2014-2015 production of approximately 10,500,000 boxes. We are a
Florida agribusiness and land management company, backed by a legacy of achievement and innovation in citrus, cattle and resource
conservation. We own approximately 121,000 acres of land in twelve Florida counties which includes approximately 90,000 acres of
mineral rights. Our principal lines of business are citrus groves, cattle ranching and conservation, and related support operations. Our
mission is to create value for our customers and stockholders by managing existing lands to their optimal current income and total returns,
opportunistically acquiring new agricultural assets and producing high quality agricultural products while exercising responsible
environmental stewardship.
Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help provide
an understanding of our results of operations, financial condition and changes in financial condition for the periods presented. This MD&A
is organized as follows:
•
•
•
•
Business Overview. This section provides a general description of our business, as well as other matters that we believe are
important in understanding our results of operations and financial condition.
Consolidated and Combined Results of Operations. This section provides an analysis of our results of operations for the three
fiscal years ended September 30, 2015. Our discussion is presented on a consolidated and combined basis and includes discussion
on future trends by segment.
Liquidity and Capital Resources. This section provides an analysis of our cash flows for the three fiscal years ended September
30, 2015 and our outstanding debt, commitments and cash resources as of September 30, 2015.
Critical Accounting Policies. This section identifies those accounting policies that we consider important to our results of
operations and financial condition, require significant judgment and involve significant management estimates. Our significant
accounting policies, including those considered to be critical accounting policies, are summarized in Note 2, "Summary of
Significant Accounting Policies," to the accompanying Consolidated and Combined Financial Statements.
20
Business Overview
Business Description
We generate operating revenues primarily from the sale of our citrus products. We operate as five business segments and
substantially all of our operating revenues are generated in the United States. During the fiscal year ended September 30, 2015, we
generated operating revenues of $153,119,000, income from operations of $19,059,000, net income of $15,733,000 and cash provided by
operations of $33,866,000.
Business Segments
We operate five business segments related to our various land holdings, as follows:
•
•
•
•
•
Citrus Groves include activities related to planting, owning, cultivating and/or managing citrus groves in order to produce fruit for
sale to fresh and processed citrus markets.
Agricultural Supply Chain Management includes activities related to the purchase and resale of fruit, as well as, to value-added
services which include contracting for the harvesting, marketing and hauling of citrus.
Improved Farmland includes activities related to owning and/or leasing improved farmland. Improved farmland is acreage that has
been converted, or is permitted to be converted, from native pasture and which may have various improvements including
irrigation, drainage and roads. As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and, as
of November 21, 2014, the Improved Farmland segment was no longer material to our business.
Ranch and Conservation includes activities related to cattle grazing, sod, native plant and animal sales, leasing, management
and/or conservation of unimproved native pasture land.
Other Operations include activities related to a citrus nursery, rock mining royalties, oil exploration and other insignificant lines of
business.
Fiscal Year Highlights and Recent Developments
Orange-Co Acquisition
On December 2, 2014, the Company completed the acquisition of certain citrus and related assets of Orange-Co, LP (“Orange-
Co”) pursuant to an Asset Purchase Agreement, which we refer to as the Orange-Co Purchase Agreement, dated as of December 1, 2014
and 51% of the ownership interests of Citree Holdings 1, LLC ("Citree"). The assets the Company purchased include approximately 21,000
acres of citrus groves in DeSoto and Charlotte Counties, Florida, which comprise one of the largest contiguous citrus grove properties in
the state of Florida. Total assets acquired were approximately $277,792,000, net of $2,060,000 in cash acquired and $4,838,000 in fair
value attributable to the noncontrolling interest in Citree, including: (1) $147,500,000 in initial cash consideration funded from the proceeds
of the sugarcane disposition and new term debt; (2) up to $7,500,000 in additional cash consideration to be released from escrow in equal
parts, subject to certain limitations, on December 1, 2015 and June 1, 2016; (3) the refinancing of Orange-Co’s outstanding debt including
approximately $92,290,000 in term loan debt and a working capital facility of approximately $27,857,000; and (4) the assumption of
certain other liabilities totaling $4,705,000. On December 1, 2014, Alico deposited an irrevocable standby letter of credit issued by Rabo
Agrifinance, Inc. (“Rabo”) in the aggregate amount of $7,500,000 into an escrow account to fund the additional cash consideration (see
Note 3, "Acquisitions and Dispositions" to the accompanying Consolidated and Combined Financial Statements).
Sugarcane Land Disposition
On November 21, 2014, the Company completed the sale of approximately 36,000 acres of land used for sugarcane production
and land leasing in Hendry County, Florida to Global Ag Properties, LLC (“Global”) for $97,913,921 in cash. We had previously leased
approximately 30,600 of these acres to United States Sugar Corporation (the “USSC Lease”) on May 19, 2014. The USSC Lease was
assigned to Global in conjunction with the land sale.
21
Net cash proceeds from the sugarcane land sale of $97,126,000 were deposited with a Qualified Intermediary in anticipation of the
Orange-Co asset acquisition in a tax deferred like-kind exchange pursuant to Internal Revenue Code Section 1031 (see Note 3 “Acquisitions
and Dispositions” to the accompanying Consolidated and Combined Financial Statements).
The sales price is subject to post-closing adjustments over a ten (10) year period. The Company realized a gain of $42,753,000 on
the sale. Initially, $29,140,000 of the gain was deferred due to the Company’s continuing involvement in the property pursuant to a post-
closing agreement and the potential price adjustments. The deferral represents the Company’s estimate of the maximum exposure to loss as
a result of the continuing involvement. The deferred gain balance as of September 30, 2015 was $29,122,000. A net gain of $13,613,000
was recognized in the first quarter of fiscal year 2015.
In May 2015, the Company made a payment of $1,347,000 to Global pursuant to the sales contract. The USSC Lease is tied to the
market price of sugar, and this payment is required annually, in advance, to supplement the rent paid by USSC in the event that the sugar
prices are below certain thresholds. Approximately $843,000 of this payment is included in prepaid expenses and other current assets in the
Consolidated and Combined Balance Sheet as of September 30, 2015 and the Company has recognized $607,000 in interest expense and
$17,300 of the deferred gain for the fiscal year ended September 30, 2015.
As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and, as of November 21, 2014, the
Improved Farmland segment was no longer material to our business.
Our sugarcane land was classified as “assets held for sale” in our Consolidated and Combined Balance Sheet as of September 30,
2014. The sugarcane operation has not been classified as a discontinued operation due to the Company’s continuing involvement pursuant
to the post-closing agreement described above.
Common Control Acquisition between the Company and 734 Citrus Holdings, LLC
Effective February 28, 2015, the Company completed the merger (the “Merger”) with 734 Citrus Holdings, LLC (“Silver Nip
Citrus”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with 734 Sub, LLC, a wholly owned subsidiary of the
Company (“Merger Sub”), Silver Nip Citrus and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. The
ownership of Silver Nip Citrus was held by 734 Agriculture, 74.89%, Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and
an entity controlled by Mr. Clay Wilson owned, 20.11%.
On November 19, 2013, 734 Agriculture and its affiliates, including 734 Investors, acquired approximately 51% of the Company’s
common stock. 734 Agriculture is the sole managing member of 734 Investors. By virtue of their ownership percentage, 734 Agriculture is
able to elect all of the Directors and, consequently, control Alico.
734 Agriculture has control over both Silver Nip Citrus and the Company and therefore the Merger was treated as a common
control acquisition.
At closing of the Merger, Merger Sub merged with and into Silver Nip Citrus, with Silver Nip Citrus and its affiliates surviving the
Merger as wholly-owned subsidiaries of the Company. Pursuant to the Merger Agreement, at closing, the Company issued 923,257 shares
of the Company’s common stock, par value $1.00 per share, to the holders of membership interests in Silver Nip Citrus. Silver Nip Citrus’
outstanding net indebtedness at the closing of the Merger was approximately $40,278,000 and other liabilities totaled $6,952,000. The
Company acquired assets with a book value of $65,739,000 and total net assets of $18,470,000. The common shares issued were recorded
at the carrying amount of the net assets transferred. In September 2015, the former holders of membership interests in Silver Nip Citrus
received an additional 115,782 shares of the Company’s common stock pursuant to the Merger Agreement. The additional consideration
was based on the value of the proceeds received by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’ citrus groves
following the conclusion of the 2014-2015 citrus harvest season.
Water Storage Contract Approval
In December 2012, the South Florida Water Management District (“SFWMD”) issued a solicitation request for projects to be
considered for the Northern Everglades Payment for Environmental Services Program. In March 2013, the Company submitted its response
proposing a dispersed water management project on a portion of its ranch land.
On December 11, 2014, the SFWMD approved a contract with the Company. The contract term is eleven years and allows up to
one year for implementation (design, permitting, construction and construction completion certification) and ten years of operation whereby
the Company will provide water retention services. Payment for these services includes an amount not to exceed $4,000,000 of
reimbursement for implementation. In addition, it provides for an annual fixed payment of $12,000,000 for operations
22
and maintenance costs as long as the project is in compliance with the contract and subject to annual SFWMD Governing Board (the
“Board”) approval of funding. The contract specifies that the Board has to approve the payments annually, and there can be no assurance
that it will approve the annual fixed payments.
During the 2015 legislative session, the Governor of Florida vetoed the legislatively approved budget for dispersed water
management projects. Although SFWMD did not receive the state funds for the project payments for the next fiscal year (October 2015
through September 2016), SFWMD has amended the Contract with the Company to extend the duration for funding beyond the 2016
legislative session. This provided the District with options to continue with the project.
As discussed above, the Dispersed Water Management Program Northern Everglades Payment for Environmental Services
Contract between the Company and SFWMD provides that funding of the contract is subject to the SFWMD receiving funds for the project
from the Florida Legislature and the SFWMD Governing Board budget appropriation.
The SFWMD budget process allows for amending the budget at any Governing Board meeting, which could allow for some
funding in fiscal year 2016. However, if no funds are provided in 2016 and accommodation is not reached to delay work on the project until
funds are available, the District would be within its rights under the contract to terminate.
Consolidated and Combined Results of Operations
The following discussion provides an analysis of our results of operations and should be read in conjunction with the
accompanying Consolidated and Combined Statements of Operations and Comprehensive Income.
The table below provides a summary of our results of operations for the years ended September 30, 2015, 2014 and 2013:
(in thousands)
Fiscal Year Ended
September 30,
2015
2014
Change
$
%
Fiscal Year Ended
September 30,
2013
2014
Change
$
%
Operating revenues:
Citrus Groves
Agricultural Supply Chain
Management
Improved Farmland
Ranch and Conservation
Other Operations
Total operating revenues
Gross profit (loss):
Citrus Groves
Agricultural Supply Chain
Management
Improved Farmland
Ranch and Conservation
Other Operations
Total gross profit
General and administrative
expenses
Income from operations
Other income, net
Income before income tax
provision
Provision for income taxes
Net income
Net loss attributable to
noncontrolling interests
Net income attributable to Alico,
Inc. common stockholders
N/M - Not meaningful
$ 139,700 $ 62,372 $ 77,328
124.0 % $ 62,372 $ 43,689 $ 18,683
42.8 %
6,439
901
5,394
685
12,376
20,429
8,172
634
153,119 103,983
(5,937)
(19,528)
(2,778)
51
49,136
28,412
12,376
(48.0)%
21,917
20,429
(95.6)%
6,755
8,172
(34.0)%
8.0 %
888
634
47.3 % 103,983 101,661
(16,036)
(1,488)
1,417
(254)
2,322
(56.4)%
(6.8)%
21.0 %
(28.6)%
2.3 %
35,619
19,801
15,818
79.9 %
19,801
12,156
7,645
62.9 %
246
(188)
586
(310)
35,953
59
(927)
2,049
260
21,242
187
739
(1,463)
(570)
14,711
316.9 %
(79.7)%
(71.4)%
(219.2)%
69.3 %
59
(927)
2,049
260
21,242
463
5,715
2,957
383
21,674
(404)
(6,642)
(908)
(123)
(432)
16,894
19,059
7,579
11,328
9,914
9,008
5,566
9,145
(1,429)
49.1 %
92.2 %
(15.9)%
11,328
9,914
9,008
9,739
11,935
19,740
1,589
(2,021)
(10,732)
26,638
(10,905)
15,733
18,922
(9,889)
9,033
7,716
(1,016)
6,700
40.8 %
10.3 %
74.2 %
18,922
(9,889)
9,033
31,675
(12,029)
19,646
(12,753)
2,140
(10,613)
(87.3)%
(116.2)%
(30.7)%
(32.1)%
(2.0)%
16.3 %
(16.9)%
(54.4)%
(40.3)%
(17.8)%
(54.0)%
31
—
31
NM
—
—
—
NM
$
15,764 $ 9,033 $ 6,731
74.5 % $ 9,033 $ 19,646 $(10,613)
(54.0)%
23
The following table presents our operating revenues, by segment, as a percentage of total operating revenues for the fiscal years
ended September 30, 2015, 2014 and 2013:
(in thousands)
Operating revenues:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Total operating revenues
Fiscal Year Ended
September 30,
2014
2015
2013
91.2%
4.2%
0.6%
3.5%
0.5%
100.0%
60.0%
11.9%
19.6%
7.9%
0.6%
100.0%
43.0%
27.9%
21.6%
6.6%
0.9%
100.0%
The following discussion provides an analysis of our business segments:
Citrus Groves
The table below presents key operating measures for the fiscal years ended September 30, 2015, 2014 and 2013:
(in thousands, except per box and per pound solids data)
Fiscal Year Ended
September 30,
2015
2014
Change
Unit
%
Fiscal Year Ended
September 30,
2014
2013
Unit
Change
%
Revenue From:
Early and Mid-Season
Valencias
Fresh Fruit
Other
Total
Boxes Harvested:
Early and Mid-Season
Valencias
Total Processed
Fresh Fruit
Total
Pound Solids Produced:
Early and Mid-Season
Valencias
Total
Pound Solids per Box:
Early and Mid-Season
Valencias
Price per Pound Solids:
Early and Mid-Season
Valencias
Price per Box:
Fresh Fruit
Operating Expenses:
Cost of Sales
Harvesting and Hauling
Other
Total
NM - Not Meaningful
41.0 %
46.9 %
(4.4)%
567.7 %
42.8 %
5.4 %
8.9 %
7.2 %
(15.1)%
5.9 %
$
51,926 $ 25,273 $ 26,653
42,529
34,095
76,624
3,773
2,343
6,116
4,373
661
5,034
$ 139,700 $ 62,372 $ 77,328
105.5 % $
124.7 %
161.0 %
661.6 %
124.0 % $
25,273 $ 17,923 $ 7,350
10,879
23,216
34,095
(108)
2,451
2,343
562
99
661
62,372 $ 43,689 $ 18,683
4,445
5,569
10,014
466
10,480
2,003
2,143
4,146
213
4,359
2,442
3,426
5,868
253
6,121
26,139
36,083
62,222
12,321
14,237
26,558
13,818
21,846
35,664
121.9 %
159.9 %
141.5 %
118.8 %
140.4 %
112.1 %
153.4 %
134.3 %
2,003
2,143
4,146
213
4,359
1,900
1,967
3,867
251
4,118
103
176
279
(38)
241
12,321
14,237
26,558
11,612
13,134
24,746
709
1,103
1,812
6.1 %
8.4 %
7.3 %
5.88
6.48
6.15
6.64
(0.27)
(0.16)
(4.4)%
(2.4)%
6.15
6.64
6.11 $
6.68 $
0.04
(0.04)
0.7 %
(0.6)%
1.99 $
2.12 $
2.05 $
2.39 $
(0.06)
(0.27)
(2.9)% $
(11.3)% $
2.05 $
2.39 $
1.54 $
1.77 $
0.51
0.62
33.1 %
35.0 %
13.12 $ 11.00 $
2.12
19.3 % $
11.00 $
9.76 $
1.24
12.7 %
$
$
$
$
73,521 $ 30,106 $ 43,415
13,661
12,463
26,124
4,434
2
4,436
$ 104,081 $ 42,571 $ 61,510
144.2 % $
109.6 %
NM
144.5 % $
30,106 $ 19,803 $ 10,303
990
11,473
12,463
(255)
257
2
42,571 $ 31,533 $ 11,038
52.0 %
8.6 %
(99.2)%
35.0 %
24
Our citrus groves produce the majority of our annual operating revenues and the citrus grove business is seasonal because it is tied
to the growing and picking seasons. Historically, the second and third quarters of our fiscal year produce the majority of our annual
revenues, and our working capital requirements are typically greater in the first and fourth quarters of our fiscal year coinciding with our
planting cycles.
We sell our Early and Mid-Season and Valencia oranges to processors that convert the majority of the citrus crop into orange
juice. They generally buy their citrus on a pound solids basis, which is the measure of the soluble solids (sugars and acids) contained in one
box of fruit. Fresh Fruit is generally sold to packing houses that purchase their citrus on a per box basis. Our operating expenses consist
primarily of cost of sales and harvesting and hauling costs. Cost of sales represents the cost of maintaining our citrus groves for the
preceding calendar year and does not vary in relation to production. Harvesting and hauling costs represent the costs of bringing citrus
product to processors and varies based upon the number of boxes produced.
The increase in citrus grove revenues and gross profit for the fiscal year ended September 30, 2015, as compared to fiscal year
ended September 30, 2014, was primarily due to the acquisition of Orange-Co in December 2014. Orange-Co related revenues and gross
profit were approximately $72,600,000 and $17,900,000 for the fiscal year ended September 30, 2015. Orange-Co revenues represented
52.0% of total citrus grove revenues for the fiscal year ended September 30, 2015.
Orange-Co related boxes harvested and pound solids produced were approximately 5,300,000 and 33,300,000 for the fiscal year
ended September 30, 2015, which represented 50.6% and 53.6% of our total boxes harvested and pound solids produced for the fiscal years
ended September 30, 2015. We included the financial results of Orange-Co in the accompanying Consolidated and Combined Financial
Statements from the date of acquisition.
The increases in boxes harvested and pound solids produced in fiscal year 2015, as compared to fiscal year 2014, were a result of
the Orange-Co acquisition as well as Silver Nip Citrus' acquisition of the TRB grove and the acquisition of Crossing Grove (see Note 3,
"Acquisitions and Dispositions" to the accompanying Consolidated and Combined Financial Statements). Excluding these acquisitions,
total boxes harvested declined by 4.0%, as compared to fiscal year 2014. Pound solids per box also declined by 4.4% and 2.4% for the
Early and Mid-Season and Valencia oranges, respectively. These declines were believed to be mainly driven by growing season
fluctuations in production which may have been attributable to various factors, including changes in weather impacting bloom, horticultural
practices and the effects of diseases and pests, including Citrus Greening. The industry and the Company both experienced higher than
normal premature fruit drop in certain areas of our groves and smaller sized fruit. Our 2014/2015 crop, including all acquisitions,
significantly outpaced the statewide performance on a boxes harvested basis with an increase of approximately 5% over fiscal year 2014.
The USDA, in its November 10, 2015 Citrus Crop Forecast for the 2015/2016 harvest season, indicated that the Florida orange
crop will decrease from 96,800,000 boxes for the 2014/2015 crop year to 74,000,000 boxes for the 2015/2016 crop year, a decrease of
23.6%. The 2014-2015 Florida orange crop declined by approximately 8,000,000 boxes or approximately 8% compared to the 2013/2014
crop.
We estimate our 2016 processed boxes to be relatively flat compared to our fiscal year 2015 processed boxes, on a per acre basis.
For fiscal year 2016, we expect that the forecasted 23.6% decrease in the size of the statewide crop could cause the price per pound solids
for fiscal year 2016 to remain at or above the price for fiscal year 2015. We expect that our operating expenses for fiscal year 2016 will
remain in-line with fiscal year 2015 on a per acre basis.
The increase in Citrus Groves gross profit for fiscal year 2014, as compared to fiscal year 2013 related primarily to increased
prices and revenue, offset by an increase of 2.2% in growing costs for the 2013/2014 harvesting season crop to $20,233,000 from
$19,803,000. Per box harvest and hauling costs remained consistent with fiscal year 2013.
Pro-Forma Results for Citrus Groves
The unaudited pro forma financial information below for the fiscal years ended September 30, 2015 and 2014 gives effect to the
acquisition of Orange-Co as if the acquisition had occurred on October 1, 2013. The pro forma financial information is not necessarily
indicative of the results of operations if the acquisitions had been effective as of this date.
25
(in thousands, except pound solids per box)
Citrus Boxes Harvested:
Early and Mid-Season
Valencias
Fresh Fruit
Pound Solids Produced:
Early and Mid-Season
Valencias
Pound Solids Per Box:
Early and Mid-Season
Valencias
Combined
Fiscal Year Ended
September 30,
2015
2014
Change % Change
(unaudited)
4,445
5,569
466
10,480
26,139
36,083
62,222
5.88
6.48
6.21
4,631
5,031
308
9,970
(186)
538
158
510
28,508
33,754
62,262
(2,369)
2,329
(40)
6.16
6.71
6.44
(0.28)
(0.23)
(0.23)
(4.0)%
10.7 %
51.3 %
5.1 %
(8.3)%
6.9 %
(0.1)%
(4.5)%
(3.4)%
(3.6)%
Citrus box and pound solids production fluctuates each growing season, and these fluctuations may be attributable to various
factors, including changes in weather, horticultural practices and the effects of diseases and pests, including Citrus Greening.
Agricultural Supply Chain Management
The table below presents key operating measures for the fiscal years ended September 30, 2015, 2014 and 2013:
(in thousands, except per box and per pound solids data)
Fiscal Year Ended
September 30,
2014
2015
Change
Unit
%
Fiscal Year Ended
September 30,
2014
2013
Unit
Change
%
Purchase and Resale of Fruit:
Revenue
Boxes Sold
Pound Solids Sold
Pound Solids per Box
Price per Pound Solids
Value Added Services:
Revenue
Value Added Boxes
Other Revenue
$ 5,172 $
442
2,663
6.02
1.94 $
$
10,096 $ (4,924)
(394)
(2,532)
(0.19)
—
836
5,195
6.21
1.94 $
(48.8)% $
(47.1)%
(48.7)%
(3.1)%
— % $
10,096 $ 22,858 $(12,762)
(1,541)
2,377
(9,644)
14,839
(0.03)
6.24
0.40
1.54 $
836
5,195
6.21
1.94 $
$ 1,238 $
537
29 $
$
1,891 $
652
389 $
(653)
(115)
(360)
(34.5)% $
(17.6)%
(92.5)% $
1,891 $ 3,592 $ (1,701)
652
(2,109)
2,761
389 $ 1,962 $ (1,573)
(55.8)%
(64.8)%
(65.0)%
(0.5)%
26.0 %
(47.4)%
(76.4)%
(80.2)%
For fiscal year 2015 compared to fiscal year 2014, the declines in Purchase and Resale of Fruit revenues, boxes sold and pound
solids sold, as well as the declines in Value Added Services revenues and boxes, are all primarily driven by management’s decision to
reduce the number of external boxes handled by Alico Fruit Company to focus on our expanded internal citrus operations
26
in fiscal years 2015 and 2014, respectively. This decision was made in the second quarter of fiscal year 2014. The decline in Alico Fruit
Company gross profit relates primarily to the changes in revenues outlined above.
For fiscal year 2016, we would expect revenues and gross profit for Agricultural Supply Chain Management to remain relatively
consistent with fiscal year 2015.
For fiscal year 2014 versus fiscal year 2013, the declines in Purchase and Resale of Fruit revenue, boxes sold and pound solids
sold, as well as the declines in Value Added Services revenue and boxes, are all being primarily driven by a management decision to
reduce the number of external boxes handled by Alico Fruit Company in fiscal year 2014 and to a lesser extent declines in Florida citrus
production. The decline in Alico Fruit Company gross profit relates primarily to the changes in revenue outlined above.
Improved Farmland
The table below presents key operating measures for the fiscal years ended September 30, 2015, 2014 and 2013:
(in thousands, except per net standard ton and per acre data)
Fiscal Year Ended
September 30,
2014
2015
Change
Unit
%
Fiscal Year Ended
September 30,
2013
2014
Change
$
%
Revenue From:
Sale of Sugarcane
Molasses Bonus
USSC Lease
Other Leases
Total
Net Standard Tons Sold
Price Per Net Standard Ton:
Sale of Sugarcane
Molasses
Net Standard Tons/Acre
Operating Expenses:
Cost of Sales
Harvesting and Hauling
Land Leasing Expenses
Guarantee Payment to
Global
Total
NM - Not Meaningful
$
$
$
$
$
— $
—
503
398
901 $
—
17,428 $ (17,428)
(817)
(886)
(397)
20,429 $ (19,528)
817
1,389
795
590 $
(590)
(100.0)% $ 17,428 $ 20,125 $(2,697)
17
(100.0)%
1,389
(63.8)%
(49.9)%
(197)
(95.6)% $ 20,429 $ 21,917 $(1,488)
44
(100.0)%
817
1,389
795
800
—
992
546 $
590
— $
— $
—
29.54 $
1.38 $
35.20
(29.54)
(1.38)
(35.20)
(100.0)% $ 29.54 $ 36.86 $ (7.32)
1.47 $ (0.09)
(100.0)% $
(5.94)
41.14
(100.0)%
1.38 $
35.20
— $
—
614
14,368 $ (14,368)
(3,759)
3,759
(2,615)
3,229
(100.0)% $ 14,368 $ 11,580 $ 2,788
(539)
(100.0)%
2,905
(81.0)%
4,298
324
3,759
3,229
475
$ 1,089 $
—
475
21,356 $ (20,267)
NM
—
(94.9)% $ 21,356 $ 16,202 $ 5,154
—
—
(13.4)%
2.1 %
NM
(19.9)%
(6.8)%
8.1 %
(19.9)%
(6.1)%
(14.4)%
24.1 %
(12.5)%
NM
—
31.8 %
On May 19, 2014, the Company entered into a triple net agricultural lease with its sole sugarcane customer, USSC, on 19,181
acres of land planted or plantable to sugar in Hendry County, Florida. As a result of the lease, the Company was no longer directly engaged
in sugarcane farming. The annual base rent under the USSC Lease was approximately $3,548,000.
On November 21, 2014, the Company completed the sale of approximately 36,000 acres of land used for sugarcane production
and land leasing to Global for $97,913,921 in cash. The USSC Lease was assigned to Global in conjunction with the land sale.
The sales price is subject to post-closing adjustments over a ten (10)-year period. The Company realized a gain of $42,753,000 on
the sale. Initially, $29,140,000 of the gain was deferred due to the Company’s continuing involvement in the property pursuant to a post-
closing agreement and the potential price adjustments. The deferral represents the Company’s estimate of the
27
maximum exposure to loss as a result of the continuing involvement. The USSC Lease is tied to the market price of sugar, and a guarantee
payment is required annually, in advance, to supplement the rent paid by USSC in the event that the sugar prices are below certain
thresholds. In fiscal year 2015, the sugar prices did not rise above the threshold and the Company paid approximately $475,000 to Global.
As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and, as of November 1, 2014, the
Improved Farmland segment is no longer material to our business.
For fiscal year 2014, the amount of acres used to produce sugarcane increased to 16,728 from 13,272 in fiscal year 2013. The
increase in net standard tons sold is related to the increased acreage in production for fiscal year 2014 versus fiscal year 2013. The increase
in production for fiscal year 2014 versus fiscal year 2013 is more than offset by the 19.9% decrease in price per net standard ton that has
resulted from changes in market conditions. Our Operating Expenses consist primarily of Cost of Sales and Harvesting and Hauling. Cost
of Sales represents the cost of maintaining our sugarcane land for the preceding calendar year and does not vary in relation to production.
Harvesting and Hauling represents the cost of bringing sugarcane product to our processor and varies based upon the number of net
standard tons produced.
The decrease in gross profit for fiscal year 2014 versus fiscal year 2013 is related primarily to the 19.9% decrease in price per
standard ton discussed above, partially offset by a 1.6% decrease in growing costs per acre and a 19.1% decrease in harvest and hauling
costs per net standard ton versus fiscal year 2013 which relates primarily to the elimination of long-haul charges related to the
transportation of sugarcane via truck.
Additionally, the gross profit of the Improved Farmland segment was negatively impacted by a charge of approximately
$2,300,000 in May 2014 recorded as an operating expense related to the reimbursement to the Company, at less than book value, for
certain of our costs to develop and plant sugarcane, cultivate and care take sugarcane and purchase certain rolling stock used in our
sugarcane operation. The charge relates to the triple net agricultural lease entered into with USSC.
Ranch and Conservation
The table below presents key operating measures for the fiscal years ended September 30, 2015, 2014 and 2013:
(in thousands, except per pound data)
Fiscal Year Ended
September 30,
2014
2015
Change
Unit
%
Fiscal Year Ended
September 30,
2013
2014
Unit
Change
%
Revenue From:
Sale of Calves
Sale of Culls
Land Leasing
Other
Total
Pounds Sold:
Calves
Culls
Price Per Pound:
Calves
Culls
Operating Expenses:
Cost of Calves Sold
Cost of Culls Sold
Land Leasing Expenses
Other
Total
NM - Not Meaningful
$ 3,805 $ 5,735 $ (1,930)
(607)
(130)
(111)
$ 5,394 $ 8,172 $ (2,778)
1,118
981
338
511
851
227
938
(33.7)% $ 5,735 $ 4,797 $
558
1,118
(54.3)%
(2)
981
(13.3)%
(32.8)%
(77)
338
(34.0)% $ 8,172 $ 6,755 $ 1,417
560
983
415
19.6 %
99.6 %
(0.2)%
(18.6)%
21.0 %
1,550
446
2,964
1,181
(1,414)
(735)
(47.7)%
(62.2)%
2,964
1,181
3,229
680
(265)
501
(8.2)%
73.7 %
$
$
2.45 $
1.15 $
1.93 $
0.95 $
0.52
0.20
26.9 % $
21.1 % $
1.93 $
0.95 $
1.49 $
0.82 $
0.44
0.13
29.5 %
15.9 %
$ 2,248 $ 3,569 $ (1,321)
(236)
(60)
302
$ 4,808 $ 6,123 $ (1,315)
220
214
2,126
456
274
1,824
295
(37.0)% $ 3,569 $ 3,274 $
176
456
(51.8)%
35
274
(21.9)%
16.6 %
1,819
1,824
(21.5)% $ 6,123 $ 3,798 $ 2,325
280
239
5
9.0 %
62.9 %
14.6 %
NM
61.2 %
28
Ranch
The decrease in revenues from the sale of calves in fiscal year 2015, as compared to fiscal year 2014, is primarily due to the
decrease in pounds sold, partially offset by an increase in price per pound. The decrease in revenues from the sale of culls in fiscal year
2015, as compared to fiscal year 2014, results from a decrease in pounds sold, partially offset by an increase in price per pound. The
decrease in gross profit for fiscal year 2015, as compared to fiscal year 2014, relates primarily to the decrease in pounds sold of beef, as the
price per pound sold for calves and culls is consistent between fiscal year 2015 and 2014. The decrease in pounds sold during fiscal year
2015 relates primarily to the timing of calf sales and expansion of the breeding herd. Approximately 1,000 calves are expected to be sold in
fiscal year 2016 and approximately 1,000 calves from fiscal 2015 will be retained to expand the breeding herd.
The increase in revenues from the sale of calves in fiscal year 2014, as compared to fiscal year 2013, results primarily from the
increase in price per pound, partially offset by a slight decrease in pounds sold. The increase in cull revenues for fiscal year 2014, as
compared to fiscal year 2013, results from an increase in pounds sold and an increase in price per pound. The increase in gross profit for
fiscal year 2014 as compared to fiscal year 2013, relates primarily to the increased price per pound of beef.
For fiscal year 2016, we expect to have a breeding herd of approximately 9,300 cows which includes retaining an additional 1,400
calves to further expand the breeding herd. We expect that the price per pound of beef sold will be greater than fiscal year 2014 but less
than fiscal year 2015. We expect operating expenses for fiscal year 2016 to remain relatively consistent.
Conservation
In December 2012, SFWMD issued a solicitation request for projects to be considered for the Northern Everglades Payment for
Environmental Services Program. In March 2013, the Company submitted its response proposing a dispersed water management project on
a portion of its ranch land.
On December 11, 2014, the SFWMD approved a contract with the Company. The contract term is eleven years and allows up to
one year for implementation (design, permitting, construction and construction completion certification) and ten years of operation whereby
the Company will provide water retention services. Payment for these services includes an amount not to exceed $4,000,000 of
reimbursement for implementation. In addition, it provides for an annual fixed payment of $12,000,000 for operations and maintenance
costs as long as the project is in compliance with the contract and subject to annual Board approval of funding. The contract specifies that
the Board has to approve the payments annually, and there can be no assurance that it will approve the annual fixed payments. Operating
expenses were approximately $2,112,000 and $1,793,000 for fiscal years 2015 and 2014, respectively.
Other Operations
Other Operations, consisting primarily of leasing revenues, was $685,000, $634,00 and $888,000 for fiscal years 2015, 2014 and
2013, respectively and gross profit (loss) of ($310,000), $260,000 and $383,000 for fiscal years 2015, 2014 and 2013, respectively.
General and Administrative
The increase of $5,566,000 in general and administrative expenses for the fiscal 2015, as compared to fiscal year 2014, relates
primarily to professional and legal costs associated with the acquisitions, dispositions and mergers, as described in the accompanying
Consolidated and Combined Financial Statements, which totaled approximately $6,485,000 and $2,639,000 for the fiscal years 2015 and
2014, respectively. The costs included approximately $4,402,000 in transaction and other real estate closing costs, approximately
$1,000,000 related to a consulting and non-competition agreement with the former CEO and approximately $893,000 related to other
consulting costs for the fiscal year 2015. Excluding the transaction-related costs noted, the overall general and administrative increase
relates to the significantly expanded size of the Company from fiscal year 2014 to fiscal year 2015.
General and administrative expenses for fiscal year 2014 included the general and administrative costs of Silver Nip Citrus
totaling approximately $887,000 due to the fact we retrospectively recast our financial statements to combine the operating results of the
Company and Silver Nip Citrus from the date common control began, November 19, 2013. In addition, general and administrative expenses
for fiscal years 2014 and 2013 included approximately $2,639,000 and $1,816,000, respectively, of professional and legal costs associated
with the change in control transaction.
29
Other Income, net
Other income, net decreased by approximately $1,429,000 in fiscal year 2015, as compared to fiscal year 2014, due to
approximately $11,700,000 in increased gains on sale of real estate, offset by approximately $6,448,000 in increased interest expense
primarily due to the refinanced term loan debt from the Orange-Co acquisition and a $6,000,000 gain on settlement of contingent
consideration arrangement in fiscal year 2014.
Other income, net decreased by approximately $10,732,000 in fiscal year 2014, as compared to fiscal year 2013, due primarily to
the gain recognized on the Conservation Easement of approximately $20,300,000 in fiscal year 2013.
Provision for Income Taxes
For the fiscal years ended September 30, 2015, 2014 and 2013, the provision for income taxes was approximately $10,905,000,
$9,889,000 and $12,029,000, respectively, and the related effective income tax rates were 40.9%, 52.2% and 37.9%, respectively.
During fiscal year 2015, the Company revised effective tax rates to reflect the impact of claiming certain deductions on amended
federal and state income tax returns filed for the fiscal years ended September 30, 2011 through September 30, 2013. Other changes to the
effective tax rates relate primarily to the nondeductible nature of political contributions and lobbying expenses. In addition, there were
limitations on certain deductions related to the vesting of the long-term incentive grants for fiscal year 2014, and non-deductible transaction
costs related to the Silver Nip Citrus merger for fiscal year 2015.
The Internal Revenue Service ("IRS") is currently auditing the Company’s tax returns for the fiscal years ended September 30,
2013, 2012 and 2011.
Non-GAAP Financial Measures
The Company utilizes Adjusted EBITDA among other measures, to evaluate the performance of its business. Due to significant
depreciable assets associated with the nature of our operations and, to a lesser extent, interest costs associated with our capital structure,
management believes that Adjusted EBITDA, Adjusted Earnings per Diluted Common Share, Adjusted Free Cash Flow and Adjusted Free
Cash Flow per Diluted Common Share are important measures to evaluate our results of operations between periods on a more comparable
basis and to help investors analyze underlying trends in our business, evaluate the performance of our business both on an absolute basis
and relative to our peers and the broader market, provides useful information to both management and investors by excluding certain items
that may not be indicative of our core operating results and operational strength of our business and helps investors evaluate our ability to
service our debt. Tax impacts are computed based on the effective rate for each of the fiscal years ended September 30, 2015. Such
measurements are not prepared in accordance with Generally Accepted Accounting Principles in the United States (“U.S. GAAP”) and
should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. The non-U.S. GAAP information
provided is unique to the Company and may not be consistent with methodologies used by other companies. Adjusted Free Cash Flow is
defined as cash provided by (used in) operations less capital expenditures adjusted for non-recurring transactions. The Company uses
Adjusted Free Cash Flow and Adjusted Free Cash Flow per Diluted Common Share to evaluate its business and this measure is considered
an important indicator of the Company's liquidity, including its ability to reduce net debt, make strategic investments and pay dividends to
common stockholders. An analysis of Adjusted Free Cash Flow and Adjusted Free Cash Flow per Common Share is provided below. Net
income attributable to common stockholders is reconciled to Adjusted EBITDA and Adjusted Earnings per Diluted Common Share, as
follows:
30
Adjusted EBITDA
(in thousands)
Net income attributable to common stockholders
$
Interest expense
Provision for income taxes
Depreciation and amortization
EBITDA
Asset impairment
Transaction costs
Acquired citrus inventory fair value adjustments
Loss on extinguishment of debt
Gain on bargain purchase
Gain on settlement of contingent consideration
Write-off of certain inventory and plant cane costs
Payments on consulting agreements
Gains on sale of real estate
Fiscal Year Ended September 30,
2014
2015
2013
15,764 $
8,373
10,905
14,637
49,679
541
5,592
8,051
1,051
(1,145)
—
—
893
(16,517)
9,033 $
1,925
9,889
8,946
29,793
—
2,639
—
—
—
(6,000)
2,309
—
(4,821)
19,646
1,257
12,029
9,675
42,607
—
1,816
—
—
—
—
—
—
(20,299)
Adjusted EBITDA
$
48,145 $
23,920 $
24,124
Adjusted Earnings per Common Share
(in thousands)
Net income attributable to common stockholders
Loss on extinguishment of debt
Asset impairment
Transaction costs
Gain on settlement of contingent consideration
Acquired citrus inventory fair value adjustments
Gain on bargain purchase
Payments on consulting agreements
Write-off of certain inventory and plant cane costs
Gains on sale of real estate
Tax impact
Adjusted net income
Diluted common shares
Adjusted Earnings per Diluted Common Share
Fiscal Year Ended September 30,
2014
2015
2013
15,764 $
1,051
541
5,592
—
8,051
(1,145)
893
—
(16,517)
628
9,033 $
—
—
2,639
(6,000)
—
—
—
2,309
(4,821)
3,066
14,858 $
6,226 $
8,061
7,354
1.84 $
0.85 $
19,646
—
—
1,816
—
—
—
—
—
(20,299)
7,024
8,187
7,357
1.11
$
$
$
31
Free Cash Flow
(in thousands)
Cash provided by operating activities
Adjustments for non-recurring items:
Transaction costs
Payment on consulting agreements
Transaction related tax savings
Capital expenditures
Adjusted Free Cash Flow
Diluted common shares
Adjusted Free Cash Flow per Diluted Common Share
Fiscal Year Ended September 30,
2014
2015
2013
33,866 $
27,991 $
13,426
5,592
893
(10,277)
(11,948)
18,126 $
8,061
2.25 $
2,639
—
—
(13,243)
17,387 $
7,354
2.36 $
1,816
—
—
(18,924)
(3,682)
7,357
(0.50)
$
$
$
Liquidity and Capital Resources
A comparative balance sheet summary is presented in the following table:
(in thousands)
Cash and cash equivalents
Total current assets
Total current liabilities
Working capital
Total assets
Debt obligations
Current ratio
September 30,
2015
2014
Change
$
$
$
$
$
$
7,360 $
70,680 $
23,633 $
47,047 $
460,580 $
205,881 $
2.99 to 1
31,020 $
125,712 $
20,670 $
105,042 $
257,580 $
64,800 $
6.08 to 1
(23,660)
(55,032)
2,963
(57,995)
203,000
141,081
Our business has historically generated positive net cash flows from operations. Sources of cash primarily include cash flows from
operations, amounts available under our credit facilities and access to capital markets. Our access to additional borrowings under our
revolving lines of credit is subject to the satisfaction of customary borrowing conditions. As a public company, we may have access to
other sources of capital. However, our access to, and the availability of, financing on acceptable terms in the future will be affected by
many factors, including (i) our financial condition, prospects and credit rating, (ii) the liquidity of the overall capital markets and (iii) the
state of the economy. There can be no assurance that we will continue to have access to the capital markets on acceptable terms or at all.
The principal uses of cash that affect our liquidity position include the following: operating expenses including employee costs,
the cost of maintaining our citrus groves, harvesting and hauling of our citrus products, capital expenditures, income tax payments,
acquisitions, dividends, and debt service costs including interest and principal payments on our term loans and other credit facilities. In
addition to the acquisitions and dispositions disclosed elsewhere, we have evaluated and expect to continue to evaluate possible acquisitions
and dispositions of certain businesses. Such transactions may be material and may involve cash, the issuance of other securities or the
assumption of indebtedness.
We believe that a combination of our cash-on-hand, cash generated from operations and availability under our lines of credit will
provide us with sufficient liquidity to service the principal and interest payments on our indebtedness, satisfy our working capital
requirements and capital expenditures for at least the next 12 months and over the long term. We have a $70,000,000 working capital line
of credit of which $52,500,000 is available for our general use as of September 30, 2015 and a $25,000,000 revolving line of credit all of
which is available for our general use as of September 30, 2015 (see Note 5 “Debt" to the accompanying Consolidated and Combined
Financial Statements). If the Company pursues significant growth opportunities in the future, it could have a material adverse impact on
our cash balances, and we may need to finance such activities by drawing down monies under our lines of credit or obtaining additional
debt or equity financing. There can be no assurance that additional financing will be
32
available to us when needed or, if available, that it can be obtained on commercially reasonable terms. Any liability to obtain additional
financing could impact our ability to pursue different growth opportunities.
Our level of debt could have important consequences on our business, including, but not limited to, increasing our vulnerability to
general adverse economic and industry conditions, limiting the availability of our cash flow to fund future investments, capital
expenditures, working capital, business activities and other general corporate requirements and limiting our flexibility in planning for, or
reacting to, changes in our business and the industry in which we operate.
Cash Management Impacts
Cash and cash equivalents decreased by $23,660,000 for the fiscal year ended September 30, 2015, as compared to the fiscal year
ended September 30, 2014; increased $6,437,000 for the fiscal year ended September 30, 2014 as compared to the fiscal year
ended September 30, 2013; and increased $11,255,000 for the fiscal year ended September 30, 2013 as compared to the fiscal year
ended September 30, 2012. The components of these changes are discussed below.
Consolidated and Combined Statements of Cash Flows
The following table details the items contributing to the Consolidated and Combined Statement of Cash Flows for fiscal years
2015, 2014 and 2013:
(in thousands)
Net cash flows provided by operating activities
Net cash flows provided by (used in) in investing activities
Net cash flows provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash Flows from Operating Activities
Fiscal Year Ended September
30,
2014
2013
2015
$
33,866 $ 27,991 $ 13,426
6,671
(8,808)
(8,842)
(12,746)
$ (23,660) $ 6,437 $ 11,255
(188,399)
130,873
% Change
2015 vs 2014
2014 vs 2013
21.0 %
2,039.0 %
(1,126.8)%
(467.6)%
108.5 %
(232.0)%
(44.2)%
(42.8)%
The increase in net cash provided by operating activities for fiscal year 2015, as compared to fiscal year 2014, was primarily due
to (i) $6,700,000 increase in net income, and (ii) approximately $7,193,000 increase in non-cash expenses, including approximately a
$7,040,000 increase in deferred income taxes. The increase in non-cash expenses is net of an approximately $12,768,000 increase in gain on
sale of assets which was substantially due to the recognition of approximately $13,700,000 of gain associated with the Sugarcane land sale
in fiscal year 2015 as discussed in Fiscal Year Highlights and Recent Developments.
The increase in net cash provided by operating activities for fiscal year 2014, as compared to fiscal year 2013, was primarily due
to (i) approximately $8,638,000 increase in changes in operating assets and liabilities due to the elimination of sugarcane inventory,
increase in income tax payable and increases in other liabilities and (ii) approximately a $16,500,000 decrease in the net gain on the sale of
property and equipment related to a non-recurring sale of the Conservation easement in fiscal year 2013 offset by the closing of the Polk
County sale in fiscal year 2014. The increase in net cash provided by operating activities was offset by (i) approximately $10,600,000
decrease in net income (ii) approximately $6,000,000 gain on settlement of contingent consideration arrangement in fiscal year 2014 and
(iii) approximately $3,751,000 decrease in deferred income taxes.
Due to the seasonal nature of our business, working capital requirements are typically greater in the first and fourth quarters of our
fiscal year. Cash flows from operating activities typically improve in our second and third fiscal quarters as we harvest our citrus crops.
Cash Flows from Investing Activities
The increase in net cash used in investing activities for fiscal year 2015, as compared to fiscal year 2014, was primarily due to (i)
the acquisition of Orange-Co for approximately $265,600,000 in December 2014 (see Note 3 “Acquisitions and Dispositions" to the
accompanying Consolidated and Combined Financial Statements) and (ii) Silver Nip Citrus’ acquisition of a 1,500 citrus grove in Charlotte
County, Florida for approximately $17,130,000. The increase in net cash flows used by investing activities was offset by proceeds from the
sale of our sugarcane land of approximately $97,200,000 from a tax deferred like-kind exchange pursuant to Internal Revenue Code Section
1031 and $8,163,000 of proceeds from other dispositions.
33
The increase in net cash used in investing activities for fiscal year 2014, as compared to fiscal year 2013, was primarily due to (i)
the acquisition of a Citrus business for approximately $16,517,000, (ii) approximately $9,902,000 decrease in proceeds for sale of assets
related to the Conservation Easement land sale in 2013, offset by the Polk County land sale and property and equipment sold to USSC in
fiscal year 2014. The increase in net cash flows used by investing activities was offset by (i) approximately $5,681,000 decrease in capital
expenditures due to a decrease in the number of cows and bulls purchased to augment our breeding herd, a decrease in purchases of rolling
stock, equipment and other assets as well as improvement to farmland related to the completion of the sugarcane expansion in fiscal year
2013, partially offset by capital expenditures related to the building of our citrus tree nursery in fiscal year 2014, and (ii) approximately
$2,635,000 increase in return on investment in Magnolia primarily due to the reinstatement of cash distributions by Magnolia after its
conversion of a large portion of its tax certificate portfolio to tax deeds and (iii) approximately $2,700,000 cash acquired in the common
control transaction.
Cash Flows from Financing Activities
The increase in net cash provided by financing activities for fiscal year 2015, as compared to fiscal year 2014, was primarily due
to (i) net proceeds from the Company’s restructured long-term debt on December 3, 2014, in connection with the Orange-Co acquisition
(see Note 5 “Debt” to the accompanying Consolidated and Combined Financial Statements). The restructured credit facilities included
$125,000,000 in fixed interest rate term loans and $57,500,000 in variable interest rate term loans. The proceeds of the new credit facilities
were partially offset by the repayment of an existing $34,000,000 variable interest rate term loan. The increase in net cash provided by
financing activities was also partially offset by approximately $17,800,000 of principal payments on term loans outstanding in fiscal year
2015.
The increase in net cash used in financing activities for fiscal year 2014, as compared to fiscal year 2013, was primarily due to (i)
approximately $1,600,000 increase in net payments on revolving line of credit and (ii) approximately $1,950,000 increase in purchase of
treasury stock for fiscal year 2014 and (iii) approximately $1,300,000 increase in dividends paid. The increase in net cash used in financing
activities was offset by approximately $1,410,000 decrease in principal payments on notes payable in fiscal year 2014.
Contractual Obligations and Off Balance Sheet Arrangements
We have various contractual obligations which are recorded as liabilities in our Consolidated and Combined Balance Sheets. The
following table presents our significant contractual obligations and commercial commitments on an undiscounted basis as of September 30,
2015 and the future periods in which such obligations are expected to be settled in cash.
(in thousands)
Long-Term Debt
Interest on Long-Term Debt
Retirement Benefits
Consulting/Non-Compete Agreement
Operating Leases
Capital Leases
Tree Purchase Commitments
Total
Purchase Commitments
Total
205,881 $
72,805
13,334
700
1,637
865
300
295,522 $
$
$
Payments Due by Period
1-3 Years
<1 Year
3-5 Years
5+ Years
4,511 $
7,494
367
600
667
277
300
14,216 $
19,043 $
14,180
712
100
964
588
—
35,587 $
21,863 $
12,614
380
—
6
—
—
34,863 $
160,464
38,517
11,875
—
—
—
—
210,856
Alico, through its wholly owned subsidiary Alico Fruit Company, enters into contracts for the purchase of citrus fruit during the
normal course of its business. The remaining obligations under these purchase agreements were approximately $4,048,000 as of September
30, 2015 for delivery in fiscal year 2016. All of these obligations are covered by sales agreements. Alico’s management currently believes
that all committed purchase volume will be sold at cost or higher.
34
CRITICAL ACCOUNTING POLICIES
Our Consolidated and Combined Financial Statements are prepared in accordance with U.S. GAAP, which requires management
to make estimates, judgments and assumptions that affect the amounts reported in those financial statements and accompanying notes.
Management considers an accounting policy to be critical if it is important to our financial condition and results of operations and if it
requires significant judgment and estimates on the part of management in its application. We consider policies relating to the following
matters to be critical accounting policies:
Revenue Recognition
Revenues from agricultural crops are recognized at the time the crop is harvested and delivered to the customer. The Company
recognizes revenues from cattle sales at the time the cattle are delivered. Management reviews the reasonableness of the revenue accruals
quarterly based on buyers’ and processors’ advances to growers, cash and futures markets and experience in the industry. Adjustments are
made throughout the fiscal year to these estimates as more current relevant information regarding the specific markets become available.
Differences between the estimates and the final realization of revenues can be significant and can be either positive or negative. During the
periods presented in this Annual Report on Form 10-K, no material adjustments were made to the reported revenues from our crops.
Alico Fruit Company ("AFC") operations primarily consist of providing supply chain management services to Alico, as well as to
other citrus growers in the state of Florida. AFC also purchases and resells citrus fruit; in these transactions, AFC (i) acts as a principal;
(ii) takes title to the products; and (iii) has the risks and rewards of ownership, including the risk of loss for collection, delivery or returns.
Therefore, AFC recognizes revenues based on the gross amounts due from customers for its marketing activities. Supply chain management
service revenues are recognized when the services are performed.
Inventory
We capitalize the cost of growing crops into inventory until the time of harvest. Once a given crop is harvested, the related
inventoried costs are recognized as cost of sales to provide an appropriate matching of costs incurred with the related revenues recognized.
We record inventory at the lower of cost or net realizable value. Management regularly assesses estimated inventory valuations based on
current and forecasted usage of the related commodity, observable prices, estimated completion costs and other relevant factors that may
affect the net realizable value.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Major improvements are capitalized
while maintenance and repairs are expensed in the period the cost is incurred. Costs related to the development of citrus groves, through
planting of trees, are capitalized. Such costs include land clearing, excavation and construction of ditches, dikes, roads and reservoirs
among other costs. After the planting, caretaking costs or pre-productive maintenance costs are capitalized for four years. After four years,
a grove is considered to have reached maturity and the accumulated costs are depreciated over 25 years, except for land clearing and
excavation, which are considered costs of land and not depreciated.
The breeding herd consists of purchased animals and replacement breeding animals raised on our ranch. Purchased animals are
stated at the cost of acquisition. The cost of animals raised on the ranch is based on the accumulated cost of developing such animals for
productive use. Breeding animals are depreciated over 6-7 years.
Income Taxes
In preparing our Consolidated and Combined Financial Statements, significant judgment is required to estimate our income taxes.
Our estimates are based on our interpretations of federal and state laws. Deferred income taxes are recognized for the income tax effect of
temporary differences between financial statement carrying amounts and the income tax basis of assets and liabilities. We regularly review
our deferred tax assets to determine whether future taxable income will be sufficient to realize the benefits of these assets. A valuation
allowance is provided for deferred income tax assets for which it is deemed, more likely than not, that future taxable income will not be
sufficient to realize the related income tax benefits from these assets. The amount of the net deferred income tax asset that is considered
realizable could be adjusted if estimates of future taxable income are adjusted. We apply a “more likely than not” threshold to the
recognition and non-recognition of tax positions. A change in judgment related
35
to prior years’ tax positions is recognized in the quarter of such change. Adjustments to temporary differences, permanent differences or
uncertain tax positions could materially impact our financial position, cash flows and results of operations.
Business Combinations
The Company accounts for its business acquisitions under the acquisition method of accounting as indicated under the Financial
Accounting Standards Board - Accounting Standards Codification TM ("FASB ASC") No. 805, “Business Combinations”, which requires
the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed and any noncontrolling
interest in the acquiree and establishes the acquisition date as the fair value measurement point. Accordingly, the Company recognizes
assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities and noncontrolling interest in
the acquiree, based on fair value estimates as of the date of acquisition. In accordance with FASB ASC No. 805, the Company recognizes
and measures goodwill, if any, as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the
identified net assets acquired.
When we acquire a business from an entity under common control, whereby the companies are ultimately controlled by the same
party or parties both before and after the transaction, it is treated similar to the pooling of interests method of accounting, whereby the
assets and liabilities are recorded at the transferring entity’s historical cost instead of reflecting the fair market value of assets and
liabilities.
Impairment of Long-Lived Assets
We evaluate property, cattle, equipment and other long-lived assets for impairment when events or changes in circumstances
(triggering events) indicate that the carrying value of assets contained in our financial statements may not be recoverable. Depending on the
asset under review, we use varying methods to determine fair value, such as discounting expected future cash flows, determining resale
values by market or applying a capitalization rate to net operating income using prevailing rates for a given market. Unfavorable changes in
economic conditions and net operating income for a specific property will change our estimates. If an impairment loss is recognized, the
adjusted carrying amount of the asset becomes its cost basis. For a depreciable long-lived asset, the new cost basis will be depreciated or
amortized over the remaining useful life of that asset. As of September 30, 2015, long-lived assets included property and equipment and
intangible assets.
Fair Value Measurements
The carrying amounts in the balance sheets for operating accounts receivable, mortgages and notes receivable, accounts payable
and accrued expenses approximate fair value because of the immediate or short term maturity of these items. When stated interest rates are
below market, we discount mortgage notes receivable to reflect their estimated fair value. We carry our investments at fair value. The
carrying amounts reported for our long-term debt approximates fair value as our borrowings with commercial lenders are at interest rates
that vary with market conditions and fixed rates that approximate market rates for comparable loans.
Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability (i.e., exit price) in an
orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are categorized into
one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Assets and liabilities are classified in their
entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:
Level 1- Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2- Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are
not active for which significant inputs are observable, either directly or indirectly.
Level 3- Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the
overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the
asset or liability at the measurement date.
36
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market Risk - Market risk represents the potential loss resulting from adverse changes in the value of financial instruments, either
derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates, commodity prices, and equity security prices.
The Company handles market risks in accordance with its established policies; however, Alico does not enter into derivatives or other
financial instruments for trading or speculative purposes. The Company does consider, on occasion, the need to enter into financial
instruments to manage and reduce the impact of changes in interest rates; however, the Company entered into no such instruments during
the three-year period ended September 30, 2015. The Company held various financial instruments as of September 30, 2015 and 2014,
consisting of financial assets and liabilities reported in the Company’s Consolidated and Combined Balance Sheets and off-balance sheet
exposures resulting from letters of credit issued for the benefit of Alico.
Interest Rate Risk - The Company is subject to interest rate risk from the utilization of financial instruments, such as term debt and
other borrowings. The fair market value of long-term, fixed interest rate debt is subject to interest rate risk. The Company’s primary long-
term obligations are fixed rate debt and are subject to fair value risk. A one percentage-point increase in prevailing interest rates would
increase interest expense on our variable rate debt obligations by $600,531 before income taxes for the fiscal year ended September 30,
2015.
Foreign-Exchange Rate Risk - The Company currently has no exposure to foreign-exchange rate risk because all of its financial
transactions are denominated in U.S. dollars.
Commodity Price Risk - The Company has no financial instruments subject to commodity price risk.
Equity Security Price Risk - None of the Company’s financial instruments have potential exposure to equity security price risk.
37
Item 8. Financial Statements and Supplementary Data.
Index to Consolidated and Combined Financial Statements
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
Consolidated and Combined Financial Statements:
Consolidated and Combined Balance Sheets
Consolidated and Combined Statements of Operations and Comprehensive Income
Consolidated and Combined Statements of Changes in Equity
Consolidated and Combined Statements of Cash Flows
Notes to Consolidated and Combined Financial Statements
All schedules are omitted for the reason that they are not applicable or the required information is included in the financial
statements or notes.
Page
39
40
41
42
43
44
46
38
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Alico, Inc.
We have audited the accompanying consolidated and combined balance sheets of Alico, Inc. and Subsidiaries as of September 30,
2015 and 2014, and the related consolidated and combined statements of operations and comprehensive income, changes in equity, and
cash flows for each of the three fiscal years in the period ended September 30, 2015. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated and combined financial statements referred to above present fairly, in all material respects, the
financial position of Alico, Inc. and Subsidiaries as of September 30, 2015 and 2014, and the results of their operations and their cash flows
for each of the three fiscal years in the period ended September 30, 2015, in conformity with U.S. generally accepted accounting principles.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
Alico, Inc. and Subsidiaries' internal control over financial reporting as of September 30, 2015, based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our
report dated December 10, 2015 expressed an unqualified opinion on the effectiveness of Alico, Inc. and Subsidiaries’ internal control over
financial reporting.
/s/ RSM US LLP
Orlando, Florida
December 10, 2015
39
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
Alico, Inc.
We have audited Alico, Inc. and Subsidiaries' internal control over financial reporting as of September 30, 2015, based on criteria
in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
established
Commission in 2013. Alico, Inc. and Subsidiaries’ management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company's internal
control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company's internal control over financial reporting includes those policies and procedures that (a) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, Alico, Inc. and Subsidiaries maintained, in all material respects, effective internal control over financial reporting
as of September 30, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated and combined balance sheets of Alico, Inc. and Subsidiaries as of September 30, 2015 and 2014, and the related consolidated
and combined statements of operations and comprehensive income, changes in equity, and cash flows for each of the three fiscal years in
the period ended September 30, 2015, and our report dated December 10, 2015 expressed an unqualified opinion.
/s/ RSM US LLP
Orlando, Florida
December 10, 2015
40
ALICO, INC.
CONSOLIDATED AND COMBINED BALANCE SHEETS
(dollars in thousands, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net
Inventories
Income tax receivable
Assets held for sale
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Goodwill
Deferred financing costs, net of accumulated amortization
Other non current assets
Total assets
Current liabilities:
LIABILITIES AND EQUITY
Accounts payable
Accrued liabilities
Long-term debt, current portion
Income taxes payable
Deferred tax liability, current portion
Obligations under capital leases, current portion
Other current liabilities
Total current liabilities
Long-term debt
Lines of credit
Deferred tax liability
Deferred gain on sale
Deferred retirement obligations
Obligations under capital leases
Total liabilities
Commitments and contingencies (Note 18)
Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and 7,377,106
shares issued and 8,325,580 and 7,361,340 shares outstanding at September 30, 2015 and
September 30, 2014, respectively
Additional paid in capital
Members' equity
Treasury stock, at cost, 90,565 and 15,766 shares held at September 30, 2015 and
September 30, 2014, respectively
Retained earnings
Total Alico Inc. equity
Noncontrolling interest
Total equity
Total liabilities and equity
September 30,
2015
2014
7,360 $
4,252
55,142
2,088
—
1,838
70,680
381,667
2,246
2,985
3,002
460,580 $
4,022 $
13,682
4,511
—
151
277
990
23,633
201,370
—
24,134
29,122
4,134
588
282,981
31,020
8,441
25,469
—
59,513
1,269
125,712
126,833
—
1,143
3,892
257,580
2,053
4,227
3,196
4,572
3,135
259
3,228
20,670
58,444
3,160
8,760
—
3,856
839
95,729
—
—
8,416
21,289
—
(3,962)
147,049
172,792
4,807
177,599
460,580 $
7,377
3,742
16,414
(650)
134,968
161,851
—
161,851
257,580
$
$
$
$
See accompanying notes to consolidated and combined financial statements.
41
ALICO, INC.
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
Operating revenues:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Total operating revenues
Operating expenses:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Total operating expenses
Gross profit
General and administrative expenses
Income from operations
Other income (expense):
Investment and interest income, net
Interest expense
Gain on sale of real estate
Gain on settlement of contingent consideration arrangement
Loss on extinguishment of debt
Gain on bargain purchase
Impairment on asset held for sale
Other expense, net
Total other income, net
Income before income taxes
Provision for income taxes
Net income
Net loss attributable to noncontrolling interests
Net income attributable to Alico, Inc. common stockholders
Comprehensive income (loss) attributable to noncontrolling interests
Comprehensive income attributable to Alico, Inc. common stockholders
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic
Diluted
Weighted-average number of common shares outstanding:
Basic
Diluted
Cash dividends declared per common share
$
$
$
$
$
See accompanying notes to consolidated and combined financial statements.
42
Fiscal Year Ended September 30,
2014
2015
2013
$
139,700 $
6,439
901
5,394
685
153,119
62,372 $
12,376
20,429
8,172
634
103,983
43,689
28,412
21,917
6,755
888
101,661
104,081
6,193
1,089
4,808
995
117,166
35,953
16,894
19,059
59
(8,373)
16,517
—
(1,051)
1,145
(541)
(177)
7,579
26,638
10,905
15,733
31
15,764 $
—
15,764 $
42,571
12,317
21,356
6,123
374
82,741
21,242
11,328
9,914
131
(1,925)
4,821
6,000
—
—
—
(19)
9,008
18,922
9,889
9,033
—
9,033 $
—
9,033 $
1.96 $
1.96 $
1.23 $
1.23 $
8,056
8,061
7,336
7,354
0.24 $
0.24 $
31,533
27,949
16,202
3,798
505
79,987
21,674
9,739
11,935
704
(1,257)
20,299
—
—
—
—
(6)
19,740
31,675
12,029
19,646
—
19,646
—
19,646
2.69
2.67
7,313
7,357
0.36
Balance at
September 30, 2012
Net income
Dividends
Treasury stock
purchases
Stock-based
compensation:
Directors
Executives
Balance at
September 30, 2013
Net income
Dividends
Treasury stock
purchases
Members' equity
as of common
control
November 19,
2013
Stock-based
compensation:
Directors
Executives
Members'
equity
Balance at
September 30, 2014
Net income (loss)
Dividends
Treasury stock
purchases
Acquisition of
citrus businesses
Stock-based
compensation:
Directors
Executives
Members'
equity
Balance at
September 30, 2015
ALICO, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF CHANGES IN EQUITY
(in thousands)
Common Stock
Shares
Amount
Additional
Paid In
Capital
Treasury
Stock
Retained
Earnings
Members'
Equity
Total Alico, Inc.
Equity
Noncontrolling
Interest
Total Equity
7,377 $ 7,377 $ 9,053 $ (543) $ 111,659 $
—
—
19,646
(2,626)
—
—
—
—
—
—
— $
—
—
127,546 $
19,646
(2,626)
— $
—
—
127,546
19,646
(2,626)
—
—
—
(2,894)
—
—
(2,894)
—
(2,894)
—
—
—
—
392
51
591
30
—
—
7,377
—
—
7,377
—
—
9,496
—
—
(2,816)
—
—
128,679
8,050
(1,761)
—
—
—
983
(605)
983
81
142,736
9,033
(2,366)
—
—
—
—
—
983
81
142,736
9,033
(2,366)
—
—
—
(4,844)
—
—
(4,844)
—
(4,844)
—
—
—
—
—
15,631
15,631
—
15,631
—
—
—
—
(26)
(5,728)
1,087
5,923
—
—
—
—
—
1,061
195
—
—
—
—
—
405
405
7,377
—
—
7,377
—
—
3,742
—
—
(650)
—
—
134,968
14,017
(1,936)
16,414
1,747
—
161,851
15,764
(1,936)
—
—
—
—
(31)
—
—
1,061
195
405
161,851
15,733
(1,936)
—
—
—
(4,013)
—
—
(4,013)
—
(4,013)
1,039
1,039
17,431
—
—
(18,470)
—
4,838
4,838
—
—
—
—
61
55
701
—
—
—
—
—
—
—
—
—
—
309
762
55
309
—
—
—
762
55
309
8,416 $ 8,416 $ 21,289 $(3,962) $ 147,049 $
— $
172,792 $
4,807 $
177,599
See accompanying notes to consolidated and combined financial statements.
43
ALICO, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Gain on sale of assets
Gain on settlement of contingent consideration arrangement
Deferred income taxes
Gain on bargain purchase
Stock-based compensation
Loss on extinguishment of debt
Asset impairment
Other non-cash gains and losses
Changes in operating assets and liabilities:
Accounts receivable
Inventories
Income tax receivable
Other assets
Accounts payable and accrued expenses
Income tax payable
Other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Acquisition of citrus businesses, net of cash acquired
Purchases of property and equipment
Proceeds from disposals of property and equipment
Return on investment in Magnolia Fund
Cash received in common control acquisition
Other
Net cash (used in) provided by investing activities
Cash flows from financing activities:
Proceeds from term loans
Repayments on revolving line of credit
Borrowings on revolving line of credit
Repayment of term loan
Principal payments on term loans
Treasury stock purchases
Financing costs
Dividends paid
Capital lease payments
Principal payments on notes payable
Net cash provided by (used in) financing activities
44
Fiscal Year Ended September 30,
2014
2015
2013
$
15,733 $
9,033 $
19,646
14,637
(17,139)
—
12,351
(1,145)
1,126
1,051
541
1,183
5,468
9,708
(2,088)
(30)
2,029
(4,572)
(4,987)
33,866
(282,717)
(11,948)
105,363
675
—
228
(188,399)
195,500
(84,333)
81,173
(34,000)
(17,759)
(4,013)
(3,583)
(1,879)
(233)
—
130,873
8,946
(4,371)
(6,000)
5,311
—
1,661
—
—
(135)
(3,276)
13,666
—
621
(7,935)
3,401
7,069
27,991
(16,517)
(13,243)
14,479
3,814
2,669
(10)
(8,808)
—
(1,600)
—
—
—
(4,844)
—
(3,386)
(426)
(2,490)
(12,746)
9,675
(20,894)
—
9,062
—
923
—
—
(78)
(1,195)
(2,113)
—
—
(3,727)
2,014
113
13,426
—
(18,924)
24,381
1,179
—
35
6,671
—
(5,661)
5,661
—
—
(2,894)
—
(2,048)
—
(3,900)
(8,842)
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amount capitalized
Cash paid for income taxes
Supplemental disclosure of non-cash investing and financing activities:
Escrow deposit in other assets applied to capital expenditures
Property and equipment purchased with capital leases
Equipment purchased with long-term debt
(23,660)
31,020
6,437
24,583
7,360 $
31,020 $
6,273 $
5,213 $
1,697 $
1,177 $
250 $
37 $
— $
— $
1,400 $
108 $
$
$
$
$
$
$
11,255
13,328
24,583
1,048
952
—
—
—
See accompanying notes to consolidated and combined financial statements.
45
ALICO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
September 30, 2015, 2014 and 2013
Note 1. Description of Business and Basis of Presentation
Alico, Inc. (“Alico”), together with its subsidiaries (collectively, the “Company", "we", "us" or our”), is a Florida agribusiness and
land management company. We own approximately 121,000 acres of land throughout Florida inclusive of approximately 90,000 acres of
mineral rights. We manage our land based upon its primary usage and review its performance based upon two primary classifications -
Citrus Groves and Ranch and Conservation. Our principal lines of business are citrus groves and related support operations. In addition, we
operate an Agricultural Supply Chain Management business that is not tied directly to our land holdings and Other Operations that include
a citrus nursery, a leasing mine and oil extraction rights to third parties. We present our financial results based upon our five business
segments (Citrus Groves, Improved Farmland, Ranch and Conservation, Agricultural Supply Chain Management and Other Operations).
As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and the Improved Farmland segment is no
longer material to our business.
Common Control Acquisition between the Company and 734 Citrus Holdings, LLC
Effective February 28, 2015, the Company completed the merger (“Merger”) with 734 Citrus Holdings, LLC (“Silver Nip Citrus”)
pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with 734 Sub, LLC, a wholly owned subsidiary of the Company
(“Merger Sub”), Silver Nip Citrus and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. The
ownership of Silver Nip Citrus was held by 734 Agriculture, 74.89%, Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and
an entity controlled by Mr. Clay Wilson owned 20.11%. Silver Nip Citrus entities include 734 Harvest, LLC, 734 Co-op Groves, LLC, 734
LMC Groves, LLC and 734 BLP Groves, LLC.
On November 19, 2013, 734 Agriculture and its affiliates, including 734 Investors, acquired approximately 51% of the Company’s
common stock. 734 Agriculture is the sole managing member of 734 Investors. By virtue of their ownership percentage, 734 Agriculture is
able to elect all of the Directors and, consequently, control Alico.
734 Agriculture had control over both Silver Nip Citrus and the Company, and therefore the Merger was treated as a common
control acquisition.
At closing of the Merger, Merger Sub merged with and into Silver Nip Citrus, with Silver Nip Citrus and its affiliates surviving the
Merger as wholly owned subsidiaries of the Company. Pursuant to the Merger Agreement, at closing, the Company issued 923,257 shares
of the Company’s common stock, par value $1.00 per share, to the holders of membership interests in Silver Nip Citrus. Silver Nip Citrus'
outstanding net indebtedness at the closing of the Merger was approximately $40,278,000 and other liabilities totaled $6,952,000. The
Company acquired assets with a book value of $65,739,000 and total net assets of $18,470,000. The shares of common stock issued were
recorded at the carrying amount of the net assets transferred. The closing price of the Company's common stock on February 27, 2015 was
$45.67.
In September 2015, the former holders of membership interests (the "Members") in Silver Nip Citrus received an additional
115,782 shares of the Company’s common stock pursuant to the Merger Agreement. The additional purchase consideration was based on
the value of the proceeds received to date by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’s citrus groves
following the conclusion of the 2014-2015 citrus harvest season. The Members will receive additional Company common shares based on
any additional proceeds received by the Company subsequent to September 2015 related to the 2014-2015 harvest season.
Basis of Presentation
The Company has prepared the accompanying financial statements on a consolidated and combined basis. These accompanying
Consolidated and Combined Financial Statements, which are referred to herein as the “Financial Statements”, have been prepared in
accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and
regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying Financial
Statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the
Company’s results as of and for the fiscal years ended September 30, 2015, 2014 and 2013. All intercompany transactions and account
balances between the consolidated and combined businesses have been eliminated.
46
Combined Financial Statements
As the Company and Silver Nip Citrus were under common control at the time of the Merger, we are required under U.S. GAAP
to account for this common control acquisition in a manner similar to the pooling of interests method of accounting. Under this method of
accounting, our Consolidated and Combined Balance Sheets as of September 30, 2015 and 2014 reflect Silver Nip Citrus’ historical
carryover basis in the assets and liabilities instead of reflecting the fair market value of the assets and liabilities. We have also
retrospectively recast our financial statements to combine the operating results of the Company and Silver Nip Citrus from the date
common control began, November 19, 2013.
Silver Nip Citrus’ fiscal year end is June 30. The Company’s financial condition as of September 30, 2015 and 2014 includes the
financial condition of Silver Nip Citrus as of June 30, 2015 and 2014, and the Company’s results of operations for the fiscal year ended
September 30, 2015 include the Silver Nip Citrus’ results of operations for the fiscal year ended June 30, 2015. The Company’s results of
operations for the fiscal year ended September 30, 2014 includes Silver Nip Citrus’ results of operations from November 19, 2013 (the
initial date of common control) through June 30, 2014.
Principles of Consolidation
The Financial Statements include the accounts of Alico, Inc. and the accounts of all the subsidiaries in which a controlling interest
is held by the Company. The Financial Statements represent the Consolidated and Combined Balance Sheets, Statements of Operations and
Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flows of Alico, Inc. and its subsidiaries. Under U.S.
GAAP, consolidation is generally required for investments of more than 50% of the outstanding voting stock of an investee, except when
control is not held by the majority owner. The Company’s subsidiaries include: Alico Land Development, Inc., Alico-Agri, Ltd., Alico
Plant World, LLC, Alico Fruit Company, LLC (formerly “Bowen Brothers Fruit Company, LLC”), Alico Citrus Nursery, LLC, Alico
Chemical Sales, LLC, 734 Citrus Holdings LLC and Citree Holdings 1, LLC. The Company considers the criteria established under the
Financial Accounting Standards Board - Accounting Standards Codification TM (“FASB ASC”) 810, “Consolidations” in its consolidation
process. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and
assumptions that affect the reported amounts of assets and liabilities as of the date of the accompanying Financial Statements, the
disclosure of contingent assets and liabilities in the Financial Statements and the accompanying Notes, and the reported amounts of
revenues and expenses and cash flows during the periods presented. Actual results could differ from those estimates based upon future
events. The Company evaluates estimates on an ongoing basis. The estimates are based on current and expected economic conditions,
historical experience, the experience and judgment of the Company’s management and various other specific assumptions that the
Company believes to be reasonable. The Company evaluates its assumptions and estimates on an ongoing basis and may employ outside
experts to assist in the Company’s evaluations.
For the fiscal year ended September 30, 2014, the Company recognized a $6,000,000 gain on settlement of contingent
consideration arrangement, recorded in other income, net, in the accompanying Consolidated and Combined Statement of Operations and
Comprehensive Income for the fiscal year ended September 30, 2014. The contingent consideration arrangement relates to a Silver Nip
Citrus asset purchase agreement. In fiscal year 2014, the Company estimated that no portion of the liability was expected to be earned or
paid out in the future, resulting in the gain on settlement in fiscal year 2014.
Noncontrolling Interest in Consolidated Affiliate
The Financial Statements include all assets and liabilities of the less-than- 100%-owned affiliate the Company controls, Citree
Holdings I, LLC (“Citree”). Accordingly, the Company has recorded a noncontrolling interest in the equity of such entity. Citree had a net
loss of approximately $64,000 for the year ended September 30, 2015, of which 51% is attributable to Alico.
Reclassifications
Certain prior year amounts have been reclassified in the accompanying Financial Statements for consistent presentation to the
current period. These reclassifications had no impact on working capital, net income, equity or cash flows as previously reported.
The Company manages its land based upon its primary usage and reviews its performance based upon two primary classifications
– Citrus Groves and Ranch and Conservation. In addition, it operates an Agricultural Supply Chain Management
47
business that is not tied directly to its land holdings and Other Operations that include leasing mines and oil extraction rights to third
parties. The Company presents its financial results and the related discussions based upon these five segments (Citrus Groves, Improved
Farmland, Ranch and Conservation, Agricultural Supply Chain Management and Other Operations). In the fourth quarter of fiscal year
2013, the Company changed its internal operations to align with the way it manages its business operations. As a result, the Company has
realigned its financial reporting segments to match its internal operations.
References to U.S. GAAP in this Annual Report on Form 10-K are to the Financial Accounting Standards Board (“FASB”),
Accounting Standards CodificationTM , (the “Codification” or “ASC”).
Note 2. Summary of Significant Accounting Policies
Business Combinations
The Company accounts for its business acquisitions under the acquisition method of accounting as indicated in FASB ASC No.
805, “Business Combinations”, which requires the acquiring entity in a business combination to recognize the fair value of all assets
acquired, liabilities assumed and any noncontrolling interest in the acquiree, and establishes the acquisition date as the fair value
measurement point. Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including
contingent assets and liabilities and noncontrolling interest in the acquiree, based on fair value estimates as of the date of acquisition. In
accordance with FASB ASC No. 805, the Company recognizes and measures goodwill, if any, as of the acquisition date, as the excess of
the fair value of the consideration paid over the fair value of the identified net assets acquired.
When we acquire a business from an entity under common control, whereby the companies are ultimately controlled by the same
party or parties both before and after the transaction, it is treated similar to the pooling of interests method of accounting. The assets and
liabilities are recorded at the transferring entity’s historical cost instead of reflecting the fair value of assets and liabilities.
Revenue Recognition
Revenues from agricultural crops are recognized at the time the crop is harvested and delivered to the customer. Receivables from
crops sold are recorded for the estimated proceeds to be received from the customer on a quarterly basis, management reviews the
reasonableness of the revenues accrued based on buyers’ and processors’ advances to growers, cash and futures markets and experience in
the industry. Adjustments are made throughout the year to these estimates as more current relevant information regarding the specific
markets becomes available. Differences between the estimates and the final realization of revenues can be significant and can be either an
increase or decrease to reported revenues. During the periods presented in this report, no material adjustments were made to the reported
revenues of the Company’s crops.
Alico recognizes revenues from cattle sales at the time the cattle are delivered.
Alico Fruit Company, LLC ("AFC") operations primarily consist of providing supply chain management services to Alico, as well
as to other citrus growers and processors in the state of Florida. AFC also purchases and resells citrus fruit; in these transactions, AFC
(i) acts as a principal; (ii) takes title to the products; and (iii) has the risks and rewards of ownership, including the risk of loss for
collection, delivery or returns. Therefore, AFC recognizes revenues based on the gross amounts due from customers for its marketing
activities. Supply chain management services revenues are recognized when the services are performed.
Cash and Cash Equivalents
The Company considers cash in banks and highly liquid instruments with an original maturity of three months or less to be cash
and cash equivalents. At various times throughout the fiscal year, and as of September 30, 2015, some accounts held at financial institutions
were in excess of the federally insured limit of $250,000. The Company has not experienced any losses on these accounts and believes
credit risk to be minimal.
Accounts receivable
Accounts receivable from customers are generated from revenues based on the sale of citrus, cattle, leasing and other transactions.
The Company grants credit in the course of its operations to third party customers. The Company performs periodic credit evaluations of its
customers’ financial condition and generally does not require collateral. The Company provides an allowance for doubtful accounts equal
to the estimated uncollectible amounts based on the aging of accounts receivable. The
48
estimate, evaluated monthly by the Company, is based on historical collection experience, current macroeconomic climate and market
conditions and a review of the current status each customer’s account. Changes in the financial viability of significant customers and
worsening of economic conditions may require changes to its estimate of the recoverability of the receivables. Such changes in estimates
are recorded in the period in which these changes become known. The allowance for doubtful accounts is charged to general and
administrative expenses in the Consolidated and Combined Statements of Operations and Comprehensive Income. As of September 30,
2015 and 2014, allowances for doubtful accounts were approximately $8,300 and $26,000, respectively.
The following table presents accounts receivable, net for fiscal years ended September 30, 2015, and 2014:
(in thousands)
Accounts receivable
Allowance for doubtful accounts
Accounts receivable, net
Fair Value of Financial Instruments
September 30,
2015
2014
$
$
4,260 $
(8)
4,252 $
8,467
(26)
8,441
The carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses approximate their fair values due to the short term and immediate nature of these financial instruments. The
carrying amounts of our debt approximate fair value due to the transactions are with commercial lenders at interest rates that vary with
market conditions and fixed rates that approximate market rates for obligations with similar terms and maturities (see Note 12, “ Fair Value
Measurements”).
Concentrations
Revenues and accounts receivable from the Company’s major customers as of September 30, 2015 and 2014 and for the fiscal
years ended September 30, 2015, 2014 and 2013, are as follows:
(in thousands)
Accounts Receivable
2015
2014
2015
— $
2,962 $
— $
Revenue
2014
19,633 $
2013
21,056
% of Total Revenue
2014
2015
2013
—%
18.9%
20.7%
USSC
Florida Orange Marketers,
Inc.
Citrosuco North America,
Inc.
Louis Dreyfus
Cutrale Citrus Juice
Minute Maid
Tropicana
$
$
$
$
$
$
$
— $
— $
— $
23,826 $
15,689
—%
22.9%
15.4%
— $
— $
— $
— $
1,019 $
— $
— $
— $
— $
4,042 $
3,870 $
22,460 $
23,556 $
57,484 $
21,925 $
804 $
24,135 $
3,984 $
— $
16,433 $
11,092
26,246
6,300
—
—
2.5%
14.7%
15.4%
37.5%
14.3%
0.8%
23.2%
3.8%
—%
15.8%
10.9%
25.8%
6.2%
—%
—%
The citrus industry is subject to various factors over which growers have limited or no control, including weather conditions,
disease, pestilence, water supply and market price fluctuations. Market prices are highly sensitive to aggregate domestic and foreign crop
sizes, as well as factors including, but not limited to, weather and competition from foreign countries.
Real Estate
In recognizing revenues from land sales, the Company applies specific revenue recognition criteria, in accordance with U.S.
GAAP, to determine when land sales revenues can be recorded. For example, in order to fully recognize a gain resulting from a real estate
transaction, the sale must be consummated with a sufficient down payment of at least 20% to 25% of the sales price depending upon the
type and timeframe for development of the property sold and any receivable from the sale cannot be subject to future subordination. In
addition, the seller cannot retain any material continuing involvement in the property sold. When these
49
criteria are not met, the Company recognizes a gain proportionate to collections utilizing either the installment method or deposit method as
appropriate.
Inventories
The costs of growing crops, including but not limited to labor, fertilization, fuel, crop nutrition and irrigation, are capitalized into
inventory throughout the respective crop year. Such costs are expensed when the crops are harvested and are recorded in citrus groves
management and improved farmland management operating expenses in the Consolidated and Combined Statements of Operations and
Comprehensive Income. Inventories are stated at the lower of cost or net realizable value. The cost for unharvested citrus crops is based on
accumulated production costs incurred during the period from January 1 through the balance sheet date. The cost of the beef cattle
inventory is based on the accumulated cost of developing such animals for sale from July 1 through the balance sheet date (see Note 6,
“Inventories”).
Property and Equipment
Property and equipment which includes amounts under capitalized leases, are stated at cost, net of accumulated depreciation and
amortization. Major improvements are capitalized while expenditures for maintenance and repairs are expensed when incurred. Costs
related to the development of citrus groves through planting of trees are capitalized. Such costs include land clearing, excavation and
construction of ditches, dikes, roads, and reservoirs, among other costs. After the planting, caretaking costs or pre-productive maintenance
costs are capitalized for four years. After four years, a grove is considered to have reached maturity and the accumulated costs are
depreciated over 25 years, except for land clearing and excavation, which are considered costs of land and not depreciated.
The breeding herd consists of purchased animals and animals raised on the Company’s ranches. Purchased animals are stated at
the cost of acquisition. The cost of animals raised on the ranch is based on the accumulated cost of developing such animals for productive
use.
Real estate costs incurred for the acquisition, development and construction of real estate projects are capitalized.
Depreciation is provided on a straight-line basis over the estimated useful lives of the depreciable assets, with the exception of
leasehold improvements and assets acquired through capital leases, which are depreciated over their estimated useful lives if the lease
transfers ownership or contains a bargain purchase option, otherwise the term of the lease.
The estimated useful lives for property and equipment are primarily as follows:
Citrus trees
Equipment and other facilities
Buildings and improvements
Breeding herd
25 years
3-20 years
40 years
6-7 years
Changes in circumstances, such as technological advances or changes to our business model or capital strategy could result in the
actual useful lives differing from the original estimates. In those cases where we determine that the useful life of property and equipment
should be shortened, we would depreciate the asset over its revised estimated remaining useful life, thereby increasing depreciation expense
(see Note 7, “Property and Equipment, Net”).
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The Company records impairment losses on long-lived assets used in operations, other than
goodwill, when events and circumstances indicate that the assets might be impaired and the estimated cash flows (undiscounted and
without interest charges) to be generated by those assets over the remaining lives of the assets are less than the carrying amounts of those
assets. The net carrying values of assets not recoverable are reduced to their fair values. Our cash flow estimates are based on historical
results adjusted to reflect our best estimates of future market conditions and operating conditions. As of September 30, 2015 and 2014,
long-lived assets were comprised of property and equipment. The Company recorded an impairment loss of approximately $541,000 on
property classified as assets held for sale as of September 30, 2015 (see Note 7, “Property and Equipment, Net”).
50
Other Non-Current Assets
Other non-current assets primarily include investments owned in agricultural cooperatives, cash surrender value on life insurance
and equity investment in affiliate (Magnolia). Investments in stock related to agricultural cooperatives are carried at cost. The Company
utilized a cooperative to harvest its sugarcane. The cooperatives require members to acquire stock ownership as a condition for the use of its
services. Due to the Company’s cessation from it sugarcane operations, the Company expects the return of the stock value in fiscal year
2016.
Income Taxes
The Company complies with the asset and liability method of accounting for deferred income taxes. The provision for income
taxes includes income taxes currently payable and those deferred as a result of temporary differences between the financial statements and
the income tax basis of assets and liabilities. Deferred income tax assets and liabilities are measured using enacted income tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of
a change in income tax rates on deferred tax assets and liabilities is recognized in income or loss in the period that includes the enactment
date. A valuation allowance is provided to reduce deferred tax assets to the amount of future tax benefit when it is more likely than not that
some portion of the deferred tax assets will not be realized. Projected future taxable income and ongoing tax planning strategies are
considered and evaluated when assessing the need for a valuation allowance. Any increase or decrease in a valuation allowance could have
a material adverse or beneficial impact on the Company’s income tax provision and net income or loss in the period the determination is
made. As of September 30, 2015 and 2014, the Company did not record a valuation allowance on deferred tax assets. The Company
recognizes interest and/or penalties related to income tax matters in income tax expense.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.
Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in
recognition or measurement are reflected in the period in which a change in judgment occurs. The Company records interest related to
unrecognized tax benefits in income tax expense.
Earnings per Share
Basic earnings per share for our common stock is calculated by dividing net income attributable to Alico common stockholders by
the weighted average number of shares of common stock outstanding for the period. Diluted earnings per common share is similarly
calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares of common stock issuable under equity-
based compensation plans in accordance with the treasury stock method, or any other type of securities convertible into common stock,
except where the inclusion of such common shares would have an anti-dilutive effect.
The following table presents a reconciliation of basic to diluted weighted average common shares outstanding for fiscal years
ended September 30, 2015, 2014 and 2013:
(in thousands)
Fiscal Year Ended September 30,
2014
2015
2013
Weighted Average Common Shares Outstanding - Basic
Unvested Restricted Stock Awards
Weighted Average Common Shares Outstanding - Diluted
8,056
5
8,061
7,336
18
7,354
7,313
44
7,357
There were no employee stock options granted for the fiscal years ended September 30, 2015, 2014 and 2013, respectively. Non-
vested restricted shares of common stock entitle the holder to receive non-forfeitable dividends upon issuance and are included in the
calculation of diluted earnings per common share. For the fiscal years ended September 30, 2015, 2014 and 2013, there were no anti-
dilutive equity awards or convertible securities that were excluded from the calculation of diluted earnings per common share.
Stock-Based Compensation
Stock-based compensation is measured based on the fair value of the equity award at the grant date and is typically expensed on a
straight-line basis over the vesting period. Upon the vesting of restricted stock, the Company issues common stock from shares held in
treasury. The Company measures the cost of employee services on the grant date fair value of the equity award.
51
The cost is recognized over the period during which the employee is required to provide services in exchange for the equity award (usually
the vesting period).
Effective January 27, 2015, the Company’s Board of Directors adopted the 2015 Stock Incentive Plan (the “2015 Plan”) which
provides for up to an additional 1,250,000 common shares available for issuance to provide a long-term incentive plan for officers,
employees, directors and/or consultants to directly link incentives to stockholder value. The 2015 Plan was approved by the Company’s
stockholders in February 2015.
The adoption of the 2015 Plan supersedes the 2013 Incentive Equity Plan (“2013 Plan”), which had been in place since April
2013. In fiscal year 2015, the Company awarded 12,500 restricted shares of the Company’s common stock (“Restricted Stock”) to two
senior executives under the 2015 Plan at a weighted average fair value of $49.49 per common share, vesting over a five year period.
The 2013 Plan was approved by the Company’s stockholders in February 2013. Under the terms of the 2013 Plan, 350,000 shares
of the Company’s common stock were to be awarded to recipients in the form of restricted stock units or stock options. Common shares
issued pursuant to awards under the 2013 Plan, if any, were outstanding shares of common stock which have been repurchased by the
Company.
The Company’s incentive equity plans provide for grants to executives in various forms including restricted shares of the
Company’s common stock. Awards are discretionary and are determined by the Compensation Committee of the Board of Directors.
Awards vest based upon service conditions. Non-vested restricted shares generally vest over requisite service periods of one to six years
from the date of grant.
Total stock-based compensation expense for the three years ended September 30, 2015 in other operations and general and
administrative expense was as follows:
(in thousands)
Stock compensation expense:
Executives
Board of Directors
Members
Total stock compensation expense
Fiscal Year Ended September 30,
2014
2015
2013
$
$
55 $
762
309
1,126 $
195 $
1,061
405
1,661 $
81
842
—
923
Stock-based compensation expense is recognized in operating expenses and general and administrative expenses in the
Consolidated and Combined Statements of Operations and Comprehensive Income.
All shares of restricted common stock awarded under the Long-Term Incentive Program, awarded by the Company in May 2011,
vested automatically upon the acquisition of a controlling interest in the Company by 734 Investors, LLC in November 2013. As a result,
the Company issued 152,403 shares of treasury stock in January 2014, before withholdings for income taxes. The Company recognized
$195,000 of stock-based compensation related to the acceleration of vesting of the restricted stock during fiscal year 2014. In December
2013, the Company determined that it would repurchase half of the gross shares awarded to Named Executive Officers other than the CEO,
totaling 58,610 common shares immediately upon their issuance for the purpose of retaining treasury shares for future issuance.
There were no employee stock options granted in fiscal years 2015, 2014 or 2013, respectively.
Equity Method Investments and Variable Interest Entities
The Company evaluates the method of accounting for investments in which it does not hold an equity interest of at least 50%
based on the amount of control it exercises over the operations of the investee, exposure to losses in excess of its investment, the ability to
significantly influence the investee and whether the Company is the primary beneficiary of the investee. Investments not qualifying for
consolidation are accounted for under the equity method whereby the ongoing investment in the entity, consisting of its initial investment
adjusted for distributions, gains and losses of the entity are classified as a single line in the balance sheet and as a non-operating item in the
income statement.
52
In May 2010, the Company invested $12,150,000 to obtain a 39% limited partner equity interest in Magnolia TC 2, LLC
(“Magnolia”), a Florida limited liability company whose primary business activity is acquiring tax certificates issued by various counties in
the state of Florida on properties which have property tax delinquencies. Revenues are recognized by Magnolia when the interest
obligation under the tax certificates it holds becomes a fixed amount. In order to redeem a tax certificate in Florida, a minimum of 5% of
the face amount of the certificate (delinquent taxes) must be paid to the certificate holder regardless of the amount of time the certificate
has been outstanding. Expenses include an acquisition fee of 1%, interest expense, a monthly management fee and other administrative
costs. The investment in Magnolia is accounted for in accordance with the equity method of accounting, whereby the Company records its
39% interest in the reported income or loss of the fund each quarter and is included in other non-current assets in the Consolidated and
Combined Balance Sheets. Based on the September 30, 2015 unaudited internal financial statements of Magnolia, the Company recognized
net investment income of approximately $57,000 for the fiscal year ended September 30, 2015. The Company recognized net investment
income of approximately $163,000 and $658,000 for the fiscal years ended September 30, 2014 and 2013, respectively. Net investment
income is included in Interest and investment, net in the Consolidated and Combined Statements of Operations and Comprehensive Income.
Magnolia made certain distributions during the fiscal years ended September 30, 2015, 2014 and 2013; the Company’s share of those
distributions was approximately $675,000, $3,814,000 and $1,179,000, respectively.
Recent Accounting Pronouncements Include:
Title and reference
ASU No. 2105-16, “Business Combinations” (Topic 805):
Simplifying the Accounting for Measurement-Period
Adjustments.
Prescribed
Effective
Date
Fiscal years
beginning
after
December 15,
2015,
including
interim
periods within
those fiscal
years.
53
the effect on earnings of changes
Commentary
In September 2015, the FASB issued ASU No. 2015-16,
“Business Combinations” (Topic 805): Simplifying the
Accounting for Measurement-Period Adjustments (“ASU
2015-16”). ASU 2105-16 requires that (i) an acquirer
recognize adjustments to provisional amounts that are
identified during the measurement period in the reporting
period in which the adjustment amounts are determined,
(ii) the acquirer record, in the same period’s financial
in
statements,
depreciation, amortization, or other income effects, if any,
as a result of the change to the provisional amounts,
calculated as if the accounting had been completed at the
acquisition date, and (iii) an entity to present separately on
the face of the income statement or disclose in the notes the
portion of the amount recorded in current-period earnings
by line item that would have been recorded in previous
reporting periods if the adjustment to the provisional
amounts had been recognized as of the acquisition date.
The amendments in this Update apply to all entities that
have reported provisional amounts for items in a business
combination for which the accounting is incomplete by the
end of the reporting period in which the combination
occurs and during the measurement period have an
adjustment
recognized. The
amendments in this guidance are effective for fiscal years
beginning after December 15, 2015, including interim
periods within those fiscal years. The amendments in this
guidance are not expected to have a significant impact on
our Financial Statements upon adoption.
to provisional amounts
ASU No. 2015-15, “Interest—Imputation of Interest”
(Subtopic 835-30): Presentation and Subsequent
Measurement of Debt Issuance Costs Associated with
Line-of-Credit Arrangements.
Effective upon
issuance
ASU No. 2015-14, “Revenue from Contracts with
Customers” (Topic 606): Deferral of the Effective Date.
Effective upon
issuance
Accounting Standard Update (“ASU”) No. 2015-11,
“Inventory” (Topic 330): Simplifying the Measurement of
Inventory.
Fiscal years
beginning
after
December 15,
2016 and for
interim
periods
therein.
54
In August 2015, the FASB issued ASU No. 2015-15,
“Interest—Imputation of Interest” (Subtopic 835-30):
Presentation and Subsequent Measurement of Debt
Issuance Costs Associated with
Line-of-Credit
Arrangements (“ASU 2015-15). In ASU 2015 -15, the SEC
adds guidance to Subtopic 835-30 pursuant to the SEC
Staff Announcement at the June 18, 2015 Emerging Issues
Task Force meeting about the presentation and subsequent
measurement of debt issuance costs associated with line-of-
credit arrangements. In April 2015, the FASB issued ASU
2015-03, “Interest—Imputation of Interest” (Subtopic 835-
30): Simplifying the Presentation of Debt Issuance Costs,
which requires entities to present debt issuance costs
related to a recognized debt liability as a direct deduction
from the carrying amount of that debt liability. According
to the SEC, the guidance in ASU 2015-03 does not address
presentation or subsequent measurement of debt issuance
costs related to line-of-credit arrangements. Given the
absence of authoritative guidance within ASU 2015-03 for
debt issuance costs related to line-of-credit arrangements,
the SEC staff would not object to an entity deferring and
presenting debt issuance costs as an asset and subsequently
amortizing the deferred debt issuance costs ratably over the
term of the line-of-credit arrangement, regardless of
whether there are any outstanding borrowings on the line-
of-credit arrangement. The guidance in ASU 2015-03 is
effective for fiscal years beginning after December 15,
2015, including interim periods within those fiscal years.
The guidance in ASU 2015-15 is effective upon issuance.
The guidance in ASU 2015-15 and ASU 2015-03 are not
expected to have a significant impact on our Financial
Statements upon adoption.
In August 2015, the FASB issued ASU No. 2015-14,
“Revenue from Contracts with Customers” (Topic 606):
Deferral of the Effective Date (“ASU 2015-14”). ASU
2015-14 effectively defers the effective date of ASU No.
2014-09, “Revenue from Contracts with Customers (Topic
606), by one year for all entities. In May 2014, the FASB
issued ASU 2014-09 with an effective date for annual
reporting periods beginning after December 15, 2016,
including interim periods within that reporting period for
public business entities, certain not-for-profit entities, and
certain employee benefit plans. The effective date for all
other entities was for annual reporting periods beginning
after December 15, 2017, and interim periods within annual
periods beginning after December 15, 2018. ASU 2015-14
is effective upon issuance. ASU 2015-14 is not expected to
have a significant impact on our Financial Statements.
In July 2015, the FASB issued ASU No. 2015-11,
“Inventory” (Topic 330): Simplifying the Measurement of
Inventory (“ASU 2015-11”). ASU 2015-11 simplifies the
measurement of inventory by requiring certain inventory to
be subsequently measured at the lower of cost and net
realizable value. The amendments in this guidance are
effective for fiscal years beginning after December 15,
2016 and for interim periods therein and are not expected to
have a significant impact on our Financial Statements upon
adoption.
ASU No. 2015-03, “Interest - Imputation of Interest”
(Subtopic 835-30): Simplifying the Presentation of Debt
Issuance Costs.
ASU No. 2015-04, “Compensation - Retirement Benefits”
(Topic 715): Practical Expedient for the Measurement
Date of an Employer’s Defined Benefit Obligation and
Plan Assets.
ASU No. 2015-02, "Consolidation" (Topic 810):
Amendments to the Consolidation Process.
ASU No. 2015-01, Income Statement - “Extraordinary
and Unusual Items” (Subtopic 225-20): Simplifying the
Income Statement Presentation by Eliminating the
Concept of Extraordinary Items.
In April 2015, the FASB issued ASU No. 2015-03,
“Interest - Imputation of Interest” (Subtopic 835-30):
Simplifying the Presentation of Debt Issuance Costs ("ASU
2015-.03"). ASU 2015-03 changes the presentation of debt
issuance costs from an asset to a direct deduction from the
related liability. This guidance, which is effective for fiscal
years beginning after December 15, 2015, and interim
periods within those fiscal years, may be early adopted for
financial statements that have not been previously issued
and its provisions are to be retrospectively applied as a
change in accounting principle. Upon adoption, this
guidance is expected to decrease Other Assets, which
includes our deferred financing costs on our debt
obligations, and comparably decrease Long-term debt on
our Balance Sheets. This guidance is not expected to have
any impact on our results of operations or cash flows.
In April 2015, the FASB issued ASU No. 2015-04,
“Compensation - Retirement Benefits” (Topic 715). ASU
2015-04 will allow employers with fiscal year ends that do
not coincide with a calendar month end to make an
accounting policy election to measure defined benefit plan
assets and obligations as of the end of the month closest to
their fiscal year ends (i.e., on an alternative measurement
date). An employer
this election must
that makes
consistently apply the practical expedient from year to year
and to all of its defined benefit plans. ASU 2015-04 will be
effective for interim and fiscal periods beginning after
December 15, 2015; prospective application is required and
early adoption is permitted. The Company's fiscal year end
is September 30 and the Company has a defined retirement
plan. This guidance is not expected to have any impact on
our financial position, results of operations or cash flows.
In February 2015, the FASB issued ASU No. 2015-02,
"Consolidation" ( To p i c 810): Amendments
the
Consolidation Process ("ASU 2015-02") . ASU 2015-02
amends the consolidation analysis for limited partnerships
and other variable interest entities ("VIEs"). This guidance,
which is effective for annual periods, and interim periods
within those annual periods, beginning after December 15,
2015, is not expected to have a significant impact on our
Financial Statements upon adoption.
to
In January 2015,the FASB issued ASU No. 2015-01,
Income Statement - “Extraordinary and Unusual Items”
(Subtopic 225-20): Simplifying the Income Statement
Presentation by Eliminating the Concept of Extraordinary
Items ("ASU 2015-.01"). ASU 2015-.01 eliminates from
GAAP the concept of extraordinary items. This guidance is
effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2015. The
guidance may be applied prospectively or retrospectively
and early adoption is permitted provided that the guidance
is applied from the beginning of the fiscal year of adoption.
This guidance is not expected to have a material impact on
our financial statements upon adoption.
Fiscal years
beginning
after
December 15,
2015, and
interim
periods within
those fiscal
years
Interim and
fiscal periods
beginning
after
December 15,
2015.
Annual
periods, and
interim
periods within
those annual
periods,
beginning
after
December 15,
2015.
Fiscal years,
and interim
periods within
those fiscal
years,
beginning
after
December 15,
2015.
55
ASU No. 2014-15, “Presentation of Financial Statements
- Going Concern” (Subtopic 205-40): Disclosure of
Uncertainty about an Entity's Ability to Continue as a
Going Concern.
ASU No. 2014-12, “Compensation - Stock
Compensation”(Topic 718):Accounting for Share-based
Payments.
Fiscal years,
and interim
periods within
those years,
beginning on
or after
December 15,
2016, with
early adoption
permitted.
Annual and
interim
periods within
the annual
period
beginning
after
December 15,
2015.
responsibility
In August 2014, the FASB issued ASU No. 2014-15,
“Presentation of Financial Statements - Going Concern”
(Subtopic 205-40): Disclosure of Uncertainty about an
Entity's Ability to Continue as a Going Concern ("ASU
2014-15"). ASU 2014-15 provides guidance
that
establishes management's
to evaluate
whether there is substantial doubt about an entity's ability
to continue as a going concern and setting rules for how this
information should be disclosed in the financial statements.
This guidance is effective for fiscal years, and interim
periods within those years, beginning on or after December
15, 2016, with early adoption permitted. We will adopt this
guidance on January 1, 2017 and do not expect it to have a
material
impact on our Financial Statements upon
adoption.
In June 2014, the FASB issued ASU No. 2014-12,
“Compensation
Compensation”(Topic
Stock
718):Accounting for Share-based Payments ("ASU 2014-
12"). ASU 2014-12 provides guidance that impacts the
accounting for share-based performance awards. This
guidance requires that a performance target that affects
vesting that could be achieved after the requisite service
period be treated as a performance condition. As such, the
performance target should not be reflected in estimating the
grant-date fair value of the award. This guidance is
effective for annual and interim periods within the annual
period beginning after December 15, 2015. We do not
currently have share-based payment awards that fall within
the scope of this guidance and therefore do not anticipate an
impact on our Financial Statements upon adoption.
-
Note 3. Acquisitions and Dispositions
Acquisition of Orange-Co
On December 2, 2014, the Company completed the acquisition of certain citrus and related assets of Orange-Co, LP (“Orange-
Co”) pursuant to an Asset Purchase Agreement, which we refer to as the Orange-Co Purchase Agreement, dated as of December 1, 2014
and 51% of the ownership interests of Citree. The assets the Company purchased include approximately 20,263 acres of citrus groves in
DeSoto and Charlotte Counties, Florida, which comprise one of the largest contiguous citrus grove properties in the state of Florida. Total
assets acquired were approximately $277,792,000, net of $2,060,000 in cash acquired and approximately $4,838,000 in fair value
attributable to noncontrolling interest in Citree, including: (i)$147,500,000 in initial cash consideration funded from the proceeds of the
sugarcane disposition and new term loan debt; (ii) up to $7,500,000 in additional cash consideration to be released from escrow in equal
parts, subject to certain limitations, on December 1, 2015 and June 1, 2016; (iii) the refinancing of Orange-Co’s outstanding debt including
approximately $92,290,000 in term loan debt and a working capital facility of approximately $27,857,000 and (iv) the assumption of
certain other liabilities totaling $4,705,000. On December 1, 2014, Alico deposited an irrevocable standby letter of credit issued by Rabo
Agrifinance, Inc. in the aggregate amount of $7,500,000 into an escrow account to fund the additional cash consideration. The standby
letter of credit will expire on December 1, 2015, and at this time the Company will deposit a new standby letter of credit for $3,750,000 to
fund the remaining cash consideration.
The Company acquired Orange-Co to transform our citrus business and meaningfully enhance the Company’s position in the
citrus industry. The Company has included the financial results of Orange-Co in the Financial Statements from the date of acquisition.
These results include approximately $72,600,000 in revenue and $17,900,000 in gross profit.
This acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts
for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs
associated with the acquisition were expensed as incurred. The excess of the purchase price over the fair value of assets acquired, net of
liabilities assumed, and noncontrolling interests is recognized as goodwill. All goodwill recognized will be deductible for income tax
purposes.
56
On the acquisition date, the initial accounting for the business combination was not complete and the total assets acquired and
liabilities assumed were based on preliminary information and were subject to adjustment as new information was obtained. As a result of
refinements to the preliminary purchase price allocation, an adjustment to the fair value of total assets acquired resulted in an increase of
approximately $1,000,000 during the fiscal year ended September 30, 2015.
For the fiscal year ended September 30, 2015, the Company incurred approximately $3,078,000 in professional and legal costs in
connection with the Orange-Co acquisition. These costs are included in general and administrative expenses in the Consolidated and
Combined Statements of Operations and Comprehensive Income.
The following table summarizes the final allocation of the acquisition cost to the assets acquired and liabilities assumed at the date
of acquisition, based on their estimated fair values:
Asset acquisition
(in thousands)
Assets:
Accounts receivable
Other current assets
Inventories
Property and equipment
Citrus Trees
Land
Equipment and other facilities
Goodwill
Other assets
Total assets, net of cash acquired
Liabilities:
Accounts payable and accrued liabilities
Debt
Contingent consideration
Total liabilities assumed
Assets acquired less liabilities assumed
Less: fair value attributable to noncontrolling interest
Total purchase consideration
Cash proceeds from sugarcane disposition
Working capital line of credit
Term loans
Total purchase consideration
Amount
888
845
35,562
164,123
63,395
13,431
2,246
2,140
282,630
4,205
500
7,500
12,205
270,425
(4,838 )
265,587
97,126
27,857
140,604
265,587
$
$
$
$
$
$
$
$
The unaudited pro-forma information below for the fiscal years ended September 30, 2015 and 2014 gives effect to this acquisition
as if the acquisitions had occurred on October 1, 2013. The pro-forma financial information is not necessarily indicative of the results of
operations if the acquisition had been effective as of this date.
57
(in thousands except per share amounts)
Revenues
Income from operations
Net income attributable to Alico Inc. common stockholders
Basic earnings per common share
Diluted earnings per common share
Acquisition of Citrus Grove - Crossing Grove
Fiscal Year Ended September 30,
2015
2014
(unaudited)
$
$
$
$
$
153,648 $
19,044 $
15,305 $
1.90 $
1.90 $
175,400
35,981
22,444
3.06
3.05
On August 8, 2014, the Company and Premiere Agricultural Properties, LLC entered into a Purchase and Sale Agreement
pursuant to which the Company purchased all of the assets on a 1,241 acre citrus grove (867 net tree acres) in DeSoto County, Florida for a
purchase price of approximately $16,517,000 (the "Crossing Grove Transaction"). The transaction was closed on September 23, 2014. The
purchase price was funded from the Company’s cash and $5,300,000 in funds from a 2014 like-kind exchange transaction in Polk County
pursuant to Internal Revenue Code Section 1031. We acquired the citrus acres to increase the size of our citrus groves which we believe
strengthens our market position.
The assets acquired in the acquisition were recorded in the quarter ended September 30, 2014. The results of operations have been
included in our Consolidated and Combined Statements of Operations and Comprehensive Income since September 23, 2014, the date of
closing. Pro-forma operating results, as if the Company had completed the acquisition at the beginning of the periods presented, are not
significant to the Company’s Consolidated and Combined Statements of Operations and Comprehensive Income and are not presented.
Assets acquired in the acquisition are as follows:
(in thousands)
Inventories
Property and Equipment:
Citrus Trees
Land
Equipment and other facilities
Total cash paid
Acquisition of Citrus Grove - TRB
Amount
1,148
9,633
3,902
1,834
16,517
$
$
In September 2014, Silver Nip Citrus and TRB Groves, LLC (“TRB”) entered into a Purchase and Sale Agreement pursuant to
which Silver Nip Citrus purchased all of TRB’s assets on a 1,500 acre citrus grove in Charlotte County, Florida for a purchase price of
approximately $17,130,000. The assets purchased included land and fruit inventory as well as irrigation and other equipment. The purchase
price was funded from Silver Nip Citrus’ cash and additional financing of $11,000,000 (see Note 5, “Debt”) in fixed rate term loans. The
citrus grove acres were purchased to increase the size of the Silver Nip Citrus’ citrus groves to strengthen their market position.
This acquisition was accounted for under the acquisition method of accounting. Accordingly, Silver Nip Citrus recognized
amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction costs
associated with the acquisition were expensed as incurred. The excess of the fair value over the purchase price of assets acquired, net of
liabilities assumed, is recognized as a gain on bargain purchase of $1,145,300 and is included in Other income (expense), net in the
Consolidated and Combined Statements of Operations and Comprehensive Income for the fiscal year ended September 30, 2015.
58
For the fiscal year ended June 30, 2015, Silver Nip Citrus incurred approximately $525,000 in professional and legal costs in
connection with the TRB acquisition. These costs are included in general and administrative expenses in the Consolidated and Combined
Statements of Operations and Comprehensive Income for the fiscal year ended September 30, 2015.
The following table summarizes the consideration paid for the acquired net assets and the acquisition accounting for the fair
values of the assets acquired and liabilities assumed in the accompanying Consolidated and Combined Balance Sheets as of the acquisition
date.
The results of operations have been included in our consolidated financial statements since September 4, 2014, the date of the
closing. Pro-forma operating results, as if Silver Nip Citrus had completed the TRB acquisition at the beginning of the periods presented,
are not significant to our Financial Statements and are not presented.
Assets acquired and liabilities assumed in the TRB acquisition are as follows:
(in thousands)
Assets:
Prepaid expenses
Inventories
Property and equipment:
Citrus trees
Land and land improvements
Equipment and other facilities
Total assets
Liabilities:
Assets acquired less liabilities assumed
Sugarcane Land
Amount
90
2,155
10,009
5,007
1,038
18,299
41
18,258
$
$
$
$
On November 21, 2014, the Company completed the sale of approximately 36,000 acres of land used for sugarcane production
and land leasing in Hendry County, Florida to Global Ag Properties, LLC (“Global”) for approximately $97,900,000 in cash. We had
previously leased approximately 30,600 of these acres to United States Sugar Corporation (the “USSC Lease”). The USSC Lease was
assigned to Global in conjunction with the land sale.
Net cash proceeds from the sugarcane land sale of approximately $97,126,000 were deposited with a Qualified Intermediary in
anticipation of the Orange-Co asset acquisition in a tax deferred like-kind exchange pursuant to Internal Revenue Code Section 1031.
The sales price is subject to post-closing adjustments over a ten (10)-year period. The Company realized a gain of $42,753,000 on
the sale. Initially, $29,140,000 of the gain was deferred due to the Company’s continuing involvement in the property pursuant to a post-
closing agreement and the potential price adjustments. The deferral represents the Company’s estimate of the maximum exposure to loss as
a result of the continuing involvement. A net gain of approximately $13,613,000 was recognized on the sale and is recognized in Other
income (expense) in the Consolidated and Combined Statements of Operations and Comprehensive Income for the fiscal year ended
September 30, 2015.
On May 1, 2015, the Company made a payment of $1,347,000 to Global pursuant to the sales contract. USSC’s rent is tied to the
market price of sugar, and this payment is required annually in advance, to supplement the rent paid by USSC in the event that the sugar
prices are below certain thresholds. Approximately $843,000 of this payment is included in prepaid expenses and other current assets in the
Consolidated and Combined Balance Sheet as of September 30, 2015 and the Company has recognized $607,000 in interest expense and
$17,300 of the deferred gain for the fiscal year ended September 30, 2015.
As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane operations and, as of November 21,
2014, the Improved Farmland segment was no longer material to our business, however, the sugarcane operation has not been classified as
a discontinued operation due to the post-closing adjustments, amongst other involvement, as described above.
59
Note 4. Common Control Acquisition
The Company completed the Merger with Silver Nip Citrus on February 28, 2015 (see Note 1, “Description of Business and Basis
of Presentation”). Silver Nip Citrus owns approximately 7,400 acres of land, consisting primarily of citrus groves, in six Florida counties
(Polk, Hardee, Osceola, Martin, Highlands and Collier). Substantially all of its revenues derive from citrus operations. As the Company and
Silver Nip Citrus were under common control at the time of the Merger, we have combined the results of operations of the Company and
Silver Nip Citrus from the date common control began, November 19, 2013.
The Company’s financial condition as of September 30, 2015 and 2014 includes the financial condition of Silver Nip Citrus as of
June 30, 2015 and 2014, and the Company’s results of operations for the fiscal year ended September 30, 2015 includes the Silver Nip
Citrus results of operations for the fiscal year ended June 30, 2015. The Company’s results of operations for the fiscal year ended
September 30, 2014 includes Silver Nip Citrus’ results of operations from November 19, 2013 (the initial date of common control) through
June 30, 2014.
Separate results for the Company and Silver Nip Citrus for the fiscal years ended September 30, 2015 and 2014 were as follows:
(in thousands except per share amounts)
Fiscal Year Ended September 30, 2015
Silver Nip
Citrus
Total
Alico
Fiscal Year Ended September 30, 2014
Silver Nip
Citrus
Total
Alico
Operating revenue
Gross profit
Income from operations
Net income
Earnings per common share:
Basic
Diluted
$
$
$
$
$
$
131,722 $
31,212 $
15,653 $
10,438 $
21,397 $
4,741 $
3,406 $
5,295 $
153,119 $
35,953 $
19,059 $
15,733 $
88,680 $
18,297 $
7,856 $
8,050 $
15,303 $
2,945 $
2,058 $
983 $
103,983
21,242
9,914
9,033
1.30 $
1.30 $
0.66 $
0.66 $
1.96 $
1.96 $
1.10 $
1.09 $
0.13 $
0.13 $
1.23
1.23
60
Note 5. Debt
(in thousands)
Long-term debt, net of current portion:
Metropolitan Life Insurance Company and New England Life Insurance Company fixed rate term
loans in the original principal amount of $125,000,000: the loans bear interest at the rate of 4.15% per
annum as of September 30,2015. The loans are collateralized by real estate and mature in November
2029.
Metropolitan Life Insurance Company and New England Life Insurance Company variable rate term
loans in the original principal amounts of $57,500,000: the variable interest rate was approximately
1.80% per annum as of September 30, 2015. The loans are collateralized by real estate and mature in
November 2029.
Metropolitan Life Insurance Company term loan: the loan bears interest at the rate of 5.30% per
annum as of September 30, 2015. A final advance of $2,500,000 is scheduled for March 1, 2016
subject to certain performance conditions. The interest rate is subject to adjustment on the date of the
final advance. The loan is collateralized by real estate and matures in February 2029.
Rabo Agrifinance, Inc. variable rate term loan. The loan was refinanced on December 3, 2014.
Prudential Mortgage Capital Company, LLC fixed rate term loans: the loans bear interest at the rate
of 5.35% per annum as of June 30, 2015. The loans are collateralized by real estate and mature in June
2033.
Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of
3.85% per annum as of June 30, 2015. The loan is collateralized by real estate and matures in
September 2021.
Prudential Mortgage Capital Company, LLC fixed rate term loan: the loan bears interest at the rate of
3.45% per annum as of June 30, 2015. The loan is collateralized by real estate and matures in
September 2039.
Note payable to a financing company collateralized by equipment and maturing in December 2016.
Less current portion
Long-term debt
(in thousands)
Lines of Credit:
Metropolitan Life Insurance Company and New England Life Insurance Company revolving line of
credit: this $25,000,000 line bears interest at a variable rate which was 1.80% per annum as of
September 30, 2015. The line is collateralized by real estate and matures in November 2019.
Rabo Agrifinance, Inc. working capital line of credit: this $70,000,000 line bears interest at a variable
rate which was 1.95% per annum as of September 30, 2015. The line is collateralized by personal
property and matures in November 2016. Availability under the line was $52,500,000 of September
30, 2015.
Rabo Agrifinance, Inc. revolving line of credit which was a $60,000,000 line. The loan was
refinanced on December 3, 2014.
Prudential Mortgage Capital Company, LLC revolving line of credit which was a $6,000,000 line that
was paid in full and closed on April 28, 2015.
Lines of Credit
61
$
$
September 30,
2015
2014
$
111,563 $
55,344
—
—
2,500
—
—
34,000
25,640
27,550
5,390
—
5,390
54
205,881
4,511
201,370 $
—
90
61,640
3,196
58,444
September 30,
2015
2014
— $
—
—
—
—
—
—
3,160
3,160
$
— $
Future maturities of debt as of September 30, 2015 are as follows:
(in thousands)
Due within one year
Due between one and two years
Due between two and three years
Due between three and four years
Due between four and five years
Due beyond five years
Total future maturities
Debt Refinancing
$
$
4,511
8,243
10,800
10,900
10,963
160,464
205,881
The Company refinanced its outstanding debt obligations on December 3, 2014 in connection with the Orange-Co acquisition (see
Note 3 “Acquisitions and Dispositions”). The new credit facilities initially included $125,000,000 in fixed interest rate term loans,
$57,500,000 in variable interest rate term loans and a $25,000,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance
Company and New England Life Insurance Company (collectively “Met”) and a $70,000,000 working capital line of credit (“WCLC”) with
Rabo Agrifinance, Inc. (“Rabo”).
The new term loans and RLOC are secured by approximately 39,300 gross acres of citrus groves and 14,000 gross acres of
farmland. The WCLC is secured by the Company’s current assets and certain other personal property owned by the Company.
The new term loans are subject to quarterly principal payments of $2,281,250 and mature November 1, 2029. The fixed rate term
loans bear interest at 4.15% per annum, and the variable rate term loans bear interest at a rate equal to 90 day LIBOR plus 150 basis points
(the “LIBOR spread”). The LIBOR spread is subject to adjustment by the lender on May 1, 2017 and every two years thereafter until
maturity. Interest on the term loans is payable quarterly.
The interest rate on the variable rate term loan was 1.80% per annum as of September 30, 2015. The loans are collateralized by
certain real estate of the Company.
The Company may prepay up to $8,750,000 of the fixed rate term loan principal annually without penalty, and any such
prepayments shall be applied to reduce subsequent mandatory principal payments. The maximum annual prepayment has been made for the
current fiscal year. The variable rate term loans may be prepaid without penalty.
The RLOC bears interest at a floating rate equal to 90 day LIBOR plus 150 basis points payable quarterly. The LIBOR spread is
subject to adjustment by the lender on May 1, 2017 and every two years thereafter. Outstanding principal, if any, is due at maturity on
November 1, 2019. The RLOC is subject to an annual commitment fee of 25 basis points on the unused portion of the line of credit. The
RLOC is available for funding general corporate needs. The variable interest rate was 1.80% per annum as of September 30, 2015. The
RLOC was available as of December 3, 2014 but has remained undrawn as of September 30, 2015.
The WCLC is a revolving credit facility and is available for funding working capital and general corporate requirements. The
interest rate on the WCLC is based on the one month LIBOR plus a spread. The spread is adjusted quarterly based on our debt service
coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. The rate is currently at LIBOR plus 175 basis points.
The variable interest rate was 1.95% per annum as of September 30, 2015. The WCLC facility matures November 1, 2016. Availability
under the line of credit was $52,501,500 as of September 30, 2015.
The WCLC is subject to a quarterly commitment fee on the daily unused availability under the line computed as the commitment
amount less the aggregate of the outstanding loans and outstanding letters of credit. The commitment fee is adjusted quarterly based on our
debt service coverage ratio for the preceding quarter and can vary from a minimum of 20 basis points to a maximum of 30 basis points.
The WCLC agreement provides for Rabo to issue up to $20,000,000 in letters of credit on the Company’s behalf. As of September
30, 2015, there was $17,498,500 in outstanding letters of credit which correspondingly reduced our availability under the line of credit.
There was no outstanding balance on the WCLC as of September 30, 2015.
62
The Company capitalized approximately $2,834,000 of debt financing costs related to the refinancing. These costs will be
amortized to interest expense over the applicable terms of the loans. The unamortized balance of deferred financing costs related to the
financing was approximately $2,543,000 which includes approximately $318,000 of fees related to the old RLOC (see below) at September
30, 2015.
The Company recognized a loss on extinguishment of debt of approximately $1,051,000 for the fiscal year ended September 30,
2015, related to the refinancing. The loss on extinguishment of debt is included in Other income (expense) in the Consolidated and
Combined Statement of Operations and Comprehensive Income for the fiscal year ended September 30, 2015.
The new credit facilities noted above are subject to various covenants including the following financial covenants: (i) minimum
debt service coverage ratio of 1.10 to 1.00, (ii) tangible net worth of at least $160,000,000 increased annually by 10% of consolidated net
income for the preceding year, (iii) minimum current ratio of 1.50 to 1.00, (iv) debt to total assets ratio not greater than .625 to 1.00, and,
solely in the case of the WCLC, (v) a limit on capital expenditures of $30,000,000 per fiscal year. As of September 30, 2015, the Company
was in compliance with all of the financial covenants.
The credit facilities also include a Met Life term loan secured by real estate owned by Citree Holdings 1, LLC. This is a
$5,000,000 credit facility that initially bore interest at 5.49%. An initial advance of $500,000 was made at closing on March 4, 2014. The
loan agreement was amended to provide for an interim advance of $2,000,000 on September 17, 2015, and the interest rate was adjusted to
5.30% at the time of the interim advance. The amendment extended the date of the final $2,500,000 advance from December 1, 2015 to
March 1, 2016. The interest rate is subject to further adjustment at the time of the final advance. The loan matures in February 2029. The
unamortized balance of deferred financing costs related to this loan was approximately $57,000 at September 30, 2015.
Debt Prior to Refinancing
Prior to the December 3, 2014 refinancing, the Company had a $33,500,000 term loan and a $60,000,000 revolving line of credit
(“Old RLOC”) with Rabo.
The variable rate term loan required quarterly payments of interest at a floating rate of one month LIBOR plus 225 basis points and
quarterly principal payments of $500,000. The variable interest rate on this loan was 2.40% per annum as of September 30, 2014. The loan
was secured by real estate and had a maturity date of October 2020. The term loan was refinanced in connection with the Orange-Co
acquisition on December 3, 2014.
The Old RLOC had a variable interest rate based on one month LIBOR plus a spread. The spread was determined based upon our
debt service coverage ratio for the preceding fiscal year and could vary from 195 to 295 basis points. The interest rate was LIBOR plus 195
basis points at the date of refinancing and as of September 30, 2014. Interest on the Old RLOC was payable quarterly. The Old RLOC was
subject to a commitment fee of 20 basis points on the annual average unused availability. The Old RLOC had no outstanding balance at the
date of refinancing or as of September 30, 2014.
The Company incurred debt financing costs of approximately $1,202,000 related to the Rabo variable rate term loan and Old
RLOC. The debt financing costs were capitalized as deferred financing costs in fiscal year 2010, and were being amortized to interest
expense over the term of the loan. The unamortized balance of deferred financing costs at the time of refinancing was approximately
$697,000, of which approximately $379,000 was written-off and expensed as a loss on extinguishment of debt and approximately $318,000
will be amortized over the applicable terms of the new loans.
As of September 30, 2014, the Company was in compliance with the financial debt covenants and terms of the Rabo loan
agreement.
Silver Nip Citrus Debt
Silver Nip Citrus has various loans payable to Prudential Mortgage Capital Company, LLC (“Prudential”) as described below.
There are two fixed rate term loans with total outstanding balances of $25,640,000 and $27,550,000 as of June 30, 2015 and 2014,
respectively. Principal of $290,000 is payable quarterly. Interest accrues at 5.35% per annum and is also payable quarterly. The Company
may prepay up to $5,000,000 of principal without penalty. On February 15, 2015, Silver Nip Citrus made a prepayment of $750,000. The
loans are collateralized by real estate in Collier, Hardee, Hendry, Highlands, Martin, Osceola and Polk Counties, Florida.
63
Silver Nip Citrus entered into two fixed rate term loans with Prudential to finance the acquisition of a 1,500 acre citrus grove on
September 4, 2014 (see Note 3 “Acquisitions and Dispositions”). Each loan had an outstanding principal balance of $5,390,000 as of June
30, 2015. Principal of $55,000 per loan is payable quarterly together with accrued interest. One loan bears interest at 3.85% while the other
bears interest at 3.45%. The note with an interest rate of 3.85% is subject to adjustment on September 1, 2019 and every year thereafter
until maturity. Both loans are collateralized by real estate in Charlotte County, Florida.
Silver Nip Citrus had a $6,000,000 revolving line of credit with Prudential. This line of credit was paid in full and terminated on
April 28, 2015. A loss on extinguishment of debt of approximately was $87,500 recognized when the loan was retired. The outstanding
balance was $3,159,620 as of June 30, 2014.
The unamortized balance of deferred financing costs related to the Silver Nip Citrus debt was approximately $385,000 at
September 30, 2015.
The Silver Nip Citrus facilities are subject to a financial debt covenant requiring a current ratio of at least 2.00 to 1.00 measured at
the end of each fiscal year. Silver Nip Citrus was in compliance with this covenant as of June 30, 2015 and 2014, respectively.
The Silver Nip Citrus facilities are personally guaranteed by George Brokaw, Remy Trafelet and Clayton Wilson .
Modification of Credit Agreements
Rabo agreed, subject to certain conditions, that the Company may loan Silver Nip Citrus up to $7,000,000 on a revolving basis.
These advances would be funded from either cash on hand or draws on the Company’s WCLC, for cash management purposes.
Silver Nip Citrus has provided a $7,000,000 limited guaranty and security agreement granting Rabo a security interest in crops,
accounts receivable, inventory and certain other assets.
This modification required the amendment of various Prudential and Rabo loan documents and mortgages.
Interest costs expensed and capitalized were as follows:
(in thousands)
Interest expense
Interest capitalized
Total
Note 6. Inventories
Fiscal Year Ended September 30,
2014
2015
2013
$
$
8,373 $
345
8,718 $
1,925 $
204
2,129 $
1,257
79
1,336
Inventories consist of the following at September 30, 2015 and 2014:
(in thousands)
Unharvested fruit crop on the trees
Beef cattle
Citrus tree nursery
Other
Total Inventories
September 30,
2015
2014
49,337 $
1,612
2,854
1,339
55,142 $
23,502
1,022
489
456
25,469
$
$
The Company records its inventory at the lower of cost or net realizable value. For the years ended September 30, 2015, 2014 and
2013, the Company did not record any adjustments to reduce inventory to net realizable value.
64
Note 7. Property and Equipment, Net
Property and equipment, net consists of the following at September 30, 2015 and 2014:
(in thousands)
Citrus trees
Equipment and other facilities
Buildings and improvements
Breeding herd
Total depreciable properties
Less accumulated depreciation and depletion
Net depreciable properties
Land and land improvements
Net property and equipment
Land Sale
September 30,
2015
2014
247,179 $
56,498
21,259
11,924
336,860
(69,621)
267,239
114,428
381,667 $
69,952
55,799
16,282
11,558
153,591
(66,321)
87,270
39,563
126,833
$
$
Certain Silver Nip Citrus land with a cost of approximately $2,832,000 was classified as held for sale as of June 30, 2014. The
land was sold during fiscal year 2015, resulting in a gain on sale of assets of approximately $2,927,000 with net cash proceeds of
approximately $5,759,000.
Asset Impairment
The Company recorded an impairment loss of approximately $541,000 during fiscal year 2015 on property classified as assets
held for sale as of September 30, 2014. The Company entered into a sales contract on February 17, 2015, which triggered the impairment of
the property based on the negotiated sales price. The property was sold on April 3, 2015 and the Company received approximately
$1,509,000 in net cash proceeds.
Sugarcane Lease
On May 19, 2014, the Company entered into a triple net agricultural lease (the "Lease") with its sole sugarcane customer, USSC,
for 19,181 acres of land planted or plantable to sugar in Hendry County, Florida. As a result of the Lease, the Company is no longer
directly engaged in sugarcane farming. The lease was assigned to Global in connection with the Sugarcane land sale (see Note 3,
"Acquisitions and Dispositions").
The lease provided for a one-time reimbursement to the Company, at book value, for certain of our costs to develop and plant
sugarcane (Property and Equipment), cultivate and care take sugarcane (Inventory) and for the purchase of certain rolling stock (Property
and Equipment) used in our sugarcane operation. We had a combined book value of approximately $11,100,000 in planting and caretaking
costs and approximately $2,200,000 net book value for the rolling stock. After negotiation with USSC, we agreed to a one time
reimbursement of approximately $8,800,000 in plant cane and caretaking costs and a sales price of approximately $2,200,000 for the rolling
stock. Therefore, the Company recorded a one-time charge of approximately $2,300,000 in the fiscal year ended September 30, 2014 as an
operating expense in the Improved Farmland segment. In addition, we also received the annual base rent payment of approximately
$3,548,000 for a total payment of approximately $14,600,000 from USSC on July 1, 2014.
Polk County property sale
On July 1, 2014, the Company sold a 2,800 acre parcel of land in Polk County, Florida for $5,623,000. This parcel was surplus to
our operations and was classified as held for sale. This sale was part of a like-kind exchange transaction that qualified for tax-deferral
treatment in accordance with Internal Revenue Code Section 1031.
Sale of Easement
In fiscal year 2013, the Company closed a warranty easement deed with the United States Department of Agriculture ("USDA"),
through its administering agency, The Natural Resources Conservation Service, granting a conservation easement on approximately 11,600
acres located in Hendry County, FL (the “Property”) for approximately $ 20,678,000. The easement agreement states the Property will be
enrolled in perpetuity in the Wetlands Reserve Program designed to restore, protect and enhance the values of the wetlands and for the
conservation of natural resources. The Company will retain title to the Property and the right
65
to various recreational uses including hunting, fishing and leasing of such rights. Additionally, the Company reserves the right to
subsurface resources including oil, gas, minerals and geothermal resources underlying the easement area and the right to water uses and
water rights identified as reserved to us. As a result of the transaction, the Company recorded a gain of approximately $20,300,000 in its
Statement of Operations and Comprehensive Income for the fiscal year ended September 30, 2013.
Note 8. Assets held for sale
There were no assets held for sale at September 30, 2015. At September 30, 2014 the assets held for sale were comprised of the
following:
(in thousands)
Citrus, land and land improvements
Sugarcane, land and land improvements
Assets held for sale
Purchase and Sale Agreement
September 30,
2014
$
$
5,532
53,981
59,513
On November 21, 2014, the Company completed the sale of approximately 36,000 acres of land used for sugarcane production
and land leasing in Hendry County, Florida to Global for approximately $97,900,000 in cash. We had previously leased these acres to
USSC. The USSC Lease was assigned to Global in conjunction with the land sale.
As a result of the disposition of our sugarcane land, we are no longer involved in sugarcane and, as of November 21, 2014, the
Improved Farmland segment was no longer material to our business.
Our sugarcane land has been classified as assets held for sale as of September 30, 2014, however the sugarcane operation has not
been classified as a discontinued operation due to the Company’s continuing involvement and continuing cash outflows in the operation
pursuant to a Post-Closing Agreement in association with the Global land sale.
Note 9. Other Assets
Other Assets consist of the following at September 30, 2015 and 2014:
(in thousands)
Investments in agricultural cooperatives
Cash surrender value
Certificate of deposit
Equity investment in affiliate
Escrow deposit for capital expenditures
Guaranteed payments on sugarcane sale
Prepaid insurance
Other
Total other assets
September 30, 2015
September 30, 2014
Current
Non-Current
Current
$
$
— $
—
—
—
—
843
643
352
1,838 $
66
846 $
722
—
817
—
—
—
617
3,002 $
Non-Current
1,106
695
—
1,435
250
—
—
406
3,892
— $
—
263
—
—
—
521
485
1,269 $
Note 10. Accrued Liabilities
Accrued Liabilities consist of the following at September 30, 2015 and 2014:
(in thousands)
Ad valorem taxes
Accrued interest
Accrued employee wages and benefits
Inventory received but not invoiced
Accrued dividends
Current portion of pension obligations
Additional purchase price consideration
Other accrued liabilities
Total accrued liabilities
Note 11. Other Current Liabilities
Other current liabilities consist of the following at September 30, 2015 and 2014:
(in thousands)
Deposits - Farm land leases
Deposits - Recreation land leases
Other
Total other current liabilities
Note 12. Fair Value Measurements
September 30,
2015
2014
2,640
1,155
427
581
501
342
7,500
536
13,682 $
1,850
397
520
197
442
342
—
479
4,227
September 30,
2015
2014
397 $
541
52
990 $
2,641
572
15
3,228
$
$
$
The Company complies with the provisions of ASC 820 “Fair Value Measurements” for its financial and non-financial assets and
liabilities. ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosure for each major asset and
liability category measured at fair value on either a recurring or nonrecurring basis. The majority of the carrying amounts of the Company’s
assets and liabilities including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses as of September 30,
2015 and 2014, approximate their fair value because of the immediate or short term maturity of these financial instruments. In the event
that stated interest rates are below market, the Company discounts mortgage and notes receivable to reflect their estimated fair value. The
carrying amounts reported for long-term debt approximates fair value as the Company’s borrowings with commercial lenders are at interest
rates that vary with market conditions and fixed rates that approximate market rates for similar obligations. The majority of our non-
financial instruments, which include inventories and property and equipment, are not required to be carried at fair value on a recurring
basis.
ASC 820 clarifies that fair value is an exit price representing the amount that would be received upon the sale of an asset or paid to
transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be
determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such
assumptions, ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
•
•
•
Level 1- Observable inputs such as quoted prices in active
markets;
Level 2- Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;
and
Level 3- Unobservable inputs in which there is little or no market data, such as internally-developed valuation models which
require the reporting entity to develop its own assumptions.
67
There were no gains or losses included in earnings attributable to changes in unrealized gains or losses relating to our assets as of
September 30, 2015 and 2014.
We use third-party service providers to assist in the evaluation of investments. For investment valuations, current market interest
rates, quality estimates by rating agencies and valuation estimates by active market participants were used to determine values. Deferred
retirement benefits were valued based on actuarial data, contracted payment schedules and an estimated discount rate of 4.2% and 4.7% as
of September 30, 2015 and 2014, respectively.
Note 13. Treasury Stock
In fiscal year 2015, the Board of Directors authorized the repurchase of up to 170,000 shares of the Company’s common stock
beginning March 25, 2015 and continuing through December 31, 2016. The stock repurchases were made through open market transactions
at times and in such amounts as the Company’s broker determined subject to the provisions of SEC Rule 10b-18.
Effective November 1, 2008, the Company’s Board of Directors authorized the repurchase of up to 350,000 shares of the
Company’s common stock through November 2013 for the purpose of funding awards under its 2008 Incentive Equity Plan. In September
2013, the Board of Directors authorized the repurchase of up to 105,000 shares of the Company’s common stock beginning in November
2013 and continuing through April 2018. The stock repurchases began in November 2008 and were made on a quarterly basis through open
market transactions at times and in such amounts as the Company’s broker determined subject to the provisions of SEC Rule 10b-18. The
following table illustrates the Company’s treasury stock purchases for the fiscal years ended September 30, 2015, 2014 and 2013:
(in thousands, except share amounts)
Fiscal Year Ended September 30,:
2015
2014
2013
Total Number of
Shares Purchased
Average Price
Paid Per Share
Total Shares
Purchased as Part of
Publicly Announced
Plan or Program
Total Dollar Value
of Shares
Purchased
91,554 $
118,792 $
75,887 $
43.83
40.78
38.14
467,549 $
375,995 $
257,203 $
4,013
4,844
2,894
The following table outlines the Company’s treasury stock transactions during the past three fiscal years:
(in thousands, except share amounts)
Balance at September 30, 2012
Purchased
Issued to Directors
Balance at September 30, 2013
Purchased
Issued to Employees and Directors
Balance at September 30, 2014
Purchased
Issued to Employees and Directors
Balance at September 30, 2015
68
Shares
Cost
23,235 $
75,887
(25,584)
73,538
118,792
(176,564)
15,766
91,554
(16,755)
90,565 $
543
2,894
(621)
2,816
4,844
(7,010)
650
4,013
(701)
3,962
Note 14. Income Taxes
The provision for income tax for the years ended September 30, 2015, 2014 and 2013 consists of the following:
(in thousands)
Current:
Federal income tax
State income tax
Total current
Deferred:
Federal income tax
State income tax
Total deferred
Total provision for income taxes
Fiscal Year Ended September 30,
2014
2015
2013
$
$
(1,348) $
(98)
(1,446)
10,432
1,919
12,351
10,905 $
4,035 $
543
4,578
4,666
645
5,311
9,889 $
2,508
459
2,967
7,921
1,141
9,062
12,029
Income tax provision (benefit) attributable to income from continuing operations differed from the amount computed by applying
the statutory federal income tax rate of 35% to pre-tax income as a result of the following:
(in thousands)
Tax at the statutory federal rate
Increase (decrease) resulting from:
State income taxes, net of federal benefit
Federal impacts from IRS exam and tax return amendments
Permanent and other reconciling items, net
Other
Total provision for income taxes
Fiscal Year Ended September 30,
2014
2015
2013
$
$
9,335 $
6,623 $
11,086
1,279
—
280
11
10,905 $
183
—
3,083
—
9,889 $
1,067
19
(143)
—
12,029
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities
as of September 30, 2015 and 2014 are presented below:
(in thousands)
Deferred tax assets:
Deferred retirement benefits
Inventories
Prepaid lease
Alico-Agri, Ltd. outside basis differences
Goodwill
Deferred gain recognition
Capital loss carry forward
Net operating loss
Other
Total deferred tax assets
Deferred tax liabilities:
Revenue recognized from citrus and sugarcane
Property and equipment
Straight-line rent
Accrual-to-cash method
Prepaid insurance
Investment in Magnolia
Total deferred tax liabilities
Net deferred income tax liability
69
September 30,
2015
2014
1,595 $
230
—
467
39,081
11,234
12,804
7,141
200
72,752
223
93,849
—
2,410
256
299
97,037
(24,285) $
1,619
95
833
3,196
—
—
10,492
2,345
284
18,864
99
26,901
43
3,135
166
415
30,759
(11,895)
$
$
Deferred taxes are included in the accompanying consolidated balance sheets are as follows:
(in thousands)
Deferred tax liabilities, current
Deferred tax liabilities, non-current
Total deferred tax liabilities
September 30,
2015
2014
$
$
151 $
24,134
24,285 $
3,135
8,760
11,895
The Company applies a “more likely than not” threshold to the recognition and non-recognition of tax positions. A change in
judgment related to prior years’ tax positions is recognized in the quarter of such change. The Company had no reserve for uncertain tax
positions as of September 30, 2015 and 2014, respectively. The Company recognizes interest and penalties related to uncertain tax positions
in income tax expense and in the liability for uncertain tax positions.
Note 15. Segment Information
Segments
Operating segments are defined in ASC Topic 280 as components of public entities that engage in business activities from which
they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by the
Company’s chief operating decision makers (“CODMs”) in deciding how to assess performance and allocate resources. The Company’s
CODMs assess performance and allocate resources based on five operating segments: Citrus Groves, Improved Farmland, Ranch and
Conservation, Agricultural Supply Chain Management and Other Operations.
The Company manages its land based upon its primary usage and reviews its performance based upon two primary classifications -
Citrus Groves and Ranch and Conservation. In addition, it operates an Agricultural Supply Chain Management business that is not tied
directly to its land holdings and Other Operations that include a citrus nursery, leasing mines and oil extraction rights to third parties.
Total revenues represent sales to unaffiliated customers, as reported in the Consolidated and Combined Statements of Operations
and Comprehensive Income. Intersegment sales and transfers are accounted by the Company as if the sales or transfers were to third parties
at current market prices. Goods and services produced by these segments are sold to wholesalers and processors in the United States who
prepare the products for consumption. The Company evaluates the segments’ performance based on direct margins (gross profit) from
operations before general and administrative expenses, interest expense, other income (expense) and income taxes, not including
nonrecurring gains and losses. All intercompany transactions between the segments have been eliminated.
70
Information by business segment is as follows:
(in thousands)
Revenues:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Total revenues
Operating expenses:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Total operating expenses
Gross profit:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Total gross profit
Capital expenditures:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Other capital expenditures
Total capital expenditures
Depreciation, depletion and amortization:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Other depreciation, depletion and amortization
Total depreciation, depletion and amortization
71
Fiscal Year Ended September 30,
2014
2015
2013
$
$
$
$
$
$
139,700 $
6,439
901
5,394
685
153,119
62,372 $
12,376
20,429
8,172
634
103,983
43,689
28,412
21,917
6,755
888
101,661
104,081
6,193
1,089
4,808
995
117,166
35,619
246
(188)
586
(310)
35,953 $
9,027 $
809
—
1,461
163
488
11,948 $
12,245 $
384
—
1,092
646
270
14,637 $
42,571
12,317
21,356
6,123
374
82,741
19,801
59
(927)
2,049
260
21,242 $
7,597 $
215
3,696
1,413
37
285
13,243 $
3,198 $
164
3,320
1,330
743
191
8,946 $
31,533
27,949
16,202
3,798
505
79,987
12,156
463
5,715
2,957
383
21,674
3,942
81
9,468
3,475
27
1,931
18,924
2,114
169
5,131
1,250
347
664
9,675
(in thousands)
Assets:
Citrus Groves
Agricultural Supply Chain Management
Improved Farmland
Ranch and Conservation
Other Operations
Other Corporate Assets
Total Assets
September 30,
2015
2014
$
$
389,963 $
2,858
420
13,779
31,048
22,512
460,580 $
121,398
2,498
57,726
13,920
26,356
35,682
257,580
Inter-segment revenues were $10,593,000, $9,621,000 and $10,981,000 for the fiscal years ended September 30, 2015, 2014 and
2013 respectively.
Note 16. Employee Benefits Plans
Management Security Plan
The management security plan (“MSP”) is a nonqualified, noncontributory defined supplemental deferred retirement benefit plan
for a select group of management personnel. The MSP plan provides a fixed supplemental retirement benefit for 180 months certain. The
MSP is frozen; no new participants are being added and no benefit increases are being granted. The MSP benefit expense and the projected
management security plan benefit obligation are determined using assumptions as of the end of the year. The weighted-average discount
rate used to compute the obligation was 4.2% and 4.7% in fiscal years 2015 and 2014, respectively.
Actuarial gains or losses are recognized when incurred, therefore; the end of year benefit obligation is the same as the accrued
benefit costs recognized in the Consolidated and Combined Balance Sheets.
The amount of MSP benefit expense charged to costs and expenses was as follows:
(in thousands)
Service cost
Interest cost
Recognized actuarial loss adjustment
Total
The following provides a roll-forward of the MSP benefit obligation.
(in thousands)
Change in projected benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Benefits paid
Recognized actuarial loss adjustment
Benefit obligation at end of year
Funded status at end of year
72
Fiscal Year Ended September 30,
2014
2015
2013
$
$
195 $
197
231
623 $
195 $
(23)
—
172 $
221
368
—
589
September 30,
2015
2014
$
$
$
4,198 $
195
197
(345)
231
4,476 $
4,371
195
(23)
(345)
—
4,198
(4,476) $
(4,198)
The MSP is unfunded and benefits are paid as they become due. The estimated future benefit payments under the plan for each of
the five succeeding years are approximately $367,000, $348,000, $365,000, $170,000 and $210,000 and for the five-year period thereafter
an aggregate of $1,308,000.
The Company has established a “Rabbi Trust” to provide for the funding of accrued benefits under the MSP. According to the
terms of the Rabbi Trust, funding is voluntary until a change of control of the Company as defined in the Management Security Plan Trust
Agreement occurs. Upon a change of control, funding is triggered. As of September 30, 2015, the Rabbi Trust had no assets, and no change
of control had occurred.
Profit Sharing and 401(k)
The Company maintains a 401(k) employee savings plan for eligible employees, which provides for a 4% matching contribution
on employee payroll deferrals. The Company’s matching funds vest to the employee immediately, pursuant to a safe harbor election
effective in October 2012. The Company’s contribution to the plan was approximately $360,000, $192,000 and $157,000 for the fiscal
years 2015, 2014 and 2013, respectively.
The Profit Sharing Plan (“Plan”) is fully funded by contributions from the Company. Contributions to the Plan are discretionary
and determined annually by the Company’s Board of Directors. Contributions to employee accounts are based on the participant’s
compensation. The Company’s contribution to the Profit Sharing Plan was $165,000, $165,000 and $210,000 for the fiscal years ended
September 30, 2015, 2014 and 2013, respectively.
Note 17. Related Party Transactions
Change in Control Transaction
On November 19, 2013, 734 Agriculture and its affiliates, including 734 Investors, completed the previously announced purchase
from Alico Holding, LLC, a company wholly owned by Atlantic Blue Group, Inc. (“Atlanticblue”), of 3,725,457 shares of our common
stock (the “Share Purchase”).
The common stock acquired by 734 Agriculture and its affiliates, including 734 Investors, represents approximately 51% of the
Company’s outstanding voting securities. On November 15, 2013, 734 Investors amended and restated its LLC operating agreement (the
“LLC Agreement”) to admit new members and to designate 734 Agriculture as the managing member, with authority to administer the
affairs of 734 Investors, including the voting and disposition of shares of common stock, subject to certain restrictions set forth therein.
As a result, upon the consummation of the Share Purchase, 734 Agriculture and its affiliates, including 734 Investors, acquired the
voting power to control the election of the Company’s Directors and any other matter requiring the affirmative vote or consent of the
Company’s stockholders'.
Appointment of Directors; Resignation of Directors
With the Closing of the Share Purchase, the previously announced election of the following individuals to the Board of Directors
became effective: Mr. George R. Brokaw, Member of 734 Agriculture; Remy W. Trafelet, Manager of 734 Agriculture; W. Andrew
Krusen, Jr., Chairman and CEO of Dominion Financial Group; Benjamin D. Fishman, Managing Principal of Arlon Group; Henry R.
Slack, former Chairman of the Board of Terra Industries, Inc. and Senior Partner of Quarterwatch, LLC; Clayton G. Wilson, former CEO
of 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus and Chairman of the Board of Latt Maxcy Corporation; and R. Greg Eisner, Head of
Strategy of Dubin & Company, LLC.
Ramon A. Rodriguez remained on the Board of Directors. In addition, Adam D. Compton, who previously resigned subject to and
effective upon the Closing of the Share Purchase, was re-elected to the Board of Directors on November 22, 2013.
Upon the Closing of the Share Purchase, the following individuals ceased to be Directors of the Company pursuant to their
previously disclosed resignations: JD Alexander, Dykes Everett, Thomas H. McAuley, Charles L. Palmer, John D. Rood, and Gordon
Walker, PhD. Mr. Robert J. Viguet, Jr. resigned from the Board on November 21, 2013.
Appointment of Mr. Wilson as the Company’s Chief Executive Officer
Upon the Closing of the Share Purchase, Mr. Alexander ceased to be the Company’s CEO pursuant to his previously disclosed
resignation. On November 22, 2013, the Board appointed Mr. Wilson to serve as the CEO, effective immediately.
73
734 Investors and 734 Agriculture
On November 19, 2013, 734 Agriculture and its affiliates, including 734 Investors, acquired all of the approximately 51% of
Alico’s common stock then owned by Atlanticblue. 734 Investors now beneficially owns, directly or indirectly, approximately 51% of the
outstanding shares of the Company’s common stock and possesses the voting power to control the election of the Company’s Directors and
any other matter requiring the affirmative vote or consent of the Company’s stockholders. 734 Agriculture is the sole managing member of
734 Investors. By virtue of their ownership percentage, 734 Investors and 734 Agriculture are able to elect all of the Directors and,
consequently, control Alico. Messrs. Brokaw and Trafelet are the two controlling persons of 734 Agriculture.
Silver Nip Merger Agreement
Effective February 28, 2015, the Company completed the merger (“Merger”) with 734 Citrus Holdings, LLC (“Silver Nip Citrus”)
pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with 734 Sub, LLC, a wholly owned subsidiary of the Company
(“Merger Sub”), Silver Nip Citrus and, solely with respect to certain sections thereof, the equity holders of Silver Nip Citrus. The
ownership of Silver Nip Citrus was held by 734 Agriculture, 74.89%, Mr. Clay Wilson, Chief Executive Officer of the Company, 5% and
an entity controlled by Mr. Clay Wilson owned, 20.11%.
734 Agriculture has control over both Silver Nip Citrus and the Company and therefore the Merger was treated as a common
control acquisition.
At closing of the Merger, Merger Sub merged with and into Silver Nip Citrus, with Silver Nip Citrus and its affiliates surviving the
Merger as wholly owned subsidiaries of the Company. Pursuant to the Merger Agreement, at closing, the Company issued 923,257 shares
of the Company’s common stock, par value $1.00 per share, to the holders of membership interests in Silver Nip Citrus. Silver Nip Citrus’
outstanding net indebtedness at the closing of the Merger was approximately $40,278,000 and other liabilities totaled approximately
$6,952,000. The Company acquired assets at with a book value of approximately $65,739,000 and total net assets of approximately
$18,470,000. The shares issued were recorded at the carrying amount of the net assets transferred. The closing price of the Company's
common stock on February 27, 2015 was $45.67.
In September 2015, the former holders of membership interests in Silver Nip Citrus (the "Members") received an additional
115,782 shares of the Company’s common stock pursuant to the Merger Agreement. The additional consideration was based on the value
of the proceeds received by the Company from the sale of citrus fruit harvested on Silver Nip Citrus’s citrus groves following the
conclusion of the 2014-2015 citrus harvest season. The Members will receive additional Company shares of common stock based on any
additional proceeds received by the Company subsequent to September 2015 related to the 2014-2015 harvest season.
Atlanticblue
Prior to the Share Purchase transaction on November 19, 2013, Atlanticblue owned approximately 51% of Alico’s common stock.
By virtue of its ownership percentage, Atlanticblue was able to elect all of the Directors and, consequently, control Alico. JD Alexander
resigned March 31, 2012 as the President and Chief Executive Officer of Atlanticblue and did not stand for re-election as a Director at the
June 2012 Atlanticblue shareholders meeting. In February 2010, JD Alexander was appointed Alico’s President and Chief Executive
Officer, and he served on Alico’s Board of Directors. Robert J. Viguet, Jr., a former Alico Director, did not stand for re-election as a
Director of Atlanticblue at its June 2012 stockholders meeting. Dykes Everett was elected to the Alico Board of Directors at Alico’s
February 2013 shareholders meeting; he was nominated by Atlanticblue.
AFC marketed citrus fruit for TRI-County Grove, LLC at the customary terms and rates the Company extends to third parties.
During the fiscal year ended September 30, 2013, AFC marketed 201,802 boxes of fruit, for approximately $1,907,000. AFC no longer
provides marketing and/or purchases citrus fruit from TRI-County Grove, LLC, a wholly owned subsidiary of Atlanticblue.
JD Alexander
On November 6, 2013, JD Alexander tendered his resignation as Chief Executive Officer and as an employee of the Company,
subject to and effective immediately after the Closing of the Share Purchase transaction on November 19, 2013. Mr. Alexander’s
resignation includes a waiver of any rights to any payments under his Change-in-Control Agreement with the Company. On November 6,
2013, the Company and Mr. Alexander also entered into a Consulting and Non-Competition Agreement under which (i) Mr. Alexander will
provide consulting services to the Company during the two-year period after the Closing, (ii) Mr. Alexander agreed to be bound by certain
non-competition covenants relating to the Company’s citrus operations and non-solicitation and non-interference covenants for a period of
two years after the Closing, and (iii) the Company will pay Mr. Alexander for such
74
services and covenants $2,000,000 intwenty-four monthly installments. Mr. Alexander also agreed, in a separate side letter with the
Company, not to sell or transfer the shares that were awarded pursuant to his Restricted Stock Award Agreement (other than to a family
trust) for a period of two years after the Closing. Mr. Alexander also executed a general release in favor of the Company.
Ken Smith
On March 20, 2015, Ken Smith tendered his resignation as Chief Operating Officer and as an employee of the Company. Mr.
Smith’s resignation includes a waiver of any rights to any payments under his Change-in-Control Agreement with the Company. On March
20, 2015, the Company and Mr. Smith also entered into a Consulting and Non-Competition Agreement under which (i) Mr. Smith will
provide consulting services to the Company during the three-year period after the resignation date, (ii) Mr. Smith agreed to be bound by
certain non-competition covenants relating to the Company’s citrus operations and non-solicitation and non-interference covenants for a
period of two years after the resignation date, and (iii) the Company will pay Mr. Smith up to $1,225,000 for such services and covenants.
The Company’s business operations previously managed by Mr. Smith will now be managed by Clay Wilson, Chief Executive Officer of
Alico. The Company does not expect to appoint an interim or ongoing Chief Operating Officer.
W. Mark Humphrey
On June 1, 2015, W. Mark Humphrey tendered his resignation as Senior Vice President and Chief Financial Officer and as an
employee of the Company. On June 1, 2015, the Company and Mr. Humphrey entered into a Separation and Consulting Agreement under
which (i) Mr. Humphrey will provide consulting services to the Company for a one-year period after his resignation, and (ii)
Mr. Humphrey will be entitled to the following benefits: (a) $100,000 in cash in a lump sum and (b) a consulting fee of $350,000 during the
period commencing on his resignation date and ending on the first anniversary of his resignation date. On June 1, 2015, the Company
appointed John E. Kiernan to serve as Senior Vice President and Chief Financial Officer. Effective September 1, 2015, Mr. Humphrey was
appointed to serve as Senior Vice President and Chief Accounting Officer.
Shared Services Agreement
The Company has a shared services agreement with Trafelet Brokaw & Co., LLC (“TBCO”) whereby the Company will
reimburse TBCO for use of office space and various administrative and support services. The annual cost of the office and services is
approximately $400,000. The agreement will expire in June 2016.
Other
Mr. Charles Palmer, who served as a member of the Board until his resignation became effective on November 19, 2013, leases
approximately 2,300 acres from the Company for recreational purposes. He pays approximately $33,000 annually at the customary terms
and rates the Company extends to third parties.
Note 18. Commitments and Contingencies
Operating Leases
The Company has obligations under various non-cancelable long-term operating leases for equipment. In addition, the Company
has various obligations under other equipment leases of less than one year.
Total rent expense was approximately $649,000, $2,015,000, and $1,182,000 for the years ended September 30, 2015, 2014 and
2013, respectively.
The future minimum annual rental payments under non-cancelable operating leases are as follows:
(in thousands)
2016
2017
2018
2019
Total
$
$
667
659
306
4
1,636
75
Change in Control Agreements
The Company entered into Change in Control Agreements (“CIC Agreements”) with its executive officers and 22 other key
employees (“CIC Recipients”) in the fiscal year 2014. The CIC Agreements provided for cash payments to CIC Recipients in the event of a
change in control as defined in the CIC Agreements followed by the termination of a CIC Recipient within 18 months of the change in
control. As of September 30, 2015, all CIC Agreements have expired.
Letters of Credit
The Company has outstanding standby letters of credit in the total amount of $17,498,500 and $254,000 for the fiscal years ended
September 30, 2015 and 2014, respectively, to secure its various contractual obligations.
Legal Proceedings
On March 11, 2015, a putative stockholder class action lawsuit captioned Shiva Y. Stein v. Alico, Inc., et al., No. 15-CA-000645 (the
“Stein lawsuit”), was filed in the Circuit Court of the Twentieth Judicial District in and for Lee County, Florida, against Alico, Inc.
(“Alico”), its current and certain former directors, 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus (“Silver Nip”), 734 Investors, LLC
(“734 Investors”), 734 Agriculture, LLC (“734 Agriculture”) and 734 Sub, LLC (“734 Sub”) in connection with the acquisition of Silver
Nip by Alico (the “Acquisition”). The complaint alleges that Alico’s directors at the time of the Acquisition, 734 Investors and 734
Agriculture breached fiduciary duties to Alico stockholders in connection with the Acquisition and that Silver Nip and 734 Sub aided and
abetted such breaches. The lawsuit seeks, among other things, monetary and equitable relief, costs, fees (including attorneys’ fees) and
expenses.
On May 6, 2015, a putative stockholder class action and derivative lawsuit captioned Ruth S. Dimon Trust v. George R. Brokaw,
et al., No. 15-CA-001162 (the “Dimon lawsuit”), was filed in the Circuit Court of the Twentieth Judicial District in and for Lee County,
Florida, against Alico, its current directors, Silver Nip, 734 Investors and 734 Agriculture in connection with the Acquisition of Silver Nip
by Alico. The complaint alleges claims for breach of fiduciary duty, gross mismanagement, waste of corporate assets and tortious
interference with contract against Alico’s directors, unjust enrichment against three of the directors and aiding and abetting breach of
fiduciary duty against Silver Nip, 734 investors and 734 Agriculture. The lawsuit seeks, among other things, rescission of the Acquisition,
an injunction prohibiting certain payments to Silver Nip stockholders, unspecified damages, disgorgement of profits, costs, fees (including
attorneys’ fees) and expenses.
On July 17, 2015, the plaintiffs in the Stein and Dimon lawsuits filed a stipulation and proposed order consolidating their cases for
all purposes under the caption, In re Alico, Inc. Shareholder Litigation, Master File No. 15-CA-000645 (the “Consolidated Action”) and
seeking the appointment of a lead plaintiff and lead and liaison counsel. The court entered that proposed order on July 21, 2015.
On October 16, 2015, the lead plaintiff in the Consolidated Action reported to the court that the parties reached an agreement in
principle to settle the Consolidated Action and other claims related to the Acquisition and that they are in the process of formally
documenting their agreements. That process is ongoing and the settlement remains subject to final documentation and court approval
following notice to the relevant Alico shareholders. Once the parties have completed the settlement documents, they will contact the court
to schedule a hearing at which they will request the court to preliminarily approve the settlement and to set a final settlement hearing date.
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of
business. There are no current legal proceedings to which we are a party to or of which any of our property is subject to that we believe will
have a material adverse effect on our business financial position or results of operations.
76
Note 19. Selected Quarterly Financial Data (unaudited)
Summarized quarterly financial data for the fiscal years ended September 30, 2015 and 2014 are computed independently each
quarter, therefore, the sum of the quarter amounts may not equal the total amount for the respective year due to rounding as follows:
(in thousands, except per share amounts)
Fiscal Quarter Ended
December 31,
March 31,
June 30,
2014
2013
2015
2014
2015
2014
September 30,
2014
2015
Total operating revenue
Total operating expenses
Gross profit
General and administrative
Other (expense) income, net
Income (loss) before income taxes
Income tax expense (benefit)
Net income (loss)
Net loss attributable to noncontrolling
interests
Net income attributable to Alico Inc.
common stockholders
Earnings per share:
Basic
Diluted
$ 16,178 $ 14,989 $ 55,122 $ 40,642 $ 68,809 $ 33,875 $ 13,010 $ 14,477
10,372
4,105
3,594
10,151
10,662
6,653
2,794 $ 4,697 $ 7,767 $ 1,031 $ (2,559) $ 4,009
12,418
2,571
3,561
(261)
(1,251)
(547)
(704) $
13,082
3,096
5,913
14,311
11,494
3,763
7,731 $
45,043
10,079
3,381
(2,954)
3,744
950
10,047
2,963
3,962
(1,595)
(2,594)
(35)
29,282
4,593
2,339
(432)
1,822
791
48,994
19,815
3,638
(2,183)
13,994
6,227
30,669
9,973
1,834
(450)
7,689
2,992
$
—
—
—
—
—
—
31
—
7,731 $
(704) $
2,794 $ 4,697 $ 7,767 $ 1,031 $ (2,528) $ 4,009
1.05 $
1.05 $
(0.10) $
(0.10) $
0.34 $
0.34 $
0.64 $
0.64 $
0.94 $
0.94 $
0.14 $
0.14 $
(0.30) $
(0.30) $
0.55
0.55
$
$
$
The operating results noted above, with the exception of the quarter ended December 31, 2013 includes the operating results of
Silver Nip Citrus, as a result of the common control acquisition in February 2015.
Note 20. Subsequent Events
On December 1, 2015, we paid $3,750,000 of additional consideration on the Orange-Co acquisition as contemplated by the
Orange-Co Purchase Agreement. Our $7,500,000 irrevocable letter of credit securing the payment of the additional consideration expired
and was replaced with a new letter of credit in the amount of $3,750,000 securing the final payment due on June 1, 2016 subject to certain
limitations.
77
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure Controls and
Procedures.
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the our disclosure controls and
procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the
“Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were
effective.
(b) Changes in Internal Control over Financial
Reporting.
During the fourth quarter ended September 30, 2015, there were no changes in our internal controls over financial reporting that have
materially affected or are reasonably likely to materially affect, our internal control over financial reporting.
(c) Management Report on Internal Control Over Financial
Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes
those policies and procedures that:
(i)
(ii)
(iii)
pertain to the maintenance of records, that in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being
made only in accordance with authorizations of management and directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
the Company’s assets that could have a material effect on the financial statements.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2015. In
making this assessment, management used the criteria described in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based on our assessment and those criteria, management concluded that our internal control over financial reporting was effective as
of September 30, 2015. Management reviewed the results of their assessment with our Audit Committee. The effectiveness of our internal
control over financial reporting as of September 30, 2015 has been audited by RSM US LLP, an independent registered public accounting
firm, as stated in their attestation report which is included herein.
Item 9B. Other Information.
None.
78
Certain information required by Part III is omitted from this Annual Report on Form 10-K because we will file a definitive Proxy
Statement for the 2016 Annual Meeting of Stockholders pursuant to Regulation 14A of the Securities Exchange Act of 1934, (the “Proxy
Statement”), not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and the applicable
information included in the Proxy Statement is incorporated herein by reference.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Information concerning our directors and nominees and other information as required by this item are hereby incorporated by
reference from our Proxy Statement to be filed with the SEC pursuant to Regulation 14A.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that is intended to serve as a code of ethics for purposes of Item 406 of
Regulation S-K. Our Code of Business Conduct and Ethics is posed on our website www.alicoinc.com (at the Investor homepage under
"Corporate Governance") and we intend to disclose on our website any amendments to, or waiver from, such code.
Item 11. Executive Compensation.
The information required by Item 11 regarding executive compensation is included under the headings “Compensation Discussion
and Analysis,” “Compensation Committee Report” and “Compensation Committee Interlocks and Insider Participation” in our Proxy
Statement to be filed with the SEC pursuant to Regulation 14A.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information concerning the ownership of certain beneficial owners and management and related stockholder matters is hereby
incorporated by reference to our Proxy Statement to be filed with the SEC pursuant to Regulation 14A.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information concerning relationships and related transactions is hereby incorporated by reference to our Proxy Statement to be
filed with the SEC pursuant to Regulation 14A.
Item 14. Principal Accountant Fees and Services.
Information concerning principal accounting fees and services is hereby incorporated by reference to our Proxy Statement to be filed
with the SEC pursuant to Regulation 14A.
79
Item 15. Exhibits, Financial Statement Schedules
(a)
Documents filed as part of this
report
PART IV
(1)
(2)
Financial
Statements:
Our Consolidated and Combined Financial Statements are included in Part II, Item 8 of this Annual Report on Form 10-K.
Financial Statement
Schedules:
Financial statement schedules are omitted as the required information is either inapplicable or the information is presented in
our Consolidated and Combined Financial Statements or notes thereto.
(3)
Exhibits
The exhibits listed in the Exhibit Index in (b) below are filed or incorporated by reference as part of this Annual Report on
Form 10-K.
(b)
Exhibit
Index.
80
Exhibit
Number
2.1
2.2
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
10.0
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
Exhibit Index
*** Asset Purchase Agreement, dated as of December 1, 2014, by and among Alico, Inc., Orange-Co, LP, and, solely with
respect to certain sections thereof, Orange-Co, LLC and Tamiami Citrus, LLC. (Incorporated by reference to Exhibit
2.1 of Alico’s filing on Form 8-K dated December 5, 2014)
*** Agreement and Plan of Merger, dated as of December 2, 2014, by and among Alico, Inc., 734 Sub, LLC, 734 Citrus
Holdings, LLC, and, solely with respect to certain sections thereof, 734 Agriculture, LLC, Rio Verde Ventures, LLC
and Clayton G. Wilson. (Incorporated by reference to Exhibit 2.2 of Alico’s filing on Form 8-K dated December 5,
2014)
Restated Certificate of Incorporation, Dated February 17, 1972 (incorporated by reference to Alico’s Registration
Statement on Form S-1 dated February 24, 1972, Registration No. 2-43156)
Certificate of Amendment to Certificate of Incorporation, Dated January 14, 1974 (incorporated by reference to
Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
Amendment to Articles of Incorporation, Dated January 14, 1987 (incorporated by reference to Alico’s Registration
Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
Amendment to Articles of Incorporation, Dated December 27, 1988 (incorporated by reference to Alico’s Registration
Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
Bylaws of Alico, Inc., amended and restated (incorporated by reference to Alico’s filing on Form 10-K, dated
December 14, 2010)
By-Laws of Alico, Inc., amended and restated (incorporated by reference to Alico’s filing on Form 8-K dated October
4, 2007)
By-Laws of Alico, Inc. amended and restated (incorporated by reference to Alico’s filing on Form 8-K dated
November 21, 2008)
By-Laws of Alico, Inc. amended and restated (incorporated by reference to Alico’s filing on Form 8-K dated October
5, 2010)
By-Laws of Alico, Inc. , amended and restated (Incorporated by reference to Exhibit 3.1 of the Company’s current
report on Form 8-K, filed with the Commission on January 25, 2013)
Material Contracts
Credit agreement with Rabobank Agri-Finance (incorporated by reference to Alico’s filing on Form 8-K dated
September 8, 2010)
Change in Control Agreement dated March 27, 2013 between Alico, Inc. and JD Alexander (Incorporated by reference
to Exhibit 10.1 of the Company’s quarterly report on Form 10-Q filed with the Commission on May 6, 2013)
Change in Control Agreement dated March 27, 2013 between Alico, Inc. and Kenneth Smith, Ph.D. (Incorporated by
reference to Exhibit 10.2 of the Company’s quarterly report on Form 10-Q filed with the Commission on May 6,
2013)
Change in Control Agreement dated March 27, 2013 between Alico, Inc. and W. Mark Humphrey (Incorporated by
reference to Exhibit 10.3 of the Company’s quarterly report on Form 10-Q filed with the Commission on May 6,
2013)
Change in Control Agreement dated March 27, 2013 between Alico, Inc. and Steven C. Lewis (Incorporated by
reference to Exhibit 10.4 of the Company’s quarterly report on Form 10-Q filed with the Commission on May 6,
2013)
Form of Indemnification Agreement (Incorporated by reference to Exhibit 10.5 of the Company’s quarterly report on
Form 10-Q filed with the Commission on May 6, 2013)
Management Security Plan(s) Trust Agreement (Incorporated by reference to Exhibit 10.6 of the Company’s quarterly
report on Form 10-Q filed with the Commission on May 6, 2013)
Fourth Amendment to Credit Agreement with Rabo Agrifinance, Inc. dated April 1, 2013 (Incorporated by reference to
Exhibit 10.7 of the Company’s quarterly report on Form 10-Q filed with the Commission on May 6, 2013)
Agricultural Lease Agreement dated May 19, 2014 between Alico, Inc. and United States Sugar
Corporation. (Incorporated by reference to Exhibit 10.1 of the Company’s quarterly report on Form 10-Q filed with
the Commission on August 11, 2014)
Purchase and Sale Agreement dated August 7, 2014 between Alico, Inc. and Terra Land Company
*
*
*
*
*
*
Fifth Amendment to Credit Agreement with Rabo Agrifinance, Inc. dated April 28, 2014
Sixth Amendment to Credit Agreement with Rabo Agrifinance, Inc. dated July 1, 2014
81
10.13
*** First Amended and Restated Credit Agreement, dated as of December 1, 2014, by and among Alico, Inc., Alico Land
Development, Inc., Alico-Agri, Ltd., Alico Plant World, L.L.C., Alico Fruit Company, LLC, Metropolitan Life
Insurance Company, and New England Life Insurance Company. (Incorporated by reference to Exhibit 10.1 of
Alico’s filing on Form 8-K dated December 5, 2014)
10.14
*** Credit Agreement dated as of December 1, 2014, by and between Alico, Inc., Alico-Agri, Ltd., Alico Plant World,
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.36
10.31
10.32
14.1
14.2
21.0
23.0
31.1
L.L.C., Alico Fruit Company, LLC, Alico Land Development, Inc., and Alico Citrus Nursery, LLC, as Borrowers and
Rabo Agrifinance, Inc., as Lender. (Incorporated by reference to Exhibit 10.2 of Alico’s filing on Form 8-K dated
December 5, 2014)
Shared Services Agreement by and between Alico, Inc. and Trafelet Brokaw Capital Management, L.P. dated June 1,
2015
Loan Agreement, dated December 31, 2012, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC (the
"Prudential Loan Agreement")
Promissory Note A, dated December 31, 2012, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC
Promissory Note B, dated December 31, 2012, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC
Promissory Note C, dated December 31, 2012, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC
First Amendment to Loan Agreement, dated March 26, 2013 (Prudential Loan Agreement)
Promissory Note D, dated March 26, 2013, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC
Loan Agreement, dated September 4, 2014, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC
("Loan E and F")
Promissory Note E, dated September 4, 2014, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC
Promissory Note F, dated September 4, 2014, by and among 734 Citrus Holdings, LLC, 734 LMC Groves, LLC, 734
Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital Company, LLC
First Amendment to Loan Agreement, dated April 23, 2015 (Loan E and F)
Second Amendment to the Loan Agreement, dated September 4, 2014 (Prudential Loan Agreement)
Third Amendment to the Loan Agreement, dated April 23, 2015 (Prudential Loan Agreement)
Cancellation and Termination of Note D, dated April 23, 2015, by and among 734 Citrus Holdings, LLC, 734 LMC
Groves, LLC, 734 Co-Op Groves, LLC, 734 BLP Groves, LLC, 734 Harvest LLC and Prudential Mortgage Capital
Company, LLC
First Amendment to Credit Agreement and Consent with Rabo Agrifinance, Inc. dated February 26, 2015
Second Amendment to Credit Agreement with Rabo Agrifinance, Inc. dated July 16, 2015
Amendment to First Amended and Restated Credit Agreement with Metropolitan Life Insurance Company and New
England Life Insurance Company, dated February 1, 2015
Second Amendment to First Amended and Restated Credit Agreement with Metropolitan Life Insurance Company and
New England Life Insurance Company dated August 12, 2015
Code of Ethics (incorporated by reference to Alico’s filing on Form 8-K dated February 24, 2009)
Whistleblower Policy (incorporated by reference to Alico’s filing on Form 8-K dated February 24, 2009)
Subsidiaries of the Registrant — Alico Land Development Company, Inc. [(formerly Saddlebag Lake Resorts, Inc. (a
Florida corporation incorporated in 1971)]; Alico-Agri, Ltd (a Florida limited partnership formed in 2003), Alico
Plant World, LLC (a Florida limited liability company organized in 2004), Bowen Brothers Fruit, LLC (a Florida
limited liability company organized in 2005) incorporated by reference to Alico’s filing on Form 10-K dated
November 28, 2006
Consent of Independent Registered Public Accounting Firm
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a)
certification
82
31.2
32.1
32.2
101
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a)
certification
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
** XBRL Instance Document
101.INS
101.SCH ** XBRL Taxonomy Extension Schema Document
101.CAL
101.DEF
101.LAB
101.PRE
*
**
** XBRL Taxonomy Calculation Linkbase Document
** XBRL Taxonomy Definition Linkbase Document
XBRL Taxonomy Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
Denotes a management contract or compensatory plan, contract or arrangement.
In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are
furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities
Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these
sections.
***
Certain schedules and exhibits have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The
Company will furnish supplemental copies of any such schedules or exhibits to the SEC upon request.
83
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
December 10, 2015
ALICO, INC. (Registrant)
By:
/s/ Clayton G. Wilson
Clayton G. Wilson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated:
December 10, 2015
Director and Chief Executive Officer
December 10, 2015
Chief Financial Officer and Senior Vice President
December 10, 2015
Chairman of the Board, Director
December 10, 2015
Director
December 10, 2015
Director
December 10, 2015
Director
December 10, 2015
Director
December 10, 2015
Director
84
:
:
:
:
:
:
:
:
/s/ Clayton G. Wilson
Clayton G. Wilson
/s/ John. E. Kiernan
John. E. Kiernan
/s/ Henry R. Slack
Henry R. Slack
/s/ George R. Brokaw
George R. Brokaw
/s/ R. Greg Eisner
R. Greg Eisner
/s/ Benjamin D. Fishman
Benjamin D. Fishman
/s/ W. Andrew Krusen
W. Andrew Krusen
/s/ Remy W. Trafelet
Remy W. Trafelet
EXECUTION VERSION
SHARED SERVICES AGREEMENT BY AND BETWEEN
TRAFELET BROKAW CAPITAL MANAGEMENT, L.P.
ALICO, INC. AND
June 1, 2015
THIS SHARED SERVICES AGREEMENT (this "Agreement ") is made and entered into as of this 1st day of June, 2015
by and between ALICO , INC., a corporation organized under the laws of the State of Florida (on behalf of itself and its affiliates
and subsidiaries, hereinafter jointly referred to as "Purchaser "), and TRAFELET BROKAW CAPITAL MANAGEMENT , L.P.,
a limited liability partnership organized under the laws of the State of Delaware ("Supplier").
RECITALS
WHEREAS, Purchaser requires certain functions and administrative services in New York City, including in connection
with Purchaser 's office of the Chairman, Chief Financial Officer and certain Board and other meetings;
WHEREAS, Purchaser has requested that Supplier provide such Services (as hereinafter defined) on an at-cost basis;
WHEREAS , the intent and purpose of this Agreement is that Purchaser shall at all times obtain the Services at a cost
equal to or less than Purchaser would be able to obtain equivalent services on an arm's-length basis from a third party; and
WHEREAS, because Supplier is controlled by affiliates of Purchaser, the transactions contemplated herein have been
approved by the Audit Committee of the Board of Directors of Purchaser (the "Audit Committee").
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter set forth, the
parties agree as follows:
ARTICLE I
SERVICES PROVIDED
1.
Description of Services. Subject to all the terms and conditions hereof , during the term of this Agreement ,
Supplier shall provide or cause to be provided to Purchaser and its subsidiaries the following functional categories of services:
(a) Shared Office Services. Supplier shall provide Purchaser with, and Purchaser shall purchase from Supplier,
a license to use and occupy a portion of Supplier's office space located at 410 Park Avenue, 17th Floor (or
such other space as is mutually agreed by the parties hereto, the "Shared Office") (the "Shared Office
Services''.);
(b) Administrative Support. Supplier shall provide Purchaser with, and Purchaser shall purchase from Supplier,
such other services as are attendant to the Shared Office Services, including reception, secretarial services
and related facilities services, as requested by Purchaser.
The above described services and products are referred to hereinafter, collectively, as the "Services."
2.
Warranty Disclaimer. EXCEPT AS OTHERWISE SPECIFICALLY SET FO RT H HEREIN, SUPPLIER
MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES, INCLUDING, WITHOUT LIMITATION ,
WARRANTIES
IMPLIED B Y L AW OF MERCHANT ABILITY OR FITNESS FOR A PARTICULAR PURPOSE ,
REGARDING THIS AGREEMENT, THE PERFORMANCE OF THE SERVICES CONTEMPLATED BY THIS
AGREEMENT OR ANY TANGIBLE PROPERTY DELIVERED BY SUPPLIER PURSUANT TO THIS AGREEMENT.
3.
Limitation of Liability. Subject to Section 1.2, neither party shall be liable to the other or to any other person or
entity for (a) any damages of any kind or nature (including compensatory damages) arising out of any act or omission of a party
or any person or entity acting on behalf of a party attributable to or arising in connection with the Services, whether negligent or
otherwise, except for such damages attributable to a party 's fraud, bad faith, gross negligence or willful misconduct or (b) any
indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in
connection with the transactions contemplated hereby (other than any such liability with respect to a third-party claim).
4.
Information. The Purchaser shall make available to Supplier any and all information which Supplier shall
reasonably deem necessary in order to perform the Services hereunder.
1.
Fees.
ARTICLE II COMPENSATION
(a)
General Shared Service Fees. In consideration of t h e Services, during t h e Initial Term of this
Agreement , Purchaser will pay Supplier an amount equal to Supplier's actual costs of providing the Services as a base shared
services fee. Such base shared services fee shall include internal allocations, as determined by Supplier in consultation with
Purchaser , and a prorated portion of any rent, utilities, telecommunications , phone, information technology infrastructure and
support, leasehold improvements, property taxes, office supplies and similar payments actually paid by Supplier in respect of the
Shared Office determined by multiplying the amounts paid by Supplier by the percentage of the Shared Office used by Purchaser.
For example, if Supplier in consultation with Purchaser allocates 30% of all head-count in any specific department to Purchaser
in any year, and the total cost to Supplier for such department is $100,000 in such year, then the Purchaser will be invoiced
$30,000 for the related services in such year. A l l such expenses and payments shall be fully supported w i t h reasonable
documentation and copies of all such documentation shall be provided to Purchaser upon Purchaser's reasonable request to the
extent required to support such expenses and payments.
(b)
On or before December 1 of each year of the Term of this Agreement, Supplier and Purchaser shall
jointly agree on an estimate of Supplier's fees for each functional category of Service set forth in Section 1.1(b) to be provided
pursuant this Agreement for Purchaser 's next fiscal year; provided , that to the extent such fees cannot be determined, as to such
unknown fees, Supplier shall set out the basis on which they shall be charged . It is understood and agreed that all fees charged to
Purchaser for any particular month shall be no greater than Supplier's actual costs of
providing such Services during such month, as determined pursuant to Section 2.1(a). Attached as Annex A is an es timate of
such costs, on a monthly basis, during the period beginning on June 1 and ending on December 31, 2015 .
2.
Invoice and Payment Procedures. Purchaser shall pay Supplier all fees described herein for Services hereunder
by means of wire transfer of immediately available funds transfer from Purchaser 's account to Supplier's designated account.
Supplier shall provide Purchaser with a written invoice of charges for such fees and out-of-pocket and pre-paid expenses (unless
such expenses are already included in the relevant fees) on a monthly basis. Purchaser shall pay each such invoice within thirty
(30) days of receipt. In the event of any dispute between Supplier and Purchaser over the amounts due for Services rendered,
such disputed amounts shall, upon resolution of the dispute, be credited to or debited from
Purchaser 's account against future payments for Services or paid in cash after termination of this Agreement.
3.
Purchaser Audit Rights. As reasonably requested by Purchaser (not to exceed once per year) and at Purchaser 's
sole expense, Purchaser or its independent auditor may reasonably audit Supplier's charges or performance under this
Agreement. Purchaser will coordinate any such audits with Supplier and comply with Supplier's reasonable policies and
procedures regarding access to and use of confidential information.
4.
Certification to Audit Committee. Once each year during the Term of this Agreement , Purchaser 's management
shall certify to the Audit Committee that the Services are being provided by Supplier at cost. Supplier shall reasonably cooperate
with and provide information, upon Purchaser's reasonable request, to assist Purchaser 's management in making such
certification .
ARTICLE III
TERM AND TERMINATION
1.
Term. This Agreement shall take effect retroactive from January 1, 2015 and will continue in force for an initial
period of one (1) year from June 1, 2015 ("Initial Term"), subject to earlier termination as provided in Section 3.2 hereof, and
thereafter , this Agreement will be automatically renewed for additional periods of one (1) year each ("Additional Term(s)").
2.
Termination . This Agreement or an entire functional category of Services may be terminated in accordance
with the following provisions (Purchaser will have no right to terminate any Services within a specific functional category of
Services):
(a)
Either party hereto may terminate this Agreement at any time upon the occurrence of an event of bankruptcy
with respect to the other party;
(b)
Either party may terminate this Agreement , or a particular functional category of Services by giving notice in
writing to the other party in the event the other party is in material breach of this Agreement and has failed to cure such breach
within ninety (90) calendar days of receipt of written notice thereof from the other party ; provided , that, to the extent such
material breach relates to a specific Service or specific Services, this Agreement may only be terminated with respect to such
Service or Services;
(c)
This Agreement , any Service or functional category of Services may be terminated by the mutual written
consent of the parties, which mutual consent may terminate this Agreement in its entirety or terminate this Agreement in part by
terminating a specific functional category of Services; or
(d)
Purchaser may terminate any or all of the functional categories of Services, described in Section 1.1(b), and
only such services, o n written notice to Supplier. The Section 1.1(b) Services that are the subject of such notice shall be
terminated as of the last day of the calendar month in which notice is given; provided , that if notice is given after the fifteenth
(15th) day of a calendar month, the Service shall terminate on the last day of the calendar month following the month in which
notice is given. In the event such termination would result in a breach by Supplier of a third party obligation, the parties agree to
use commercially reasonable efforts to resolve or prevent the breach in a manner which will allow the Purchaser to proceed with
termination of the Service.
3.
Rights and Obligations on Termination. In the event of termination of this Agreement or a particular functional
category of Services for any reason, the parties will have the following rights and obligations:
(a)
Termination will not release either party from the obligation to make payment of all amounts then or thereafter
due and owing for Services already provided; and
(b)
The obligations hereunder which by their terms or clear intent extend beyond termination of this Agreement
shall survive termination of this Agreement.
ARTICLE IV RELATIONSHIP
4.1 General. Nothing contained in this Agreement shall be construed to give either party the power to direct or control
the day-to-day activities of the other party, nor to assume or create any obligation or responsibility , express or implied, on behalf
of or in the name of the other party. In fulfilling its obligations under this Agreement, Supplier will be acting as an independent
contractor.
5.1 Notices. All notices and other communications to be given to any party hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered by hand, courier or overnight delivery service or five (5) days after being mailed
by certified or registered mail, return receipt requested , with appropriate postage prepaid, o r when received in the form of a
facsimile or email transmission and shall be directed to the address set forth below (or at such other address or facsimile number
as such party shall designate by like notice):
ARTICLE V MISCELLANEOUS
As to Supplier: Trafelet Brokaw Capital Management, L.P.
410 Park Avenue, 17th Floor New York, NY 10022
Attention:
Remy Trafelet
Fax No: 212-201-7801
As to Purchaser Alico, Inc.
10070 Daniels Interstate Court, Suite 100 Fort Myers, FL 33913
Attention:
Clayton G. Wilson
Fax No: 239-226 -2004
5.2 Entire Agreement; Amendments; Assignment. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof. This Agreement may not be modified, amended, rescinded, canceled or waived, in
whole or in part, except by a written instrument duly executed by the parties hereto. Neither party shall voluntarily or
involuntarily assign its rights or obligations under this Agreement without the prior written approval of the other party. Any such
prohibited assignment will be null and void.
5 . 3 Counterparts. This Agreement may be executed simultaneously in two (2) or more counterparts, and each such
counterpart will be deemed an original hereof, but all such counterparts together will constitute one and the same instrument.
5.4 Waiver. No failure or delay by either party to take any action or assert any right or remedy hereunder or to enforce
strict compliance with any provision hereof will be deemed to be a waiver of, or estopped with respect to, such right, remedy or
noncompliance in the event of the continuation or repetition of the circumstances giving rise to such right, remedy or
noncompliance. No waiver will be effective unless given in a duly executed written instrument.
5.5 Severability. In the event that any of the terms or provisions of this Agreement are in conflict with any rule of law
or statutory provision or otherwise unenforceable under the laws or regulations of any government or subdivision thereof having
jurisdiction over this agreement , such terms or provisions will be deemed stricken from this Agreement to the extent necessary
to avoid such conflict, but such invalidity or unenforceability will not invalidate any of the other terms or provisions of this
agreement and the remainder of such terms or provisions and the remainder of this Agreement will continue in full force and
effect, unless the invalidity or unenforceability of any such provisions hereof does substantial violence to, or where the invalid or
unenforceable provisions comprise an integral part of, or are otherwise inseparable from, the remainder of this Agreement.
5.6 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their permitted successors
and assigns, and nothing in this Agreement express or implied shall give or be construed to give to any Person, other than the
Parties and their permitted successors and assigns, any legal or equitable rights hereunder , whether as third-party beneficiaries or
otherwise.
5.7 Governing Law. This Agreement shall be construed and enforced in accordance with the internal laws of the State
of New York , United States of America, without regard to its principles of conflicts of law (except to the extent that the internal
affairs doctrine or other requirements of statute or case law requires the application of the laws of the country or jurisdiction of
organization of any entity).
IN W ITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their
authorized representatives effective as of the date first above written.
ALICO INC. TRAFELET BROKAW CAPITAL MANAGEMENT, L.P.
By: /s/ Clayton G. Wilson By: /s/ Andrew Loggia
Its: Chief Executive Officer Its: Chief Financial Officer
Annex A
2015 OFFICE COSTS FOR TRAFELET BROKAW BASED ON
SQUARE FOOTAGE USAGE
Total Annual Cost
429,672
61,640
16,757
54,000
33,480
15,000
610,549
6,072
100.55
Office Costs
Rent and Electricity
Amortized Improvements
Commercial Rent Tax
Technology and Support
Supplies and Miscellaneous
Letter of Credit
Total Monthly Office Cost
Square feet of office
Cost per Sq foot
ALICO ALLOCATION FOR SHARED SERVICES
Square Footage Allocation
Total Monthly Office Cost
Staff Support
50% Ad min cost (l00K/yr)
Receptionist
Analyst
Total Per Month Alico
Total For Quarter Alico
Monthly Cost
35,806
5,137
1,396
4,500
2,790
1,250
50,879
6,072
8.38
2,429
20,352
8,333
0
4,167
32,852
98,555
Loan Numbers:
717610613
717610637
717610638
LOAN AGREEMENT
THIS LOAN AGREEMENT(the "Agreement") is made and entered into as of the 31st
day of December, 2012 (the "Effective Date"), by and among 734 CITRUS HOLDINGS, LLC, a Florida limited liability
company, 734 LMC GROVES, LLC, a Florida limited liability company, 734 CO-OP GROVES, LLC, a Florida limited
liability company, 734 BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited
liability company, being collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall
apply to each of said four limited liability companies both separately and collectively), jointly and severally, all having an office
and place of business at 590 Madison Avenue, 26th Floor, New York, New York 10022 and PRUDENTIAL MORTGAGE
CAPITAL COMPANY, LLC, a Delaware limited liability company, having an office and place of business at 801 Warrenville
Road, Suite 150, Lisle, Illinois 60532-1357 (referred to herein as the "Lender).
WITNESSETH:
WHEREAS, Borrower, on even date herewith, has executed (a) Promissory Note A to Lender in the amount of
Fourteen Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) in lawful money of the United States of America
("Note A" and the loan evidenced thereby known as Loan 717610613 being referred to as "Loan A"); (b) Promissory Note B to
in the amount of Fourteen Million Five Hundred Thousand and No/I 00 Dollars ($14,500,000.00) in lawful money of the United
States of America ( "Note B" and the loan evidenced thereby known as Loan 717610637 being referred to as "Loan B") and (c)
Promissory Note C to Lender in the amount of Five Million and No/I 00 Dollars ($5,000,000.00) in lawful money of the United
States of America ( "Note C" and the loan evidenced thereby known as Loan 717610638 being referred to as "Loan C" and with
such Note A, Note Band Note C being collectively referred to as the "Note" and Loan A, Loan B and Loan C being collectively
referred to as the "Loan");
WHEREAS, on even date herewith, the Borrower has executed that certain Mortgage and Security Agreement (the
"Security Instrument") in seven counterparts encumbering the Premises, as defined herein, and other collateral described therein,
in favor of Lender, to secure the Note and a counterpart of said Security Instrument is to be recorded on or about the date hereof
in the Public Records of Collier, Hardee, Hendry, Highlands, Martin, Osceola and Polk Counties, Florida;
WHEREAS, on even date herewith, the Borrower has executed that certain Assignment of Leases and Rents (the
"Assignment of Leases and Rents") in seven counterparts assigning to
Lender certain leases and rents described therein to secure the Note and which Assignment of Leases and Rents is to be recorded
on or about the date hereof in the Public Records of Collier, Hardee, Hendry, Highlands, Martin, Osceola and Polk Counties,
Florida; and
WHEREAS, the parties desire to set forth certain agreements as to the Loan.
IN CONSIDERATION OF the foregoing facts and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and of the mutual covenants and agreements contained in this Loan Agreement, the Borrower and the
Lender agree as follows:
ARTICLE I DEFINITIONS
Section 1.1 Definitions. For the purpose of this Agreement, the following terms shall have the respective meanings
specified in this Section 1.1 which apply to both the singular and plural forms of such terms:
"Account" shall mean account as defined in the UCC.
"Affiliate" shall mean any Person directly or indirectly controlling, controlled by, or under direct or indirect common
control with any Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Agreement" shall mean this agreement as originally executed by the parties hereto and all permitted amendments,
supplements and modifications hereof, including all exhibits and schedules.
"Business Day" shall mean each Monday through Friday except for days in which commercial banks are not authorized
to open or are required by law to close in the State in which the place designated by Lender for payments under the Note is
located.
"Collateral" shall mean the Premises and all other property encumbered by the Security
Instrument and other Loan Documents and the products and proceeds thereof.
"Costs" shall mean all costs, expenses, losses and damages sustained or incurred by the Lender because of or as a result
of any default or any one or more Events of Default of the Borrower under this Agreement, the Loan Documents or any of them,
or in realizing upon, protecting, perfecting, defending or enforcing, or any combination thereof, the rights and remedies of the
Lender under this Agreement, the Loan Documents, or any of them, including, without limitation, all attorney's fees and costs,
including paralegal fees in all legal proceedings, including administrative, trial, appellate, probate, bankruptcy or any other legal
or administrative proceeding, regardless of whether suit is brought, all environmental consultants and engineers fees and costs
and all appraisers fees and costs.
"Crops" shall mean all growing crops and future crops now growing or hereafter grown on the Premises o r any part
thereof whether Fructus Naturales o r Fructus Industriales ("Emblements") including, but not b y way o f limitation, all citrus
crops, row crops and vegetables, whether mature or immature and whether now owned or now planted and now growing on the
Premises or any part thereof or hereafter acquired or planted and grown on the Premises or any part thereof and all by-products
thereof.
"Debt" shall mean debt as determined and calculated under GAAP.
"Default Rate" shall mean the interest rate specified in the Note A as the Default Rate as to monetary sums due
thereunder, the interest rate specified in Note B as the Default Rate as to monetary sums d u e thereunder, t h e interest rate
specified in Note C as the Default Rate as to monetary sums due thereunder and as to other sums due under the other Loan
Documents, the higher of the Default Rate under Note A, Note Band Note C ..
"Due Date" shall mean the date any payment of principal or interest is due and payable on the Note.
"Effective Date" the date of this Agreement first set forth above.
"Equipment" shall mean equipment as defined in the Security Instrument.
"Event of Default" shall mean an event of default specified in this Agreement or any other Loan Document.
"Farm Products" shall mean farm products as defined in the UCC whether now owned or hereafter acquired including
but not by way of limitation, Crops.
"Financing Statements" shall mean any financing statement or statements recorded and/or filed for the purpose of
perfecting the Security Interest in the Collateral or any portion thereof, under the UCC or any other state law.
"Fiscal Year" shall mean the fiscal year of the Borrower ending on June 30 in each calendar year. Subsequent changes of
the Fiscal Year shall not change the term, "Fiscal Year" as used herein, unless the Lender shall consent in writing to such
changes.
"Fixtures" shall mean Goods determined to be fixtures under the laws of Florida as to
Goods located on Real Property located in Florida.
"GAAP" shall mean generally accepted accounting principles consistently applied to the particular item.
"Goods" shall mean goods under the UCC other than Equipment not within the definition of Equipment in the Security
Instrument.
"Intercreditor Agreement" shall mean any Intercreditor Agreement or Intercreditor
Agreements between Lender and the LOC Lender now or hereafter entered into.
"Interest Rate" shall mean the interest rate specified in the Note applicable when referring to said term.
"Inventory" means inventory as defined in the UCC.
"Loan" shall have the meaning ascribed thereto in the Recitals herein.
"Loan Application" shall mean Borrower's Loan Application to Lender for Loan
717610613, Loan 717610637 and Loan 717610638 dated December 7, 2012.
"Loan Commitment" shall mean the Lender's commitment t o make the Loan t o the Borrower pursuant to the Loan
Application and the Borrower's acceptance thereof on terms and conditions set forth in the letter from the Lender to the Borrower
as to such commitment and acceptance.
"Loan Documents" shall have the meaning ascribed thereto in Section 2.4 herein.
"LOC" shall mean a short term loan or loans to Borrower from any LOC Lender for working capital purposes.
"LOC Lender" the lender or lenders which provide the LOC. "Note" shall mean the Note described in the Recitals
herein.
"Obligations" with respect to Borrower, shall mean, individually and collectively, all payment and performance duties,
obligations and liabilities of the Borrower to the Lender, however and whenever incurred, acquired or evidenced, whether
primary or secondary, direct or indirect, absolute or contingent, sole or joint and several, due or to become due, including,
without limitation, all Costs and all such duties, obligations and liabilities of the Borrower to the Lender, under and pursuant to
the Loan Documents and all renewals, replacements, modifications, extensions, increases and amendments of any thereof.
"Permitted Liens" shall mean: (i) liens imposed by law for taxes, assessments or charges or levies of any governmental
authority not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP; (ii) statutory liens of suppliers carriers, warehousemen, mechanics,
materialmen and similar Liens arising by operation of law in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP; (iii) pledges, liens and deposits made in the ordinary course of business in compliance with workers'
compensation, unemployment insurance a n d other social security laws o r regulations; (iv) deposits or liens to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business;
(v) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and d o not materially detract from the value o f the
affected property or materially interfere with the ordinary conduct of business of the Borrower; (vi) extensions, renewals or
replacements of any lien referred to in paragraphs (i) through (v) above, provided that the principal amount of the obligation
secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally
encumbered thereby; (vii) statutory liens on deposit accounts maintained with, or other property in the custody of, a depositary
bank pursuant to its general business terms and in the ordinary course of business, provided that such Liens do not secure any
Debt; (viii) liens that are contractual rights of set-off relating t o purchase orders a n d other agreements entered into with
customers of Borrower in the ordinary course of business; and (ix) liens arising o u t of conditional sale, title retention,
consignment or similar arrangements for sale of goods entered into by the Borrower in the ordinary course of business or liens
arising by operation of law under Article 2 of the U CC in favor of a reclaiming seller of goods or buyer of goods.
"Person" shall mean any individual, joint venture, partnership, firm, corporation, trust, unincorporated organization or
other organizational entity, or a governmental body or any department or agency thereof, and shall include both the singular and
the plural.
"Place of Business" shall mean those places of business in which the Borrower undertakes its business and shall include
the Principal Place of Business.
"Principal Place of Business" shall mean the principal place of business and the headquarters of the Borrower at which
place all of Borrower's records are kept and which is currently located at 590 Madison Avenue, 26th Floor, New York, New
York 10022.
"Proceeds" shall mean proceeds as defined in the UCC.
"Real Property" shall mean those parcels of land described in Exhibit "A" attached hereto located in Collier, Hardee,
Hendry, Highlands, Martin, Osceola and Polk Counties, Florida, and all leasehold interests therein, all improvements and
Fixtures located thereon or attached thereto and all easements, tenements, hereditaments, appurtenances, profits, rents, insurance
and condemnation proceeds paid in connection therewith, and all Accounts, Chattel Paper and General Intangibles pertaining to,
connected with or arising out of the foregoing.
"Security Instrument" Shall mean that certain Security Instrument as defined in the
Recitals.
"Security Interest" shall mean the security interest granted in the Collateral to the Lender pursuant to the Security
Instrument and other Loan Documents.
"Subsidiary" or "Subsidiaries" means, as to any particular parent corporation or parent organization, any other
corporation or organization more than fifty percent (50%) of the outstanding Voting Stock of which is at the time directly or
indirectly owned by such parent corporation o r organization o r b y a n y o n e o r more other entities which themselves are
subsidiaries of such parent corporation or organization. Unless otherwise expressly noted herein,
the term "Subsidiary" means a Subsidiary of the Borrower or of any of its direct or indirect
Subsidiaries.
"Tropicana Supply Agreement Condition Precedent" shall have the meaning set forth in
Section 2.2 of this Agreement.
"Voting Stock" of any Person means capital stock or other equity interests of any class or classes (however designated)
having ordinary power for the election of directors or other similar governing body of such Person, other than stock or equity
interests having such power only by reason of the happening of a contingency.
"UCC" shall mean the Uniform Commercial Code as adopted in the State of Florida.
Section 1.2 Other Definitional Provisions. All of the terms defined in this Agreement
shall have such defined meanings when used in other Loan Documents unless the context shall
otherwise require. Capitalized terms used herein, but not herein defined, shall have the meanings ascribed thereto in the other
Loan Documents. All terms defined or used in this Agreement in the singular shall have comparable meanings when used in the
plural, and vice versa. The words "hereby", "hereto", "hereof", "herein", "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any particular provision of the this Agreement. The use of the
words "to", "until", "on", and words of similar import in this Agreement, in indicating expiration, shall be interpreted to include
the date mentioned. The neuter genders are used herein a n d whenever used if the context so indicates, shall include the
masculine, feminine and neuter as well. Whenever in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the heirs, devisees, personal representatives, successors and assigns of such party unless the context shall
expressly provide otherwise.
ARTICLEII THE LOAN
Section 2.1 Loan. The Loan consists of Loan A, Loan B and Loan C has defined in the Recitals to this Agreement and is
being made under the provisions of Note A, Note B, Note C, this Agreement and the other Loan Documents.
Section 2.2 Tropicana Supply Agreement Condition Precedent. Borrower shall not be entitled to the disbursement of
any sums under Note C by Lender, and shall have obligations with respect thereto, unless the Tropicana Supply Agreement
Condition Precedent, as defined in this Section, occurs on or before the date that is ninety days (90) after the date of Note C and
if the Tropicana Sur,ply Agreement Condition Precedent should not so occur then at the end of the ninetieth (901) day after the
date of Note C, said Note C shall be deemed cancelled with Lender and Lender shall no longer have any obligation to disburse
or fund any amount under Note C. As used herein and in Note C, the "Tropicana Supply Agreement Condition Precedent" shall
mean that (i) an Orange Purchase Agreement to be entered into between Borrower, as supplier and Tropicana Products, Inc., as
purchaser ("Tropicana"), as to the citrus Crops now and hereafter growing on certain portions of the Premises referenced as the
"Tropicana Supply Agreement" in the Letter oflntent dated September 10, 2012 by 734 Citrus, LLC and various parties inclusive
of
the Latt Maxcy Corporation (the "Letter of Intent"), all on terms and provisions and for a term not materially different from the
last draft of such Tropicana Supply Agreement presented to Lender by Borrower prior to the Effective Date unless any such
materially different terms and provisions are consented to by Lender in writing and (ii) said Tropicana Supply Agreement is
collaterally assigned by Borrower to Lender on terms acceptable to Lender as additional security for the Loan with the consent of
Tropicana unless such consent is not required under the provisions of the Tropicana Supply Agreement. If the Tropicana Supply
Agreement Condition Precedent is satisfied, then Borrower shall have thirty (30) days in which to notify Lender that Borrower
elects to accept disbursement of the full face amount of this Note C and shall do so within thirty (30) days after giving notice of
said election or Note C shall be deemed cancelled with Lender to no longer have any obligation to disburse or fund Note C and
with Borrower to have no payment or other obligations with respect thereto.
Section 2.3 Loan Proceeds Use. The proceeds of the Loan are being used to acquire the assets of described in the Letter
of Intent described in Section 2.2 above.
Section 2.4 Security Instrument. The Loan is secured by the Security Instrument, the Assignment of Leases and Rents
and other loan documents by Borrower to Lender or between Borrower and Lender pertaining to the Loan (collectively, the
"Loan Documents").
Section 2.5 Partial Release and Substitution of Collateral.
Borrower shall, from time t o time, b e entitled t o make a written request (the "Partial Release a n d Substitution of
Collateral Request") to Lender for a partial release of real estate Collateral and substitution of Collateral for that to be released on
the following terms and conditions, which if met, Lender shall approve and Borrower and Lender shall, proceed, with reasonable
diligence, to implement, such terms and conditions being as follows:
(a) the Partial Release and Substitution Request shall provide (i) a legal description of the real estate Collateral t o be
released, (ii) a legal description of the real estate Collateral to be substituted; (iii) a detailed description of any other Collateral to
b e substituted; (iv) any information Borrower has with respect to the fair market value of the Collateral to be released and
substituted; and (v) the business reason for the partial release and substitution which must be a sound business reason.
(b) the amount of real estate Collateral proposed to be substituted for the partial release Collateral shall not exceed thirty
five percent (35%) of the total gross acres of real estate Collateral at the time of the Partial Release and Substitution of Collateral
Request.
(c) the Collateral to be substituted must be Florida agricultural property acceptable to
Lender with a market value equivalent to the real estate Collateral being released.
( d) the partial release and substitution o f Collateral must not materially impact Borrower's repayment capacity nor
Borrower's operations (including, but not b y w a y of limitation practical , legal a n d cost efficient access t o t h e remaining
Collateral and the availability of utility services, drainage, and irrigation to the Collateral over the Collateral
remaining after the partial release and substitution of Collateral over such remaining Collateral or easement rights appurtenant
thereto sufficient to adequately service such remaining Collateral in a cost efficient manner).
( e) Borrower will provide Lender the following documentation which needs t o be satisfactory to Lender (i) a title
commitment for a loan title insurance policy in the amount of the then principal balance of the Note agreeing to insure as a first
priority lien on the new real estate Collateral together with copies o f all documents referenced therein subject only t o such
exceptions and matters as Lender shall approve and (ii) all due diligence items and documentation pertaining to the new real
estate Collateral typically required by Lender in real estate mortgage loan transactions such as real estate t a x information,
appraisals, environmental questionnaires, irrigation and drainage reports, plats, personal property inventory, zoning evidence,
liability and other insurance, tree and crop insurance, permits, contracts, UCC searches and other documentation.
(f) to accommodate the Borrower in identifying acceptable substitute real estate collateral, proceeds from said sale of the
partially released real estate Collateral may be deposited into a Pledge Account as substitute collateral. The Pledge Account shall
be in cash, cash equivalents and marketable financial securities that are listed for sale on a public securities exchange at readily
identifiable prices including without limitation, stocks, bonds, mutual funds, and treasuries acceptable to Lender. Use of the
Pledge Account as substitute Collateral shall not exceed twelve (12) months and the value of the pledged Collateral in the Pledge
Account shall not exceed fifty percent (50%) of the value of the total Collateral. Borrower shall provide a perfected first lien
security interest in the Pledge Account and there shall be a Pledge Agreement, Account Control Agreement and other related
documents all satisfactory to Lender together with the financial intermediary.
(g) the Loan Documents shall be modified to provide Lender with a first mortgage lien and security interest on the new
real estate Collateral to secure the Loan.
(h) Borrower shall at the time of presenting the Partial Release and Substitution Request to Lender, pay Lender a non-
refundable servicing fee not to exceed Five Thousand and Noll 00
Dollars ($5,000) for evaluating and processing the request. Borrower shall also pay the legal fees
of Lender's outside counsel in connection with the foregoing and all expenses of the transaction including but not by way of
limitation any documentary stamp taxes, intangibles taxes, title insurance premiums, title insurance company search charges,
and recording and filing fees incident thereto.
Section 2.6 Prepayments. Prepayments of the Loan, other than Exempt Prepayments (as defined in the Note), shall be
subject to the Prepayment Premium set forth in the applicable Note. Any prepayments o f principal ("Optional Prepayments")
under the Loan, other than scheduled principal payments pursuant to the applicable Note, shall b~ applied either to (i) Loan A
and Loan B , pro rata, o r (ii) Loan C , a t the option o f a n d a s specified b y t h e Borrower; provided however, that the first
$5,000,000.00 in Optional Prepayments made by the Borrower after the first anniversary of the date hereof shall be applied to
Note A.
ARTICLE III REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender (which representations and warranties shall survive the execution
and delivery of the Loan Documents) that:
Section 3 .1 Authority. Each of the entities included in the definition of "Borrower" (i) is a limited liability company
duly organized, validly existing and in good standing under the laws of the State of Florida, (ii) has all requisite power and
authority to own its properties and assets and to carry on its business as now conducted and proposed to be conducted, (iii) is
duly qualified to do business and is in good standing in every jurisdiction in which its properties or assets are owned or the nature
of its activities conducted makes such qualification necessary, and (iv) has the power and authority to execute and deliver, and to
perform its obligations under the Loan Documents.
Section 3 .2 Authorization of Loan for the Borrower The execution, delivery and performance of the Loan Documents
by each of the entities constituting Borrower (a) have been duly authorized by all requisite action and (b) will not (i) violate (x)
any provision of law, any governmental rule or regulation, any order, writ, judgment, decree, determination or award of any
court, arbitrator or other agency of government, (y) the Articles of Organization and operating agreement or other governance
documents of Borrower or (z) any provision of any indenture, agreement or other instrument to which Borrower is a party or by
which Borrower or its properties or assets are bound, (ii) be in conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such indenture, agreement or other instrument, or (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of Borrower other
than as permitted by the terms hereof.
Section 3.3 Binding Effect. This Agreement, the Note, the Security Instrument and the other Loan Documents when
delivered hereunder will be legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, except (a) as enforceability may be limited b y any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors rights, and (b) as enforceability may be limited or qualified by
general principles of equity, whether raised in a proceeding at law or equity.
Section 3.4 Agreements.
( 1) Borrower is not a party to any agreement, indenture, lease or instrument or subject to any charter or other
limited liability company governance document restriction, or any judgment, order, writ, injunction, decree, rule or regulation
materially and adversely affecting its business, properties, assets, operations or condition (financial or otherwise). There are no
unrealized losses with respect to any such agreement, indenture, lease or instrument.
(2) Borrower is not a party to, or otherwise subject to any provision contained in, any instrument evidencing
indebtedness of Borrower, any agreement relating thereto or any other contract or agreement which restricts or otherwise limits
the incurring of the indebtedness
to be evidenced by the Note.
(3) Borrower is not in default in the performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any material agreement or instrument to which it is a party.
( 4) Borrower enjoys lawful, peaceful and undisturbed possession in all material respects to all licenses, trade
names, trade marks, services marks and patents used or whose use is contemplated in the operation of its business.
Section 3.5 Litigation, etc. There are no undisclosed actions, proceedings or investigations pending or, to the knowledge
of the Borrower, threatened, against the Borrower, , (or any basis therefor known to the Borrower) which, either in any case or in
the aggregate, might result in any material adverse change in the financial condition, business, prospects, affairs or operations of
the Borrower or its properties or assets, or in any material impairment of the right o r ability of the Borrower t o carry on its
operations as now conducted or proposed to be conducted, or in any material liability on the part of the Borrower and none which
questions the validity of this Agreement, the Note or any of the other Loan Documents or of any action taken or to be taken in
connection with the transactions contemplated hereby or thereby.
Section 3.6 Violation of Judicial or Governmental Orders, Laws, Ordinances or Regulations. The Borrower knows of no
violation and has no notice of a violation of any court order or of any law, regulation, ordinance, rule, order, code, or requirement
of any governmental authority having jurisdiction over the Borrower that may detrimentally affect the business and operations of
the Borrower.
Section 3.7 No Outstanding Debt. Borrower has no outstanding Debt, except for the Loan [and the LOC], any liabilities
disclosed to Lender in writing before the Effective Date and other obligations in the nature o f trade payables incurred by
Borrower (or its predecessor) in their ordinary course of business.
Section 3.8 Priority of Liens and Security Interest. The Security Interest and liens granted to the Lender in the Collateral
shall be and are a perfected first priority Security Interest in the Collateral except for liens expressly permitted or provided in this
Loan Agreement, and there are not and will be no other security interests or other liens other than the Permitted Liens upon the
Collateral during the term of the Loan without the prior written consent of the Lender.
Section 3 . 9 Solvency. After giving effect to the funding of the Loan, the application of t h e proceeds thereof as
contemplated by this Agreement and the Loan Documents, and the payment of all estimated Lender, legal, accounting and other
fees related thereto, Borrower is solvent.
Section 3 .10 Executive Offices and Location of Records. The Borrower's Principal Place of Business is located at 590
Madison A venue, 26th Floor, New York, New York 10022t and all of its books and records are and shall be maintained there.
Section 3 .11 Regulatory Compliance. The Borrower has in the past complied with and is presently complying i n all
material respects with all laws applicable to the Borrower's business.
Section 3.12 Intentionally Omitted.
Section 3.13 Fair Labor Standards Act. The Borrower has complied with, and will continue to comply with, the
provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. Section 200, et seq., as amended from time to time (the "FLSA"),
including specifically, but without limitation, 29 U.S.C. Section 215(a). This representation and warranty, and each
reconfirmation hereof, shall constitute written assurance from the Borrower, given as of the date hereof and as of the date of each
reconfirmation, that the Borrower has complied with the requirements of the FLSA, in general, and 29 U.S.C. Section 215(a)(l)
thereof, in particular.
Section 3 .14 Intentionally Omitted.
Section 3.15 Usury. The Borrower believes that the amounts to be received by the Lender which are or which may be
deemed to be interest under any of the Loan Documents or otherwise in connection with the transactions described herein
constitute lawful interest and are not usurious or illegal under the laws of the State of Florida, and no aspect of the transaction
contemplated by this Agreement is intended to be usurious.
Section 3 .16 Borrower Setoffs. The Borrower does not, as of the date hereof, have any defenses, counterclaims, or
setoffs with respect to any sums to be advanced under this Loan Agreement.
Section 3.17 Disclosure and No Representation. Warranty or Document Untrue. No representation or warranty made by
the Borrower contained herein, the Loan Documents, or in any certificate or other document furnished or to be furnished by the
Borrower pursuant hereto, or which will be made by the Borrower from time to time in connection with the Loan Documents (a)
contains or will contain any misrepresentation or untrue statement of fact, or (b) omits or will omit to state any material fact
necessary to make the statements therein not misleading, unless otherwise disclosed in writing to the Lender. There is no fact
known to the Borrower which adversely affects, or which might in the future adversely affect, the business, assets, properties or
condition, financial or otherwise, of the Borrower, or the Collateral, except as set forth or reflected in the Loan Documents or
otherwise disclosed in writing to the Lender.
Section 3.18 Continuation. The Borrower's warranties and representations contained in this Agreement are and shall
remain correct and complete until the Loan is paid in full. All representations, warranties, covenants and agreements made to or
with the Lender by or on behalf of, or at the request of the Borrower in connection with this Agreement may be relied upon by
the Lender.
Section 3 .19 Real Property. There is legal access and adequate practical access to all of the Real Property. Each of the
entities within the definition of "Borrower" holding title to any
part of the Real Property is now and will continue to be in compliance with all of the terms of all agreements binding upon the
Real Property which it now owns.
Section 3 .20 Survival. All of the representations and warranties set forth in this Article shall survive until all
Obligations are satisfied in full.
FINANCIAL COVENANTS OF THE BORROWER
ARTICLEIV
The Borrower covenants, for so long as any of the principal amount of or interest on the Note is outstanding and unpaid
or any duty or obligation of the Borrower hereunder or under any other Obligation remains unpaid or unperformed, as follows:
Section 4.1 Financial Records. The Borrower at all times will keep proper and adequate records and books of account in
accordance with GAAP consistently applied in which the full, true and correct entries will be made of its transactions and which
will properly and correctly reflect all items of income and expense in connection with the operation of the Borrower's business
regardless of whether such income or expense is realized by the Borrower.
Section 4.2 Delivery of Financial Statements of the Borrower. The Borrower will deliver to the Lender copies of each of
the following:
(1) Within one hundred twenty (120) days after the end of each Fiscal Year, audited financial statements of
Borrower and its Subsidiaries on both a consolidated basis (with appropriate subsidiary eliminations), which are prepared in
accordance with GAAP (consisting of an income statement, balance sheet, statement of retained earnings and cash flow, a
schedule of all related debt and all contingent liabilities and including all normal and reasonable financial notes). They shall be
prepared and certified by a certified public accountant reasonably acceptable to the Lender, all in reasonable detail. Such audited
financial statements shall be further certified by the chief financial officer of the Borrower as being true, correct, and accurate, as
completely and accurately reflecting the financial transactions during the period covered thereby of Borrower and its consolidated
Subsidiaries, and as completely and accurately reflecting the financial condition of Borrower and its consolidated Subsidiaries as
of the beginning and end of said period covered.
(2) As soon as practicable and in any event within one hundred twenty (120) days after the end of each Fiscal
Year, a certificate of compliance with financial covenants from the chief financial officer of the Borrower ("Certificate of
Compliance") addressed to Lender and certifying the compliance of Borrower with the financial covenants provided in this
Article.
(3) Annually, within ninety (90) days after the completion of each Crop Season (a Crop Season shall, as to a
particular Crop, be the Crop season used by the industry in the area of the Premises as to which the Crop pertains), Borrower
shall furnish to Lender operating information on the Collateral as follows:
(i) Reports/documents (internal inventory reports etc.) that describe and value all inventory security, including
each citrus crop variety's acreage both on a gross acreage and grove planted acreage basis; and
(ii) Citrus Crop production and operations detailed information, including yields by variety, costs and pricing by
grove/farm and variety.
( 4) With reasonable promptness, such other data and information as from time to time may be reasonably
required by the Lender.
Section 4.3 Delivery of Reports. All of the reports, statements, and items required under Section 4.2 shall be in form and
substance satisfactory to Lender. All of the reports, statements, and items required under Section 4.2 must, unless another time
period is specified above, be received each year this Agreement is in force by the date which is one hundred twenty ( 120) days
after the end of the Borrower's Fiscal Year, as the case may be subject to filing
deadline extensions. If any one report, statement, or item is not received within thirty (30) days
of this due date, Lender may declare an Event of Default under this Agreement and the Loan
Documents.
Section 4.4 Inspection of Records. Borrower shall allow Lender or its authorized representatives at all reasonable times
to examine and make copies of all such books and records and all supporting data therefor at Lender's principal place of business
or at such other place where such books, records, and data may be located. Borrower shall assist Lender or such representative in
effecting such examination. Within three (3) years after Lender's receipt of any such report, statement, or item, Lender may, upon
at least five (5) Business Days prior written notice to Borrower, inspect and make copies of the books, records, and income tax
returns with respect to the Collateral of Borrower, for the purpose of verifying any such reports, statements, or items.
Section 4.5 Article IV Terms:
The following definitions shall apply to the financial covenants in this Article as to Borrower and its Subsidiaries on a
consolidated basis (with appropriate subsidiary eliminations):
(1) "Consolidated Current Ratio" shall mean the ratio of (i) Consolidated
Current Assets to (ii) Consolidated Current Liabilities;
(2) "Consolidated Current Assets " shall mean current assets as defined under and computed in accordance with
GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a consolidated basis; and
( 3 ) "Consolidated Current Liabilities" shall mean current liabilities as defined under and computed in
accordance with GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a
consolidated basis including all funded debt under lines of credit to Borrower and its Subsidiaries.
Section 4.6 Required Consolidated Current Ratio. The Consolidated Current Ratio measured at the end of each Fiscal
Year based on audited consolidated financial statements of Borrower shall be at least 2.00 to 1.00.
Section 4. 7 LOC. Any LOC Lender shall, if required b y Lender, enter into an Intercreditor Agreement with Lender
providing for the respective rights of the LOC Lender(s) and Lender as to their respective collateral, all in form and substance
satisfactory to Lender. Upon the written request of Lender, Borrower shall provide Lender with copies of all LOC Lender loan
documents which shall include the recording information of all such documents which are recorded. A default under any LOC
shall be a default hereunder.
OTHERAFFIRMATIVE COVENANTS OF THE BORROWER
ARTICLEV
Section 5.1 Inspection. The Borrower will permit the Lender or Lender's designated representative to (i) visit any Place
of Business, (ii) inspect the Collateral, including such crop inspections as the Lender deems advisable (iii) inspect and make
extracts from the Borrower's books and records, and (iv) discuss the affairs, finances and accounts of the Borrower with the
officers of the Borrower, all at such reasonable times and as often as may reasonably be requested.
Section 5.2 Maintenance of Legal Existence and Compliance with Laws. Borrower shall at all times preserve and
maintain in full force and effect its legal existence, powers, rights, licenses, permits and franchises in the jurisdiction of its
organization; continue to conduct and operate its businesses substantially as conducted and operated as of the Effective Date;
operate in full compliance with all applicable laws, statutes, regulations, certificates of authority and orders in respect of the
conduct of its businesses; and qualify and remain qualified as foreign organizations in each jurisdiction in which such
qualification is necessary or appropriate in view of its businesses and operations.
Section 5.3 First Lien. Borrower shall provide Lender a first lien and security interest on the Real Property.
Section 5.4 Second Lien. Borrower shall provide Lender a lien and security interest on all Crops and Farm Products and
all Accounts, Chattel Paper and General Intangibles ansmg out of the same which shall be second only to the first lien of any
LOC Lender.
Section 5.5 Intercreditor Agreement. At Lender's option, any LOC Lender, if other than Lender, shall enter into an
Intercreditor Agreement or Intercreditor Agreements with Lender in form and content satisfactory to Lender.
Section 5.6 Leases of the Real Property. Any tenants of the Real Property shall subordinate their leasehold interests
therein and furnish Lender a Tenant Estoppel Certificate, all in form and content satisfactory to Lender. Borrower shall cause
any lender holding a security
interest or lien on any such leasehold interests to subordinate the same to the lien and security interests of the Loan Documents.
Section 5. 7 Defaults/Notices. T h e Borrower shall immediately notify t h e Lender in writing upon t h e happening,
occurrence or existence of any Event of Default, or any event or condition which with the passage of time or giving of notice, or
both, would constitute an Event of Default, and shall provide the Lender with such written notice, a detailed statement by a
responsible officer of the Borrower of all relevant facts and the action being taken or proposed to be taken by the Borrower with
respect thereto. Borrower shall cause any and all holders of its debt to agree, in writing, unto Lender, to provide Lender notice of
any default under the documents evidencing such debt.
Section 5.8 Maintenance of Properties. The Borrower shall maintain or cause to be maintained in good repair, working
order and condition the Collateral and all other properties used or useful in the businesses of Borrower (ordinary wear and tear
excepted) and from time to time will make or cause to be made all appropriate repairs, renewals, improvements and replacements
thereof so that the businesses carried on in connection therewith may be properly and advantageously conducted at all times. The
Borrower will not do or permit any act or thing which might impair the value or commit or permit any waste of its properties or
any part thereof, or permit any unlawful occupation, business or trade to be conducted on or from any of its properties.
Section 5.9 Notice of Suit, Proceedings, Adverse Change. The Borrower shall promptly give the Lender notice in writing
(a) of all threatened or actual actions or suits (at law or in equity) and of all threatened or actual investigations or proceedings by
or before any court, arbitrator or any governmental department, commission, board, bureau, agency o r other instrumentality,
state, federal or foreign, affecting Borrower or the rights or other properties of Borrower or (i) which involves potential liability
of Borrower in an amount in excess of $500,000.00, or (ii) which the shareholders of Borrower believe in good faith is likely to
materially and adversely affect the financial condition of Borrower or to impair the right or ability of Borrower to carry on their
businesses as now conducted or to pay the Obligations or perform its duties under the Loan Documents; (b) o f any material
adverse change i n the condition (financial or otherwise) of Borrower; and (c) of any seizure o r levy upon a n y part of the
properties of Borrower under any process or by a receiver.
Section 5 .10 Debts and Taxes and Liabilities. The Borrower shall pay and discharge (i) all of their indebtedness and
obligations in accordance with their terms and before they shall become in default, (ii) all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits or against its properties prior to the date on which penalties
attach thereto, and (iii) all lawful claims which, if unpaid, might become a lien or charge upon any of its properties; provided,
however, that the Borrower and shall not be required to pay any such indebtedness, obligation, tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate and lawful proceedings diligently pursued and for which adequate
reserves have been set aside on its books. The Borrower shall also set aside and/or pay as and when due all monies required to be
set aside and/or paid by any federal, state or local statute or agency in regard to F.I.C.A., withholding, sales or excise or other
similar taxes.
Section 5.11 Notification of Change of Name or Business Location. The Borrower shall notify the Lender of each
change in the name of the Borrower and of each change of the location of any Place of Business and the office where the records
of the Borrower are kept, and, in such case, shall execute such documents as the Lender may reasonably request to reflect said
change of name or change of location, as the case may be; provided, however, the records of the Borrower may not be removed
from the Place of Business designated from time to time by Borrower, without the prior written consent of the Lender.
Section 5.12 Compliance With Laws. The Borrower will comply with all laws, regulations, rules, ordinances, statutes,
orders and decrees of any governmental authority or court applicable to the Borrower.
Section 5 .13 Further Assurances. The Borrower will, at the cost of the Borrower, and without expense to the Lender,
promptly upon the request of the Lender: (a) correct any defect, enor or omission which may be discovered in the contents of any
Loan Documents or in the execution or acknowledgment thereof; (b) execute, acknowledge, deliver and record or file such other
and further instruments (including, without limitation, mortgages, deeds or trusts, security agreements, financing statements and
specific assignments of rents or leases) and do such further acts, in either case as may be necessary, desirable or proper in the
Lender's opinion to carry out more effectively the purposes of the Loan Documents; to protect and preserve the lien and security
interest on the Collateral to subject thereto any property intended by the terms thereof to be covered thereby, including, without
limitation, any renewals, additions, substitutions or replacements thereto; or protect the security interest of the Lender and the
Collateral against the rights or interest of third parties. The Borrower hereby appoint the Lender as their attorney-in• fact, coupled
with an interest, to take the above actions and to perform such obligations on behalf of the Borrower, at Borrower's sole expense,
if Borrower fails to comply with their obligations under this paragraph.
Section 5 .14 After Acquired Property. Without the necessity of any further act of the Borrower or the Lender, the lien of
and the security interest created in the Collateral automatically extends to and includes:
(1) Any and all renewals, replacements, substitutions, accessions, proceeds, products or additions of or to the
Collateral and
(2) Any and all monies and other property that from time to time may either by delivery to the Lender or by any
instrument be subjected to such lien and security interest by the Borrower or by anyone on behalf of the Borrower, or with the
consent of the Borrower, or which otherwise may come into possession or otherwise be subject to the control of the Lender
pursuant to the Loan Documents.
Section 5.15 Indemnity. The Borrower shall indemnify, defend and hold harmless the Lender from and against and
reimburse the Lender for, all claims, demands, liabilities, losses, damages, judgments, penalties, costs and expenses, including,
without limitation, attorney's fees and disbursements, which may be imposed upon, asserted against or incurred or paid by the
Lender by reason of, on account of or in connection with any claim or damage occurring in, upon
or in the vicinity of the Collateral through any cause whatsoever, or asserted against the Lender on account of any act performed
or omitted to be performed under the Loan Documents or on account of any transaction arising out of or in any way connected
with the Collateral or the Loan Documents, except as a result of the willful misconduct or gross negligence of the Lender.
Section 5 .16 Insurance. During the term o f this Agreement, t h e Borrower shall maintain the insurance coverage
required by the Loan Documents.
ARTICLE VI
NEGATIVE COVENANTS
The Borrower covenants, for so long as any of the principal amount of or interest accrued on the Note is outstanding and
unpaid or any Obligations remain unpaid or unperformed, that none of Borrower or its Subsidiaries will undertake the following
actions without the prior written consent of the Lender:
Section 6.1 Merger, Consolidation. Dissolution, etc. Neither the Borrower nor any of its Subsidiaries will consolidate
with or merge into any other corporation, partnership, limited liability company or other entity or permit another corporation or
partnership, limited liability company or other entity to merge into them, or dissolve or take or omit to take any action which
would result in their dissolution, or acquire all or substantially all the properties or assets of any other Person, or enter into any
arrangement, directly or indirectly, with any Person whereby any of Borrower or its Subsidiaries shall sell or transfer any
property, real or personal, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property
which any Borrower or any of its Subsidiaries intend to use for substantially the same purpose or purposes as the property being
sold or transferred (other than with respect to another entity comprising Borrower) without the prior written consent of the
Lender.
Section 6.2 Changes in Business. Neither Borrower nor any of its Subsidiaries will make any material change in the
nature or scope of their respective business operations from that existing on the date of this Loan Agreement including but not
limited to major asset acquisitions or dispositions, acquisition or disposition of businesses or their components, mergers,
consolidations, reorganizations and/or restructurings.
Section 6.3 Other Agreements. Neither Borrower nor any of its Subsidiaries will enter into any arrangements,
contractual or otherwise, which would materially and adversely affect its duties or the rights of the Lender under the Loan
Documents, or which is inconsistent with or limits or abrogates the Loan Documents.
Section 6.4 Due-on-Sale or Encumbrance.
The Due-on-Sale or Encumbrance provision of the Security Instrument (Section 5.01 thereof) is incorporated herein. The term
"Minimum Ownership and Control Requirement" used therein shall mean that at all time any of the Obligations are outstanding,
Remy W. Trafelet (in the event
of his death, his estate and those taking by way of devise or inheritance due to his death) and 734 Agriculture, LLC, collectively
shall hold directly or indirectly n o less than fifty one percent (51 %) of the ownership interests in Borrower and Remy W.
Trafelet (in the event of his death, his estate and those taking by way of devise or inheritance due to his death) shall maintain
directly or indirectly management control of each of the entities within the definition of "Borrower".
Section 6.5 Loans to Borrower/Liens on Collateral. Other than the LOC permitted herein, the Borrower will not borrow
from anyone on the security of or create, incur or suffer to exist any lien on any of the Collateral or permit any Financing
Statement (other than the Lender's and any LOC Lender's security interest and Financing Statement) to be on file with respect
thereto, without the Lender's written consent.
Section 6.6 Other Liens. Other than liens and security interests permitted to secure LOC, the Borrower will not create,
assume, or suffer to exist any lien upon any other of its property or assets, whether now owned or hereafter acquired, except:
(1) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings;
(2) Purchase money security interest in property not a part of the Collateral;
and
(3) Permitted Liens.
Section 6. 7 Change in Management/Ownership. Without Lender's prior written consent, until the Loan is paid in full,
there shall be no substantial change in the executive management or ownership of each of the entities within the definition of
"Borrower" except as allowed herein.
ARTICLE VII
EVENTS OF DEFAULT
The following each and all are Events of Default hereunder:
Section 7.1 Monetary Default. If the Borrower shall default in any payment of the principal of or interest on the Note,
other monetary Obligations under the Loan Documents, within five (5) days following the date the same shall become due and
payable, whether at maturity, by acceleration by the Lender as permitted herein or otherwise.
Section 7.2 Non-Monetary Default. If the Borrower shall default in the performance or compliance with any of the
material terms, conditions, covenants or agreements contained in this Loan Agreement without curing the same within thirty (30)
days after written notice thereof shall have been given to Borrower; provided however, that if such default cannot be cured
within said period, Borrower shall have such additional time for cure as Lender may, in its reasonable discretion, approve in
writing after receipt by Lender within said period of a written request from Borrower or if the Borrower shall default under any
other non-monetary Obligations without
curing the same within any cure period provided in the Loan Documents containing such Obligations.
Section 7.3 Default in Other Obligations. If Borrower shall default in the performance of the LOC.
Section 7.4 Misrepresentation. If any representation or warranty made in writing by or on behalf of the Borrower, in this
Agreement or in any other Loan Document, shall prove to have been false or incorrect in any material respect on the date as of
which made or reaffirmed.
Section 7.5 Dissolution. If any order, judgment, or decree is entered in any proceedings against Borrower decreeing the
dissolution of Borrower or any of its Subsidiaries and such order, judgment, or decree remains unstayed and in effect for more
than thirty (30) days.
Section 7.6 Bankruptcy, Failure to Pay Debts, etc. If Borrower o r any o f its Subsidiaries shall admit in writing their
inability, or be generally unable, to pay their respective debts as they become due or shall make an assignment for the benefit of
creditors, file a petition in Bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for
Borrower or any of its Subsidiaries or a substantial part of their assets, or shall commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect, or if there shall have been filed any such petition or application, or any such proceeding shall have been
commenced against Borrower or any of its Subsidiaries, in which an order for relief is entered or which remains undismissed for
a period of thirty (30) days or more, or if Borrower or any of its Subsidiaries by any act or omission shall indicate consent to,
approval of or acquiescence in any such petition, application, or proceeding or order for relief for the appointment of a custodian,
receiver or any trustee for Borrower or any of its Subsidiaries or any substantial part of any of their properties, or shall suffer any
such custodianship, receivership or trusteeship to continue undischarged for a period of thirty (30) days or more.
Section 7.7 Fraudulent Conveyance. If Borrower or its Subsidiaries , shall have concealed, removed, or permitted to be
concealed or removed, any part of their respective properties, with intent to hinder, delay or defraud its creditors, or made or
suffered a transfer of any of its properties which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law,
or shall have made any transfer of its properties to or for the benefit of a creditor at a time when other creditors similarly situated
have not been paid, or shall have suffered or permitted, while insolvent, any creditor to obtain a lien upon any of their respective
properties through legal proceedings or distraint which is not vacated within thirty (30) days from the date thereof.
Section 7.8 Final Judgment. If a final judgment for the payment of money in excess o $500,000.00 shall be rendered
against Borrower or any of its Subsidiaries, and the same shall remain undischarged or shall not be bonded off to the satisfaction
of the Lender for a period of thirty (30) consecutive days during which the execution shall not be effectively stayed.
Section 7.9 Impairment of Security. If any security document, mortgage, agreement, guaranty or other instrument given
to the Lender to evidence or secure the payment and performance of the Obligations hereunder shall be revoked by the Borrower
or shall cease to be in full force and effect, or the protection or security afforded the Lender in any portion of the Collateral
secured thereby is in any material respect impaired for any reason; or the Borrower shall default in any material respect in the
performance or observance of any term, covenant, condition or agreement on its part to be performed or observed under any
security document and such default shall not have been cured or waived in any applicable grace period contained therein; or any
representation or warranty of the Borrower made in any security document shall be false in any material respect on the date as of
which made; or for any reason (except for acts or omissions of the Lender) the Lender shall fail to have a valid, perfected and
enforceable first priority security interest, lien or mortgage encumbering the Collateral or if the Borrower shall contest in any
manner that any security document constitutes its valid and enforceable agreement or the Borrower shall assert in any manner
that it has no further obligation or liability under such agreement.
ARTICLE VIII
RIGHTS UPON DEFAULT
Upon the occurrence and during the continuance of any Event of Default, the Lender shall have and may exercise any or
all of the rights set forth herein (provided, however, the Lender shall be under no duty or obligation to do so):
Section 8.1 Acceleration. To declare the indebtedness evidenced by the Note, to the extent the proceeds thereof shall
have been disbursed and remain outstanding, and all other Obligations to be forthwith due and payable, whereupon the Note, to
the extent the proceeds thereof shall have been disbursed and remain outstanding, and all other Obligations shall become
forthwith due and payable, both as to principal and interest, without presentment, demand, protest or any other notice or grace
period o f any kind, all of which are hereby expressly waived, anything contained herein or in the Note or in such other
Obligations to the contrary notwithstanding, and, upon such acceleration, the disbursed and unpaid principal balance and accrued
interest upon each of Note A, Note Band Note C shall from and after such date of acceleration bear interest at the Default Rate.
Section 8.2 Other Rights. To exercise such other rights as may be permitted under any of the Loan Documents or
applicable law.
Section 8.3 Uniform Commercial Code/Applicable Law. To exercise from time to time any and all rights and remedies
of a secured creditor under the UCC and any and all rights and remedies available to it under any other applicable law.
Section 8.4 Cure of Defaults. Cure any default or Event of Default without releasing the Borrower from any obligation
hereunder or under the Loan Documents.
Section 8.5 Receiver. Cause the appointment of a receiver, as a matter of strict right, without regard to the solvency of
the Borrower, for the purpose of preserving the Collateral and
to protect all rights accruing to the Lender by virtue of this Agreement and any other Loan Documents and expressly to maintain
Collateral and the Crops and Farm Products operations on the Real Property, with all costs and expenses incurred in connection
with such receivership to be charged against the Borrower and to be secured by the security interest granted pursuant to the Loan
Documents. Borrower hereby consents t o the appointment of such receiver o r receivers, waive any and all defenses to such
appointment and agree not to oppose any application therefor by the Lender. The receiver shall be appointed to take charge of,
manage, preserve, protect and operate any business, make any needed repairs, pay all costs associated with the operations of such
businesses and after payment of all expenses of the receivership, including reasonable attorney's fees and court costs, in any, to
apply all the net proceeds derived therefrom in the reduction of the Obligations or in such other manner as the court shall direct.
All expenses, fees and compensation incurred pursuant to any such receivership shall also by secured b y the Security Interest
granted by the Loan Documents.
ARTICLEIX MISCELLANEOUS
Section 9 .1 Cumulative Remedies. The remedies provided in this Agreement and in the Loan Documents are cumulative
and not exclusive of any remedies provided by law or in equity. Upon an Event of Default, the Lender may elect to exercise any
one or more of such remedies and such election shall not waive or cause the Lender to have elected not to subsequently exercise
any other such remedies available to it under the Agreement or any Loan Document.
Section 9.2 Amendments, etc. No amendment, modification, termination or waiver of any provision of this Agreement,
the Note or the other Loan Documents, nor consent to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in specific
instance and for the specific purpose for which given.
Section 9.3 Notices. Any notice, demand, consent, approval, direction, agreement, or other communication (any
"Notice") required or permitted hereunder or under the other Loan Documents shall be in writing and shall be addressed as
follows to the person entitled to receive the same:
If to Borrower:
734 Citrus Holdings, LLC
734 LMC Groves, LLC
734 Co-op Groves, LLC
734 BLP Groves, LLC
734 Harvest, LLC
590 Madison Avenue, 26th Floor
New York, New York 10022
Attn: Mr. Remy W. Trafelet
With copy to:
Shumaker, Loop & Kendrick, LLP Bank of America Plaza
101 East Kennedy Blvd., Suite 2800
Tampa, Florida 33602
Attn: Timothy M. Hughes
If to Lender:
Prudential Mortgage Capital Company, LLC
801 Warrenville Road, Suite 150
Lisle, Illinois 60532-1357
Attn: Investment Manager
Reference Loan Numbers: 717610613, 717610637
and 717610638
With copy to:
Prudential Mortgage Capital Company, LLC
201 S. Orange Avenue, Suite 795
Attn: Investment Director
Reference Loan Numbers: 717610613, 717610637
and 717610638
With copy to:
Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500
Dallas, Texas 75201
Attn: Legal Department
Reference Loan Numbers: 717610613, 717610637
and 717610638
Any notice shall be sent (a) by depositing it with the United States postal service, or any official successor thereto, certified or
registered mail, return receipt requested, with adequate postage prepaid; (b) by depositing it with a reputable overnight courier
service from whom a receipt is available; or ( c) by personal delivery, provided a signed receipt is obtained. Each notice shall be
effective three (3) Business Days after being so deposited in the case of (a) above, one ( 1) Business Day after being so deposited
in the case of (b) above or upon delivery in the case of item (c) above, but the time period in which a response to any notice must
be given or any action taken with respect thereto shall commence to run from the date of receipt of the notice by the addressee
thereof, as evidenced by the return receipt. Rejection or other refusal by
the addressee to accept or receipt the delivery, or the inability to deliver because of a changed address of which no notice was
given, shall be deemed to be the receipt of the notice sent. Any party shall have the right from time to time to change the address
or individual's attention to which notices to it shall be sent and to specify up to two (2) additional addresses to which copies of
the notices to it shall be sent by giving the other party hereto at least ten (10) days' prior notice thereof.
Section 9.4 Intentionally deleted.
Section 9.5 Applicable Law. This Agreement, and each of the Loan Documents and transactions contemplated herein
(unless specifically stipulated to the contrary in such document) shall be governed by and interpreted in accordance with the
laws of the State of Florida.
Section 9.6 Time of the Essence. Time is of the essence of this Agreement, the Note and the other Loan Documents.
Section 9. 7 Headings. The headings in this Agreement are intended to be for convenience of reference only, and shall
not define or limit the scope, extent or intent or otherwise affect the meaning of any portion hereof.
Section 9.8 Severability. In case any one or more of the provisions contained in this Agreement, the Note or the other
Loan Documents shall for any reason be held to be invalid, illegal or unenforceable in any respect, the same shall not affect any
other provision of this Agreement, the Note or the other Loan Documents, but this Agreement, the Note and the other Loan
Documents shall be construed as if such invalid or illegal or unenforceable provision had never been contained therein; provided,
however, in the event said matter would be in the reasonable opinion of the Lender adversely affect the rights of the Lender
under any or all of the Loan Documents, the same shall be an Event of Default.
Section 9.9 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such
counterpart.
Section 9 .10 Conflict. In the event any conflict arises between the terms of this Agreement and the terms of any other
Loan Document, the terms of this Agreement shall govern in all instances of such conflict.
Section 9.11 Term. The term of this Agreement shall be for such period of time until the Loan, the Note, a n d all
renewals, replacements, modifications, extensions, increases and amendments of any of the foregoing have been repaid in full.
Section 9.12 Expenses. The Borrower agrees, whether or not the transactions hereby contemplated shall be
consummated, to pay and save Lender harmless against liability for the payment of documentary stamp taxes, intangible tax, all
out-of-pocket expenses arising in connection with this transaction and all taxes, together in each case with interest and penalties,
if any, which may be payable in respect of the execution, delivery and performance of this
Agreement or the execution, delivery, acquisition and performance of the Note (including any renewal, extension, substitution or
replacement thereof) issued under or pursuant to this Agreement (excepting only any tax on or measured by net income of Lender
determined substantially in the same manner, other than the rate of tax, as net income is presently determined under the Federal
Internal Revenue Code), all printing costs and the reasonable fees and expenses of any special counsel to
Lender in connection with this Agreement and any subsequent modification thereof or consent thereunder. The obligations of
Borrower under this Section shall survive payment of the Note.
Section 9.13 Joint and Several Liability. Each entity within the definition of "Borrower" shall be jointly and severally
liable hereunder, each covenant, representation, undertaking and provision of this Agreement shall apply to each of such entities
separately and collectively.
Section 9 .14 Successors and Assigns. All covenants and agreements in this Agreement contained by or on behalf of
either of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; provided, however, this clause shall not by itself authorize, any delegation of duties by the Borrower
or any other assignment which may be prohibited by the terms and conditions of this Agreement.
Section 9 .15 Further Assurances. The Borrower shall, from time to time, execute such additional documents as may
reasonably be requested by the Lender or the counsel, to carry out and fulfill the intent and purpose of this Agreement and the
Loan Documents.
Section 9 .16 No Third Party Beneficiaries. The parties intend that this Agreement is solely for their benefit and no
Person not a party hereto shall have any rights or privileges under this Agreement whatsoever either as the third party beneficiary
or otherwise.
Section 9.17 WAIVER OF JURY TRIAL. THE BORROWER HEREBY AGREES TO WAIVE ITS RIGHTS T O A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION· BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED B Y THIS AGREEMENT, O R ANY LOAN DOCUMENT. T H E SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT A N D T H AT RELATE T O THE SUBJECT MATTER O F T H I S TRANSACTION, INCLUDING WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
A N D STATUTORY CLAIMS. T H E BORROWER ACKNOWLEDGES THAT T H I S WAIVER I S A MATERIAL
INDUCEMENT T O THE LENDER T O ENTER INTO A BUSINESS RELATIONSHIP WITH T H E BORROWER. THE
BORROWER REPRESENTS A N D WARRANTS T H AT IT HAS REVIEWED T H I S W AIYER W I T H ITS LEGAL
KNOWINGLY AND VOLUNTARILY GIVEN FOLLOWING
C O U N S E L , A N D T H A T S U C H WA I Y E R IS
CONSULTATION WITH LEGAL COUNSEL. THIS W AIYER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED, EITHER ORALLY OR IN WRITING, A N D T H E WAIVER SH A L L A PPLY T O A N Y SUBSEQUENT
AMENDMENTS, RENEWALS, REPLACEMENTS, REAFFIRMATIONS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, O R A N Y O T H E R DOCUMENTS OR AGREEMENTS RELATING T O T H E TRANSACTIONS
CONTEMPLATED BY THIS
AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT WITHOUT A JURY.
Section 9.18 N o Waiver. No failure or delay on the part of the Lender in exercising any right, power or remedy
hereunder, or under the Note or the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy hereunder or thereunder.
Section 9 .19 Entire Agreement. Except as otherwise expressly provided, this Agreement and the other Loan Documents
embody t h e entire agreement a n d understanding between the parties hereto a n d supersede all prior agreements and
understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Loan Agreement to be executed, sealed and delivered, as
applicable, by their duly authorized officers as of the Effective Date first set forth above.
[SIGNATURE AND NOTARY BLOCKS FOLLOW]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Remy W. Trafelet
(Signed Name)
As: Remy W. Trafelet, Manager
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
"LENDER"
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware
limited liability company
By: /s/ Charles E. Allison
(Signed Name)
Its: Charles E. Allison, Vice President
STATE OF NEW YORK
S.S.
COUNTY OF NEW YORK
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Remy W.
Trafelet, the manager of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by New York , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 22nd day of December, 2012.
/s/ Gino Palacios
Signature of Notary Public)
Gino D. Palacios
(Printed Name of Notary Public)
My commission expires: 07/11/14
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manger of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Kimberly D. McGreal
Signature of Notary Public)
Kimberly D. McGreal
(Printed Name of Notary Public)
My commission expires: 12/29/13
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manger of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Kimberly D. McGreal
Signature of Notary Public)
Kimberly D. McGreal
(Printed Name of Notary Public)
My commission expires: 12/29/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF ORANGE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Charles E.
Allison, the manger of PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company,
and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person ( x) personally known to me or ( ) produced a driver's license issued by Florida, a State of the United States which
is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Diane M. Barnett
Signature of Notary Public)
Diane M. Barnett
(Printed Name of Notary Public)
My commission expires: 03/06/16
[NOTARY SEAL]
U.S. $14,500,000.00 December 31, 2012
PROMISSORY NOTE A
FOR VALUE RECEIVED, the undersigned, 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC
GROVES, LLC, a Florida limited liability company, 734 CO-OP GROVES, LLC, a Florida limited liability company, 734
BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC , a Florida limited liability company,
being collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said
four limited liability companies both separately and collectively), jointly a n d severally, promise t o p a y t o t h e order of
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC , a Delaware limited liability company, its successors and
assigns ("Holder") the principal sum o f Fourteen Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00),
with interest thereon, from the date hereof until the Maturity Date payable as provided herein at the rate of five and thirty-five
hundredths (5.35%) percent per annum. Capitalized terms used herein without definition shall have the meanings ascribed to
them in the Instrument, as defined herein.
The principal and interest of this Promissory Note A (" Promissory Note" and the loan evidenced thereby are referred to
herein as "Loan A") are to be paid in installments as follows:
(i) quarterly interest payments of accrued interest on the principal balance remaining outstanding, from time to time, shall
be paid by Borrower to Holder
Reference Loan No: 717-610-613
beginning on the first (1st) day of June, 2013 and continuing on the first (1st) day of each September, December, March
and June thereafter; and
(ii) quarterly principal reduction payments shall be made by Borrower to Holder in the amount of One Hundred Forty
Five Thousand and No/100 Dollars (U.S. $145,000.00) each, commencing o n the first (l ") d a y o f June, 2013 and
continuing on the first (l ") day of each September, December, March and June thereafter; and
(iii) the entire then remaining outstanding balance of all principal and accrued interest thereon shall be due and payable,
in full, on the first (1st) day of June, 2033 (the "Maturity Date").
Unless otherwise provided by law, all payments made by Borrower will be applied first to any costs a n d expenses
incurred by Holder in enforcing or collecting this Promissory Note, including reasonable attorney fees, and then to any advances
and expenditures made by Holder to protect its interests under this Promissory Note, the Instrument or any other document given
to secure Borrower's payment of this indebtedness. Any remaining amounts will then be applied to interest due with the balance,
if any, to be applied on account of principal.
For the purposes of calculating interest under this Promissory Note, a year of 360 days consisting of twelve (12) thirty
(30) day months shall be employed regardless of the actual time elapsed.
All payments under this Promissory Note shall be made, without offset or deduction, (a) in lawful money of the United
States of America at the office of Holder or at such other place (and in the manner) Holder may specify by written notice to
Borrower, (b) in immediately available federal funds by federal wire transfer, and (c) if received by Holder prior to 2 P.M.
Reference Loan No: 717-610-613
local time in the place so designated by Holder for payments under this Promissory Note, shall be credited on that day, or, if
received by Holder on or after 2 P.M. local time in the place so designated by Holder for payments under this Promissory Note,
shall, at Holder's option, be credited on the next Business Day. If any payment due date falls on a day which is not a Business
Day, then the payment due date shall be deemed to have fallen on the next succeeding Business Day. The term "Business Day"
shall mean each Monday through Friday except for days in which commercial banks are not authorized to open or are required
by law to close in the State in which the place designated by Holder for payments under this Promissory Note is located.
Both principal and interest shall be payable in lawful money of the United States of America by federal wire transfer
unless directed by Holder in writing to be otherwise forwarded to Prudential Asset Resources, Inc. Mortgage Loan Servicing ,
2100 Ross Avenue, Su ite 2500, Dallas, Texas 75201 or such other place as the Holder hereof may, from time to time, designate
in writing.
In the event that any payment of principal and/or interest due under this Promissory Note should not be fully made by
the fifth (5th) day following the due date thereof, then:
(A). A late charge of $0.05 for each ($1.00) Dollar of such payment shall automatically become due to the Holder of this
Promissory Note and be secured by the Instrument. This charge shall be in addition to all other rights and remedies
available to the Holder of this Promissory Note upon the occurrence of a default under the Promissory Note or any other
Loan Document (as hereinafter defined); and
(B). The Holder of this Promissory Note shall have the right, upon written notice to Borrower, to increase the rate of
interest per annum on the entire principal balance of this Promissory Note then outstanding, from the Note Rate to the
Default Rate (as hereinafter
Reference Loan No: 717 -610-613
defined) and, upon said notice and unless Borrower shall pay to Holder the amount of such overdue payment together
with the late charge assessed thereon within three (3) Business Days of Borrower's receipt of said notice (which receipt
shall be conclusively presumed to have occurred on the third Business Day following the date such notice was placed in
the mail with the United States Postal Service or on the date of actual delivery if delivered personally or by private
carrier/messenger service), such increase to the Default Rate shall remain in force and effect for so long as such default
shall continue o r the Holder otherwise agrees. Interest at the Default Rate is in addition to and not in lieu of any
Prepayment Premium due after acceleration of the indebtedness due hereunder by Holder after an Event of Default. The
Default Rate shall also apply to any judgment obtained with respect to the Obligations and/or any Loan Document from
the date such judgment becomes due and owing under a final a n d non-appealable order until the amount of such
judgment is paid in full.
As used herein, "Note Rate" is defined as the contract rate of interest stated above in the first paragraph of this Promissory Note.
"Default Rate" is defined as the lesser of (i) the maximum rate allowed by applicable law or (ii) the per annum rate equal to the
Note Rate plus Five Percent (5%).
The Borrower severally waives presentment for payment, demand, notice of demand and of dishonor and nonpayment of
this Promissory Note, notice of intention to accelerate and notice of acceleration of the maturity of this Promissory Note, protest
and notice of protest, diligence in collecting and the bringing of suit against any other party and said Borrower agrees to all
renewals, extensions, modifications, partial payments, releases or substitutions of security, in whole or in part, with or without
notice, before or after maturity, all without in any way affecting the liability of Borrower under this Promissory Note.
Reference Loan No: 717-610-613
Should this Promissory Note be signed by more than one person and/or firm and/or corporation, all of the obligations
herein contained shall be considered joint and several obligations of each signer hereof.
This Promissory Note evidences Borrower's unconditional obligation to repay the indebtedness described herein. This
Promissory Note and interest hereon are secured by a Mortgage and Security Agreement of even date herewith by Borrower to
Holder (the "Instrument") executed in seven counterparts, one of each counterpart to be recorded in the Public Records of Collier,
Hardee, Hendry, Highlands, Martin, Osceola and Polk Counties, Florida, which Instrument encumbers property located in said
counties and, unless otherwise stated herein, this Promissory Note is to be construed according to the laws of the State of Florida.
The payment of this Promissory Note is secured by, among other things, the aforementioned Instrument together with the Loan
Commitment, any and all mortgages, deeds of trust, security agreements, financing statements assignments of leases and rents,
loan agreements, guarantees, letters of credit and any other documents and instruments, now or hereafter executed by Borrower,
or any other party, to evidence, secure or guarantee the payment of this Promissory Note and any and all renewals, extensions,
amendments and replacements hereof. All of the foregoing instruments as well as this Promissory Note and the Other Notes,
defined below, are collectively referred to herein as the "Loan Document(s)". Promissory Note B in the face amount of Fourteen
Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder on even date herewith ("Note
B" and the loan evidenced thereby is referred to as "Loan B") and Promissory Note C in the face amount of up to Five Million
and No/100 Dollars ($5,000,000.00) from Borrower to Holder on even date herewith ("Note C" and the loan evidenced thereby
is referred to as "Loan C") are collectively herein referred to as the "Other Notes" and Loan A, Loan B and Loan C constitute an
aggregate loan from Holder to Borrower on even date herewith in the total face amount of up to Thirty Four Million and No/100
Dollars ($34,000,000.00), which is hereafter referred to as the "Loan" and is evidenced b y this Promissory Note, Note B and
Note C. The terms of the Loan Document(s) are incorporated
Reference Loan No: 717-610-613
herein by this reference. A default in this Promissory Note, after expiration of all applicable grace and notice periods herein, is a
default in the Other Notes and in the other Loan Documents and a default in the Other Notes and/or in the other Loan
Documents, after expiration of all applicable grace and notice periods therein, is a default herein.
This Promissory Note may be declared due (accelerated) at the option of the Holder hereof prior to its expressed maturity
date for an Event of Default, as defined in the Instrument, and after the expiration of applicable grace and notice periods therein.
In the event of such acceleration, all of the then remaining principal and interest, together with any Prepayment Premium due
under the terms of this Promissory Note shall become at once due and payable without further notice, demand or presentment for
payment. Borrower agrees that any Prepayment Premium due upon any such acceleration by Holder is in addition to the remedy
of acceleration and is not in lieu thereof and is in addition to both the collection of interest at the Note Rate or Default Rate, as
applicable, and collection of Late Charges hereunder.
The privilege granted to Borrower to make unscheduled principal reduction payments of the indebtedness evidenced by
this Promissory Note and the terms under which this Promissory Note may be prepaid by Borrower and the applicable
Prepayment Premium (as defined in the Prepayment Rider) that will - be due upon any such unscheduled prepayment(s) of this
indebtedness are set forth in the Prepayment Rider attached hereto and incorporated herein by this reference. Terms defined in
this Promissory Note shall also be applicable to the use of such terms in the Prepayment Rider.
It is the intent of the Holder of this Promissory Note and the Borrower in the execution of this Promissory Note, the
Loan Documents and all other instruments now or hereafter securing this Promissory Note to contract in strict compliance with
all applicable laws and, in particular, with applicable usury law. In furtherance thereof, the Holder and the Borrower stipulate and
agree that none of the terms and provisions contained in this Promissory Note, or in any other
Reference Loan No: 717-610-613
instrument executed in connection herewith, shall ever be construed to create a contract to pay interest at a rate in excess of the
maximum interest rate permitted to be charged by applicable law for the use, forbearance or detention of money or to pay any
other amount not permitted by law. Neither the Borrower nor a n y guarantors, endorsers or other parties n o w or hereafter
becoming liable for payment of this Promissory Note shall ever be required to pay interest on this Promissory Note at a rate in
excess of the maximum interest that may be lawfully charged or to make any other payment(s) not permitted under applicable
law. The provisions of this paragraph shall control over all other provisions of this Promissory Note and any other instruments
now or hereafter executed in connection herewith which may be in apparent conflict herewith. The Holder o f this Promissory
Note expressly disavows any intention to charge any amount not permitted by law or to collect excessive, unearned interest or
finance charges under this Promissory Note, or in the event the maturity of this Promissory Note is accelerated. If the maturity of
this Promissory Note shall be accelerated, for any reason, or if the principal of this Promissory Note is paid prior to the end of
the term of this Promissory Note and, as a result thereof, the interest or any other charge received for the actual period of
existence of the loan evidenced by this Promissory Note exceeds the applicable maximum lawful rate for such interest or other
charge, the Holder of this Promissory Note shall, at its option, either refund to the Borrower the amount of such excess or credit
the amount of such excess against the principal balance of this Promissory Note then outstanding and thereby shall render
inapplicable any and all penalties of any kind provided by applicable law as a result of such excess interest or other charge. In the
event that any Holder of this Promissory Note shall collect monies which are deemed to constitute interest which would increase
the effective interest rate on this Promissory Note to a rate in excess of that permitted to be charged by applicable law, all such
sums deemed to constitute interest in excess of the lawful rate shall, upon such determination, at the option of the Holder of this
Promissory Note be either immediately returned to the Borrower or credited against the principal balance of this Promissory
Note then outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest
shall be inapplicable. By execution of this Promissory Note the Borrower acknowledge(s) that Borrower believe(s) the
Reference Loan No: 717-610-613
loan evidenced by this Promissory Note to be non-usurious and agrees that if, at any time, the Borrower should have reason to
believe that such loan is in fact usurious or any other charge exceeds that permitted by applicable law, Borrower will give the
Holder of this Promissory Note notice of such condition and the Borrower agree(s) that said Holder shall have thirty (30) days in
which to make appropriate refund or other adjustment in order to correct such condition, if in fact such exists. The term
"applicable law" as used in this Promissory Note shall mean the laws of the State Florida, as such laws now exist or may be
changed or amended or come into effect in the future.
Should the indebtedness represented by this Promissory Note or any part thereof be enforced or collected at Jaw or in
equity or through any bankruptcy, receivership, probate or other court proceedings or if this Promissory Note is placed in the
hands of attorneys for collection after default, and expiration of all applicable grace and notice periods, the Borrower agrees to
pay to the Holder of this Promissory Note, in addition to the principal and interest due and payable hereon and to the full extent
permitted by law, all reasonable attorneys' fees and reasonable costs of collection. For purposes of this paragraph "costs of
collection" shall be deemed to include (by way of example and not by limitation), among other reasonable costs, all reasonable
costs incurred in securing and protecting any of the real property or personal property described in the Loan Documents and
Holder's interest therein, together with all reasonable fees and expenses charged by the attorneys engaged by Holder for collection
purposes.
Any forbearance, failure or delay by Holder in exercising any right, power or remedy provided herein or in the Loan
Documents or provided by law shall not preclude a further or subsequent exercise thereof or constitute a waiver of default by
Borrower and every such right, power or remedy of Holder shall continue in full force and effect unless such right, power and
remedy and each such default or breach by Borrower is separately and specifically waived by Holder in writing.
Reference Loan No: 717-610-613
If any clause, term or provision of this Promissory Note or any of the Loan Documents is held to be unenforceable by a
court of competent jurisdiction, said clause, term, provision so held to be unenforceable shall be stricken and all the remaining
portions of this Promissory Note and/or the Loan Documents shall remain in full force and effect.
Borrower and all persons or entities holding any legal or beneficial interest whatsoever in Borrower or any security for
this Promissory Note are not included in, owned by, controlled by, acting for or on behalf of, providing assistance, support,
sponsorship, or services or any kind to, or otherwise associated with any of the persons or entities referred to or described in
Executive Order 13224 - Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism, as amended. It shall constitute an Event of Default hereunder and under the Instrument securing this
instrument if the foregoing representation and warranty shall ever become false.
Neither Borrower, nor any persons holding any legal or beneficial interest whatsoever in any collateral given by
Borrower to secure this Promissory Note shall, at any time during the term of the loan evidenced by this Promissory Note, be
described in, covered by or specially designated pursuant to or be affiliated with any persons described in, covered by or
specially designated pursuant to Executive Order 13224, as amended, or any similar list issued by the Office of Foreign Assets
Control ("OF AC") or any other department or agency of the United States of America. Notwithstanding the foregoing,
Borrower hereby confirm(s) that if he/she//they/i t become(s) aware o r receives any notice o f any violation o f t h e foregoing
covenant and agreement (an "OF AC Violation") Borrower will immediately (i) give notice to Holder of such OFAC Violation,
and (ii) comply with all Laws applicable to such OFAC Violation, including, without limitation, Executive Order 13224; the
International Emergency Economic Powers Act 50 U.S.C. Sections 1701-06; the Iraqi Sanctions Act, Pub. L. 101-513,104 Stat.
2047-55; the United Nations Participation Act, 2 2 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty Act,
(enacting 8 U.S.C. Section 219, 18 U.S.C.
Reference Loan No: 717-610-613
Section 2332d, and 18 U.S.C. Section 2339b ); the International Security and Development Cooperation Act, 22 U.S.C. Section
2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List Governments Sanctions Regulations, 31.
C.F.R Part 596; and the Foreign Terrorist Organizations Sanctions Regulations, 3 1 C.F.R. Part 597 (collectively, the "Anti-
Terrorism Regulations") and Borrower hereby authorize(s) and consent(s) to Holder's taking any and all reasonable steps Holder
deems necessary, i n its sole discretion, to comply with all Laws applicable to any such OF AC Violation, including the
requirements of the Anti• Terrorism Regulations. Notwithstanding anything to the contrary in this Section, Borrower shall not be
deemed to be i n violation o f the covenants and agreements set forth in the first sentence of this Section if Borrower timely
comply(ies) with all requirements imposed by the foregoing sentence and all requirements of the Anti-Terrorism Regulations and
all other applicable Laws relating to such OF AC Violation.
Borrower acknowledge(s), represent(s) and warrant(s) to Holder that:
(a) the primary purpose for the within loan is business and investment (and not for personal, family or household
purposes); and
(b) none of the proceeds to be distributed under this Promissory Note will be used t o acquire (or refinance the
acquisition price of) real property or personal property which was o r i s t o be used a s a primary residence of
Borrower or any other party to any of the Loan Documents.
Without limiting the right of Holder to bring any action or proceeding against the undersigned or its property arising out
of or relating to the Obligations, as defined i n the Instrument, (an "Action") in the courts of other jurisdictions t o the extent
necessary to satisfy jurisdiction and venue requirements as to Borrower (the "Jurisdiction and Venue Exception"), Holder and
Borrower hereby irrevocably submit to the jurisdiction of any state circuit court in Florida having jurisdiction over any cause of
action set forth in the Action for any county in which any part of the Premises is located even if located in more than one county
and regardless
Reference Loan No: 717-610-613
of whether such counties are contiguous or in any United States District Court for the district including any said counties where
the Premises are located. Further, subject to the Jurisdiction and Venue Exception, Holder and Borrower hereby irrevocably
agree that any Action may be heard and determined in any of such state circuit court or in any such federal district court as the
sole and exclusive courts and venue for any such Action. Holder, subject to the Jurisdiction and Venue Exception, and Borrower
hereby irrevocably waive, to the fullest extent that it may effectively d o so, the defense o f a n inconvenient forum to the
maintenance of any Action in such jurisdiction. Holder, subject to the Jurisdiction and Venue Exception, and Borrower hereby
irrevocably agree that the summons and complaint or any other process in any Action in any jurisdiction may be served in any
manner authorized by applicable law. Such service will be complete as provided under applicable law and the time to respond
shall be governed by applicable law.
WAIVER OF JURY TRIAL. THE BORROWER, HOLDER AND ALL ENDORSERS, GUARANTORS AND
SURETIES, TO THE FULL EXTENT PERMITTED BY LAW, DO HEREBY WAIVE AND COVENANT THAT
EACH WILL NOT ASSERT, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, ANY RIGHTTO TRIAL
BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS PROMISSORY NOTE, THE SUBJECT MATTER HEREOF, THE
OTHER NOTES, THE INSTRUMENT OR ANY LOAN DOCUMENT(S) OR OTHER INSTRUMENT RELATING
HERETO,IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING O R WHETHER IN
CONTRACT OR IN TORT OR
OTHERWISE.
Reference Loan No: 717-610-613
[SIGNATURE BLOCKS ON SUBSEQUENT PAGES]
IN WITNESS WHEREOF, this Promissory Note has been executed by as of the date
first set forth above.
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Remy W. Trafelet
(Signed Name)
As: Remy W. Trafelet, Manager
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
PREPAYMENT RIDER
Subject to payment of the Prepayment Premium referred to below and all accrued interest and other sums due under this
Promissory Note, Borrower shall have the right to prepay all or any part of the outstanding principal balance of this Promissory
Note, on any date (the "Prepayment Date"), upon giving not less than thirty (30) days prior written notice to Holder of
Borrower's intention to prepay. Any partial prepayment must be in a minimum amount of Two Hundred Fifty Thousand and
No/100 ($250,000.00). No partial prepayment shall result in any adjustment of the amount of the scheduled payments thereafter
becoming due.
Except for any prepayments of principal (i) commencing one (1) calendar year after the date of this Promissory Note in
an amount not exceeding Five Million and Noll 00 Dollars ($5,000,000.00) in the aggregate for the period commencing one (1)
calendar year after the date of this Promissory Note and (ii) made with t h e proceeds received in connection with any
condemnation action if applicable law does not allow such proceeds to be subject to prepayment premiums (collectively the
"Exempt Prepayments"), if all or any portion of the outstanding principal balance of this Promissory Note i s prepaid for any
reason whether voluntary or involuntary or after acceleration by Holder upon a default by Borrower under this Promissory Note,
the Instrument or any Loan Document, Borrower shall pay Holder a prepayment premium (the "Prepayment Premium") equal to
the greater of (i) or (ii) below:
(i) one half of one percent (0.50%) of the principal amount of this Promissory
Note being prepaid; or,
Reference Loan No: 717-610-613
(ii) an amount equal to the Present Value of Loan A (as hereinafter defined) less the amount of principal of this
Promissory Note being prepaid including accrued interest, if any, calculated as of the Prepayment Date.
Holder will notify Borrower of the amount and basis of the determination of the Prepayment Premium. On or before the
Prepayment Date, Borrower shall pay to Holder the Prepayment Premium together with the amount of the principal being prepaid
and all accrued interest and other sums due under this Promissory Note and under Loan A.
Except as to Exempt Prepayments, Holder shall not be obligated to accept any prepayment of the principal balance of
this Promissory Note unless such prepayment is accompanied by any Prepayment Premium, all accrued interest and all other
sums due under Loan A.
For the purposes of determining the Prepayment Premium, the following terms shall have the following meanings:
The "Treasury Rate" is the semi-annual yield on the Treasury Constant Maturity Series with maturity equal to the
remaining weighted average life of Loan A, for the week prior to the Prepayment Date, as reported in Federal Reserve
Statistical Release H.15 - Selected Interest Rates, conclusively determined by Holder on the Prepayment Date. The rate
will be determined by linear interpolation between the yields reported in Release H.15, if necessary. In the event Release
H.15 is no longer published, Holder shall select a comparable publication to determine the Treasury Rate.
The "Discount Rate" is the rate which, when compounded quarterly, is
equivalent to the Treasury Rate, when compounded semi-annually.
Reference Loan No: 717-610-613
The "Present Value of Loan A" shall be determined by discounting all scheduled payments of principal and
interest (at the Note Rate even if interest is then accruing at the Default Rate) remaining through the Maturity Date
attributed to the amount being prepaid under this Promissory Note, at the Discount Rate. If prepayment occurs on a date
other than a regularly scheduled payment date, the actual number of days remaining from the Prepayment Date to the
next regularly scheduled payment date will be used to discount within this period.
Borrower agrees that Holder shall not be obligated to reinvest the amount prepaid
in any Treasury obligations as a condition precedent to receiving the Prepayment
Premium.
A default by Borrower in any payment of any amount(s) due under this Promissory Note or a default or breach of any of
Borrower's duties and obligations under the Instrument or any of the other Loan Documents as to which Holder accelerates all
indebtedness due under this Promissory Note, shall conclusively be deemed an effort by the Borrower to effect a voluntary
prepayment of the Promissory Note. The Prepayment Premium for such voluntary prepayment (excluding Exempt Prepayments)
shall become effective, due and payable as of the day prior to the date of acceleration of this Promissory Note (the "Effective
Date"). The related Prepayment Premium, whether paid from the proceeds of a foreclosure sale or otherwise, shall be calculated,
due, and payable as of the Effective Date.
It is the express intention of the parties that any application of the Default Rate before, upon and/or after acceleration of
the indebtedness due under this Promissory Note by Holder as permitted in this Promissory Note is in addition to, and not in lieu
of any Prepayment Premium provided for herein whether any Event of Default upon which acceleration is based is intentional or
unintentional. In addition to voluntary prepayments, the above Prepayment Premium shall also be due upon involuntary and
voluntary defaults upon acceleration of the indebtedness due hereby by Holder and is not in lieu of the right to accelerate and
shall be in
Reference Loan No: 717-610-613
addition to the collection of interest at the Default Rate under the Promissory Note and in addition to the collection of Late
Charges under the Promissory Note.
No unscheduled prepayment of amounts due under this Promissory Note, whether made pursuant to the provisions of this
Rider, or otherwise, shall result in the adjustment or reduction of any scheduled payment of principal and interest as set forth in
this Promissory Note.
[SIGNATURE AND NOTARY BLOCKSON SUBSEQUENT PAGES]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Remy W. Trafelet
(Signed Name)
As: Remy W. Trafelet, Manager
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
Florida documentary stamp tax
in the amount of $119,000.00 calculated on the $34,000,000.00 total of the face amount of this Promissory Note and those of
Note B and Note C have been
paid on the counterpart of the Instrument being recorded in the Public Records of
Osceola County, Florida on or about the date hereof
STATE OF NEW YORK
S.S.
COUNTY OF NEW YORK
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Remy W.
Trafelet, the manager of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by New York , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 22nd day of December, 2012.
/s/ Gino Palacios
Signature of Notary Public)
Gino D. Palacios
(Printed Name of Notary Public)
My commission expires: 07/11/14
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manger of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Kimberly D. McGreal
Signature of Notary Public)
Kimberly D. McGreal
(Printed Name of Notary Public)
My commission expires: 12/29/13
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Kimberly D. McGreal
Signature of Notary Public)
Kimberly D. McGreal
(Printed Name of Notary Public)
My commission expires: 12/29/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manger of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
U.S. $14,500,000.00 December 31st, 2012
PROMISSORY NOTE B
FOR VALUE RECEIVED, the undersigned, 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC
GROVES, LLC, a Florida limited liability company, 734 CO-OP GROVES , LLC, a Florida limited liability company, 734
BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited liability company,
being collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said
four limite d liability companies both separately and collectively), jointly a n d severally, promise t o p a y t o t h e order of
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liabili t y company, its successors and
assigns ("Holder") the principal sum of Fourteen Million Five Hundred Thousand and NO/100 Dollars ($14,500,000.00),
with interest thereon, from the date hereof until the Maturity Date payable as provided herein at the rate of five and thirty-five
hundredths (5.35%) percent per annum. Capitalized terms used herein without definition shall have the meanings ascribed to
them in the Instrument, as defined herein.
The principal and interest of this Promissory Note B (" Promissory Note" and the loan evidenced thereby are referred to
herein as "Loan B") are to be paid in installments as follows:
(i) quarterly interest payments of accrued interest on the principal balance remaining outstanding, from time to time,
shall be paid by Borrower to Holder
Reference Loan No: 717-610-637
beginning on the first (l ") day of June, 2013 and continuing on the first (l ") day of each September, December, March
and June thereafter; and
(ii) quarterly principal reduction payments shall be made by Borrower to Holder in the amount of One Hundred Forty
Five Thousand and NO/100 Dollars (U.S. $145,000.00) each, commencing o n the first (1st ) day o f June, 2013 and
continuing on the first (L") day of each September, December, March and June thereafter; and
(iii) the entire then remaining outstanding balance of all principal and accrued interest thereon shall be due and payable,
in full, on the first (1st) day of June, 2033 (the "Maturity Date").
Unless otherwise provided by law, all payments made by Borrower will be applied first to any costs and expenses
incurred by Holder in enforcing or collecting this Promissory Note, including reasonable attorney fees, and then to any advances
and expenditures made by Holder to protect its interests under this Promissory Note, the Instrument or any other document given
to secure Borrower's payment of this indebtedness. Any remaining amounts will then be applied to interest due with the balance,
if any, to be applied on account of principal.
For the purposes of calculating interest under this Promissory Note, a year of 360 days consisting of twelve ( 12) thirty
(30) day months shall be employed regardless of the actual time elapsed.
All payments under this Promissory Note shall be made, without offset or deduction, (a) in lawful money of the
United States of America at the office of Holder or at such other place (and in the manner) Holder may specify by written notice
to Borrower, (b) in immediately available federal funds by federal wire transfer, and (c) if received by Holder prior to 2 P.M.
Reference Loan No: 717 -610-637
local time in the place so designated by Holder for payments under this Promissory Note, shall be credited on that day, or, if
received by Holder on or after 2 P.M. local time in the place so designated by Holder for payments under this Promissory Note,
shall, at Holder's option, be credited on the next Business Day. If any payment due date falls on a day which is not a Business
Day, then the payment due date shall be deemed to have fallen on the next succeeding Business Day. The term "Business Day"
shall mean each Monday through Friday except for days in which commercial banks are not authorized to open or are required
by law to close in the State in which the place designated by Holder for payments under this Promissory Note is located.
Both principal and interest shall be payable in lawful money of the United States of America by federal wire transfer
unless directed by Holder in writing to be otherwise forwarded to Prudential Asset Resources, Inc. Mortgage Loan Servicing,
2100 Ross Avenue, Suite 2500, Dallas, Texas 75201 or such other place as the Holder hereof may, from time to time , designate
in writing.
In the event that any payment of principal and/or interest due under this Promissory Note should not be fully made by
the fifth (5th) day following the due date thereof, then:
(A). A late charge of $0.05 for each ($1.00) Dollar of such payment shall automatically become due to the Holder of this
Promissory Note and be secured by the Instrument. This charge shall be in addition to all other rights and remedies
available to the Holder of this Promissory Note upon the occurrence of a default under the Promissory Note or any other
Loan Document (as hereinafter defined); and
(B). The Holder of this Promissory Note shall have the right, upon written notice to Borrower, to increase the rate of
interest per annum on the entire principal balance of this Promissory Note then outstanding, from the Note Rate to the
Default Rate (as hereinafter
Reference Loan No: 717-610-637
defined) and, upon said notice and unless Borrower shall pay to Holder the amount of such overdue payment together
with the late charge assessed thereon within three (3) Business Days of Borrower's receipt of said notice (which receipt
shall be conclusively presumed to have occurred on the third Business Day following the date such notice was placed in
the mail with the United States Postal Service or on the date of actual delivery if delivered personally or by private
carrier/messenger service), such increase to the Default Rate shall remain in force and effect for so long as such default
shall continue or the Holder otherwise agrees. Interest at the Default Rate is in addition to and not in lieu of any
Prepayment Premium due after acceleration of the indebtedness due hereunder by Holder after an Event of Default. The
Default Rate shall also apply to any judgment obtained with respect to the Obligations and/or any Loan Document from
the date such judgment becomes due and owing under a final a n d non-appealable order until the amount of such
judgment is paid in full.
As used herein, "Note Rate" is defined as the contract rate of interest stated above in the first paragraph of this Promissory Note.
"Default Rate" is defined as the lesser of (i) the maximum rate allowed by applicable law or (ii) the per annum rate equal to the
Note Rate plus Five Percent (5%).
The Borrower severally waives presentment for payment, demand, notice of demand and of dishonor and nonpayment of
this Promissory Note, notice of intention to accelerate and notice of acceleration of the maturity of this Promissory Note, protest
and notice of protest, diligence in collecting and the bringing of suit against any other party and said Borrower agrees t o all
renewals, extensions, modifications, partial payments, releases or substitutions of security, in whole or in part, with or without
notice, before or after maturity, all without in any way affecting the liability of Borrower under this Promissory Note.
Reference Loan No: 717-610-637
Should this Promissory Note be signed by more than one person and/or firm and/or corporation, all of the obligations
herein contained shall be considered joint and several obligations of each signer hereof.
This Promissory Note evidences Borrower's unconditional obligation to repay the indebtedness described herein. This
Promissory Note and interest hereon are secured by a Mortgage and Security Agreement of even date herewith by Borrower to
Holder (the "Instrument") executed in seven counterparts, one of each counterpart to be recorded in the Public Records of Collier,
Hardee, Hendry, Highlands, Martin, Osceola and Polk Counties, Florida, which Instrument encumbers property located in said
counties and, unless otherwise stated herein, this Promissory Note is to be construed according to the laws of the State of Florida.
The payment of this Promissory Note is secured by, among other things, the aforementioned Instrument together with the Loan
Commitment, any and all mortgages, deeds of trust, security agreements, financing statements assignments of leases and rents,
loan agreements, guarantees, letters of credit and any other documents and instruments, now or hereafter executed by Borrower,
or any other party, to evidence, secure or guarantee the payment of this Promissory Note and any and all renewals, extensions,
amendments and replacements hereof. All of the foregoing instruments as well as this Promissory Note and the Other Notes,
defined below, are collectively referred to herein as the "Loan Document(s)". Promissory Note A in the face amount of Fourteen
Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder on even date herewith ("Note
A" and the loan evidenced thereby is referred to as "Loan A") and Promissory Note C in the face amount of up to Five Million
and No/100 Dollars ($5,000,000.00) from Borrower to Holder on even date herewith ("Note C" and the loan evidenced thereby
is referred to as "Loan C") are collectively herein referred to as the "Other Notes" and Loan A, Loan Band Loan C constitute an
aggregate loan from Holder to Borrower on even date herewith in the total face amount of up to Thirty Four Million and NO/100
Dollars ($34,000,000.00), which is hereafter referred to as the "Loan" and is evidenced b y this Promissory Note, Note A and
Note C. The terms of the Loan Document(s) are incorporated
Reference Loan No: 717-610-637
herein by this reference. A default in this Promissory Note, after expiration of all applicable grace and notice periods herein, is a
default in the Other Notes and in the other Loan Documents and a default in the Other Notes and/or in the other Loan
Documents, after expiration of all applicable grace and notice periods therein, is a default herein.
This Promissory Note may be declared due (accelerated) at the option of the Holder hereof prior to its expressed maturity
date for an Event of Default, as defined in the Instrument and after the expiration of applicable grace and notice periods therein.
In the event of such acceleration, all of the then remaining principal and interest, together with any Prepayment Premium due
under the terms of this Promissory Note shall become at once due and payable without further notice, demand or presentment for
payment. Borrower agrees that any Prepayment Premium due upon any such acceleration by Holder is in addition to the remedy
of acceleration and is not in lieu thereof and is in addition to both the collection of interest at the Note Rate or Default Rate, as
applicable, and collection of Late Charges hereunder.
The privilege granted to Borrower to make unscheduled principal reduction payments of the indebtedness evidenced by
this Promissory Note and the terms under which this Promissory Note m a y be prepaid by Borrower a n d t h e applicable
Prepayment Premium (as defined in the Prepayment Rider) that will be due upon any such unscheduled prepayment(s) o f this
indebtedness are set forth in the Prepayment Rider attached hereto and incorporated herein by this reference. Terms defined in
this Promissory Note shall also be applicable to the use of such terms in the Prepayment Rider.
It is the intent of the Holder of this Promissory Note and the Borrower in the execution of this Promissory Note, the
Loan Documents and all other instruments now or hereafter securing this Promissory Note to contract in strict compliance with
all applicable laws and, in particular, with applicable usury law. In furtherance thereof, said Holder and the Borrower stipulate
and agree that none of the terms and provisions contained in this Promissory Note, or in any other
Reference Loan No: 717-610-637
instrument executed in connection herewith, shall ever be construed to create a contract to pay interest at a rate in excess of the
maximum interest rate permitted to be charged by applicable law for the use, forbearance or detention of money or to pay any
other amount not permitted by law. Neither the Borrower nor any guarantors, endorsers or other parties n o w or hereafter
becoming liable for payment of this Promissory Note shall ever be required to pay interest on this Promissory Note at a rate in
excess of the maximum interest that may be lawfully charged or to make any other payment(s) not permitted under applicable
law. The provisions of this paragraph shall control over all other provisions of this Promissory Note and any other instruments
now or hereafter executed in connection herewith which may be in apparent conflict herewith. The Holder o f this Promissory
Note expressly disavows any intention to charge any amount not permitted by law or to collect excessive, unearned interest or
finance charges under this Promissory Note, or in the event the maturity of this Promissory Note is accelerated. If the maturity of
this Promissory Note shall be accelerated, for any reason, or if the principal of this Promissory Note is paid prior to the end of the
term of this Promissory Note and, as a result thereof, the interest or any other charge received for the actual period of existence of
the loan evidenced by this Promissory Note exceeds the applicable maximum lawful rate for such interest or other charge, the
Holder of this Promissory Note shall, at its option, either refund to the Borrower the amount of such excess or credit the amount
of such excess against the principal balance of this Promissory Note then outstanding and thereby shall render inapplicable any
and all penalties of any kind provided by applicable law as a result of such excess interest or other charge. In the event that any
Holder of this Promissory Note shall collect monies which are deemed to constitute interest which would increase the effective
interest rate on this Promissory Note to a rate in excess of that permitted to be charged by applicable law, all such sums deemed
to constitute interest in excess of the lawful rate shall, upon such determination, at the option of the Holder of this Promissory
Note be either immediately returned to the Borrower or credited against the principal balance of this Promissory Note then
outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be
inapplicable. By execution of this Promissory Note the B01TOwer acknowledge(s) that Borrower believe(s) the
Reference Loan No: 717-610-637
loan evidenced by this Promissory Note to be non-usurious and agrees that if, at any time, the Borrower should have reason to
believe that such loan is in fact usurious or any other charge exceeds that permitted by applicable law, Borrower will give the
Holder of this Promissory Note notice of such condition and the Borrower agree(s) that said Holder shall have thirty (30) days in
which to make appropriate refund or other adjustment in order to correct such condition, if in fact such exists. The term
"applicable law" as used in this Promissory Note shall mean the laws of the State Florida, as such laws now exist or may be
changed or amended or come into effect in the future.
Should the indebtedness represented by this Promissory Note or any part thereof be enforced or collected at law or in
equity or through any bankruptcy, receivership, probate or other court proceedings or if this Promissory Note is placed in the
hands of attorneys for collection after default, and expiration of all applicable grace and notice periods, the Borrower agrees to
pay to the Holder of this Promissory Note, in addition to the principal and interest due and payable hereon and to the full extent
permitted by law, all reasonable attorneys' fees and reasonable costs of collection. For purposes of this paragraph "costs of
collection" shall be deemed to include (by way of example and not by limitation), among other reasonable costs, all reasonable
costs incurred in securing and protecting any of the real property or personal property described in the Loan Documents and
Holder's interest therein, together with all reasonable fees and expenses charged by the attorneys engaged by Holder for collection
purposes.
Any forbearance, failure or delay by Holder in exercising any right, power or remedy provided herein o r in the Loan
Documents or provided by law shall not preclude a further or subsequent exercise thereof or constitute a waiver of default by
Borrower and every such right, power or remedy of Holder shall continue in full force and effect unless such right, power and
remedy and each such default or breach by Borrower is separately and specifically waived by Holder in writing.
Reference Loan No: 717-610-637
If any clause, term or provision of this Promissory Note or any of the Loan Documents is held to be unenforceable by a
court of competent jurisdiction, said clause, term, provision so held to be unenforceable shall be stricken and all the remaining
portions of this Promissory Note and/or the Loan Documents shall remain in full force and effect.
Borrower and all persons or entities holding any legal or beneficial interest whatsoever in Borrower or any security for
this Promissory Note are not included in, owned by, con trolled by, acting for or on behalf of, providing assistance, support,
sponsorship, or services or any kind to, or otherwise associated with any of the persons or entities referred to or described in
Executive Order 13224 - Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism, as amended. It shall constitute an Event of Default hereunder and under the Instrument securing this
instrument if the foregoing representation and warranty shall ever become false.
Neither Borrower, nor any persons holding any legal or beneficial interest whatsoever in any collateral given by
Borrower to secure this Promissory Note shall, at any time during the term of the loan evidenced by this Promissory Note, be
described in, covered by or specially designated pursuant to or be affiliated with any persons described in, covered by or
specially designated pursuant to Executive Order 13224, as amended, or any similar list issued by the Office of Foreign Assets
Control ("OF AC") or any other department or agency of the United States of America. Notwithstanding the foregoing,
Borrower hereby confirm(s) that if he/she//they/i t become(s) aware o r receives any notice of any violation o f t h e foregoing
covenant and agreement (an "OFAC Violation") Borrower will immediately (i) give notice to Holder of such OFAC Violation,
and (ii) comply with all Laws applicable to such OFAC Violation, includin g, without limitation, Executive Order 13224; the
International Emergency Economic Powers Act 50 U.S.C. Sections 1701-06; the Iraqi Sanctions Act, Pub. L. 101-513,104 Stat.
2047-55; the United Nations Participatio n Act , 2 2 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty Act,
(enacting 8 U.S.C. Section 219, 18 U.S.C.
Reference Loan No: 717-610-637
Section 2332d, and 18 U.S.C. Section 2339b); the International Security and Development Cooperation Act, 22 U.S.C. Section
2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List Governments Sanctions Regulations, 31.
C.F.R Part 596; and the Foreign Terrorist Organizations Sanctions Regulations, 3 1 C.F.R. Part 597 (collectively, the "Anti-
Terrorism Regulations") and Borrower hereby authorize(s) and consent(s) to Holder's taking any and all reasonable steps Holder
deems necessary, in its sole discretion, t o comply with all Laws applicable to any such OF AC Violation, includi n g the
requirements of the Anti• Terrorism Regulations. Notwithstanding anything to the contrary in this Section, Borrower shall not be
deemed to be in violation of the covenants and agreements set forth i n the first sentence o f this Section if Borrower timely
comply(ies) with all requirements imposed by the foregoing sentence and all requirements of the Anti-Terrorism Regulations and
all other applicable Laws relating to such OF AC Violation.
Borrower acknowledge(s), represent(s) and warrant(s) to Holder that:
(a) the primary purpose for the within loan is business and investment (and not for personal, family or household
purposes); and
(b) none of the proceeds to be distributed under this Promissory Note will b e used t o acquire (or refinance the
acquisitio n price of) real property or personal property which was o r is to be used a s a primary residence of
Borrower or any other party to any of the Loan Documents.
Without limiting the right of Holder to bring any action or proceeding against the undersigned or its property arising out
of or relating to the Obligations, as defined i n the Instrument, (an "Action") in the courts o f other jurisdictions to the extent
necessary to satisfy jurisdiction and venue requirements as to Borrower (the "Jurisdiction and Venue Exception"), Holder and
Borrower hereby irrevocably submit to the jurisdiction of any state circuit court in Florida having jurisdiction over any cause of
action set forth in the Action for any county in which any part of the Premises is located even if located in more than one county
and regardless
Reference Loan No: 717-610-637
of whether such counties are contiguous or in any United States District Court for the district including any said counties where
the Premises are located. Further, subject to the Jurisdiction and Venue Exception , Holder and Borrower hereby irrevocably
agree that any Action may be heard and determined in any of such state circuit court or in any such federal district court as the
sole and exclusive courts and venue for any such Action. Holder, subject to the Jurisdiction and Venue Exception, and Borrower
hereby irrevocably waive, t o the fullest extent that it ma y effectively d o so, t h e defen s e of an inconvenien t for u m to the
maintenance of any Action in such jurisdiction. Holder, subject to the Jurisdiction and Venue Exception, and Borrower hereby
irrevocably agree that the summons and complaint or any other process in any Action in any jurisdiction may be served in any
manner authorized by applicable law. Such service will be complete as provided under applicable law and the time to respond
shall be governed by applicable law.
WAIVER OF JURY TRIAL. THE BORROWER, HOLDER AND ALL ENDORSERS, GUARANTORS AND
SURETIES, TO THE FULL EXTENT PERMITTED BY LAW, DO HEREBY WAIVE AND COVENANT THAT EACH
WILL NOT ASSERT, WHETHER AS PLAINTIFF, DEFENDANT O R OTHERWISE, ANY RIGHT T O TRIAL BY
JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION O R CAUSE O F ACTION
ARISING O U T O F O R BASED UPON THIS PROMISSORY NOTE, T H E SUBJECT MATTER HEREOF, THE
OTHER NOTES, THE INSTRUMENT O R ANY LOAN DOCUMENT(S) O R OTHER INSTRUMENT RELATING
HERETO, I N E A C H C A S E WHETHER N O W EXISTING OR HEREAFTER ARISING O R WHETHER IN
CONTRACT OR IN TORT OR
OTHERWISE.
[SIGNATURE BLOCKS ON SUBSEQUENT PAGES]
Reference Loan No: 717-610-637
IN WITNESS WHEREOF, this Promissory Note has been executed by as of the date
first set forth above.
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Remy W. Trafelet
(Signed Name)
As: Remy W. Trafelet, Manager
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
PREPAYMENT RIDER
Subject to payment of the Prepayment Premium referred to below and all accrued interest and other sums due under this
Promissory Note, Borrower shall have the right to prepay all or any part of the outstanding principal balance of this Promissory
Note, on any date (the "Prepayment Date"), upon giving not less than thirty (30) days prior written notice to Holder of
Borrower's intention to prepay. Any partial prepayment must be in a minimum amount of Two Hundred Fifty Thousand and
No/100 ($250,000.00). No partial prepayment shall result in any adjustment of the amount of the scheduled payments thereafter
becoming due.
Except for any prepayments of principal made with the proceeds received in connection with any condemnation action if
applicable law does not allow such proceeds to be subject to prepayment premiums (collectively the "Exempt Prepayments"), if
all or any portion of the outstanding principal balance of this Promissory Note is prepaid for any reason whether voluntary or
involuntary or after acceleration by Holder upon a default by Borrower under this Promissory Note, the Instrument or any Loan
Document, Borrower shall pay Holder a prepayment premium (the "Prepayment Premium") equal to the greater of (i) or (ii)
below:
(i) one half of one percent (0.50%) of the principal amount of this Promissory
Note being prepaid; or,
(ii) an amount equal to the Present Value of Loan B (as hereinafter defined) less the amount of principal of this
Promissory Note being prepaid including accrued interest, if any, calculated as of the Prepayment Date.
Reference Loan No: 717-610-637
Holder will notify Borrower of the amount and basis of the determination of the Prepayment Premium. On or before the
Prepayment Date, Borrower shall pay t o Holder the Prepayment Premium together with the amount of the principal being
prepaid and all accrued interest and other sums due under this Promissory Note and under Loan B.
Holder shall not be obligated to accept any prepayment of the principal balance of this Promissory Note unless such
prepayment is accompanied by any Prepayment Premium, all accrued interest and all other sums due under Loan B.
For the purposes of determining the Prepayment Premium, the following terms shall have the following meanings:
The "Treasury Rate" is the semi-annual yield on the Treasury Constant Maturity Series with maturity equal to
the remaining weighted average life of Loan B, for the week prior to the Prepayment Date, as reported in Federal
Reserve Statistical Release H.15 - Selected Interest Rates, conclusively determined by Holder on the Prepayment Date.
The rate will be determined by linear interpolation between the yields reported in Release H.15, if necessary. In the
event Release H.15 is no longer published, Holder shall select a comparable publication to determine the Treasury Rate.
The "Discount Rate" is the rate which, when compounded quarterly, is equivalent to the Treasury Rate, when
compounded semi-annually.
The "Present Value of Loan B" shall be determined by discounting all scheduled payments of principal and
interest (at the Note Rate even if interest is then accruing at the Default Rate) remaining through the Maturity Date
attributed to the amount being prepaid under this Promissory Note, at the Discount Rate. If prepayment occurs on a date
other than a regularly scheduled payment date, the actual number of days remaining
Reference Loan No: 717-610-637
from the Prepayment Date to the next regularly scheduled payment date will be used to discount within this period.
Borrower agrees that Holder shall not be obligated to reinvest the amount prepaid in any Treasury obligations as
a condition precedent to receiving the Prepayment Premium.
A default by Borrower in any payment of any amount(s) due under this Promissory Note or a default or breach of any of
Borrower's duties and obligations under the Instrument or any of the other Loan Documents as to which Holder accelerates all
indebtedness due under this Promissory Note, shall conclusively be deemed an effort by the Borrower to effect a voluntary
prepayment of the Promissory Note. The Prepayment Premium for such voluntary prepayment (excluding Exempt Prepayments)
shall become effective, due and payable as of the day prior to the date of acceleration of this Promissory Note (the "Effective
Date"). The related Prepayment Premium, whether paid from the proceeds of a foreclosure sale or otherwise, shall be calculated,
due, and payable as of the Effective Date.
It is the express intention of the parties that any application of the Default Rate before, upon and/or after acceleration of
the indebtedness due under this Promissory Note by Holder as permitted in this Promissory Note is in addition to, and not in lieu
of any Prepayment Premium provided for herein whether any Event of Default upon which acceleration is based is intentional or
unintentional. In addition to voluntary prepayments, the above Prepayment Premium shall also be due upon involuntary and
voluntary defaults upon acceleration of the indebtedness due hereby by Holder and is not in lieu of the right to accelerate and
shall be in addition to the collection of interest at the Default Rate under the Promissory Note and in addition to the collection of
Late Charges under the Promissory Note.
No unscheduled prepayment of amounts due under this Promissory Note, whether made pursuant to the provisions of this
Rider, or otherwise, shall result in the adjustment or reduction of any scheduled payment of principal and interest as set forth in
this Promissory Note.
Reference Loan No: 717-610-637
[SIGNATURE AND NOTARY BLOCKS ON SUBSEQUENT PAGES]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Remy W. Trafelet
(Signed Name)
As: Remy W. Trafelet, Manager
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
Florida documentary stamp tax
in the amount of $119,000.00 calculated on the $34,000,000.00 total of the face amount of this Promissory Note and those of
Note A and Note C have been
paid on the counterpart of the Instrument being recorded in the Public Records of
Osceola County, Florida on or about the date hereof
STATE OF NEW YORK
S.S.
COUNTY OF NEW YORK
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Remy W.
Trafelet, the manager of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by New York , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 22nd day of December, 2012.
/s/ Gino Palacios
Signature of Notary Public)
Gino D. Palacios
(Printed Name of Notary Public)
My commission expires: 07/11/14
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manger of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Kimberly D. McGreal
Signature of Notary Public)
Kimberly D. McGreal
(Printed Name of Notary Public)
My commission expires: 12/29/13
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Kimberly D. McGreal
Signature of Notary Public)
Kimberly D. McGreal
(Printed Name of Notary Public)
My commission expires: 12/29/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manger of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
U.S. $5,000,000.00 December 31, 2012
PROMISSORY NOTE C
FOR VALUE RECEIVED, the undersigned, 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC
GROVES, LLC, a Florida limited liability company, 734 CO-OP GROVES, LLC, a Florida limited liability company, 734
BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited liability company,
being collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said
four limited liability companies both separately and collectively), jointly and severally, promise to pay to t h e order of
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company, i t s successors and
assigns ("Holder") the principal sum of Five Million and No/100 Dollars ($5,000,000.00), with interest thereon, from the date
said sum is disbursed by Holder (the "Funding Date") pursuant to the provisions of the Loan Agreement between Borrower and
Holder of even date herewith (the "Loan Agreement") until the Maturity Date payable as provided herein at the Note Rate, as
hereinafter defined. Capitalized terms used herein without definition shall have the meanings ascribed to them in the Instrument,
as defined herein.
Pursuant to the provisions of the Loan Agreement, Borrower shall not be entitled to the disbursement of any sums under
this Promissory Note by Holder unless the Tropicana Supply Agreement Condition Precedent, as defined in the Loan Agreement
occurs on or before the date that is ninety days (90) after the date of this Promissory Note and if the Tropicana Supply
Agreement Condition Precedent should not so occur then at the end of the ninetieth day after the
date of this Promissory Note, this Promissory Note shall be deemed cancelled with Holder to no longer have any obligation to
disburse or fund this Promissory Note and with Borrower to have no payment or other obligations with respect thereto. If the
Tropicana Supply Agreement Condition Precedent is satisfied, then Borrower shall have thirty (30) days in which to notify
Lender that Borrower elects to accept disbursement of the full face amount of this Promissory Note and shall do so within thirty
(30) days after giving notice of said election or this Promissory Note shall be deemed cancelled with Holder to no longer have
any obligation to disburse or fund this Promissory Note and with Borrower to have no payment or other obligations with respect
thereto.
The "Note Rate" is the contract rate of interest payable under this Promissory Note which shall be dete1mined on the
Funding Date (the "Initial Interest Rate Determination Date") and shall be adjusted quarterly on the first (1st) day of each June,
September, December and March occurring after the Funding Date (each a "Interest Rate Change Date") by adding a margin of
two hundred seventy-five basis points (2.75%) (said percentage, as changed in the manner provided herein, is referred to as the
"Margin”) to the Index, as defined herein. The Margin shall change as provided herein every three (3) years commencing June 1,
2016 and on each third (3rd) year anniversary date thereof (each a "Margin Change Date"), at which time Holder may change the
Margin at its discretion. If the Borrower chooses not to accept the proposed change in Margin to take effect on any Margin
Change Date then this Promissory Note shall mature and become due and payable by Borrower, in full, on the Margin Change
Date when the proposed Margin would otherwise have taken effect. The index (the "Index") is the Three Month London
Interbank Offered Rate ("Three Month Libor") as the Three Month London Interbank Offered Rate is reported on the tenth
day of the month preceding each Initial Interest Rate Determination Date and Interest Rate Change Date by the Wall Street
Journal in its daily listing of money rates and rounding the resulting rate to the next higher one-hundredth (e.g., a 2.903 Three
Month Libor Rate plus the Margin of 275 basis points [2.903 + 2.75 =5.653] to be rounded up to an effective adjusted Note Rate
of 5.66%). If a Three Month Libor Rate is not
reported on the tenth day of the month preceding the Initial Interest Rate Determination Date or quarterly Interest Rate Change
Date, the Three Month Libor Rate reported on the first Business Day preceding the tenth day of the month will be used. If this
Index is no longer available, Holder will seek a new Index, which is based upon comparable information.
Borrower may apply to Holder to convert the interest rate on this Promissory Note to any fixed interest rate offered by
Holder. The interest rate conversion, the interest rate and the terms and conditions for the conversion shall be determined by
Holder in its sole and absolute business discretion, as accepted by Borrower. The interest rate conversion is subject to a service
fee which will be determined by Holder at the time of the conversion. Borrower is responsible for payment of all legal and title
costs incurred relative to the conversion.
The principal and interest of this Promissory Note C ("Promissory Note" and the loan evidenced hereby are referred to
herein as "Loan C") are to be paid in installments as follows:
(i)
quarterly interest payments of accrued interest on the principal balance remaining outstanding, from time to
time, shall be paid by Borrower to Holder beginning on the first (1st) day of June, 2013 and continuing on the first (1st)
day of each September, December, March and June thereafter; and
(ii)
constant quarterly principal reduction payments shall be made by Borrower to Holder in the amount of Fifty
Thousand and No/100 Dollars (U.S. $50,000.00) each, commencing on the first (1st) day of June, 2013 and continuing
on the first (1st) day of each September, December, March and June thereafter; and
(iii)
the entire then remaining outstanding balance of all principal and accrued interest thereon shall be due and
payable, in full, on the first (1st) day of June, 2023 (the "Maturity Date").
Unless otherwise provided by law, all payments made by Borrower will be applied first to any costs and expenses
incurred by Holder in enforcing or collecting this Promissory Note, including reasonable attorney fees, and then to any advances
and expenditures made by Holder to protect its interests under this Promissory Note, the Instrument or any other document given
to secure Borrower's payment of this indebtedness. Any remaining amounts will then be applied to interest due with the balance,
if any, to be applied on account of principal.
For the purposes of calculating interest under this Promissory Note, a year of 360 days consisting of twelve (12) thirty
(30) day months shall be employed regardless of the actual time elapsed.
All payments under this Promissory Note shall be made, without offset or deduction,
(a)
in lawful money of the United States of America at the office of Holder or at such other place (and in the manner)
Holder may specify by written notice to Borrower, (b) in immediately available federal funds by federal wire transfer, and (c) if
received by Holder prior to 2 P.M. local time in the place so designated by Holder for payments under this Promissory Note,
shall be credited on that day, or, if received by Holder on or after 2 P.M. local time in the place so designated by Holder for
payments under this Promissory Note, shall, at Holder's option, be credited on the next Business Day. If any payment due date
falls on a day which is not a Business Day, then the payment due date shall be deemed to have fallen on the next succeeding
Business Day. The term "Business Day" shall mean each Monday through Friday except for days in which commercial banks are
not authorized to open or are required by law to close in the State in which the place designated by Holder for payments under
this Promissory Note is located.
Both principal and interest shall be payable in lawful money of the United States of America by federal wire transfer
unless directed by Holder in writing to be otherwise forwarded
to Prudential Asset Resources, Inc. Mortgage Loan Servicing, 2100 Ross Avenue, Suite 2500, Dallas, Texas 75201 or such other
place as the Holder hereof may, from time to time, designate in writing.
In the event that any payment of principal and/or interest due under this Promissory Note should not be fully made by the
fifth (5th) day following the due date thereof, then:
(A).
A late charge of $0.05 for each ($1.00) Dollar of such payment shall automatically become due to the Holder
of this Promissory Note and be secured by the Instrument. This charge shall be in addition to all other rights and
remedies available to the Holder of this Promissory Note upon the occurrence of a default under the Promissory Note or
any other Loan Document (as hereinafter defined); and
(B).
The Holder of this Promissory Note shall have the right, upon written notice to Borrower, to increase the rate
of interest per annum on the entire principal balance of this Promissory Note then outstanding, from the Note Rate to the
Default Rate (as hereinafter defined) and, upon said notice and unless Borrower shall pay to Holder the amount of such
overdue payment together with the late charge assessed thereon within three (3) Business Days of Borrower's receipt of
said notice (which receipt shall be conclusively presumed to have occurred on the second business day following the
date such notice was placed in the mail with the United States Postal Service or on the date of actual delivery if delivered
personally or by private carrier/messenger service), such increase to the Default Rate shall remain in force and effect for
so long as such default shall continue or the Holder otherwise agrees. Interest at the Default Rate is in addition to and not
in lieu of any Prepayment Premium due after acceleration of the indebtedness due hereunder by Holder after an Event of
Default. The Default Rate shall also apply to any judgment obtained with respect to the Obligations and/or any Loan
Document from the date such
judgment becomes due and owing under a final and non-appealable order until the amount of such judgment is paid in
full.
"Default Rate" is defined as the lesser of (i) the maximum rate allowed by applicable law or (ii) the per annum rate equal to the
Note Rate plus Five Percent (5%).
The Borrower severally waives presentment for payment, demand, notice of demand and of dishonor and nonpayment of
this Promissory Note, notice of intention to accelerate and notice of acceleration of the maturity of this Promissory Note, protest
and notice of protest, diligence in collecting and the bringing of suit against any other party and said Borrower agrees to all
renewals, extensions, modifications, partial payments, releases or substitutions of security, in whole or in part, with or without
notice, before or after maturity, all without in any way affecting the liability of Borrower under this Promissory Note.
Should this Promissory Note be signed by more than one person and/or firm and/or corporation, all of the obligations
herein contained shall be considered joint and several obligations of each signer hereof.
This Promissory Note evidences Borrower's unconditional obligation to repay the indebtedness described herein. This
Promissory Note and interest hereon are secured by a Mortgage and Security Agreement of even date herewith by Borrower to
Holder (the "Instrument") executed in seven counterparts, one of each counterpart to be recorded in the Public Records of
Collier, Hardee, Hendry, Highlands, Martin, Osceola and Polk Counties, Florida, which Instrument encumbers property located
in said counties and, unless otherwise stated herein, this Promissory Note is to be construed according to the laws of the State of
Florida. The payment of this Promissory Note is secured by, among other things, the aforementioned Instrument together with
the Loan Commitment, any and all mortgages, deeds of trust, security agreements, financing statements assignments of leases
and rents, loan agreements, guarantees,
letters of credit and any other documents and instruments, now or hereafter executed by Borrower, or any other party, to
evidence, secure or guarantee the payment of this Promissory Note and any and all renewals, extensions, amendments and
replacements hereof All of the foregoing instruments as well as this Promissory Note and the Other Notes, defined below, are
collectively referred to herein as the "Loan Document(s)". Promissory Note A in the face amount of Fourteen Million Five
Hundred Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder on even date herewith ("Note A" and the
loan evidenced thereby is referred to as "Loan A") and Promissory Note B in the face amount of Fourteen Million Five Hundred
Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder on even date herewith ("Note B" and the loan
evidenced thereby is referred to as "Loan B" are collectively herein referred to as the "Other Notes" and Loan A, Loan B and
Loan C constitute an aggregate loan from Holder to Borrower on even date herewith in the total face amount of up to Thirty
Four Million and No/100 Dollars ($34,000,000.00), which is hereafter referred to as the "Loan" and is evidenced by this
Promissory Note, Note A and Note B. The terms of the Loan Document(s) are incorporated herein by this reference. A default in
this Promissory Note, after expiration of all applicable grace and notice periods herein, is a default in the Other Notes and in the
other Loan Documents and a default in the Other Notes and/or in the other Loan Documents, after expiration of all applicable
grace and notice periods therein, is a default herein.
This Promissory Note may be declared due (accelerated) at the option of the Holder hereof prior to its expressed maturity
date for an Event of Default, as defined in the Instrument, and after the expiration of applicable grace and notice periods therein.
In the event of such acceleration, all of the then remaining principal and interest, together with any Prepayment Premium due
under the terms of this Promissory Note shall become at once due and payable without further notice, demand or presentment for
payment. Borrower agrees that any Prepayment Premium due upon any such acceleration by Holder is in addition to the remedy
of acceleration and is not in lieu thereof and is in addition to both the collection of interest at the Default Rate and collection of
Late Charges hereunder.
The privilege granted to Borrower to make unscheduled principal reduction payments of the indebtedness evidenced by
this Promissory Note and the terms under which this Promissory Note may be prepaid by Borrower and the applicable
Prepayment Premium (as defined in the Prepayment Rider) that will be due upon any such unscheduled prepayment(s) of this
indebtedness are set forth in the Prepayment Rider attached hereto and incorporated herein by this reference. Terms defined in
this Promissory Note shall also be applicable to the use of such terms in the Prepayment Rider.
It is the intent of the Holder of this Promissory Note and the Borrower in the execution of this Promissory Note, the Loan
Documents and all other instruments now or hereafter securing this Promissory Note to contract in strict compliance with all
applicable laws and, in particular, with applicable usury law. In furtherance thereof, the said Holder and the Borrower stipulate
and agree that none of the terms and provisions contained in this Promissory Note, or in any other instrument executed in
connection herewith, shall ever be construed to create a contract to pay interest at a rate in excess of the maximum interest rate
permitted to be charged by applicable law for the use, forbearance or detention of money or to pay any other amount not
permitted by law. Neither the Borrower nor any guarantors, endorsers or other parties now or hereafter becoming liable for
payment of this Promissory Note shall ever be required to pay interest on this Promissory Note at a rate in excess of the
maximum interest that may be lawfully charged or to make any other payment(s) not permitted under applicable law. The
provisions of this paragraph shall control over all other provisions of this Promissory Note and any other instruments now or
hereafter executed in connection herewith which may be in apparent conflict herewith. The Holder of this Promissory Note
expressly disavows any intention to charge any amount not permitted by law or to collect excessive, unearned interest or finance
charges under this Promissory Note, or in the event the maturity of this Promissory Note is accelerated. If the maturity of this
Promissory Note shall be accelerated, for any reason, or if the principal of this Promissory Note is paid prior to the end of the
term of this Promissory Note and, as a result
thereof, the interest or any other charge received for the actual period of existence of the loan evidenced by this Promissory Note
exceeds the applicable maximum lawful rate for such interest or other charge, the Holder of this Promissory Note shall, at its
option, either refund to the Borrower the amount of such excess or credit the amount of such excess against the principal balance
of this Promissory Note then outstanding and thereby shall render inapplicable any and all penalties of any kind provided by
applicable law as a result of such excess interest or other charge. In the event that any Holder of this Promissory Note shall
collect monies which are deemed to constitute interest which would increase the effective interest rate on this Promissory Note
to a rate in excess of that permitted to be charged by applicable law, all such sums deemed to constitute interest in excess of the
lawful rate shall, upon such determination, at the option of the Holder of this Promissory Note be either immediately returned to
the Borrower or credited against the principal balance of this Promissory Note then outstanding, in which event any and all
penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. By execution of this
Promissory Note the Borrower acknowledge(s) that Borrower believe(s) the loan evidenced by this Promissory Note to be non-
usurious and agrees that if, at any time, the Borrower should have reason to believe that such loan is in fact usurious or any other
charge exceeds that permitted by applicable law, Borrower will give the Holder of this Promissory Note notice of such condition
and the Borrower agree(s) that said Holder shall have thirty (30) days in which to make appropriate refund or other adjustment in
order to collect such condition, if in fact such exists. The term "applicable law" as used in this Promissory Note shall mean the
laws of the State Florida, as such laws now exist or may be changed or amended or come into effect in the future.
Should the indebtedness represented by this Promissory Note or any part thereof be enforced or collected at law or in
equity or through any bankruptcy, receivership, probate or other court proceedings or if this Promissory Note is placed in the
hands of attorneys for collection after default, and expiration of all applicable grace and notice periods, the Borrower agrees to
pay to the Holder of this Promissory Note, in addition to the principal and interest due and payable
hereon and to the full extent permitted by law, all reasonable attorneys' fees and reasonable costs of collection. For purposes of
this paragraph "costs of collection" shall be deemed to include (by way of example and not by limitation), among other
reasonable costs, all reasonable costs incurred in securing and protecting any of the real property or personal property described
in the Loan Documents and Holder's interest therein, together with all reasonable fees and expenses charged by the attorneys
engaged by Holder for collection purposes.
Any forbearance, failure or delay by Holder in exercising any right, power or remedy provided herein or in the Loan
Documents or provided by law shall not preclude a further or subsequent exercise thereof or constitute a waiver of default by
Borrower and every such right, power or remedy of Holder shall continue in full force and effect unless such right, power and
remedy and each such default or breach by Borrower is separately and specifically waived by Holder in writing.
If any clause, term or provision of this Promissory Note or any of the Loan Documents is held to be unenforceable by a
court of competent jurisdiction, said clause, term, provision so held to be unenforceable shall be stricken and all the remaining
portions of this Promissory Note and/or the Loan Documents shall remain in full force and effect.
Borrower and all persons or entities holding any legal or beneficial interest whatsoever in Borrower or any security for
this Promissory Note are not included in, owned by, controlled by, acting for or on behalf of, providing assistance, support,
sponsorship, or services or any kind to, or otherwise associated with any of the persons or entities referred to or described in
Executive Order 13224 - Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism, as amended. It shall constitute an Event of Default hereunder and under the Instrument securing this
instrument if the foregoing representation and warranty shall ever become false.
Neither Borrower, nor any persons holding any legal or beneficial interest whatsoever in any collateral given by
Borrower to secure this Promissory Note shall, at any time during the term of the loan evidenced by this Promissory Note, be
described in, covered by or specially designated pursuant to or be affiliated with any persons described in, covered by or
specially designated pursuant to Executive Order 13224, as amended, or any similar list issued by the Office of Foreign Assets
Control ("OFAC") or any other department or agency of the United States of America. Notwithstanding the foregoing, Borrower
hereby confirm(s) that if he/she//they/it become(s) aware or receives any notice of any violation of the foregoing covenant and
agreement (an "OFAC Violation") Borrower will immediately (i) give notice to Holder of such OFAC Violation, and (ii) comply
with all Laws applicable to such OFAC Violation, including, without limitation, Executive Order 13224; the International
Emergency Economic Powers Act 50 U.S.C. Sections 1701-06; the Iraqi Sanctions Act, Pub. L. 101-513, 104 Stat. 2047-55; the
United Nations Participation Act, 22 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty Act, (enacting 8 U.S.C.
Section 219, 18 U.S.C. Section 2332d, and 18 U.S.C. Section 2339b); the International Security and Development Cooperation
Act, 22 U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List Governments
Sanctions Regulations, 31. C.F.R Part 596; and the Foreign Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597
(collectively, the "Anti-Terrorism Regulations") and Borrower hereby authorize(s) and consent(s) to Holder's taking any and all
reasonable steps Holder deems necessary, in its sole discretion, to comply with all Laws applicable to any such OFAC Violation,
including the requirements of the AntiTerrorism Regulations. Notwithstanding anything to the contrary in this Section, Borrower
shall not be deemed to be in violation of the covenants and agreements set forth in the first sentence of this Section if Borrower
timely comply(ies) with all requirements imposed by the foregoing sentence and all requirements of the Anti-Terrorism
Regulations and all other applicable Laws relating to such OFAC Violation.
Borrower acknowledge(s), represent(s) and warrant(s) to Holder that:
(a)
household purposes); and
the primary purpose for the within loan is business and investment (and not for personal, family or
none of the proceeds to be distributed under this Promissory Note will be used to acquire (or refinance
(b)
the acquisition price of) real property or personal property which was or is to be used as a primary residence of
Borrower or any other party to any of the Loan Documents.
Without limiting the right of Holder to bring any action or proceeding against the undersigned or its property arising out
of or relating to the Obligations, as defined in the Instrument, (an "Action") in the courts of other jurisdictions to the extent
necessary to satisfy jurisdiction and venue requirements as to Borrower (the "Jurisdiction and Venue Exception"), Holder and
Borrower hereby irrevocably submit to the jurisdiction of any state circuit court in Florida having jurisdiction over any cause of
action set forth in the Action for any county in which any part of the Premises is located even if located in more than one county
and regardless of whether such counties are contiguous or in any United States District Court for the district including any said
counties where the Premises are located. Further, subject to the Jurisdiction and Venue Exception, Holder and Borrower hereby
irrevocably agree that any Action may be heard and determined in any of such state circuit court or in any such federal district
court as the sole and exclusive courts and venue for any such Action. Holder, subject to the Jurisdiction and Venue Exception,
and Borrower hereby irrevocably waive, to the fullest extent that it may effectively do so, the defense of an inconvenient forum
to the maintenance of any Action in such jurisdiction. Holder, subject to the Jurisdiction and Venue Exception, and Borrower
hereby irrevocably agree that the summons and complaint or any other process in any Action in any jurisdiction may be served in
any manner authorized by applicable law. Such service will be complete as provided under applicable law and the time to
respond shall be governed by applicable law.
WAIVER OF JURY TRIAL. THE BORROWER, HOLDER AND ALL ENDORSERS, GUARANTORS AND
SURETIES, TO THE FULL EXTENT PERMITTED BY LAW, DO HEREBY WAIVE AND COVENANT THAT
EACH WILL NOT ASSERT, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, ANY RIGHT TO TRIAL
BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS PROMISSORY NOTE, THE SUBJECT MATTER HEREOF, THE
OTHER NOTES, THE INSTRUMENT OR ANY LOAN DOCUMENT(S) OR OTHER INSTRUMENT RELATING
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE.
[SIGNATURE BLOCKS ON SUBSEQUENT PAGES]
IN WITNESS WHEREOF, this Promissory Note has been executed by as of the date first set forth above.
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Remy W. Trafelet
(Signed Name)
As: Remy W. Trafelet, Manager
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
PREPAYMENT RIDER
Subject to payment of the Prepayment Premium referred to below and all accrued interest and other sums due under this
Promissory Note, Bo1rnwer shall have the right to prepay all or any part of the outstanding principal balance of this Promissory
Note, on any date (the "Prepayment Date"), upon giving not less than thirty (30) days prior written notice to Holder of
Borrower's intention to prepay. Any partial prepayment must be in a minimum amount of Two Hundred Fifty Thousand and
No/100 ($250,000.00). There shall be not Prepayment Premium as to such prepayments made after the Prepayment Period, as
defined below. No partial prepayment shall result in any adjustment of the amount of the scheduled payments thereafter
becoming due.
Except for any prepayments of principal made with the proceeds received in connection with any condemnation action if
applicable law does not allow such proceeds to be subject to prepayment premiums (collectively the "Exempt Prepayments"), if
all or any p01iion of the outstanding principal balance of this Promissory Note is prepaid for any reason whether voluntary or
involuntary or after acceleration by Holder upon a default by Borrower under this Promissory Note, the Instrument or any Loan
Document, during the period (the "Prepayment Period") which is three (3) calendar years after the Funding Date, Borrower shall
pay Holder a prepayment premium (the "Prepayment Premium") equal to the greater of (i) or (ii) below:
(i)
one half of one percent (0.50%) of the principal amount of this Promissory Note being prepaid; or,
(ii)
an amount equal to the Present Value of Loan C (as hereinafter defined) less the amount of principal of
this Promissory Note being prepaid including accrued interest, if any, calculated as of the Prepayment Date.
Holder will notify Borrower of the amount and basis of the determination of the Prepayment Premium. On or before the
Prepayment Date, Borrower shall pay to Holder the Prepayment Premium together with the amount of the principal being prepaid
and all accrued interest and other sums due under this Promissory Note and under Loan C.
Holder shall not be obligated to accept any prepayment of the principal balance of this Promissory Note unless such
prepayment is accompanied by any Prepayment Premium, all accrued interest and all other sums due under Loan C.
For the purposes of determining the Prepayment Premium, the following terms shall have the following meanings:
The "Treasury Rate" is the semi-annual yield on the Treasury Constant Maturity Series with maturity equal to
the remaining weighted average life of Loan C, for the week prior to the Prepayment Date, as reported in Federal
Reserve Statistical Release
H.15 - Selected Interest Rates, conclusively determined by Holder on the Prepayment Date. The rate will be determined
by linear interpolation between the yields reported in Release H.15, if necessary. In the event Release H.15 is no longer
published, Holder shall select a comparable publication to determine the Treasury Rate.
The "Discount Rate" is the rate which, when compounded quarterly, 1s equivalent to the Treasury Rate, when
compounded semi-annually.
The "Present Value of Loan C" shall be determined by discounting all scheduled payments of principal and
interest (at the Note Rate even if interest is then accruing at the Default Rate) remaining through the Maturity Date
attributed to the amount being prepaid under this Promissory Note, at the Discount Rate. If prepayment occurs on a date
other than a regularly scheduled payment date, the actual number of days remaining
from the Prepayment Date to the next regularly scheduled payment date will be used to discount within this period.
Borrower agrees that Holder shall not be obligated to reinvest the amount prepaid m any Treasury obligations as
a condition precedent to receiving the Prepayment Premium.
A default by Borrower in any payment of any amount(s) due under this Promissory Note or a default or breach of any of
Borrower's duties and obligations under the Instrument or any of the other Loan Documents as to which Holder accelerates all
indebtedness due under this Promissory Note during the Prepayment Period, shall conclusively be deemed an effort by the
Borrower to effect a voluntary prepayment of the Promissory Note. The Prepayment Premium for such voluntary prepayment
(excluding Exempt Prepayments), shall become effective, due and payable as of the day prior to the date of acceleration of this
Promissory Note (the "Effective Date"). The related Prepayment Premium, whether paid from the proceeds of a foreclosure sale
or otherwise, shall be calculated, due, and payable as of the Effective Date.
It is the express intention of the parties that any application of the Default Rate before, upon and/or after acceleration of
the indebtedness due under this Promissory Note by Holder as permitted in this Promissory Note is in addition to, and not in lieu
of any Prepayment Premium provided for herein (excluding Exempt Prepayments) whether any Event of Default upon which
acceleration is based is intentional or unintentional. In addition to voluntary prepayments during the Prepayment Period, the
above Prepayment Premium shall also be due upon involuntary and voluntary defaults upon acceleration of the indebtedness due
hereby by Holder during the Prepayment Period and is not in lieu of the right to accelerate and shall be in addition to the
collection of interest at the Default Rate under the Promissory Note and in addition to the collection of Late Charges under the
Promissory Note.
No unscheduled prepayment of amounts due under this Promissory Note, whether made
pursuant to the provisions of this Rider, or otherwise, shall result in the adjustment or reduction of any scheduled payment of
principal and interest as set forth in this Promissory Note.
[SIGNATURE AND NOTARY BLOCKS ON SUBSEQUENT PAGES]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Remy W. Trafelet
(Signed Name)
As: Remy W. Trafelet, Manager
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
Florida documentary stamp tax
in the amount of $119,000.00 calculated on the $34,000,000.00 total of the face
amount of this Promissory Note and those of Note A and Note B have been
paid on the counterpart of the Instrument being recorded in the Public Records of
Osceola County, Florida on or about the date hereof
STATE OF NEW YORK
S.S.
COUNTY OF NEW YORK
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Remy W.
Trafelet, the manager of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by New York , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 22nd day of December, 2012.
/s/ Gino Palacios
Signature of Notary Public)
Gino D. Palacios
(Printed Name of Notary Public)
My commission expires: 07/11/14
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manger of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
STATE OF FLORIDA
S.S.
COUNTY OF HILLSBOROUGH
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida, a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manger of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person ( ) personally known to me or (x) produced a driver's license issued by Florida , a State of the United States
which is either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of December, 2012.
/s/ Shannon Kalmbach
Signature of Notary Public)
Shannon Kalmback
(Printed Name of Notary Public)
My commission expires: 12/05/16
[NOTARY SEAL]
Loan Numbers:
717610613
717610637
717610638
717610647
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "First Amendment") is made and entered into as of the
26th day of March, 2013 (the "First Amendment Effective Date"), by and among 734 CITRUS HOLDINGS, LLC, a Florida
limited liability company, 734 LMC GROVES, LLC, a Florida limited liability company, 734 CO-OP GROVES, LLC, a
Florida limited liability company, 734 BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a
Florida limited liability company, being collectively referred to as the "Borrower" (and unless otherwise provided the term
"Borrower" shall apply to each of said five limited liability companies both separately and collectively), jointly and severally, all
having an office and place of business at 181 Highway 630 East, Frostproof, Florida 33843 and PRUDENTIAL MORTGAGE
CAPITAL COMPANY, LLC, a Delaware limited liability company, having an office and place of business at 801 Warrenville
Road, Suite 150, Lisle, Illinois 60532-1357 (referred to herein as the "Lender).
WITNESSETH:
WHEREAS, Borrower executed in favor of Lender that certain Promissory Note A in the face amount of Fourteen
Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 ("Note A", and the loan
evidenced thereby is known as Loan 717610613 and is referred to as "Loan A"), that certain Promissory Note B in the face
amount of Fourteen Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 ("Note B",
and the loan evidenced thereby is known as Loan 717610637 and is referred to as "Loan B") and that certain Promissory Note C
in the face amount of up to Five Million and No/100 Dollars ($5,000,000.00) dated December 31, 2012 ("Note C", and the loan
evidenced thereby is known as Loan 717610638 and is referred to as "Loan C", and Note A, Note B and Note C are collectively
herein referred to as "Notes A, B and C" with Loan A, Loan B and Loan C constituting an aggregate loan from Lender to
Borrower on December 31, 2012 in the total face amount of up to Thirty Four Million and No/100 Dollars ($34,000,000.00)
herein referred to as "Loans A B and C")·
'
WHEREAS, in connection with the execution and delivery of Notes A, B and C, Borrower and Lender executed that
certain Loan Agreement dated December 31, 2012 (the "Original Loan Agreement");
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Mortgage and Security
Agreement dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book
4872, Page 2431, in the Public Records of
Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as Instrument Number 201325000089, in the
Public Records of Hardee, County, Florida, one counterpart of which was recorded on January 4, 2013 in Official Records Book
856, Page 1833, in the Public Records of Hendry County, Florida, one counterpart of which was recorded on January 3, 2013 in
Official Records Book 2359, Page 1500, in the Public Records of Highlands, County, Florida, one counterpart of which was
recorded on January 3, 2013 in Official Records Book 2622, Page 1255, in the Public Records of Martin, Florida, one
counterpart of which was recorded on January 3, 2013 in Official Records Book 4375, Page 689, in the Public Records of
Osceola County, Florida and one counterpart of which was recorded on January 3, 2013 in Official Records Book 08841, Page
0130, in the Public Records of Polk County, Florida, encumbering property located in said counties securing Notes A, B and C
(the "Original Security Instrument");
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Assignment of Leases and Rents
dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4872, Page
2510, in the Public Records of Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as Instrument
Number 201325000090, in the Public Records of Hardee, County, Florida, one counterpart of which was recorded on January 4,
2013 in Official Records Book 856, Page 1912, in the Public Records of Hendry County, Florida, one counterpart of which was
recorded on January 3, 2013 in Official Records Book 2359, Page 1579, in the Public Records of Highlands, County, Florida,
one counterpart of which was recorded on January 3, 2013 in Official Records Book 2622, Page 1334, in the Public Records of
Martin, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4375, Page 768, in the
Public Records of Osceola County, Florida and one counterpart of which was recorded on January 3, 2013 in Official Records
Book 08841, Page 0209, in the Public Records of Polk County, Florida, encumbering property located in said counties securing
Notes A, B and C (the "Original Assignment of Leases and Rents");
WHEREAS, in connection with the execution and delivery of Notes A, B and C, the Original Security Instrument, the
Original Assignment of Leases and Rents, and the Original Loan Agreement, Borrower executed in favor of Lender and/or
Borrower and Lender entered into certain other loan documents (said loan documents are collectively referred to as the "Loans
A, B and C Loan Documents");
WHEREAS, on even date herewith, Borrower has executed in favor of Lender a Future Advance Promissory Note D in
the face amount of up to Six Million and No/100 Dollars ($6,000,000.00) evidencing a loan known as Loan 717610647 (referred
to herein as "Note D", and the loan evidenced thereby being referred to as "Loan D"), which is a revolving loan future advance
under Section 1.03 of the Original Security Instrument; Borrower and Lender have executed a Modification of Mortgage and
Security Agreement and Modification of Other Loan Documents between Borrower and Lender (the "2013 Modification"), in
seven counterparts, one of which is to be recorded in the Public Records of Collier, Hardee, Hendry, Highlands, Martin, Osceola
and Polk counties, Florida; and Borrower has executed in favor of Lender and/or Borrower and Lender have entered into certain
other loan documents pertaining thereto (Note D, the 2013 Modification, this First Amendment and such other loan documents
related to the foregoing are herein collectively referred to as the "Loan D Loan Documents'); and
WHEREAS, the parties desire to modify and amend the Original Loan Agreement to reflect the changes the parties have
agreed upon as a result of the addition of Loan D as provided herein.
IN CONSIDERATION OF the foregoing facts and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and of the mutual covenants and agreements contained in this First Amendment, the Borrower and the
Lender agree that the Original Loan Agreement is hereby modified and amended as follows:
Modification of Definitions. Article I of the Original Loan Agreement is hereby amended as of, from and after the First
1.
Amendment Effective Date, by adding the defined terms in this First Amendment as defined terms therein and by amending and
restating any of the following defined terms to the extent such terms are already defined in the Original Loan Agreement as
follows:
(a)
"Agreement" shall mean this Loan Agreement as modified by the First Amendment and all other subsequent
permitted amendments, supplements, and modifications thereof, including all exhibits and schedules.
(b)
"Default Rate" shall mean the interest rate specified in the Note A as the Default Rate as to monetary sums due
thereunder, the interest rate specified in Note B as the Default Rate as to monetary sums due thereunder, the interest rate
specified in Note C as the Default Rate as to monetary sums due thereunder, the interest rate specified in Note D as the Default
Rate as to monetary sums due thereunder and as to other sums due under the other Loan Documents, the higher of the Default
Rate under Note A, Note B, Note C and Note D.
(c)
"First Amendment" shall mean that certain First Amendment to Loan Agreement between Borrower and
Lender dated as of the First Amendment Effective Date.
(d)
First Amendment Effective Date" shall mean March ____,
2013.
(e)
"Loan" shall mean Loan A, Loan B and Loan C, all as defined in the Recitals, and Loan D, as defined in the
recitals to the First Amendment, collectively.
(f)
"Loan Application" shall mean Borrower's Loan Application to Lender as to Loan 717610613, Loan
717610637 and Loan 717610638 dated December 7, 2012 as to Loans A, B and C, and Borrower's Loan Application to Lender
for Loan 717610647 dated January 25, 2013 as to Loan D.
(g)
"Loan Commitment" shall mean, as to Loan A, Loan B and Loan C, the Lender's commitment to make the
Loan to the Borrower pursuant to the Loan Application as to Loan A, Loan B and Loan C and the Borrower's acceptance thereof
on terms and conditions set forth in the letter from the Lender to the Borrower as to such commitment and acceptance and as to
Loan D, the Lender's commitment to make the Loan to the Borrower pursuant to the Loan Application as to Loan D and the
Borrower's acceptance thereof on terms and conditions set forth in the letter from the Lender to the Borrower as to such
commitment and acceptance.
(h)
"Note" shall mean Note A, Note B and Note C, all as defined in the Recitals, and Note D, as defined in the
recitals to the First Amendment, collectively, in each case as amended, restated and renewed from time to time.
(i)
"Security Instrument" shall mean the Security Instrument, as defined in the Recitals, as modified by the First
Amendment, and all other subsequent permitted amendments, supplements, and modifications thereof.
Modification of Section 2.1. Section 2.1 of the Original Loan Agreement is hereby modified as of, from and after the
2.
First Amendment Effective Date to read as follows: "Section 2.1 Loan. The Loan consists of Loan A, Loan B and Loan C, as
defined in the recitals to this Agreement, and Loan D, as defined in the recitals to the First Amendment, respectively consisting
of Loan A, Loan B, Loan C and Loan D, and is being made under the provisions of Note A, Note B, Note C, Note D, this
Agreement and the other Loan Documents."
Modification of Section 2.3. Section 2.3 of the Original Loan Agreement is modified as of, from and after the First
3.
Amendment Effective Date to read as follows: "Section 2.3 Loan Proceeds Use. The proceeds of Loans A, B and C are being
used to acquire the assets described in the Letter of Intent described in Section 2.2 above and the proceeds of Loan D are being
used as a working capital line of credit which is revolving. The outstanding principal balance of such revolving Loan D may,
from time to time, increase and decrease and may be repaid and re borrowed as provided in Note D, but shall never, at any one
time, exceed the sum of Six Million and No/100 Dollars ($6,000,000.00). Note D contains an annual Unused Fee calculated
and payable by Borrower to Lender as provided therein. Borrower's right to re-borrow under Note D expires upon the earlier of
an Event of Default under any of the Loan Documents and the Maturity Date, unless there is a renewal of Note D, with Lender
having no obligation to renew the same."
Modification of Section 3.10. Section 2.3 of the Original Loan Agreement is modified as of, from and after the First
4.
Amendment Effective Date to read as follows: "Section 3.10 Executive Offices and Location of Records. The Borrower's
Principal Place of Business is located at 181 Highway 630 East, Frostproof, Florida 33843 and all of its books and records are
and shall be maintained there."
Modification of Section 4.2 (4). Section 4.2 (4) of the Original Loan Agreement is modified as of, from and after the
5.
First Amendment Effective Date to read as follows: "(4) Within thirty (30) days after the end of each quarter of each Fiscal Year,
Borrower prepared financial statements of Borrower and its Subsidiaries on a consolidated basis (with appropriate subsidiary
eliminations). Further, with reasonable promptness, such other data and information as from time to time may be reasonably
requested by Lender."
Modification of Sections 4.7 and 6.5. Sections 4.7 and 6.5 of the Original Loan Agreement are modified as of, from and
6.
after the First Amendment Effective Date to add the following to the end thereof: "Notwithstanding the foregoing or any
provision in this Agreement, there shall be no LOC permitted while Note D and Loan D are not paid in full without any
obligation of Lender to make further advances thereunder."
Modification of Section 8.1. Section 8.1 of the Original Loan Agreement is modified as of, from and after the First
7.
Amendment Effective Date to delete "and Note C" and replace said words with "Note C, and Note D".
Modification of Section 9.3. Section 9.3 of the Original Loan Agreement is modified to delete "Reference Loan
8.
Numbers: 717610613, 717610637 and 717610638" from the Lender notice and the two related "With copy to" blocks and
replace it with "Reference Loan Numbers: 717610613, 717610637, 717610638 and 717610647".
Article III Representations and Warranties. Borrower hereby remakes the representations of Borrower in the Original
9.
Loan Agreement as of the First Amendment Effective Date.
No Novation. This is not a novation or new obligation to pay money and the Loans A, B and C Loan Documents, and
10.
all their terms, covenants, conditions, agreements and stipulations shall remain in full force and effect, except as herein modified
and supplemented.
No Impairment. Nothing herein contained invalidates or impairs or shall invalidate any or impair security now held by
11.
Lender for said debt, nor impair nor release any covenants, conditions, agreements, or stipulations in said Loans A, B and C
Loan Documents, and the same, except as herein modified shall continue in full force and effect and Borrower, and each of them,
jointly and severally further covenant and agree to perform, comply with and abide by each and every of the covenants,
agreements, conditions and stipulations of the said Loans A, B and C Loan Documents as modified herein.
Release of Defenses, Counterclaims and Offsets. Borrower and each of them hereby agree and confirm that, as of the
12.
date hereof, neither (i) Loans A, B and C and Loan D, (ii) the Loans A, B and C Loan Documents and the Loan D Loan
Documents, (iii) the servicing of Loans A, B and C and Loan D nor (iv) this transaction, is subject to any defenses, set-offs or
counterclaims whatsoever, and, any existing, are hereby waived.
13.
Florida (without reference to conflicts or choice of law principles).
Governing Law. This First Amendment shall be governed by and construed in accordance with the laws of the State of
14.
inure to the benefit of the parties hereto and their respective successors, heirs, assigns, and legal representatives.
Successors and Assigns Joint and Several Liability. The prov1s1ons of this First Amendment shall be binding upon and
Attorney's Fees. The prevailing party in any litigation brought to enforce the provisions of this First Amendment shall
15.
be entitled to recover from the other party its reasonable costs and expenses, including attorneys' fees, whether at trial or on
appeal, in mediation, bankruptcy, insolvency proceedings or other proceedings.
Counterparts. This First Amendment may be executed in any number of counterparts, all of which taken together shall
16.
constitute one and the same instrument and any of the parties hereto may execute this First Amendment by signing any such
counterpart.
JURY TRIAL WAIVER. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
17.
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY NOTE D, THE ORIGINAL LOAN AGREEMENT, THIS FIRST AMENDMENT, THE OTHER LOAN
DOCUMENTS, OR ANY ACTS OR OMISSIONS OF LENDER IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, each of the parties hereto has caused this First Amendment to be executed, sealed and
delivered, as applicable, by their duly authorized officers as of the First Amendment Effective Date first set forth above.
[SIGNATURE AND NOTARY BLOCKS FOLLOW]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
"LENDER"
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Florida
limited liability company
By: /s/ Robert E. Lassites III
(Signed Name)
Its: Robert E. Lassites III, Vice President
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, as the Chief Executive Officer of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and
acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF ORANGE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Robert E.
Lassites III, the Vice President of PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, Delaware limited liability
company, and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 22nd day of March, 2013.
/s/ Diane M. Barnett
Signature of Notary Public)
Diane M. Barnett
(Printed Name of Notary Public)
My commission expires: 03/08/16
FUTURE ADVANCE PROMISSORY NOTED (Adjustable Rate)
U.S. $6,000,000.00 March 26, 2013
FOR VALUE RECEIVED, the undersigned, 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734
LMC GROVES, LLC, a Florida limited liability company, 734 CO-OP GROVES, LLC, a Florida limited liability company,
734 BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited liability company,
being collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said
four limited liability companies both separately and collectively), jointly and severally, promise to pay to the order of
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company, its successors and
assigns ("Holder") the principal sum of SIX MILLION AND NO/100 DOLLARS ($6,000,000.00),or whatever lesser sum may
be outstanding, including any advances which may hereafter be made hereunder from time to time prior to maturity, together
with interest thereon, from date of disbursement until the Maturity Date, at the initial interest rate of three and three hundredths
(3.03%) percent per annum, which initial interest rate is subject to adjustment as provided below (as used herein, the term "Note
Rate" means said contract rate of interest as so adjusted from time to time in the manner provided herein). This Future Advance
Promissory Note D ("Promissory Note"), is a future advance under Section 1.03 of the Original Instrument, as hereinafter
defined, and is a revolving line of credit loan (the "Loan D"). The outstanding principal balance of such revolving loan may, from
time to time, increase and decrease and may be repaid and re• borrowed as provided in this Promissory Note, but shall never, at
any one time, exceed the sum of Six Million and No/100 Dollars ($6,000,000.00). Borrower's right to re-borrow expires the
earlier of an Event of Default under any of the Loan Documents and the Maturity Date, unless there is a renewal of this
Promissory Note, with Holder having no obligation to renew the same . Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Instrument, as defined herein.
The principal and interest of this Promissory Note are to be paid as follows:
(i) semi-annual payments of accrued interest only o n the principal balance remaining outstanding, from time to time,
beginning on the first (l ") day of June, 2013 and continuing on the first (I") day of each December and June thereafter
[subject to interest rate adjustments resulting from change(s) in the interest rate for this Promissory Note, as described
below]; and
(ii) the entire then remaining outstanding balance of all principal and accrued interest thereon shall be due and payable, in
full, on the first (I") day of July, 2018 (the "Maturity Date").
The Note Rate shall be adjusted quarterly commencing June 1 , 2013 a n d continuing on the first (I" ) d a y of each
September, December, March and June thereafter (each, a "Interest Rate Change Date"), by adding a margin of two hundred
seventy-five basis points (2.75%) (said percentage, as changed in the manner provided herein, is referred to as the "Margin') to
the Index, as defined herein. The index (the "Index") is the Three Month London Interbank Offered Rate ("Three Month Libor
Rate") as the Three Month London Interbank Offered Rate is reported on the tenth (10th) day of the month preceding each
Interest Rate Change Date by The Wall Street Journal in its daily listing of money rates and rounding the resulting rate to the
next higher one-hundredth (e.g., a 3.05 Three Month Libor Rate plus the Margin of 275 basis points [3.05 + 2.75 =3.013] to be
rounded up to an effective adjusted Note Rate of 3.02%). If a Three Month Libor Rate is not reported on the tenth (10th)day of
the month preceding the Initial Interest Rate Determination Date or quarterly Interest Rate Change Date, the Three Month Libor
Rate reported on the first (1st) Business Day preceding the tenth (10th) day of the month will be used. If this Index is no longer
available, Holder will seek a new Index, which is based upon comparable information.
For the term of this Promissory Note, there will be an Unused Fee payable on each annual anniversary of the date of this
Promissory Note within twenty (20) days of the invoicing thereof by the Holder to Borrower. The Unused Fee shall be
calculated by Holder on each such annual anniversary date of this Promissory Note by multiplying ten hundredths percent
(0.10%)
by the difference between (i) $6,000,000.00 and (ii) the average daily unpaid principal balance of the Loan (calculated by adding
the unpaid daily principal balance of the Loan for each day during the preceding annual period and dividing the sum thereof by
the number of days in said preceding annual period). By way of example assuming that on an annual anniversary date of this
Promissory Note, there are 365 days in the prior annual period and on 182 of those days the unpaid principal balance of the Loan
is $4,000,000.00 and on 183 of those days the unpaid principal balance of the Loan is $3,500,000.00. The average daily unpaid
principal balance of the Loan for said prior annual period would be $3,749,315.07 (182 days times $4,000,000.00 plus 183 days
times $3,500,000.00 divided by 365 days) and the difference between $6,000,000.00 and the said $3,749,315.07 average daily
unpaid principal balance would be $2,250,684.93 with the Unused Fee for said period being $2,250.68 ($2,250,684.93 times
0.10%).
Unless otherwise provided by law, all payments made by Borrower will be applied first to any costs and expenses
incurred by Holder in enforcing or collecting this Promissory Note, including reasonable attorney fees, and then to any advances
and expenditures made by Holder to protect its interests under this Promissory Note, the Instrument or any other document given
to secure Borrower's payment of this indebtedness. Any remaining amounts will then be applied to interest due with the balance,
if any, to be applied on account of principal.
Interest under this Promissory Note shall be computed on the basis of a 360-day year for the actual number of days in
the applicable period.
Post closing advances a n d paydowns under t h i s Promissory N o t e shall b e in accordance w i t h the following
requirements: (i) all advances and paydowns shall be completed via wire transfer with Borrower to provide Holder written wire
transfer instructions before any such advance and with Holder to provide Borrower written wire transfer instructions before any
such paydown; (ii) there shall be no more than two (2) advances i n any calendar month commencing from the date of this
instrument except that Borrower may request up to four (4) additional advances per each calendar year commencing with the
date of this Promissory Note; (iii) the minimum advance and principal paydown amount shall be $250,000.00; (iv) advances
after the date of Promissory Note shall be for operating needs of the Borrower; (v) advances after the date of this Promissory
Note shall require a written request by Borrower to Holder to be received by Holder at least two (2) Business Days before the
date of the requested advance; (vi) there shall b e a n unlimited number o f principal paydowns provided Borrower furnishes
Holder written notice thereof received by Holder at least two (2) Business Days before the date of the subject principal paydown
and (vii) there be no default under the Loan Documents at the time of each advance which has not been cured by Borrower; and
upon the occurrence of an Event of Default, Holder may terminate Borrower's right t o future advances under this Promissory
Note by written notice to Borrower.
All payments under this Promissory Note shall be made, without offset or deduction, (a) in lawful money of the
United States of America at the office of Holder or at such other place (and in the manner) Holder may specify by written notice
to Borrower, (b) in immediately available federal funds by federal wire transfer, and (c) if received by Holder prior to 2 P.M.
local time in the place so designated by Holder for payments under this Promissory Note, shall be credited on that day, or, if
received by Holder on or after 2 P .M. local time in the place so designated by Holder for payments under this Promissory Note,
shall, at Holder's option, be credited on the next Business Day. If any payment due date falls on a day which is not a Business
Day, then the payment due date shall be deemed to have fallen on the next succeeding Business Day . The term "Business Day"
shall mean each Monday through Friday except for days in which commercial banks are not authorized to open or are required
by law to close in the State in which the place designated by Holder for payments under this Promissory Note is located.
Both principal and interest shall be payable in lawful money of the United States of America by federal wire transfer
unless directed by Holder in writing to be otherwise forwarded to Prudential Asset Resources, Inc. Mortgage Loan Servicing,
2100 Ross Avenue, Suite 2500, Dallas, Texas 75201 or such other p lace as the Holder hereof may, from time to time, designate
in writing.
In the event that any payment of principal and/or interest due under this Promissory Note should not be fully made by
the fifth (5th) day following the due date thereof, then:
(A). A late charge of $0.05 for each ($1.00) Dollar of such payment shall automatically become due to the Holder of this
Promissory Note and be secured by the Instrument. This charge shall be in addition to all other rights and remedies
available to the Holder of this Promissory Note upon the occurrence of a default under the Promissory Note or any other
Loan Document (as hereinafter defined); and
(B). The Holder of this Promissory Note shall have the right, upon written notice to Borrower, to increase the rate of
interest per annum on the entire principal balance of this Promissory Note then outstanding, from the Note Rate to the
Default Rate (as hereinafter defined) and, upon said notice and unless Borrower shall pay to Holder the amount of such
overdue payment together with the late charge assessed thereon within three (3) Business Days of Borrower's receipt of
said notice (which receipt shall be conclusively presumed to have occurred on the third (3rd) Business Day following
the date such notice was placed in the mail with the United States Postal Service or on the date of actual delivery if
delivered personally or by private carrier/messenger service), such increase to the Default Rate shall remain in force and
effect for so long as such default shall continue or the Holder otherwise agrees. The Default Rate shall also apply to any
judgment obtained with respect to the Obligations and/or any Loan Document from the date such judgment becomes due
and owing under a final and non-appealable order until the amount of such judgment is paid in full.
As used herein, the term "Default Rate" is defined as the lesser of (i) the maximum rate allowed by applicable law or (ii) the per
annum rate equal to the Note Rate plus five percent (5%).
The Borrower severally waives presentment for payment, demand, notice of demand and of dishonor and nonpayment
of this Promissory Note, notice of intention to accelerate and notice of acceleration of the maturity of this Promissory Note,
protest and notice of protest, diligence in collecting and the bringing of suit against any other party and said Borrower agrees to
all
renewals, extensions, modifications, partial payments, releases or substitutions of security, in whole or in part, with or without
notice, before or after maturity, all without in any way affecting the liability of Borrower under this Promissory Note.
Should this Promissory Note be signed by more than one person and/or firm and/or corporation, all of the obligations
herein contained shall be considered joint and several obligations of each signer hereof.
This Promissory Note evidences Borrower's unconditional obligation to repay the indebtedness described herein. That
certain Mortgage and Security Agreement dated December
31, 2012 by Borrower to Holder (the "Original Instrument") executed in seven counterparts, one counterpart of which was
recorded on January 3, 2013 in Official Records Book 4872, Page 2431, in the Public Records of Collier, County, Florida, one
counterpart of which was recorded on January 3, 2013 as Instrument Number 201325000089, in the Public Records of Hardee,
County, Florida, one counterpart of which was recorded on January 4, 2013 in Official Records Book 856, Page 1833, i n the
Public Records of Hendry County, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book
2359, Page 1500, in the Public Records of Highlands, County, Florida, one counterpart of which was recorded on January 3,
2013 in Official Records Book 2622, Page 1255, in the Public Records o f Martin, Florida, o n e counterpart of which was
recorded on January 3, 2013 in Official Records Book 4375, Page 689, in the Public Records of Osceola County, Florida and
one counterpart of which was recorded on January 3, 2013 in Official Records Book 08841, Page 0130, in the Public Records of
Polk County, Florida, encumbering property located in said counties secures Notes A, Band C, as defined below, and on even
date herewith, is being modified to also secure this Promissory Note on a pari passu basis with Notes A, B and C as to Collateral
under the Original Mortgage, as so modified, such modification being by a Modification of Mortgage and Security Agreement
and Modification of Other Loan Documents between Borrower and Holder (the "2013 Modification"), executed in multiple
counterparts, one of which is to be recorded in the Public Records of Collier, Hardee, Hendry, Highlands, Martin, Osceola and
Polk Counties, Florida (said Original Instrument as modified by said 2013 Modification, is herein referred to as the
"Instrument"). Unless otherwise stated herein, this Promissory Note is to be construed according to the laws of the State of
Florida. This Promissory Note may be declared due (accelerated) at the option of the Holder hereof prior to its expressed
maturity date for an Event of Default, as defined in the Instrument, and after the expiration of applicable grace and notice
periods
therein. In the event of such acceleration, all of the then remaining principal and interest, shall become at once due and payable
without further notice, demand or presentment for payment.
It is the intent of the Holder of this Promissory Note and the Borrower in the execution of this Promissory Note, the
Loan Documents and all other instruments now or hereafter securing this Promissory Note to contract in strict compliance with
all applicable laws and, in particular, with applicable usury law. In furtherance thereof, the said Holder and the Borrower
stipulate and agree that none of the terms and provisions contained in this Promissory Note, or in any other instrument executed
in connection herewith, shall ever be construed to create a contract to pay interest at a rate in excess of the maximum interest rate
permitted to be charged by applicable law for the use, forbearance or detention of money or to pay any other amount not
permitted by law. Neither the Borrower nor any guarantors, endorsers or other parties now or hereafter becoming liable for
payment of this Promissory Note shall ever be required to pay interest on this Promissory Note at a rate in excess of the
maximum interest that may be lawfully charged or to make any other payment(s) not permitted under applicable law. The
provisions of this paragraph shall control over all other provisions of this Promissory Note and any other instruments now or
hereafter executed in connection herewith which may be in apparent conflict herewith. The Holder of this Promissory Note
expressly disavows any intention to charge any amount not permitted by law or to collect excessive, unearned interest or finance
charges under this Promissory Note, or in the event the maturity of this Promissory Note is accelerated. If the maturity of this
Promissory Note shall be accelerated, for any reason, or if the principal of this Promissory Note is paid prior to the end of the
term of this Promissory Note and, as a result thereof, the interest or any other charge received for the actual period of existence
of the loan evidenced by this Promissory Note exceeds the applicable maximum lawful rate for such interest or other charge, the
Holder of this Promissory Note shall, at its option, either refund to the Borrower the amount of such excess or credit the amount
of such excess against the principal balance of this Promissory Note then outstanding and thereby shall render inapplicable any
and all penalties of any kind provided by applicable law as a result of such excess interest or other charge. In the event that any
Holder of this Promissory Note shall collect monies which are deemed to constitute interest which would increase the effective
interest rate on this Promissory Note to a rate in excess of that permitted to be charged by applicable law, all such sums deemed
to constitute interest in excess of the lawful rate shall, upon such determination, at the option of the Holder of this Promissory
Note be either immediately returned to the Borrower or credited against the principal balance of this Promissory Note then
outstanding, in which event any and all penalties of any kind under applicable law as a result of such excess interest shall be
inapplicable. By execution of this Promissory Note the Borrower acknowledge(s) that Borrower believe(s) the loan evidenced by
this Promissory Note to be non-usurious and agrees that if, at any time, the Borrower should have reason to believe that such loan
is in fact usurious or any other charge exceeds that
permitted by applicable law, Borrower will give the Holder of this Promissory Note notice of such condition and the Borrower
agree(s) that said Holder shall have thirty (30) days in which to make appropriate refund or other adjustment in order to correct
such condition, if in fact such exists. The term "applicable law" as used in this Promissory Note shall mean the laws of the State
Florida, as such laws now exist or may be changed or amended or come into effect in the future.
Should the indebtedness represented by this Promissory Note or any part thereof be enforced or collected at law or in
equity or through any bankruptcy, receivership, probate or other court proceedings or if this Promissory Note is placed in the
hands of attorneys for collection after default, and expiration of all applicable grace and notice periods, the Borrower agrees to
pay to the Holder of this Promissory Note, in addition to the principal and interest due and payable hereon and to the full extent
permitted by law, all reasonable attorneys' fees and reasonable costs of collection. For purposes of this paragraph "costs of
collection" shall be deemed to include (by way of example and not by limitation), among other reasonable costs, all reasonable
costs incurred in securing and protecting any of the real property or personal property described in the Loan Documents and
Holder's interest therein, together with all reasonable fees and expenses charged by the attorneys engaged by Holder for
collection purposes.
Any forbearance, failure or delay by Holder in exercising any right, power or remedy provided herein or in the Loan
Documents or provided by law shall not preclude a further or subsequent exercise thereof or constitute a waiver of default by
Borrower and every such right, power or remedy of Holder shall continue in full force and effect unless such right, power and
remedy and each such default or breach by Borrower is separately and specifically waived by Holder in writing.
If any clause, term or provision of this Promissory Note or any of the Loan Documents is held to be unenforceable by a
court of competent jurisdiction, said clause, term, provision so held to be unenforceable shall be stricken and all the remaining
portions of this Promissory Note and/or the Loan Documents shall remain in full force and effect.
Borrower and all persons or entities holding any legal or beneficial interest whatsoever in Borrower or any security for
this Promissory Note are not included in, owned by, controlled by, acting for or on behalf of, providing assistance, support,
sponsorship, or services or any kind to, or otherwise associated with any of the persons or entities referred to or described in
Executive Order 13224 - Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism, as amended. It shall constitute an Event of Default hereunder and under the Instrument securing this
instrument if the foregoing representation and warranty shall ever become false.
Neither Borrower, nor any persons holding any legal or beneficial interest whatsoever in any collateral given by
Borrower to secure this Promissory Note shall, at any time during the term of the loan evidenced by this Promissory Note, be
described in, covered by or specially designated pursuant to or be affiliated with any persons described in, covered by or
specially designated pursuant to Executive Order 13224, as amended, or any similar list issued by the Office of Foreign Assets
Control ("OFAC") or any other department or agency of the United States of America. Notwithstanding the foregoing, Borrower
hereby confirm(s) that if he/she//they/it become(s) aware or receives any notice of any violation of the foregoing covenant and
agreement (an "OFAC Violation") Borrower will immediately (i) give notice to Holder of such OFAC Violation, and (ii)
comply with all Laws applicable to such OFAC Violation, including, without limitation , Executive Order 13224; the
International Emergency Economic Powers Act 50 U.S.C. Sections 1701-06; the Iraqi Sanctions Act, Pub. L. 101-513,104 Stat.
2047-55; the United Nations Participation Act, 2 2 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty Act,
(enacting 8 U.S.C. Section 219, 1 8 U.S.C. Section 2332d, and 1 8 U.S.C. Section 2339b); the International Security and
Development Cooperation Act, 22 U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the
Terrorism List Governments Sanctions Regulations, 31. C.F.R Part 596; and the Foreign Terrorist Organizations Sanctions
Regulations, 3 1 C.F.R. Part 597 (collectively, the "Anti-Terrorism Regulations") and Borrower hereby authorize(s) and
consent(s) to Holder's taking any and all reasonable steps Holder deems necessary, in its sole discretion, to comply with all Laws
applicable to any such OFAC Violation, including the requirements of the Anti• Terrorism Regulations. Notwithstanding
anything to the contrary in this Section, Borrower shall not be deemed to be in violation of the covenants and agreements set
forth in the first sentence of this Section if Borrower timely comply(ies) with all
requirements imposed by the foregoing sentence and all requirements of the Anti-Terrorism Regulations and all other applicable
Laws relating to such OFAC Violation.
Borrower acknowledge(s),represent(s) and warrant(s) to Holder that:
(a) the primary purpose for the within loan is business and investment (and not for personal, family or household
purposes); and
(b) none of the proceeds to be distributed under this Promissory Note will be used to acquire (or refinance the
acquisition price of) real property or personal property which was or is to be used as a primary residence of
Borrower or any other party to any of the Loan Documents.
Without limiting the right of Holder to bring any action or proceeding against the undersigned or its property arising out
of or relating to the Obligations, as defined in the Instrument, (an "Action") in the courts of other jurisdictions to the extent
necessary to satisfy jurisdiction and venue requirements as to Borrower (the "Jurisdiction and Venue Exception") , Holder and
Borrower hereby irrevocably submit to the jurisdiction of any state court in Florida having jurisdiction over any cause of action
set forth in the Action for any county in which any part of the Premises is located even if located in more than one county and
regardless of whether such counties are contiguous or in any United States District Court for the district including any said
counties where the Premises are located. Further, subject to the Jurisdiction and Venue Exception, Holder and Borrower hereby
irrevocably agree that any Action may be heard and determined in any of such state court or in any such federal district court as
the sole and exclusive courts and venue for any such Action. Holder, subject to the Jurisdiction and Venue Exception, and
Borrower hereby irrevocably waive, to the fullest extent that it may effectively do so, the defense of an inconvenient forum to
the maintenance of any Action in such jurisdiction. Holder, subject to the Jurisdiction and Venue Exception, and Borrower
hereby irrevocably agree that the summons and complaint or any other process in any Action in any jurisdiction may be served
in any manner authorized by applicable law. Such service will be complete as provided under applicable law and the time to
respond shall be governed by applicable law.
WAIVER OF JURY TRIAL. THE BORROWER, HOLDER AND ALL ENDORSERS, GUARANTORS AND
SURETIES, T O THE FULL EXTENT PERMITTED BY LAW, DO HEREBY WAIVE AND COVENANT THAT
EACH WILL NOT ASSERT, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, ANY RIGHT TO TRIAL
BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING O U T OF OR BASED UPON THIS PROMISSORY NOTE, T H E SUBJECT MATTER HEREOF, THE
OTHER NOTES, THE INSTRUMENT O R ANY LOAN DOCUMENT(S) O R OTHER INSTRUMENT RELATING
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE.
[SIGNATURE BLOCKS ON SUBSEQUENT PAGES]
IN WITNESS WHEREOF, this Promissory Note has been executed as of the date first set forth above.
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
Florida documentary stamp tax
in the amount of$119,000 calculated on
the $34,000,000.00 total of the Other Loans were paid on the counterpart of the Original Instrument recorded January 3, 2012,
in Official Records Book 4375, Page 689, Public Records of Osceola County Florida and Florida documentary stamp tax
in the amount of $21,000.00 calculated
on the $6,000,000.00 face amount of this Promissory
Note is being paid on the counterpart of the
2013 Modification, being recorded in the Public Records of Osceola County, Florida around the date of this Promissory Note.
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as the Chief Executive Officer of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and
acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manger of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manger of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manger of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 21st day of March, 2013.
/s/ Katherine Lake
Signature of Notary Public)
Katherine Lake
(Printed Name of Notary Public)
My commission expires: 11/30/13
[NOTARY SEAL]
Loan Numbers:
717610897
717610898
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement") is made and entered into as of the 4th day of September, 2014 (the
"Effective Date"), by and among 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC GROVES,
LLC, a Florida limited liability company, 7 3 4 CO-OP GROVES, LLC, a Florida limited liability company, 734 BLP
GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited liability company, being
collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said four
limited liability companies both separately and collectively), jointly and severally, all having an office and place of business at
1 8 1 Highway 6 3 0 East, Frostproof, Florida 33843 a n d PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a
Delaware limited liability company, having an office and place of business at 801 Warrenville Road, Suite 150, Lisle, Illinois
60532-1357 (referred to herein as the "Lender).
WITNESSETH:
WHEREAS, Borrower, on even date herewith, has executed (a) Promissory Note E to Lender in the amount o f Five
Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00) in lawful money of the United States of America ("Note E"
and the loan evidenced thereby known as Loan 717610897 being referred to as "Loan E") and (b) Promissory Note F to Lender
in the amount of Five Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00) in lawful money of the United States
of America ( "Note F" and the loan evidenced thereby known as Loan 717610898 being referred to as "Loan F" and Note E and
Note F are collectively referred to as the "Note" and Loan E and Loan F are collectively referred to as the "Loan");
WHEREAS, on even date herewith, the Borrower has executed that certain Mortgage and Security Agreement (the
"Security Instrument") encumbering the Premises, as defined herein, and other collateral described therein, in favor of Lender, to
secure the Note to be recorded on or about the date hereof in the Public Records of Charlotte County, Florida;
WHEREAS, on even date herewith, the Borrower has executed that certain Assignment of Leases and Rents (the
"Assignment of Leases and Rents") in seven counterparts assigning to Lender certain leases and rents described therein to secure
the Note and which Assignment of Leases and Rents is to be recorded on or about the date hereof in the in the Public Records of
Charlotte County, Florida; and
WHEREAS, the parties desire to set forth certain agreements as to the Loan.
IN CONSIDERATION OF the foregoing facts and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and of the mutual covenants and agreements contained in this Loan Agreement, the Borrower and the
Lender agree as follows:
ARTICLE I DEFINITIONS
Section 1.1 Definitions. For the purpose of this Agreement, the following terms shall have the respective meanings
specified in this Section 1.1 which apply to both the singular and plural forms of such terms:
"Account" shall mean account as defined in the UCC.
"Affiliate" shall mean any Person directly or indirectly controlling, controlled by, or under direct or indirect common
control with any Person. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise,
"Agreement" shall mean this agreement as originally executed by the patties hereto and all permitted amendments,
supplements and modifications hereof, including all exhibits and schedules.
"Business Day" shall mean each Monday through Friday except for days in which commercial banks are not authorized
to open or are required by law to close in the State in which the place designated by Lender for payments under the Note is
located.
"Collateral" shall mean the Premises and all other property encumbered by the Security
Instrument and other Loan Documents and the products and proceeds thereof.
"Costs" shall mean all costs, expenses, losses and damages sustained or incurred by the Lender because of or as a result
of any default or any one or more Events of Default of the Borrower under this Agreement, the Loan Documents or any of them,
or in realizing upon, protecting, perfecting, defending or enforcing, or any combination thereof, the rights and remedies of the
Lender under this Agreement, the Loan Documents, or any of them, including, without limitation, all attorney's fees and costs,
including paralegal fees in all legal proceedings, including administrative, trial, appellate, probate, bankruptcy or any other legal
or administrative proceeding, regardless of whether suit is brought, all environmental consultants and engineers fees and costs
and all appraisers fees and costs.
"Crops" shall mean all growing crops and future crops now growing or hereafter grown on the Premises o r any part
thereof whether Fructus Naturales o r Fructus Industriales ("Emblements") including, but not b y way o f limitation, all citrus
crops, row crops and vegetables, whether mature or immature and whether now owned or now planted and now
growing on the Premises or any part thereof or hereafter acquired or planted and grown on the
Premises or any part thereof and all by-products thereof
"Debt" shall mean debt as determined and calculated under GAAP.
"Default Rate" shall mean the interest rate specified in the Note E as the Default Rate as to monetary sums due
thereunder, the interest rate specified in Note F as the Default Rate as to monetary sums due thereunder and as to other sums due
under the other Loan Documents, the higher of the Default Rate under Note E and Note F.
"Due Date" shall mean the date any payment of principal or interest is due and payable on the Note.
"Effective Date" the date of this Agreement first set forth above. "Equipment" shall mean equipment as defined in the
Security Instrument.
"Event of Default" shall mean an event of default specified in this Agreement or any other Loan Document.
"Farm Products" shall mean farm products as defined in the UCC whether now owned or hereafter acquired including
but not by way of limitation, Crops.
"Financing Statements" shall mean any financing statement or statements recorded and/or filed for the purpose of
perfecting the Security Interest in the Collateral or any portion thereof, under the UCC or any other state law.
"Fiscal Year" shall mean the fiscal year of the Borrower ending on June 30 in each calendar year. Subsequent changes of
the Fiscal Year shall not change the term, "Fiscal Year" as used herein, unless the Lender shall consent in writing to such
changes.
"Fixtures" shall mean Goods determined to be fixtures under the laws of Florida as to
Goods located on Real Property located in Florida.
"GAAP" shall mean generally accepted accounting principles consistently applied to the particular item.
"Goods" shall mean goods under the UCC other than Equipment not within the definition of Equipment in the Security
Instrument.
"Intercreditor Agreement" shall mean any Intercreditor Agreement or Intercreditor
Agreements between Lender and the LOC Lender now or hereafter entered into.
"Interest Rate" shall mean the interest rate specified in the Note applicable when referring to said term.
"Inventory" means inventory as defined in the UCC.
"Loan" shall have the meaning ascribed thereto in the Recitals herein.
"Loan Application" shall mean Borrower's Loan Application to Lender for Loan
717610897 and Loan 717610898.
"Loan Commitment" shall mean the Lender's commitment t o make the Loan t o the Borrower pursuant to the Loan
Application and the Borrower's acceptance thereof on terms and conditions set forth in the letter from the Lender to the Borrower
as to such commitment and acceptance.
"Loan Documents" shall have the meaning ascribed thereto in Section 2.3 herein.
"LOC'' shall mean a short term loan or loans to Borrower from any LOC Lender for working capital purposes.
"LOC Lender" the lender or lenders which provide the LOC. "Note" shall mean the Note described in the Recitals herein.
"Obligations" with respect to Borrower, shall mean, individually and collectively, all payment and performance duties,
obligations and liabilities o f the Borrower t o the Lender, however and whenever incurred, acquired or evidenced, whether
primary or secondary, direct or indirect, absolute o r contingent, sole or joint and several, due o r t o become due, including,
without limitation, all Costs and all such duties, obligations and liabilities of the Borrower to the Lender, under and pursuant to
the Loan Documents and all renewals, replacements, modifications, extensions, increases and amendments of any thereof.
"Permitted Liens" shall mean: (i) liens imposed by law for taxes, assessments or charges or levies of any governmental
authority not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP; (ii) statutory liens o f suppliers carriers, warehousemen, mechanics,
materialmen and similar Liens arising by operation of law in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP; (iii) pledges, liens and deposits made in the ordinary course of business in compliance with workers'
compensation, unemployment insurance a n d other social security laws o r regulations; (iv) deposits or liens to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of business; (v) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or materially interfere with the ordinary conduct of business of the Borrower; (vi) extensions, renewals or
replacements of any lien referred to in paragraphs (i) through (v) above, provided that the principal amount of the obligation
secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally
encumbered thereby; (vii) statutory liens on deposit accounts maintained with, or other property in the custody of, a depositary
bank pursuant to its general business terms and in the ordinary course of business, provided that such Liens do not secure any
Debt; (viii) liens that are contractual rights of set-off relating t o purchase orders a n d other agreements entered into with
customers of Borrower in the ordinary course of business; and (ix) liens arising out of conditional sale, title retention,
consignment or similar arrangements for sale of goods entered into by the Borrower in the ordinary course of business or liens
arising by operation of law under Article 2 of the UCC in favor of a reclaiming seller of goods or buyer of goods.
"Person" shall mean any individual, joint venture, partnership, film, corporation, trust, unincorporated organization or
other organizational entity, or a governmental body or any department or agency thereof, and shall include both the singular and
the plural.
"Place of Business" shall mean those places of business in which the Borrower undertakes its business and shall include
the Principal Place of Business.
"Premises" shall have the meaning ascribed thereto in the Security Instrument.
"Principal Place of Business" shall mean the principal place of business and the headquarters of the Borrower at which
place all of Borrower's records are kept and which is currently located at 181 Highway 630 East, Frostproof, Florida 33843.
"Proceeds" shall mean proceeds as defined in the UCC.
"Real Property" shall mean those parcels of land described in Exhibit "A" attached hereto located in Charlotte County,
Florida, and all leasehold interests therein, all improvements and Fixtures located thereon or attached thereto and all easements,
tenements, hereditaments, appurtenances, profits, rents, insurance and condemnation proceeds paid in connection therewith, and
all Accounts, Chattel Paper and General Intangibles pertaining to, connected with or arising out of the foregoing.
"Security Instrument" Shall mean that certain Security Instrument as defined in the
Recitals.
"Security Interest" shall mean the security interest granted in the Collateral to the Lender pursuant to the Security
Instrument and other Loan Documents.
"Subsidiary" or "Subsidiaries" means, as to any particular parent corporation or parent organization, a n y other
corporation or organization more than fifty percent (50%) of the outstanding Voting Stock of which is at the time directly or
indirectly owned by such parent corporation o r organization o r b y a n y o n e o r more other entities which themselves are
subsidiaries of such parent corporation or organization. Unless otherwise expressly noted herein,
the term "Subsidiary" means a Subsidiary of the Borrower or of any of its direct or indirect Subsidiaries.
"Voting Stock" of any Person means capital stock or other equity interests of any class or classes (however designated)
having ordinary power for the election of directors or other similar governing body of such Person, other than stock or equity
interests having such power only by reason of the happening of a contingency.
"UCC" shall mean the Uniform Commercial Code as adopted in the State of Florida.
Section 1.2 Other Definitional Provisions. All of the terms defined in this Agreement shall have such defined meanings
when used in other Loan Documents unless the context shall
otherwise require. Capitalized terms used herein, but not herein defined, shall have the meanings ascribed thereto in the other
Loan Documents. All terms defined or used in this Agreement in the singular shall have comparable meanings when used in the
plural, and vice versa. The words "hereby", "hereto", "hereof", "herein", "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any particular provision of the this Agreement. The use of the
words "to", "until", "on", and words of similar import in this Agreement, in indicating expiration, shall be interpreted to include
the date mentioned. The neuter genders a r e used herein a n d whenever used if the context s o indicates, shall include the
masculine, feminine and neuter as well. Whenever in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the heirs, devisees, personal representatives, successors and assigns of such party unless the context shall
expressly provide otherwise.
ARTICLE II THE LOAN
Section 2.1 Loan. The Loan consists of Loan E and Loan F as defined in the Recitals to this Agreement and is being
made under the provisions of Note E and Note F, this Agreement and the other Loan Documents.
Section 2.2 Loan Proceeds Use. The proceeds of the Loan are being used to acquire the TRB Groves in Charlotte
County, Florida and Borrower will use all the funds in the 1031 trust account from the sale o f the Chancey B a y released
collateral from Loans 717610613,
717610637 and 717610647 to so acquire the TRB Groves.
Section 2.3 Security Instrument. The Loan is secured by the Security Instrument, the Assignment of Leases and Rents
and other loan documents by Borrower to Lender or between Borrower and Lender pertaining to the Loan (collectively, the
"Loan Documents").
Section 2.4 Partial Release and Substitution of Collateral.
Borrower shall, from time t o time, b e entitled t o make a written request (the "Partial Release a n d Substitution of
Collateral Request") to Lender for a partial release of real estate Collateral and substitution of Collateral for that to be released on
the following terms and conditions, which if met, Lender shall approve and Borrower and Lender shall, proceed, with reasonable
diligence, to implement, such terms and conditions being as follows:
(a) the Partial Release and Substitution Request shall provide (i) a legal description of the real estate Collateral t o be
released, (ii) a legal description of the real estate Collateral to be substituted; (iii) a detailed description of any other Collateral to
b e substituted; (iv) any information Borrower has with respect t o the fair market value o f the Collateral t o b e released and
substituted; and (v) the business reason for the partial release and substitution which must be a sound business reason.
(b) the amount of real estate Collateral proposed to be substituted for the partial release Collateral shall not exceed thirty
five percent (35%) of the total gross acres of real estate Collateral at the time of the Partial Release and Substitution of Collateral
Request.
(c) the Collateral t o b e substituted must b e Florida agricultural property acceptable to Lender with a market value
equivalent to the real estate Collateral being released.
( d) the partial release and substitution o f Collateral must not materially impact Borrower's repayment capacity nor
Borrower's operations (including, but not b y w a y of limitation practical , legal a n d cost efficient access t o t h e remaining
Collateral and the availability of utility services, drainage, and irrigation to the Collateral over the Collateral remaining after the
partial release and substitution of Collateral over such remaining Collateral or easement rights appurtenant thereto sufficient to
adequately service such remaining Collateral in a cost efficient manner).
(e) Borrower will provide Lender the following documentation which needs t o be satisfactory to Lender (i) a title
commitment for a loan title insurance policy in the amount of the then principal balance of the Note agreeing to insure as a first
priority lien on the new real estate Collateral together with copies o f all documents referenced therein subject only t o such
exceptions and matters as Lender shall approve and (ii) all due diligence items and documentation pertaining t o the new real
estate Collateral typically required b y Lender in real estate mortgage loan transactions such as real estate t a x information,
appraisals, environmental questionnaires, irrigation and drainage reports, plats, personal property inventory, zoning evidence,
liability and other insurance, tree and crop insurance, permits, contracts, UCC searches and other documentation.
(f) to accommodate the Borrower in identifying acceptable substitute real estate collateral, proceeds from said sale of the
partially released real estate Collateral may be deposited into a Pledge Account as substitute collateral. The Pledge Account shall
be in cash, cash equivalents and marketable financial securities that are listed for sale on a public securities exchange at readily
identifiable prices including without limitation, stocks, bonds, mutual funds, and treasuries acceptable to Lender. Use of the
Pledge Account as substitute Collateral shall not exceed twelve (12) months and the value of the pledged Collateral in the Pledge
Account shall
not exceed fifty percent (50%) of the value of the total Collateral. Borrower shall provide a perfected first lien security interest in
the Pledge Account and there shall be a Pledge Agreement, Account Control Agreement a n d other related documents all
satisfactory to Lender together with the financial intermediary.
(g) the Loan Documents shall be modified to provide Lender with a first mortgage lien and security interest on the new
real estate Collateral to secure the Loan.
(h) Borrower shall at the time of presenting the Partial Release and Substitution Request to Lender, pay Lender a non-
refundable servicing fee not to exceed Five Thousand and No/100 Dollars ($5,000) for evaluating and processing the request.
Borrower shall also pay the legal fees of Lender's outside counsel in connection with the foregoing and all expenses of the
transaction including but not by way of limitation any documentary stamp taxes, intangibles taxes, title insurance premiums, title
insurance company search charges, and recording and filing fees incident thereto.
Section 2.5 Prepayments. Prepayments of the Loan, shall be subject to the Prepayment Premium provisions set forth in
the applicable Note.
Section 2.6 Cross-Default/Cross Collateralization o n a Pari Passu Basis. Capitalized terms used in this Section not
defined in this Agreement shall have the meanings ascribed thereto in the Security Instrument. A default under (i) any of Note A,
Note B, Note D, Note E, or Note F, after the expiration of any applicable grace and notice periods, shall be a default under each
and every one of said notes and (ii) a default under any of the Loan A, B and D Existing Loan Documents, as modified by the
2014 Modification or the Second Amendment to Loan Agreement, or under any of the Loan Documents, after the expiration of
any applicable grace and notice periods, shall be a default under each and every one of said documents. The lien and security
interests of the 2013 Original Security Instrument, as modified by the 2014 Modification, the 2013 Assignment of Leases and
Rents, as modified by the 2014 Modification, or under the other security documents pertaining to the Loan A, B and D Existing
Loan Documents, as modified by the 2014 Modification and by the Second Amendment to Loan Agreement and the Collateral
encumbered thereby, shall also secure the obligations of Borrower under Note E, Note F and the other Loan Documents on a pari
passu basis. The lien and security interests o f the Security Instrument, the Assignment o f Leases and Rents, the other Loan
Documents and the Collateral encumbered thereby, shall also secure the obligations of Borrower under Note A, Note B, Note D
and the other Loan A, B and D Existing Loan Documents as modified by the 2014 Modification and by the Second Amendment
to Loan Agreement on a pari.passu basis. "A pari passu basis", as used herein, shall mean that such liens and security interests
shall be apportioned among Loan A, Loan B, Loan D, Loan E and Loan F by using a percentage for each of Loan A, Loan B,
Loan D, Loan E and Loan F calculated by dividing (x) the sum owing under the subject loan by (y) the total of all sums owing
under all of said loans together, as such sums change from time to time. No present and/or future holder of such loans shall be
entitled to make any future advances or modifications to any of such loans except with the advance written consent o f all the
holders of all of said loans at the time thereof. Each holder of such loans shall, at the request of the other, from time t o time,
execute record and file such
documents reasonably necessary to carry out the foregoing provisions and/or to perfect such lien and security interests on the
foregoing basis.
ARTICLE III REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender (which representations and warranties shall survive the execution
and delivery of the Loan Documents) that:
Section 3.1 Authority. Each of the entities included in the definition of "Borrower" (i) is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of Florida, (ii) has all requisite power and authority
to own its properties and assets and to carry on its business as now conducted and proposed to be conducted, (iii) is duly
qualified to do business and is in good standing in every jurisdiction in which its properties or assets are owned or the nature of
its activities conducted makes such qualification necessary, and (iv) has the power and authority to execute and deliver, and to
perform its obligations under the Loan Documents.
Section 3.2 Authorization of Loan for the Borrower The execution, delivery and performance of the Loan Documents by
each of the entities constituting Borrower (a) have been duly authorized by all requisite action and (b) will not (i) violate (x) any
provision of law, any governmental rule or regulation, any order, writ, judgment, decree, determination or award of any court,
arbitrator o r other agency o f government, ( y ) t h e Articles o f Organization and operating agreement o r other governance
documents of Borrower or (z) any provision of any indenture, agreement or other instrument to which Borrower is a party or by
which Borrower or its properties or assets are bound, (ii) be in conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture, agreement or other instrument, or (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of Borrower other
than as permitted by the terms hereof.
Section 3 .3 Binding Effect. This Agreement, the Note, the Security Instrument and the other Loan Documents when
delivered hereunder will be legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, except (a) as enforceability may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors rights, and (b) as enforceability may be limited or qualified
by general principles of equity, whether raised in a proceeding at law or equity.
Section 3.4 Agreements.
(1) Borrower is not a party to any agreement, indenture, lease or instrument or subject to any charter or other
limited liability company governance document restriction, or any judgment, order, writ, injunction, decree, rule or regulation
materially and adversely affecting its business, properties, assets, operations or condition (financial or otherwise). There are no
unrealized losses with respect to any such agreement, indenture, lease or instrument.
(2) Borrower is not a patty to, or otherwise subject to any provision contained in, any instrument evidencing
indebtedness of Borrower, any agreement relating thereto or
any other contract or agreement which restricts or otherwise limits the incurring of the indebtedness to be evidenced by the Note.
(3) Borrower is not in default in the performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any material agreement or instrument to which it is a party.
(4) Borrower enjoys lawful, peaceful and undisturbed possession i n all material respects t o all licenses, trade
names, trade marks, services marks and patents used or whose use is contemplated in the operation of its business.
Section 3.5 Litigation, etc. There are no undisclosed actions, proceedings or investigations pending or, to the knowledge
of the Borrower, threatened, against the Borrower, , (or any basis therefor known to the Borrower) which, either in any case or in
the aggregate, might result in any material adverse change in the financial condition, business, prospects, affairs or operations of
the B01TOwer or its properties or assets, or in any material impairment of the right or ability of the Borrower t o carry o n its
operations as now conducted or proposed to be conducted, or in any material liability on the part of the B01TOwer and none
which questions the validity of this Agreement, the Note or any of the other Loan Documents or of any action taken or to be
taken in connection with the transactions contemplated hereby or thereby.
Section 3.6 Violation of Judicial or Governmental Orders, Laws, Ordinances or Regulations. The Borrower knows of no
violation and has no notice of a violation of any court order or of any law, regulation, ordinance, rule, order, code, or requirement
of any governmental authority having jurisdiction over the Borrower that may detrimentally affect the business and operations of
the Borrower,
Section 3.7 No Outstanding Debt. Borrower has no outstanding Debt, except for the Loan, any liabilities disclosed to
Lender in writing before the Effective Date and other obligations in the nature of trade payables incurred b y Borrower (or its
predecessor) in their ordinary course of business.
Section 3.8 Priority of Liens and Security Interest. The Security Interest and liens granted to the Lender in the Collateral
shall be and are a perfected first priority Security Interest in the Collateral except for liens expressly permitted or provided in this
Loan Agreement, and there are not and will be no other security interests or other liens other than the Permitted Liens upon the
Collateral during the term of the Loan without the prior written consent of the Lender.
Section 3.9 Solvency. After giving effect t o t h e funding o f t h e Loan, t h e application of t h e proceeds thereof as
contemplated by this Agreement and the Loan Documents, and the payment of all estimated Lender, legal, accounting and
other fees related thereto, Borrower is solvent.
Section 3.10 Executive Offices and Location of Records. The Borrower's Principal Place of Business is located at 181
Highway 630 East, Frostproof, Florida 33843 and all of its books and records are and shall be maintained there.
Section 3.11 Regulatory Compliance. The Borrower has in the past complied with and is presently complying i n all
material respects with all laws applicable to the Borrower's business.
Section 3.12 Intentionally Omitted.
Section 3.13 Fair Labor Standards Act. T h e Borrower h a s complied with, a n d will continue t o comply with, the
provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. Section 200, et seq., as amended from time to time (the "FLSA"),
including specifically, but without limitation, 2 9 U.S.C. Section 215(a). T h i s representation a n d warranty, a n d each
reconfirmation hereof, shall constitute written assurance from the Borrower, given as of the date hereof and as of the date of each
reconfirmation, that the Borrower has complied with the requirements of the FLSA, in general, and 29 U .S.C. Section 215( a)(l)
thereat: in particular.
Section 3 .14 Intentionally Omitted.
Section 3.15 Usury. The Borrower believes that the amounts to be received by the Lender which are or which may be
deemed to be interest under any of the Loan Documents or otherwise in connection with t h e transactions described herein
constitute lawful interest and are not usurious or illegal under the laws of the State of Florida, and no aspect of the transaction
contemplated by this Agreement is intended to be usurious.
Section 3 .16 Borrower Setoffs. The Borrower does not, as of the date hereof, have any defenses, counterclaims, or
setoffs with respect to any sums to be advanced under this Loan Agreement.
Section 3.17 Disclosure and No Representation. Warranty or Document Untrue. No representation or warranty made by
the Borrower contained herein, the Loan Documents, or in any certificate or other document furnished or to be furnished by the
Borrower pursuant hereto, or which will be made by the Borrower from time to time in connection with the Loan Documents (a)
contains or will contain any misrepresentation or untrue statement of fact, or (b) omits or will omit t o state any material fact
necessary to make the statements therein not misleading, unless otherwise disclosed in writing to the Lender. There i s n o fact
known to the Borrower which adversely affects, or which might in the future adversely affect, the business, assets, properties or
condition, financial or otherwise, of the Borrower, or the Collateral, except as set forth or reflected in the Loan Documents or
otherwise disclosed in writing to the Lender.
Section 3.18 Continuation. The Borrower's warranties and representations contained in this Agreement are and shall
remain correct and complete until the Loan is paid in full. All representations, warranties, covenants and agreements made to or
with the Lender by or on behalf of, or at the request of the Borrower in connection with this Agreement may be relied upon by the
Lender.
Section 3.19 Real Property. There is legal access and adequate practical access to all of the Real Property. Each of the
entities within the definition o f "Borrower" holding title t o any part of the Real Property is now and will continue to be in
compliance with all of the terms of all agreements binding upon the Real Property which it now owns.
Section 3 .20 Survival. All of the representations and warranties set forth in this Article shall survive until all Obligations
are satisfied in full.
FINANCIAL COVENANTS OF THE BORROWER
ARTICLE IV
The Borrower covenants, for so long as any of the principal amount of or interest on the Note is outstanding and unpaid
or any duty or obligation of the Borrower hereunder or under any other Obligation remains unpaid or unperformed, as follows:
Section 4.1 Financial Records. The Borrower at all times will keep proper and adequate records and books of account in
accordance with GAAP consistently applied in which the full, true and correct entries will be made of its transactions and which
will properly and correctly reflect all items of income and expense in connection with the operation of the Borrower's business
regardless of whether such income or expense is realized by the Borrower.
Section 4.2 Delivery of Financial Statements of the Borrower. The Borrower will deliver to the Lender copies of each of
the following:
(1) Within one hundred twenty (120) days after the end of each Fiscal Year, audited financial statements of
B01TOwer and its Subsidiaries on both a consolidated basis (with appropriate subsidiary eliminations), which are prepared in
accordance with GAAP (consisting of an income statement, balance sheet, statement of retained earnings and cash flow, a
schedule of all related debt and all contingent liabilities and including all normal and reasonable financial notes). They shall be
prepared and certified by a certified public accountant reasonably acceptable to the Lender, all in reasonable detail. Such audited
financial statements shall be further certified by the chief financial officer of the Borrower as being true, correct, and accurate, as
completely and accurately reflecting the financial transactions during the period covered thereby of Borrower and its consolidated
Subsidiaries, and as completely and accurately reflecting the financial condition of Borrower and its consolidated Subsidiaries as
of the beginning and end of said period covered.
(2) As soon as practicable and in any event within one hundred twenty (120)
days after the end of each Fiscal Year, a certificate of compliance with financial covenants from
the chief financial officer of the Borrower ("Certificate of Compliance") addressed to Lender and certifying the compliance of
Borrower with the financial covenants provided in this Article.
(3) Annually, within ninety (90) days after the completion of each Crop Season (a Crop Season shall, as to a
particular Crop, be the Crop season used by the industry in the area of the Premises as to which the Crop pertains), Borrower
shall furnish to Lender operating information on the Collateral as follows:
(i) Reports/documents (internal inventory reports etc.) that describe and value all inventory security, including
each citrus crop variety's acreage both on a gross acreage and grove planted acreage basis; and
(ii) Citrus Crop production and operations detailed information, including yields by variety, costs and pricing by
grove/farm and variety.
(4) Within thirty (30) days after the end of each quarter of each Fiscal Year, Borrower prepared financial
statements of Borrower and its Subsidiaries on a consolidated basis (with appropriate subsidiary eliminations). Further, with
reasonable promptness, such other data and information as from time to time may be reasonably requested by Lender.
Section 4.3 Delivery of Reports. All of the reports, statements, and items required under Section 4.2 shall be in form and
substance satisfactory to Lender. All of the reports, statements, and items required under Section 4.2 must, unless another time
period is specified above, be received each year this Agreement is in force by the date which is one hundred twenty (120) days
after the end of the Borrower's Fiscal Y car, as the case may be subject to filing deadline extensions. If any one report, statement,
or item is not received within thirty (30) days of this due date, Lender may declare an Event of Default under this Agreement and
the Loan Documents.
Section 4.4 Inspection of Records. Borrower shall allow Lender or its authorized representatives at all reasonable times
to examine and make copies of all such books and records and all supporting data therefor at Lender's principal place of business
or at such other place where such books, records, and data may be located. Borrower shall assist Lender or such representative in
effecting such examination. Within three (3) years after Lender's receipt of any such report, statement, or item, Lender may, upon
at least five (5) Business Days prior written notice to Borrower, inspect and make copies of the books, records, and income tax
returns with respect to the Collateral of Borrower, for the purpose of verifying any such reports, statements, or items.
Section 4.5 Article IV Terms:
The following definitions shall apply to the financial covenants in this Article as to Borrower and its Subsidiaries on a
consolidated basis (with appropriate subsidiary eliminations):
(1) "Consolidated Current Ratio" shall mean the ratio of (i) Consolidated
Current Assets to (ii) Consolidated Current Liabilities;
(2) "Consolidated Current Assets" shall mean current assets as defined under and computed in accordance with
GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a consolidated basis; and
(3) "Consolidated Current Liabilities" shall mean current liabilities as defined under and computed in accordance
with GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a consolidated basis
including all funded debt under lines of credit to Borrower and its Subsidiaries.
Section 4.6 Required Consolidated Current Ratio. The Consolidated Current Ratio measured at the end o f each Fiscal
Year based on audited consolidated financial statements of Borrower shall be at least 2.00 to 1.00.
Section 4.7 LOC. Any LOC Lender shall, i f required b y Lender, enter into an Intercreditor Agreement with Lender
providing for the respective rights of the LOC Lender(s) and Lender as to their respective collateral, all in form and substance
satisfactory to Lender. Upon the written request of Lender, Borrower shall provide Lender with copies of all LOC Lender loan
documents which shall include the recording information of all such documents which are recorded. A default under any LOC
shall be a default hereunder. Notwithstanding the foregoing or any provision in this Agreement, there shall be no LOC permitted
while Note D and Loan D, as defined in the Security Instrument, are not paid in full without any obligation of Lender to make
further advances thereunder.
OTHER AFFIRMATIVE COVENANTS OF THE BORROWER
ARTICLE V
Section 5.1 Inspection. The Borrower will permit the Lender or Lender's designated representative to (i) visit any Place
of Business, (ii) inspect the Collateral, including such crop inspections as the Lender deems advisable (iii) inspect and make
extracts from the Borrower's books and records, and (iv) discuss the affairs, finances and accounts of the Borrower with the
officers of the Borrower, all at such reasonable times and as often as may reasonably be requested.
Section 5.2 Maintenance o f Legal Existence and Compliance with Laws. Borrower shall at all times preserve and
maintain in full force and effect its legal existence, powers, tights, licenses, permits and franchises in the jurisdiction of its
organization; continue to conduct and operate its businesses substantially as conducted and operated as of the Effective Date;
operate in full compliance with all applicable laws, statutes, regulations, certificates of authority and orders in respect o f the
conduct o f i t s businesses; a n d qualify a n d remain qualified a s foreign organizations in each jurisdiction in which such
qualification is necessary or appropriate in view of its businesses and operations.
Section 5.3 First Lien. Borrower shall provide Lender a first lien and security interest on the Real Property.
Section 5.4 Second Lien. Borrower shall provide Lender a lien and security interest on all Crops and Farm Products and
all Accounts, Chattel Paper and General Intangibles ansmg out of the same which shall be second only to the first lien of any
LOC Lender.
Section 5.5 Intercreditor Agreement. A t Lender's option, any LOC Lender, i f other than Lender, shall enter into an
Intercreditor Agreement or Intercreditor Agreements with Lender in form and content satisfactory to Lender.
Section 5.6 Leases of the Real Property. Any tenants o f the Real Property shall subordinate their leasehold interests
therein and furnish Lender a Tenant Estoppel Certificate, all in form and content satisfactory to Lender. Borrower shall cause any
lender holding a security interest or lien on any such leasehold interests to subordinate the same to the lien and security interests
of the Loan Documents.
Section 5 . 7 Defaults/Notices. T h e Borrower shall immediately notify t h e Lender in writing u p o n t h e happening,
occurrence or existence of any Event of Default, or any event or condition which with the passage of time or giving of notice, or
both, would constitute an Event of Default, and shall provide the Lender with such written notice, a detailed statement b y a
responsible officer of the Borrower of all relevant facts and the action being taken or proposed to be taken by the Borrower with
respect thereto. Borrower shall cause any and all holders of its debt to agree, in writing, unto Lender, to provide Lender notice of
any default under the documents evidencing such debt.
Section 5.8 Maintenance of Properties. The Borrower shall maintain or cause to be maintained in good repair, working
order and condition the Collateral and all other properties used or useful in the businesses of Borrower (ordinary wear and tear
excepted) and from time to time will make or cause to be made all appropriate repairs, renewals, improvements and replacements
thereof so that the businesses carried on in connection therewith may be properly and advantageously conducted at all times. The
Borrower will not do or permit any act or thing which might impair the value or commit or permit any waste of its properties or
any part thereof, or permit any unlawful occupation, business or trade to be conducted on or from any of its properties.
Section 5.9 Notice of Suit, Proceedings, Adverse Change. The Borrower shall promptly give the Lender notice in writing
(a) of all threatened or actual actions or suits (at law or in equity) and of all threatened or actual investigations or proceedings by
or before any court, arbitrator or any governmental department, commission, board, bureau, agency o r other instrumentality,
state, federal or foreign, affecting Borrower or the rights or other properties of Borrower or (i) which involves potential liability
of Borrower in an amount in excess of $500,000.00, or (ii) which the shareholders of Borrower believe in good faith is likely to
materially and adversely affect the financial condition of Borrower or to impair the right or ability of Borrower to carry on their
businesses as now conducted or to pay the Obligations or
perform its duties under the Loan Documents; (b) of any material adverse change in the condition (financial or otherwise) of
Borrower; and (c) of any seizure or levy upon any part of the properties of Borrower under any process or by a receiver.
Section 5.10 Debts and Taxes and Liabilities. The Borrower shall pay and discharge (i) all o f their indebtedness and
obligations in accordance with their terms and before they shall become in default, (ii) all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits or against its properties prior to the date on which penalties
attach thereto, and (iii) all lawful claims which, if unpaid, might become a lien or charge upon any of its properties; provided,
however, that the Borrower and shall not be required to pay any such indebtedness, obligation, tax, assessment, charge, levy or
claim which is being contested in good faith by appropriate and lawful proceedings diligently pursued and for which adequate
reserves have been set aside on its books. The B01TOwer shall also set aside and/or pay as and when due all monies required to
be set aside and/or paid by any federal, state or local statute or agency in regard to F.I.C.A., withholding, sales or excise or other
similar taxes.
Section 5.11 Notification of Change of Name or Business Location. The Borrower shall notify t h e Lender of each
change in the name of the Borrower and of each change of the location of any Place of Business and the office where the records
of the Borrower are kept, and, in such case, shall execute such documents as the Lender may reasonably request to reflect said
change
of name or change of location, as the case may be; provided, however, the records of the
Section 5.12 Compliance With Laws. The Borrower will comply with all laws, regulations, rules, ordinances, statutes,
orders and decrees of any governmental authority or court applicable to the Borrower.
Section 5.13 Further Assurances. The Borrower will, at the cost of the Borrower, and without expense to the Lender,
promptly upon the request of the Lender: (a) correct any defect, error or omission which may be discovered in the contents of any
Loan Documents or in the execution or acknowledgment thereof; (b) execute, acknowledge, deliver and record or file such other
and further instruments (including, without limitation, mortgages, deeds or trusts, security agreements, financing statements and
specific assignments ofrents or leases) and do such further acts, in either case as may be necessary, desirable or proper in the
Lender's opinion to carry out more effectively the purposes of the Loan Documents; to protect and preserve the lien and security
interest on the Collateral to subject thereto any property intended by the terms thereof to be covered thereby, including, without
limitation, any renewals, additions, substitutions or replacements thereto; or protect the security interest of the Lender and the
Collateral against the tights o r interest of third parties. The Borrower hereby appoint t h e Lender as their attorney-in• fact,
coupled with an interest, to take the above actions and to perform such obligations on behalf of the Borrower, at Borrower's sole
expense, if Borrower fails to comply with their obligations under this paragraph.
Section 5.14 After Acquired Property. Without the necessity of any further act of the Borrower or the Lender, the lien of
and the security interest created in the Collateral automatically extends to and includes:
(1) Any and all renewals, replacements, substitutions, accessions, proceeds, products or additions of or to the
Collateral and
(2) Any and all monies and other property that from time to time may either by delivery to the Lender or by any
instrument be subjected to such lien and security interest by the Borrower or by anyone on behalf of the Borrower, or with the
consent of the Borrower, or which otherwise may come into possession or otherwise be subject to the control of the Lender
pursuant to the Loan Documents.
Section 5.1 5 Indemnity. The Borrower shall indemnify, defend and hold harmless the Lender from and against and
reimburse the Lender for, all claims, demands, liabilities, losses, damages, judgments, penalties, costs and expenses, including,
without limitation, attorney's fees and disbursements, which may be imposed upon, asserted against or incurred or paid by the
Lender by reason of, on account of or in connection with any claim or damage occurring in, upon or in the vicinity of the
Collateral through any cause whatsoever, or asserted against the Lender on account of any act performed or omitted to be
performed under the Loan Documents or on account of any transaction arising out of or in any way connected with the Collateral
or the Loan Documents, except as a result of the willful misconduct or gross negligence of the Lender.
Section 5 .16 Insurance. During t h e term o f this Agreement, t h e Borrower shall maintain the insurance coverage
required by the Loan Documents.
ARTICLE VI NEGATIVE COVENANTS
The Borrower covenants, for so long as any of the principal amount of or interest accrued on the Note is outstanding and
unpaid or any Obligations remain unpaid or unperformed, that none of Borrower or its Subsidiaries will undertake the following
actions without the prior written consent of the Lender:
Section 6.1 Merger, Consolidation. Dissolution, etc. Neither the Borrower nor any of its Subsidiaries wil l consolidate
with or merge into any other corporation, partnership, limited liability company or other entity or permit another corporation or
partnership, limited liability company or other entity to merge into them, or dissolve or take or omit to take any action which
would result in their dissolution, or acquire all or substantially all the properties or assets of any other Person, or enter into any
arrangement, directly or indirectly, with any Person whereby any of Borrower or its Subsidiaries shal l sell or transfer any
property, real or personal, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property
which any Borrower or any of its Subsidiaries intend to use for substantially the same purpose or
purposes as the property being sold or transferred (other than with respect to another entity comprising Borrower) without the
prior written consent of the Lender.
Section 6.2 Changes in Business. Neither Borrower nor any of its Subsidiaries will make any material change in the
nature or scope of their respective business operations from that existing on the date of this Loan Agreement including but not
limited to major asset acquisitions or dispositions, acquisition o r disposition o f businesses o r their components, mergers,
consolidations, reorganizations and/or restructurings.
Section 6.3 Other Agreements. Neither Borrower nor any of its Subsidiaries will enter into any arrangements, contractual
or otherwise, which would materially and adversely affect its duties or the rights of the Lender under the Loan Documents, or
which is inconsistent with or limits or abrogates the Loan Documents.
Section 6.4 Due-on-Sale or Encumbrance.
The Due-on-Sale or Encumbrance provision of the Security Instrument (Section 5.01 thereof) is incorporated herein. The term
"Minimum Ownership and Control Requirement" used therein shall mean that at all time any of the Obligations are outstanding,
Remy W. Trafelet (in the event of his death, his estate and those taking by way of devise or inheritance due to his death) and 734
Agriculture, LLC, collectively shall hold directly or indirectly no less than fifty one percent (51 %) of the ownership interests in
Borrower and Remy W. Trafelet (in the event of his death, his estate and those taking by way of devise or inheritance due to his
death) shall maintain directly or indirectly management control of each of the entities within the definition of "Borrower".
Section 6.5 Loans to Bo1rnwer/Liens on Collateral. Other than the LOC permitted herein, the Borrower will not borrow
from anyone on the security of or create, incur or suffer to exist any lien on any of the Collateral or permit any Financing
Statement (other than the Lender's and any LOC Lender's security interest and Financing Statement) to be on file with respect
thereto, without the Lender's written consent. Notwithstanding the foregoing or any provision in this Agreement, there shall be
no LOC permitted while Note D and Loan D, as defined in the Security Instrument, are not paid in full without any obligation of
Lender to make further advances thereunder.
Section 6.6 Other Liens. Other than liens and security interests permitted to secure LOC, the Borrower will not create,
assume, or suffer to exist any lien upon any other of its property or assets, whether now owned or hereafter acquired, except:
(1) Liens for taxes not yet due or which are being actively contested in good faith by appropriate proceedings;
and
(2)
(3)
Purchase money security interest in property not a part of the
Collateral;
Permitted
Liens.
Section 6.7 Change in Management/Ownership. Without Lender's prior written consent, until the Loan is paid in full,
there shall be no substantial change in the executive management or ownership
of each of the entities within the definition of "Borrower" except as allowed herein.
ARTICLE VII EVENTS OF DEFAULT
The following each and all are Events of Default hereunder:
Section 7.1 Monetary Default. If the Borrower shall default in any payment of the principal of or interest on the Note,
other monetary Obligations under the Loan Documents, within five (5) days following the date the same shall become due and
payable, whether at maturity, by acceleration by the Lender as pennitted herein or otherwise.
Section 7.2 Non-Monetary Default. If the Borrower shall default in the performance or compliance with any of the
material terms, conditions, covenants or agreements contained in this Loan Agreement without curing the same within thirty (30)
days after written notice thereof shall have been given to Borrower; provided however, that if such default cannot be cured
within said period, Borrower shall have such additional time for cure as Lender may, in its reasonable discretion, approve in
writing after receipt by Lender within said pe1iod of a written request from Bo1rnwer or if the Borrower shall default under any
other non-monetary Obligations without curing the same within any cure period provided in the Loan Documents containing
such Obligations.
Section 7.3 Default in Other Obligations. If Borrower shall default in the performance of the LOC.
Section 7.4 Misrepresentation. If any representation or warranty made in writing by or on behalf of the Borrower, in this
Agreement or in any other Loan Document, shall prove to have been false or inc01Tect in any material respect on the date as of
which made or reaffirmed.
Section 7 .5 Dissolution. If any order, judgment, or decree is entered in any proceedings against Borrower decreeing
the dissolution of Borrower or any of its Subsidiaries and such order, judgment, or decree remains unstayed and i n effect for
more than thirty (30) days.
Section 7.6 Bankruptcy, Failure to Pay Debts, etc. If Borrower or any of its Subsidiaries shall admit in writing their
inability, or be generally unable, to pay their respective debts as they become due or shall make an assignment for the benefit of
creditors, file a petition in Bankruptcy, petition or apply to any tribunal for the appointment of a custodian, receiver or trustee for
Borrower or any of its Subsidiaries or a substantial pa1i of their assets, or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect, or if there shall have been filed any such petition or application, or any such proceeding
shall have been commenced against Borrower or any of its Subsidiaries, in which an order for relief is entered or which remains
undismissed for a period of thirty (30) days or more, or if Bo1rnwer or any of its Subsidiaries by any act or omission shall
indicate consent to, approval o f or acquiescence in any such petition, application, or proceeding or order for relief for the
appointment of a custodian, receiver or any trustee for Borrower or any of its Subsidiaries or any substantial part of any of their
properties, or shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of thiliy (30)
days or more.
Section 7.7 Fraudulent Conveyance. If Borrower or its Subsidiaries shall have concealed, removed, or permitted to be
concealed or removed, any part of their respective prope1ties, with intent to hinder, delay or defraud its creditors, or made or
suffered a transfer of any of its prope1iies which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law,
or shall have made any transfer of its prope1ties to or for the benefit of a creditor at a time when other creditors similarly situated
have not been paid, or shall have suffered or permitted, while insolvent, any creditor to obtain a lien upon any of their respective
prope1ties through legal proceedings or distraint which is not vacated within thirty (30) days from the date thereof.
Section 7.8 Final Judgment. If a final judgment for the payment of money in excess of
$500,000.00 shall be rendered against Borrower or any of its Subsidiaries, and the same shall remain undischarged or shall not
be bonded off to the satisfaction of the Lender for a period of thirty (30) consecutive days during which the execution shall not
be effectively stayed.
Section 7.9 Impairment of Security. If any security document, mortgage, agreement, guaranty or other instrument
given to the Lender to evidence or secure the payment and perfo1111ance of the Obligations hereunder shall be revoked by the
Borrower or shall cease to be in full force and effect, or the protection or security afforded the Lender in any p01iion of the
Collateral secured thereby is in any material respect impaired for any reason; or the B01Tower shall default in any material
respect in the performance or observance of any tenn, covenant, condition or agreement on its pait to be performed or observed
under any security document and such default shall not have been cured or waived in any applicable grace period contained
therein; or any representation or warranty of the Borrower made in any security document shall be false in any material respect
on the date as of which made; or for any reason (except for acts or omissions of the Lender) the Lender shall fail to have a valid,
perfected and enforceable first priority security interest, lien or mo1tgage encumbering the Collateral or if the Borrower shall
contest in any manner that any security document constitutes its valid and enforceable agreement or the Borrower shall asse1t in
any manner that it has no further obligation or liability under such agreement.
ARTICLE VIII
RIGHTS UPON DEFAULT
Upon the occurrence and during the continuance of any Event of Default, the Lender shall have and may exercise any or
all of the rights set forth herein (provided, however, the Lender shall he under no duty or obligation to do so):
Section 8.1 Acceleration. To declare the indebtedness evidenced by the Note, to the extent the proceeds thereof shall
have been disbursed and remain outstanding, and all other Obligations to be forthwith due and payable, whereupon the Note, to
the extent the proceeds thereof shall have been disbursed a n d remain outstanding, a n d a l l other Obligations shall become
fo1ihwith due and payable, both as to principal and interest, without presentment, demand, protest or any other notice or grace
period of any kind, all o f which are hereby expressly waived, anything contained herein or in the Note or in such other
Obligations to the contrary notwithstanding, and, upon such acceleration, the disbursed and unpaid principal balance and accrued
interest upon each of Note A, Note B and Note C shall from and after such date of acceleration bear interest at the Default Rate.
Section 8.2 Other Rights. To exercise such other rights as may be permitted under any of the Loan Documents or
applicable law.
Section 8.3 Uniform Commercial Code/Applicable Law. To exercise from time to time any and all 1ights and remedies
of a secured creditor under the UCC and any and all 1ights and remedies available to it under any other applicable law.
Section 8.4 Cure of Defaults. Cure any default or Event of Default without releasing the Borrower from any obligation
hereunder or under the Loan Documents.
Section 8.5 Receiver. Cause the appointment of a receiver, as a matter of strict 1ight, without regard to the solvency of
the Borrower, for the purpose of preserving the Collateral and to protect all lights accruing to the Lender by vi1iue of this
Agreement and any other Loan Documents and expressly to maintain Collateral and the Crops and Fam1Products operations on
the Real Prope1iy, with all costs and expenses incurred in connection with such receivership to be charged against the Borrower
and to be secured by the security interest granted pursuant to the Loan Documents. Borrower hereby consents to the appointment
of such receiver or receivers, waive any and all defenses to such appointment and agree not to oppose any application therefor by
the Lender. The receiver shall be appointed to take charge of, manage, preserve, protect and operate any business, make any
needed repairs, pay all costs associated with t h e operations of such businesses and after payment of all expenses of the
receivership, including reasonable attorney's fees and court costs, in any, to apply all the net proceeds derived therefrom in the
reduction of the Obligations or in such other manner as the court shall direct. All expenses, fees and compensation incurred
pursuant to any such receivership shall also by secured by the Security Interest granted by the Loan Documents.
Section 9.1 Cumulative Remedies. T h e remedies provided i n this Agreement a n d in the Loan Documents are
cumulative and not exclusive of any remedies provided by law or in equity. Upon an Event of Default, the Lender may elect to
exercise any one or more of such remedies and such election shall not waive or cause the Lender to have elected not to
ARTICLE IX MISCELLANEOUS
subsequently exercise any other such remedies available to it under the Agreement or any Loan Document.
Section 9.2 Amendments, etc. No amendment, modification, termination or waiver of any provision of this Agreement,
the Note or the other Loan Documents, nor consent to any departure by the Bo1rnwer therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Lender, and then such waiver or consent shall be effective only in specific
instance and for the specific purpose for which given.
Section 9.3 Notices. Any notice, demand, consent, approval, direction, agreement, or other communication (any
"Notice") required or permitted hereunder or under the other Loan Documents shall be in writing and shall be addressed as
follows to the person entitled to receive the same:
If to Borrower:
734 Citrus Holdings, LLC 734 LMC Groves, LLC
734 Co-op Groves, LLC
734 BLP Groves, LLC
734 Harvest, LLC
590 Madison Avenue, 26th Floor
New York, New York 10022
Attn: Mr. Remy W. Trafelet
With copy to:
Clayton G. Wilson
181 Highway 630 East
Frostproof, Florida 33843
With copy to:
David A. Miller Peterson & Myers, P.A.
P.O. Box 24628
225 East Lemon Street, Suite 300 Lakeland, F101ida 33802-4628
If to Lender:
Prudential Mortgage Capital Company, LLC
801 Warrenville Road, Suite 150
Lisle, Illinois 60532-1357 Attn: Investment Manager
Reference Loan Numbers: 717610897 and 717610898
With copy to:
Prudential Mortgage Capital Company, LLC
201 S. Orange Avenue, Suite 795
Attn: Investment Director
Reference Loan Numbers: 717610897 and 717610898
With copy to:
Prudential Asset Resources, Inc.
2100 Ross Avenue, Suite 2500
Dallas, Texas 75201 Attn: Legal Department
Reference Loan Numbers: 717610897 and 717610898
Any notice shall be sent (a) by depositing it with the United States postal service, or any official successor thereto, ce1iified
or registered mail, return receipt requested, with adequate postage prepaid; (b) by depositing it with a reputable overnight courier
service from whom a receipt is available; or (c) by personal delive1y, provided a signed receipt is obtained. Each notice shall be
effective three (3) Business Days after being so deposited in the case of (a) above, one (1) Business Day after being so deposited
in the case of (b) above or upon delivery in the case of item (c) above, but the time period in which a response to any notice must
be given or any action taken with respect thereto shall commence to run from the date of receipt of the notice by the addressee
thereof, as evidenced by the return receipt. Rejection or other refusal by the addressee to accept or receipt the delivery, or the
inability to deliver because of a changed address of which no notice was given, shall be deemed to be the receipt of the notice
sent. Any party shall have the right from time to time to change the address or individual's attention to which notices to it shall
be sent and to specify up to two (2) additional addresses to which copies of the notices to it shall be sent by giving the other party
hereto at least ten ( 10) days' prior notice thereof.
Section 9.4 Intentionally deleted.
Section 9.5 Applicable Law. This Agreement, and each of the Loan Documents and trm1sactions contemplated herein
(unless specifically stipulated to the contrary in such document) shall be governed by and interpreted in accordance with the
laws of the State of Florida.
Section 9.6 Time of the Essence. Time is of the essence of this Agreement, the Note and the other Loan Documents.
Section 9.7 Headings. The headings in this Agreement are intended to be for convenience of reference only, and shall
not define or limit the scope, extent or intent or otherwise affect the meaning of any portion hereof.
Section 9.8 Severability. In case any one or more of the provisions contained in this Agreement, the Note or the other
Loan Documents shall for any reason be held to be invalid, illegal or unenforceable in any respect, the same shall not affect any
other provision of this Ab1Teernent, the Note or the other Loan Documents, but this Agreement, the Note and the other Loan
Documents shall be construed as if such invalid or illegal or unenforceable provision had never been contained therein;
provided, however, in the event said matter would be in the reasonable opinion of the Lender adversely affect the rights of the
Lender under any or all of the Loan Documents, the same shall be an Event of Default.
Section 9.9 Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such
counterpart.
Section 9.10 Conflict. In the event any conflict arises between the terms of this Agreement and the tenns of any other
Loan Document, the terms of this Agreement shall govern in all instances of such conflict.
Section 9.11 Term. The terms of this Agreement shall be for such period of time until the Loan, the Note, and all
renewals, replacements, modifications, extensions, increases and amendments of any of the foregoing have been repaid in full.
Section
9.12 Expenses. The Borrower agrees, whether or not the transactions hereby contemplated shall be
consummated, to pay and save Lender harmless against liability for the payment of documentary stamp taxes, intangible tax, all
out-of-pocket expenses arising in connection with this transaction and all taxes, together in each case with interest and penalties,
if any, which may be payable in respect of the execution, delivery and performance of this Agreement or the execution, delivery,
acquisition and performance of the Note (including any renewal, extension, substitution or replacement thereof) issued under or
pursuant to this Agreement (excepting only any tax on or measured by net income of Lender determined substantially in the same
manner, other than the rate of tax, as net income is presently determined under the Federal Internal Revenue Code), all printing
costs and the reasonable fees and expenses of any special counsel to Lender in connection with this Agreement and any
subsequent modification thereof or consent thereunder. The obligations of Borrower under this Section shall survive payment of
the Note.
Section 9.13 Joint and Several Liability. Each entity within the definition of "Borrower" shall be jointly and severally
liable hereunder, each covenant, representation, undertaking and provision of this Agreement shall apply to each of such entities
separately and collectively.
Section 9.14 Successors and Assigns. All covenants and agreements in this Agreement contained by or on behalf of
either of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; provided, however, this clause shall not by itself auth01ize, any delegation of duties by the
Borrower or any other assignment which may be prohibited by the terms and conditions of this Agreement.
Section 9.15 Further Assurances. The Borrower shall, from time to time, execute such additional documents as may
reasonably be requested by the Lender or the counsel, to carry out and fulfill the intent and purpose.of this Agreement and the
Loan Documents.
Section 9.16 No Third Party Beneficiaries. The parties intend that this Agreement is solely for their benefit and no
Person not a party hereto shall have any rights or privileges under this Agreement whatsoever either as the third party
beneficiary or otherwise.
Section 9.17 WAIVER OF JURY TRIAL. THE BORROWER HEREBY AGREES TO WAIVE ITS RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, O R ANY LOAN DOCUMENT. T H E SCOPE OF THIS
WAIYER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT A N D THAT RELATE T O THE SUBJECT MATTER OF THIS TRANSACTION, INCLU DING WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
LAW AND STATUTORY CLAIMS. T H E BORROWER ACKNOWLEDGES THAT THIS WAIYER IS A MATERIAL
INDUCEMENT T O THE LENDER T O ENTER INTO A BUSINESS RELATIONSHIP WITH THE BORROWER. THE
BORROWER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIYER WITH ITS LEGAL
C O U N S E L , A N D T H A T S U C H WA I V E R I S K N O W IN G LY A N D VOLUNTARILY
GIVEN FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED, EITHER ORALLY O R IN WRITING, AND THE WAIYER SHALL APPLY T O A N Y SUBSEQUENT
AMENDMENTS, RENEWALS, REPLACEMENTS, REAFFIRMATIONS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT, OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS
A WRITTEN CONSENT TO A TRIAL BY THE COURT WITHOUT A JURY.
Section 9.18 No Waiver. No failure or delay on the pati of the Lender in exercising any right, power or remedy
hereunder, or under the Note or the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right,
power or remedy hereunder or thereunder.
Section 9.19 Entire Agreement. Except as otherwise expressly provided, this Agreement and the other Loan Documents
embody the entire agreement and understanding
between the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Loan Agreement to be executed, sealed and delivered, as
applicable, by their duly authorized officers as of the Effective Date first set forth above.
[SIGNATURE AND NOTARY BLOCKS FOLLOW]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
"LENDER"
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Florida
limited liability company
By: /s/ Robert E. Lassites III
(Signed Name)
Its: Robert E. Lassites III, Vice President
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, as the Chief Executive Officer of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and
acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
STATE OF FLORIDA
COUNTY OF ORANGE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Robert E.
Lassites III, the Vice President of PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, Delaware limited liability
company, and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ Diane M. Barnett
Signature of Notary Public)
Diane M. Barnett
(Printed Name of Notary Public)
My commission expires: 03/08/16
EXHIBIT "A"
LEGAL DESCRIPTION
ALL OF SECTION 10; THE NORTH THREE-QUARTERS (N 3/4) OF SECTION 11, AND THE NORTH ONE-HALF (N
1/2) OF SECTION 12, LYING WEST OF STATE ROAD 31, ALL IN TOWNSHIP 40 SOUTH, RANGE 25 EAST,
CHARLOTTE COUNTY, FLORIDA.
TOGETHER WITH A DRAINAGE AND MAINTENANCE EASEMENT GRANTED IN GRANT OF DRAINAGE
RECORDED DECEMBER 27, 2000 IN OFFICIAL RECORDS BOOK 1849, PAGE 865, PUBLIC RECORDS OF
CHARLOTTE COUNTY, FLORIDA AS AMENDED BY FIRST AMENDMENT TO GRANT OF DRAINAGE EASEMENT
RECORDED AUGUST 22, 2014 IN OFFICIAL RECORDS BOOK 3895, Page 418, PUBLIC RECORDS OF CHARLOTTE
COUNTY, FLORIDA.
EXHIBIT "A"
LEGAL DESCRIPTION
ALL OF SECTION IO; THE NORTH THREE-QUARTERS (N 3/4) OF SECTION 11, AND THE NORTH ONE-HALF (N
1/2) OF SECTION 12, LYING WEST OF STATE ROAD 31, ALL IN TOWNSHIP 40 SOUTH, RANGE 25 EAST,
CHARLOTTE COUNTY, FLORIDA.
TOGETHER WITH A DRAINAGE AND MAINTENANCE EASEMENT GRANTED IN GRANT OF DRAINAGE
RECORDED DECEMBER 27, 2000 IN OFFICIAL RECORDS BOOK 1849, PAGE 865, PUBLIC RECORDS OF
CHARLOTTE COUNTY, FLORIDA AS AMENDED BY FIRST AMENDMENT TO GRANT OF DRAINAGE EASEMENT
RECORDED AUGUST 22, 2014 IN OFFICIAL RECORDS BOOK 3895, Page 418, PUBLIC RECORDS OF CHARLOTTE
COUNTY, FLORIDA.
U.S. $5,500,000.00 September 4th, 2014
PROMISSORY NOTE E
FOR VALUE RECEIVED, the undersigned, 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC
GROVES, LLC, a Florida limited liability company, 734 CO OP GROVES, LLC, a Florida limited liability company, 734
BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited liability company,
being collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said
four limited liability companies both separately and collectively), jointly and severally, promise to pay to t h e order of
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company, i t s successors and
assigns ("Holder") the principal sum of Five Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00), with
interest thereon, from the date hereof until the Maturity Date payable as provided herein at the rate of three and eighty-five
hundredths (3.85%) percent per annum. Capitalized terms used herein without definition shall have the meanings ascribed to
them in the Instrument, as defined herein.
The principal and interest of this Promissory Note E (" Promissory Note" and the loan evidenced thereby are referred to
herein as "Loan E") are to be paid in installments as follows:
(i)
quarterly interest payments of accrued interest on the principal balance remaining outstanding, from time to
time, shall be paid by Borrower to Holder beginning on the first (1st) day of December, 2014 and continuing on the first
(1st) day of each March, June, September and December thereafter; and
(ii)
quarterly principal reduction payments shall b e made by Borrower t o Holder in the amount of Fifty Five
Thousand and No/100 Dollars (U.S. $55,000.00) each, commencing on the first (1st) day of March, 2015 and continuing
on the first (1st) day of each June, September, December and June thereafter; and
(iii)
the entire then remaining outstanding balance of all principal and accrued interest thereon shall be due and
payable, in full, on the first (1st) day of September, 2021 (the "Maturity Date").
Unless otherwise provided by law, all payments made by Borrower will be applied first to any costs and expenses
incurred by Holder in enforcing or collecting this Promissory Note, including reasonable attorney fees, and then to any advances
and expenditures made by Holder to protect its interests under this Promissory Note, the Instrument or any other document given
to secure Borrower's payment of this indebtedness. Any remaining amounts will then be applied to interest due with the balance,
if any, to be applied on account of principal.
For the purposes of calculating interest under this Promissory Note, a year of 360 day consisting of twelve (12) thirty
(30) day months shall be employed regardless of the actual time elapsed.
All payments under this Promissory Note shall be made, without offset or deduction,
in lawful money of the United States of America at the office of Holder or at such other place (and in the manner) Holder
may specify by written notice to Borrower, (b) in immediately available federal funds by federal wire transfer, and (c) if received
by Holder prior to 2 P.M. local time in the place so designated by Holder for payments under this Promissory Note, shall be
credited on that day, or, if received by Holder on or after 2 P.M. local time in the place so designated by Holder for payments
under this Promissory Note, shall, at Holder's option, be credited on the next Business Day. If any payment due date falls on a
day which is not a Business Day, then the payment due date shall be deemed to have fallen on the next succeeding Business
Day. The term "Business Day" shall mean each Monday through Friday except for
days in which commercial banks are not authorized to open or are required by law to close in the State in which the place
designated by Holder for payments under this Promissory Note is located.
Both principal and interest shall be payable in lawful money of the United States of America by federal wire transfer
unless directed by Holder in writing to be otherwise forwarded to Prudential Asset Resources, Inc. Mortgage Loan Servicing,
2100 Ross Avenue, Suite 2500, Dallas, Texas 75201 or such other place as the Holder hereof may, from time to time, designate
in writing.
In the event that any payment of principal and/or interest due under this Promissory Note should not be fully made by
the fifth (5th) day following the due date thereof, then:
(A).
A late charge of $0.05 for each ($1.00) Dollar of such payment shall automatically become due to the Holder
of this Promissory Note and be secured by the Instrument. This charge shall be in addition to all other rights and
remedies available to the Holder of this Promissory Note upon the occurrence of a default under the Promissory Note or
any other Loan Document (as hereinafter defined); and
(B).
The Holder of this Promissory Note shall have the right, upon written notice to Borrower, to increase the rate
of interest per annum on the entire principal balance of this Promissory Note then outstanding, from the Note Rate to the
Default Rate (as hereinafter defined) and, upon said notice and unless Borrower shall pay to Holder the amount of such
overdue payment together with the late charge assessed thereon within three (3) Business Days of Bo1rnwer's receipt of
said notice (which receipt shall be conclusively presumed to have occurred on the third Business Day following the date
such notice was placed in the mail with the United States Postal Service or on the date of actual delivery if delivered
personally or by private carrier/messenger service), such increase to the Default Rate shall remain in force and effect for
so long as such default shall continue or the Holder otherwise agrees. Interest at the Default Rate is in addition to and not
in lieu of
any Prepayment Premium due after acceleration of the indebtedness due hereunder by Holder after an Event of Default.
The Default Rate shall also apply to any judgment obtained with respect to the Obligations and/or any Loan Document
from the date such judgment becomes due and owing under a final and non-appealable order until the amount of such
judgment is paid in full.
As used herein, "Note Rate" is defined as the contract rate of interest stated above in the first paragraph of this Promissory Note.
"Default Rate" is defined as the lesser of (i) the maximum rate allowed by applicable law or (ii) the per annum rate equal to the
Note Rate plus Five Percent (5%).
The Borrower severally waives presentment for payment, demand, notice of demand and of dishonor and nonpayment of
this Promissory Note, notice of intention to accelerate and notice of acceleration of the maturity of this Promissory Note, protest
and notice of protest, diligence in collecting and the bringing of suit against any other party and said Borrower agrees t o all
renewals, extensions, modifications, partial payments, releases or substitutions of security, in whole or in part, with or without
notice, before or after maturity, all without in any way affecting the liability of Borrower under this Promissory Note.
Should this Promissory Note be signed by more than one person and/or firm and/or corporation, all of the obligations
herein contained shall be considered joint and several obligations of each signer hereof.
This Promissory Note evidences Borrower's unconditional obligation to repay the indebtedness described herein. This
Promissory Note and interest hereon are secured by a Mortgage and Security Agreement of even date herewith by Borrower to
Holder (the "Instrument") to be recorded in the Public Records of Charlotte County, which Instrument encumbers property
located in said county and, unless otherwise stated herein, this Promissory Note is to be construed according to the laws of the
State of Florida. The payment of this Promissory Note is secured by, among other things, the Collateral as defined in
aforementioned
Instrument. A default by Borrower under the Instrument is a default herein and Borrower shall observe and perform all of the
terms and conditions in the Loan Documents as defined in the Instrument. Said Loan Documents are incorporated into this
Promissory Note as if fully set forth herein. A default under Promissory Note A in the face amount of Fourteen Million Five
Hundred Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder dated December 31, 2012 evidencing Loan
717610613 ("Note A", the loan evidenced thereby is referred to as "Loan A" and the loan documents pertaining thereto are
referred to as the "Loan A Loan Documents"), Promissory Note B in the face amount of Fourteen Million Five Hundred
Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder dated December 31, 2012 evidencing Loan 717610637
("Note B", the loan evidenced thereby is referred to as "Loan B and the loan documents pertaining thereto are referred to as the
"Loan B Loan Documents"), Future Advance Promissory Note D (Adjustable Rate) in the face amount of up to Six Million and
No/100 Dollars ($6,000,000.00) from Borrower to Holder dated March 26, 2013 evidencing Loan 717610647 ("Note D", the
loan evidenced thereby is referred to as "Loan D", and the loan documents pertaining thereto are referred to as the "Loan D Loan
Documents") and/or under Promissory Note F in the face amount of Five Million Five Hundred Thousand and No/100 Dollars
($5,500,000.00) from Borrower to Holder dated of even date herewith evidencing Loan 717610898 ("Note F", the loan
evidenced thereby is referred to as "Loan F and the loan documents pertaining thereto are referred to as the "Loan F Loan
Documents", said Note A, Note B, Note D and Note F are collectively referred to as the "Other Notes", Loan A, Loan B, Loan
D, and Loan F are collectively referred to as the "Other Loans" and the Loan A Loan Documents, Loan B Loan Documents,
Loan D Loan Documents and Loan F Loan Documents, are collectively referred to as the "Other Loan Documents"). A default in
this Promissory Note, after expiration of all applicable grace and notice periods herein, is a default in the Other Notes and in the
other Loan Documents and a default in the Other Notes and/or in the Other Loan Documents, after expiration of all applicable
grace and notice periods therein, is a default herein. The Collateral for the Other Loans also secures the obligations of Borrower
under this Promissory Note and under the Loan Documents and the Collateral for this Promissory Note also secures the
obligations of Borrower under the Other Notes and under the Other Loan Documents.
This Promissory Note may be declared due (accelerated) at the option of the Holder hereof prior to its expressed
maturity date for an Event of Default, as defined in the Instrument and after the expiration of applicable grace and notice periods
therein. In the event of such acceleration, all of the then remaining principal and interest, together with any Prepayment Premium
due under the terms of this Promissory Note shall become at once due and payable without further notice, demand or
presentment for payment. Borrower agrees that any Prepayment Premium due upon any such acceleration by Holder is in
addition to the remedy of acceleration and is not in lieu thereof and is in addition to both the collection of interest at the Note
Rate or Default Rate, as applicable, and collection of Late Charges hereunder.
The privilege granted to Borrower to make unscheduled principal reduction payments of the indebtedness evidenced by
this Promissory Note and the terms under which this Promissory Note may be prepaid by Borrower and the applicable
Prepayment Premium (as defined in the Prepayment Rider) that will be due upon any such unscheduled prepayment(s) of this
indebtedness are set forth in the Prepayment Rider attached hereto and incorporated herein by this reference. Terms defined in
this Promissory Note shall also be applicable to the use of such terms in the Prepayment Rider.
It is the intent of the Holder of this Promissory Note and the Borrower in the execution of this Promissory Note, the
Loan Documents and all other instruments now or hereafter securing this Promissory Note to contract in strict compliance with
all applicable laws and, in particular, with applicable usury law. In furtherance thereof, said Holder and the Borrower stipulate
and agree that none of the terms and provisions contained in this Promissory Note, or in any other instrument executed in
connection herewith, shall ever be construed 'to create a contract to pay interest at a rate in excess of the maximum interest rate
permitted to be charged by applicable law for the use, forbearance or detention of money or to pay any other amount not
permitted by law. Neither the Borrower nor any guarantors, endorsers or other parties now or hereafter becoming liable for
payment of this Promissory Note shall ever be required to pay interest on this Promissory Note at a rate in excess of the
maximum interest that may be lawfully charged or to make any other payment(s) not permitted under applicable law. The
provisions of this paragraph
shall control over all other provisions of this Promissory Note and any other instruments now or hereafter executed in connection
herewith which may be in apparent conflict herewith. The Holder of this Promissory Note expressly disavows any intention to
charge any amount not permitted by law or to collect excessive, unearned interest or finance charges under this Promissory Note,
or in the event the maturity of this Promissory Note is accelerated. If the maturity of this Promissory Note shall be accelerated,
for any reason, or if the principal of this Promissory Note is paid prior to the end of the term of this Promissory Note and, as a
result thereof, the interest or any other charge received for the actual period of existence of the loan evidenced by this Promissory
Note exceeds the applicable maximum lawful rate for such interest or other charge, the Holder of this Promissory Note shall, at
its option, either refund to the Borrower the amount of such excess or credit the amount of such excess against the principal
balance of this Promissory Note then outstanding and thereby shall render inapplicable any and all penalties of any kind
provided by applicable law as a result of such excess interest or other charge. In the event that any Holder of this Promissory
Note shall collect monies which are deemed to constitute interest which would increase the effective interest rate on this
Promissory Note to a rate in excess of that permitted to be charged by applicable law, all such sums deemed to constitute interest
in excess of the lawful rate shall, upon such determination, at the option of the Holder of this Promissory Note be either
immediately returned to the Borrower or credited against the principal balance of this Promissory Note then outstanding, in
which event any and all penalties of any kind under applicable law as a result of such excess interest shall be inapplicable. By
execution of this Promissory Note the Borrower acknowledge(s) that Borrower believe(s) the loan evidenced by this Promissory
Note to be non-usurious and agrees that if, at any time, the Borrower should have reason to believe that such loan is in fact
usurious or any other charge exceeds that permitted by applicable law, Borrower will give the Holder of this Promissory Note
notice of such condition and the Borrower agree(s) that said Holder shall have thirty (30) days in which to make appropriate
refund or other adjustment in order to correct such condition, if in fact such exists. The term "applicable law" as used in this
Promissory Note shall mean the laws of the State Florida; as such laws now exist or may be changed or amended or come into
effect in the future.
Should the indebtedness represented by this Promissory Note or any part thereof be enforced or collected at law or in
equity or through any bankruptcy, receivership, probate or other court proceedings or if this Promissory Note is placed in the
hands of attorneys for collection after default, and expiration of all applicable grace and notice periods, the Borrower agrees to
pay to the Holder of this Promissory Note, in addition to the principal and interest due and payable hereon and to the full extent
permitted by law, all reasonable attorneys' fees and reasonable costs of collection. For purposes of this paragraph "costs of
collection" shall be deemed to include (by way of example and not by limitation), among other reasonable costs, all reasonable
costs incurred in securing and protecting any of the real property or personal property described in the Loan Documents and
Holder's interest therein, together with all reasonable fees and expenses charged by the attorneys engaged by Holder for
collection purposes.
Any forbearance, failure or delay by Holder in exercising any right, power or remedy provided herein or in the Loan
Documents or provided by law shall not preclude a further or subsequent exercise thereof or constitute a waiver of default by
Borrower and every such right, power or remedy of Holder shall continue in full force and effect unless such right, power and
remedy and each such default or breach by Borrower is separately and specifically waived by Holder in writing.
If any clause, term or provision of this Promissory Note or any of the Loan Documents is held to be unenforceable by a
court of competent jurisdiction, said clause, term, provision so held to be unenforceable shall be stricken and all the remaining
portions of this Promissory Note and/or the Loan Documents shall remain in full force and effect.
Borrower and all persons or entities holding any legal or beneficial interest whatsoever in Borrower or any security for
this Promissory Note are not included in, owned by, controlled by, acting for or on behalf of, providing assistance, support,
sponsorship, or services or any kind to, or otherwise associated with any of the persons or entities referred to or described in
Executive Order 13224 - Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism, as amended. It shall
constitute an Event of Default hereunder and under the Instrument securing this instrument if the foregoing representation and
warranty shall ever become false.
Neither Borrower, nor any persons holding any legal or beneficial interest whatsoever in any collateral given by
Borrower to secure this Promissory Note shall, at any time during the term of the loan evidenced by this Promissory Note, be
described in, covered by or specially designated pursuant to or be affiliated with any persons described in, covered by or
specially designated pursuant to Executive Order 13224, as amended, or any similar list issued by the Office of Foreign Assets
Control ("OFAC") or any other department or agency of the United States of America. Notwithstanding the foregoing, Borrower
hereby confirm(s) that if he/she//they/it become(s) aware or receives any notice of any violation of the foregoing covenant and
agreement (an "OFAC Violation") Borrower will immediately (i) give notice to Holder of such OFAC Violation, and (ii) comply
with all Laws applicable to such OFAC Violation, including, without limitation, Executive Order 13224; the International
Emergency Economic Powers Act 50 U.S.C. Sections 1701-06; the Iraqi Sanctions Act, Pub. L. 101-513, 104 Stat. 2047-55; the
United Nations Participation Act, 22 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty Act, (enacting 8 U.S.C.
Section 219, 18 U.S.C. Section 2332d, and 18 U.S.C. Section 2339b); the International Security and Development Cooperation
Act, 22 U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List Governments
Sanctions Regulations, 31. C.F.R Part 596; and the Foreign Terrorist Organizations Sanctions Regulations, 31 C.F.R. Part 597
(collectively, the "Anti-Terrorism Regulations") and Borrower hereby authorize(s) and consent(s) to Holder's taking any and all
reasonable steps Holder deems necessary, in its sole discretion, to comply with all Laws applicable to any such OFAC Violation,
including the requirements of the AntiTerrorism Regulations. Notwithstanding anything to the contrary in this Section, Borrower
shall not be deemed to be in violation of the covenants and agreements set forth in the first sentence of this Section if Borrower
timely comply(ies) with all requirements imposed by the foregoing sentence and all requirements of the Anti-Terrorism
Regulations and all other applicable Laws relating to such OFAC Violation.
Borrower acknowledge(s), represent(s) and warrant(s) to Holder that:
(a)
household purposes); and
the primary purpose for the within loan is business and investment (and not for personal, family or
none of the proceeds to be distributed under this Promissory Note will be used to acquire (or refinance
(b)
the acquisition price of) real property or personal prope1iy which was or is to be used as a primary residence of
Borrower or any other party to any of the Loan Documents.
Without limiting the right of Holder to bring any action or proceeding against the undersigned or its property arising out
of or relating to the Obligations, as defined in the Instrument, (an "Action") in the courts of other jurisdictions to the extent
necessary to satisfy jurisdiction and venue requirements as to Borrower (the "Jurisdiction and Venue Exception"), Holder and
Borrower hereby irrevocably submit to the jurisdiction of any state circuit court in Florida having jurisdiction over any cause of
action set forth in the Action for any county in which any part of the Premises is located even if located in more than one county
and regardless of whether such counties are contiguous or in any United States District Court for the district including any said
counties where the Premises are located. Further, subject to the Jurisdiction and Venue Exception, Holder and Borrower hereby
irrevocably agree that any Action may be heard and determined in any of such state circuit court or in any such federal district
court as the sole and exclusive courts and venue for any such Action. Holder, subject to the Jurisdiction and Venue Exception,
and Borrower hereby irrevocably waive, to the fullest extent that it may effectively do so, the defense of an inconvenient forum
to the maintenance of any Action in such jurisdiction. Holder, subject to the Jurisdiction and Venue Exception, and Borrower
hereby irrevocably agree that the summons and complaint or any other process in any Action in any jurisdiction may be served in
any manner authorized b y applicable law. Such service will be complete as provided under applicable law and the time to
respond shall be governed by applicable law.
WAIVER OF JURY TRIAL. THE BORROWER, HOLDER AND ALL ENDORSERS, GUARANTORS AND
SURETIES, T O THE FULL EXTENT PERMITTED BY LAW, DO HEREBY WAIVE A N D COVENANT THAT
EACH WILL NOT ASSERT, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, ANY RIGHT TO TRIAL
BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE O F ACTION
ARISING OUT OF OR BASED UPON THIS PROMISSORY NOTE, T H E SUBJECT MATTER HEREOF, THE
OTHER NOTES, THE INSTRUMENT O R ANY LOAN DOCUMENT(S) O R OTHER INSTRUMENT RELATING
HERETO, I N EACH CASE WHETHER N O W EXISTING OR HEREAFTER ARISING O R WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE.
[SIGNATURE BLOCKS ON SUBSEQUENT PAGES]
IN WITNESS WHEREOF, this Promissory Note has been executed by as of the date first set forth above.
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
PREPAYMENT RIDER
Subject to payment of the Prepayment Premium referred to below, if any, and all accrued interest and other sums due
under this Promissory Note, Borrower shall have the right to prepay all or any part of the outstanding principal balance of this
Promissory Note, on any date (the "Prepayment Date"), upon giving not less than thirty (30) days prior written notice to Holder
of Borrower's intention to prepay. Any partial prepayment must be in a minimum amount of Two Hundred Fifty Thousand and
No/100 ($250,000.00). No partial prepayment shall result in any adjustment of the amount of the scheduled payments thereafter
becoming due.
If all or any portion of the outstanding principal balance of this Promissory Note is prepaid for any reason whether
voluntary or involuntary or after acceleration by Holder upon a default by Borrower under this Promissory Note, the Instrument
or any Loan Document, Borrower shall pay Holder a prepayment premium (the "Prepayment Premium") equal to the greater of
(i) or (ii) below:
(i)
one half of one percent (0.50%) of the principal amount of this Promissory Note being prepaid; or,
(ii)
an amount equal to the Present Value of Loan E (as hereinafter defined) less the amount of principal of
this Promissory Note being prepaid including accrued interest, if any, calculated as of the Prepayment Date.
Holder will notify Borrower of the amount and basis of the determination of the Prepayment Premium. On or before the
Prepayment Date, Borrower shall pay to Holder the Prepayment Premium together with the amount of the principal being
prepaid and all accrued interest and other sums due under this Promissory Note and under Loan E.
Holder shall not be obligated to accept any prepayment of the principal balance of this Promissory Note unless such
prepayment is accompanied by any Prepayment Premium, all accrued interest and all other sums due under Loan E.
For the purposes of determining the Prepayment Premium, the following terms shall have the following meanings:
The "Treasury Rate" is the semi-annual yield on the Treasury Constant Maturity Series with maturity equal to
the remaining weighted average life of Loan E, for the week prior to the Prepayment Date, as reported in Federal Reserve
Statistical Release
H.15 - Selected Interest Rates, conclusively determined by Holder on the Prepayment Date. The rate will be determined
by linear interpolation between the yields reported in Release H.15, if necessary. In the event Release H.15 is no longer
published, Holder shall select a comparable publication to determine the Treasury Rate.
The "Discount Rate" is the rate which, when compounded quarterly, 1s equivalent to the Treasury Rate, when
compounded semi-annually.
The "Present Value of Loan E" shall be determined by discounting all scheduled payments of principal and
interest (at the Note Rate even if interest is then accruing a t the Default Rate) remaining through the Maturity Date
attributed to the amount being prepaid under this Promissory Note, at the Discount Rate. If prepayment occurs on a date
other than a regularly scheduled payment date, the actual number of days remaining from the Prepayment Date to the
next regularly scheduled payment date will be used to discount within this period.
Borrower agrees that Holder shall not be obligated to reinvest the amount prepaid in any Treasury obligations as
a condition precedent to receiving the Prepayment Premium.
A default by Borrower in any payment of any amount(s) due under this Promissory Note or a default or breach of any of
Borrower's duties and obligations under the Instrument or any of
the other Loan Documents as to which Holder accelerates all indebtedness due under this Promissory Note, shall conclusively be
deemed an effort by the Borrower to effect a voluntary prepayment of the Promissory Note. The Prepayment Premium for such
voluntary prepayment shall become effective, due and payable as of the day prior to the date of acceleration of this Promissory
Note (the "Effective Date"). The related Prepayment Premium, whether paid from the proceeds of a foreclosure sale or
otherwise, shall be calculated, due, and payable as of the Effective Date.
It is the express intention of the parties that any application of the Default Rate before, upon and/or after acceleration of
the indebtedness due under this Promissory Note by Holder as permitted in this Promissory Note is in addition to, and not in lieu
of any Prepayment Premium provided for herein whether any Event of Default upon which acceleration is based is intentional or
unintentional. In addition to voluntary prepayments, the above Prepayment Premium shall also be due upon involuntary and
voluntary defaults upon acceleration of the indebtedness due hereby by Holder and is not in lieu of the right to accelerate and
shall be in addition to the collection of interest at the Default Rate under the Promissory Note and in addition to the collection of
Late Charges under the Promissory Note.
No unscheduled prepayment of amounts due under this Promissory Note, whether made pursuant to the provisions of this
Rider, or otherwise, shall result in the adjustment or reduction of any scheduled payment of principal and interest as set forth in
this Promissory Note.
[SIGNATURE AND NOTARY BLOCKS ON SUBSEQUENT PAGES)
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
Florida documentary stamp tax
in the amount of $19,250.00 calculated on the $5,500,000.00 total of the face
amount of this Promissory paid on the Instrument being recorded in the Public Records of
Charlotte County, Florida on or about the date hereof.
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, as the Chief Executive Officer of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and
acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
PROMISSORY NOTE F
(Adjustable Rate)
U.S. $5,500,000.00 September 4th, 2014
FOR VALUE RECEIVED, the undersigned, 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC
GROVES, LLC, a Florida limited liability company, 734 CO OP GROVES, LLC, a Florida limited liability company, 734
BLP GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited liability company,
being collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said
four limited liability companies both separately and collectively), jointly and severally, promise to pay to the order of
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company, its successors and
assigns ("Holder") the principal sum of Five Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00), with
interest thereon, from the date hereof until the Maturity Date payable as provided herein at the initial interest rate of three and
forty-five hundredths (3.45%) percent per annum, which initial interest rate is subject to adjustment as provided below.
Capitalized terms used herein without definition shall have the meanings ascribed to them in the Instrument, as defined herein.
The principal and interest of this Promissory Note F (" Promissory Note" and the loan evidenced thereby are referred to
herein as "Loan F") are to be paid in installments as follows:
(i)
quarterly interest payments of accrued interest on the principal balance remaining outstanding, from time to
time, shall be paid by Borrower to Holder beginning on the first (1st) day of December, 2014 and continuing on the first
(1st) day of each March, June, September and December thereafter; and
(ii)
quarterly principal reduction payments shall be made by B01Tower t o Holder in the amount of Fifty Five
Thousand and No/100 Dollars (U.S. $55,000.00) each, commencing on the first (1st) day of March, 2015 and continuing
on the first (1st) day of each June, September, December and March thereafter; and
(iii)
the entire then remaining outstanding balance of all principal and accrued interest thereon shall be due and
payable, in full, on the first (1st) day of September, 2039 (the "Maturity Date").
On September 1, 2019 (the "First Change Date"), Holder shall have the right to adjust the Note Rate to the interest rate
per annum equal to Holder's Adjusted Contract Rate (as defined below). Prior to the First Change Date, Holder shall give the
Borrower written notice of the Adjusted Contract Rate to be applicable to this Promissory Note for the five (5) year period
commencing on the First Change Date (the "Adjustment Notice"). Borrower shall be deemed to have accepted the Adjusted
Contract Rate as the New Note Rate if Borrower does not pay all of the then outstanding balance of principal and interest due
under this Promissory Note on the First Change Date. In the event the Borrower accepts the Adjusted Contract Rate as the New
Note Rate by not paying this Promissory Note in full on the First Change Date after having received an Adjustment Notice from
Holder, then the regularly scheduled quarterly installment payment of interest and regularly scheduled quarterly installment of
principal, shall be due and payable on the First Change Date and the New Note Rate will be as set forth in the Adjustment
Notice for the five (5) year period commencing on the First Change Date.
On September 1, 2024, September 1, 2029 and September 1, 2034 (the "Subsequent Change Dates"), Holder shall again
have the right to adjust the Note Rate to the rate per annum equal to Holder's Adjusted Contract Rate. The Adjustment Notice
procedure and the Borrower's acceptance of the Adjusted Contract Rate as the new Note Rate if Borrower does not pay all of the
outstanding balance of principal and interest due under this Promissory Note on the Subsequent Change Dates shall be the same
as set forth above for the First Change Date.
The term "Adjusted Contract Rate" means the interest rate, as determined by Holder in its sole discretion, at which
Holder would be willing to make a loan on the First Change Date or on any Subsequent Change Date in the amount of the then
remaining unpaid principal balance of this Promissory Note to a comparable borrower with a net worth and financial position
equal to that of Borrower on the First Change Date or any Subsequent Change Date and secured by similar collateral of
comparable value, age, condition, marketability and utility to the remaining collateral securing this Promissory Note.
Holder shall not be required to provide Borrower with a new Adjusted Contract Rate on the First Change Date or on any
Subsequent Change Date if (i) the Borrower is in default under any term or provisions of this Promissory Note, the Instrument
securing this Promissory Note or any other Loan Document or (ii) Borrower has not delivered to Holder any and all financial
information related to the Borrower and/or the real and personal property pledged as collateral for this Promissory Note or to the
operation thereof, as Holder may reasonably request, in order for Holder to perform a review of the then remaining indebtedness
to determine the Adjusted Contract Rate. The parties agree that a default by Borrower in any of the matters set forth in items (i)
through (ii) of this paragraph shall constitute a material default under this Promissory Note and, in the event of such default,
Holder may, at its sole and absolute discretion, declare a default under this Promissory Note whereupon this Promissory Note
shall become immediately due and payable in full.
Unless otherwise provided by law, all payments made by Borrower will be applied first to any costs and expenses
incurred by Holder in enforcing or collecting this Promissory Note, including reasonable attorney fees, and then to any advances
and expenditures made by Holder to protect its interests under this Promissory Note, the Instrument or any other document given
to secure Borrower's payment of this indebtedness. Any remaining amounts will then be applied to interest due with the balance,
if any, to be applied on account of principal.
For the purposes of calculating interest under this Promissory Note, a year of 360 day consisting of twelve (12) thirty
(30) day months shall be employed regardless of the actual time elapsed.
All payments under this Promissory Note shall be made, without offset or deduction,
(a)
in lawful money of the United States of America at the office of Holder or at such other place (and in the manner)
Holder may specify by written notice to Borrower, (b) in immediately available federal funds by federal wire transfer, and (c) if
received by Holder prior to 2 P.M. local time in the place so designated by Holder for payments under this Promissory Note,
shall be credited on that day, or, if received by Holder on or after 2 P.M. local time in the place so designated by Holder for
payments under this Promissory Note, shall, at Holder's option, be credited on the next Business Day. If any payment due date
falls on a day which is not a Business Day, then the payment due date shall be deemed to have fallen on the next succeeding
Business Day. The term "Business Day" shall mean each Monday through Friday except for days in which commercial banks are
not authorized to open or are required by law to close in the State in which the place designated by Holder for payments under
this Promissory Note is located.
Both principal and interest shall be payable in lawful money of the United States of America by federal wire transfer
unless directed by Holder in writing to be otherwise forwarded to Prudential Asset Resources, Inc. Mortgage Loan Servicing,
2100 Ross Avenue, Suite 2500, Dallas, Texas 75201 or such other place as the Holder hereof may, from time to time, designate
in writing.
In the event that any payment of principal and/or interest due under this Promissory Note should not be fully made by the
fifth (5th) day following the due date thereof, then:
(A).
A late charge of $0.05 for each ($1.00) Dollar of such payment shall automatically become due to the Holder
of this Promissory Note and be secured by the Instrument. This charge shall be in addition to all other rights and
remedies available to the Holder of this Promissory Note upon the occurrence of a default under the Promissory Note or
any other Loan Document (as hereinafter defined); and
(B).
The Holder of this Promissory Note shall have the right, upon written notice to Borrower, to increase the rate
of interest per annum on the entire principal balance of this Promissory Note then outstanding, from the Note Rate to the
Default Rate (as hereinafter defined) and, upon said notice and unless Borrower shall pay to Holder the amount of such
overdue payment together with the late charge assessed thereon within three (3) Business Days of Borrower's receipt of
said notice (which receipt shall be conclusively presumed to have occurred on the third Business Day following the date
such notice was placed in the mail with the United States Postal Service or on the date of actual delivery if delivered
personally or by private carrier/messenger service), such increase to the Default Rate shall remain in force and effect for
so long as such default shall continue or the Holder otherwise agrees. Interest at the Default Rate is in addition to and not
in lieu of any Prepayment Premium due after acceleration of the indebtedness due hereunder by Holder after an Event of
Default. The Default Rate shall also apply to any judgment obtained with respect to the Obligations and/or any Loan
Document from the date such judgment becomes due and owing under a final and non-appealable order until the amount
of such judgment is paid in full.
As used herein, "Note Rate" is defined as the contract rate of interest stated above in the first paragraph of this Promissory Note.
"Default Rate" is defined as the lesser of (i) the maximum rate allowed by applicable law or (ii) the per annum rate equal to the
Note Rate plus Five Percent (5%).
The Borrower severally waives presentment for payment, demand, notice of demand and of dishonor and nonpayment of
this Promissory Note, notice of intention to accelerate and notice of acceleration of the maturity of this Promissory Note, protest
and notice of protest, diligence in collecting and the bringing of suit against any other party and said Borrower agrees t o all
renewals, extensions, modifications, partial payments, releases or substitutions of security, in whole or in part, with or without
notice, before or after maturity, all without in any way affecting the liability of Borrower under this Promissory Note.
Should this Promissory Note be signed by more than one person and/or firm and/or corporation, all of the obligations
herein contained shall be considered joint and several obligations of each signer hereof.
This Promissory Note evidences Borrower's unconditional obligation to repay the indebtedness described herein. This
Promissory Note and interest hereon are secured by a Mortgage and Security Agreement of even date herewith by Borrower to
Holder (the "Instrument") to be recorded in the Public Records of Charlotte County, which Instrument encumbers property
located in said county and, unless otherwise stated herein, this Promissory Note is to be construed according to the laws of the
State of Florida. The payment of this Promissory Note is secured by, among other things, the Collateral as defined in
aforementioned Instrument. A default by Borrower under the Instrument is a default herein and Borrower shall observe and
perform all of the terms and conditions in the Loan Documents as defined in the Instrument. Said Loan Documents are
incorporated into this Promissory Note as if fully set forth herein. A default under Promissory Note A in the face amount of
Fourteen Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder dated December 31,
2012 evidencing Loan 717610613 ("Note A", the loan evidenced thereby is referred to as "Loan A" and the loan documents
pertaining thereto are referred to as the "Loan A Loan Documents"), Promissory Note B in the face amount of Fourteen Million
Five Hundred Thousand and No/100 Dollars ($14,500,000.00) from Borrower to Holder dated December 31, 2012 evidencing
Loan 717610637 ("Note B", the loan evidenced thereby is referred to as "Loan B and the loan documents pertaining thereto are
referred to as the "Loan B Loan Documents"), Future Advance Promissory Note D (Adjustable Rate) in the face amount of up to
Six Million and No/100 Dollars ($6,000,000.00) from Borrower to Holder dated March 26, 2013 evidencing Loan 717610647
("Note D", the loan evidenced thereby is referred to as "Loan D", and the loan documents pertaining thereto are referred to as the
"Loan D Loan Documents") and/or under Promissory Note F in the face amount of Five Million Five Hundred Thousand and
No/100 Dollars ($5,500,000.00) from Borrower to Holder dated of even date herewith evidencing Loan 717610897 ("Note E",
the loan evidenced thereby is referred to as "Loan E and the loan documents pertaining thereto are referred to as the "Loan E
Loan Documents", said Note A, Note
B, Note D and Note E are collectively referred to as the "Other Notes", Loan A, Loan B, Loan D, and Loan F are collectively
referred to as the "Other Loans" and the Loan A Loan Documents, Loan B Loan Documents, Loan D Loan Documents and Loan
E Loan Documents, are collectively referred to as the "Other Loan Documents"). A default in this Promissory Note, after
expiration of all applicable grace and notice periods herein, is a default in the Other Notes and in the other Loan Documents and
a default in the Other Notes and/or in the Other Loan Documents, after expiration of all applicable grace and notice periods
therein, is a default herein. The Collateral for the Other Loans also secures the obligations of Borrower under this Promissory
Note and under the Loan Documents and the Collateral for this Promissory Note also secures the obligations of Borrower under
the Other Notes and under the Other Loan Documents.
This Promissory Note may be declared due (accelerated) at the option of the Holder hereof prior to its expressed
maturity date for an Event of Default, as defined in the Instrument and after the expiration of applicable grace and notice periods
therein. In the event of such acceleration, all of the then remaining principal and interest, together with any Prepayment Premium
due under the terms of this Promissory Note shall become at once due and payable without further notice, demand or
presentment for payment. Borrower agrees that any Prepayment Premium due upon any such acceleration by Holder is in
addition to the remedy of acceleration and is not in lieu thereof and is in addition to both the collection of interest at the Note
Rate or Default Rate, as applicable, and collection of Late Charges hereunder.
The privilege granted to Borrower to make unscheduled principal reduction payments of the indebtedness evidenced by
this Promissory Note and the terms under which this Promissory Note may be prepaid by Borrower and the applicable
Prepayment Premium (as defined in the Prepayment Rider) that will be due upon any such unscheduled prepayment(s) of this
indebtedness are set forth in the Prepayment Rider attached hereto and incorporated herein by this reference. Terms defined in
this Promissory Note shall also be applicable to the use of such terms in the Prepayment Rider.
It is the intent of the Holder of this Promissory Note and the Borrower in the execution of this Promissory Note, the
Loan Documents and all other instruments now or hereafter securing this Promissory Note to contract in strict compliance with
all applicable laws and, in particular, with applicable usury law. In furtherance thereof, said Holder and the Borrower stipulate
and agree that none of the terms and provisions contained in this Promissory Note, or in any other instrument executed in
connection herewith, shall ever be construed to create a contract to pay interest at a rate in excess of the maximum interest rate
permitted to be charged by applicable law for the use, forbearance or detention of money or to pay any other amount not
permitted by law. Neither the Borrower nor any guarantors, endorsers or other parties now or hereafter becoming liable for
payment of this Promissory Note shall ever be required to pay interest on this Promissory Note at a rate in excess of the
maximum interest that may be lawfully charged or to make any other payment(s) not permitted under applicable law. The
provisions of this paragraph shall control over all other provisions of this Promissory Note and any other instruments now or
hereafter executed in connection herewith which may be in apparent conflict herewith. The Holder of this Promissory Note
expressly disavows any intention to charge any amount not permitted by law or to collect excessive, unearned interest or finance
charges under this Promissory Note, or in the event the maturity of this Promissory Note is accelerated. If the maturity of this
Promissory Note shall be accelerated, for any reason, or if the principal of this Promissory Note is paid prior to the end of the
term of this Promissory Note and, as a result thereof, the interest or any other charge received for the actual period of existence of
the loan evidenced by this Promissory Note exceeds the applicable maximum lawful rate for such interest or other charge, the
Holder of this Promissory Note shall, at its option, either refund to the Borrower the amount of such excess or credit the amount
of such excess against the principal balance of this Promissory Note then outstanding and thereby shall render inapplicable any
and all penalties of any kind provided by applicable law as a result of such excess interest or other charge. In the event that any
Holder of this Promissory Note shall collect monies which are deemed to constitute interest which would increase the effective
interest rate on this Promissory Note to a rate in excess of that permitted to be charged by applicable law, all such sums deemed
to constitute interest in excess of the lawful rate shall, upon such determination, at the option of the Holder of this Promissory
Note be either immediately returned to the Borrower or credit
against the principal balance of this Promissory Note then outstanding, in which event any and all penalties of any kind under
applicable law as a result of such excess interest shall be inapplicable. By execution of this Promissory Note the Borrower
acknowledge(s) that B01rnwer believe(s) the loan evidenced by this Promissory Note to be non-usurious and agrees that if, at
any time, the Borrower should have reason to believe that such loan is in fact usurious or any other charge exceeds that
permitted by applicable law, Borrower will give the Holder of this Promissory Note notice of such condition and the Borrower
agree(s) that said Holder shall have thirty (30) days in which to make appropriate refund or other adjustment in order to correct
such condition, if in fact such exists. The term "applicable law" as used in this Promissory Note shall mean the laws of the State
Florida; as such laws now exist or may be changed or amended or come into effect in the future.
Should the indebtedness represented by this Promissory Note or any part thereof be enforced or collected at law or in
equity or through any bankruptcy, receivership, probate or other court proceedings or if this Promissory Note is placed in the
hands of attorneys for collection after default, and expiration of all applicable grace and notice periods, the Borrower agrees to
pay to the Holder of this Promissory Note, in addition to the principal and interest due and payable hereon and to the full extent
permitted by law, all reasonable attorneys' fees and reasonable costs of collection. For purposes of this paragraph "costs of
collection" shall be deemed to include (by way of example and not by limitation), among other reasonable costs, all reasonable
costs incurred in securing and protecting any of the real property or personal property described in the Loan Documents and
Holder's interest therein, together with all reasonable fees and expenses charged by the attorneys engaged by Holder for
collection purposes.
Any forbearance, failure or delay by Holder in exercising any right, power or remedy provided herein or in the Loan
Documents or provided by law shall not preclude a further or subsequent exercise thereof or constitute a waiver of default by
Borrower and every such right, power or remedy of Holder shall continue in full force and effect unless such right, power and
remedy and each such default or breach by Borrower is separately and specifically waived by Holder in writing.
If any clause, term or provision of this Promissory Note or any of the Loan Documents is held to be unenforceable by a
court of competent jurisdiction, said clause, term, provision so held to be unenforceable shall be stricken and all the remaining
portions of this Promissory Note and/or the Loan Documents shall remain in full force and effect.
Borrower and all persons or entities holding any legal or beneficial interest whatsoever in Borrower or any security for
this Promissory Note are not included in, owned by, controlled by, acting for or on behalf of, providing assistance, support,
sponsorship, or services or any kind to, or otherwise associated with any of the persons or entities referred to or described in
Executive Order 13224 - Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or
Support Terrorism, as amended. It shall constitute an Event of Default hereunder and under the Instrument securing this
instrument if the foregoing representation and warranty shall ever become false.
Neither Borrower, nor any persons holding any legal or beneficial interest whatsoever in any collateral given by
Borrower to secure this Promissory Note shall, at any time during the term of the loan evidenced by this Promissory Note, be
described in, covered by or specially designated pursuant to or be affiliated with any persons described in, covered by or
specially designated pursuant to Executive Order 13224, as amended, or any similar list issued by the Office of Foreign Assets
Control ("OFAC") or any other department or agency of the United States of America. Notwithstanding the foregoing, Borrower
hereby confirm(s) that if he/she//they/it become(s) aware or receives any notice of any violation of the foregoing covenant and
agreement (an "OFAC Violation") Borrower will immediately (i) give notice to Holder of such OFAC Violation, and (ii) comply
with all Laws applicable to such OFAC Violation, including, without limitation, Executive Order 13224; the International
Emergency Economic Powers Act 50 U.S.C. Sections 1701-06; the Iraqi Sanctions Act, Pub. L. 101-513,
104 Stat. 2047-55; the United Nations Participation Act, 22 U.S.C. Section 287c; the Antiterrorism and Effective Death Penalty
Act, (enacting 8 U.S.C. Section 219, 18 U.S.C. Section 2332d and 18 U.S.C. Section 2339b); the International Security and
Development
Cooperation Act, 22 U.S.C. Section 2349 aa-9; the Terrorism Sanctions Regulations, 31 C.F.R. Part 595; the Terrorism List
Governments Sanctions Regulations, 31. C.F.R Part 596; and the Foreign Te1Torist Organizations Sanctions Regulations, 31
C.F.R. Part 597 (collectively, the "Anti-Terrorism Regulations") and Borrower hereby authorize(s) and consent(s) t o Holder's
taking any and all reasonable steps Holder deems necessary, in its sole discretion, to comply with all Laws applicable to any such
OFAC Violation, including the requirements of the AntiTerrorism Regulations. Notwithstanding anything to the contrary in this
Section, Borrower shall not be deemed to be in violation of the covenants and agreements set forth in the first sentence of this
Section if B01Tower timely comply(ies) with all requirements imposed by the foregoing sentence and all requirements of the
Anti-Terrorism Regulations and all other applicable Laws relating to such OFAC Violation.
Borrower acknowledge(s), represent(s) and warrant(s) to Holder that:
(a)
household purposes); and
the primary purpose for the within loan is business and investment (and not for personal, family or
none of the proceeds to be distributed under this Promissory Note will be used to acquire (or refinance
(b)
the acquisition price of) real property or personal property which was or is to be used as a primary residence of
Borrower or any other party to any of the Loan Documents.
Without limiting the right of Holder to bring any action or proceeding against the undersigned or its property arising out
of or relating to the Obligations, as defined in the Instrument, (an "Action") in the courts of other jurisdictions to the extent
necessary to satisfy jurisdiction and venue requirements as to B01Tower (the "Jurisdiction and Venue Exception"), Holder and
Borrower hereby irrevocably submit to the jurisdiction of any state circuit court in Florida having jurisdiction over any cause of
action set forth in the Action for any county in which any part of the Premises is located even if located in more than one county
and regardless of whether such counties are contiguous or in any United States District Court for
the district including any said counties where the Premises are located. Further, subject to the Jurisdiction and Venue Exception,
Holder and Borrower hereby irrevocably agree that any Action may be
heard and determined in any of such state circuit court or in any such federal district court as the sole and exclusive courts and
venue for any such Action. Holder, subject to the Jurisdiction and Venue Exception, and Borrower hereby irrevocably waive, to
the fullest extent that it may effectively do so, the defense of an inconvenient forum to the maintenance of any Action in such
jurisdiction. Holder, subject to the Jurisdiction and Venue Exception, and Borrower hereby irrevocably agree that the summons
and complaint or any other process in any Action in any jurisdiction may be served in any manner authorized by applicable law.
Such service will be complete as provided under applicable law and the time to respond shall be governed by applicable law.
WAIVER OF JURY TRIAL. THE BORROWER, HOLDER AND ALL ENDORSERS, GUARANTORS AND
SURETIES, TO THE FULL EXTENT PERMITTED BY LAW, DO HEREBY WAIVE AND COVENANT THAT
EACH WILL NOT ASSERT, WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE, ANY RIGHT TO TRIAL
BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS PROMISSORY NOTE, THE SUBJECT MATTER HEREOF, THE
OTHER NOTES, THE INSTRUMENT OR ANY LOAN DOCUMENT(S) OR OTHER INSTRUMENT RELATING
HERETO, IN EACH C A S E WHETHER N O W EXISTING OR HEREAFTER ARISING OR WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE.
[SIGNATURE BLOCKS ON SUBSEQUENT PAGES]
IN WITNESS WHEREOF, this Promissory Note has been executed by as of the date first set forth above.
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
PREPAYMENT RIDER
Subject to payment of the Prepayment Premium referred to below and all accrued interest and other sums due under this
Promissory Note, Borrower shall have the right to prepay all or any part of the outstanding principal balance of this Promissory
Note, on any date (the "Prepayment Date"), upon giving not less than thirty (30) days prior written notice to Holder of
Borrower's intention to prepay. Any partial prepayment must be in a minimum amount of Two Hundred Fifty Thousand and
No/100 ($250,000.00). No partial prepayment shall result in any adjustment of the amount of the scheduled payments thereafter
becoming due.
If within five (5) years after the date of this Promissory Note (the "Prepayment Premium Period") all or any portion of
the outstanding principal balance of this Promissory Note is prepaid for any reason whether voluntary or involuntary or after
acceleration by Holder upon a default by Borrower under this Promissory Note, the Instrument or any Loan Document,
Borrower shall pay Holder a prepayment premium (the "Prepayment Premium") equal to the greater of (i) or (ii) below:
(i)
one half of one percent (0.50%) of the principal amount of this Promissory Note being prepaid; or,
(ii)
an amount equal to the Present Value of Loan F (as hereinafter defined) less the amount of principal of
this Promissory Note being prepaid including accrued interest, if any, calculated as of the Prepayment Date.
Holder will notify Borrower of the amount and basis of the determination of the Prepayment Premium. On or before the
Prepayment Date, Borrower shall pay to Holder the Prepayment Premium together with the amount of the principal being
prepaid and all accrued interest and other sums due under this Promissory Note and under Loan F.
Holder shall not be obligated to accept any prepayment of the principal balance of this Promissory Note unless such
prepayment is accompanied by any Prepayment Premium, all accrued interest and all other sums due under Loan F.
For the purposes of determining the Prepayment Premium, the following terms shall have the following meanings:
The "Treasury Rate" is the semi-annual yield on the Treasury Constant Maturity Series with maturity equal to
the remaining weighted average life o f Loan F, for the week prior t o the Prepayment Date, as reported i n Federal
Reserve Statistical Release
H.15 - Selected Interest Rates, conclusively determined by Holder on the Prepayment Date. The rate will be determined
by linear interpolation between the yields reported in Release H.15, if necessary. In the event Release H.15 is no longer
published, Holder shall select a comparable publication to determine the Treasury Rate.
The "Discount Rate" is the rate which, when compounded quarterly, is equivalent to the Treasury Rate, when
compounded semi-annually.
The "Present Value of Loan F" shall be determined by discounting all scheduled payments of principal and
interest (at the Note Rate even if interest is then accruing at the Default Rate) remaining through the Maturity Date
attributed to the amount being prepaid under this Promissory Note, at the Discount Rate. If prepayment occurs on a date
other than a regularly scheduled payment date, the actual number of days remaining from the Prepayment Date to the
next regularly scheduled payment date will be used to discount within this period.
Borrower agrees that Holder shall not be obligated to reinvest the amount prepaid in any Treasury obligations as
a condition precedent to receiving the Prepayment Premium.
A default by Borrower in any payment of any amount(s) due under this Promissory Note or a default or breach of any of
Borrower's duties and obligations under the Instrument or any of the other Loan Documents as to which Holder accelerates all
indebtedness due under this Promissory Note, shall conclusively be deemed an effort by the Borrower to effect a voluntary
prepayment of the Promissory Note. The Prepayment Premium for such voluntary prepayment shall become effective, due and
payable as of the day prior to the date of acceleration of this Promissory Note (the "Effective Date"). The related Prepayment
Premium, whether paid from the proceeds of a foreclosure sale or otherwise, shall be calculated, due, and payable as of the
Effective Date.
Unscheduled prepayments (whether voluntary or involuntary or after acceleration by Holder upon a default by Borrower
under this Promissory Note), made on this Promissory Note after the Prepayment Premium Period shall not be subject to the
payment of the Prepayment Premium.
It is the express intention of the parties that any application of the Default Rate before, upon and/or after acceleration of
the indebtedness due under this Promissory Note by Holder as permitted in this Promissory Note is in addition to, and not in lieu
of any Prepayment Premium provided for herein whether any Event of Default upon which acceleration is based is intentional or
unintentional. In addition to voluntary prepayments, the above Prepayment Premium shall also be due upon involuntary and
voluntary defaults upon acceleration of the indebtedness due hereby by Holder during the Prepayment Premium Period and is not
in lieu of the right to accelerate and shall be in addition to the collection of interest at the Default Rate under the Promissory Note
and in addition to the collection of Late Charges under the Promissory Note.
No unscheduled prepayment of amounts due under this Promissory Note, whether made pursuant to the provisions of this
Rider, or otherwise, shall result in the adjustment or reduction of any scheduled payment of principal and interest as set forth in
this Promissory Note.
[SIGNATURE AND NOTARY BLOCKS ON SUBSEQUENT PAGES]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
Florida documentary stamp tax
in the amount of $19,250.00 calculated on the $5,500,000.00 total of the face
amount of this Promissory Note paid on the Instrument being recorded in the Public Records of
Charlotte County, Florida on or about the date hereof.
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, as the Chief Executive Officer of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and
acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
Loan Numbers:
717610897
717610898
FIRST AMENDMENT TO LOAN AGREEMENT
(Loan E and F)
THIS FIRST AMENDMENT TO LOAN AGREEMENT (Loan E and F) (the "Loan E
and F First Amendment") is made and entered into as of the 23rd day of April, 2015 (the "Loan E and F First Amendment
Effective Date"), by and among 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC GROVES,
LLC, a Florida limited liability company, 734 CO-OP GROVES, LLC, a Florida limited liability company, 7 3 4 BLP
GROVES, LLC, a Florida limited liability company, and 734 HARVEST, LLC, a Florida limited liability company, being
collectively referred to as the "Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said five
limited liability companies both separately and collectively), jointly and severally, all having an office and place of business at
10070 Daniels Interstate Court, Suite 100, Fort Myers, Florida 33913, and PRUDENTIAL MORTGAGE CAPITAL
COMPANY, LLC, a Delaware limited liability company, having an office and place of business at 801 Warrenville Road, Suite
150, Lisle, Illinois 60532-1357 (referred to herein as the "Lender").
WITNESSETH:
WHEREAS, Borrower executed in favor of Lender that certain Promissory Note A in the face amount of Fourteen
Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 ("Note A", and the loan
evidenced thereby is known as Loan 717610613 and is referred to as "Loan A"), that certain Promissory Note B in the face
amount of Fourteen Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 ("Note B",
and the loan evidenced thereby is known as Loan 717610637 and is referred to as "Loan B" and Note A and Note B are
collectively herein referred to as "Notes A and B" with Loan A and Loan B herein referred to as " Loans A and B "), and a
Promissory Note C in the face amount of Five Million Dollars ($5,000,000.00) which was never disbursed, was heretofore
canceled and is no longer in force and effect;
WHEREAS, in connection with the execution and delivery of Notes A and B, Borrower and Lender executed that
certain Loan Agreement dated December 31, 2012 (the "2012 Original Loan Agreement");
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Mortgage and Security
Agreement dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book
4872, Page 2431, in the Public Records of Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as
Instrument
Number 201325000089, in the Public Records of Hardee, County, Florida, one counterpart of which was recorded on January 4,
2013 in Official Records Book 856, Page 1833, in the Public Records of Hendry County, Florida, one counterpart of which was
recorded on January 3, 2013 in Official Records Book 2359, Page 1500, in the Public Records of Highlands, County, Florida,
one counterpart of which was recorded on January 3, 2013 in Official Records Book 2622, Page 1255, in the Public Records of
Martin, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4375, Page 689, in the
Public Records of Osceola County, Florida and one counterpart of which was recorded on January 3, 2013 in Official Records
Book 08841, Page 0130, in the Public Records of Polk County, Florida, encumbering property located in said counties securing
Notes A and B (the "2012 Original Security Instrument");
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Assignment of Leases and Rents
dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4872, Page
2510, in the Public Records of Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as Instrument
Number 201325000090, in the Public Records of Hardee, County, Florida, one counterpart of which was recorded on January 4,
2013 in Official Records Book 856, Page 1912, in the Public Records of Hendry County, Florida, one counterpart of which was
recorded on January 3, 2013 in Official Records Book 2359, Page 1579, in the Public Records of Highlands, County, Florida,
one counterpart of which was recorded on January 3, 2013 in Official Records Book 2622, Page 1334, in the Public Records of
Martin, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4375, Page 768, in the
Public Records of Osceola County, Florida and one counterpart of which was recorded on January 3, 2013 in Official Records
Book 08841, Page 0209, in the Public Records of Polk County, Florida, encumbering property located in said counties securing
Notes A and B (the "2012 Original Assignment of Leases and Rents");
WHEREAS, in connection with the execution and delivery of Notes A and B, the 2012 Original Security Instrument,
the 2012 Original Assignment of Leases and Rents, and the 2012 Original Loan Agreement, Borrower executed in favor of
Lender and/or Borrower and Lender entered into certain guarantees and other loan documents pertaining to Loan A and B (said
loan documents are collectively referred to as the "2012 Loan Documents");
WHEREAS, on March 26, 2013, Borrower executed in favor of Lender a Future Advance Promissory Note D in the
face amount of up to Six Million and No/100 Dollars ($6,000,000.00) evidencing a loan known as Loan 717610647 (referred to
herein as "Note D", and the revolving loan evidenced thereby being referred to as "Loan D"); Borrower and Lender executed a
First Amendment to Loan Agreement (the "2013 First Amendment to Loan Agreement" with the 2012 Original Loan Agreement
as amended thereby being referred to as the "2013 Loan Agreement"); Borrower and Lender executed a Modification of
Mortgage and Security Agreement and Modification of Other Loan Documents dated March 26, 2013 (the "2013 Modification"),
in seven counterparts, one of which was recorded on March 27, 2013 in Official Records Book 4901, Page 545, the Public
Records of Collier County, Florida, recorded on March 27, 2013 as Instrument 201325001828, Public Records of Hardee
County, Florida, on March 27, 2013 in Official Records Book 860, Page 400, Public Records of Hendry County, Florida, on
March 27, 2013 in Official Records Book 2371, Page 1945 Public Records of Highlands County, Florida, on March 27, 2013 in
Official Records Book 2639, Page 11743 Public Records of Martin
County, Florida, on March 27, 2013 in Official Records Book 4417, Page 2860 Public Records of Osceola County, Florida and
on March 27, 2013 in Official Records Book 8917, Page 377 Public Records of Polk County, Florida; and Borrower executed in
favor of Lender and/or Borrower and Lender entered into certain other guarantees of such loan documents and other loan
documents of even date therewith (Note D, the First Amendment to Loan Agreement, the 2013 Modification, and such other loan
documents related to the foregoing are herein collectively referred to as the "2013 Loan Documents" and the 2012 Original
Security Instrument, as modified by the 2013 Modification, is referred to as the "2013 Original Security Instrument", the 2012
Original Assignment of Leases and Rents as modified by the 2013 Modification is referred to as the "2013 Assignment of Leases
and Rents", and the 2012 Loan Documents as modified by the 2013 Loan Documents are referred to as the "2013 Loan A, B and
D Existing Loan Documents");
WHEREAS, on September 4, 2014 Borrower executed in favor of Lender a Promissory Note E in the face amount of up
to Five Million Five Hundred Thousand and Noll 00 Dollars ($5,500,000.00) evidencing a loan known as Loan 717610897
(referred to herein as "Note E", and the loan evidenced thereby being referred to as "Loan E"); Borrower executed in favor of
Lender a Promissory Note F in the face amount of up to Five Million Five Hundred Thousand and No/100 Dollars
($5,500,000.00) evidencing a loan known as Loan 717610898 (referred to herein as "Note F", and the loan evidenced thereby
being referred to as "Loan F"); Borrower executed in favor of Lender a Mortgage and Security Agreement dated September 4,
2014 and securing Loan E and Loan F and cross-collateralized with the 2013 Loan A, B and D Existing Loan Documents as
modified by said instrument, which was recorded on September 5, 2014 in Official Records Book 3898, Page 1387, Public
Records of Charlotte County, Florida (the "2014 Charlotte County Security Instrument"); Borrower executed in favor of Lender
an Assignment of Leases and Rents securing Loan E and Loan F and cross-collateralized with the 2013 Loan A, B and D
Existing Loan Documents as modified by the 2014 Loan A, B and D Modification (defined below), which instrument was
recorded on September 5, 2014 in Official Records Book 3898, Page 1450, Public Records of Charlotte County, Florida (the
"2014 Charlotte County Assignment of Leases and Rents"); Borrower and Lender entered into a Loan E and Loan F Loan
Agreement (the "2014 Loan E and F Loan Agreement"), Borrower and Lender executed a 2014 Second Amendment to Loan
Agreement dated September 4, 2014 (the "Second Amendment to Loan Agreement" with the 2013 Loan Agreement, as amended
thereby, being referred to as the "2014 Loan A, B and D Loan Agreement ") and certain guarantees of such loan documents and
certain other loan documents of even date therewith by Borrower in favor of Lender and/or between Borrower and Lender
pertaining to Loan E and Loan F (Note E, Note F, the 2014 Charlotte County Security Instrument, the 2014 Charlotte County
Assignment of Leases and Rents, the 2014 Loan E and F Loan Agreement, any guarantees as to Loan E and Loan F, and said
other loan documents (excluding the 2014 Second Amendment to Loan Agreement) are collectively referred to as the " 2014
Loan E and F Existing Loan Documents");
WHEREAS, on September 4, 2014, Borrower and Lender entered into a 2014 Modification of Mortgage and Security
Agreement and Modification of Other Loan Documents (the "2014 Loan A, B and D Modification" and the 2013 Original
Security Instrument as modified by the 2014 Loan A, B and D Modification, is referred to as the "2014 Loan A, B and D
Original Security Instrument" and the 2013 Loan A, B and D Existing Loan Documents as modified by the 2014 Loan A, B and
D Modification and by the 2014 Second Amendment to Loan Agreement are
referred to as the "2014 Loan A, B and D Existing Loan Documents"), in seven counterparts, one of which was recorded on
September 5, 2014 in Official Records Book 5074, Page 1814, the Public Records of Collier County, Florida, recorded on
September 5, 2014 as Instrument 201425005126, Public Records of Hardee County, Florida, on September 5, 2014 in Official
Records Book 882, Page 562, Public Records of Hendry County, Florida, on September 5, 2014 in Official Records Book 2443,
Page 802 Public Records of Highlands County, Florida, on September 5, 2014 in Official Records Book 2739, Page 278 Public
Records of Martin County, Florida, on September 5, 2014 in Official Records Book 4662, Page 223 Public Records of Osceola
County, Florida and on September 8, 2014 in Official Records Book 9333, Page 1419 Public Records of Polk County, modifying
the Loan A, B and D Existing Loan Documents to cross-default and cross-collateralize the same with the 2014 Loan E and F
Existing Loan Documents;
WHEREAS, 734 Sub, LLC, a Florida limited liability company has merged into 734 Citrus Holdings, LLC, a Florida
limited liability company with the latter being the surviving entity and with the result that Alico, Inc., a Florida corporation
("Alico") is the sole member of said surviving entity (the "Silver Nip Merger");
WHEREAS, the Borrower desires to provide a $7,000,000.00 Subsidiary Guaranty (the "Silver Nip Rabo Subsidiary
Guaranty") of the obligations of Alico, Alico-Agri, Ltd., a Florida limited partnership, Alico Land Development Inc., a Florida
corporation, Alico Plant World, L.L.C., a Florida limited liability company, Alico Fruit Company, LLC, a Florida limited
liability company, and Alico Citrus Nursery, LLC, a Florida limited liability company (collectively, " Alico Rabo Borrower")
under that certain Credit Agreement with Rabo Agrifinance, Inc., a Delaware corporation (" Rabo") dated December 1, 2014 as
amended by the First Amendment to Credit Agreement and Consent, pursuant to which Rabo has agreed to make certain
extensions of credit to the Alico Borrower in an aggregate principal amount of up to
$70,000,000.00 (the "Rabo Revolving Line-of-Credit Loan");
WHEREAS, the Borrower desires that Lender enter into an Intercreditor Agreement with Rabo on or about the date of
this Loan E and F First Amendment (the "Rabo Intercreditor Agreement"), which provides for a subordination, subject to the
terms, conditions and provisions therein, of Lender's lien and security interest in the crops and certain other collateral;
WHEREAS, the parties desire to modify and amend the 2014 Loan A, B and D Original Security Instrument by that
certain 2015 Modification of Mortgage and Security Agreement and Modification of Other Loan Documents of even date
herewith between Borrower and Lender, in seven counterparts to be recorded in the Public Records of the Florida Counties of
Collier, Hardee, Hendry, Highlands, Martin, Osceola and Polk (the " 2015 Loan A and B Modification ") and to modify the 2014
Loan A, B and D Loan Agreement by a Third Amendment to Loan Agreement of even date herewith between Borrower and
Lender (the "2015 Loan A and B Third Amendment " and the 2014 Loan A, B and D Loan Agreement, as modified by the 2015
Loan A and B Third Amendment, is referred to as the "Loan A and B Loan Agreement") to reflect the foregoing changes and the
loan document changes required by Lender as a result thereof and in consideration of Lender's consent and agreement thereto;
WHEREAS, the parties desire to modify and amend the 2014 Charlotte County Security Instrument by a 2015
Modification of Mortgage and Security Agreement and Modification of Other Loan Documents (Charlotte County) between
Borrower and Lender of even date herewith (the "2015 Loan E and F Modification"); and
WHEREAS, the parties desire to modify and amend the 2014 Loan E and F Loan Agreement to reflect the above
changes and the loan document changes required by Lender as a result thereof and in consideration of Lender's consent and
agreement thereto, all as provided herein.
IN CONSIDERATION OF the foregoing facts and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and of the mutual covenants and agreements contained in this Loan E and F First Amendment,
the Borrower and the Lender agree that the 2014 Loan E and F Loan Agreement is hereby modified and amended as follows:
Definitions. The recitals above are incorporated herein and any capitalized terms used, but not defined herein, shall have
1.
the meaning ascribed thereto in the Loan Documents and Article I of the 2014 Loan E and F Loan Agreement is hereby
amended as of, from and after the Loan E and F First Amendment Effective Date, by adding the defined terms in this Loan E
and F First Amendment as defined terms therein and by amending and restating any of the following defined terms to the extent
such terms are already defined in the 2014 Loan E and F Loan Agreement as follows:
(a)
"Agreement" shall mean the 2014 Loan E and F Loan Agreement as modified by this Loan E and F First
Amendment and all other subsequent permitted amendments, supplements, and modifications thereof, including all exhibits and
schedules.
(b)
"Assignment of Leases and Rents" shall mean the 2014 Charlotte County Assignment of Leases and Rents as
modified by the 2015 Loan E and F Modification.
(c)
"Loan" shall mean Loan E and Loan
F.
(d)
"Loan A & B Assignment of Leases and Rents " shall mean the 2013 Assignment of Leases and Rents as
modified by the 2014 Loan A, B and D Modification and by the 2015 Loan A and B Modification as affected by any and all
partial releases therefrom heretofore executed by Lender and recorded in the Public Records of the county in which the released
parcels are located , and all other subsequent permitted amendments, supplements, modifications thereof and partial releases
therefrom executed by Lender and recorded in the Public Records of the county in which the released parcel or parcels are
located.
(e)
"Loan A and B Loan Documents " shall mean shall mean the 2014 Loan A, B and D Existing Loan Documents
as modified by the 2015 Loan A and B Modification and the 2015 Loan A and B Third Amendment, the guarantees of said loan
documents, and the other documents by Borrower in favor of Lender or between Borrower and Lender of even date with the
2015 Loan A and B Third Amendment other than the 2015 Loan E and F Modification and the Loan E and F First Amendment.
(f)
"Loan Documents" shall mean the 2014 Loan E and F Existing Loan Documents as modified by the 2015 Loan
E and F Modification and this Loan E and F First Amendment, the guarantees of said loan documents, and the other documents
by Borrower in favor of Lender or between Borrower and Lender of even date with this Loan E and F First Amendment other
than the 2015 Loan A and B Modification and the 2015 Loan A and B Third Amendment.
(g)
"Loan A and B Security Instrument" shall mean the 2014 Loan A, B and D Original Security Instrument as
modified by the 2015 Loan A and B Modification together as affected by any and all partial releases therefrom heretofore
executed by Lender and recorded in the Public Records of the county in which the released parcels are located, and all other
subsequent permitted amendments, supplements, modifications thereof and partial releases therefrom executed by Lender and
recorded in the Public Records of the county in which the released parcel or parcels are located.
(h)
(i)
"Note" shall mean Note E and Note
F.
"Premises" shall have the meaning ascribed thereto in the Security
Instrument.
(j) "Principal Place of Business" shall mean the principal place of business and the headquarters of the Borrower at
which place all of Borrower's records are kept and which currently is located at 10070 Daniels Interstate Court, Suite 100, Fort
Myers, Florida 33913.
(a)
"Loan E and F First Amendment" shall mean this First Amendment to Loan Agreement (Loan E and F)
between Borrower and Lender dated as of the Loan E and F First Amendment Effective Date.
(1)
"Loan E and F First Amendment Effective Date" shall mean the date first set forth above in this Loan E and F
First Amendment preceding the designation "Loan E and F First Amendment Effective Date".
(a)
"Rabo Security Agreement" shall mean that certain Security Agreement between Borrower and Rabo of even
date herewith.
(b)
"Security Instrument" shall mean the 2014 Charlotte County Security Instrument as modified by the 2015 Loan
E and F Modification.
Note D and Loan D Canceled/ Note C Previously Canceled. On even date herewith, Borrower and Lender have entered
2.
into a Cancellation and Termination of Future Advance Promissory Note D which cancels and terminates Note D on a date
which is the same as the Loan E and F First Amendment Effective Date with Borrower to have no further right to advances from
Lender thereunder as the revolving credit facility evidenced by said Note D and Loan D, are canceled, terminated and of no
further force and effect. Accordingly, any provisions of the Loan A and B Loan Agreement or any other Loan Document
pertaining to Note D or Loan D or any such revolving credit facility thereunder are of no further force and effect. As that certain
Promissory Note C from Borrower to Lender in the face amount of up to Five Million and No/100 Dollars ($5,000,000.00) dated
December 31, 2012 ("Note C", and the loan evidenced thereby is known as Loan 717610638 and is referred to as "Loan C") has
previously been canceled, any provisions of the Loan A and B Loan Agreement or any other Loan Document pertaining to Note
C or Loan C are of no further force and effect.
Modification of Section 2.6 Cross-Default/Cross-Collateralization on a Pari Passu Basis. Section 2.6 of Article II of the
3.
2014 Loan E and F Loan Agreement is hereby modified as of, from and after the Loan E and F First Amendment Effective Date
to read as follows: "Section
2.7 Cross-Default/Cross Collateralization on a Pari Passu Basis. A default under (i) any of Note A, Note B, Note E, or Note F,
after the expiration of any applicable grace and notice periods, shall be a default under each and every one of said notes and (ii)
a default under any of the Loan Documents or under any of the Loan A and B Loan Documents, after the expiration of any
applicable grace and notice periods, shall be a default under each and every one of said documents. The lien and security
interests of the Security Instrument, the Assignment of Leases and Rents, the Loan Documents and the Collateral encumbered
thereby, shall also secure the obligations of Borrower under Note A, Note B and the other Loan A and B Loan Documents on a
pari passu basis. The lien and security interests of the Loan A and B Security Instrument, the Loan A and B Assignment of
Leases and Rents, the other Loan A and B Loan Documents and the Collateral encumbered thereby, shall also secure the
obligations of Borrower under Note E and Note F and the Loan E and F Loan Documents on a pari passu basis. "A pari passu
basis", as used herein, shall mean that such liens and security interests shall be apportioned among Loan A, Loan B, Loan E and
Loan F by using a percentage for each of Loan A, Loan B, Loan E and Loan F calculated by dividing (x) the sum owing under
the subject loan by (y) the total of all sums owing under all of said loans together, as such sums change from time to time. No
present and/or future holder of such loans shall be entitled to make any future advances or modifications to any of such loans
except with the advance written consent of all the holders of all of said loans at the time thereof. Each holder of such loans shall,
at the request of the other, from time to time, execute record and file such documents reasonably necessary to carry out the
foregoing provisions and/or to perfect such lien and security interests on the foregoing basis."
Modification of Section 3.7 (No Outstanding Debt). Section 3.7 of the 2014 Loan E and F Loan Agreement is modified
4.
to read: "Borrower has no outstanding Debt for an amount owed by Borrower to another, except for the intercompany loan from
Alico pursuant to Section 4.8, loans outstanding under the Loan A and B Loan Documents, the Loan, capital leases on
equipment, and any liabilities disclosed to Lender in writing before the Loan E and F First Amendment Effective Date and other
obligations in the nature of trade payables incurred by Borrower in its ordinary course of business."
Modification of Section 3.10 (Executive Office and Location of Records). Section 3.10 of the 2014 Loan E and F Loan
5.
Agreement is modified to read: "The Borrower's Principal Place of Business is located at 10070 Daniels Interstate Court, Suite
100, Fort Myers, Florida 33913 and all of its books and records are and shall be maintained there."
Modification of Article IV Financial Covenants of the Borrower. The contents of Article IV Financial Covenants of
6.
Borrower of the 2014 Loan E and F Loan Agreement are amended to read as follows: "The Borrower covenants, for so long as
any of the principal amount of or interest on the Note is outstanding and unpaid or any duty or obligation of the Borrower
hereunder or under any other Obligation remains unpaid or unperformed, as follows:
Section 4.1 Financial Records. The Borrower at all times will keep proper and adequate records and books of account in
accordance with GAAP consistently applied in which the full, true and correct entries will be made of its transactions and which
will properly and correctly reflect all items of income and expense in connection with the operation of the Borrower's business.
Section 4.2 Delivery of Financial Statements of the Borrower. The Borrower will deliver to the Lender copies of each
of the following:
(1)
Within one hundred twenty (120) days after the end of each Fiscal Year, audited financial statements
of Borrower and its Subsidiaries on a consolidated basis (with appropriate subsidiary eliminations), which are prepared in
accordance with GAAP (consisting of an income statement, balance sheet, and a statement of retained earnings and cash flow).
They shall be prepared and certified by a certified public accountant reasonably acceptable to the Lender, all in reasonable
detail. Such audited financial statements shall be further certified by the chief financial officer of the Borrower or its managing
member as being true, correct, and accurate, as completely and accurately reflecting the financial transactions during the period
covered thereby of Borrower and its consolidated Subsidiaries, and as completely and accurately reflecting the financial
condition of Borrower and its consolidated Subsidiaries as of the beginning and end of said period covered.
(2)
As soon as practicable and in any event within one hundred twenty (120) days after the end of each
Fiscal Year, a certificate of compliance with financial covenants from the chief financial officer of the Borrower or its managing
member ("Certificate of Compliance") addressed to Lender and certifying the compliance of Borrower with the financial
covenants provided in this Article.
(3)
Annually, within ninety (90) days after the completion of each Crop Season (a Crop Season shall, as to
a particular Crop, be the Crop season used by the industry in the area of the Premises as to which the Crop pertains), Borrower
shall furnish to Lender operating information on the Collateral as follows:
(i)
Reports/documents (internal inventory reports etc.) that describe and value all inventory security,
including each citrus crop variety's acreage both on a gross acreage and grove planted acreage basis; and
(ii)
pricing by grove/farm and variety.
Citrus Crop production and operations detailed information, including yields by variety, costs and
(iii)
With reasonable promptness, such other data and information as from time to time may be reasonably
required by the Lender.
Section 4.3 Delivery of Reports. All of the reports, statements, and items required under Section 4.2 shall be in form
and substance satisfactory to Lender. All of the reports, statements, and items required under Section 4.2 must, unless another
time period is specified
above, be received each year this Agreement is in force by the date which is one hundred twenty
days after the end of the Borrower's Fiscal Year, as the case may be subject to filing deadline extensions. If any one
(1)
report, statement, or item is not received within thirty (30) days of this due date, Lender may declare an Event of Default under
this Agreement and the Loan Documents.
Section 4.4 Inspection of Records. Borrower shall allow Lender or its authorized representatives at all reasonable
times, but no more than twice per Fiscal Year if no Event of Default then exists, to examine and make copies of all such books
and records and all supporting data therefor at Lender's principal place of business or at such other place where such books,
records, and data may be located. Borrower shall assist Lender or such representative in effecting such examination. Within three
(3) years after Lender's receipt of any such report, statement, or item, Lender may, upon at least five (5) Business Days prior
written notice to Borrower, inspect and make copies of the books, records, and income tax returns with respect to the Collateral
of Borrower, for the purpose of verifying any such reports, statements, or items.
Section 4.5 Article IV Terms:
The following definitions shall apply to the financial covenants in this Article as to Borrower and its Subsidiaries on a
consolidated basis (with appropriate subsidiary eliminations):
(1)
Consolidated Current Liabilities;
"Consolidated Current Ratio" shall mean the ratio of (i) Consolidated Current Assets to (ii)
"Consolidated Current Assets" shall mean current assets as defined under and computed in accordance
with GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a consolidated
basis; and
(2)
"Consolidated Current Liabilities" shall mean current liabilities as defined under and computed in
accordance with GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a
consolidated basis including all funded debt under lines of credit to Borrower and its Subsidiaries.
(3)
Section 4.6 Required Consolidated Current Ratio. The Consolidated Current Ratio measured at the end of each Fiscal
Year based on audited consolidated financial statements of Borrower shall be at least 1.50 to 1.00.
Section 4.7 LOC. While any portion of the Loan remains unpaid and outstanding there shall be no LOC other than the
Rabo Revolving Line-of Credit-Loan subject to the Rabo Intercreditor Agreement. Other than the Silver Nip Rabo Subsidiary
Guaranty, Borrower shall incur no obligation under the Rabo Revolving Line-of-Credit Loan without Lender's advance written
consent. Without limiting the foregoing, Borrower will not execute any security instruments under the Rabo Revolving Line-of-
Credit except (i) the Rabo Security Agreement and any documents executed in connection with or required by the Rabo Security
Agreement and
(ii) those documents that secure only the obligations under the Silver Nip Rabo Subsidiary Guaranty. Borrower will provide
Lender a true and complete copy of each such security
instrument before the Loan E and F First Amendment Effective Date if executed before said date, and promptly after execution if
executed after such date. A default under the Rabo Revolving Line-of-Credit Loan, the effect of which is to cause, with the
giving of notice, if required, amounts outstanding under the Rabo Revolving Line-of-Credit to become due prior to their stated
maturity, or any payment made by Borrower under the Silver Nip Rabo Subsidiary Guaranty shall be a default hereunder. Any
modification of the Rabo Revolving Line-of-Credit that limits Alico's ability to extend credit to the Silver Nip Entities under the
written agreement between Silver Nip and Alico pursuant to Section 4.8 hereof or any modification of the Silver Nip Rabo
Subsidiary Guaranty without Lender's advance written consent shall be a default herein.
Section 4.8 Silver Nip Rabo Subsidiary Guaranty. At the time the Silver Nip Rabo Subsidiary Guaranty is delivered to
Rabo, there shall be a written agreement between Borrower and Alico, giving Borrower the revolving right to borrow from Alico
at any time and from time to time, so long as the Silver Nip Rabo Subsidiary Guaranty is in full force and effect, a sum up to an
amount which would not result in the loan balance of such loan obligation outstanding at any one time exceeding $7,000,000.00.
A copy of such executed written agreement shall be delivered by Borrower to Lender before the Loan E and F First Amendment
Effective Date. The failure to keep such agreement in full force and effect while such guaranty is in full force and effect shall be
a default hereunder."
Modification of Section 5.3 (First Lien). Section 5.3 of the 2014 Loan E and F Loan Agreement is modified to read:
7.
"Borrower shall provide Lender a first lien and security interest in all the Collateral, as defined in the Security Instrument,
subject only to Permitted Liens, and except such Collateral that is subordinated by Lender in the Rabo Intercreditor Agreement
while such subordination is in force and effect as provided in said agreement."
Modification of Section 5.4 (Second Lien). Section 5.4 of the 2014 Loan E and F Loan Agreement is modified to read:
8.
"Borrower shall provide Lender a second lien and security interest in all the Collateral (as defined in the Security Instrument)
which is subordinated by Lender in the Rabo Intercreditor Agreement while such subordination is in force and effect as provided
in said agreement, subject only to Permitted Liens."
Silver Nip Merger. Lender has consented to the Silver Nip Merger and the same is not in violation of Section 6.1 of the
9.
2014 Loan E and F Loan Agreement or any other provision of the Loan A and B Loan Agreement or of any provision in any
other Loan Document.
Modification of Section 6.5 (Loans to Borrower/Liens on Collateral). Section 6.5 of the 2014 Loan E and F Loan
10.
Agreement is modified to read: "Borrower and none of the entities constituting Borrower shall incur any Debt for an amount
owed by Borrower to another or extend any guarantees of Debt for an amount owed by Borrower to another other than
intercompany loans from Alico pursuant to Section 4.8, the Silver Nip Rabo Subsidiary Guaranty, loans outstanding under the
Loan A and B Loan Documents, the Loan, capital leases on equipment, or any liabilities disclosed to Lender in writing before
the Third Amendment Effective Date and other obligations in the nature of trade payables incurred by Borrower in its ordinary
course of business. Borrower and none of the entities constituting Borrower may create, incur or suffer to exist any lien on any
of the Collateral or permit any Financing
Statement (other than any of Lender or any of Rabo as provided for in the Rabo Security Agreement and documents executed in
connection with or required by the Rabo Security Agreement) to be on file with respect thereto, without the Lender's written
consent."
Modification of Section 6.6 (Other Liens). Section 6.6 of the 2014 Loan E and F Loan Agreement is modified to delete
11.
"Other than liens and security interests permitted to secure LOC," and replace such text with "Other than the lien and security
interest of Rabo permitted in Section 6.5 hereof.”
12.
Borrower to 10070 Daniels Interstate Court, Suite 100, Fort Myers, Florida 33913.
Modification of Section 9.3. Section 9.3 of the Loan E and F Loan Agreement is modified to: Change the address of
13.
and F Loan Agreement as of the Loan E and F First Amendment Effective Date.
Article III Representations and Warranties. Borrower hereby remakes the representations of Borrower in the Loan E
No Novation. This is not a novation and the 2014 Loan E and F Existing Loan Documents, and all their terms,
14.
covenants, conditions, agreements and stipulations shall remain in full force and effect, except as modified by the 2015 Loan E
and F Modification and herein.
No Impairment. Nothing herein contained invalidates or impairs or shall invalidate any or impair security now held by
15.
Lender for said debt, nor impair nor release any covenants, conditions, agreements, or stipulations in said 2014 Loan E and F
Existing Loan Documents, and the same, except as modified by the 2015 Loan E and F Modification and herein shall continue in
full force and effect and Borrower, and each of them, jointly and severally further covenant and agree to perform, comply with
and abide by each and every of the covenants, agreements, conditions and stipulations of the said 2014 Loan E and F Existing
Loan Documents as modified by the 2015 Loan E and F Modification and herein.
Release of Defenses, Counterclaims and Offsets. Borrower and each of them hereby agree and confirm that, as of the
16.
date hereof, neither (i) Loans A and B, Loan E and Loan F, (ii) the 2014 Loan A, B and D Existing Loan Documents and the
2014 Loan E and F Existing Loan Documents, (iii) the servicing of Loans A, B, E and F nor (iv) this transaction, is subject to
any defenses, set-offs or counterclaims whatsoever, and, any existing, are hereby waived.
17.
of the State of Florida (without reference to conflicts or choice of law principles).
Governing Law. This Loan E and F First Amendment shall be governed by and construed in accordance with the laws
Successors and Assigns Joint and Several Liability. The provisions of this Loan E and F First Amendment shall be
18.
binding upon and inure to the benefit of the parties hereto and their respective successors, heirs, assigns, and legal
representatives.
Attorney's Fees. The prevailing party in any litigation brought to enforce the provisions of this Loan E and F First
19.
Amendment shall be entitled to recover from the other party its reasonable costs and expenses, including attorneys' fees, whether
at trial or on appeal, in mediation, bankruptcy, insolvency proceedings or other proceedings.
Counterparts. This Loan E and F First Amendment may be executed in any number of counterparts, all of which taken
20.
together shall constitute one and the same instrument and any of the parties hereto may execute this Loan E and F First
Amendment by signing any such counterpart.
JURY TRIAL WAIVER. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
21.
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE
2014 LOAN E AND F LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY OF THE 2014 LOAN A, B AND D
LOAN DOCUMENTS, THIS LOAN E AND F FIRST AMENDMENT, THE 2015 LOAN A, B AND D MODIFICATION,
THE 2015 LOAN E AND F MODIFICATION, OR ANY ACTS OR OMISSIONS OF LENDER IN CONNECTION
THEREWITH.
IN WITNESS WHEREOF, each of the parties hereto has caused this Loan E and F First Amendment to be executed,
sealed and delivered, as applicable, by their duly authorized officers as of the Loan E and F First Amendment Effective Date first
set forth above.
[SIGNATURE AND NOTARY BLOCKS FOLLOW]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Chief Executive Officer of Alico, Inc., its Sole Member
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"LENDER"
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware
limited liability company
By: /s/ William M. Lewis
(Signed Name)
Its: Vice President
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as the Chief Executive Officer of ALICO INC., the sole member of 734 CITRUS HOLDINGS, LLC, a Florida limited
liability company, and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF ORANGE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared William M.
Lewis the Vice President of PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company,
and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ Charles E. Hurst
Signature of Notary Public)
Charles E. Hurst
(Printed Name of Notary Public)
My commission expires: 1-20-2019
[NOTARY SEAL]
Loan Numbers:
717610613
717610637
717610647
SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT(the “Second
Amendment”) is made and entered into as of the 4th day of September, 2014 (the “Second Amendment Effective Date”), by and
among 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC GROVES, LLC, a Florida limited
liability company, 734 CO-OP GROVES, LLC, a Florida limited liability company, 734 BLP GROVES, LLC, a Florida
limited liability company, and 734 HARVEST, LLC , a Florida limited liability company, being collectively referred to as the
“Borrower” (and unless otherwise provided the term “Borrower” shall apply to each of said five limited liability companies both
separately and collectively), jointly and severally, all having an office and place of business at 181 Highway 630 East,
Frostproof, Florida 33843 and PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC , a Delaware limited liability
company, having an office and place of business at 801 Warrenville Road, Suite 150, Lisle, Illinois 60532-1357 (referred to
herein as the “Lender”).
WITNESSETH:
WHEREAS, Borrower executed in favor of Lender that certain Promissory Note A in the face amount of Fourteen
Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 (“Note A”, and the loan
evidenced thereby is known as Loan 717610613 and is referred to as “Loan A”), that certain Promissory Note B in the face
amount of Fourteen Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 (“Note B”,
and the loan evidenced thereby is known as Loan 717610637 and is referred to as “Loan B” and Note A and Note B are
collectively herein referred to as “Notes A and B” with Loan A and Loan B herein referred to as “Loans A and B”), and a
Promissory Note C in the face amount of Five Million Dollars ($5,000,000.00) which was never disbursed, was heretofore
cancelled and is no longer in force and effect;
WHEREAS, in connection with the execution and delivery of Notes A and B, Borrower and Lender executed that
certain Loan Agreement dated December 31, 2012 (the “2012 Original Loan Agreement”);
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Mortgage and Security
Agreement dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book
4872, Page 2431, in the Public Records of Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as
Instrument Number 201325000089, in the Public Records of Hardee, County, Florida, one counterpart of which was recorded on
January 4, 2013 in Official Records Book 856, Page 1833, in the Public Records of Hendry County, Florida, one counterpart of
which was recorded on January 3, 2013 in Official Records Book 2359, Page 1500, in the Public Records of Highlands,
County, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 2622, Page 1255, in the
Public Records of Martin, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4375,
Page 689, in the Public Records of Osceola County, Florida and one counterpart of which was recorded on January 3, 2013 in
Official Records Book 08841, Page 0130, in the Public Records of Polk County, Florida, encumbering property located in said
counties securing Notes A and B (the “2012 Original Security Instrument”);
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Assignment of Leases and Rents
dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4872, Page
2510, in the Public Records of Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as Instrument
Number 201325000090, in the Public Records of Hardee, County, Florida, one counterpart of which was recorded on January 4,
2013 in Official Records Book 856, Page 1912, in the Public Records of Hendry County, Florida, one counterpart of which was
recorded on January 3, 2013 in Official Records Book 2359, Page 1579, in the Public Records of Highlands, County, Florida,
one counterpart of which was recorded on January 3, 2013 in Official Records Book 2622, Page 1334, in the Public Records of
Martin, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4375, Page 768, in the
Public Records of Osceola County, Florida and one counterpart of which was recorded on January 3, 2013 in Official Records
Book 08841, Page 0209, in the Public Records of Polk County, Florida, encumbering property located in said counties securing
Notes A and B (the “2012 Original Assignment of Leases and Rents”);
WHEREAS, in connection with the execution and delivery of Notes A and B, the 2012 Original Security Instrument,
the 2012 Original Assignment of Leases and Rents, and the 2012 Original Loan Agreement, Borrower executed in favor of
Lender and/or Borrower and Lender entered into certain other loan documents pertaining to Loan A and B (said loan documents
are collectively referred to as the “2012 Loan Documents”);
WHEREAS, on March 26, 2013, Borrower executed in favor of Lender a Future Advance Promissory Note D in the
face amount of up to Six Million and No/100 Dollars ($6,000,000.00) evidencing a loan known as Loan 717610647 (referred to
herein as “Note D”, and the revolving loan evidenced thereby being referred to as “Loan D”); Borrower and Lender executed a
First Amendment to Loan Agreement (the “First Amendment to Loan Agreement” with the 2012 Original Loan Agreement as
amended thereby being referred to as the “2013 Loan Agreement”); Borrower and Lender executed a Modification of Mortgage
and Security Agreement and Modification of Other Loan Documents dated March 26, 2013 (the “2013 Modification”), in seven
counterparts, one of which was recorded on March 27, 2013 in Official Records Book 4901, Page 545, the Public Records of
Collier County, Florida, recorded on March 27, 2013 as Instrument 201325001828, Public Records of Hardee County, Florida,
on March 27, 2013 in Official Records Book 860, Page 400, Public Records of Hendry County, Florida, on March 27, 2013 in
Official Records Book 2371, Page 1945 Public Records of Highlands County, Florida, on March 27, 2013 in Official Records
Book 2639, Page 11743 Public Records of Martin County, Florida, on March 27, 2013 in Official Records Book 4417, Page
2860 Public Records of Osceola County, Florida and on March 27, 2013 in Official Records Book 8917, Page 377 Public
Records of Polk County, Florida; and Borrower executed
in favor of Lender and/or Borrower and Lender entered into certain other loan documents of even date therewith (Note D, the
First Amendment to Loan Agreement, the 2013 Modification, and such other loan documents related to the foregoing are herein
collectively referred to as the “2013 Loan Documents” and the 2012 Original Security Instrument, as modified by the 2013
Modification, is referred to as the “2013 Original Security Instrument”, the 2012 Original Assignment of Leases and Rents as
modified by the 2013 Modification is referred to as the “2013 Assignment of Leases and Rents”, and the 2012 Loan Documents
as modified by the 2013 Loan Documents are referred to as the “Loan A, B and D Existing Loan Documents”);
WHEREAS, on even date herewith, Borrower has executed in favor of Lender a Promissory Note E in the face amount
of up to Five Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00) evidencing a loan known as Loan 717610897
(referred to herein as “Note E”, and the loan evidenced thereby being referred to as “Loan E”); Borrower has executed in favor of
Lender a Promissory Note F in the face amount of up to Five Million Five Hundred Thousand and No/100 Dollars
($5,500,000.00) evidencing a loan known as Loan 717610898 (referred to herein as “Note F”, and the loan evidenced thereby
being referred to as “Loan F”); Borrower has executed in favor of Lender a Mortgage and Security Agreement securing Loan E
and Loan F and cross-collateralized with the Loans A and B Loan Documents and with the Loan D Loan Documents, which
instrument is to be recorded in the Public Records of Charlotte County, Florida (the “2014 Charlotte County Security
Instrument); Borrower has executed in favor of Lender an Assignment of Leases and Rents securing Loan E and Loan F and
cross- collateralized with the Loans A and B Loan Documents and with the Loan D Loan Documents, which instrument is to be
recorded in the Public Records of Charlotte County, Florida (the “2014 Charlotte County Assignment of Leases and Rents”);
Borrower and Lender have entered into a Loan E and Loan F Loan Agreement (the “Loans E and F Loan Agreement”), and
Borrower has executed in favor of Lender and/or Borrower and Lender have entered into certain other loan documents of even
date therewith pertaining to Loan E and Loan F (Note E, Note F, this Second Amendment, the 2014 Charlotte County Security
Instrument, the 2014 Charlotte County Assignment of Leases and Rents, the Loans E and F Loan Agreement, any guarantees as
to Loan E and Loan F, and said other loan documents are collectively referred to as the “Loans E and F Loan Documents”);
WHEREAS, on even date herewith, Borrower and Lender have entered into a 2014 Modification of Mortgage and
Security Agreement and Modification of Other Loan Documents between Borrower and Lender (the “2014 Modification”), in
seven counterparts, one of which is to be recorded in the Public Records of Collier, Hardee, Hendry, Highlands, Martin, Osceola
and Polk counties, Florida modifying the Loan A, B and D Existing Loan Documents to cross-default and cross-collateralized
the same with the Loans E and F Loan Documents; and
WHEREAS, the parties desire to modify and amend the 2013 Loan Agreement to reflect the changes the parties have
agreed upon as a result of the addition of Loan E and Loan F, all as provided herein.
IN CONSIDERATION OF the foregoing facts and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and of the mutual covenants and agreements contained in this Second Amendment, the Borrower and
the Lender agree that the 2013 Loan Agreement is hereby modified and amended as follows:
1.
Modification of Definitions. Article I of the 2013 Loan Agreement is hereby amended as of, from and after the Second
Amendment Effective Date, by adding the defined terms in this Second Amendment as defined terms therein and by amending
and restating any of the following defined terms to the extent such terms are already defined in the 2013 Loan Agreement as
follows:
(a)
permitted amendments, supplements, and modifications thereof, including all exhibits and schedules.
“Agreement” shall mean the 2013 Loan Agreement as modified by the Second Amendment and all other subsequent
“Assignment of Leases and Rents” shall mean the 2013 Assignment of Leases and Rents as modified by the 2014
(b)
Modification as affected by any and all partial releases therefrom heretofore executed by Lender and recorded in the Public
Records of the county in which the released parcels are located, and all other subsequent permitted amendments, supplements,
modifications thereof and partial releases therefrom executed by Lender and recorded in the Public Records of the county in
which the released parcel or parcels are located.
(c)
Agreement as modified herein.
“Loan Documents” shall mean the 2013 Loan Documents as modified by the 2014 Modification and the 2013 Loan
(d)
“Premises” shall have the meaning ascribed thereto in the Security Instrument.
(e)
“Principal Place of Business” shall mean the principal place of business and the headquarters of the Borrower at
which place all of Borrower’s records are kept and which currently is located at 181 Highway 630 East, Frostproof, Florida
35843.
(f)
as of the Second Amendment Effective Date.
“Second Amendment” shall mean this Second Amendment to Loan Agreement between Borrower and Lender dated
(g)
“Second Amendment Effective Date” shall mean the date hereof.
(h)
“Security Instrument” shall mean the 2013 Original Security Instrument as modified by the 2014 Modification
together as affected by any and all partial releases therefrom heretofore executed by Lender and recorded in the Public Records
of the county in which the released parcels are located, and all other subsequent permitted amendments, supplements,
modifications thereof and partial releases therefrom executed by Lender and recorded in the Public Records of the county in
which the released parcel or parcels are located.
2.
Addition of Section 2.7 Cross-Default/Cross-Collateralization on a Pari Passu Basis. Article II of the 2013 Loan
Agreement is hereby modified as of, from and after the Second Amendment Effective Date to add a new Section 2.7 to read as
follows: “Section 2.7 Cross- Default/Cross Collateralization on a Pari Passu Basis. A default under (i) any of Note A, Note B,
Note D, Note E, or Note F, after the expiration of any applicable grace and notice periods, shall be a default under each and
every one of said notes and (ii) a default under any of the Loan Documents or under any of the Loans E and F Loan Documents,
after the expiration of any applicable grace and notice periods, shall be a default under each and every one of said documents.
The lien and security interests of the Security Instrument, the Assignment of Leases and Rents, the Loan Documents and the
Collateral encumbered thereby, shall also secure the
obligations of Borrower under Note E, Note F and the other Loans E and F Loan Documents on a pari passu basis. The lien and
security interests of the 2014 Charlotte County Security Instrument, the 2014 Charlotte County Assignment of Leases and Rents,
the other Loans E and F Loan Documents and the Collateral encumbered thereby, shall also secure the obligations of Borrower
under Note A, Note B, Note D and the Loan Documents on a pari passu basis. “A pari passu basis”, as used herein, shall mean
that such liens and security interests shall be apportioned among Loan A, Loan B, Loan D, Loan E and Loan F by using a
percentage for each of Loan A, Loan B, Loan D, Loan E and Loan F calculated by dividing (x) the sum owing under the subject
loan by (y) the total of all sums owing under all of said loans together, as such sums change from time to time. No present and/or
future holder of such loans shall be entitled to make any future advances or modifications to any of such loans except with the
advance written consent of all the holders of all of said loans at the time thereof. Each holder of such loans shall, at the request of
the other, from time to time, execute record and file such documents reasonably necessary to carry out the foregoing provisions
and/or to perfect such lien and security interests on the foregoing basis.”
Modification of Section 9.3. Section 9.3 of the 2013 Loan Agreement is modified to delete “Reference Loan Numbers:
3.
717610613, 717610637, 717610638 and 717610647” from the Lender notice and the two related “With copy to” blocks and
replace it with “Reference Loan Numbers: 717610613, 717610637 and 717610647”.
4.
Loan Agreement as of the Second Amendment Effective Date.
Article III Representations and Warranties. Borrower hereby remakes the representations of Borrower in the 2013
5.
agreements and stipulations shall remain in full force and effect, except as modified by the 2014 Modification and herein.
No Novation. This is not a novation and the 2013 Loan Documents, and all their terms, covenants, conditions,
6.
No Impairment. Nothing herein contained invalidates or impairs or shall invalidate any or impair security now held by
Lender for said debt, nor impair nor release any covenants, conditions, agreements, or stipulations in said 2013 Loan Documents,
and the same, except as modified by the 2014 Modification and herein shall continue in full force and effect and Borrower, and
each of them, jointly and severally further covenant and agree to perform, comply with and abide by each and every of the
covenants, agreements, conditions and stipulations of the said 2013 Loan Documents as modified by the 2014 Modification and
herein.
7.
Release of Defenses, Counterclaims and Offsets. Borrower and each of them hereby agree and confirm that, as of the
date hereof, neither (i) Loans A and B, Loan D, Loan E and Loan F, (ii) the 2013 Loan Documents and the Loans E and F Loan
Documents, (iii) the servicing of Loans A and B, Loan D, Loan E and Loan F nor (iv) this transaction, is subject to any defenses,
set-offs or counterclaims whatsoever, and, any existing, are hereby waived.
8.
of Florida (without reference to conflicts or choice of law principles).
Governing Law. This Second Amendment shall be governed by and construed in accordance with the laws of the State
9.
and inure to the benefit of the parties hereto and their respective successors, heirs, assigns, and legal representatives.
Successors and Assigns Joint and Several Liability. The provisions of this Second Amendment shall be binding upon
Attorney’s Fees. The prevailing party in any litigation brought to enforce the provisions of this Second Amendment
10.
shall be entitled to recover from the other party its reasonable costs and expenses, including attorneys’ fees, whether at trial or on
appeal, in mediation, bankruptcy, insolvency proceedings or other proceedings.
11.
Counterparts. This Second Amendment may be executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may execute this Second Amendment by signing any
such counterpart.
12.
JURY TRIAL WAIVER. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER
PARTY, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THE NOTE, THE EXISTING LOAN AGREEMENT, THIS SECOND AMENDMENT, THE OTHER
LOAN DOCUMENTS, OR ANY ACTS OR OMISSIONS OF LENDER IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, each of the parties hereto has caused this Second Amendment to be executed, sealed and
delivered, as applicable, by their duly authorized officers as of the Second Amendment Effective Date first set forth above.
[SIGNATURE AND NOTARY BLOCKS FOLLOW]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Clayton G. Wilson, Chief Executive Officer
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Thomas B. Powers
(Signed Name)
Its: Thomas Brian Powers, Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Clayton G. Wilson, Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Jerry L. Brewer
(Signed Name)
Its: Jerry L. Brewer, Manager
"LENDER"
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Florida
limited liability company
By: /s/ Robert E. Lassites III
(Signed Name)
Its: Robert E. Lassites III, Vice President
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, as the Chief Executive Officer of 734 CITRUS HOLDINGS, LLC, a Florida limited liability company, and
acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Thomas
Brian Powers, the manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he
executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson, the manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
STATE OF FLORIDA
COUNTY OF POLK
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Jerry L.
Brewer, the manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ David A. Miller
Signature of Notary Public)
David A. Miller
(Printed Name of Notary Public)
My commission expires: 06/04/17
STATE OF FLORIDA
COUNTY OF ORANGE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Robert E.
Lassites III, the Vice President of PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, Delaware limited liability
company, and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 28th day of August, 2014.
/s/ Diane M. Barnett
Signature of Notary Public)
Diane M. Barnett
(Printed Name of Notary Public)
My commission expires: 03/08/16
Loan Numbers:
717610613
717610637
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (the "Third Amendment")
is made and entered into as of the 23rd day of April, 2015 (the "Third Amendment Effective Date"), by and among 734 CITRUS
HOLDINGS, LLC, a Florida limited liability company, 734 LMC GROVES, LLC, a Florida limited liability company, 734
CO-OP GROVES, LLC, a Florida limited liability company, 734 BLP GROVES, LLC, a Florida limited liability company,
and 734 HARVEST, LLC, a Florida limited liability company, being collectively referred to as the "Borrower" (and unless
otherwise provided the term "Borrower" shall apply to each of said five limited liability companies both separately and
collectively), jointly and severally, all having an office and place of business at 10070 Daniels Interstate Court, Suite 100, Fort
Myers, Florida 33913 and PRUDENTIAL MORTGAGE CAPITAL COMPANY, L L C , a Delaware limited liability
company, having an office and place of business at 801 Warrenville Road, Suite 150, Lisle, Illinois 60532-1357 (referred to
herein as the "Lender").
WITNESSETH:
WHEREAS, Borrower executed in favor of Lender that certain Promissory Note A in the face amount of Fourteen
Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 ("Note A", and the loan
evidenced thereby is known as Loan 717610613 and is referred to as "Loan A"), that certain Promissory Note B in the face
amount of Fourteen Million Five Hundred Thousand and No/100 Dollars ($14,500,000.00) dated December 31, 2012 ("Note B",
and the loan evidenced thereby is known as Loan 717610637 and is referred to as "Loan B" and Note A and Note B are
collectively herein referred to as "Notes A and B" with Loan A and Loan B herein referred to as "Loans A and B "), and a
Promissory Note C in the face amount of Five Million Dollars ($5,000,000.00) which was never disbursed, was heretofore
canceled and is no longer in force and effect;
WHEREAS, in connection with the execution and delivery of Notes A and B, Borrower and Lender executed that
certain Loan Agreement dated December 31, 2012 (the "2012 Original Loan Agreement");
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Mortgage and Security
Agreement dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book
4872, Page 2431, in the Public Records of Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as
Instrument Number 201325000089, in the Public Records of Hardee, County, Florida, one counterpart of which was recorded on
January 4, 2013 in Official Records Book 856, Page 1833, in the Public
Records of Hendry County, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 2359,
Page 1500, in the Public Records of Highlands, County, Florida, one counterpart of which was recorded on January 3, 2013 in
Official Records Book 2622, Page 1255, in the Public Records of Martin, Florida, one counterpart of which was recorded on
January 3, 2013 in Official Records Book 4375, Page 689, in the Public Records of Osceola County, Florida and one counterpart
of which was recorded on January 3, 2013 in Official Records Book 08841, Page 0130, in the Public Records of Polk County,
Florida, encumbering property located in said counties securing Notes A and B (the "2012 Original Security Instrument");
WHEREAS, Borrower executed, in seven counterparts, in favor of Lender, that certain Assignment of Leases and Rents
dated December 31, 2012, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4872, Page
2510, in the Public Records of Collier, County, Florida, one counterpart of which was recorded on January 3, 2013 as Instrument
Number 201325000090, in the Public Records of Hardee, County, Florida, one counterpart of which was recorded on January 4,
2013 in Official Records Book 856, Page 1912, in the Public Records of Hendry County, Florida, one counterpart of which was
recorded on January 3, 2013 in Official Records Book 2359, Page 1579, in the Public Records of Highlands, County, Florida,
one counterpart of which was recorded on January 3, 2013 in Official Records Book 2622, Page 1334, in the Public Records of
Martin, Florida, one counterpart of which was recorded on January 3, 2013 in Official Records Book 4375, Page 768, in the
Public Records of Osceola County, Florida and one counterpart of which was recorded on January 3, 2013 in Official Records
Book 08841, Page 0209, in the Public Records of Polk County, Florida, encumbering property located in said counties securing
Notes A and B (the "2012 Original Assignment of Leases and Rents");
WHEREAS, in connection with the execution and delivery of Notes A and B, the 2012 Original Security Instrument,
the 2012 Original Assignment of Leases and Rents, and the 2012 Original Loan Agreement, Borrower executed in favor of
Lender and/or Borrower and Lender entered into certain guarantees and other loan documents pertaining to Loan A and B (said
loan documents are collectively referred to as the "2012 Loan Documents");
WHEREAS, on March 26, 2013, Borrower executed in favor of Lender a Future Advance Promissory Note D in the
face amount of up to Six Million and No/100 Dollars ($6,000,000.00) evidencing a loan known as Loan 717610647 (referred to
herein as "Note D", and the revolving loan evidenced thereby being referred to as "Loan D"); Borrower and Lender executed a
First Amendment to Loan Agreement (the " 2013 First Amendment to Loan Agreement" with the 2012 Original Loan Agreement
as amended thereby being referred to as the "2013 Loan Agreement"); Borrower and Lender executed a Modification of
Mortgage and Security Agreement and Modification of Other Loan Documents dated March 26, 2013 (the "2013 Modification"),
in seven counterparts, one of which was recorded on March 27, 2013 in Official Records Book 4901, Page 545, the Public
Records of Collier County, Florida, recorded on March 27, 2013 as Instrument 201325001828, Public Records of Hardee
County, Florida, on March 27, 2013 in Official Records Book 860, Page 400, Public Records of Hendry County, Florida, on
March 27, 2013 in Official Records Book 2371, Page 1945 Public Records of Highlands County, Florida, on March 27, 2013 in
Official Records Book 2639, Page 11743 Public Records of Martin County, Florida, on March 27, 2013 in Official Records
Book 4417, Page 2860 Public Records of Osceola County, Florida and on March 27, 2013 in Official Records Book 8917, Page
377 Public
Records of Polk County, Florida; and Borrower executed in favor of Lender and/or Borrower and Lender entered into certain
other guarantees of such loan documents and other loan documents of even date therewith (Note D, the First Amendment to
Loan Agreement, the 2013 Modification, and such other loan documents related to the foregoing are herein collectively referred
to as the "2013 Loan Documents" and the 2012 Original Security Instrument, as modified by the 2013 Modification, is referred
to as the "2013 Original Security Instrument", the 2012 Original Assignment of Leases and Rents as modified by the 2013
Modification is referred to as the "2013 Assignment of Leases and Rents", and the 2012 Loan Documents as modified by the
2013 Loan Documents are referred to as the "2013 Loan A, B and D Existing Loan Documents");
WHEREAS, on September 4, 2014 Borrower executed in favor of Lender a Promissory Note E in the face amount of up
to Five Million Five Hundred Thousand and No/100 Dollars ($5,500,000.00) evidencing a loan known as Loan 717610897
(referred to herein as "Note E", and the loan evidenced thereby being referred to as "Loan E"); Borrower executed in favor of
Lender a Promissory Note F in the face amount of up to Five Million Five Hundred Thousand and No/100 Dollars
($5,500,000.00) evidencing a loan known as Loan 717610898 (referred to herein as "Note F", and the loan evidenced thereby
being referred to as "Loan F"); Borrower executed in favor of Lender a Mortgage and Security Agreement dated September 4,
2014 and securing Loan E and Loan F and cross-collateralized with the 2013 Loan A, B and D Existing Loan Documents as
modified by said instrument, which was recorded on September 5, 2014 in Official Records Book 3898, Page 1387, Public
Records of Charlotte County, Florida (the "2014 Charlotte County Security Instrument"); Borrower executed in favor of Lender
an Assignment of Leases and Rents securing Loan E and Loan F and cross-collateralized with the 2013 Loan A, B and D
Existing Loan Documents as modified by the 2014 Loan A, B and D Modification (defined below), which instrument was
recorded on September 5, 2014 in Official Records Book 3898, Page 1450, Public Records of Charlotte County, Florida (the
"2014 Charlotte County Assignment of Leases and Rents"); Borrower and Lender entered into a Loan E and Loan F Loan
Agreement (the "Loan E and F Loan Agreement"), Borrower and Lender executed a 2014 Second Amendment to Loan
Agreement dated September 4, 2014 (the "2014 Second Amendment to Loan Agreement " with the 2013 Loan Agreement, as
amended thereby, being referred to as the "2014 Loan A, B and D Loan Agreement ") and certain guarantees of such loan
documents and certain other loan documents of even date therewith by Borrower in favor of Lender and/or between Borrower
and Lender pertaining to Loan E and Loan F (Note E, Note F, the 2014 Charlotte County Security Instrument, the 2014
Charlotte County Assignment of Leases and Rents, the Loan E and F Loan Agreement, any guarantees as to Loan E and Loan F,
and said other loan documents (excluding the 2014 Second Amendment to Loan Agreement) are collectively referred to as the
"2014 Loan E and F Existing Loan Documents");
WHEREAS, on September 4, 2014, Borrower and Lender entered into a 2014 Modification of Mortgage and Security
Agreement and Modification of Other Loan Documents (the "2014 Loan A, B and D Modification" and the 2013 Original
Security Instrument as modified by the 2014 Loan A, B and D Modification, is referred to as the "2014 Loan A, B and D
Original Security Instrument" and the 2013 Loan A, B and D Existing Loan Documents as modified by the 2014 Loan A, B and
D Modification and by the 2014 Second Amendment to Loan Agreement are referred to as the " 2014 Loan A, B and D Existing
Loan Documents"), in seven counterparts, one of which was recorded on September 5, 2014 in Official Records Book 5074,
Page 1814, the
Public Records of Collier County, Florida, recorded on September 5, 2014 as Instrument 201425005126, Public Records of
Hardee County, Florida, on September 5, 2014 in Official Records Book 882, Page 562, Public Records of Hendry County,
Florida, on September 5, 2014 in Official Records Book 2443, Page 802 Public Records o f Highlands County, Florida, on
September 5, 2014 in Official Records Book 2739, Page 278 Public Records of Martin County, Florida, on September 5, 2014 in
Official Records Book 4662, Page 223 Public Records of Osceola County, Florida and on September 8, 2014 in Official Records
Book 9333, Page 1419 Public Records of Polk County, modifying the Loan A, B and D Existing Loan Documents to cross-
default and cross-collateralized the same with the 2014 Loan E and F Existing Loan Documents;
WHEREAS, 734 Sub, LLC, a Florida limited liability company has merged into 734 Citrus Holdings, LLC, a Florida
limited liability company with the latter being the surviving entity and with the result that Alico, Inc., a Florida corporation
("Alico") is the sole member of said surviving entity (the "Silver Nip Merger");
WHEREAS, the Borrower desires to provide a $7,000,000.00 Subsidiary Guaranty (the "Silver Nip Rabo Subsidiary
Guaranty") of the obligations of Alico, Alico-Agri, Ltd., a Florida limited partnership, Alico Land Development Inc., a Florida
corporation, Alico Plant World, L.L.C., a Florida limited liability company, Alico Fruit Company, LLC, a Florida limited
liability company, and Alico Citrus Nursery, LLC, a Florida limited liability company (collectively, " Alico Rabo Borrower")
under that certain Credit Agreement with Rabo Agrifinance, Inc., a Delaware corporation (" Rabo") dated December 1, 2014 as
amended by the First Amendment to Credit Agreement and Consent, pursuant to which Rabo has agreed to make certain
extensions of credit to the Alico Borrower in an aggregate principal amount of up to
$70,000,000.00 (the "Rabo Revolving Line-of-Credit Loan");
WHEREAS, the Borrower desires that Lender enter into an Intercreditor Agreement with Rabo on or about the date of
this Third Amendment (the "Rabo Intercreditor Agreement"), which provides for a subordination, subject to the terms, conditions
and provisions therein, of Lender's lien and security interest in the crops and certain other collateral;
WHEREAS, the parties desire to modify and amend the 2014 Loan A, B and D Original Security Instrument by that
certain 2015 Modification of Mortgage and Security Agreement and Modification of Other Loan Documents of even date
herewith between Borrower and Lender, in seven counterparts to be recorded in the Public Records of the Florida Counties of
Collier, Hardee, Hendry, Highlands, Martin, Osceola and Polk (the "2015 Loan A and B Modification") to reflect the foregoing
changes and the loan document changes required by Lender as a result thereof and in consideration of Lender's consent and
agreement thereto;
WHEREAS, the parties desire to modify and amend the 2014 Charlotte County Security Instrument by a 2015
Modification of Mortgage and Security Agreement and Modification of Other Loan Documents (Charlotte County) between
Borrower and Lender of even date herewith (the "2015 Loan E and F Modification") and the Loan E and F Loan Agreement by a
First Amendment to Loan Agreement (Loan E and F) between Borrower and Lender of even date herewith (the "2015 First
Amendment to Loan E and F Loan Agreement") to reflect the
foregoing changes and the loan document changes required by Lender as a result thereof and in consideration of Lender's
consent and agreement thereto; and
WHEREAS, the parties desire to modify and amend the 2014 Loan A, B and D Loan Agreement to reflect the above
changes and the loan document changes required by Lender as a result thereof and in consideration of Lender's consent and
agreement thereto, all as provided herein.
IN CONSIDERATION OF the foregoing facts and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and of the mutual covenants and agreements contained in this Third Amendment, the Borrower
and the Lender agree that the 2014 Loan A, B and D Loan Agreement is hereby modified and amended as follows:
1.
Definitions. The recitals above are incorporated herein and any capitalized terms used, but not defined herein, shall have
the meaning ascribed thereto in the Loan Documents and Article I of the 2014 Loan A, B and D Loan Agreement is hereby
amended as of, from and after the Third Amendment Effective Date, by adding the defined terms in this Third Amendment as
defined terms therein and by amending and restating any of the following defined terms to the extent such terms are already
defined in the 2014 Loan A, B and D Loan Agreement as follows:
(a)
"Agreement" shall mean the 2014 Loan A, B and D Loan Agreement as modified by this Third Amendment
and all other subsequent permitted amendments, supplements, and modifications thereof, including all exhibits and schedules.
(b)
"Assignment of Leases and Rents" shall mean the 2013 Assignment of Leases and Rents as modified by the
2014 Loan A, B and D Modification and by the 2015 Loan E and F Modification as affected by any and all partial releases
therefrom heretofore executed by Lender and recorded in the Public Records of the county in which the released parcels are
located, and all other subsequent permitted amendments, supplements, modifications thereof and partial releases therefrom
executed by Lender and recorded in the Public Records of the county in which the released parcel or parcels are located.
(c)
"Loan" shall mean Loan A and Loan
B.
(d)
"Loan Documents" shall mean the 2014 Loan A, B and D Existing Loan Documents as modified by the 2015
Loan A and B Modification and this Third Amendment, the guarantees of said loan documents, and the other documents by
Borrower in favor of Lender or between Borrower and Lender of even date with this Third Amendment other than the 2015
Loan E and F Modification and the 2015 First Amendment to Loan E and F Loan Agreement.
(e)
"Loan E and F Assignment of Leases and Rents" shall mean the 2014 Charlotte County Assignment of Leases
and Rents as modified by the 2015 Loan E and F Modification.
(f)
"Loan E and F Security Instrument" shall mean the 2014 Charlotte County Security Instrument as modified by
the 2015 Loan E and F Modification.
(g)
"Loan E and F Loan Documents" shall mean the 2014 Loan E and F Loan Documents, as modified by the 2015
Loan E and F Modification and by the 2015 First Amendment to Loan E and F Loan Agreement, the guarantees of said loan
documents, and the other documents by Borrower in favor of Lender or between Borrower and Lender of even date with the
2015 First Amendment to Loan E and F Loan Agreement.
(h)
(i)
"Note" shall mean Note A and Note
B.
"Premises" shall have the meaning ascribed thereto in the Security
Instrument.
G) "Principal Place of Business" shall mean the principal place of business and the headquarters of the Borrower at
which place all of Borrower's records are kept and which currently is located at 10070 Daniels Interstate Court, Suite 100, Fort
Myers, Florida 33913.
(k) "Third Amendment" shall mean this Third Amendment to Loan Agreement between Borrower and Lender dated as
of the Third Amendment Effective Date.
(l) "Third Amendment Effective Date" shall mean the date first set forth above in this Third Amendment preceding the
designation "Third Amendment Effective Date".
(a)
"Rabo Security Agreement" shall mean that certain Security Agreement between Borrower and Rabo of even
date herewith.
(b)
"Security Instrument" shall mean the 2014 Loan A, B and D Original Security Instrument as modified by the
2015 Loan A and B Modification together as affected by any and all partial releases therefrom heretofore executed by Lender
and recorded in the Public Records of the county in which the released parcels are located, and all other subsequent permitted
amendments, supplements, modifications thereof and partial releases therefrom executed by Lender and recorded in the Public
Records of the county in which the released parcel or parcels are located.
Note D and Loan D Canceled/ Note C Previously Canceled. On even date herewith, Borrower and Lender have entered
2.
into a Cancellation and Termination of Future Advance Promissory Note D which cancels and terminates Note D on a date
which is the same as the Third Amendment Effective Date with Borrower to have no further right to advances from Lender
thereunder as the revolving credit facility evidenced by said Note D and Loan D, are cancelled, terminated and of no further
force and effect. Accordingly, any provisions of the 2014 Loan A, B and D Loan Agreement or any other Loan Document
pertaining to Note D or Loan D or any such revolving credit facility thereunder are of no further force and effect. As that certain
Promissory Note C from Borrower to Lender in the face amount of up to Five Million and No/100 Dollars ($5,000,000.00) dated
December 31, 2012 ("Note C", and the loan evidenced thereby is known as Loan 717610638 and is referred to as "Loan C") has
previously been canceled, any provisions of the 2014 Loan A, B and D Loan Agreement or any other Loan Document pertaining
to Note C or Loan C are of no further force and effect.
3.
Modification of Section 2.7 Cross-Default/Cross-Collateralization on a Pari Passu Basis. Section 2.7 of Article II of the
2014 Loan A, B and D Loan Agreement is hereby modified as of, from and after the Third Amendment Effective Date to read
as follows: "Section 2.7 Cross-
Default/Cross Collateralization on a Pari Passu Basis. A default under (i) any of Note A, Note B, Note E, or Note F, after the
expiration of any applicable grace and notice periods, shall be a default under each and every one of said notes and (ii) a default
under any of the Loan Documents or under any of the Loan E and F Loan Documents, after the expiration of any applicable
grace and notice periods, shall be a default under each and every one of said documents. The lien and security interests of the
Security Instrument, the Assignment of Leases and Rents, the Loan Documents and the Collateral encumbered thereby, shall
also secure the obligations of Borrower under Note E, Note F and the other Loan E and F Loan Documents on a pari passu basis.
The lien and security interests of the Loan E and F Security Instrument, the Loan E and F Assignment of Leases and Rents, the
other Loan E and F Loan Documents and the Collateral encumbered thereby, shall also secure the obligations of Borrower under
Note A and Note B and the Loan A and B Loan Documents on a pari passu basis. "A pari passu basis", as used herein, shall
mean that such liens and security interests shall be apportioned among Loan A, Loan B, Loan E and Loan F by using a
percentage for each of Loan A, Loan B, Loan E and Loan F calculated by dividing (x) the sum owing under the subject loan by
(y) the total of all sums owing under all of said loans together, as such sums change from time to time. No present and/or future
holder of such loans shall be entitled to make any future advances or modifications to any of such loans except with the advance
written consent of all the holders of all of said loans at the time thereof. Each holder of such loans shall, at the request of the
other, from time to time, execute record and file such documents reasonably necessary to carry out the foregoing provisions
and/or to perfect such lien and security interests on the foregoing basis."
4.
Modification of Section 3.7 (No Outstanding Debt). Section 3.7 of the 2014 Loan A, B and D Loan Agreement is
modified to read: "Borrower has no outstanding Debt for an amount owed by Borrower to another, except for the intercompany
loan from Alico pursuant to Section 4.8, loans outstanding under the Loan E and F Loan Agreement, the Loan, capital leases on
equipment, and any liabilities disclosed to Lender in writing before the Third Amendment Effective Date and other obligations
in the nature of trade payables incurred by Borrower in its ordinary course of business."
5.
Modification of Section 3.10 (Executive Office and Location of Records). Section 3.10 of the 2014 Loan A, B and D
Loan Agreement is modified to read: "The Borrower's Principal Place of Business is located at 10070 Daniels Interstate Court,
Suite 100, Fort Myers, Florida 33913 and all of its books and records are and shall be maintained there."
6.
Modification of Article IV Financial Covenants of the Borrower. The contents of Article IV Financial Covenants of
Borrower of the 2014 Loan A, B and D Loan Agreement are amended to read as follows: "The Borrower covenants, for so long
as any of the principal amount of or interest on the Note is outstanding and unpaid or any duty or obligation of the Borrower
hereunder or under any other Obligation remains unpaid or unperformed, as follows:
Section 4.1 Financial Records. The Borrower at all times will keep proper and adequate records and books of account in
accordance with GAAP consistently applied in which the full, true and correct entries will be made of its transactions and which
will properly and correctly reflect all items of income and expense in connection with the operation of the Borrower's business.
Section 4.2 Delivery of Financial Statements of the Borrower. The Borrower will deliver to the Lender copies of each
of the following:
(1)
Within one hundred twenty (120) days after the end of each Fiscal Year, audited financial statements
of Borrower and its Subsidiaries on a consolidated basis (with appropriate subsidiary eliminations), which are prepared in
accordance with GAAP (consisting of an income statement, balance sheet, and a statement of retained earnings and cash flow).
They shall be prepared and certified by a certified public accountant reasonably acceptable to the Lender, all in reasonable
detail. Such audited financial statements shall be further certified by the chief financial officer of the Borrower or its managing
member as being true, correct, and accurate, as completely and accurately reflecting the financial transactions during the period
covered thereby of Borrower and its consolidated Subsidiaries, and as completely and accurately reflecting the financial
condition of Borrower and its consolidated Subsidiaries as of the beginning and end of said period covered.
(2)
As soon as practicable and in any event within one hundred twenty (120) days after the end of each
Fiscal Year, a certificate of compliance with financial covenants from the chief financial officer of the Borrower or its managing
member ("Certificate of Compliance") addressed to Lender and certifying the compliance of Borrower with the financial
covenants provided in this Article.
(3)
Annually, within ninety (90) days after the completion of each Crop Season (a Crop Season shall, as to
a particular Crop, be the Crop season used by the industry in the area of the Premises as to which the Crop pertains), Borrower
shall furnish to Lender operating information on the Collateral as follows:
including each citrus crop variety's acreage both on a gross acreage and grove planted acreage basis; and
(i)
Reports/documents (internal inventory reports etc.) that describe and value all inventory security,
(ii)
pricing by grove/farm and variety.
Citrus Crop production and operations detailed information, including yields by variety, costs and
required by the Lender.
(iii)
With reasonable promptness, such other data and information as from time to time may be reasonably
Section 4.3 Delivery of Reports. All of the reports, statements, and items required under Section 4.2 shall be in form
and substance satisfactory to Lender. All of the reports, statements, and items required under Section 4.2 must, unless another
time period is specified above, be received each year this Agreement is in force by the date which is one hundred twenty
(1)
days after the end of the Borrower's Fiscal Year, as the case may be subject to filing deadline extensions. If any one
report, statement, or item is not received within thirty (30) days of this due date, Lender may declare an Event of Default under
this Agreement and the Loan Documents.
Section 4.4 Inspection of Records. Borrower shall allow Lender or its authorized representatives at all reasonable
times, but no more than twice per Fiscal Year if no Event of Default then exists, to examine and make copies of all such books
and records and all supporting data therefor at Lender's principal place of business or at such other place where such books,
records, and data may be located. Borrower shall assist Lender or such representative in effecting such examination. Within three
(3) years after Lender's receipt of any such report, statement, or item, Lender may, upon at least five (5) Business Days prior
written notice to Borrower, inspect and make copies of the books, records, and income tax returns with respect to the Collateral
of Borrower, for the purpose of verifying any such reports, statements, or items.
Section 4.5 Article IV Terms:
The following definitions shall apply to the financial covenants in this Article as to Borrower and its Subsidiaries on a
consolidated basis (with appropriate subsidiary eliminations):
(1)
Consolidated Current Liabilities;
"Consolidated Current Ratio" sh all m e a n t h e ratio o f ( i ) Consolidated Current Assets to (ii)
(2)
"Consolidated Current Assets" shall mean current assets as defined under and computed in accordance
with GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a consolidated
basis; and
(3)
"Consolidated Current Liabilities" shall mean current liabilities as defined under and computed in
accordance with GAAP consistently applied based upon audited financial statements of Borrower and its Subsidiaries on a
consolidated basis including all funded debt under lines of credit to Borrower and its Subsidiaries.
Section 4.6 Required Consolidated Current Ratio. The Consolidated Current Ratio measured at the end of each Fiscal
Year based on audited consolidated financial statements of Borrower shall be at least 1.50 to 1.00.
Section 4.7 LOC. While any portion of the Loan remains unpaid and outstanding there shall be no LOC other than the
Rabo Revolving Line-of Credit-Loan subject to the Rabo Intercreditor Agreement. Other than the Silver Nip Rabo Subsidiary
Guaranty, Borrower shall incur no obligation under the Rabo Revolving Line-of-Credit Loan without Lender's advance written
consent. Without limiting the foregoing, Borrower will not execute any security instruments under the Rabo Revolving Line-of-
Credit except (i) the Rabo Security Agreement and any documents executed in connection with or required by the Rabo Security
Agreement and (ii) those documents that secure only the obligations under the Silver Nip Rabo Subsidiary Guaranty. Borrower
will provide Lender a true and complete copy of each such security instrument before the Third Amendment Effective Date if
executed before said date, and promptly after execution if executed after such date. A default under the Rabo Revolving Line of-
Credit Loan, the effect of which is to cause, with the giving of notice, if required, amounts outstanding under the Rabo Revolving
Line-of-Credit to become due prior t o their stated maturity, or any payment made by Borrower under the Silver N i p Rabo
Subsidiary Guaranty shall be a default hereunder. Any modification of the Rabo Revolving Line-of-Credit that limits
Alico's ability to extend credit to the Silver Nip Entities under the written agreement between Silver Nip and Alico pursuant to
Section 4.8 hereof or any modification of the Silver Nip Rabo Subsidiary Guaranty without Lender's advance written consent
shall be a default herein.
Section 4.8 Silver Nip Rabo Subsidiary Guaranty. At the time the Silver Nip Rabo Subsidiary Guaranty is delivered to
Rabo, there shall be a written agreement between Borrower and Alico, giving Borrower the revolving right to borrow from Alico
at any time and from time to time, so long as the Silver Nip Rabo Subsidiary Guaranty is in full force and effect, a sum up to an
amount which would not result in the loan balance of such loan obligation outstanding at any one time exceeding $7,000,000.00.
A copy of such executed written agreement shall be delivered by Borrower to Lender before the Third Amendment Effective
Date. The failure to keep such agreement in full force and effect while such guaranty is in full force and effect shall be a default
hereunder."
Modification of Section 5.3 (First Lien). Section 5.3 of the 2014 Loan A, B and D Loan Agreement is modified to read:
7.
"Borrower shall provide Lender a first lien and security interest in all the Collateral as defined in the Security Instrument,
subject only to Permitted Liens, and except such Collateral that is subordinated by Lender in the Rabo Intercreditor Agreement
while such subordination is in force and effect as provided in said agreement."
8.
Modification of Section 5.4 (Second Lien). Section 5.4 of the 2014 Loan A, B and D Loan Agreement is modified to
read: "Borrower shall provide Lender a second lien and security interest in all the Collateral, as defined in the Security
Instrument, which is subordinated by Lender in the Rabo Intercreditor Agreement while such subordination is in force and
effect as provided in said agreement, subject only to Permitted Liens."
9.
Silver Nip Merger. Lender has consented to the Silver Nip Merger and the same is not in violation of Section 6.1 of the
2014 Loan A, B and D Loan Agreement or any other provision of the 2014 Loan A, B and D Loan Agreement or of any
provision in any other Loan Document.
10.
Modification of Section 6.5 (Loans to Borrower/Liens on Collateral). Section 6.5 of the 2014 Loan A, B and D Loan
Agreement is modified to read: "Borrower and none of the entities constituting Borrower shall incur any Debt for an amount
owed by Borrower to another or extend any guarantees of such Debt for an amount owed by Borrower to another other than
intercompany loans from Alico pursuant to Section 4.8, the Silver Nip Rabo Subsidiary Guaranty, loans outstanding under the
Loan E and F Loan Agreement, the Loan, capital leases on equipment, or any liabilities disclosed to Lender in writing before the
Third Amendment Effective Date and other obligations in the nature of trade payables incurred by Borrower in its ordinary
course of business. Borrower and none of the entities constituting Borrower may create, incur or suffer to exist any lien on any
of the Collateral or permit any Financing Statement (other than any of Lender or any of Rabo, but in the case of Rabo, as
provided for in the Rabo Security Agreement and documents executed in connection with or required by the Rabo Security
Agreement) to be on file with respect thereto, without the Lender's written consent."
11.
delete "Other than liens and security interests permitted to
Modification of Section 6.6 (Other Liens). Section 6.6 of the 2014 Loan A, B and D Loan Agreement is modified to
secure LOC," and replace such text with ''Other than the lien and security interest of Rabo permitted in Section 6.5 hereof,".
12.
Modification of Section 9.3. Section 9.3 of the 2014 Loan A, B and D Loan Agreement is modified to change the
address of Borrower to 10070 Daniels Interstate Court, Suite 100, Fort Myers, Florida 33913 and to delete "Reference Loan
Numbers: 717610613, 717610637, 717610647" from the Lender notice and the two related "With copy to" blocks and replace
them with "Reference Loan Numbers: 717610613 and 717610637".
13.
Loan A, B and D Loan Agreement as of the Third Amendment Effective Date.
Article III Representations and Warranties. Borrower hereby remakes the representations of Borrower in the 2014
14.
No Novation. This is not a novation and the 2014 Loan A, B and D Existing Loan Documents, and all their terms,
covenants, conditions, agreements and stipulations shall remain in full force and effect, except as modified by the 2015 Loan A,
B and D Modification and herein.
15.
No Impairment. Nothing herein contained invalidates or impairs or shall invalidate any or impair security now held by
Lender for said debt, nor impair nor release any covenants, conditions, agreements, or stipulations in said 2014 Loan A, B and D
Existing Loan Documents, and the same, except as modified by the 2015 Loan A, B and D Modification and herein, shall
continue in full force and effect and Borrower, and each of them, jointly and severally further covenant and agree to perform,
comply with and abide by each and every of the covenants, agreements, conditions and stipulations of the said 2014 Loan A, B
and D Existing Loan Documents as modified by the 2015 Loan A, B and D Modification and herein.
Release of Defenses, Counterclaims and Offsets. Borrower and each of them hereby agree and confirm that, as of the
16.
date hereof, neither (i) Loans A and B, Loan E and Loan F, (ii) the 2014 Loan A, B and D Existing Loan Documents and the
2014 Loan E and F Loan Documents, (iii) the servicing of Loans A, B, E and F nor (iv) this transaction, is subject to any
defenses, set-offs or counterclaims whatsoever, and, any existing, are hereby waived.
17.
of Florida (without reference to conflicts or choice of law principles).
Governing Law. This Third Amendment shall be governed by and construed in accordance with the laws of the State
18.
and inure to the benefit of the parties hereto and their respective successors, heirs, assigns, and legal representatives.
Successors and Assigns Joint and Several Liability. The prov1s1ons of this Third Amendment shall be binding upon
19.
Attorney's Fees. The prevailing party in any litigation brought to enforce the provisions of this Third Amendment shall
be entitled to recover from the other party its reasonable costs and expenses, including attorneys' fees, whether at trial or on
appeal, in mediation, bankruptcy, insolvency proceedings or other proceedings.
20.
Counterparts. This Third Amendment may be executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may execute this Third Amendment by signing any such
counterpart.
21.
JURY TRIAL WAIVER. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE
2014 LOAN A, B AND D LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT, ANY OF THE 2014 LOAN E AND F
LOAN DOCUMENTS, THIS THIRD AMENDMENT, THE 2015 LOAN A, B AND D MODIFICATION, THE 2015 LOAN E
AND F MODIFICATION, OR ANY ACTS OR OMISSIONS OF LENDER IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, each of the parties hereto has caused this Third Amendment to be executed, sealed and
delivered, as applicable, by their duly authorized officers as of the Third Amendment Effective Date first set forth above.
[SIGNATURE AND NOTARY BLOCKS FOLLOW]
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Chief Executive Officer of Alico, Inc., its Sole Member
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"LENDER"
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware
limited liability company
By: /s/ William M. Lewis
(Signed Name)
Its: Vice President
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as the Chief Executive Officer of ALICO INC., the sole member of 734 CITRUS HOLDINGS, LLC, a Florida limited
liability company, and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF ORANGE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared William M.
Lewis the Vice President of PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company,
and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ Charles E. Hurst
Signature of Notary Public)
Charles E. Hurst
(Printed Name of Notary Public)
My commission expires: 1-20-2019
[NOTARY SEAL]
Loan No.:
717610647
CANCELLATION AND TERMINATION
OF FUTURE ADVANCE PROMISSORY NOTED
THIS CANCELLATION AND TERMINATION OF FUTURE ADVANCE PROMISSORY NOTED (this
"Agreement"), made and entered into effective the 23rd day of April, 2015 (the "Agreement Effective Date"), by and among 734
CITRUS HOLDINGS, LLC, a Florida limited liability company, 734 LMC GROVES, LLC, a Florida limited liability
company, 734 CO-OP GROVES, LLC, a Florida limited liability company, 734 BLP GROVES, LLC, a Florida limited
liability company, and 734 HARVEST, LLC, a Florida limited liability company, being collectively referred to as the
"Borrower" (and unless otherwise provided the term "Borrower" shall apply to each of said five limited liability companies both
separately and collectively),jointly and severally, all having an office and place of business at 10070 Daniels Interstate Court,
Suite 100, Fort Myers, Florida 33913 and PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited
liability company, having an office and place of business at 801 Warrenville Road, Suite 150, Lisle, Illinois 60532-1357
(referred to herein as the "Lender").
WITNESSETH:
WHEREAS, Borrower executed in favor of Lender that certain Future Advance Promissory Note D in the face amount
of up to Six Million and NO/100 Dollars ($6,000,000.00) dated March 26, 2013 ("Note D", and the loan evidenced thereby is
known as Loan 717610647 and is referred to as "Loan D");
WHEREAS, in connection with certain changes, the Borrower and Lender have agreed to cancel and terminate Note D
and the revolving loan evidenced thereby and also set forth in that certain Loan Agreement between said parties dated December
31, 2012 as amended by said parties in that certain First Amendment to Loan Agreement dated March 26, 2013 and by that
Second Amendment to Loan Agreement dated September 4, 2014 (collectively, the "Loan Agreement").
NOW, THEREFORE,in consideration of the foregoing and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and Lender agree as set forth below:
1 . Recitals/Incorporation. The recitals above are incorporated herein and all capitalized terms herein shall have the
meanings set forth herein, but if none is so set forth, they
shall have the meanings set forth for same in the Loan Documents referenced in the Loan
Agreement.
2. Cancellation and Termination. On or before the Agreement Effective Date Borrower agrees to and shall pay to Lender
all sums due under Note D to bring the principal balance and outstanding accrued and unpaid interest to a zero balance on the
Agreement Effective Date a n d simultaneously therewith Borrower a n d Lender agree that Note D i s hereby canceled and
terminated with Borrower having no further right to advances from Lender thereunder as the revolving
credit facility evidenced by Note D and as set forth in the Loan Agreement provisions as to Note D and Loan D, are canceled,
terminated and of no further force and effect.
3. Release of Defenses, Counterclaims and Offsets. Borrower and each of them hereby agree and confirm that, as of the
date hereof, neither (i) Note D, (ii) Loan D, (iii) the revolving credit facility evidenced by Note D and the Loan Agreement
provisions concerning draws a n d advances thereunder a n d ( i v ) t h i s transaction, is subject t o a n y defenses, set-offs or
counterclaims whatsoever, and, any existing, are hereby waived.
4. Governing Law. This Agreement shall b e governed b y and construed in accordance with the laws of the State of
Florida (without reference to conflicts or choice of law principles).
5. Successors and Assigns Joint and Several Liability. The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, heirs, assigns, and legal representatives.
6. Attorney's Fees. The prevailing party in any litigation brought to enforce the provisions of this Agreement shall be
entitled to recover from the other party its reasonable costs and expenses, including attorneys' fees, whether at trial or on appeal,
in mediation, bankruptcy, insolvency proceedings or other proceedings.
7 . Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall
constitute o n e and the same instrument a n d a n y of the parties hereto may execute this Agreement by signing any such
counterpart.
8. JURY TRIAL WAIVER. BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY EITHER PARTY,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO NOTED, LOAN D,
THE LOAN AGREEEMENT PERTAINING TO NOTED AND LOAN D, THIS AGREEMENT AND THIS TRANSACTION
OR ANY ACTS OR OMISSIONS OF LENDER IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and delivered, as
applicable, by their duly authorized officers as of the Agreement Effective Date first set forth above.
"BORROWER"
734 CITRUS HOLDINGS, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
As: Chief Executive Officer of Alico, Inc., its Sole Member
"BORROWER"
734 LMC GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 CO-OP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 BLP GROVES, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"BORROWER"
734 HARVEST, LLC, a Florida limited liability company
By: /s/ Clayton G. Wilson
(Signed Name)
Its: Manager
"LENDER"
PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware
limited liability company
By: /s/ William M. Lewis
(Signed Name)
Its: Vice President
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as the Chief Executive Officer of ALICO INC., the sole member of 734 CITRUS HOLDINGS, LLC, a Florida limited
liability company, and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 LMC GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 CO-OP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed
the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 BLP GROVES, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF LEE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared Clayton G.
Wilson as manager of 734 HARVEST, LLC, a Florida limited liability company, and acknowledged that he executed the
foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ A. Denise Plair
Signature of Notary Public)
A. Denise Plair
(Printed Name of Notary Public)
My commission expires: 1-4-17
[NOTARY SEAL]
STATE OF FLORIDA
COUNTY OF ORANGE
S.S.
BEFORE ME, a Notary Public in and for said County and State on the date below, personally appeared William M.
Lewis the Vice President of PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware limited liability company,
and acknowledged that he executed the foregoing instrument on behalf of said limited liability company.
Said person (x) personally known to me or ( ) produced a driver's license issued by , a State of the United States which is
either current or has been issued within the past five (5) years and bears a serial or other identification number.
IN WITNESS WHEREOF, I have affixed my notarial seal this 23rd day of April, 2015.
/s/ Charles E. Hurst
Signature of Notary Public)
Charles E. Hurst
(Printed Name of Notary Public)
My commission expires: 1-20-2019
[NOTARY SEAL]
FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT
This FIRST AMENDMENT TO CREDIT AGREEMENT AND CONSENT (this “Amendment”), is dated as of
February 26, 2015, by and among ALICO, INC., a Florida corporation (“Alico”), ALICO-AGRI, LTD., a Florida limited
partnership (“Alico-Agri”), ALICO PLANT WORLD, L.L.C., a Florida limited liability company (“Plant World”), ALICO
FRUIT COMPANY, LLC , a Florida limited liability company (“Fruit Company”), ALICO LAND DEVELOPMENT INC.,
a Florida corporation (“Land Development”), ALICO CITRUS NURSERY, LLC, a Florida limited liability company (“Citrus
Nursery”, and together with Alico, Alico-Agri, Plant World, Fruit Company and Land Development, each a “Borrower” and
collectively the “Borrowers”), and RABO AGRIFINANCE, INC., a Delaware corporation (“Lender”).
W I T N E S S E T H:
WHEREAS, Borrowers and Lender are parties to that certain Credit Agreement dated as of December 1, 2014 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); and
WHEREAS, Borrowers have requested that Lender amend certain provisions of the Credit Agreement and consent to the
Silver Nip Merger (as defined below) as more fully set forth herein; and
WHEREAS, Lender is willing to agree to the requested amendments and consent to the Silver Nip Merger, in each case
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree
that all capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement,
and further agree as follows:
1.
Amendments to Credit Agreement.
Section 1.1 of the Credit Agreement, Defined Terms, is hereby modified and amended by adding the
defined terms set forth below thereto in appropriate alphabetical order, and deleting any existing definition for any of the
following defined terms as may be currently set forth in such Section:
(a)
““734 Citrus” means 734 Citrus Holdings, LLC, a Florida limited liability company.
“734 Sub” means 734 Sub, LLC, a Florida limited liability company and wholly owned subsidiary of
Alico.
“Debt Service Coverage Ratio” means, as of any date of determination for the four Fiscal Quarter
period then ended, the ratio of (a)
Consolidated EBITDA for such period, to (b) Interest Expense of the Consolidated Group calculated without
duplication for such period, plus the current portion of any long-term debt, excluding any amounts due upon the
final maturity of such long-term debt, of the Consolidated Group calculated without duplication, as of the last
day of
such period.
“Intercreditor Agreement” means, individually and collectively, as the context may require, the Met
Life Intercreditor Agreement and the Prudential Intercreditor Agreement.
“Met Life Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of even date
herewith, by and among Metropolitan Life Insurance Company, a New York corporation, Rabo, and New
England Life Insurance Company, a Massachusetts corporation, and acknowledged by Borrowers, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
“Prudential Facility” means, collectively, (a) the credit and term loan facility established for the Silver
Nip Entities pursuant to that certain Loan Agreement, dated as of December 31, 2012 by and among Prudential
Mortgage Capital Company, LLC, a Delaware limited liability company, and each of the Silver Nip Entities,
together with the First Amendment to Loan Agreement dated March 26, 2013 and the Second Amendment to
Loan Agreement dated September 4, 2014, and (b) the term loan facility established for the Silver Nip Entities
pursuant to that certain Loan Agreement dated as of September 4, 2014 by and among Prudential Mortgage
Capital Company, LLC, a Delaware limited liability company, and each of the Silver Nip Entities, in each case
as the same may be further amended, restated, supplemented or otherwise modified from time to time to the
extent permitted herein or in the Prudential Intercreditor Agreement.
“Prudential Intercreditor Agreement” means that certain Intercreditor Agreement by and among
Prudential Mortgage Capital Company, LLC, a Delaware limited liability company, and Lender, and
acknowledged by Borrowers and the Silver Nip Entities, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
“Silver Nip Conditions” means, collectively, each of the following, in each case in form and substance
satisfactory to Lender: (i) a Guaranty Agreement, a joinder to the Security Agreement, Control Agreements,
Assignments of Crop Insurance, and a collateral assignment of any Material Contract, including but not limited
to, the Fruit Production Contracts, signed and delivered on behalf of each Silver Nip Entity; (ii) favorable written
opinions addressed to Lender from counsel to each Silver Nip Entity; (iii) copies of such documents and
certificates as Lender
may reasonably request relating to the organization, existence and good standing of each Silver Nip Entity, the
authorization of the execution, delivery and performance of the Loan Documents to which it is a party, and the
identity, authority and capacity of each Responsible Officer authorized to act on behalf of Silver Nip Entity in
connection with the Loan Documents; (iv) the results, dated as of a recent date, of searches conducted in the
UCC filing records in the governmental office in the jurisdiction in which each Silver Nip Entity is organized,
which shall have revealed no Liens with respect to any of the Collateral of the Silver Nip Entities except
Permitted Encumbrances or Liens as to which Lender shall have received (and is authorized to file) termination
statements or documents (Form UCC-3 or such other termination
statements or documents as shall be required by applicable law) fully executed for filing; (v) evidence that all
filings, registrations and recordings have been made in the appropriate governmental offices, and all other action
has been taken, that Lender deems necessary or desirable in order to create, in favor of Lender, a perfected first-
priority Lien on the Collateral of each Silver Nip Entity, subject to no other Liens except for Permitted
Encumbrances; (vi) the Prudential Intercreditor Agreement duly executed by the parties thereto, together with
evidence that the Silver Nip Entities have no rights to borrow additional loans under any Prudential Facility; and
(vii) any “Know Your Customer” information requested by Lender pursuant to Section 9.13.
“Silver Nip Entities” means 734 Citrus, 734 Co-op Groves, LLC, 734 LMC Groves, LLC, 734 BLP
Groves, LLC, and 734 Harvest, LLC.
“Silver Nip Merger” means the merger in accordance with the Silver Nip Merger Agreement of 734 Sub
with and into 734 Citrus, with 734 Citrus surviving the merger as a wholly owned subsidiary of Alico.
“Silver Nip Merger Agreement” means that certain Agreement and Plan of Merger dated as of
December 2, 2014, by and among Alico, 734 Citrus, 734 Sub, and the other parties thereto.
“Sweep Depositary” has the meaning assigned to such term in the definition of “Sweep to Loan
Arrangement”.
“Sweep to Loan Arrangement” means a cash management arrangement established by Borrowers with
Lender or an Affiliate of Lender, as depositary (in such capacity, the “Sweep Depositary”), pursuant to which
Lender is authorized (a) to make advances of Loans hereunder, the proceeds of which are deposited by Lender
into a designated account of a Borrower maintained at the Sweep Depositary, and (b) to accept as prepayments
of the Loans hereunder proceeds of excess targeted balances held in such designated account at the Sweep
Depositary, which cash management arrangement is subject to such
agreement(s) and on such terms acceptable to the Sweep Depositary and Lender.”
Section 1.1 of the Credit Agreement, Defined Terms , is hereby further modified and amended by
deleting clause (i) of the defined term “Permitted Encumbrances” set forth therein in its entirety and inserting in lieu thereof the
following:
(b)
“(i) (1) Liens securing the MetLife Facility as in existence on the date hereof or Liens securing any Refinancing
Indebtedness thereof, provided, that in the case of a Lien securing (x) Refinancing Indebtedness, such Lien shall
be limited to all or part of the same property that was secured by the original Lien (plus improvements on such
property), and (y) the MetLife Facility or Refinancing Indebtedness thereof, such Lien shall be subject to the
Met Life Intercreditor Agreement, and (2) Liens on certain fixed assets (and related general intangibles) of the
Silver Nip Entities securing the Prudential Facility as in existence on the date of the Silver Nip Merger or Liens
securing any Refinancing Indebtedness thereof, provided, that in the case of a Lien securing (x) Refinancing
Indebtedness,
such Lien shall be limited to all or part of the same property that was secured by the original Lien (plus
improvements on such property), and (y) the Prudential Facility or Refinancing Indebtedness thereof,
commencing on March 30, 2015 or such later date as the Lender shall consent to in writing (with any such
consent not to be unreasonably withheld) and at all times thereafter, such Lien shall be subject to the Prudential
Intercreditor Agreement and the Silver Nip Conditions shall have been satisfied;”
in its entirety and inserting in lieu thereof the following:
(c)
Section 2.9 of the Credit Agreement, Fees, is hereby modified and amended by deleting subsection (b)
“(b) Letter of Credit Fees. Borrowers agree, jointly and severally, to pay to Lender for its own account
(i) a Letter of Credit fee, in connection with each Letter of Credit issued hereunder, in an amount equal to the
Applicable Margin then applicable for the “Letter of Credit Fee” multiplied by the amount of such Letter of
Credit, with such fee being due and payable on the date of issuance of such Letter of Credit and on the date of
each renewal or extension thereof, and (ii) Lender’s standard fees and other standard costs and charges with
respect to the issuance, amendment, administration, renewal, extension, cancellation or conversion of any Letter
of Credit or processing of drawings thereunder, with such fees being due and payable within 10 days after
demand by Lender.”
immediately after Section 2.15 set forth therein the following Section 2.16:
(d)
Section 2 of the Credit Agreement, THE CREDIT, is hereby modified and amended by adding
“2.16 Sweep to Loan Arrangement. So long as a Sweep to Loan Arrangement is in effect, and subject
to the terms and conditions thereof, Loans may be advanced and prepaid hereunder notwithstanding any notice,
minimum amount, or funding and payment location requirements set forth in Sections 2.2, 2.3, 2.5 a n d 2.8
hereunder for any advance of Loans or for any prepayment of any Loans. The making of any such Loans shall
otherwise be subject to the other terms and conditions of this Agreement. Lender shall have the right in its sole
discretion to suspend or terminate the making and/or prepayment of Loans pursuant to such Sweep to Loan
Arrangement with notice to the Sweep Depositary and Alico, whether or not any Default or Event of Default
exists. Lender shall not be liable to any Borrower or any other Person for any losses directly or indirectly
resulting from events beyond Lender’s reasonable control, including any interruption of communications or data
processing services or legal restriction or for any special, indirect, consequential or punitive damages in
connection with any Sweep to Loan Arrangement.”
and amended by adding immediately after subsection (c) set forth therein the following new paragraph:
(e)
Section 5.8 of the Credit Agreement, Certain Obligations Respecting Subsidiaries, is hereby modified
“Additionally, and without limiting the generality of the foregoing, Borrowers shall take such action, and shall
cause each of the Silver Nip Entities to take such action, as is necessary to cause to be delivered to Lender by
March 30, 2015 or such later date as the Lender shall consent to in writing (with any such consent not to be
unreasonably withheld), each of the requirements of the Silver Nip Conditions.”
subsection (b) in its entirety and inserting in lieu thereof the following:
(f)
Section 6.1 of the Credit Agreement, Indebtedness, is hereby modified and amended by deleting
“(b) (i) Indebtedness of the Borrowers pursuant to the MetLife Facility, and any Refinancing Indebtedness in
respect of such Indebtedness, and
(ii) Indebtedness of the Silver Nip Entities pursuant to the Prudential Facility in an aggregate principal amount
not to exceed $42,820,000, and any Refinancing Indebtedness in respect of such Indebtedness;”
and amended by deleting clause (i) of subsection (a) thereof in its entirety and inserting in lieu thereof the following:
(g)
Section 6.3 of the Credit Agreement, Fundamental Changes; Lines of Business, is hereby modified
“(i) Any Subsidiary of a Borrower may merge into a Borrower or any other Domestic Subsidiary (including any
Person that will be a Domestic Subsidiary upon the consummation of a Permitted Acquisition) of a Borrower;
provided, (A) if Alico is party to any such transaction, Alico shall be the surviving entity, (B) no Obligor (other
than a Silver Nip Entity) may merge with or into a Silver Nip Entity, and (C) if an Obligor (other than Alico or a
Silver Nip Entity) is a party to such transaction, (x) the surviving entity shall be an Obligor or (y) the surviving
entity shall be a Domestic Subsidiary and shall assume in writing satisfactory to Lender
in its sole discretion all Obligations and Loan Documents of such Obligor (and deliver to Lender all information
required by Section 9.13); and”
subsection (c) in its entirety and inserting in lieu thereof the following:
(h)
Section 6.4 of the Credit Agreement, Dispositions, is hereby modified and amended by deleting
“(c) Dispositions of property by (i) Borrowers and any of their Subsidiaries to any other Obligor (other than a
Silver Nip Entity), (ii) any Subsidiary of Borrowers that is not an Obligor to any other Subsidiary of Borrowers
that is not an Obligor; and (iii) any Silver Nip Entity to any other Silver Nip Entity;”
subsections (c), (d) and (l) in their entirety and inserting in lieu thereof, respectively, the following:
(i)
Section 6.5 of the Credit Agreement, Investments, is hereby modified and amended by deleting
“(c) extensions of credit by (x) any Obligor to any other Obligor (other than a Silver Nip Entity), (y) Alico to the
Silver Nip Entities in an aggregate principal amount up to but not exceeding $7,000,000 at any time outstanding
provided the Silver Nip Conditions shall have been satisfied prior to the making of any such extension of credit
pursuant to this clause (y), and (z) any Silver Nip Entity to any other Silver Nip Entity;
(d) equity contributions by (x) any Obligor to any other Obligor (other than Alico or a Silver Nip Entity), and (y)
any Silver Nip Entity to any other Silver Nip Entity;
(l) any Guarantee of, or assumption of Indebtedness of, any other Person in either case to the extent the Person
incurring such Guarantee or assuming such Indebtedness would have been permitted to incur the underlying
Indebtedness under Section 6.1; provided in no event shall any Company other than a Silver Nip Entity provide
any Guarantee for the benefit of, or assume any Indebtedness of, a Silver Nip Entity;”
(j) Section 7.3 of the Credit Agreement, Consolidated Debt to Total Asset Ratio, is hereby modified and
amended by deleting such section in its entirety and inserting in lieu thereof the following:
“7.3 Consolidated Debt to Total Asset Ratio. Borrowers shall maintain a Consolidated Debt to Total
Asset Ratio of not greater than 0.625 to 1.00 as of the last day of the Fiscal Quarter ended March 31, 2015, and
as of the last day of each Fiscal Quarter thereafter.”
2.
Consent to Silver Nip Merger. Notwithstanding the prohibitions of Sections 6.5 or 6.7 of the Credit Agreement,
Lender hereby consents to the Silver Nip Merger (as defined after giving effect to this Amendment), provided, (a) the Silver Nip
Merger is financed solely through the issuance by Alico of its common stock to the owners of 734 Citrus (and by the payment of
cash in lieu of fractional shares to such owners) at such times as may be required by the Silver Nip Merger Agreement, and (b)
upon the consummation of the Silver Nip Merger and after giving effect to this Amendment, no Default or Event of Default
shall exist or be caused thereby. Additionally, notwithstanding anything in Section 5.8 to the contrary, Lender hereby consents
and agrees that the Guaranty Agreement and Security Agreement (or joinder thereto) to be provided by the Silver Nip Entities
thereunder may limit the aggregate principal amount of the Obligations guaranteed (or secured) thereunder to $7,000,000.
3.
No Other Amendments. Except as expressly set forth above, the execution, delivery and effectiveness of this
Amendment shall not operate as an amendment, modification or waiver of any right, power or remedy of Lender under the
Credit Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Credit Agreement or any
of the other Loan Documents. Except for the amendments and consent set forth above, the text of the Credit Agreement and all
other Loan Documents shall remain unchanged and in full force and effect and each Borrower hereby ratifies and confirms its
obligations thereunder. This Amendment shall not constitute a modification of the Credit Agreement or any of the other Loan
Documents or a course of dealing with Lender at variance with the Credit Agreement or the other Loan Documents such as to
require further notice by Lender to require strict compliance with the terms of the Credit Agreement and the other Loan
Documents in the future. Each Borrower acknowledges and expressly agrees that Lender reserves the right to, and does in fact,
require strict compliance with all terms and provisions of the Credit Agreement and the other Loan Documents, as amended
herein.
4.
Representations and Warranties. In consideration of the execution and delivery of this Amendment by Lender,
each Borrower hereby represents and warrants in favor of Lender as follows:
(a)
The execution, delivery and performance by each Borrower of this Amendment (i) are all
within such Borrower’s limited liability company powers, (ii) have been duly authorized, (iii) do not require any consent,
authorization or approval of, registration or filing with, notice to, or any other action by, any Governmental Authority or
any other Person, except for such as have been obtained or made and are in full force and effect, (iv) will not violate any
applicable law or regulation or the Organizational Documents of such Borrower, (v) will not violate or result in a default
under any material agreement binding upon such Borrower, (vi) will not conflict with or result in a breach or
contravention of, any material order, injunction, writ or decree of any Governmental Authority or any arbitral award to
which such Borrower is a party or affecting such Borrower or its properties, and (vii) except for the Liens created
pursuant to the Security Documents, will not result in the creation or imposition of any Lien on any asset of such
Borrower or any of its properties;
(b)
This Amendment has been duly executed and delivered by each Borrower, and constitutes
legal, valid and binding obligations of each Borrower enforceable against each Borrower in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar laws
of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);
(c)
As of the date hereof and after giving effect to this Amendment, the representations and
warranties made by or with respect to any Borrower under the Credit Agreement and the other Loan Documents, are true
and correct in all material respects (unless any such representation or warranty is qualified as to materiality or as to
Material Adverse Effect, in which case such representation and warranty shall be true and correct in all respects), except
to the extent previously fulfilled with respect to specific prior dates;
Immediately after giving effect hereto, no event has occurred and is continuing which
constitutes a Default or an Event of Default or would constitute a Default or an Event of Default but for the requirement
that notice be given or time elapse or both; and
(d)
Documents, or to the effectiveness of the Loan Documents.
(e)
No Borrower has knowledge of any challenge to Lender’s claims arising under the Loan
5.
Effectiveness. This Amendment shall become effective as of the date set forth above (the “Amendment
Effective Date”) upon Lender’s receipt of each of the following, in each case in form and substance satisfactory to Lender:
(a)
this Amendment duly executed by each Borrower and Lender;
(b)
a certificate of a Responsible Officer of Alico, dated the Amendment Effective Date, certifying
(i) that attached thereto are true and correct copies of the Silver Nip Merger Agreement (including all schedules and
exhibits thereto) and the material agreements evidencing the Prudential Facility, and (ii) that after giving effect to this
Amendment and the Silver Nip Merger, no Default or Event of Default exists; and
(c)
reasonably request.
all other certificates, reports, statements, instruments or other documents as Lender may
6.
Costs and Expenses. Each Borrower agrees to pay on demand all costs and expenses of Lender in connection
with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered
hereunder (including, without limitation, the fees and out-of-pocket expenses of counsel for Lender with respect thereto).
7.
Counterparts. This Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same
instrument. Delivery of a signature page hereto by facsimile transmission or by other electronic transmission shall be as
effective as delivery of a manually executed counterpart hereof.
8.
Reference to and Effect on the Loan Documents. Upon the effectiveness of this Amendment, on and after the
date hereof, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”,
thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended hereby.
9.
Governing Law. This Amendment shall be deemed to be made pursuant to the laws of the State of New York
with respect to agreements made and to be performed wholly in the State of New York and shall be construed, interpreted,
performed and enforced in accordance therewith.
10.
Final Agreement . This Amendment represents the final agreement between Borrowers and Lender as to the
subject matter hereof and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the
parties. There are no unwritten oral agreements between the parties.
11.
Agreement.
Loan Document. This Amendment shall be deemed to be a Loan Document for all purposes under the Credit
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IN WITNESS WHEREOF, the parties hereto have caused their respective duly authorized officers or representatives
to execute and deliver this Amendment as of the day and year first above written.
BORROWER:
ALICO, INC., a Florida corporation
By: /s/ W. Mark Humphrey
Name: W. Mark Humphrey
Title: Senior Vice President, Chief Financial Officer and Assistant Secretary
ALICO LAND DEVELOPMENT, INC.,
a Florida corporation
By: /s/ W. Mark Humphrey
Name: W. Mark Humphrey
Title: Senior Vice President, Chief Financial Officer and Assistant Secretary
ALICO-AGRI, LTD., a Florida limited partnership
By: /s/ W. Mark Humphrey
Name: W. Mark Humphrey
Title: Senior Vice President, Chief Financial Officer and Assistant Secretary
ALICO PLANT WORLD, L.L.C.,
a Florida limited liability company
By: Alico-Agri, Ltd., a Florida
limited partnership, its Sole Member
By: Alico, Inc., a Florida Corporation,
its General Partner
By: /s/ W. Mark Humphrey
Name: W. Mark Humphrey
Title: Senior Vice President, Chief Financial Officer and Assistant Secretary
ALICO FRUIT COMPANY, LLC,
a Florida limited liability company
By: Alico, Inc., a Florida corporation
its Managing Member
By: /s/ W. Mark Humphrey
Name: W. Mark Humphrey
Title: Senior Vice President, Chief Financial Officer and Assistant Secretary
ALICO CITRUS NURSERY, LLC,
a Florida limited liability company
By: Alico, Inc., a Florida corporation
its Managing Member
By: /s/ W. Mark Humphrey
Name: W. Mark Humphrey
Title: Senior Vice President, Chief Financial Officer and Assistant Secretary
LENDER:
RABO AGRIFINANCE, INC.
a Delaware corporation
By: /s/ Bryan L. Byrd
Name: Bryan L. Byrd
Title:
Senior Vice
President
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), is dated as of July 16 , 2015, by
and among ALICO, INC., a Florida corporation (“Alico”), ALICO-AGRI, LTD., a Florida limited partnership (“Alico-Agri”),
ALICO PLANT WORLD, L.L.C., a Florida limited liability company (“Plant World”), ALICO FRUIT COMPANY, LLC , a
Florida limited liability company (“Fruit Company”), ALICO LAND DEVELOPMENT INC., a Florida corporation (“Land
Development”), ALICO CITRUS NURSERY, LLC, a Florida limited liability company (“Citrus Nursery”), and together with
Alico, Alico-Agri, Plant World, Fruit Company and Land Development, each a “ Borrower” and collectively the “Borrowers”),
the Guarantors party hereto and RABO AGRIFINANCE, INC., a Delaware corporation (“Lender”).
W I T N E S S E T H:
WHEREAS, Borrowers and Lender are parties to that certain Credit Agreement dated as of December 1, 2014 (as
amended by that certain First Amendment to Credit Agreement and Consent dated as of February 26, 2015, and as may be
further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); and
WHEREAS, Borrowers have requested that Lender amend certain provisions of the Credit Agreement as more fully set
forth herein; and
WHEREAS, Lender is willing to agree to the requested amendments in each case on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree
that all capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement,
and further agree as follows:
1.
Amendments to Credit Agreement.
Section 1.1 of the Credit Agreement, Defined Terms , is hereby modified and amended by deleting
the definitions of “Consolidated Current Liabilities” and “Consolidated Total Liabilities” in their entirety and inserting the
following in lieu thereof:
(a)
““Consolidated Current Liabilities” means, as of the date of determination thereof, the aggregate of all
liabilities which in accordance with GAAP would be so classified and appear as current liabilities on the consolidated
balance sheet of the Consolidated Group; provided that, for the purposes hereof, Consolidated Current Liabilities shall
not include any deferred gains realized in connection with the Sugarcane Sale.
“Consolidated Total Liabilities” means, as of the date of determination thereof, the aggregate of all
liabilities which in accordance with GAAP would be so classified and appear as liabilities on the consolidated balance
sheet of the Consolidated Group; provided that, for the purposes hereof, Consolidated Total Liabilities shall not include
any deferred gains realized in connection with the Sugarcane Sale.”
by adding the following new defined term thereto in appropriate alphabetical order:
(b)
Section 1.1 of the Credit Agreement, Defined Terms, is hereby further modified and amended
““Sugarcane Sale” means the sale by Borrowers of approximately 36,000 acres of real property to
Global Ag Properties, LLC that closed on or about November 21, 2014.”
2.
No Other Amendments. Except as expressly set forth above, the execution, delivery and effectiveness of this
Amendment shall not operate as an amendment, modification or waiver of any right, power or remedy of Lender under the
Credit Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the Credit Agreement or any
of the other Loan Documents. Except for the amendments set forth above, the text of the Credit Agreement and all other Loan
Documents shall remain unchanged and in full force and effect and each Borrower hereby ratifies and confirms its obligations
thereunder. This Amendment shall not constitute a modification of the Credit Agreement or any of the other Loan Documents or
a course of dealing with Lender at variance with the Credit Agreement or the other Loan Documents such as to require further
notice by Lender to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the
future. Each Borrower acknowledges and expressly agrees that Lender reserves the right to, and does in fact, require strict
compliance with all terms and provisions of the Credit Agreement and the other Loan Documents, as amended herein.
3.
Representations and Warranties. In consideration of the execution and delivery of this Amendment by Lender,
each Borrower and each Guarantor hereby represents and warrants in favor of Lender as follows:
(a)
The execution, delivery and performance by each Borrower and each Guarantor of this
Amendment (i) are all within such Borrower’s or such Guarantor’s powers (corporate or otherwise), (ii) have been duly
authorized, (iii) do not require any consent, authorization or approval of, registration or filing with, notice to, or any other
action by, any Governmental Authority or any other Person, except for such as have been obtained or made and are in full
force and effect, (iv) will not violate any applicable law or regulation or the Organizational Documents of such Borrower
or such Guarantor, (v) will not violate or result in a default under any material agreement binding upon such Borrower or
such Guarantor, (vi) will not conflict with or result in a breach or contravention of, any material order, injunction, writ or
decree of any Governmental Authority or any arbitral award to which such Borrower or such Guarantor is a party or
affecting such Borrower or such Guarantor or its properties, and (vii) except for the Liens created pursuant to the Security
Documents, will not result in the creation or imposition of any Lien on any asset of such Borrower or such Guarantor or
any of its properties;
(b)
This Amendment has been duly executed and delivered by each Borrower and each Guarantor,
and constitutes legal, valid and binding obligations of each Borrower and each Guarantor enforceable against each
Borrower and each Guarantor in accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of
creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(c)
As of the date hereof and after giving effect to this Amendment, the representations and
warranties made by or with respect to any Borrower or any Guarantor under the Credit Agreement and the other Loan
Documents, are true and correct in all material respects (unless any such representation or warranty is qualified as to
materiality or as to Material Adverse Effect,
in which case such representation and warranty shall be true and correct in all respects), except to the extent previously
fulfilled with respect to specific prior dates;
Immediately after giving effect hereto, no event has occurred and is continuing which
constitutes a Default or an Event of Default or would constitute a Default or an Event of Default but for the requirement
that notice be given or time elapse or both; and
(d)
the Loan Documents, or to the effectiveness of the Loan Documents.
(e)
No Borrower or Guarantor has knowledge of any challenge to Lender’s claims arising under
4.
Effectiveness. This Amendment shall become effective as of the date set forth above upon Lender’s receipt of
each of the following, in each case in form and substance satisfactory to Lender:
(a)
this Amendment duly executed by each Borrower, each Guarantor and Lender; and
(b)
reasonably request.
all other certificates, reports, statements, instruments or other documents as Lender may
5.
Affirmation of Guaranty Agreements. By executing this Amendment, each Guarantor hereby acknowledges,
consents and agrees that all of its obligations and liability under each Guaranty Agreement to which such Guarantor is a party
remain in full force and effect, and that the execution and delivery of this Amendment and any and all documents executed in
connection therewith shall not alter, amend, reduce or modify its obligations and liability under such Guaranty Agreement.
6.
Costs and Expenses. Each Borrower agrees to pay on demand all costs and expenses of Lender in connection
with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered
hereunder (including, without limitation, the fees and out-of-pocket expenses of counsel for Lender with respect thereto).
7.
Counterparts. This Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same
instrument. Delivery of a signature page hereto by facsimile transmission or by other electronic transmission shall be as effective
as delivery of a manually executed counterpart hereof.
8.
Reference to and Effect on the Loan Documents. Upon the effectiveness of this Amendment, on and after the
date hereof, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring
to the Credit Agreement, and each reference in the other Loan Documents to “the Credit Agreement”, “thereunder”, thereof” or
words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended
hereby.
9.
Governing Law. This Amendment shall be deemed to be made pursuant to the laws of the State of Florida with
respect to agreements made and to be performed wholly in the State of Florida and shall be construed, interpreted, performed and
enforced in accordance therewith.
10.
Final Agreement. This Amendment represents the final agreement between Borrowers, Guarantors and Lender
as to the subject matter hereof and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.
11.
Agreement.
Loan Document. This Amendment shall be deemed to be a Loan Document for all purposes under the Credit
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused their respective duly authorized officers or representatives
to execute and deliver this Amendment as of the day and year first above written.
BORROWER:
ALICO, INC., a Florida corporation
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO LAND DEVELOPMENT, INC.,
a Florida corporation
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO-AGRI, LTD., a Florida limited partnership
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO PLANT WORLD, L.L.C.,
a Florida limited liability company
By: Alico-Agri, Ltd., a Florida
limited partnership, its Sole Member
By: Alico, Inc., a Florida Corporation,
its General Partner
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO FRUIT COMPANY, LLC,
a Florida limited liability company
By: Alico, Inc., a Florida corporation
its Managing Member
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
The undersigned Guarantor hereby executes and joins in this Amendment for purpose of consenting to the provisions
hereof.
ALICO CITRUS NURSERY, LLC,
a Florida limited liability company
By: Alico, Inc., a Florida corporation
its Managing Member
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
GUARANTORS:
734 CITRUS HOLDINGS LLC
By: Alico, Inc., as its sole member
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
734 HARVEST, LLC
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
734 CO-OP GROVES, LLC
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
734 LMC GROVES, LLC
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
734 BLP GROVES, LLC
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
GUARANTORS:
RABO AGRIFINANCE, INC.,
a Delaware corporation
By: /s/ Judy A. Cochran
Name: Judy A. Cochran
Title: Assistant Vice President
AMENDMENT TO
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT
AGREEMENT(the "Amendment") is made and entered into as of this 1st day of February 2015, by and among ALICO,
INC., a Florida corporation ("Alico"), ALICO LAND DEVELOPMENT, INC., a Florida corporation (" ALDI"), ALICO-AGRI,
LTD., a Florida limited partnership ("Alico-Agri"), ALICO PLANT WORLD, L.L.C., a Florida limited liability company
("Plant World") and ALICO FRUIT COMPANY, LLC, a Florida limited liability company (" Alico Fruit" and collectively with
Alico, ALDI, Alico-Agri, and Plant World, " Borrower") and in favor of METROPOLITAN LIFE INSURANCE COMPANY, a
New York corporation (" Servicer" or "MetLife"), as lender ("Lender") and as servicer, pursuant to that certain Co-Lending
Agreement of even date herewith between MetLife and New England Life Insurance Company, a Massachusetts corporation
("NEL''), as co-lender (and together with MetLife, "Co Lenders"). ALICO CITRUS NURSERY, LLC, a Florida limited liability
company ("Citrus Nursery") hereby joins in this Amendment as a Guarantor of the Loan) (collectively, the "Parties").
WHEREAS, the Parties entered into that certain First Amended and Restated Credit Agreement dated as of December
1, 2014 (the "Agreement"); and
WHEREAS, the Parties wish to amend the Agreement as set forth herein.
NOW, THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. The foregoing recitals are true and correct and are incorporated herein by reference. Capitalized terms not otherwise
defined herein shall have the meaning set forth in the Agreement.
2. The second sentence of Section 7.11 of the Agreement is deleted and replaced with the following sentence:
"The RLOC Unused Commitment Fee shall be calculated on February 1st of each year, commencing February 1, 2015,
for the preceding calendar year and shall be due and payable on the date that is fifteen (15) Business Days after February
1st of each year."
Except as specifically hereby amended, the Agreement shall remain in full force and effect. In the event of any conflict
between the terms of the Agreement and the terms of this Amendment, the terms of this Amendment shall govern.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment effective as of the date set forth above.
SERVICER/LENDER:
METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
By: /s/ Greg G. Gallaway
Name: Greg G. Gallaway
Title: Director
CO-LENDER:
NEW ENGLAND LIFE INSURANCE
COMPANY, a Massachusetts corporation
By: Metropolitan Life Insurance Company, a New York corporation, its Investment manager
By: /s/ Greg G. Gallaway
Name: Greg G. Gallaway
Title: Director
BORROWER:
ALICO, INC., a Florida corporation
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO LAND DEVELOPMENT, INC.,
a Florida corporation
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO-AGRI, LTD., a Florida limited partnership
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO PLANT WORLD, L.L.C.,
a Florida limited liability company
By: Alico-Agri, Ltd., a Florida
limited partnership, its Sole Member
By: Alico, Inc., a Florida Corporation,
its General Partner
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO FRUIT COMPANY, LLC,
a Florida limited liability company
By: Alico, Inc., a Florida corporation
its Managing Member
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
The undersigned Guarantor hereby executes and joins in this Amendment for purpose of consenting to the provisions
hereof.
ALICO CITRUS NURSERY, LLC,
a Florida limited liability company
By: Alico, Inc., a Florida corporation
its Managing Member
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
SECOND AMENDMENT TO
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") is made as of the 12th day of August, 2015, by and among ALICO, INC., a Florida corporation ("Alico"),
ALICO LAND DEVELOPMENT, INC., a Florida corporation ("ALDI"), ALICO-AGRI, LTD., a Florida limited partnership
("Alico Agri"), ALICO PLANT WORLD, L.L.C., a Florida limited liability company ("Plant World") and ALICO FRUIT
COMPANY, LLC, a Florida limited liability company (" Alico Fruit") and collectively with Alico, ALDI, Alico-Agri, and Plant
World, ''Borrower") and in favor of METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation (" Servicer"
or "MetLife"), as lender ("Lender") and as servicer, pursuant to that Amended and Restated Co Lending Agreement of even
date herewith (the "Restated Co-Lending Agreement"), between MetLife, New England Life Insurance Company, a
Massachusetts corporation ("NEL''), as co lender, and RABO AGRIFINANCE , INC., a Delaware corporation ("Rabo"), as co-
lender (and together with MetLife and NEL, "Co-Lenders").
W I T N E S S E T H:
WHEREAS, the parties hereto other than Rabo are parties to the Amended and Restated Credit Agreement dated
December 1, 2014, as amended by that certain Amendment to First Amended and Restated Credit Agreement dated effective
February 1, 2015 (collectively, the "Restated Credit Agreement"); and
WHEREAS, the parties hereto wish to make certain modifications in the terms of the Restated Credit Agreement, as
described herein; and
WHEREAS, Rabo desires to participate in the Loan made under the Restated Credit Agreement, and MetLife, NEL and
Rabo have entered into the Restated Co-Lending Agreement to include Rabo as an additional Co-Lender.
NOW, THEREFORE, in consideration of the foregoing and the mutual and reciprocal promises and agreements
contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by
all parties, the Co-Lenders and Borrower agree as follows:
1.
Definitions. All capitalized terms not defined herein shall have the meaning attributed to such term in the
Restated Credit Agreement.
2.
Additional Co-Lender. The Restated Credit Agreement is hereby amended to include Rabo as an additional Co-
Lender (as defined in Section 9 of the Restated Credit Agreement). The parties agree that Rabo is entitled and subject to all
rights, obligations and privileges as a Co-Lender in accordance with the Restated Credit Agreement, and, from and after the
effective date of this Amendment, shall be included in the term "Co-Lender[s]" for all purposes. Pursuant to the Restated Co-
Lending Agreement, MetLife shall serve as Servicer for the Co-Lenders, including Rabo.
3.
Assignment of Certain Notes. MetLife has assigned to Rabo the Libor Term Note B and the RLOC Note (the
"Assigned Notes"), which are secured by, among other things, the Collateral Documents listed in Section 1.4 of the Restated
Credit Agreement together with that certain Mortgage
Spreader Agreement dated as of July 29, 2015, and to be recorded among the Public Records of DeSoto County, Florida
(collectively, the “Collateral Documents"). The parties agree that Rabo, as an assignee of the Assigned Notes, is a secured party
under the Collateral Documents. All obligations of Borrower under the Assigned Notes and the Restated Credit Agreement with
respect to the Assigned Notes run to and for the benefit of Rabo. Such obligations are fully enforceable by Rabo as if the
Assigned Notes had been originally issued in its favor.
4.
Tangible Net Worth Computation. Section 8.2 of the Restated Credit Agreement is hereby amended by changing
"March 30, 2015," in the first line thereof to "March 31, 2015," and by also adding the following new sentence at the end of
such Section:
"For purposes of computing Consolidated Tangible Net Worth, Consolidated Current Ratio, or any other amount or ratio
required to be calculated under this Agreement and involving the assets and/or liabilities of Borrower, the terms
Consolidated Debt, Consolidated Tangible Net Worth, Current Assets, Current Liabilities, Consolidated Tangible
Assets, Consolidated Total Liabilities, and Consolidated Total Assets shall not be deemed to include any assets or
liabilities required to be shown on the books of Alico as a result of the Terra Land Sale."
5.
subsection (a)(4):
Flood Insurance. Section 7.5 of the Restated Credit Agreement is hereby amended by adding the following
11(4) If any Improvements or structures (as determined by the Federal Emergency Management Agency ("FEMA")) are
located in an area now or hereafter designated by the Director of FEMA as a special flood hazard area, Borrowers agree
to obtain and maintain Federal Flood Insurance, if available, within 45 days after notice is given by Lender that the
Improvements are located in a special flood area, for the lesser of (1) the full unpaid principal balance of the Loan, (2) the
total replacement value of any structure located in the flood hazard area, or (3) the maximum amount available under the
National Flood Insurance Program for the particular type of property, up to the maximum policy limits set under the
National Flood Insurance Program, or as otherwise required by Lender, and to maintain such insurance for the term of
the Loan.11
6.
Full Force and Effect. Except ·as expressly modified by this Amendment, the Restated Credit Agreement
remains in full force and effect in accordance with its terms.
7.
Counterparts. This Amendment may be executed simultaneously in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date and year first above
written.
SERVICER/LENDER:
METROPOLITAN LIFE INSURANCE COMPANY, a New York corporation
By: /s/ Greg G. Gallaway
Name: Greg G. Gallaway
Title: Director
CO-LENDER:
NEW ENGLAND LIFE INSURANCE
COMPANY, a Massachusetts corporation
By: Metropolitan Life Insurance Company, a New York corporation, its Investment manager
By: /s/ Greg G. Gallaway
Name: Greg G. Gallaway
Title: Director
CO-LENDER:
RABO AGRIFINANCE, INC.
a Delaware corporation
By: /s/ Judy A. Cochran
Name: Judy A. Cochran
Title: Assistant Vice
President
BORROWER:
ALICO, INC., a Florida corporation
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO LAND DEVELOPMENT, INC.,
a Florida corporation
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO-AGRI, LTD., a Florida limited partnership
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO PLANT WORLD, L.L.C.,
a Florida limited liability company
By: Alico-Agri, Ltd., a Florida
limited partnership, its Sole Member
By: Alico, Inc., a Florida Corporation,
its General Partner
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
ALICO FRUIT COMPANY, LLC,
a Florida limited liability company
By: Alico, Inc., a Florida corporation
its Managing Member
By: /s/ Clayton G. Wilson
Name: Clayton G. Wilson
Title: Chief Executive Officer
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement (No. 33-53761) on Form S-8 of Alico, Inc. of our
reports dated December 10, 2015, relating to our audit of the consolidated and combined financial statements and internal
control over financial reporting, which appear in this Annual Report on Form 10-K of Alico, Inc. for the year ended September
30, 2015.
/s/ RSM US LLP
Orlando, Florida
December 10, 2015
Exhibit 31.1
I, Clayton G. Wilson, certify that:
1. I have reviewed this annual report on Form 10-K of Alico, Inc.;
CERTIFICATION
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such
evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: December 10, 2015
By:
/s/ Clayton G. Wilson
Clayton G. Wilson
President and Chief Executive Officer
Exhibit 31.2
I, John E. Kiernan, certify that:
1. I have reviewed this annual report on Form 10-K of Alico, Inc.;
CERTIFICATIONS
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such
evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent
functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: December 10, 2015
By:
/s/ John E. Kiernan
John E. Kiernan
Chief Financial Officer and Senior Vice President
Certification of Chief Executive Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Exhibit 32.1
In connection with the Annual Report on Form 10-K for the year ended September 30, 2015 (the “Report”) of Alico, Inc. (the
“Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Clayton G. Wilson, President and Chief
Executive Officer of the Registrant, hereby certify, pursuant to Section 906 of the Sarbanes Oxley Act of 2002 that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Registrant.
Date: December 10, 2015
By:
/s/ Clayton G. Wilson
Clayton G. Wilson
President and Chief Executive Officer
Certification of Chief Financial Officer
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
Exhibit 32.2
In connection with the Annual Report on Form 10-K for the year ended September 30, 2015 (the “Report”) of Alico, Inc. (the
“Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, John E. Kiernan, Chief Financial Officer and
Senior Vice President of the Registrant, hereby certify, pursuant to Section 906 of the Sarbanes Oxley Act of 2002 that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Registrant.
Date: December 10, 2015
By:
/s/ John E. Kiernan
John E. Kiernan
Chief Financial Officer and Senior Vice President