EPSTEIN
page 3 / 412 . OCR, unverified
Run Vineyard represented approximately 11.7%, 10.6%, 7.6%, 6.1%, 5.7% and 5.6%, respectively, of
our 2014 contractual rent received through December 31, 2014, which does not include certain rent to
be paid under 2014 participating leases that was not recognized in 2014. No other tenant represents
greater than 5.0% of our 2014 contractual rent.
The tenant at our Golden Eagle Ranch farm represents approximately 57.6% of our 2015
contractual rent received through June 30, 2015, due in large part to the timing of the sale of the 2014
harvest in 2015 as well as increased almond prices. Our tenants at Kane County Farms, Pleasant Plains
and Blue Heron Farms represented approximately 7.5%, 5.4% and 5.2%, respectively, of our 2015
contractual rent received through June 30, 2015, which does not include certain rent to be paid under
participating leases that has not yet been recognized. No other tenant represents greater than 5.0% of
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CONFIDENTIAL - PURSUANT TO FED. R. CRIM P 6(e)
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our 2015 contractual rent received through the second quarter, but some tenants may do so in the
future.
Government Regulation
Fanning Regulation
The farms that we own and intend to acquire are subject to the laws, ordinances and regulations of
state, local and federal governments, including laws, ordinances and regulations involving land use and
usage, water rights, treatment methods, disturbance, the environment and eminent domain.
Farmland is principally subject to environmental laws, ordinances and regulations. Each
governmental jurisdiction has its own distinct environmental laws, ordinances and regulations governing
the use of farmland. These laws, ordinances and regulations primarily seek to regulate water usage and
water runoff due to the limited supply in certain areas, including California, Florida and Illinois, where
the majority of the farms in our portfolio are located. In addition, runoff from rain or from irrigation is
also governed by state, county and federal governments. Further, if any of the water used on or running
off of our farms flows to any rivers, ponds, the ocean or other water sources, then there may be
specific laws, ordinances and/or regulations governing the amount of pollutants, including sediments,
nutrients and pesticides, that such water may contain.
All of the farms in our portfolio have sources of water, including wells and/or surface water that
currently provide sufficient amounts of water necessary for the current farming operations at each
location. Ilowever, should the need arise for additional water from wells and/or surface water sources,
we may be required to obtain additional permits or approvals or to make other required notices prior
to developing or using such water sources. Permits for drilling water wells or withdrawing surface water
may be required by federal, state and local governmental entities pursuant to laws, ordinances,
regulations or other requirements, and such permits may be difficult to obtain due to drought, the
limited supply of available water within the farming districts of the states in which our farms are
located or other reasons. We believe that our farms are currently in compliance with applicable state,
county and federal environmental and agricultural regulations.
In addition to the regulation of water usage and water runoff, state, county and federal
governments also seek to regulate the type, quantity and method of use of chemicals for growing crops,
including fertilizers, pesticides and nutrient rich materials. Such regulations could include restricting or
preventing the use of such chemicals and materials near residential housing or near water sources. For
example, when farmland is located near residential housing, the spraying of crops on the farmland may
only occur on windless days and the spray may not be used on plants that are specific distances from
homes. Further, some regulations have strictly forbidden or significantly limit the use of certain
chemicals and materials. Licenses, permits and approvals must be obtained from governmental
authorities before most chemicals and materials can be used on farmland and crops, and reports on the
usage of such chemicals and materials must be submitted in accordance with the terms of the specific
licenses, permits and approvals. Failure to obtain such permits or comply with the terms of such
permits could result in fines and imprisonment.
The use of farmland in California, Florida and other jurisdictions is also subject to regulations
governing the protection of endangered species. When farmland borders, or is in close proximity to,
national parks, protected natural habitats or wetlands, the farming operations on such faros must
comply with the laws, ordinances and regulations related to the use of chemicals in a manner to avoid