Grondex International B.V.

Terms and Conditions

Last updated: January 22, 2023

1 - Definitions, headings, and references

1.1 Terms
Article - An article from these Terms and Conditions
Terms and Conditions - The Terms and Conditions
Client - The natural person(s) or legal entity (entities) who Grondex closed an Agreement with
Grondex - A company registered in the Netherlands under Chamber of Commerce Grondex International B.V.
Investment Vehicle - The natural person(s) or legal entity (entities) charged with holding Farms that are managed by Grondex.
Agreement - Any agreement between the Client and Grondex
Website - Grondex’s website: grondex.com
Services - The acquisition, management, and disposition of (agricultural) real estate as well as advice regarding farm and farmland management.
Capital Call - A request for funds made by Grondex to the Client to supply funds to the Investment Vehicle, and which must be met by the Client.
Invested Capital - The total amount of Capital invested by the Client
Third Party - A natural person or legal entity not being the Client nor Grondex
CBS - Centraal bureau voor de Statistiek (https://www.cbs.nl)
Buildings - All farm buildings (e.g. silos, storage), cottages and houses (incl. gardens and yards), and other infrastructure (e.g. roads, tracks, solar panels, wind turbines, weighting bridges).
Farmland - Land used for farming, as well as woods, meadows, and parks. When referring to Farmland we also mean irrigation and drainage infrastructure (e.g. ditches, ponds, rivers, creeks, water reservoirs).
Farm - Everything that makes up a farm estate. This includes Farmland and Buildings.
Euribor - The Euro interbank offered rate

1.2 Markup
Headings above the Articles are for convenience only and do not affect the meaning of the Terms.

1.3 References
In the Terms and Conditions, singular also includes plural and masculine also includes feminine and vice versa.

2 - Applicability

2.1 Applicability
These Terms and Conditions apply to the Agreement and any further agreement between Grondex and the Client in connection with the provision of Investment Services.

2.2 Deviations
Deviations from the Agreement only apply if agreed in writing between the Parties.

2.3 Changes
Grondex is authorized to change the Terms and Conditions by notifying the Client of these changes thirty (30) days before such changes are implemented and by providing the Client with the latest version of the Terms and Conditions. In such a case, if the Client, is a natural person, the Client is authorized to cancel the Agreement within fourteen (14) days after receipt of a notification that the Terms and Conditions have been amended if the Client is negatively affected by the change. If the Client is a legal entity or joint venture, the Client is authorised to cancel the Agreement with fourteen (14) days after receipt of a notification that the Terms and Condition have been amended, if and only if, such a change negatively affects the Client materially. Changes to the General Terms and Conditions do not apply retroactively.

3 - Acceptance, Duty of Care & Third Parties

3.1 Provided information
Grondex can set rules regarding identification, acceptance and/or the size, nature and scope of the service. The Client and its representatives are obliged to fully cooperate and provide information to Grondex in this regard. Changes in the information provided must be communicated to Grondex immediately in writing. Grondex may make copies, register, and store the data from the documents from which this data appears. If the Client is a legal entity or joint venture, the Client and its representatives are also obliged, at Grondex's first request, to provide insight into the ownership and control structure of the legal entity or joint venture in the manner requested by Grondex, including the ultimate beneficial owner. The Client will notify Grondex of the ultimate beneficial owner(s) and will immediately inform Grondex of any announced changes.

3.2 Client Address
The Client will inform Grondex of the address to which documents and/or information intended for him can be sent. The Client will notify Grondex in writing of any name and address changes as soon as possible. If Grondex does not know or no longer knows the address of the Client, Grondex may investigate the Client's address without being obliged to do so. The costs of such an investigation shall be borne by the Client. The Client who does not have an address known to Grondex, is deemed to have chosen his postal address at the address where Grondex has its registered office, unless otherwise agreed.

3.3. Security
In dealing with Grondex, the Client is obliged to handle the use of the internet, fax, e-mail, post or other means of communication carefully and safely. The Client must carefully store and handle the materials made available to him, such as forms, information carriers, communication and security means, access codes and passwords. The Client must handle personal access codes and the like with care and keep them secret from other persons. The Client shall comply with the security regulations set by Grondex. If the Client knows or can reasonably suspect that resources made available to him by or on behalf of Grondex have come into the hands of an unauthorized person or that they have been or can be abused or that an unauthorized person knows his access code(s), he immediately inform Grondex.

3.4 Non-acceptance
Grondex is entitled not to accept a Client without stating reasons, or to terminate the service prematurely in a manner as referred to in Article 26.

3.6 Duty of Care
Grondex takes due care in providing its services, taking the Client's interests into account to the best of its ability. The Client will exercise due care towards Grondex taking into account the interests of Grondex to the best of its ability.

3.7 Legal obligations
The Client enables Gronex to fulfill its legal and contractual obligations and to perform its services correctly. The Client may not use the services and/or products of Grondex or allow them to make improper or unlawful use, including use that is contrary to laws and regulations, serves criminal offenses or is harmful to Grondex or its reputation or for the integrity of the financial system.

3.8 Use of Third Parties
Grondex may have activities necessary for the performance of the Services carried out by third parties, under its responsibility.

4 - Risks
Grondex invests in Farms. These farms are let or operated by Grondex. In either case, the risks faced by the Farm investment are risks that affect the profitability of the current and future operations performed or services rendered on the Farm premises. These operations and services include, amongst others, letting land (farmland, as well as land used for other purposes such as electricity pylons, telephone masts, solar farms, and wind-turbines), letting cottages and houses, letting farm buildings, letting farm infrastructure, and all activities related to farming (e.g. sowing, ploughing, spraying, watering crops, harvesting, developing and maintaining Farms, marketing proceeds).

The value of the current operations and services performed on the Farm premises affect farming. The value of the future operations and services performed on the Farm premises affect the value of the Farm (as the value is the net present value of all future cash flows) and rental income (as farmers base the rents that they are willing to pay on the expected proceeds over the duration of the lease.

4.1 Farming income and rental income risk
Grondex operates or lets Farms on behalf of Clients. The income generated from operating the Farm is referred to as farming income. The rental income generated from letting Farms also dependents on farming income. Farming income depends on yields, commodity prices and input costs (such as, but not limited to: labor cost, fertiliser cost, seed cost, herbicides and pesticides cost, fuel cost, water cost, and waste handling cost). Yields are variable and depend amongst others on the farmers expertise, the inputs used, the condition of the soil, and the weather. Commodity prices and input cost are determined by market dynamics.
In the long-run farming income and rental income are affected by climate change. Climate change may have a positive or a negative effect on future farming and rental incomes.

Rental income might not cover expenses. Hence, the cashflow of the Investment Vehicle may be negative. Grondex may issue a Capital Call to cover expenses.

4.2 Capital depreciation risk
When investing in farmland Client’s face the risk to lose more than the Invested Capital. To cover such losses Clients will receive a Capital Call which must be met by the Client. The Client expressly declares that it is aware of the risk of losing his investment and having a debt. Depending on the corporate structure and the applicable legislation, this risk may be more or less prevalent.
The value of the land is driven by the net present value of all future cashflows. These cashflows are affected by, amongst others, the expected farming income and expected rental income. The drivers of which are discussed in 4.1.

4.3 Debt
The Client (or Grondex on the Client’s behalf) may make use of borrowed money to leverage the position of the Client. The Client expressly declares that it is aware of the risk of losing his investment and having a debt.
Farms may be used as collateral in debt agreements. These agreements may have default triggers other than late debt payments. Independent of the default trigger, if a default occurs, lenders may foreclose Farms that serve as collateral. These Farms may be sold in inopportune times, which might lead to heightened losses (see also 4.2).

4.4 Environmental risks
Farmland may be contaminated or become contaminated. The cost of cleaning contaminated soils is bourn by the Client. Clients may be required to clean contaminated soils.
In addition, inputs (e.g. water, herbicides, pesticides, fertilisers) applied on the Farmland may cause runoff. This runoff may contaminate the neighbouring soils and groundwater. The cost of cleaning contaminated neighbouring soils and the groundwater is bourn by the Client. In addition, if runoff is forbidden by law, the Client might also be penalised for the runoff and subsequent contamination.
Cleaning contaminated soils or ground water may result in significant cost. These cost may even be exceed the value of the land.
Farmland that is let may not be sought after by the tenant. This may result in soil degradation. Degraded soils need time to restore, during this time, farmland may not be productive. During this period farm income, farmland rental income, and the value of the farmland will be suppressed.

4.5 Damage to cottages, houses, and other buildings and infrastructure
Buildings and irrigation and drainage infrastructure may be damaged beyond the expected wear and tear. Such damage may result from, for example, a fire, an explosion, or an extreme weather event (e.g. floods, storms, whirlwinds, hail, lightning strikes). Buildings and irrigation and drainage infrastructure, may be damaged beyond repair. The rental income derived from the Buildings and Farmland may be suppressed until the damage is repaired or may be permanently suppressed. If the Buildings and irrigation and drainage infrastructure are beyond repair, the Buildings and irrigation and drainage infrastructure needs to be written off in which case a loss is realised.
The Client may request Grondex to purchase insurance to cover some of these risks. However, the insurance might not be economically warranted.

4.6 Expropriation risk
Clients may be forced by the government or governmental organisations to sell or exchange farmland. The compensation for selling, or the value of the land after an exchange, might not reflect the value of the land. Hence, a forced sale or exchange, may result in a loss.

4.7 Health, injuries, damage, and safety risks
Working on the farm is hazardous. Employees and tenants may raise claims against the Investment Vehicle and/or Client for any health related incidents. For example, a property (Buildings or other assets such as machinery) might not be maintained well. This may lead to fires, collapses, explosions or other malfunctions that may harm employees. Health and safety claims may not only be rissen by Employees and tenants but also by other third parties. For example, a tree that belongs to a Farm might fall on a neighbouring property thereby damaging the neighbouring property or causing injuries to people and animals. Such situations, of which this is just one example, may lead to claims from third parties.

4.8 Cybersecurity risk
Cybersecurity incidents (hacks, viruses, and other malware) and other technology disruptions could result in a violation of law or negatively impact our reputation and relationships with our tenants, any of which could have a material adverse effect on our results of operations and the Client financial performance. In addition, these incidents and disruptions may impact our Service. For example, these incidents and disruptions, might render us unable to meet financial reporting deadlines. Furthermore, these incidents and disruptions may lead to the leakage of Client, tenant, Grondex’s, and other third parties’ proprietary information, confidential information, and personal information.

4.9 Legislative changes, changes in taxes and subsidies
The legislator may change legislation, taxes and subsidies at any time. It is difficult to forecast the impact of legislative changes and changes to taxes and subsidies. These changes may have a significant impact on the profitability of farmers and thus on farm and rental income. Furthermore, changes might directly impact the value of the Farms to prospective buyers. For example, governmental bodies might impose taxes (or increase) taxes on real estate purchases. Such a tax (or tax increase) would impose (or increase) the cost of a Farm to prospective buyers. This cost increase to prospective buyers may negatively impact the Farm value. Similarly, governmental bodies might impose (or increase) a tax on the sale of Farms. Such a tax (or tax increase) is a cost to the Investment Vehicle. Hence, the profitability of the vehicle is negatively affected. In addition, legislative changes might impact the tradability of Farms. This may change market dynamics and might warrant larger discounts if Farms need to be sold quickly.

4.10 Received sufficient information

By entering into the Agreement, the Client declares that he:

a. has received sufficient information to form an opinion about the content and scope of the services provided by Grondex under the Agreement;

b. in its opinion, has been sufficiently informed by Grondex about the risks and consequences associated with the services provided by Grondex and with investing in (agricultural) real estate in particular;

c. is fully aware of these risks and consequences, and accepts these risks and consequences.

4.11 Act on behalf of the Client
Grondex performs all actions in the context of the Services for the account and risk of the Investment Vehicle and the Client. If the effectuation of a risk triggers a default or otherwise requires the Investment Vehicle to raise capital, Grondex will issue a Capital Call which must be met by the Client.

5. Fees

5.1 Types of fees
For its Services Grondex charges the Client a management fee, performance fee, acquisition fee, disposition fee, and where applicable, other fees in accordance with the Agreements made with the Client and the rates applicable at any time at Grondex. Grondex charges an hourly fee for services not mentioned in the Agreements made with the Client.

5.2 Third Party Fees
Grondex may also charge the Client for the costs and fees it owes to Third Parties for the Services Grondex performs.

5.3 Fees related to disputes
If Grondex is involved in a seizure, dispute or procedure between the Client and a Third Party, the Client will reimburse Grondex in full for the resulting costs. All other special costs of Grondex arising from the relationship with the Client will be borne by the Client insofar as this is reasonable.

5.4 VAT and Currency
All fees are excluding VAT and must be paid in euros unless otherwise mentioned.

5.5 Hourly fee
Unless otherwise quoted, the hourly fee charged by Grondex hourly is 417 euro per hour as of 2022.

5.6 Fee changes
Grondex reserves the right to change the rates, costs and fees referred to in Article 5.1 at any time if, in its sole discretion, the circumstances give cause to do so. The change will take effect immediately unless Grondex determines a different effective date. The change cannot be applied retroactively. In the event of a change in the rates, the Client has the right to terminate the relationship between the Client and Grondex in writing with immediate effect.
Grondex does reserve the right to adjust the hourly fee (see Article 5.5) by the inflation rate published by the CBS. This inflation adjustment of the hourly wage does not give the Client the right to terminate the relationship with Grondex, as such an increase is deemed fair and is only applicable to work that is not agreed upon in the Agreements made with the Client. The Client can choose not to grant this type of work to Grondex.

5.7 Due date
All invoices send by Grondex must be paid by the Client within 10 business days.

5.8 Consequences of paying late
Grondex may charge the Client collection cost when invoices are not paid on time. In addition, Grondex may charge interest on past due amounts. The interest rate Grondex may charge equals Euribor plus 5% per annum. Grondex may start charging interest cost 30 days after the invoice date. Furthermore, Grondex may seize all activities from the date a payment is past due.

6 - Liability

6.1 Grondex’s Liability
Grondex is only liable if Grondex’s action or failure to act involved fraud, wilful misconduct, gross negligence or material breach of Grondex’s obligations under an Agreement or other material breach of Grondex fiduciary duties as adjudicated by a court of competent jurisdiction (see Article 10.2) . Grondex’s maximum liability towards the Client, in all respects and for all accrued events, is limited to an amount of the lower of: (i) one annual payments of management fees or (ii) whatever sum has been paid as management fee up to the liability date, except in case of gross negligence or wilful misconduct.

6.1 Personal Liability Directors and Officers
Neither any affiliate, officer, manager, director, partner, member or shareholder of Grondex shall be personally liable for any damages unless otherwise stated by applicable law (see Article 9.1). The Client cannot raise a claim directly or personally against the executive and/or non-executive directors or other employees of Grondex except where such person has acted fraudulent or wilfully negligent.

7. Conflict of interest
Grondex acts on behalf the Client and must have the Clients interest at heart when performing its Services. If Grondex acts on behalf of the Client in the purchase, sale or lease of a Farm, it may not act on behalf of the counter-party. In addition, Grondex or its employees may not receive any compensation (i.e. kickback) from agreement other than the payment from the Client. Furthermore, Grondex or its employees may not benefit from a deal that did not go through.
Grondex’s employees, may not receive gifts from third parties with whom Grondex performs business on behalf of the Client in excess of 250 euro per year. If a single Grondex employee, receives gifts from a single third party of which the total value is reasonably estimated to be larger than 250 euro per year, then Grondex’s employees or directors, may not accept the gift.
In light of this article a Grondex employee means the person employed by Grondex and its family (parents, children, spouse, and siblings).
If a conflict of interest arises, Grondex will inform the Client. The Client may give its approval the conflict of interest or may request Grondex to pursue another agreement, one in which the conflict of interest does not arise.

8. Partial nullity or nullity
Should any provision of these Terms and Conditions be unenforceable or void in whole or in part, then (i) this shall not make any other provision in whole or in part unenforceable or void and (ii) such provision shall be deemed unenforceable or voidable to the extent replaced by a valid provision that most closely approximates its intent.

9. Privacy

9.1 Privacy Policy
Grondex processes personal data for various purposes, including Client acceptance, but also to be able to offer products and services. For a further description of Grondex’s policy with regard to personal data, we refer to our Privacy Policy on the Website. By accepting these terms and conditions, the Client agrees to this policy.

9.2 Recordings
Grondex is, among other things, authorized to record telephone conversations between Grondex and the Client and prospective clients on sound carriers for the purpose of verifying or recording (pre-contractual) agreements or information communications, as well as in the event that in its sole discretion or that of the police, judicial authorities, supervisors and/or tax authorities is necessary or desirable to combat or detect fraudulent or otherwise punishable conduct; even if this is not required by or pursuant to Dutch law. Grondex is not obliged to keep and/or archive such recordings or to make them available to the Client in any form whatsoever. Grondex has the right to use such recordings as evidence. Recorded recordings will be deleted by Grondex over time.

10. Competent courts and Applicable Law

10.1 Applicable law
This agreement is exclusively governed by Dutch law

10.2 Competent courts
All disputes that may arise between the Client and Grondex will be settled by the competent court in Amsterdam.