Cadiz Inc.
Annual Report 1995

Plain-text annual report

Morningstar® Document Research℠ FORM 10-K405CADIZ INC - CDZIFiled: June 29, 1995 (period: March 31, 1995)Annual report filed under Regulation S-K Item 405 (Discontinued)The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K MARK ONE [1] [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED MARCH 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM .......TO....... COMMISSION FILE NUMBER 0-12114 ----------------- CADIZ LAND COMPANY, INC. (EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER) DELAWARE 77-0313235(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 10535 FOOTHILL BOULEVARD, SUITE 150 RANCHO CUCAMONGA, CALIFORNIA 91730(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (909) 980-2738 ----------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- NONE NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK (TITLE OF CLASS)Indicate by check mark whether the registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. YES X NO --- ---Indicate by check mark if disclosure of delinquent filers pursuant to Item 405of regulation S-K ((S)220.405 of this chapter) is not contained herein, and willnot be contained to the best of registrant's knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K. YES X NO --- ---As of June 23, 1995, the registrant had 17,053,455 shares of Common Stockoutstanding. The aggregate market value of the Common Stock held bynonaffiliates as of June 23, 1995, was approximately $76,432,060 based on thelast sales price on that date. DOCUMENTS INCORPORATED BY REFERENCE NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT (INCORPORATED INTO PART III)Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.================================================================================ PART IITEM 1. BUSINESS Cadiz Land Company, Inc. (the "Company") identifies, acquires and developsproperties (to date in the desert regions of Southern California) which havesignificant indigenous supplies of water. The Company currently owns or controlsapproximately 41,700 acres, with its largest property totalling approximately31,800 acres at Cadiz, California. The Company's primary objective is to maximize the long-term value of each ofits properties through strategic use of the water resources associated with theproperties. Management believes that, with the increasing scarcity of watersupplies in California and increasing demand, the value of properties withsizable assured supplies of water will continue to appreciate. The variousmeans by which the land and water resources available to these properties can beused are evaluated by management on an ongoing basis. The alternativesavailable to the Company include the transfer of water to third party usersand/or the development of the properties, using indigenous water sources, foragricultural, commercial or residential purposes. The transfer of water to third party users, both from the Cadiz property andfrom other Company properties, is being actively pursued by the Company. Duringthe past year the Company has made significant progress in developing its watertransfer project at Cadiz. Various independent studies and analyses pertainingto the design and financing of the proposed project have been completed. Theseanalyses and reports are a necessary precursor for the regulatory approvalsrequired prior to commencing construction of a water delivery project at Cadiz. It is expected that water from the project will be sold to various Californiawater agencies pursuant to water delivery contracts which the Company iscurrently negotiating. The Company expects that this water delivery project,when completed, will be capable of delivering between 30,000 and 50,000 acre-feet per year under long-term water delivery contracts. In addition, due to the abundance of both water and land at Cadiz, as comparedto other agricultural properties operating in similar climates, the Company isat a cost advantage in agricultural development. Therefore, in addition to itswater transfer activities, the Company has developed 1,600 acres of agriculturalland at Cadiz to date, and plans to develop additional agricultural land, withrelated residential and commercial facilities. Not only has this agriculturaldevelopment helped, in management's opinion, to increase the value of theCompany's surrounding landholdings, it also is expected to provide a return oncapital during the next fiscal year. Agricultural operations are conductedlargely through joint ventures and lease arrangements with third party growers,so as to obtain the best expertise available as well as to reduce the exposureof the Company to the performance of any single given crop. In each case, theCompany retains ownership of the land and associated water resources. -1- In furtherance of the Company's strategic business plan to maximize the valueof the Company's assets, 54% of total cash used during fiscal 1995 and 40% oftotal cash used during each of the two preceding fiscal years was applied toinvesting activities. Such investment activities related to development of thewater transfer project at Cadiz and a second water transfer project at Piute(See discussion at Item 1, "Resource Development - Piute"), as well as thedevelopment of seven production wells, state-of-the-art drip and micro sprayirrigation systems, other necessary residential and commercial facilities andacquisition of additional acreage. The Company will continue to seek additional properties for acquisition. Tobe considered suitable for acquisition, these properties must possess rights tocommercially usable quantities of water. Properties with previously unexploitedwater resources will be identified through the use of the Company's expertise inidentifying undeveloped ground water basins in arid regions. The Company willalso consider acquiring developed properties with established water supplies inSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.order to create a strategic fit with the Company's existing properties. (A) GENERAL DEVELOPMENT OF BUSINESS The Company was formed in 1983 under the name AridTech, Inc. ("AridTech") forthe purpose of identifying arid or semi-arid properties with underground waterresources with a view to acquiring such properties for development. AridTech,in its search for underground water resources, applied advanced geologicalsurvey techniques derived, for the most part, from commercially availableLandsat and U2 high altitude photographic surveys. In mid-1983, the Companyidentified a geological structure indicating a horseshoe shaped mountainouscatchment area known as the Cadiz Valley consisting of about 1,400 square mileslocated 180 miles east of Los Angeles in San Bernardino County. See Item 2,"Properties - The Cadiz Property". In pursuit of its business plan, AridTech negotiated options to purchaseapproximately 25,000 acres in this area which were owned in one square milesections alternately by the Bureau of Land Management ("BLM") and the SouthernPacific Railroad. The options to purchase the land were exercised in 1986 and1988. Initially, the Company did not have the capability to develop such raw landthrough its internal operations, and the Company therefore entered into a seriesof development agreements with a Fresno, California based agriculturaldevelopment and farm management company named Pacific Agricultural Services,Inc. ("PAS"). On May 9, 1988, the Company merged with PAS. Simultaneously, thename of the Company was changed to Pacific Agricultural Holdings, Inc. ("PAH").With this merger, the Company's pre-existing operations were combined with thoseof PAS and the Company's corporate offices were relocated to Fresno, California. In the years immediately following the merger, the Company sought to combineits landholdings with the development and third party farm management businessesacquired from PAS thereby creating a vertically integrated agribusinessconcentrating on permanent specialty crops. However, the Company's third partyfarm management operations did not prove self-sufficient during this period,leading to significant operating losses and a re-evaluation by the Company ofthe desirability of continuing these agribusiness activities. In December 1990,the Company decided to limit its further exposure to agricultural risks byterminating the agribusiness activities acquired from PAS, and to conduct futurefarming operations, when possible, through lease or joint venture arrangementswith third parties. All assets acquired in connection with the merger have beensold or written off. -2- As part of its current business plan, the Company's land acquisition anddevelopment activities are conducted for the purpose of enhancing the long-termappreciation of its properties. See "Narrative Description of Business", below. In May 1992, the Company's shareholders approved the reincorporation of theCompany into Delaware under the name Cadiz Land Company, Inc. As a part of thereincorporation, the Company's common stock was reverse split on a one-for-fivebasis, giving each shareholder of the Company one share of Cadiz Land Company,Inc. stock for every five shares of Pacific Agricultural Holdings, Inc. stockheld at the time of the reincorporation. (B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS During its fiscal year ended March 31, 1995, the Company operated in oneindustry segment: resource development. See Consolidated Financial Statements.Also, see Item 7, "Management's Discussion and Analysis". (C) NARRATIVE DESCRIPTION OF BUSINESS Pursuant to its business strategy, the Company seeks to maximize the value ofits properties through the development of the land and water resourcesassociated with these properties. The Company seeks to determine, for each ofits properties, the form of development for the property's land and waterresources which will maximize the property's long-term value. Developmentalternatives include the transfer of a portion of water resources from theproperty and/or development for agricultural, commercial or residentialpurposes. Currently, the Company is engaged in both water resource developmentand agricultural development.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.WATER RESOURCE DEVELOPMENT The Company's resource development activities include planning for thedevelopment and transfer of water from its Cadiz and Piute properties. CADIZ. The Company's Cadiz properties overlie a substantial high quality ----- ground water basin with active recharge from basins covering approximately 1,400square miles. The water is of excellent quality and well within recommendedguidelines for drinking water. The Company proposes to sell to third partyusers water from this basin which is surplus to both the present and projectedagricultural development requirements of the Company. To this end, the Companyplans to transfer between 30,000 and 50,000 acre-feet of surplus water per yearfrom the Company's well field to the Colorado River Aqueduct via a 30-milepipeline, the capital cost of which is projected to total approximately$50,000,000, although the final design criteria will determine the total capitalcost. The Company has retained an investment banking firm to perform variouseconomic analyses and advise the Company as to various alternative means ofimplementing this project. Based upon the results of analyses performed by itsinvestment banker, management believes several alternative long-term financingarrangements are available to the Company which will be further evaluated oncefunding responsibility and ownership alternatives are determined. The variousalternatives available for structuring the delivery of this water to thirdparties include the construction by the Company of a water delivery system foroff-site delivery to third party purchasers, as well as the sale of water at thewell head or in ground reserve with the purchaser or another third partyassuming responsibility for transport of the water off-site. The investmentbanking firm is continuing to assist management in evaluating these deliveryalternatives and in determining which alternatives maximize the Company's profitpotential in addition to assisting in determining which financial structure willbest accommodate such a plan. -3- Based on preliminary negotiations to date, the Company expects to be able toenter into agreements with approximately four separate agencies to transferapproximately 30,000 acre-feet per year. Although, a final price formula fordelivered water has not yet been finalized, the Company believes the price peracre-foot (net of capital amortization costs) will be at a premium to otherwisesimilar multi-year contracts in the San Joaquin Valley and will includeprovisions for escalation based on prices for similar water supplies. However,before construction can be completed and actual water delivery can commence,numerous regulatory and environmental approvals must be obtained. See"Regulation", below. In order to expedite completion of the Cadiz watertransfer project, the Company is pursuing such approvals concurrently with itsnegotiation of water delivery agreements. During the past year, since entering into a Memorandum of Understanding("MOU") with the Mojave Water Agency ("MWA"), the Company has made significantprogress. In June 1994, the MWA Board of Directors, by unanimous approval,authorized MWA staff to proceed with the environmental assessment of theproposed Cadiz water transfer project and to serve as Lead Agency for purposesof complying with the California Environmental Quality Act ("CEQA") uponcompletion and acceptance of a Final Draft Feasibility Report. The Final DraftFeasibility Report, prepared for the project under the joint review of theCompany and MWA, included the various results of independent studies conductedthroughout the year. Such independent studies included engineering alternativesfor developing the ground water transfer system, as well as routing and designsof the transmission pipeline from the Company's well field to the Colorado RiverAqueduct or other suitable points of delivery. Also included were results ofproduction well drilling and computer modeling of a well field suitable for theproposed transfer project, evaluations of suitable power sources and evaluationof the feasibility for temporary banking of imported water. These independentreports and analyses, which were incorporated into a Final Draft FeasibilityReport, confirmed the engineering feasibility of the project. The Company hassubmitted to MWA both this report and a Conceptual Ground Water Management Planwhich clarifies many of the hydrological features and resource managementconcepts of the proposed water transfer project. The Company expects that allremaining required environmental reports will be filed within nine months. Inaddition, the specific terms of the Company's proposals with the water agenciesare expected to be submitted for public review during this same time period. In order to receive all necessary regulatory approvals and permits, theCompany will be subject to various waiting periods applicable to requiredSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.submissions and responses. There is a risk that delays in this process willresult in delays in completion of the Cadiz water project. Given the currentlyanticipated length of the regulatory review and pipeline construction process,the Company expects actual movement of water to the point of sale in early 1997,although no assurances can be given. In addition, the Company is involved invigorously opposing a waste landfill project as discussed at Item 2, "Properties- - Rail.Cycle". PIUTE. The Company has also commenced water development operations at its ----- landholdings in the Piute valley, which is located approximately 12 miles fromthe Colorado River near the town of Needles, California. See Item 2,"Properties - The Piute Property". Following the drilling of a production wellon the property in February 1995, and the results of preliminary engineeringtests, the Company has determined both the quantity and the quality of theunderlying water to be suitable for commercial development. In addition, it hasbeen determined that the depth of the ground water table allows for economicproduction of ground water. -4- A feasibility study on the transfer of water from the Piute property, which isa necessary precursor to serious negotiations on the sale of water from theproperty, has recently been completed. This study, together with other analyses,demonstrates that the Piute water transfer project is both technically andeconomically feasible. Several delivery alternatives are available and theCompany is currently analyzing which option is preferable. The Company expectsthat the Piute water transfer project will be capable of transferringapproximately 10,000 to 15,000 acre-feet per year via a pipeline, which couldrange in length from approximately 10 to 30 miles, depending upon route anddelivery point selected. The Company also expects it will be able to enter into water transferagreements with a net profit per acre-foot similar to or greater than for theCadiz project, although no assurances can be given. The Company also believesthat much of the development work being performed for the Cadiz project will betransferable to the Piute project, thus making it possible for water transfersfrom Piute to begin in parallel or shortly after Cadiz.AGRICULTURAL DEVELOPMENT Agricultural development has been an integral part of the Company's ongoingbusiness strategy as a means of maximizing the value of the Company'slandholdings and a way to generate cash flow from such landholdings. As ofMarch 31, 1995, approximately $17 million has been invested by the Company inthe agricultural development of its Cadiz properties, where 800 acres have beendeveloped to table grapes, 560 acres have been developed to citrus, and 240acres have been planted to various row crops. In addition to the landimprovements, seven production wells, state-of-the-art drip and micro sprayirrigation systems and facilities to accommodate a temporary contract laborforce have been installed. In 1994, the Company received approval from SanBernardino County to develop up to 9,600 acres of its Cadiz property toagriculture. See Item 2, "Properties - The Cadiz Property". As a result of the above, the Company has been able to attract third partygrowers with significant expertise in their respective purview and to enter intojoint venture or leasing arrangements for the farming of crops on itsproperties. By associating with these third party growers, the Company is ableto elevate the farming expertise available to its agricultural operations. Inaddition, the Company is able, through these joint ventures and leasearrangements with third party growers, to reduce the exposure of the Company tothe performance of any single given crop. Management believes that the terms of these arrangements and the crops whichwill be grown under these arrangements will vary from growing period to growingperiod. It is expected, however, that under such arrangements the grower willprovide the growing expertise, seeds and crop marketing, and that the Companywill provide the land, water, and facilities to accommodate the growers andmarketers. In each case, the Company will continue to maintain management ofthe infrastructure associated with the Cadiz project as an integral part of itsstrategy to control the ultimate use of the resources associated with thisproperty. Since December 1992, the Company has leased its table grape vineyard to anSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.independent operator in return for both a fixed minimum income stream and apercentage of the gross revenue stream. Given the success of this arrangementfor both the Company and the operator, both parties are currently renegotiatingfor an additional three-year term at an increased rate to the Company, althoughno assurances can be given. -5- The 560-acre citrus orchard at Cadiz produced its first harvest in fiscal1995, although the Company expects improved results during the 1996 fiscal yearas the trees continue to mature. The Company currently markets the citrusthrough a large international marketing conglomerate. In the winter of 1994-1995, the Company, in partnership with established rowcrop growers, concluded trial plantings of a variety of crops. Following thesuccessful completion of these plantings, the Company entered into four separateventures whereby a total of 240 acres at Cadiz were successfully planted to rowcrops such as honeydew melons, seedless watermelons, tomatoes and radicchio.Such crops generally develop to the point of harvest within several months ofplanting and generate multiple harvests from the same acreage each year. Thefirst harvest has been completed successfully. A second planting will commencein autumn 1995 with harvest occurring approximately 100 days later. The Company expects to develop a further 160 acres during the fiscal yearending March 31, 1996 to field or row crops. As discussed above, suchdevelopment to row crops allows for multiple harvests from the same acreage eachyear, thus providing the Company with an opportunity for an immediate return oncapital invested in the infrastructure. The Company has not yet determined thespecific amount of acreage or which mix of crop it will choose for developmentin the longer term, however, the Company intends to cultivate the remainingacreage, along with related residential and commercial infrastructure asadditional profitable arrangements are completed.SEASONALITY In connection with the resource development activities of the Company,revenues are not expected to be seasonal in nature. The Company does not expectthat contracts entered into for the transfer of water will provide for revenuepayments varying significantly from season to season. In addition, theCompany's intended development of additional acreage to field and row cropsallows for double and sometimes triple - cropping, whereby two and sometimesthree different crops can be raised and harvested sequentially from the sameacreage during one year. This type of agricultural development should provide arevenue stream that does not significantly vary between seasons.COMPETITION The Company faces competition for the acquisition, development and sale of itsproperties from a number of competitors, some of which have significantlygreater resources than the Company. The Company may face competition in thedevelopment of water resources associated with its properties. Since Californiahas scarce water resources and an increasing demand for available water, theCompany believes that price and reliability of delivery are the principalcompetitive factors affecting transfers of water in California. In this regard,the ability of the Company to price its water on a competitive basis will dependupon the cost of constructing and maintaining delivery systems for its surpluswater. Management of the Company believes, however, that the geographicproximity of its available water supplies to its potential customers, coupledwith the Company's ability to guarantee long-term access to its water supplies,will provide the Company with a competitive advantage with respect to suchcustomers. -6- The Company may also face substantial competition from existing agriculturalproducers in the sales of its produce, which could affect the successfulagricultural development of the Cadiz property, although such competition may bereduced in the future by urban encroachment in competing agricultural areas.The Company believes that factors such as climate and water quality andavailability may provide the Company's Cadiz property with significantcompetitive advantages for agricultural development. In addition, many of thecompetitors of the Cadiz property rely on federally subsidized sources of water.If those subsidies are reduced or gradually eliminated, the Cadiz property,Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.which has its own non-subsidized water source, may gain a competitive advantage.EMPLOYEES As of March 31, 1995, the Company employed a total of 35 full-time employees,of whom 9 were engaged in resource development activities, 5 were engaged ingeneral and administrative activities and 21 were engaged in support of theCompany's infrastructure and land development. The Company from time to timeengages various part-time and seasonal employees. The Company's employees arenot represented by a labor union, and the Company has not had any workstoppages, strikes or organization attempts. The Company believes that itsemployee relations are good.REGULATION Certain segments of the Company's operations are subject to varying degrees offederal, state and local laws and regulations. For example, farm operationssuch as those conducted on Company properties are subject to federal, state andlocal laws and regulations controlling the discharge of materials into theenvironment or otherwise relating to the protection of the environment.Existing environmental regulations have not, in the past, had a materiallyadverse effect upon the operations of the Company, and the Company believes thatexisting environmental regulations will not, in the future, have a materiallyadverse effect upon its operations. There can be no assurances, however, as tothe effect of any environmental regulations which may be adopted in the future. As the Company proceeds with the development of its properties, includingrelated infrastructure, the Company will be required to satisfy variousregulatory authorities that it is in compliance with the laws, regulations andpolicies enforced by such authorities. Ground water development, and the exportof surplus ground water for sale to single entities such as public wateragencies, are not subject to regulation by existing statutes, other than generalenvironmental statutes applicable to all development projects. Althoughapplicable laws, regulations and policies have not had a materially adverseeffect upon the ability of the Company to develop its Cadiz or other propertiesto date, management cannot predict with certainty what requirements, if any, maybe imposed by regulators upon future development. In addition, the time andcosts associated with obtaining regulatory approvals for resource developmentare significant, and there can be no assurance that the Company will receivedesired approvals for future development plans.ITEM 2. PROPERTIES The principal properties owned or controlled by the Company and its affiliatesare located in the desert regions of Southern California. -7- THE CADIZ PROPERTY In 1984, the Company conducted an investigation of the feasibility of theagricultural development of land located in the Mojave desert near Cadiz,California, and confirmed the availability of prime quality water in commercialquantities. Since 1985, the Company has acquired over 26,000 acres and theright to purchase an additional 5,652 acres in the Cadiz vicinity. The Company has determined that the ground water basin which underlies theCadiz property contains more water than is needed for both the present andprojected agricultural development requirements of the property. The Companytherefore proposes to transfer water from this basin to third party users. SeeItem 1, "Business - Narrative Description of Business - Water ResourceDevelopment". In November 1993, the San Bernardino County Board of Supervisors unanimouslyapproved a General Plan Amendment establishing an agricultural land usedesignation for 9,600 acres at Cadiz. This Board action represented the largestland use approval on behalf of a single property holder in the County's knownhistory. This action also approved permits to construct infrastructure andfacilities to house as many as 1,150 seasonal workers and 170 permanentresidents (employees and their families) and allows for the withdrawal of morethan 1,000,000 acre-feet of ground water from the Company's underground waterbasin.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. To date, 1,600 acres of the Cadiz property have been developed for tablegrapes, citrus and row crops. See Item 1, "Business - Narrative Description ofBusiness - Agricultural Development". A total of 680 acres of the table grape vineyard and 2,560 acres ofundeveloped land at Cadiz are held by Southwest Fruit Growers, L.P. ("SWFG"), alimited partnership in which the Company acts as general partner. SWFG wasformed as a part of the restructuring of certain entities which had investedwith PAS and PAH in table grape properties at Cadiz and at Hyder, Arizona. TheCompany holds a 65.4 percent limited partnership interest in SWFG. Substantially all other Cadiz acreage is held directly by the Company orthrough its wholly-owned subsidiary, Cadiz Valley Development Corporation("CVDC"), with 5,652 acres subject to an option and the remainder held in fee.THE PIUTE PROPERTY The Piute property consists of 6,315 acres and is located approximately 60miles east of Cadiz and approximately 15 miles west of the Colorado River andLaughlin, Nevada, a fast growing town with hotels, casinos and water recreationfacilities. The Piute property was identified for acquisition by the Company bya combination of the satellite imaging and geological techniques which were usedby the Company to identify water at Cadiz. The Piute acreage adjoins Highway 95, which is a direct route to Las Vegas,approximately 60 miles north. The Santa Fe Railroad passes through the land andInterstate 40 is approximately 12 miles to the south. The property is held bythe Company in fee title as to approximately 3,000 acres, with the remainingacreage under option. The Company has commenced the development of the water resources of thisproperty. See Item 1, "Business - Narrative Description of Business - WaterResource Development". -8- THE HOMER PROPERTY The Homer property, consisting of approximately 2,500 acres held in fee, islocated approximately six miles southwest of Piute in an ecologically protectedarea. The value of the Homer land as part of an ecologically protected areashould allow the Company, if it so chooses, to exchange the property for landelsewhere or to allow for consolidation of other areas of ownership.OTHER PROPERTIES In addition to the Cadiz, Piute and Homer properties, the Company ownsapproximately 1,079 additional acres in the Mojave Desert as to whichdevelopment has not yet commenced. The Company will continue to seek to acquireadditional properties both in Southern California desert regions and elsewherewhich are believed to be suitable for development. All of the Company's fee property is subject to encumbrances in favor of theCompany's two primary lenders as security for loans with outstanding balancesaggregating approximately $16.8 million.RAIL.CYCLE A proposal is currently before the San Bernardino County Board of Supervisors(the "Board of Supervisors") for approval of a waste landfill project (the"Rail.Cycle Project") at a site located approximately one mile from the westernborder of the Cadiz property. The Company has raised objections to theRail.Cycle Project on a number of grounds, and contends that the project, ascurrently designed, poses environmental risks both to the Company's agriculturaloperations at Cadiz and to the ground water basin underlying the Cadiz property. In early 1995, the San Bernardino County Planning Commission (the "PlanningCommission") recommended approval of the Rail.Cycle Project, with four of theseven members of the Planning Commission voting in favor of approval and theremaining three members abstaining. The Company has appealed this decision. TheBoard of Supervisors, which is hearing this appeal, has decided to consolidatethe appeal with its decision on the proposed Rail.Cycle Project. At its mostrecent meeting, the Board of Supervisors announced that there would be nofurther public hearings on this appeal, and that the Board's consideration ofSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the matter would be continued due to the need for more time to review all of theinformation presented by both opponents and proponents of the proposed project.The Board of Supervisors also indicated that it would take no further action onthis matter until the latter part of the summer. The Company intends to continue its opposition to the Rail.Cycle Projectthrough a variety of available legal means. In addition, the Company has joineda local coalition which aims to put a county-wide initiative on the ballot atthe next general election. This initiative, if approved, would require that nolarge solid waste landfill shall overlie or be located within 10 miles from thepoint of extraction of a significant water resource, unless such a facility hadbeen fully permitted, constructed or operational as of March 14, 1995. -9- ITEM 3. LEGAL PROCEEDINGS On April 8, 1992, the Company, SWFG and CVDC, among others, were named in anaction filed by Percy R. and Helen H. Turner and by James R. and Susan TurnerSteen in the Superior Court of Maricopa County, Arizona. The complaint allegedvarious claims arising from the purchase by the plaintiffs of severalagricultural properties (including properties purchased prior to the 1988 Mergerfrom affiliates of PAS), the farming of these properties subsequent to purchase,and the formation of SWFG. The complaint requested damages in an unspecifiedamount, but in excess of $1,000,000, plus treble damages plus punitive damages.On May 2, 1994, the plaintiffs' claims were dismissed with prejudice and cannotbe asserted again. On June 23, 1994, the Company was awarded full reimbursementfor all of its legal fees and costs incurred in defending this action.Subsequently, the plaintiffs filed several motions for a new trial, all of whichwere denied. In October 1994, plaintiffs filed an appeal from the Court'sjudgement. The briefing schedule was completed May 18, 1995. A decision isexpected in approximately six months, however, it may take as long as a year.Meanwhile, the plaintiffs have posted a cash bond totalling over $500,000 fromwhich the Company will collect its judgement if the trial court's decisions areaffirmed. -10- PART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded on the Nasdaq Stock Market under thesymbol "CLCI". Since July 1994, the Company's common stock has been traded as aNational Market System security. The following table reflects, for periods upuntil the period ended June 30, 1994, inter-dealer quotations, without retailmarkup, markdown or commission, and may not necessarily represent actualtransactions. For the periods ended September 30, 1994 and thereafter, thetable reflects actual sales transactions. The high and low range of the commonstock and bid prices, where applicable, for the dates indicated have beenprovided by Nasdaq. QUARTER ENDED BID PRICES ASKED PRICES ------------- --------------------------- -------------------------- HIGH LOW HIGH LOW ----------- ------------- ----------- ------------ 1993: March 31 $1.688 $0.625 $1.875 $1.000 June 30 $3.688 $0.750 $3.875 $0.875 September 30 $4.000 $2.875 $4.250 $3.125 December 31 $5.550 $3.000 $5.875 $3.375 1994: March 31 $6.125 $4.375 $6.500 $4.625 June 30 $6.000 $3.750 $6.250 $4.125 HIGH LOW SALES PRICE SALES PRICE ----------- -----------Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. September 30 $5.2500 $ 3.75 December 31 $5.2500 $ 4.25 1995: March 31 $5.4375 $4.125 On June 23, 1995, the high, low and last sales prices for the shares, asreported by Nasdaq, were $4.75, $4.625 and $4.75, respectively. The Company has also authorized a class of preferred stock, although no sharesof preferred stock have yet been issued. The estimated number of beneficialowners of the Company's common stock is approximately 1,300 and the number ofstockholders of record on June 23, 1995, was 196. To date, the Company has never paid a cash dividend and currently, theCompany's ability to pay cash dividends is restricted by agreements with theCompany's lenders. The Company has retained an investment banking firm to,among other things, advise the Company as to the most tax-efficient means ofdistributing revenues from the Company's operations to its shareholders whenrevenues from the transfer of water commence. -11- ITEM 6. SELECTED FINANCIAL DATA The following selected financial data insofar as it relates to each of theyears ended March 31, 1995, 1994, 1993, 1992 and 1991 has been derived fromfinancial statements audited by Price Waterhouse LLP, independent accountants.Consolidated balance sheets at March 31, 1995 and 1994 and the relatedconsolidated statements of operations and of cash flows for the three yearsended March 31, 1995 and notes thereto appear elsewhere herein. See also Item7, "Management's Discussion and Analysis". -12- CADIZ LAND COMPANY, INC. Selected Financial Data (In thousands, except for per share data) YEAR ENDED MARCH 31, ------------------------------------------------------- 1995 1994 1993 1992 1991 -------- -------- -------- -------- --------- Statement of Operations Data: Revenues $ 543 $ 190 $ -0- $ -0- $ 1,142 Loss from continuing operations before extraordinary items $ (4,706) $ (4,239) $ (4,087) $ (4,659) $ (8,966) Loss from operations of discontinued segment/(1)/ $ -0- $ -0- $ -0- $ -0- $ (2,195) Gain (loss) from disposal of discontinued segment/(1)/ $ -0- $ 145 $ -0- $ (4,189) $ (8,371) Extraordinary items $ 115 $ 343 $ -0- $ 200 $ -0- Net loss $ (4,591) $ (3,751) $ (4,087) $ (8,648) $(19,532) Per Share: Net loss from continuing operations before extraordinary items $ (0.29) $ (0.33) $ (0.47) $ (0.82) $ (2.03) Net income (loss) fromSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. operations of discounted segment and disposal of discontinued segment/(1)/ $ -0- $ 0.01 $ -0- $ (0.74) $ (2.39) Extraordinary items $ 0.01 $ 0.03 $ -0- $ 0.04 $ -0- Net income loss $ (0.28) $ (0.29) $ (0.47) $ (1.52) $ (4.42) Dividends $ -0- $ -0- $ -0- $ -0- $ -0- Weighted average common shares and equivalents 16,500 12,800 8,700 5,700 4,400 AS OF MARCH 31, ------------------------------------------------------- 1995 1994 1993 1992 1991 -------- -------- -------- -------- --------- Balance Sheet Data: Total assets $ 34,888 $ 34,058 $ 27,635 $ 27,862 $ 34,526 Long-term debt $ 16,381 $ 13,740 $ 17,939 $ 18,846 $ 19,909 Common stock and additional paid-in-capital $ 62,857 $ 60,044 $ 45,199 $ 40,813 $ 35,204 Retained earnings (accumulated deficit) $(45,909) $(41,318) $(37,567) $(33,480) $(24,832) Stockholders' equity $ 16,948 $ 18,726 $ 7,632 $ 7,333 $ 10,372_______________/1/ In December 1990, the Company committed to a plan to eliminate all agribusiness operations. See "Business - General Development of Business". -13- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSGENERAL Cadiz Land Company, Inc. (formerly known as Pacific Agricultural Holdings,Inc.) was incorporated in Delaware on May 26, 1992. On May 6, 1992, theshareholders of Pacific Agricultural Holdings, Inc. approved its reincorporationas a Delaware corporation, a one-for-five reverse stock split, and the change ofits name to Cadiz Land Company, Inc. (the "Company"). The reincorporation,reverse split, and name change became effective on May 26, 1992.RESULTS OF OPERATIONS The following is management's discussion of certain factors which haveaffected the Company's financial condition and results of operations included inthe consolidated financial statements through its fiscal year ended March 31,1995.YEAR ENDED MARCH 31, 1995 COMPARED TO YEAR ENDED MARCH 31, 1994 During the year ended March 31, 1995, the Company had a net loss of $4,591,000as compared to a net loss of $3,751,000 during the previous year. The followingtable summarizes the net loss for both periods (in thousands): 1995 1994 ------- ------- Revenues $ 543 $ 213 ------ ------ Costs and expenses: Resource development 2,166 1,367 General and administrative 1,641 1,998 Amortization 234 234 Interest expense, net 1,208 853 Gain on disposal ofSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. discontinued segment -0- (145) Gain on debt settlement (115) (343) ------ ------ Net loss $4,591 $3,751 ====== ====== REVENUES. Revenue was recognized from the Company's resource development as a -------- result of its agricultural operations. A combination of gross crop proceedsfrom the citrus orchard and both rent and a percentage of gross crop proceedsfrom the vineyard totalled $543,000 and $213,000 for the years ended March 31,1995 and 1994, respectively. Management expects revenue from the Company's agricultural development willincrease over the next several years as a result of increased revenues fromexisting developed acreage and the further development of additional acreage. -14- RESOURCE DEVELOPMENT. The Company, in furtherance of its strategic plan to -------------------- develop the resources associated with its properties so as to maximize the valueof the Company's landholdings, incurred costs related to the development andplanning of the Company's transfer water projects, overhead related tomanagement of the Cadiz agricultural development and legal and other expensesrelated to development activities. The Company is planning for the developmentand transfer of water from its Cadiz and Piute properties. See Item, "Business- - Narrative Description of Business - Water Resource Development". The Companybelieves it will enter into binding contracts with third parties which willprovide for the realization by the Company of a revenue stream from its land andwater resources commencing in calendar year 1997, although no assurance can begiven. Resource development expenses increased in 1995 by $799,000 as compared to theprior year primarily due to an overall increase in resource development, largelyresulting from activities related to the water transfer project, and theestablishment of an Agricultural Development Department in April 1994. Inaddition, depreciation on the citrus orchard commenced in April 1994 whenmanagement determined that the crop had matured sufficiently to produce thefirst commercial harvest. As a result, depreciation expense increased $180,000.It is expected that agricultural operations, exclusive of overhead anddepreciation, will be cash flow positive in 1996 and are expected to remain cashflow positive. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for ----------------------------------- both periods consisted primarily of salaries and professional fees. Theseexpenses decreased by $357,000 for the year ended March 31, 1995 compared to thesame period last year. Professional fees declined from $970,000 in 1994 to$768,000 in 1995, primarily as a result of the favorable conclusion oflitigation in May 1994. INTEREST EXPENSE. Net interest expense totalled $1,208,000 during the year ---------------- ended March 31, 1995, compared to $853,000 during the same period in 1994. Thefollowing table summarizes the components of interest expense for the yearsended March 31, 1995 and 1994 (in thousands): 1995 1994 ------- ------ Interest expense on outstanding debt $ 842 $ 831Interest on citrus orchard capitalized -0- (252)Amortization of financing costs 479 340Interest income (113) (66) ------ ----- Net Expense $1,208 $ 853 ====== =====Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Interest expense on outstanding debt increased due to higher interestrates on the Rabobank loan and an increase in Ansbacher debt outstanding. See"Liquidity and Capital Resources - Current Financing Arrangements". Interestexpense related to the citrus orchard was capitalized in 1994, as the orchardhad not yet reached maturity during the period. As the orchard is no longer inthe developmental stage, such interest is no longer capitalized. Theamortization of debt issue costs and debt discount increased $139,000 in 1995compared to 1994 due to the costs related to the refinancing of the Rabobank andAnsbacher loans in January 1994. Such costs are amortized over the life of thedebt arrangement, which matures on January 31, 1997. Interest income increasedin 1995 compared to 1994 due to higher cash balances throughout 1995. -15- GAIN ON DISPOSAL OF DISCONTINUED SEGMENT. There were no such ---------------------------------------- transactions during the fiscal year ended March 31, 1995. However, during thefiscal year ended March 31, 1994, the Company reversed valuation reserves andliabilities related to discontinued operations totalling $145,000. Of thisamount, $75,000 resulted from a reduction in a reserve no longer necessaryfollowing the disposition of a cooler property in Arizona as part of asettlement of a $925,000 note obligation, as discussed under "Gain on DebtSettlement", below. In addition, approximately $70,000 resulted from a write-off of an accrued liability for certain crop advances previously received by theCompany which the Company determined would not be claimed by the advancingparty. GAIN ON DEBT SETTLEMENT. In June 1994, the Company retired a note ----------------------- payable in the amount of $249,000 to an individual at a discounted amountresulting in an extraordinary gain on settlement of debt of $115,000. The note,which originated in 1985, was scheduled to be retired with a balloon payment inDecember 1996. During the quarter ended June 1993, the Company concluded asettlement agreement regarding a $925,000 note obligation which resulted in aextraordinary gain of $300,000 on settlement of debt. See "Year ended March 31,1994 Compared to Year ended March 31, 1993 - Gain on Debt Settlement". Inaddition, during the third quarter of fiscal year 1994, the Company recorded anadditional extraordinary gain of $43,000 which resulted from the forgiveness ofdebt due under a note payable issued several years earlier.YEAR ENDED MARCH 31, 1994 COMPARED TO YEAR ENDED MARCH 31, 1993 During the year ended March 31, 1994, the Company had a net loss of $3,751,000as compared to a net loss of $4,087,000 during the previous year. The followingtable summarizes the net loss for both periods (in thousands): 1994 1993 ------- ------ Revenues $ 213 $ -0- ------ ------ Costs and expenses: Resource development 1,367 702 General and administrative 1,998 2,249 Amortization 234 234 Interest expense, net 853 902 Gain on disposal of discontinued segment (145) -0- Gain on debt settlement (343) -0- ------ ------ Net loss $3,751 $4,087 ====== ====== REVENUES. Revenue of $213,000 was recognized from the Company's -------- resource development activity for the year ended March 31, 1994.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. -16- RESOURCE DEVELOPMENT. Resource development expenses, which include -------------------- overhead related to management of the Cadiz agricultural development, legal andother expenses related to development activities, increased in 1994 by $665,000as compared to the prior year. This increase was due to establishment of theResource Development Department during December 1992 which resulted in fourquarters of activity in fiscal 1994 as compared to one quarter of activity infiscal 1993 and an overall increase in development. In addition, depreciationof the Cadiz vineyard which totalled $163,000 was included in expense for fiscalyear 1994, whereas such depreciation was included in growing crops inventoryuntil the vineyard was leased to a third party effective January 1, 1993. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative ----------------------------------- expenses which consisted primarily of salaries and professional expensestotalled $1,998,000 for the fiscal year ended March 31, 1994 as compared to$2,249,000 for the year ended March 31, 1993. Professional expense declinedfrom $1,145,000 for fiscal year 1993 to $970,000 for fiscal year 1994 as aresult of lower legal and consulting fees. In addition, general andadministrative expenses were reduced by approximately $52,000 due to the write-off of payables resulting from a negotiated reduction in banking and legal feespreviously accrued. The decline in professional expenses was offset, in part,by an increase in facilities cost resulting from the establishment of theCompany's new Rancho Cucamonga headquarters office and the inclusion of expensesrelating to the operations of the Company's Los Angeles office, which expenseshad been recorded as real estate expenses prior to the relocation of theCompany's real estate operations from Los Angeles to Rancho Cucamonga. As aresult of all of the foregoing, general and administrative expenses declined bya total of approximately $251,000 during the period. INTEREST EXPENSE. Interest expense decreased approximately $49,000 ---------------- during the year ended March 31, 1994 compared to the year ended March 31, 1993due to lower interest rates; however, this was partially offset by the fixing ofRabobank's interest rate through 1994 in anticipation of a general interest rateincrease. The amortization of warrants of approximately $246,000 and $137,000for the years ended March 31, 1994 and 1993, respectively, is also included ininterest expense as such warrants were issued to lenders in consideration forreduced interest rates. Amortization of financing fees totalling approximately$95,000 and $25,000 for the years ended March 31, 1994 and 1993, respectively,is also included in interest expense. GAIN ON DISPOSAL OF DISCONTINUED SEGMENT. During the fiscal year ---------------------------------------- ended March 31, 1994, the Company reversed valuation reserves and liabilitiesrelated to discontinued operations totalling $145,000. For a furtherdiscussion, see "Year ended March 31, 1995 Compared to Year ended March 31, 1994- - Gain on Disposal of Discontinued Segment". GAIN ON DEBT SETTLEMENT. In connection with the Company's ----------------------- discontinued agribusiness segment, in July 1993, the Company entered into arevised agreement with the holder of a purchase money mortgage related tocertain commercial property owned by the Company for the satisfaction of thisobligation. See "Year ended March 31, 1995 Compared to Year ended March 31,1994 - Gain on Debt Settlement". In connection with this transaction, theCompany recorded an extraordinary gain of $300,000 during the year ended March31, 1994. In addition, during the third quarter of fiscal year 1994, the Companyrecorded an additional extraordinary gain of $43,000 which resulted from theforgiveness of debt due under a note payable issued several years earlier. -17- YEAR ENDED MARCH 31, 1993 During the year ended March 31, 1993, the Company had a net loss of$4,087,000. No revenues were recognized from the Company's resource developmentoperations in that year. As discussed above, agribusiness revenues and expensesfor all years presented have been reclassified to discontinued operations.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. RESOURCE DEVELOPMENT. The resource development segment operating loss -------------------- amounted to $702,000. Although as a part of its business strategy the Companydid not complete any significant sales transactions during the year, certaincosts related to resource development activities were incurred amounting to$702,000. Such costs principally related to overhead expenses and include legaland other expenses related to development activities. GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative costs ----------------------------------- for the fiscal year ended March 31, 1993 consisted principally of salary, wagesand fringe benefits of $499,000 and professional fees, including legal, of$1,145,000. INTEREST EXPENSE. Net interest expense (i.e., interest expense offset ---------------- by interest income) amounted to $902,000 in 1993.LIQUIDITY AND CAPITAL RESOURCESLIQUIDITY AND CAPITAL RESOURCES Pursuant to its business strategy, the Company utilizes its working capitalprimarily for development purposes; that is, for purposes designed to increasethe long term value of its properties. A substantial portion of thesedevelopmental expenses are being incurred in connection with the development ofthe Company's water transfer projects at Cadiz and Piute. As the Company doesnot expect to receive significant revenues from these water transfer projectsuntil 1997, the Company has been required to obtain financing to bridge the gapbetween the time development expenses are incurred and the time that a revenuestream will commence. Accordingly, the Company has looked to outside fundingsources to address its liquidity and working capital needs. Since the beginningof the 1992 fiscal year, the Company has addressed these needs primarily throughsecured debt financing arrangements with its lenders, private equity placementsand the exercise of outstanding stock options. With the implementation of the Company's program to conduct agriculturaloperations on its properties primarily through third party leasing and jointventures operations, agricultural operations are expected to be cash flowpositive in 1996 and subsequent years. CURRENT FINANCING ARRANGEMENTS. The Company's two primary lenders are ------------------------------ Cooperative Centrale Raiffeisen-Boerenleenbank B.A., a Netherlands commercialbank ("Rabobank") and Henry Ansbacher & Co. Limited, a banking corporationorganized under the laws of England ("Ansbacher") (collectively, the "Banks").At March 31, 1995, the Company's obligations to Rabobank and Ansbacher amountedto $9.1 million and $7.7 million, respectively. Ansbacher and Rabobank holdsenior and subordinate deeds of trust, respectively, on substantially all of theCompany's property. -18- In furtherance of the Company's business strategy and in light of theCompany's progress with its business plan, in January 1994, the Banks completedarrangements which extended the maturity dates of the debt from December 31,1994 until January 31, 1997, and fixed the interest rates for the period.Rabobank agreed to accrue and capitalize interest payments through December1994. Ansbacher agreed to accrue and capitalize interest through maturity andfurther agreed to give the Company an additional line of credit of approximately$800,000 which may be used to pay interest to Rabobank with effect from January1995. In addition, the Company reduced its obligation to Rabobank by $4,000,000by way of a $2,000,000 advance from Ansbacher, together with $2,000,000 ofproceeds raised from a private placement in January 1994. In March 1995, the Company arranged to draw $2.45 million from an additional$3 million loan facility provided by Ansbacher. From these proceeds, the Companyused $250,000 to reduce the Company's existing Rabobank loan and to reimburseRabobank for various fees and expenses with the applied to be used towards theCompany's estimated working capital requirements through March 31, 1996. Theremaining $550,000 of this facility is expected to be drawn down April 1, 1996for application towards the Company's estimated working capital requirements forSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the fiscal year ending March 31, 1997. Ansbacher agreed to accrue and capitalizeinterest on the outstanding principal amount of these advances through January1997. In connection with this facility, the Company issued 110,000 shares ofcommon stock to Ansbacher and issued to Rabobank 35,000 common stock purchasewarrants exercisable for three years at $0.05 per share. As the Company continues to aggressively pursue its business strategy,additional financing specifically in connection with the Company's waterprojects will be obtained. See Item 1, "Description of Business - NarrativeDescription of Business - Water Resource Development". The nature of suchadditional financing for the water transfer projects will depend upon how thedevelopment and ownership of each project is ultimately structured, and how muchof each project's funding will be the Company's responsibility. Should theCompany determine that it will be able to maximize its profit potential throughconstruction and ownership of the water delivery systems used in the project,the Company will be required to obtain long term project financing. Based uponthe results of analyses performed by the Company's investment banking firm,management believes that several alternative long-term financing arrangementsare available to the Company which will be further evaluated once fundingresponsibility and ownership alternatives are determined. EQUITY PLACEMENTS. During the fiscal year ended March 31, 1995, the ----------------- Company raised proceeds of approximately $2.3 million through the exercise ofoutstanding stock options and warrants. The Company utilized such proceeds tofund its capital projects related to development of its water transfer projects,production well development, development of further agricultural acreage andpurchase of additional acreage. WORKING CAPITAL RESOURCES. The Company has adopted an unclassified ------------------------- balance sheet (eliminating the distinction between current assets and long-termassets and current liabilities and long-term liabilities). Accordingly, anyhistorical or forward looking discussion of the Company's working capitalresources should focus on the receipt and use of cash as opposed to the broaderconcepts of working capital and current ratio. -19- The following table summarizes the Company's cash position for theperiods indicated (amounts in thousands): YEAR ENDED MARCH 31, -------------------- 1995 1994 --------- -------- Net cash used for continuing operations $(2,890) $(3,427) Net cash provided by discontinued operating activities 57 52 ------- ------- Net cash used for operating activities (2,833) (3,375) Net cash used for investing activities (3,368) (2,064) Net cash provided by financing activities 4,247 9,788 ------- ------- Net increase (decrease) in cash (1,954) 4,349 Cash, beginning of year 4,408 59 ------- ------- Cash, end of year $ 2,454 $ 4,408 ======= ======= CASH USED FOR OPERATING ACTIVITIES. During the year ended March 31, 1995, netSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ---------------------------------- cash used for continuing operations decreased to $2.89 million from $3.427million during the 1994 period. Net cash provided by discontinued operatingactivities totalled $57,000 and $52,000 during the year ended March 31, 1995 and1994, respectively. Net cash used for operating activities totalled $2.833million and $3.375 million for the year ended March 31, 1995 and 1994,respectively, resulting in a decrease of $542,000. This decrease is primarilydue to less cash expended in 1995 for the settlement of legal matters thanduring the 1994 period. The Company currently pays no income taxes. As of March 31, 1995, the Companyhas a net operating loss (NOL) carryforward of approximately $48 million forfederal and $20 million for state income tax purposes. Such carryforwardsexpire in varying amounts through the year 2010. In accordance with the TaxReform Act of 1986, NOL utilization may be subject to an annual limitation. Asa result at March 31, 1995, approximately $15 million of federal NOL iscurrently available to offset federal taxable income in future years. Similarlimitations apply to the state NOL, the amount of which has not been determined. CASH USED FOR INVESTING ACTIVITIES. In furtherance of the Company's strategic ---------------------------------- business plan to maximize the value of its landholdings, during the year endedMarch 31, 1995, net cash used for investing activities totalled $3.368 million(or 54% of available cash) compared to $2.064 million (or 40% of available cash)in 1994. The increase of $1.304 million compared to 1994 is due todevelopmental expenses incurred in connection with the development of theCompany's water transfer projects, well development, development of furtheragricultural acreage and purchase of additional acreage. During fiscal year 1995, the Company continued its development of the watertransfer project at Cadiz. In addition, the Company began development of asecond water transfer project in the Piute valley by drilling a production welland the retention of an independent engineering firm to complete a feasibilitystudy for the project. -20- During 1995, the Company also developed 240 acres of land to row crops,developed two new production wells, and improved the existing facilities. Theseimprovements have enabled the Company to attract third party agriculturalentities to Cadiz and to establish Cadiz as a developing area for produce trade.The Company intends to further develop the Cadiz area with both residential andcommercial improvements which will support the increase in agriculturaldevelopment. The Company also intends to develop additional acreage to rowcrops in the coming year which will allow for double and sometimes triplecropping, whereby two and sometimes three different crops can be planted andharvested sequentially from the same acreage during one year. This type ofagricultural development has proven to be successful and provides thepossibility for an immediate return on capital. CASH PROVIDED BY FINANCING ACTIVITIES. During the year ended March 31, 1995, ------------------------------------- net cash flows generated by financing activities totalled $4.2 million primarilyfrom proceeds resulting from the exercise of stock options and warrants grantedin prior years totalling $2.3 million and the completion of additional financingfrom Ansbacher in the amount of $2.45 million. During 1995, the Company reduceddebt payable to Rabobank and other notes payable by $530,000.SHORT-TERM OUTLOOK During fiscal 1995, the Company's working capital requirements were fundedprimarily from available cash at the beginning of the year and from the proceedsfrom the exercise of outstanding stock options. The $2.45 million in proceedsreceived in March 1995 from the additional loan facility provided by Ansbacherwill be applied toward the Company's working capital requirements through March31, 1996. The Company most likely will require additional funds in pursuit ofthe various environmental and entitlement approvals required as a prerequisiteto the commencement of construction of the Cadiz water delivery project andcapital obligations relating to continuing agricultural development at Cadiz.The Company will work with its investment banking firm in choosing the form offunding most appropriate under the circumstances. As stock options with anaggregate exercise price of approximately $9.5 million are currentlyoutstanding, any remaining working capital needs during fiscal 1996 canSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.potentially be met through the exercise of outstanding stock options. Otherpossible alternatives include deposits from water agencies or other pre-salearrangements related to the Company's water transfer projects. Private equityplacements to institutional shareholders may be undertaken, but only to theextent necessary so as to minimize the dilutive effect of any such placementsupon the Company's existing shareholders.LONG-TERM OUTLOOK Historically, the Company has financed both its working capital and propertyacquisition cash requirements from outside resources via a combination of debtand equity placements. Although the Company expects the revenue stream from itsagricultural operations will increase in fiscal 1996 and a revenue stream fromits other landholdings and associated resources will commence in calendar 1997,no assurance can be given as to whether such revenues will be of sufficientlevels by the end of fiscal 1996 to fund the Company's ongoing cashrequirements. Such cash requirements will be dependent, in large part, upon theform of the arrangements utilized by the Company for the development of itsresources. -21- As the Company is actively pursuing the development of its water resources, itis seeking finalization of the regulatory approvals needed to commenceconstruction of a water delivery project at Cadiz. The Company is alsonegotiating the terms of water delivery contracts with various California wateragencies, which terms include institutional arrangements, financing, pricingconcepts and formulas and ownership of the pipeline and the delivery system. The Company's investment banking firm has performed various economic analysesof the Company's Cadiz water transfer project and has advised the Company as tovarious alternative means of implementing this project. The variousalternatives available for structuring the delivery of this water to thirdparties include the construction by the Company of a water delivery system foroff-site delivery to third party purchasers as well as the sale of water at thewell head or as in-ground reserve, with the purchaser or another third partyassuming responsibility for transport of the water off-site. The Company'sinvestment banking firm is continuing to assist management in evaluating thesedelivery alternatives and in determining which alternatives maximize theCompany's profit potential in addition to assisting in determining whichfinancial structure will best accommodate such a plan. In addition, as a result of San Bernardino County's approval of a General PlanAmendment covering 9,600 acres of the Company's landholdings at Cadiz and theincreased grower interest in Cadiz as an agricultural area, the Company expectsto continue further development of its landholdings to agriculture. Suchdevelopment will be systematic and in furtherance of the Company's businessstrategy to provide for maximization of the value of its assets. Suchdevelopment is expected to be accomplished through negotiated arrangements withthird parties, which will significantly reduce any capital outlay required of aCompany in connection with such development activities. Aggregate maturities of debt for fiscal years subsequent to March 31, 1995,are approximately as follows: 1996 - $34,000; 1997 - $16,820,000; 1998 - $7,000;and none thereafter. Since the Company's inception, inflation has not had a material impact eitheron the costs of materials required in the development of property and/or inlabor costs. Similarly, the value of the Company's real property has not beenmaterially impacted by inflation. In the event the rate of inflation shouldaccelerate in the future, the Company believes the increase in the value of itsreal property will exceed any increases in costs attributable to inflation.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is submitted in response to Part IVhereof. See the Index to Consolidated Financial Statements.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not Applicable.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. -22- PART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information called for by this Item is incorporated herein by reference tothe definitive proxy statement involving the election of directors which theCompany intends to file with the Commission pursuant to Regulation 14A under theSecurities Exchange Act of 1934 not later than 120 days after March 31, 1995.ITEM 11. EXECUTIVE COMPENSATION The information called for by this Item is incorporated herein by reference tothe definitive proxy statement involving the election of directors which theCompany intends to file with the Commission pursuant to Regulation 14A under theSecurities Exchange Act of 1934 not later than 120 days after March 31, 1995.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information called for by this Item is incorporated herein by reference tothe definitive proxy statement involving the election of directors which theCompany intends to file with the Commission pursuant to Regulation 14A under theSecurities Exchange Act of 1934 not later than 120 days after March 31, 1995.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information called for by this Item is incorporated herein byreference to the definitive proxy statement involving the election of directorswhich the Company intends to file with the Commission pursuant to Regulation 14Aunder the Securities Exchange Act of 1934 not later than 120 days after March31, 1995. -23- PART IVITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements. See Index to Consolidated Financial Statements. 2. Financial Statement Schedules. See Index to Consolidated Financial Statements. 3. Exhibits. The following exhibits are filed or incorporated by reference as part of thisRegistration Statement. 3.1 - Articles of Incorporation of the Company, as amended to date./(8)/ 3.3 - Bylaws of the Company, as amended to date./(4)/ 4.1 - Specimen Form of Stock Certificate for the Company's registered stock./(4)/ 10.1 - The Company's 1984 Incentive Stock Option Plan./(2)/ 10.2 - Pacific Agricultural Holdings, Inc. 1988 Nonstatutory Stock Option Plan./(1)/ 10.3 - Stock Purchase and Fee Agreement dated March 22, 1989 between the Company and Mark A. Liggett./(2)/ 10.4 - Form of Limited Partnership Agreement of Southwest Fruit Growers,Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. L.P./(3)/ 10.5 - Farm Management Agreement dated as of March 28, 1990 between the Company and Southwest Fruit Growers, L.P./(3)/ 10.6 - Promissory Note in the amount of $3,486,868 dated as of March 28, 1990 issued by Southwest Fruit Growers, L.P. in favor of the Company. (Hyder Note)./(3)/ 10.7 - Promissory Note in the amount of $4,934,922 dated as of March 28, 1990 issued by Southwest Fruit Growers, L.P. in favor of the Company. (Cadiz Note)./(3)/ 10.8 - Promissory Note in the amount of $3,141,344 dated as of March 28, 1990 issued by Southwest Fruit Growers, L.P. in favor of the Company. (Farming Note)./(3)/ 10.9 - Agricultural Lease between Southwest Fruit Growers, L.P. and the Company, on the one hand, and Donald Kizirian, on the other hand, dated December 20, 1992./(5)/ -24- 10.10 - Convertible Promissory Note dated December 15, 1993 in the principal amount of (Pounds)300,000 issued by the Company in favor of Midland Montagu Asset Management./(5)/ 10.11 - Compensation Agreement dated April 2, 1993 between the Company and Dwight Makins./(5)/ 10.12 - Option Agreement dated April 2, 1993 between the Company and Dwight Makins./(5)/ 10.13 - Compensation Agreement dated April 2, 1993 between the Company and J.F.R. Hammond./(5)/ 10.14 - Option Agreement dated April 2, 1993 between the Company and J.F.R. Hammond./(5)/ 10.15 - Compensation Agreement dated April 2, 1993 between the Company and Keith Brackpool./(5)/ 10.16 - Option Agreement dated April 2, 1993 between the Company and Keith Brackpool./(5)/ 10.17 - Employment Agreement dated December 1, 1992 between the Company and Ted Dutton./(5)/ 10.18 - Option Agreement dated April 2, 1993 between the Company and Ted Dutton./(5)/ 10.19 - Form of Non-Executive Option Agreement./(5)/ 10.20 - Second Amendment and Supplement to Stock Purchase and Fee Agreement, dated December 23, 1992 between the Company and Mark Liggett./(5)/ 10.21 - Option Agreement dated September 20, 1993 between the Registrant and Stephen D. Weinress./(6)/ 10.22 - Option Agreement dated October 12, 1993 between the Registrant and Susan Chapman./(6)/ 10.23 - Second Loan Modification Agreement dated as of September 15, 1993 by and between the Company, CVDC and Rabobank./(7)/ 10.24 - Second Agreement to Modify Loans dated September 23, 1993 by and between the Company, CVDC and Ansbacher./(7)/ 10.25 - Memorandum of Understanding dated January 11, 1994 by and betweenSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. the Company and the Mojave Water Agency./(7)/ -25- 10.26 - Third Agreement to Modify Loads dated January 11, 1994 by and between the Company, CVDC and Ansbacher./(7)/ 10.27 - Third Loan Modification Agreement dated as of January 12, 1994 by and between the Company, CVDC and Rabobank./(7)/ 10.28 - Letter re: Modification Agreement dated January 20, 1994 from Rabobank to the Company./(7)/ 10.29 - Form of Subscription Agreement between the Company and Purchasers of Placement Shares./(8)/ 10.30 - Severance and Release Agreement dated August 26, 1993 by and between the Company and George P. Rice./(8)/ 10.31 - Letter re: Employment dated August 5, 1993 from the Company to Stephen D. Weinress./(8)/ 10.32 - Letter Agreement re: Employment dated October 15, 1993 between the Company and Susan K. Chapman./(8)/ 10.33 - Form of Employment Agreement dated April 11, 1994 between the Company and David Peterson./(8)/ 10.34 - Form of Option Agreement dated April 29, 1994 between the Company and David Peterson./(8)/ 10.35 - Form of Option Agreement dated May 3, 1994 between the Company and Keith Brackpool, Dwight Makins, J.F.R. Hammond, Stephen D. Weinress, and Ted W. Dutton, respectively./(8)/ 10.36 - Form of Option Agreement dated May 3, 1994 between the Company and Susan K. Chapman./(8)/ 10.37 - Form of Option Agreement dated May 5, 1994 between the Company and James R. Smirl./(8)/ 10.38 - Letter Agreement re: Services dated August 31, 1994 between the Company and Prudential Securities Incorporated. 10.39 - Letter Agreement re: Services dated October 5, 1994 between L.H. Friend, Weinress & Frankson, Inc. and Prudential Securities Incorporated. 10.40 - Letter Agreement re: Services dated February 1, 1995 between the Company and L.H. Friend, Weinress, Frankson & Presson, Inc. 10.41 - Loan Agreement dated March 15, 1995 between the Company, CVDC and Ansbacher. -26- 10.42 - Fourth Loan Modification Agreement dated March 15, 1995 between the Company, CVDC and Rabobank. 10.43 - Form of Option Agreement dated April 20, 1995 between the Company and David Peterson. 21.1 - List of Subsidiaries. Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 23.1 - Consent of Independent Accountants (included in Part IV of the Form 10-K). _______________________/1/ Previously filed as Exhibits to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1988./2/ Previously filed as Exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1989./3/ Previously filed as Exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1990./4/ Previously filed as Exhibit to the Company's Report on Form 8-K dated May 6, 1992./5/ Previously filed as Exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1993./6/ Previously filed as Exhibit to the Company's Registration Statement on Form S-8 (Registration No. 33-73936) effective January 10, 1994./7/ Previously filed as Exhibit to the Company's Report on Form 10-Q for the quarter ended December 31, 1993./8/ Previously filed as Exhibit to the Company's Registration Statement on Form S-1 (Registration No. 33-75642) declared effective May 16, 1994. -27- SIGNATURES ----------Pursuant to the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereto duly authorized.CADIZ LAND COMPANY, INC.By: /s/ Keith Brackpool By: /s/ Susan K. Chapman -------------------- --------------------- Keith Brackpool, Susan K. Chapman, Chief Executive Officer Chief Financial Officer and Director and Secretary Date: June 28, 1995 Date: June 28, 1995Pursuant to the requirements of the Securities Exchange Act of 1934, this reporthas been signed by the following persons in the capacities and on the datesindicated. NAME AND POSITION DATE ----------------- ---- /s/ Dwight Makins June 28, 1995- ----------------------------------------Dwight Makins, Chairman of the Board and Director /s/ Keith Brackpool June 28, 1995- ---------------------------------------- Keith Brackpool, Chief Executive Officer and Director (Principal Executive Officer) /s/ Susan K. Chapman June 28, 1995- ---------------------------------------- Susan K. Chapman, Chief Financial Officer and Secretary (Principal FinancialSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. and Accounting Officer) /s/ J.F.R. Hammond June 28, 1995- ---------------------------------------- J.F.R. Hammond, Director /s/ Stephen D. Weinress June 28, 1995- ---------------------------------------- Stephen D. Weinress, Director -28- CADIZ LAND COMPANY, INC. INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page (s) -------- FINANCIAL STATEMENTS:- -------------------- Report of Independent Accountants 30 Consolidated Balance Sheet at March 31, 1995 and 1994 31-32 Consolidated Statement of Cash Flows for the three years ended March 31, 1995 33 Consolidated Statement of Operations for the three years ended March 31, 1995 34 Consolidated Statement of Stockholders' Equity for the three years ended March 31, 1995 35 Notes to the Consolidated Financial Statements 36-47 FINANCIAL STATEMENT SCHEDULES:- ----------------------------- Report of Independent Accountants 48 Schedule VIII - Valuation and Qualifying Accounts 49 Schedule XI - Real Estate and Accumulated Depreciation 50(Schedules other than those listed above have been omitted since they are eithernot required, inapplicable, or the required information is included on thefinancial statements or notes thereto.) -29- [PRICE WATERHOUSE LLP] LETTERHEAD REPORT OF INDEPENDENT ACCOUNTANTSSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.To the Board of Directorsand Stockholders ofCadiz Land Company, Inc.In our opinion, the financial statements listed in the accompanying indexpresent fairly, in all material respects, the financial position of Cadiz LandCompany, Inc. and its subsidiaries at March 31, 1995 and 1994, and the resultsof their operations and their cash flows for each of the three years in theperiod ended March 31, 1995, in conformity with generally accepted accountingprinciples. These financial statements are the responsibility of the Company'smanagement; our responsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits of these statements inaccordance with generally accepted auditing standards which require that we planand perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall financial statement presentation.We believe that our audits provide a reasonable basis for the opinion expressedabove./s/ Price Waterhouse LLP- ------------------------PRICE WATERHOUSE LLPLos Angeles, CaliforniaJune 9, 1995 -30- CADIZ LAND COMPANY, INC. CONSOLIDATED BALANCE SHEET ASSETS ($ in thousands) MARCH 31, ------------------- 1995 1994 --------- -------- Cash and cash equivalents $ 2,454 $ 4,408 Inventory 198 -0- Net assets of discontinued segment -0- 57Property and equipment, net (Note 3) 2,308 1,137 Land and improvements, net (Note 4) Developed property 9,715 10,044 Unimproved land 11,792 11,563 Water transfer projects (Note 5) 1,764 217 Excess of purchase price over net assets acquired, net 5,389 5,623Debt issue costs and other assets 1,268 1,009 ------- ------- $34,888 $34,058 ======= ======= See accompanying notes to the consolidated financial statements. -31- CADIZ LAND COMPANY, INC. CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITYSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ($ in thousands) MARCH 31, -------------------- 1995 1994 -------- --------- Accounts payable $ 1,174 $ 1,034 Other liabilities 385 558 Debt (Note 6) 16,381 13,740 Contingencies (Note 9) Stockholders' equity (Note 1) Common stock - $.01 par value, 24,000,000 shares authorized; shares issued and outstanding - 16,988,454 at March 31, 1995 and 15,430,864 at March 31, 1994 170 154 Additional paid-in-capital 62,687 59,890 Accumulated deficit (45,909) (41,318) -------- -------- Total stockholders' equity 16,948 18,726 -------- -------- $ 34,888 $ 34,058 ======== ======== See accompanying notes to the consolidated financial statements. -32- CADIZ LAND COMPANY, INC. CONSOLIDATED STATEMENT OF CASH FLOWS ($ in thousands) YEARS ENDED MARCH 31, ------------------------------------ 1995 1994 1993 ------- -------- ------- Cash flows from operating activities: Loss from continuing operations $(4,591) $ (3,751) $(4,087) Adjustments to reconcile loss from continuing operations to net cash used for continuing operating activities: Depreciation and amortization 1,450 1,029 687 Extraordinary gains on debt settlement (115) (343) -0- Stock issued for services -0- 17 80 Interest capitalized to debt 734 760 -0- The effect on net cash used for continuing operating activities from changes in assets and liabilities: Inventory and notes receivable (198) 19 24 Other assets (158) (396) (20) Accounts payable and other liabilities (12) (762) 1,021 ------- -------- ------- Net cash used for continuing operating activities (2,890) (3,427) (2,295) Net cash provided by (used for) discontinued operating activities 57 52 (567) ------- -------- -------Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Net cash used for operating activities (2,833) (3,375) (2,862) ------- -------- -------Cash flows from investing activities: Land purchase and development (315) (1,441) (1,654) Water transfer projects (1,547) (217) -0- Additions to property and equipment (1,506) (406) (163) ------- -------- ------- Net cash used for investing activities (3,368) (2,064) (1,817) ------- -------- ------- Cash flows from financing activities: Net proceeds from issuance of common stock 2,307 11,925 4,307 Proceeds from issuance of debt 2,470 2,485 465 Principal payments on debt (530) (4,622) (761) ------- -------- ------- Net cash provided by financing activities 4,247 9,788 4,011 ------- -------- ------- Net increase (decrease) in cash (1,954) 4,349 (668)Cash, beginning of year 4,408 59 727 ------- -------- ------- Cash, end of year $ 2,454 $ 4,408 $ 59 ======= ======== ======= See accompanying notes to the consolidated financial statements. -33- CADIZ LAND COMPANY, INC. CONSOLIDATED STATEMENT OF OPERATIONS ($ in thousands except per share data) YEARS ENDED MARCH 31, ------------------------------------ 1995 1994 1993 ------- ------- ------- Revenues $ 543 $ 190 $ -0- ------- ------- -------Costs and expenses Resource development 2,166 1,344 702 General and administrative 1,641 1,998 2,249 Amortization 234 234 234 ------- ------- ------- 4,041 3,576 3,185 ------- ------- -------Operating loss (3,498) (3,386) (3,185) Interest expense, net 1,208 853 902 ------- ------- -------Loss before discontinued operations and extraordinary item (4,706) (4,239) (4,087) Gain (loss) on disposal of discontinued segment -0- 145 -0- ------- ------- -------Loss before extraordinary item (4,706) (4,094) (4,087) Extraordinary item - gain on debt settlement (Note 6) 115 343 -0- ------- ------- ------- Net loss $(4,591) $(3,751) $(4,087) ======= ======= ======= Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Earnings (loss) per share: Loss before discontinued operations and extraordinary item $ (.29) $ (.33) $ (.47) Gain (loss) on disposal of discontinued segment -0- .01 -0- Extraordinary item .01 .03 -0- ------- ------- -------Net loss per share $ (.28) $ (.29) $ (.47) ======= ======= ======= See accompanying notes to the consolidated financial statements. -34- CADIZ LAND COMPANY, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY ($ in thousands) COMMON STOCK TOTAL ------------------------------ PAID-IN ACCUMULATED STOCKHOLDERS SHARES AMOUNT CAPITAL DEFICIT EQUITY --------------- ------------ -------- ------------ ------------- Balance as of March 31, 1992 7,644,719 $ 77 $40,736 $(33,480) $ 7,333 Issuance of shares in connection with private placements 2,311,844 23 4,180 4,203 Issuance of stock warrants for services 145,000 1 7 8 Issuance of shares for professional services 103,300 1 174 175 Net loss (4,087) (4,087) ---------- ---- ------- -------- --------Balance as of March 31, 1993 10,204,863 102 45,097 (37,567) 7,632 Issuance of shares in connection with private placements 4,320,000 43 11,832 11,875 Issuance of stock upon conversion of debt 512,251 5 1,358 1,363 Issuance of shares for professional services 155,000 1 541 542 Issuance of stock for vineyard parcel 78,750 1 235 236 Issuance of stock warrants for services 779 779 Exercise of stock options 160,000 2 48 50 Net loss (3,751) (3,751) ---------- ---- ------- -------- --------Balance as of March 31, 1994 15,430,864 154 59,890 (41,318) 18,726 Issuance of shares for professional services 110,000 1 384 385 Issuance of stock warrants for services 121 121 Exercise of stock options and warrants 1,447,590 15 2,292 2,307 Net loss (4,591) (4,591) ---------- ---- ------- -------- --------Balance as of March 31, 1995 16,988,454 $170 $62,687 $(45,909) $ 16,948 ========== ==== ======= ======== ======== See accompanying notes to the consolidated financial statements. -35- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTE 1 - CURRENT STATUS AND DESCRIPTION OF BUSINESSSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.- ---------------------------------------------------BUSINESS OF THE COMPANY- -----------------------Cadiz Land Company, Inc. (the "Company") identifies, acquires and developsproperties (to date in the desert regions of Southern California) which havesignificant indigenous supplies of water. The Company currently owns or controlsapproximately 41,700 acres, with its largest property totalling approximately31,800 acres at Cadiz, California.The Company's primary objective is to maximize the long-term value of each ofits properties through strategic use of the water resources associated with theproperties. Management believes that, with the increasing scarcity of watersupplies in California and increasing demand, the value of properties withsizable assured supplies of water will continue to appreciate. The variousmeans by which the land and water resources available to these properties can beused are evaluated by management on an ongoing basis. The alternativesavailable to the Company include the transfer of water to third party usersand/or the development of the properties, using indigenous water sources, foragricultural, commercial or residential purposes.CURRENT OPERATING ENVIRONMENT- -----------------------------The transfer of water to third party users, both from the Cadiz property andfrom other Company properties, is being actively pursued by the Company. It isexpected that water from the Cadiz water transfer project will be sold tovarious California water agencies pursuant to water delivery contracts which theCompany is currently negotiating. The Company expects that this water deliveryproject, when completed, will be capable of delivering between 30,000 and 50,000acre-feet of water per year under long-term water delivery contracts. TheCompany has also commenced water development operations at its landholdings inthe Piute valley which are expected to be capable of delivering approximately10,000 to 15,000 acre-feet of water per year.During the past year, since entering into a Memorandum of Understanding ("MOU")with the Mojave Water Agency ("MWA"), the Company has made significant progress.In June 1994, the MWA Board of Directors, by unanimous approval, authorized MWAstaff to proceed with the environmental assessment of the proposed Cadiz watertransfer project and to serve as Lead Agency for purposes of complying with theCalifornia Environmental Quality Act ("CEQA") upon completion and acceptance ofa Final Draft Feasibility Report. The Final Draft Feasibility Report, preparedfor the project under the joint review of the Company and MWA, included thevarious results of independent studies conducted throughout the year. TheCompany has submitted to MWA both this report and a Conceptual Ground WaterManagement Plan which clarifies many of the hydrological features and resourcemanagement concepts of the proposed water transfer project. The Company expectsthat all remaining required environmental reports will be filed within fiscal1996. In addition, the specific terms of the Company's proposals with the wateragencies are expected to be submitted for public review during this same timeperiod. -36- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - CURRENT STATUS AND DESCRIPTION OF BUSINESS (CONTINUED)- --------------------------------------------------- The Company has also commenced water development operations at its landholdingsin the Piute valley, which is located approximately 12 miles from the ColoradoRiver near the town of Needles, California. Following the drilling of aproduction well on the property in February 1995, and the results of preliminaryengineering tests, the Company has determined both the quantity and the qualityof the underlying water to be suitable for commercial development and that thedepth of the ground water table allows for economic production of ground water.The Company believes that the Piute water transfer project is both technicallyand economically feasible and is currently analyzing its options fordevelopment.Additionally, agricultural development has been an integral part of theSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Company's ongoing business strategy as a means of maximizing the value of theCompany's landholdings and a way to generate cash flow from such landholdings.As of March 31, 1995, 800 acres have been developed to table grapes, 560 acreshave been developed to citrus, and 240 acres have been planted to various rowcrops. In addition to the land improvements, seven production wells, drip andmicro spray irrigation systems and facilities to accommodate a temporarycontract labor force have been installed.The Company has raised objections to a proposed waste landfill project to belocated adjacent to its Cadiz landholdings. It is management's opinion that theproposed project, as currently designed, poses environmental risks both to theCompany's agricultural operations at Cadiz and to the ground water basinunderlying the Cadiz property.Pursuant to its business strategy, the Company utilizes its working capitalprimarily for development purposes; that is, for purposes designed to increaselong-term value of its properties. As the Company does not expect to receivesignificant revenues from its water transfer projects until 1997, the Companyhas been required to obtain financing to bridge the gap between the timedevelopment expenses are incurred and the time that a revenue stream willcommence. During the fiscal years ended March 31, 1994 and 1993, the Companyraised $11.9 million and $4.2 million, respectively, from external sources whichwas used for debt reduction, the purchase and development of land, and workingcapital. In March 1995, the Company received $2.45 million from an additionalloan facility provided by its primary lender which is expected to fund themajority of the Company's working capital requirements for the next fiscal year.As stock options with an aggregate exercise price of approximately $9.5 millionare currently outstanding, any remaining working capital needs during fiscal1996 can potentially be met through the exercise of these stock options. Otherpossible alternatives include deposits from water agencies or other pre-salearrangements related to the Company's water transfer projects or via acombination of debt or equity placements. Management is confident thatsufficient working capital can be raised to allow the Company to continue topursue its business strategies during fiscal 1996, although no assurance can bemade. -37- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - CURRENT STATUS AND DESCRIPTION OF BUSINESS (CONTINUED)- --------------------------------------------------- ORGANIZATION AND MERGER- -----------------------In order to effectuate the reincorporation of the Company into the State ofDelaware, on May 26, 1992, Pacific Agricultural Holdings, Inc. ("PAH"), as theCompany was formerly known, merged with and into its wholly owned subsidiary,Cadiz Land Company, Inc. ("CLCI"), with CLCI the surviving entity. Concurrentlywith the reincorporation, the Company authorized 100,000 preferred shares andapproved a one-for-five reverse stock split of the common shares. CLCI did notconduct any operations prior to the effective date of this merger.NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- ---------------------------------------------------PRINCIPLES OF CONSOLIDATION- ---------------------------The consolidated financial statements include the accounts of the Company andits wholly-owned subsidiaries, Cadiz Valley Development Corporation, Inc. andSouthwest Fruit Growers Limited Partnership, a limited partnership ("SWFG") inwhich the Company is the general partner and has an approximate 65.4 percentpartnership interest. SWFG owns a total of 680 acres of table grape vineyardand 2,560 acres of undeveloped land at Cadiz, California. Allocable lossesincurred in the year ended March 31, 1991 served to eliminate the minorityinterest. All material intercompany balances and activity have been eliminatedfrom the consolidated financial statements.DEVELOPED PROPERTYSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.- ------------------Developed property is stated at cost which management believes is less than netrealizable value. Cost includes land acquisitions and improvements, and, duringdevelopment periods, interest and direct holding costs which consist principallyof net farming costs. The development costs associated with mature propertiesare depreciated on a straight-line basis over the estimated productive life ofthe property.UNIMPROVED LAND- ---------------Unimproved land consists of approximately 40,280 acres of undeveloped land inCadiz, Piute and other desert regions of California. Unimproved land is statedat cost, which management believes is less than net realizable value. -38- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)- --------------------------------------------------- PROPERTY AND EQUIPMENT- ----------------------Property and equipment are stated at cost. Depreciation is provided using thestraight-line method over the estimated useful lives of the assets, generallyfive to fifteen years for land improvements and buildings, seven years formachinery and equipment, two to six years for autos and trucks and four yearsfor office furniture and equipment.WATER TRANSFER PROJECTS- -----------------------The water transfer projects are stated at cost, which management believes isless than net realizable value. Costs directly attributable to the developmentof the Cadiz and Piute water transfer projects, such as drilling costs,hydrological costs, and other fees are being capitalized.INVENTORY- ---------Growing crops are stated at the lower of cost or estimated market. Cost consistsof cultural and harvest costs and are accumulated by commodity.REVENUES- --------Revenues from crop proceeds are recorded when received.AMORTIZATION- ------------The excess of purchase price over net assets acquired is being amortized at therate of $234,000 annually on a straight-line basis over thirty years.Accumulated amortization was $1,617,000 and $1,383,000 at March 31, 1995 and1994, respectively. The Company reviews the recoverability of intangible assetsby comparing projected operating income on an undiscounted basis to the net bookvalue of the related assets.DEBT ISSUE COSTS- ----------------Debt issue costs relate to the March 1995 and January 1994 debt agreements asdescribed in Note 6. These charges totalled approximately $593,000 and$850,000, respectively, and are being amortized over the remaining life of thedebt. The accumulated amortization at March 31, 1995 is $361,000. -39-Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)- --------------------------------------------------- STATEMENT OF CASH FLOWS- -----------------------For purposes of the statement of cash flows, the Company considers any highlyliquid debt instruments purchased with an original maturity date of three monthsor less to be cash equivalents. Cash paid for interest, during 1995, 1994, and1993 was $6,000, $131,000, and $789,000, respectively. Interest capitalized andadded to principal, in accordance with debt arrangements, totalled $734,000 and$760,000 in 1995 and 1994, respectively. In addition, interest of approximately$250,000 was capitalized as part of the development cost of the citrus orchardin 1994 and 1993. Interest related to the citrus orchard was not capitalized in1995 as the orchard produced its first harvest in fiscal 1995. Non-cash transactions have been excluded from the statement of cash flows inall years presented. There were no significant non-cash transactions in 1995,however, significant non-cash transactions in 1994 consisted of assets exchangedfor debt ($.4 million), stock issued for debt ($1.4 million), stock issued forproperty ($.2 million) and stock issued for fees ($.5 million) and in 1993, thecancellation of debt in exchange for assets ($1.2 million). Cash provided by orused for the Company's discontinued agribusiness segment is recorded net in theconsolidated statement of cash flows.INCOME TAXES- ------------Income taxes are accounted for using an asset and liability approach whichrequires the recognition of deferred tax assets and liabilities for the expectedfuture tax consequences of temporary differences between the financial statementand tax bases of assets and liabilities at the applicable enacted tax rates.EARNINGS PER SHARE- ------------------Earnings per share is computed for each year presented using the weightedaverage number of shares outstanding during the year. The weighted averagenumber of shares outstanding used to calculate earnings per share wereapproximately 16.5 million, 12.8 million and 8.7 million, for the years endedMarch 31, 1995, 1994, and 1993, respectively.DISCONTINUED OPERATIONS- -----------------------In December 1990, the Company decided to terminate its agribusiness operationswhich involved farm management and farm contract services in connection with thedevelopment and maintenance of certain permanent specialty crops. Theseoperations were not profitable and at the same time required substantial workingcapital. Agribusiness assets and liabilities pertaining to discontinuedoperations are included on the balance sheet as "Net assets of discontinuedsegment". Agribusiness revenue and expenses pertaining to discontinuedoperations are charged to applicable reserves or are included on the statementof operations as "Gain (loss) on disposal of discontinued segment". -40- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)- --------------------------------------------------- NEW ACCOUNTING STANDARD- -----------------------In March 1995, the Financial Accounting Standards Board issued Statement ofFinancial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). SFASSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.No. 121 establishes new guidance in accounting for the impairment of long-livedassets, including identifiable intangibles. When circumstances indicate thatthe carrying amount of the asset may not be recoverable as demonstrated byestimated cash inflows, an impairment loss shall be recorded based on fairvalue. Management believes SFAS No. 121 will have no material effect on thefinancial statements of the Company upon adoption in fiscal 1997.RECLASSIFICATIONS- -----------------Certain reclassifications have been made to the March 31, 1994 balances toconform with the March 31, 1995 presentation.NOTE 3 - PROPERTY AND EQUIPMENT- -------------------------------Property and equipment consisted of the following (net of accumulateddepreciation, in thousands): MARCH 31, ------------------ 1995 1994 -------- ------- Land improvements $ 1,732 $ 735Buildings 730 543Equipment 365 346Autos and trucks 303 178Office furniture and equipment 292 160 ------- ------ 3,422 1,962 Less accumulated depreciation (1,114) (825) ------- ------ $ 2,308 $1,137 ======= ====== -41- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - LAND AND IMPROVEMENTS- ------------------------------Developed property consisted of the following (net of accumulated depreciation,in thousands): MARCH 31, ------------------- 1995 1994 -------- -------- Land $ 2,307 $ 2,307Citrus orchard 3,613 3,599Vineyard 4,885 4,885 ------- ------- 10,805 10,791Less accumulated depreciation (1,090) (747) ------- ------- Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. $ 9,715 $10,044 ======= =======Unimproved land consisted of the costs directly related to the acquisition ofapproximately 40,000 acres, such as the cost to purchase, commissions, realestate taxes and legal and other professional fees.NOTE 5 - WATER TRANSFER PROJECTS- --------------------------------The Company currently has two water transfer projects under development. Allcosts directly attributable to the development of the water transfer projectsare being capitalized by the Company. These costs consist of drilling costs,hydrological costs, consulting fees for various engineering, environmental andfeasibility studies, and other professional and legal fees. Both water transferprojects are stated at cost, which management believes is less than netrealizable value.NOTE 6 - LONG-TERM DEBT- -----------------------The Company maintains its primary financing relationships with CooperativeCentrale Raiffeisen-Boerenleenbank B.A. (Rabobank) and Henry Ansbacher & Co.Limited (Ansbacher), collectively the "Banks". At March 31, 1995, the Company'sobligations to Rabobank and Ansbacher amounted to $9.1 million and $7.7 million,respectively. Ansbacher and Rabobank hold senior and subordinate deeds oftrust, respectively, on substantially all of the Company's property. -42- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT (CONTINUED)- ----------------------- At March 31, 1995, and 1994, the Company's outstanding debt is summarized asfollows (in thousands): 1995 1994 -------- ------- Rabobank $ 9,100 $ 8,807Ansbacher 7,713 4,944Other 48 544 ------- ------ 16,861 14,295 Debt discount (480) (555) ------- ------- $16,381 $13,740 ======= =======In furtherance of the Company's business strategy and in light of the Company'sprogress with its business plan, in 1993, the Banks completed arrangements whichallowed for both banks to accrue and capitalize monthly interest paymentsthrough December 31, 1994, the maturity date of the loans. In consideration ofthis restructuring, the Company issued each of the Banks 125,000 warrants topurchase the Company's common stock at $.05 per share exercisable for threeyears following the date of issuance. In addition, Ansbacher and Rabobankreceived additional collateral in the form of senior and subordinate deeds oftrust, respectively, on the Homer and Piute properties.In January 1994 the Banks entered into a further arrangement regarding theCompany's debt. Under terms of this arrangement, the Banks extended thematurity dates of the Company's debt until January 31, 1997, and fixed theinterest rates for the period. Rabobank and Ansbacher agreed to accrue andSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.capitalize interest payments through December 1994 and January 1997,respectively. In connection with this arrangement, interest was capitalizedduring the year ended March 31, 1995 and 1994 in the amount of $734,000 and$760,000, respectively. Ansbacher agreed to give the Company a line of credit ofapproximately $800,000 which may be used to pay interest quarterly to Rabobankwith effect from January 1995 and which will expire on March 3, 1997. Inaddition, the Company reduced its obligation to Rabobank by $4,000,000 by way ofa $2,000,000 advance from Ansbacher, together with $2,000,000 of proceeds raisedfrom a private placement in January 1994.In consideration for the above mentioned arrangements Rabobank returned andcancelled 533,000 outstanding warrants in exchange for new warrants exercisableas to a total of 175,000 shares of common stock. The total value of thesewarrants, $604,000, has been recorded as a debt discount and will be amortizedover the remaining term of the debt. Ansbacher received 100,000 shares ofcommon stock as an arrangement fee and 50,000 shares of common stock as anadvisory fee valued at $3.50 per share. Additionally, the Company agreed toconvert $770,000 of debt to Ansbacher into 220,000 shares of common stock. -43- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - LONG-TERM DEBT (CONTINUED)- ----------------------- On March 15, 1995, the Company entered into an agreement whereby Ansbacher wouldprovide a loan facility in two separate advances, both of which in the aggregatewill total $3,000,000. The first advance in the amount of $2,450,000, issued onMarch 31, 1995, was used to reduce the Company's existing obligation to Rabobankand to reimburse Rabobank for various fees and expenses from this and previousarrangements in the amount of $250,000 and provide the Company with $2,200,000to be applied toward the Company's estimated working capital requirementsthrough March 31, 1996. The second advance in the amount of $550,000, which theCompany expects to draw down on April 1, 1996, is anticipated to be appliedtoward the Company's estimated working capital requirements for the fiscal yearending March 31, 1997. Ansbacher agreed to accrue and capitalize interest onthe outstanding principal amount of these advances through January 1997.In consideration for the above agreement, Ansbacher received 110,000 shares ofcommon stock valued at $3.50 per share. The Company also issued to Rabobank35,000 warrants to purchase the Company's common stock at $.05 per shareexercisable for three years following the date of issuance. The total value ofthese warrants, $121,000, has been recorded as a debt discount and will beamortized over the remaining term of the debt. In addition, Rabobank agreed tosubordinate to Ansbacher's senior security interests in substantially all of theCompany's property.In June 1994, the Company retired a note payable in the amount of $249,000 to anindividual at a discounted amount, resulting in an extraordinary gain of$115,000. The note, which originated in 1985, was scheduled to be retired witha balloon payment in December 1996.In June 1993, the Company entered into a transaction by which debt was exchangedfor commercial property resulting in a gain of $300,000. In addition, duringDecember 1993, the Company recorded an additional gain of $43,000 on thesettlement of a debt at less than book value. The total gain from these twotransaction resulted in an extraordinary gain of $343,000 and was recorded assuch for the year ended March 31, 1994.The rate in effect on the Rabobank debt was 4.81 percent at March 31, 1995. Theaverage rate in effect on the Ansbacher debt was 6.59 percent at March 31, 1995.Aggregate maturities of debt for years subsequent to March 31, 1995 areapproximately as follows: 1996 - $34,000; 1997 -$16,820,000; 1998 - $7,000 andnone thereafter. -44- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. NOTE 7 - INCOME TAXES- ---------------------As of March 31, 1995, the Company has a net operating loss (NOL) carryforward ofapproximately $48,300,000 for federal and $20,100,000 for state income taxpurposes. For financial statement purposes, as of March 31, 1995, the Companyhas a net operating loss carryforward of $42,500,000 and $17,900,000 for federaland state purposes, respectively. Such carryforwards expire in varying amountsthrough the year 2010. For financial reporting purposes, the tax benefitresulting from utilization of such NOL carryforward will be applied to reducethe excess of purchase price over net assets acquired.In accordance with the Tax Reform Act of 1986, NOL utilization may be subject toan annual limitation. When there is a change in ownership of more than 50percent (as defined) of a corporation, the use of any NOL existing at the dateof the change of ownership is limited annually to an amount defined by the law.Based upon such formula, and as a result of the merger between AridTech and PASand stock issuances subsequent to that merger, use of approximately $42,300,000of the federal NOL is limited to approximately $2,200,000 per year. From thedate of the merger to the date of the latest ownership change in September 1993,utilization of the federal NOL was limited to $1,000,000. At March 31, 1995,approximately $14,800,000 of federal NOL is currently available for use.Similar limitations apply also to the state NOL carryforward.Deferred taxes are recorded based upon differences between the financialstatement and tax basis of assets and liabilities and available carryforwards.Temporary differences and carryforwards which give rise to a significant portionof deferred tax assets and liabilities for the year end March 31, 1995 were asfollows (in thousands): Basis difference in partnership interest $ (3,884)Net operating loss 18,275State taxes (364)Other 194 -------- Net deferred tax asset $ 14,221 ======== Valuation allowance $(14,221) ======== -45- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - INCOME TAXES (CONTINUED)- --------------------- A reconciliation of the provision (credit) for income taxes to the statutoryfederal income tax rate is as follows (in thousands): YEARS ENDED MARCH 31, ------------------------------- 1995 1994 1993 --------- -------- -------- Expected federal income tax expense (credit) at 34% $(1,561) $(1,276) $(1,389)Net operating loss carryforward for financial reporting purposes (for which benefit is fully reserved) 1,468 1,197 1,310Amortization 79 79 79Other nondeductible expenses 14 -0- -0- ------- ------- ------- $ -0- $ -0- $ -0- Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. ======= ======= =======NOTE 8 - STOCK OPTIONS AND WARRANTS- -----------------------------------The Company issues stock options which are not pursuant to a plan. During theyear ended March 31, 1995, the Board of Directors of the Company granted optionsto purchase 1,872,000 shares of the Company's common stock at an exercise priceof $4.00 per share to $5.00 per share of which 400,000 options are conditionalbased upon terms of employment and certain performance criteria. The recipientsof all such options were officers, directors, consultants, and employees of theCompany. During the fiscal year ended March 31, 1995, 1,447,590 shares of theCompany's common stock were issued as a result of the exercise of stock optionsand warrants, providing gross proceeds to the Company of $2,307,000.Subsequent to March 31, 1995, 40,000 shares of the Company's common stock wereissued through the exercise of outstanding options resulting in gross proceedsto the Company of $50,000. In addition, subsequent to March 31, 1995, theCompany granted options to purchase 100,000 shares of the Company's common stockat an exercise price of $4.25 per share to an officer and an employee of theCompany. These options are conditional based upon terms of employment andcertain performance criteria. -46- CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 - STOCK OPTIONS AND WARRANTS (CONTINUED)- ----------------------------------- The following table summarizes options granted and outstanding as of March 31,1995 which were not issued pursuant to a plan. All options listed below wereissued to officers, directors, consultants and other employees. OPTIONS OUTSTANDING PRICE NUMBER RANGE ------------------- ----- Outstanding at March 31, 1994 1,801,890 $0.75 to $5.00 Granted 1,872,000 $4.00 to $5.00 Exercised (1,333,890) $0.75 to $4.00 Cancelled or expired (4,500) $4.625 ---------- Outstanding at March 31, 1995 2,335,500* $1.25 to $5.00 ========== (*) Expiration dates vary from June 13, 1995 to May 3, 1999.NOTE 9 - CONTINGENCIES- ----------------------A legal action is pending against the Company in which claims for money damagesare asserted. However, on May 2, 1994, the plaintiffs' claims in this actionwere dismissed with prejudice and cannot be asserted again. In addition, theCompany was awarded full reimbursement for all of its legal fees and costsincurred in defending this action. Subsequently, the plaintiffs filed severalmotions for a new trial, all of which were denied. The plaintiffs recentlyfiled an appeal from the court judgement which is currently pending. A decisionis not likely for at least six months and may take as long as a year.Meanwhile, the plaintiffs have posted a cash bond totalling over $500,000 fromwhich the Company can collect its judgement if the trial court's decisions areaffirmed. The Company has not recorded a gain contingency in connection withthis matter.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. -47- [PRICE WATERHOUSE LLP] LETTERHEAD REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULESTo the Board of Directorsand Shareholders ofCadiz Land Company, Inc.Our audits of the consolidated financial statements referred to in our reportdated June 9, 1995 appearing with the consolidated financial statements includedin this Form 10-K also included an audit of the Financial Statement Scheduleslisted in the index on page 29 of this Form 10-K. In our opinion, theseFinancial Statement Schedules present fairly, in all material respects, theinformation set forth therein when read in conjunction with the relatedconsolidated financial statements./s/ Price Waterhouse LLP- -------------------------PRICE WATERHOUSE LLPLos Angeles, CaliforniaJune 9, 1995 -48- CADIZ LAND COMPANY, INC. SCHEDULE VIII VALUATION AND QUALIFYING ACCOUNTS For the years ended March 31, 1995, 1994 & 1993 (in thousands) ADDITIONS BALANCE AT ----------------------------------- BALANCE BEGINNING CHARGED TO CHARGED TO AT END OF PERIOD COSTS AND EXPENSES OTHER ACCOUNTS DEDUCTIONS OF PERIOD ---------- ------------------ -------------- ---------- --------- Fiscal year ended March 31, 1995 Allowance for doubtful accounts $ -0- $-0- $ -0- $ -0- $ -0- Allowance for discontinued operation losses -0- -0- -0- -0- -0- Amortization of excess of purchase price over net assets acquired 1,383 234 -0- -0- 1,617 ------ ---- ----- ------ ------ $1,383 $234 $ -0- $ -0- $1,617 ====== ==== ===== ====== ====== Fiscal year ended March 31, 1994 Allowance for doubtful accounts $ 218 $-0- $ -0- $ 218 $ -0- Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Allowance for discontinued operation losses 75 -0- -0- 75 -0- Amortization of excess of purchase price over net assets acquired 1,150 233 -0- -0- 1,383 ------ ---- ----- ------ ------ $1,443 $233 $ -0- $ 293 $1,383 ====== ==== ===== ====== ====== Fiscal year ended March 31, 1993 Allowance for doubtful accounts $3,079 $-0- $ -0- $2,861 $ 218 Allowance for discontinued operation losses 622 -0- -0- 547 75 Amortization of excess of purchase price over net assets acquired 916 234 -0- -0- 1,150 ------ ---- ----- ------ ------ $4,617 $234 $ -0- $3,408 $1,443 ====== ==== ===== ====== ====== -49- CADIZ LAND COMPANY, INC. SCHEDULE XI REAL ESTATE AND ACCUMULATED DEPRECIATION March 31, 1995 (in thousands) INITIAL COST COST CAPITALIZED NET AMOUNT AT WHICH TO COMPANY SUBSEQUENT TO ACQUISITION CARRIED AT CLOSE OF PERIOD ------------ ------------------------- ---------------------------- LAND AND CARRYING ACCUMULATED LAND AND DESCRIPTION ENCUMBRANCES IMPROVEMENTS IMPROVEMENTS COSTS DEPRECIATION IMPROVEMENTS ACQUIRED- -------------------------- ------------ ------------ --------------- -------- ------------- ------------ -------- Unimproved land, Cadiz, CA (1) $ 8,421 $ 657 $ (292) $ 8,786 May 1988 Unimproved land, Piute, CA (1) 1,179 96 1,275 January 1993 Unimproved land, Homer, CA (1) 1,086 14 1,100 September 1993 Unimproved land, Other (1) 189 1 190 July 1994 Agricultural land, planted to citrus, Cadiz, CA (1) 160 $3,779 252 (180) 4,011 May 1988 Agricultural land planted to grapes, Cadiz, CA (1) 6,486 (782) 5,704 March 1990 Miscellaneous investments (1) 441 441 ------- ------ ------ ------- ------- $17,521 $3,779 $1,461 $(1,254) $21,507 ======= ====== ====== ======= ======= (1) Included in collateral securing debt totalling $16.8 million. -50- CADIZ LAND COMPANY, INC. NOTE TO SCHEDULE XI Real Estate and Accumulated Depreciation (in thousands)Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. FISCAL YEAR ENDED MARCH 31, --------------------------- 1995 1994 1993 ------- ------- ------- Carrying cost of land and improvements at beginning of period $21,607 $20,057 $18,327 Additions: Acquisitions 189 591 1,055 Option payments -0- 495 350 Improvements 14 273 206 Capitalized carrying cost 113 427 355 ------- ------- ------- 316 1,786 1,966 ------- ------- ------- Deductions: Depreciation of developed property 416 236 236 ------- ------- ------- 416 236 236 ------- ------- ------- Balance at end of period $21,507 $21,607 $20,057 ======= ======= ======= -51- CONSENT OF INDEPENDENT ACCOUNTANTSWe hereby consent to the incorporation by reference in the RegistrationStatement on Form S-8 (No. 33-73936) of Cadiz Land Company, Inc. of our reportdated June 9, 1995 appearing with the Consolidated Financial Statements includedin this Form 10-K. We also consent to the incorporation by reference of ourreport on the Financial Statement Schedules, which appears on page 30 of thisForm 10-K./s/ Price Waterhouse LLP- -------------------------------------PRICE WATERHOUSE LLPLos Angeles, CaliforniaJune 27, 1995 -52-Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 10.38 [PRUDENTIAL SECURITIES INCORPORATED] LETTERHEAD August 31, 1994Mr. Keith BrackpoolChief Executive OfficerCadiz Land Company, Inc.10470 Foothill Boulevard, Suite 200Rancho Cucamonga, CA 91730Dear Keith: This will confirm the understanding and agreement (the "Agreement") between Prudential Securities Incorporated ("Prudential Securities") and Cadiz Land Company, Inc. (the "Company") as follows:1. The Company hereby engages Prudential Securities as its agent for the purpose of providing the Company with overall financial advisory services, including, without limitation, reviewing the Company's strategic assets and business plan, structuring negotiating a financable water contract as it pertains to the Cadiz aquifer, andagenting the placement of up to $75,000,000 of debt securities (the "Securities") of the Company to a limited number of institutional investors (the "Investors").2. Prudential Securities hereby accepts the engagement and, in that connection, agrees to: (a) review and analyze the business, operations, financial condition and prospects of the Company; (b) develop, in consultation with the Company, a financing structure and water contract to build an approximately 30 mile pipeline in order totransport and sell 30,000 to 50,000 acre-feet of water to any number of third party purchasers; (c) prepare, in consultation with the Company, a Private PlacementMemorandum (the "Memorandum") describing the Company and the Securities; which Memorandum shall not be made available to potential Investors until such Memorandum and its use shall be approved by the Company, which will also represent to Prudential Securities that the Memorandum does not contain any untrue statement or alleged untrue statement of a materialfact or omit to state a material fact required to be stated or necessary to make any statement not misleading; (d) assist the Company in negotiating purchase contract(s) with such third party purchasers with a view towards the financability of such contracts; (e) develop and review with the Company a list of the Investors to whom the Memorandum will be provided; (f) use its best efforts to privately place the Securities; (g) prepare with the assistance and approval of the Company any other communications to be used in placing the Securities, whether in the form of letter, circular, notice or otherwise; (h) negotiate the sale of the Securities to the Investors.3. In connection with Prudential Securities' engagement, the Companywill furnish Prudential Securities with any information concerning Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.the Company which Prudential Securities reasonably deems appropriate and will provide Prudential Securities with access to the Company's officers, directors, accountants, counsel and other advisors. The Company represents and warrants to Prudential Securities that to the best of its knowledge, all such information concerning the Company will be true and accurate in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading inlight of the circumstances under which such statements are made. The Company acknowledges and agrees thatPrudential Securities will be using and relying upon such information supplied by the Company and its officers, agents and others and any other publicly available information concerning the Company without any independent investigation or verification thereof or independent appraisal by Prudential Securities of the Company or its business or assets.4. As compensation for the advisory services to be rendered by Prudential Securities hereunder, the Company shall pay Prudential Securities an initial retainer of $20,000 payable upon the signingof this Agreement and an additional work fee of $20,000 per month beginning one month after the signing of this Agreement. This arrangement will continue on a monthly basis unless terminated as provided below. Upon closing of the transaction, the Company shall also pay Prudential Securities a Placement Fee of 1.75% of the principal amount raised in the private placement of the securities. The aggregate dollar amount of the retainer and work fees shall be non-refundable but shall be a credit against the 1.75% Placement Fee upon a successful closing of the transaction. Such Placement Fee shall be payable with respect to any sale of Securities that occurs either (a) during the term of Prudential Securities' engagement hereunder regardless of whether the Investor was identified by Prudential Securities or (b) at any time during a period of six months following the effective date of termination of Prudential Securities' engagement hereunder and the sale involves an Investor identified by Prudential Securities or with whomPrudential Securities discussed the purchase of the Securities during the term of its engagement hereunder. 5. The Company shall reimburse Prudential Securities for its out-of-pocket and incidental expenses, incurred during the term of its engagement hereunder, including the reasonable fees and expenses of its legal counsel and those of any advisor retainedby Prudential Securities. External legal and advisory fees will be capped at a level to be mutually agreed upon by the Company andPrudential Securities.6. Since Prudential Securities will be acting on behalf of the Company in connection with this engagement, the Company agrees to indemnify Prudential Securities as set forth in a separate letter agreement, dated the date hereof, between Prudential Securities and the Company.7. The Company agrees that during the term of Prudential Securities' engagement hereunder, it will not contact or solicit institutions or other entities other than the Investors as potential purchasers of the Securities.8. The term of Prudential Securities' engagement hereunder as the Company's exclusive agent shall extend from the date hereof through December 31, 1995. Subject to the provisions of paragraphs 3 through 6, 8 and 10 through 12 which shall survive any termination of this Agreement, either party may terminate Prudential Securities' engagement hereunder at anytime, with or without cause, by giving the other party at least 10 days' prior written notice. Notwithstanding the previous sentence, if Prudential Securities terminates this engagement prior to December 1, 1994, the provisions of paragraph 4 shall not survive such termination. Upon the termination of Prudential Securities' engagement, the Company shall send a letter to each investor in form and substance acceptable to Prudential Securities notifying themof such termination.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.9. Except as required by law, any advice to be provided by Prudential Securities under this Agreement, and the Memorandum, shall not be publicly disclosed or made available to third parties, other than the Investors, without Prudential Securities' prior consent. In addition, Prudential Securities may not be publicly referred to without its prior consent.10. Except as disclosed in the letter, dated the date hereof, between L.H. Friend, Weinress & Frankson and Prudential Securities, the Company represent and warrants to Prudential Securities that there are no brokers, representatives or other persons which have an interest in compensation due to PrudentialSecurities from any transaction contemplated herein.11. The benefits of this Agreement shall, together with the separate indemnity letter, inure to the benefit of respective successors and assigns of the parties hereto and of the indemnified parties hereunder and their successors and assigns and representatives, and the obligations and liabilities assumed in this Agreement by the parties hereto shall be binding upon their respective successors and assigns.12. This Agreement may not be amended or modified except in writing and shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws. Prudential Securities is delighted to accept this engagement and looks forward to working with you on this assignment. Please confirm that the foregoing correctly sets forth our agreement by signing the enclosed duplicate of this letter in the space provided and returning it, whereupon this letter shall constitute a binding agreement as of the date first above written. PRUDENTIAL SECURITIES INCORPORATED By: /s/ James C. Woods --------------------- James C. WoodsAGREED:Cadiz Land Company, Inc.By: /s/ Keith Brackpool ---------------------- Keith Brackpool [PRUDENTIAL SECURITIES INCORPORATED] LETTERHEAD Date: August 31, 1994PRUDENTIAL SECURITIES INCORPORATEDOne Seaport PlazaNew York, N.Y. 10292 In connection with the engagement, dated July 26, 1994,Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.between Prudential Securities Incorporated ("Prudential Securities") and Cadiz Land Company, Inc. (the "Company"), the Company hereby agrees to indemnify and hold harmless Prudential Securities and its affiliates, their respective directors, officers, controlling persons (within the meaning of Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities Exchange Act of 1934), if any, agents and employees of Prudential Securities or any of Prudential Securities' affiliates (collectively, "Indemnified Persons" and individually, an "Indemnified Person") from and against any and all claims, liabilities, losses, damages and expenses incurred by any Indemnified Person (including fees and disbursements of Prudential Securities' and an Indemnified Person's counsel) which (A) are related to or arise out of (i) actions taken or omitted to be taken (including any untrue statements made or any statements omitted to be made) by the Company or (ii) actions taken or omitted to be taken by an Indemnified Person with Company's consent or in conformity with the Company's instructions or the Company's actions or omissions or (B) are otherwise related to or arise out of Prudential Securities' engagement, and will reimburse Prudential Securities and any other Indemnified Person for all costs and expenses, including fees ofPrudential Securities or an Indemnified Person's counsel, as they are incurred, in connection with investigating, preparing for, or defending any action, formal or informal claim, investigation, inquiry or other proceeding, whether or not in connection with pending or threatened litigation, caused by or arising out of or in connection with Prudential Securities acting pursuant to the engagement, whether or not Prudential Securities or any Indemnified Person is named as a party thereto and whether or not any liability results therefrom. The Company will not, however, be responsible for any claims, liabilities, losses, damages, or expenses pursuant to clause (B) of the preceding sentence which are finally judicially determined to have resulted primarily from Prudential Securities' bad faith or gross negligence. The Company also agrees that neither Prudential Securities nor any other Indemnified Person shall have any liabilityto the Company for or in connection with such engagement except for any such liability for claims, liabilities, losses, damages, or expenses incurred by the Company whichare finally judicially determined to have resulted primarily from Prudential Securities' bad faith or gross negligence. The Company further agrees that the Company will not, without the prior written consent of Prudential Securities, settle or compromise or consent to the entry of any judgement in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not Prudential Securities or any IndemnifiedPerson is an actual or potential party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of Prudential Securities and each other Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. In order to provide for just and equitable contribution,if a claim for indemnification is made pursuant to these provisions but is found in a final judgment by a court of competent jurisdiction (not subject to further appeal) that such indemnification is not available for any reason (except, with respect to indemnification sought solely pursuant to clause (B) of the first paragraph hereof, for the reasons specified in the second sentence thereof), even though the express provisions hereof provide for indemnification insuch case, then the Company, on the one hand, and Prudential Securities, on the other hand, shall contribute to such claim, liability, loss damage or expense for which such indemnification or reimbursement is held unavailable in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and Prudential Securities on the other hand, in connection with the transactions contemplated by the engagement, subject to the limitation that in any event Prudential Securities'aggregate contribution to all losses, claims damages, liabilities Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.and expenses to which contribution is available hereunder shall not exceed the amount of fees actually received by Prudential Securities pursuant to the engagement. The foregoing right to indemnity and contribution shall be in addition to any rights that Prudential Securities and/or any other Indemnified Person may have at common law or otherwise and shall remain in full force and effect following the completion or any termination of your engagement. The Company hereby consents to personal jurisdiction and to service and venue in any court in which any claim which is subject to this agreement is brought against Prudential Securities or any other Indemnified Person. It is understood that, in connection with Prudential Securities' engagement, Prudential Securities may also be engaged to actfor the Company in one or more additional capacities, and thatthe terms of this engagement or any such additional engagement may be embodied in one or more separate written agreements. This indemnification shall apply to said engagement, any such additional engagement(s) (whether written or oral) and any modification of said engagement or such additional engagement(s)and shall remain in full force and effect following the completion or termination of said engagement or such additional engagements. The Company further understands that if Prudential Securities is asked to act for the Company as dealer manager in an exchange or tender offer or as an underwriter in connection with the issuance of securities by the Company or to furnish the Company a financial opinion letter or in any other formal capacity, such further action may be subject to a separate agreement containing provisions and terms to be mutually agreed upon. Very truly yours, Cadiz Land Company, Inc. By: /s/ Keith Brackpool ----------------------- Title: CEOAGREED AND ACCEPTED:PRUDENTIAL SECURITIES INCORPORATEDBy: /s/ James C. Woods ---------------------Title: Managing Director Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 10.39 [PRUDENTIAL SECURITIES INCORPORATED] LETTERHEAD October 5, 1994Mr. Larry FriendL.H. Friend, Weinress, Frankson, Inc.333 Michelson DriveSuite 650Irvine, CA 92715Dear Larry, Per our recent telephone conversation, I will be pleased to summarize the fee splitting arrangement between our respective firms relating to the Cadiz project. As you know our direct compensation from the Company is set at $20,000 per month to be offset against debt placement fees of 1 3/4% of the principle amount. We presently anticipate that the financing will be in the $60 million range which would equate to a placement fee in the $1 million range. From this we would subtract the amount of our monthly retainer and split the balance with you as follows 75% to Prudential Securities, 25% to L.H. Friend. If however, the debt placement is larger, or is in more than one tranche, we will certainly apply the same formula to our respective compensation. As always it is a great pleasure working with you and we look forward to another successful venture together. Sincerely, /s/ Alexander C. Schwartz, Jr. ------------------------------- [PRUDENTIAL SECURITIES INCORPORATED] LETTERHEAD Date: August 31, 1994PRUDENTIAL SECURITIES INCORPORATEDOne Seaport PlazaNew York, N.Y. 10292 In connection with the engagement, dated July 26, 1994,between Prudential Securities Incorporated ("Prudential Securities") and Cadiz Land Company, Inc. (the "Company"), the Company hereby agrees to indemnify and hold harmless Prudential Securities and its affiliates, their respective directors, officers, controlling persons (within the meaningof Section 15 of the Securities Act of 1933 or Section 20(a) Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.of the Securities Exchange Act of 1934), if any, agents and employees of Prudential Securities or any of Prudential Securities' affiliates (collectively, "Indemnified Persons" and individually, an "Indemnified Person") from and against any and all claims, liabilities, losses, damages and expenses incurred by any Indemnified Person (including fees anddisbursements of Prudential Securities' and an Indemnified Person's counsel) which (A) are related to or arise out of (i) actions taken or omitted to be taken (including any untrue statements made or any statements omitted to be made) by the Company or (ii) actions taken or omitted to be taken by an Indemnified Person with the Company's consent or in conformity with the Company's instructions or the Company's actions or omissions or (B) are otherwise related to or arise out of Prudential Securities' engagement, and willreimburse Prudential Securities and any other Indemnified Person for all costs and expenses, including fees of Prudential Securities or an Indemnified Person's counsel, as they are incurred, in connection with investigating, preparing for, or defending any action, formal or informal claim, investigation, inquiry or other proceeding,whether or not in connection with pending or threatened litigation, caused by or arising out of or in connection with Prudential Securities acting pursuant to the engagement, whether or not Prudential Securities or any Indemnified Person is named as a party thereto and whether or not any liability results therefrom. The Company will not, however,be responsible for any claims, liabilities, losses, damages, or expenses pursuant to clause (B) of the preceding sentence which are finally judicially determined to have resulted primarily from Prudential Securities' bad faith or gross negligence. The Company also agrees that neither PrudentialSecurities nor any other Indemnified Person shall have anyliability to the Company for or in connection with such engagement except for any such liability for claims, liabilities, losses, damages, or expenses incurred by theCompany which are finally judicially determined to have resulted primarily from Prudential Securities' bad faith or gross negligence. The Company further agrees that the Company will not, without the prior written consent of Prudential Securities, settle or compromise or consent to the entry of any judgement in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not Prudential Securities or any Indemnified Person is an actual or potential party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of Prudential Securitiesand each other Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. In order to provide for just and equitable contribution, if a claim for indemnification is made pursuant to these provisions but is found in a final judgement by a court of competent jurisdiction (not subject to further appeal) that such indemnification is not available for any reason (except, with respect to indemnification sought solely pursuant to clause (B) of the first paragraph hereof, for the reasons specified in the second sentence thereof), even though the express provisions hereof provide for indemnification insuch case, then the Company, on the one hand, and PrudentialSecurities, on the other hand, shall contribute to such claim, liability, loss damage or expense for which such indemnification or reimbursement is held unavailable in such proportion as is appropriate to reflect the relative benefits to the Company, on the one hand, and Prudential Securities on the other hand, in connection with the transactions contemplated by the engagement, subject to the limitation that in any event Prudential Securities'aggregate contribution to all losses, claims damages, liabilities and expenses to which contribution is available hereunder shall not exceed the amount of fees actually received by Prudential Securities pursuant to the engagement.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The foregoing right to indemnity and contribution shall be in addition to any rights that Prudential Securities and/or any other Indemnified Person may have at common law or otherwise and shall remain in full force and effect following the completion or any termination of your engagement. The Company hereby consents to personal jurisdiction and to service and venue in any court in which any claim which is subject to this agreement is brought against Prudential Securities or any other Indemnified Person. It is understood that, in connection with PrudentialSecurities' engagement, Prudential Securities may also be engaged to act for the Company in one or more additional capacities, and that the terms of this engagement or any such additional engagement may be embodied in one or more separate written agreements. This indemnification shall apply to said engagement, any such additional engagement(s) (whether written or oral) and any modification of said engagement or such additional engagement(s) and shall remain in full force and effect following the completion or termination ofsaid engagement or such additional engagements. The Company further understands that if Prudential Securities is asked to act for the Company as dealer manager in an exchange or tender offer or as an underwriter in connection with the issuance of securities by the Company or to furnish the Company a financial opinion letter or in any other formal capacity, such further action may be subject to a separate agreement containing provisions and terms to be mutually agreed upon. Very truly yours, Cadiz Land Company, Inc. By: /s/ Keith Brackpool ----------------------- Title: CEOAGREED AND ACCEPTED:PRUDENTIAL SECURITIES INCORPORATEDBy: /s/ James C. Woods --------------------------Title: Managing Director Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 10.40 [L.H. FRIEND, WEINRESS & FRANKSON, INC.] LETTERHEAD PERSONAL & CONFIDENTIALFebruary 1, 1995Mr. Keith BrackpoolChief Executive OfficerCadiz Land Company, Inc.10535 Foothill Blvd.Suite 150Rancho Cucamonga, CA 91730Dear Keith:This will confirm the understanding and agreement (the "Agreement")between L.H. Friend, Weinress, Frankson & Presson, Inc. ("Friend")and Cadiz Land Company, Inc. (the "Company") as follows:1. The Company hereby engages Friend as its agent for the purposeof providing the Company with investment banking services tostructure and negotiate a financable water contract as it pertains to the ground water underlying the Company's land in the Piute Valley.2. Friend hereby accepts the engagement and, in that connection,agrees to: (a) Review and analyze the business, operations, financialconditions and prospects of the Company; (b) Assist the Company in negotiating a water transfer contractwith the City of Needles and other third parties.3. In connection with Friend's engagement, the Company will furnishFriend with any information concerning the Company which Friendreasonably deems appropriate and will provide Friend with access to the Company's officers, directors, accountants, counsel and other advisors. The Company represents and warrants to Friend that to the best of its knowledge, all such information concerning the Company will be true and accurate in all material respects and will not contain any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in light of the circumstances relying upon such informationsupplied by the Company and its officers, agents and others and any other available information concerning the Company without any independent investigation or verification thereof of independent appraisal by Friend of the Company or its business assets.4. As compensation for the financial review and investigation ofthe Project, the Company shall pay Friend, a retainer of $2,000.00 per month payable upon the signing of this Agreement. This arrangement will be for a minimum of six (6) months and continue on a monthly basis unless terminated as provided below.5. The Company shall reimburse Friend for its out-of-pocket andincidental expenses, incurred during the term of its engagementhereunder. This provision is subject to prior approval by theCompany.6. The term of Friend's engagement hereunder as the Company'sfinancial advisor shall extend from the date hereof through July 31, 1995. Subject to the provisions of paragraphs 3 through 5, and 7 through 8 which shall survive any termination of this Agreement, Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.either party may terminate Friend's engagement hereunder by giving the other party at least 10 days' prior written notice, after the six month term has elapsed.7. Except as required by law, any advice to be provided by Friendunder this Agreement, shall not be publicly disclosed or madeavailable to third parties without Friend's prior consent. Inaddition, Friend may not be publicly referred to without its prior consent.8. This Agreement may not be amended or modified except in writingand shall be governed by and construe in accordance with the laws of the State of California, without regard to principles of conflicts of laws. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way. L.H. Friend, Weinress, Frankson & Presson, Inc. is delighted toaccept this engagement and looks forward to working with you andCadiz Land Company, Inc. Please confirm that the foregoingcorrectly sets forth our agreement by signing in the space provided below, retaining a copy for your files and returning the original to us. L.H. Friend, Weinress, Frankson & Presson, Inc. By: /s/ Gregory E. Presson ----------------------------- Gregory E. Presson PresidentAGREED:By: /s/ Keith Brackpool ---------------------- Keith Brackpool President & CEO Cadiz Land Company, Inc.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 10.41 LOAN AGREEMENT This Loan Agreement (the "Agreement") is entered into asof this 15th day of March, 1995, by Henry Ansbacher & Co.Limited, a corporation organized under the laws of England("Ansbacher" or "Lender"), on the one hand, and Cadiz ValleyDevelopment Corporation, a California corporation ("CVDC") andCadiz Land Company, Inc., a Delaware corporation ("Cadiz")(CVDC and Cadiz are sometimes collectively referred to hereinas the "Borrowers"), on the other, with respect to thefollowing facts and objectives: A. Pursuant to the terms and provisions of thatcertain Third Agreement to Modify Loans dated January 11, 1994(the "1994 Loan Agreement"), among CVDC, Cadiz and Ansbacher,CVDC has heretofore executed that certain Promissory NoteSecured By Deed of Trust dated January 11, 1994, in favor ofAnsbacher in the original principal sum of $2,546,783.06 (the"CVDC Note"). The CVDC Note is secured by, inter alia, (i)that certain First Deed of Trust, Assignment of Rents, SecurityAgreement and Fixture Filing dated January 11, 1994 (the "FirstCVDC Deed of Trust"), executed by CVDC in favor of Lender whichwas recorded on May 23, 1994, as Instrument No. 94233573 in theOfficial Records of San Bernardino County, California (the"Official Records") and which encumbers the real property (the"CVDC Land") described in Exhibit "A" attached hereto andincorporated herein by this reference; and (ii) that certainFirst Assignment, Pledge and Security Agreement dated January11, 1994, executed by CVDC in favor of Ansbacher (collectively,the "First CVDC Security Agreement"). CVDC's obligations underthe loan (the "CVDC Loan") evidenced by the CVDC Note have beenguaranteed pursuant to that certain Amended and RestatedGuarantee dated January 11, 1994, executed by Cadiz in favor ofAnsbacher (the "Guarantee"). The Guarantee is secured, interalia, by (i) that certain Second Deed of Trust, Assignment ofRents, Security Agreement and Fixture Filing(Homer/Piute/Hammack) dated January 11, 1994 (the "Cadiz SecondDeed of Trust"), executed by Cadiz in favor of Ansbacher, whichwas recorded on February 11, 1994, as Instrument No. 94058717in the Official Records and which encumbers the real property(the "Cadiz Property") described in Exhibit "B" attached tothis Agreement and incorporated herein by this reference; and(ii) that certain First Assignment, Pledge and SecurityAgreement dated January 11, 1994 (the "Cadiz FirstAssignment"), executed by Cadiz in favor of Ansbacher. B. Also pursuant to the terms and provisions of the1994 Loan Agreement, Cadiz has heretofore executed that certainSecured Promissory Note dated January 11, 1994 (the "CadizNote"), in favor of Ansbacher in the original principal amountof $2,397,424.08. The loan evidenced by the Cadiz Note issometimes referred to in this Agreement as the "Cadiz Loan." The Cadiz Note is secured, inter alia, by (i) that certainFirst Deed of Trust, Assignment of Rents, Security Agreementand Fixture Filing (Homer/Piute/Hammack) dated January 11, 1994(the "Cadiz First Deed of Trust"), executed by Cadiz in favorof Ansbacher which was recorded on February 11, 1994, asInstrument No. 94058716 in the Official Records and whichencumbers the Cadiz Property; (ii) that certain Second Deed ofTrust, Assignment of Rents, Security Agreement and FixtureFiling (CVDC) dated January 11, 1994 (the "Second CVDC Deed ofTrust"), executed by CVDC in favor of Ansbacher which wasrecorded on May 23, 1994, as Instrument No. 94233574 in theOfficial Records and which encumbers the CVDC Land; (iii) thatcertain Second Assignment, Pledge and Security Agreement datedJanuary 11, 1994, executed by Cadiz in favor of Ansbacher (theSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results."Cadiz Second Assignment"); and (iv) that certain SecondAssignment, Pledge and Security Agreement dated January 11,1994 (the "Second CVDC Security Agreement"), executed by CVDCin favor of Ansbacher. C. Pursuant to the terms of the 1994 Loan Agreement,Ansbacher issued a letter of credit (the "Letter of Credit") infavor of Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,"Rabobank Nederland" ("Rabobank") in the maximum amount of$853,000 with respect to certain interest payable under thatcertain promissory note dated January 12, 1994 (the "RabobankNote"), executed by Cadiz and CVDC in favor of Rabobank in theoriginal principal amount of $8,681,474.03. In conjunctionwith Ansbacher's issuance of the Letter of Credit, Cadizexecuted that certain Reimbursement Agreement dated January 11,1994 (the "Reimbursement Agreement"), in favor of Ansbacher. The performance of Cadiz' obligations under the ReimbursementAgreement is secured by, among other things, (i) that certainThird Deed of Trust, Assignment of Rents, Security Agreementand Fixture Filing (Homer/Piute/Hammack) dated January 11,1994, which was recorded on February 11, 1994 (the "Cadiz ThirdDeed of Trust"), as Instrument No. 94058718 in the OfficialRecords and which encumbers the Cadiz Property; (ii) thatcertain Third Deed of Trust, Assignment of Rents, SecurityAgreement and Fixture Filing (CVDC) dated January 11, 1994 (the"Third CVDC Deed of Trust"), executed by CVDC in favor ofAnsbacher which was recorded on May 23, 1994, as Instrument No.94233575 in the Official Records and which encumbers the CVDCLand; (iii) that certain Third Assignment, Pledge and SecurityAgreement dated January 11, 1994 (the "Cadiz ThirdAssignment"), executed by Cadiz in favor of Ansbacher; and (iv)that certain Third Assignment, Pledge and Security Agreementdated January 11, 1994 (the "Third CVDC Security Agreement"),executed by CVDC in favor of Ansbacher. D. In addition to their respective obligations toAnsbacher in connection with the Obligations (as defined inParagraph 3(a) below), Borrowers have requested that Ansbachermake an additional loan to Borrowers in the amount of$3,000,000 (the "Additional Advance Loan"). Ansbacher hasexpressed a willingness to make the Additional Advance Loan asrequested, subject to the terms and conditions set forth ingreater detail below, including, without limitation, (i) Cadizgranting Ansbacher security interests in the real property (the"Additional Cadiz Property") described on Exhibit "C" attachedhereto and incorporated herein by this reference as additionalsecurity for the CVDC Loan, the Cadiz Loan, the ReimbursementAgreement and the Additional Advance Loan and (ii) CVDCgranting Ansbacher security interests in the real property (the"Additional CVDC Property") described on Exhibit "D" attachedhereto and incorporated herein by this reference as additionalsecurity for the CVDC Loan, the Cadiz Loan, the ReimbursementAgreement and the Additional Advance Loan and such securityinterests described in clauses (i) and (ii) of this sentencebeing of a priority relative to any liens or security interestsgranted to Rabobank or any other party with respect to theAdditional Cadiz Property (or any portion thereof) or theAdditional CVDC Property (or any portion thereof), as the casemay be, satisfactory to Ansbacher (in Ansbacher's sole andabsolute discretion). The Additional Cadiz Property and theCadiz Property are sometimes collectively referred to herein asthe "CLCI Real Property." The CVDC Land and the Additional CVDC Property are sometimesreferred to in this Agreement as the "CVDC Real Property." NOW, THEREFORE, Ansbacher, CVDC and Cadiz hereby agree asfollows: 1. CERTAIN ACKNOWLEDGMENTS. Cadiz (as to all of thematters described in this Paragraph 1) and CVDC (as to thematters described in subparagraph (b) of this Paragraph 1)hereby acknowledge and agree that as of March 15, 1995, theoutstanding indebtedness under (a) the Cadiz Loan was$2,578,706.24 (representing $2,551,244.92 of principalSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(inclusive of all interest theretofore added to principal asprovided in the Cadiz Note) and $27,461.32 of accrued interestwhich had not yet been added to principal), and (b) the CVDCLoan was $2,741,235.43 (representing $2,712,043.30 of principal(inclusive of all interest theretofore added to principal asprovided in the CVDC Note) and $29,192.13 of accrued interestwhich had not yet been added to principal). 2. NO SATISFACTION. Cadiz and CVDC hereby expresslyacknowledge and agree that nothing in this Agreement or in anydocument or instrument executed in connection with or pursuantto this Agreement shall constitute a satisfaction of or anovation as to all or any portion of CVDC's indebtedness underthe CVDC Loan or Cadiz' indebtedness under the Cadiz Loan, theGuarantee or the Reimbursement Agreement. Cadiz herebyunconditionally reaffirms, reconfirms and restates itsobligation to pay in full the indebtedness arising under the Cadiz Loan, the Reimbursement Agreement and the Guarantee(collectively, the "Existing Cadiz Indebtedness"). CVDC herebyunconditionally reaffirms, reconfirms and restates itsobligation to pay in full the indebtedness arising under theCVDC Loan. Cadiz (as to the Existing Cadiz Indebtedness) andCVDC (as to the CVDC Loan and CVDC's obligations under thedocuments and agreements CVDC has heretofore executed whichsecure or relate to the Cadiz Existing Indebtedness) eachhereby further acknowledge and agree that they have no defensesto the enforcement of such obligations (or any portion thereof)nor any counter-claims or claims of offset whatsoever and thatneither this Agreement nor the consummation of the transactionscontemplated herein will give rise to any such defenses,counter-claims or claims of offset. 3. ADDITIONAL ADVANCE. (a) Borrowers' obligation to repay the Additional AdvanceLoan shall be joint and several and shall be evidenced byBorrower's execution and delivery of a promissory note (the"Additional Advance Note") substantially in the form andcontent attached as Exhibit "E" hereto and incorporated hereinby this reference. The Additional Advance Note shall besecured by, inter alia, the deeds of trust, assignments andsecurity agreements described in Paragraphs 5(b)(ii),5(b)(iii), 5(c)(ii), and 5(c)(v) hereof. The AdditionalAdvance Loan, the Cadiz Loan and the CVDC Loan shall sometimescollectively be referred to herein as the "Loans." The Loansand the obligations evidenced by the Reimbursement Agreementand the Guarantee are sometimes collectively referred to hereinas the "Obligations." (b) ADVANCE TO CADIZ AT CLOSING. The Additional Advanceis comprised of two separate advances, one in the amount of$2,450,000 (the "First Advance") and the other in the amount of$550,000 (the "Second Advance"). The First Advance and SecondAdvance shall be disbursed in accordance with and subject tothe conditions provided in subparagraphs (i) and (ii) of thisParagraph 3(b): (i) DISBURSEMENT OF FIRST ADVANCE. Uponsatisfaction of all of the conditions to Ansbacher'sobligations under this Agreement and the consummation (the"Closing") of the transaction contemplated herein, Ansbachershall disburse the First Advance to the Borrowers. Borrowersshall use the First Advance only for the purposes of (i) paying$250,000 to Rabobank, $200,000.00 of which representsreimbursement of costs and attorneys' fees theretofore incurredby Rabobank in connection with the restructuring of theindebtedness (the "Rabobank Loan") evidenced by the RabobankNote and the balance of which shall be credited and applied inreduction of the outstanding principal of the Rabobank Loan;and (ii) funding the costs and expenses (legal and otherwise)incurred by Borrowers in connection with the Additional AdvanceLoan and a portion of Cadiz' other projected working capitalrequirements through March 31, 1996. (ii) DISBURSEMENT OF SECOND ADVANCE. AnsbacherSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.shall disburse the Second Advance to Borrowers followingBorrowers' written request therefor only if each of thefollowing conditions has been fully satisfied: (1) The Closing shall have occurred; (2) No default or event which with noticeand/or the passage of time, or both, would constitute a defaultshall have occurred under this Agreement, the CVDC Note, theCadiz Note, the Reimbursement Agreement, the Guarantee, theAdditional Advance Note, or any other document, agreement,certificate, undertaking or instrument securing, evidencing orotherwise relating to the Obligations (collectively, the "LoanDocuments"), or any of them; (3) Cadiz shall have delivered to Ansbacherthe Appraisal (as defined in Paragraph 6(d) below) and the D&TAppraisal (as defined in Paragraph 6(e) below) in accordancewith the provisions and requirements set forth in Paragraphs6(d) and 6(e) hereof; (4) Borrowers shall have furnished toAnsbacher and Ansbacher shall have approved, in Ansbacher'ssole and absolute discretion, Cadiz' operating budget for thefiscal year commencing April 1, 1996 and ending on March 31,1997; (5) Borrowers shall have executed suchadditional documents and taken such actions as Ansbacher mayrequire in order to reaffirm and reconfirm Borrowers'respective obligations and all of Ansbacher's rights andinterests arising under or in connection with the LoanDocuments (including, without limitation, providing Ansbacher,at Borrowers' sole cost and expense, with such titleendorsements and other evidence satisfactory to Ansbacher as Ansbacher may require to reconfirm the continuing priority ofthe liens of the Cadiz Deeds of Trust (as defined in Paragraph5(b)(ii) below), the CVDC Deeds of Trust (as defined inParagraph 5(c)(ii) below), and the other instruments andagreements securing the Obligations); and (6) Ansbacher shall in no event be requiredto disburse the Second Advance on a date earlier than April 1,1996 or on a date later than June 30, 1996. In the event that all conditions set forth above aretimely satisfied in accordance with the provisions of thisParagraph 3(b)(ii), Ansbacher shall disburse the Second Advanceto Borrowers promptly following the satisfaction of the last ofsuch conditions. If and when advanced to Cadiz pursuant to thisParagraph 3(b)(ii), Cadiz shall use the Second Advance only forthe purpose of funding Cadiz projected working capitalrequirements during the period from April 1, 1996 to March 31,1997. (c) Borrowers expressly acknowledge and agree that other than Ansbacher's obligation to make the Additional Advance Loanin accordance with and subject to the terms and provisions ofthis Agreement, Ansbacher has no obligation to make anyadditional advances or loans whatsoever to Borrowers (or eitherof them). 4. CONSIDERATION TO ANSBACHER. In consideration ofthe agreements set forth in this Agreement, including, withoutlimitation, Ansbacher's agreement to make the AdditionalAdvance Loan, Cadiz shall (without payment of additionalconsideration by Ansbacher) issue to Ansbacher concurrentlywith the Closing 110,000 shares of common stock of Cadiz(collectively, the "Shares"). The Shares shall be issued toAnsbacher pursuant to Regulation S of the Securities andExchange Act of 1933, as amended. Concurrently with the mutualexecution and delivery of this Agreement, Cadiz shall alsoprovide Ansbacher with evidence in form and contentsatisfactory to Ansbacher that sufficient shares of Cadiz'Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.common stock have been duly authorized to enable Cadiz to issueto Ansbacher the Shares. When issued to Ansbacher, the Sharesshall be duly and validly issued, fully paid and nonassessable. 5. CONDITIONS TO EFFECTIVENESS OF AGREEMENT. Ansbacher's obligation to consummate the transactionscontemplated hereby are expressly conditioned upon satisfactionof all of the following conditions on or prior to March 31,1995 (the "Termination Date"), all of which conditionsBorrowers shall use their best efforts to satisfy by theTermination Date: (a) If requested by Ansbacher, Cadiz shall execute anddeliver to Ansbacher a Reaffirmation of Guarantee in form andcontent satisfactory to Ansbacher (in Ansbacher's sole andabsolute discretion) (the "Reaffirmation"), pursuant to whichCadiz will further unconditionally reaffirm its obligations toAnsbacher under the Guarantee; (b) Cadiz shall execute and deliver to Ansbacher (inrecordable form, where appropriate, and otherwise in form andcontent satisfactory to Ansbacher) each of the followingdocuments, instruments, agreements and other writings: (i) Amendments to each of the Cadiz First Deed ofTrust, Cadiz Second Deed of Trust and Cadiz Third Deed of Trust(the "Existing Cadiz Trust Deeds"), pursuant to which, amongother things, the Additional Cadiz Property will be added tothe real property encumbered by the Existing Cadiz Deeds ofTrust; (ii) A deed of trust (the "New Cadiz Deed ofTrust" and, together with the Existing Cadiz Trust Deeds, the"Cadiz Deeds of Trust") encumbering the CLCI Real Property assecurity for the Additional Advance Note and having a lienpriority satisfactory to Ansbacher (in Ansbacher's sole andabsolute discretion); (iii) A fourth lien security agreement (the "CadizFourth Assignment") pursuant to which Cadiz will grant toAnsbacher a fourth priority security interest in and to, amongother things, (xx) that certain promissory note dated March 28,1990 (the "SWFG Note"), executed by SWFG in favor of PacificAgricultural Holdings ("PAH"), Cadiz' predecessor in interest,in the original principal amount of $4,934,922 and in and tothat certain deed of trust of even date therewith (the "SWFGDeed of Trust") securing the SWFG Note (the SWFG Note and SWFGDeed of Trust are sometimes collectively referred to in thisAgreement as the "SWFG Collateral"); (yy) that certainpromissory note dated March 28, 1990 (the "Farming Note"),executed by SWFG in favor of PAH in the original principalamount of $3,141,344.00 and in and to that certain deed oftrust of even date therewith (the "Farming Deed of Trust")securing the Farming Note (the Farming Note and Farming Deed ofTrust are sometimes collectively referred to in this Agreementas the "Farming Collateral"); and (zz) that certain promissorynote dated March 31, 1988 (the "EVCO Note"), executed by EVCOLimited in favor of PAH in the original principal amount of$342,600 and in and to that certain deed of trust of even datetherewith (the "EVCO Deed of Trust") securing the EVCO Note(the EVCO Note and EVCO Deed of Trust are sometimescollectively referred to in this Agreement as the "EVCOCollateral"), such security interests being granted as securityfor the Additional Advance Note; (iv) With respect to all Cadiz Deeds of Trust,environmental certificates confirming the absence of hazardouswaste on or environmental contamination of the Cadiz RealProperty and evidence that Cadiz has obtained and ismaintaining in full force and effect all insurance policiesrequired pursuant to the terms and provisions of the CadizDeeds of Trust; (v) If requested by Ansbacher, an independent,Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.unsecured environmental indemnity agreement in favor ofAnsbacher with respect to each of the Cadiz Deeds of Trust; (vi) Representations and warranties regarding suchmatters as Ansbacher may require; (vii) The Additional Advance Note; and (viii) If requested by Ansbacher, general securityagreements pursuant to which Cadiz will grant to Ansbacher orreaffirm and restate, as the case may be, security interests in personal property of Cadiz to secure the Cadiz Note, theGuarantee, the Reimbursement Agreement and the AdditionalAdvance Note, respectively, which security interests shallapply to such personal property of Cadiz and be of a prioritysatisfactory to Ansbacher (in Ansbacher's sole and absolutediscretion). (c) CVDC shall execute and deliver to Ansbacher (inrecordable form, where appropriate, and otherwise in form andcontent satisfactory to Ansbacher) the following documents, instruments, agreements and other writings: (i) Amendments to each of the First CVDC Deed ofTrust, Second CVDC Deed of Trust, and Third CVDC Deed of Trust(collectively, the "Existing CVDC Deeds of Trust"), pursuant towhich, among other things, the Additional CVDC Property will beadded to the real property encumbered by the Existing CVDCDeeds of Trust; (ii) A deed of trust (the "New CVDC Deed of Trust"and, together with the Existing CVDC Deeds of Trust, the "CVDCDeeds of Trust") encumbering the CVDC Real Property as securityfor the CVDC Note and having a lien priority satisfactory toAnsbacher (in Ansbacher's sole and absolute discretion); (iii) Representations and warranties regarding suchmatters as Ansbacher may require; (iv) With respect to each of the CVDC Deeds ofTrust, environmental certificates confirming the absence ofhazardous waste on or environmental contamination of the CVDCReal Property and evidence that CVDC has obtained and ismaintaining in full force and effect all insurance policiesrequired pursuant to the terms and provisions of the CVDC Deedsof Trust; (v) A fourth lien security agreement (the "FourthCVDC Security Agreement") pursuant to which CVDC will grant toAnsbacher a fourth priority security interest in and to, amongother things, (xx) that certain promissory note dated March 10,1988, in the original principal amount of $262,000, made byP.S.W.R. I Limited in favor of CVDC (the "PSWR Note"), whichPSWR Note is secured by that certain deed of trust dated March10, 1988, which encumbers the property described therein (the"PSWR Property") and which was recorded on October 11, 1988, asInstrument No. 88-340268 in the Official Records (the "PSWRDeed of Trust" and together with the PSWR Note, the "PSWRCollateral"), and (yy) that certain promissory note dated March31, 1988 (the "Harweal Note"), executed by Harweal InvestmentsLimited in favor of CVDC in the original principal amount of$262,000, which Harweal Note is secured by that certain deed oftrust dated March 31, 1988 (the "Harweal Deed of Trust" andtogether with the Harweal Note, the "Harweal Collateral"),which encumbers the property described therein (the "HarwealProperty") and recorded on December 13, 1988, as Instrument No.88-434719 in the Official Records, such security interestsbeing granted to Ansbacher as partial security for theAdditional Advance Note; and (vi) The Additional Advance Note; (vii) If requested, an independent, unsecuredenvironmental indemnity agreement in favor of Ansbacher,relating to each of the CVDC Deeds of Trust; andSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (viii) If requested by Ansbacher, general securityagreements pursuant to which CVDC will grant to Ansbacher or reaffirm and restate, as the case may be, security interests in personal property of CVDC as security for the CVDC Note, theCadiz Note, the Reimbursement Agreement and the AdditionalAdvance Note, respectively, which security interests shallapply to such personal property of CVDC and be of a prioritysatisfactory to Ansbacher (in Ansbacher's sole and absolutediscretion). (d) Borrowers shall obtain and deliver to Ansbacher anopinion of Miller & Holguin (in form and content satisfactoryto Ansbacher) with respect to such matters relating to thetransactions contemplated by this Agreement as Ansbacher mayrequire; (e) With respect to each of the Cadiz Deeds of Trustand the CVDC Deeds of Trust, Borrowers shall obtain (atBorrowers' sole cost and expense) such title insurance/or titleendorsements as Ansbacher may require in order to insure, amongother things, that the Cadiz Deeds of Trust and CVDC Deeds ofTrust secure the applicable obligations, and that the liens ofthe Cadiz Deeds of Trust and CVDC Deeds of Trust are valid andenforceable liens on the CLCI Real Property and the CVDC RealProperty, respectively, subject only to those matters andexceptions hereafter approved in writing by Ansbacher. Suchtitle insurance and endorsements shall be issued by a titlecompany or companies satisfactory to Ansbacher and shallinclude insurance for mechanic's liens and any other matterAnsbacher may (in its sole and absolute discretion) require; (f) Ansbacher shall have received certified copies ofthe resolutions (in form and content satisfactory to Ansbacher)of the Boards of Directors of each of Cadiz and CVDC, approvingand authorizing this Agreement and the transactionscontemplated herein and any and all actions to be taken byCadiz and/or CVDC in furtherance of or in connection with thisAgreement; (g) Ansbacher shall have received from the DelawareSecretary of State a Certificates of Good Standing with respectto Cadiz and from the California Secretary of State aCertificate of Good Standing with respect to CVDC and acertificate evidencing that Cadiz is qualified to do businessin California, all of which Certificates must be in form andcontent satisfactory to Ansbacher; (h) Ansbacher shall have received a certificate (inform and content satisfactory to Ansbacher) of the Secretary ofeach of Cadiz and CVDC, certifying as to the names andsignatures of the officers authorized to sign this Agreementand the other documents to be executed and delivered on itsbehalf pursuant to this Agreement; (i) Borrowers shall have delivered to Ansbacher acertification (in form and content satisfactory to Ansbacher)certifying both on an aggregate basis and on a parcel by parcelbasis as to the acreage owned by Cadiz, SWFG and/or CVDC or inwhich Cadiz, SWFG and/or CVDC has an interest (whether by virtue of a purchase agreement, a deed of trust, an option toacquire, or otherwise); (j) Borrowers shall have furnished to Ansbacher and tothe title company insuring any deed of trust securing theObligations (or any of them), as the case may be, suchdocumentation as may be necessary or appropriate in order toconfirm that Cadiz, by virtue of the merger of PAH with Cadiz,is the successor to (i) all assets, rights, powers and propertyof PAH, including, without limitation, the SWFG Collateral, theFarming Collateral and the EVCO Collateral, and (ii) all debts,liabilities and obligations of PAH, including, withoutlimitation, the debts, liabilities and obligations evidenced bythe Guarantee;Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (k) All real property taxes with respect to theproperty encumbered by the Cadiz Deeds of Trust and/or the CVDCDeeds of Trust (or any of them), as well as all real propertytaxes affecting the property encumbered by any and all deeds oftrust pledged or assigned to Ansbacher as security for theObligations (or any of them), shall have been paid current; (l) Prior to or concurrently with the Closing,Borrowers shall have consummated in accordance with its termsthe transaction contemplated by that certain Fourth LoanModification Agreement dated as of March 15, 1995 (the"Rabobank Agreement"), among Rabobank, Borrowers and Ansbacher; (m) Borrowers shall have caused appropriate officers ofBorrowers to execute and deliver to Ansbacher such additionalcertificates with respect to matters relating to thetransactions contemplated herein as Ansbacher may require; (n) Borrowers shall have delivered to Ansbacher theirjoint undertaking not to borrow any money or incur any otherdebts (except trade debts incurred in the ordinary course ofbusiness) without first obtaining Ansbacher's express writtenconsent; (o) Cadiz shall have delivered to Ansbacher areaffirmation of its undertaking, pursuant to which Cadiz hasheretofore agreed to provide to Ansbacher all such financialand other information as Ansbacher may from time to timerequire concerning the Water Assets (as such term is defined inExhibit "F" hereto); (p) Borrowers shall have delivered to Ansbacher theirjoint undertaking to (i) provide Ansbacher with first, second,third and fourth lien security interests in all property whicheither hereafter acquires or in which either Cadiz or CVDCpresently has or hereafter obtains any interest; provided,however, that (xx) Cadiz' obligations with respect to thatcertain Option Agreement dated December 29, 1993 (the "SFOption"), between Cadiz, as optionee, and S.F. PacificProperties, Inc. ("SF"), as optionor, covering approximately5,652 acres in the so-called Cadiz Basin and that certainOption Agreement dated June 20, 1994 (the "Piute Option"), between Cadiz, as optionee, and SF, as optionor, coveringapproximately 3,358 acres of land, shall be to use its bestefforts during the 45-day period following the Closing toobtain the optionor's consent, if required, to the pledge toAnsbacher of Cadiz' option rights under the SF Option and thePiute Option and to provide Ansbacher with copies of allcorrespondence relevant to such requests for consent; (yy)Cadiz shall in no event assign, pledge or transfer such optionrights to any party other than Ansbacher and Rabobank; and (zz)with respect to all other options acquired by Cadiz or CVDC,Cadiz or CVDC, as the case may be, shall only be required topledge such options if they are assignable; and (ii) refrainfrom encumbering or granting any security interest to any thirdparty (other than a security interest to Rabobank, which shallin any event be junior to all security interests granted toAnsbacher to secure the Obligations) in any property whichCadiz and/or CVDC hereafter acquires or in which Cadiz and/orCVDC hereafter acquires any other interest (whether by virtueof a purchase agreement, option agreement or otherwise); (q) Borrowers shall have reaffirmed their jointundertaking to use their best efforts to substitute directfirst, second, third and fourth lien deeds of trust for thesecurity interests currently held by Ansbacher in the SWFGCollateral, Farming Collateral, EVCO Collateral, PSWRCollateral, and Harweal Collateral; (r) Rabobank shall have executed and delivered toAnsbacher an agreement (in form and content satisfactory toAnsbacher) pursuant to which Rabobank agrees to subordinate infavor of Ansbacher its right to receive any voluntaryprepayments under the Rabobank Loan until such time asAnsbacher has received an amount not less than all principalSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.and other sums from time to time outstanding under theAdditional Advance Loan, plus all accrued but unpaid interestthereon; (s) Borrowers shall have executed and delivered orcaused the appropriate third parties to execute and/or deliver(in recordable form, where appropriate, and otherwise in formand content satisfactory to Ansbacher) such other documents,instruments, agreements and writings as Ansbacher may requirein connection with the creation or continuation of any securityinterest(s) granted to Ansbacher in furtherance of thetransactions contemplated by this Agreement or as Ansbacher mayotherwise require in connection with the consummation of suchtransactions (including, without limitation, current estoppelcertificates relating to the SWFG Collateral, the FarmingCollateral, the Harweal Collateral, and the PSWR Collateral;guaranty waivers, security agreements; pledges; assignments;subordination agreements from Rabobank and others, if required;endorsements; certificates; certifications; reports; andstudies); and (t) Borrowers shall have furnished to Ansbacher andAnsbacher shall have approved, in Ansbacher's sole and absolute discretion, Cadiz' operating budget for the fiscal year commencing April 1, 1995, and ending on March 31, 1996. Each of the conditions set forth in this Paragraph5 shall be waivable by Ansbacher in its sole and absolutediscretion, it being understood and agreed that any such waivershall only be valid if made in writing by Ansbacher. In theevent that each of the conditions set forth in this Paragraph 5has not either been satisfied or so waived prior to theTermination Date, then, at Ansbacher's sole option, thisAgreement (and all of Ansbacher's obligations hereunder) shallterminate and be of no further force or effect. Following anysuch termination of this Agreement, the Cadiz Loan, CVDC Loan,the Reimbursement Agreement, and the Guarantee shall beunmodified and unchanged and CVDC's and Cadiz' respectiveobligations thereunder shall be determined as though thisAgreement had never been executed. 6. CERTAIN ADDITIONAL COVENANTS. (a) Until such time as all of the Obligations have beensatisfied in full, Borrowers shall furnish to Ansbacher (i)within fifteen (15) days following filing with the Securitiesand Exchange Commission (the "SEC"), a true, correct andcomplete copy of each Quarterly Report on Form 10-Q from timeto time filed by Cadiz, (ii) on or before March 1 and August 1of each year, a statement of projected cash flow of Cadiz andits subsidiaries for the next ensuing twelve (12) month periodfrom April 1 through March 31 (as to the statement due on orbefore each March 1) and for the next ensuing twelve (12) monthperiod from September 1 through August 31 (as to the statementdue on or before each August 1), (iii) within forty-five (45)days following the end of each calendar quarter, a varianceanalysis (in form and content satisfactory to Ansbacher)setting forth the variances in Cadiz' actual results ofoperation from its budgeted results of operation, (iv) withinfifteen (15) days of filing with the SEC, a true, correct andcomplete copy of each Annual Report on Form 10-K from time totime filed by Cadiz, and (v) such other information concerningthe financial condition or operations of Cadiz, CVDC, or any ofCadiz' other subsidiaries as Ansbacher may from time to timereasonably request. All financial information furnished toAnsbacher pursuant to this Paragraph 6(a) shall be prepared inaccordance with GAAP and the information provided pursuant toParagraph 6(a)(i) through (iii) shall be certified by Cadiz'Chief Financial Officer. (b) Cadiz shall continue timely to file all materialsrequired to be filed with the Securities and ExchangeCommission (the "SEC") pursuant to Section 13 (a) of theSecurities and Exchange Act of 1934 (the "Act").Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (c) Borrowers hereby agree that they will not, withoutfirst obtaining Ansbacher's express written consent, transfer,assign, sell, agree to sell, convey, exchange, gift, encumber,pledge, hypothecate, alienate, grant an option to purchase oracquire, or otherwise dispose of, directly, indirectly or in trust, voluntarily or involuntarily, by operation of law orotherwise, or enter into an agreement to do any of theforegoing, with respect to all or any part of any existing orhereinafter created or acquired Water Assets, including,without limitation, any future agreement for the transfer ofany Water Assets as contemplated by the Memorandum ofUnderstanding dated January 11, 1994, between Cadiz and theMojave Water Agency (the "Memorandum"). Notwithstanding anyother provision herein to the contrary, (i) Cadiz and/or CVDCmay convey or enter into contracts regarding the Water Assetsso long as (xx) no such single conveyance or contract involvesmore than twenty-five acre feet of water; and (yy) thecumulative total of all such conveyances or contracts in oneyear does not exceed two hundred (200) acre feet of water; (ii)Ansbacher will not unreasonably withhold its consent to anyproposed contract or agreement pursuant to which water would besold and delivered by CVDC and/or Cadiz to a third party; and(iii) the restrictions on the sale of water provided inthis Paragraph 6(c) shall not apply to water transferred tothird parties all of which is used solely for irrigationpurposes in connection with agricultural operations conductedby such third party on the CLCI Real Property, the CVDC RealProperty, and/or the real property encumbered by the SWFG Deedof Trust. (d) Within one hundred twenty (120) days following theClosing, Borrowers shall obtain, at Borrowers' sole cost andexpense, and provide to Ansbacher a true, correct and completecopy of an appraisal (the "Appraisal") of the CVDC RealProperty, CLCI Real Property, and the real property encumberedby the deeds of trust which secure the SWFG Note, the FarmingNote, the EVCO and Harweal Notes, and the PSWR Note(collectively, the "Appraised Properties") prepared by anappraiser or appraisers satisfactory to Ansbacher. TheAppraisal shall, among other things, value the AppraisedProperties based both upon their current usage and upon theassumption that the Water Assets attributable to the AppraisedProperties are and can be fully exploited by Borrowers. (e) On or before July 31, 1995, Borrowers shall deliverto Ansbacher a true, correct and complete copy of an appraisal(the "D&T Appraisal") of the properties encumbered by theFarming Deed of Trust and SWFG Deed of Trust prepared byDeloitte & Touche and any other information or documentationrelating to the value of such properties as Ansbacher mayrequest; provided that, without in any manner modifying thecondition set forth in Paragraph 3(b)(ii)(3) above, in theevent that the D&T Appraisal has not been completed by July 31,1995, then Borrowers shall deliver a true, correct and completecopy of the most current draft of the D&T Appraisal on suchdate. (f) Neither Borrowers, nor either of them, shallhereafter make, cause or permit any voluntary prepayment to bemade under the Rabobank Loan until such time as Ansbacher hasreceived an amount not less than all principal and other sumsfrom time to time outstanding under the Additional Advance Loan, plus all accrued but unpaid interest thereon. (g) On or before December 31, 1995, Borrowers shallprovide Ansbacher with an opinion letter prepared by Borrowers'water rights counsel concerning Cadiz' rights with respect tothe Water Assets associated with the approximately 2,955 acresof land owned by Cadiz at Piute. 7. CERTAIN REPRESENTATIONS OF BORROWERS. (a) Borrowers hereby make the following representationsand warranties to Ansbacher, each of which (i) is materiallySource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.relied upon by Ansbacher in making its determination to enterinto this Agreement; (ii) Borrowers represent and warrant to betrue in all respects as of the execution date hereof and as ofthe Closing; (iii) shall survive mutual execution and deliveryof this Agreement as well as any future transfer of any realproperty or other collateral for the Obligations (or any ofthem) to Ansbacher or any transferee, successor or assignee ofAnsbacher; and (iv) along with all other representations andwarranties made or given by Borrowers (or either of them) inconnection with the transactions contemplated by this LoanAgreement, shall be deemed to be reaffirmed and remade asthough they were made and given as of the date of disbursement,if any, of the Second Advance and the expiration of eachInterest Period (as defined in the Additional Advance Note)under the Additional Advance Note; provided, however, Borrowersshall not be deemed to be in default under this Agreement orunder any of the other Loan Documents or to have failed tosatisfy a condition to the disbursement of the Second Advanceby reason of any inaccuracy in any representation or warrantyset forth in clause (i) below so reaffirmed so long as thematter making such representation or warranty inaccurate wouldnot have a material adverse effect on the financial oroperating condition of Borrowers (or either of them) or have amaterial adverse effect on any collateral for the Obligations(or any of them): (i) Except as otherwise disclosed in (vv) thatcertain letter dated June 10, 1994, from Miller & Holguin("M&H") to Price Waterhouse, (xx) that certain letter datedJune 10, 1994, from William D. Baker of Ellis, Baker & Porter,Ltd. to Price Waterhouse, (yy) that certain letter dated March21, 1995, from James D. Burnside of Caswell, Bell, Hillison,Burnside & Greer to Susan K. Chapman of Cadiz, and (zz) thatcertain letter dated as of the Closing from Howard J.Unterberger of M&H to Ansbacher, there are no pending or, tothe best of Borrowers' knowledge, threatened litigation,proceedings, lawsuits or claims, whether for personal injury,property damage, property taxes, contractual disputes orotherwise, which do or may affect the property or othercollateral securing the Obligations (or any of them),including, without limitation, pending proceedings incondemnation or eminent domain, and there are no actions orproceedings pending or, to the best of Borrowers' knowledge,threatened against CVDC and/or Cadiz before any court oradministrative agency in any way connected with such property or collateral; (ii) Neither the entering into of this Agreementnor the consummation of the transactions contemplated herebywill constitute or result in (i) a violation or breach by Cadizand/or CVDC of any judgment, order, writ, injunction or decreeissued against or imposed upon it; or (ii) any default or eventof default that with notice or lapse of time, or both, would bea default, breach or violation of any lease, mortgage, deed oftrust or other agreement, instrument or arrangement by whichCadiz and/or CVDC or any property or other collateral securingthe Obligations (or any of them) are bound; (iii) All financial information of CVDC and Cadizprovided to Ansbacher is true and correct in all materialrespects; (iv) No representations, warranties or covenantsmade by CVDC and/or Cadiz or any statements furnished or to befurnished by Cadiz and/or CVDC hereunder or in connection withthe transactions contemplated herein or in the RabobankAgreement contains, or will contain, any untrue statement of amaterial fact or omits, or will omit, a material fact therebymaking the statements contained therein misleading. Borrowershave disclosed all information concerning the real property andother collateral securing the Obligations (or any of them) ofwhich CVDC and/or Cadiz is aware which may materially affectthe value of such real property or other collateral; (v) No authorization or approval or other actionSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.by, and no notice to or filing with, any governmental authorityor regulatory body is required for the due execution, deliveryand performance by CVDC and/or Cadiz of any document to whichit is or will be a party in connection with the Obligations;and (vi) Except for (aa) the Memorandum, (bb) suchsecurity interests as have heretofore been granted to Ansbacherand Rabobank in connection with the Obligations and theindebtedness evidenced by the Rabobank Note, as the case maybe, and (cc) prior transfers of Water Assets in connection withprior transfers by Cadiz and/or CVDC of real property, as towhich real property (together with the Water Assets arisingfrom or in connection therewith) Cadiz and/or CVDC (xx) hassubsequently reacquired and presently hold the fee interest, or(yy) presently hold a security interest, neither Cadiz nor CVDChas heretofore transferred, assigned, sold, conveyed,encumbered, pledged, hypothecated or otherwise disposed of anyWater Assets (or entered into an agreement to do any of theforegoing). (b) In addition to the representations set forth inParagraph 7(a) above, Cadiz hereby makes the followingrepresentations and warranties to Ansbacher, each of which (xx)is materially relied upon by Ansbacher in making itsdetermination to enter into this Agreement and make theAdditional Advance Loan, (yy) Cadiz represents and warrants to be true and correct in all respects as of the execution datehereof and as of the Closing, and (zz) shall survive the mutualexecution and delivery of this Agreement and any futuretransfer of any real property or other collateral for theObligations (or any of them) to Ansbacher or any successor,transferee or assign of Ansbacher: (i) Cadiz has not, in connection with the purchase,issuance, or sale of any of its securities, directly orindirectly, arising out of the transactions contemplated bythis Agreement or the transactions contemplated by the RabobankAgreement (collectively, the "Current Transactions"): (xx) employed any device, scheme orartifice to defraud; (yy) made any untrue statement of amaterial fact, or omitted to state a material fact, necessaryin order to make the statements made in light of thecircumstances under which they were made, not misleading, or (zz) engaged in any act, practice or courseof business which operates or would operate as a fraud ordeceit upon any person in connection with the purchase or saleof any security; (ii) To the best knowledge of Cadiz' currentofficers, Cadiz has not, in connection with the purchase,issuance or sale of any of its securities in any transactionengaged in any of the acts or done any of the things describedin Paragraphs 7(b)(i)(xx) through (zz) above, with respect towhich the applicable statutes of limitations have not run; provided, however, nothing in this Paragraph 7(b)(ii) shall inany way limit the representation set forth in Paragraph 7(b)(i)above with respect to the Current Transactions; and (iii) For a period of at least the last twelve (12)months, Cadiz has filed with the SEC all materials required tobe filed with the SEC pursuant to Section 13 (a) of the Act. All representations and warranties made hereunderare in addition to any representations and warranties impliedby law, set forth in any document heretofore executed inconnection with the Obligations (or any of them) or in anydocument executed in connection with this Agreement and in noevent shall this Paragraph 7 be construed to limit, diminish orreduce any obligation of disclosure implied upon CVDC and/orCadiz by law. The representations and warranties set forth inSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.this Agreement shall survive indefinitely the consummation ofthe transactions contemplated hereby. 8. GENERAL RELEASE. In consideration of theAdditional Advance and the other terms and provisions of thisAgreement, Borrowers, on behalf of themselves, their respectiveagents, successors, assigns, subsidiaries, partners andaffiliates hereby fully release and forever discharge Ansbacherand Ansbacher's agents, consultants, heirs, successors, assigns, affiliates, directors, officers, employees,shareholders, executives, servants, attorneys, accountants,representatives and other related persons (collectively,"Affiliates") from any and all rights, claims, demands,actions, causes of action, costs, losses, suits, liens, debts,damages, judgments, executions and demands of every nature,kind and description whatsoever, whether now known or unknown,either at law, in equity or otherwise, which Cadiz, CVDC or anyof their respective agents, successors, assigns, subsidiaries,partners and/or affiliates ever had or may have againstAnsbacher or Ansbacher's Affiliates, including, withoutlimitation, all claims arising under or in connection with theCadiz Loan, CVDC Loan, Reimbursement Agreement, AdditionalAdvance Loan, and/or the Guarantee and/or in connection withthe dealings between the parties up to and including theClosing of the transactions contemplated in this Agreement andall claims which have arisen or may arise in any other waywhatsoever; provided that nothing herein shall be deemed torelease Ansbacher or any Ansbacher Affiliate from any liabilityor obligation arising in connection with facts or circumstanceswhich occur or arise for the first time after the Closing ofthe transaction contemplated by this Agreement. It is further understood and agreed that theforegoing general release extends to all claims of every kindand nature whatsoever, known, suspected or unsuspected,liquidated or contingent, foreseen or unforeseen, and CVDC andCadiz, on behalf of themselves and their respective agents,successors, assigns, subsidiaries, partners and affiliateshereby waive all rights under Section 1542 of the CaliforniaCivil Code. Section 1542 of the California Civil Code providesas follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMSWHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH DEBTOR." 9. WAIVER OF ANTI-DEFICIENCY PROTECTION. Cadiz andCVDC each hereby waives, as to this Agreement and any and alldocuments heretofore executed in connection with the CadizLoan, the CVDC Loan, the Guarantee, and/or the ReimbursementAgreement, and as to the Additional Advance Note and any andall other documents or agreements executed by Cadiz and/or CVDCpursuant to this Agreement, any defense, protection or rightunder: (a) California Code of Civil Procedure ("CCP") Section580(d) concerning the bar against rendition of a deficiencyjudgment after foreclosure under a power of sale; (b) CCP Section 580(a) purporting to limit the amountof a deficiency judgment which may be obtained following exerciseof a power of sale under a deed of trust; and (c) CCP Section 726 concerning exhaustion ofcollateral, the form of foreclosure proceedings with respect toreal property security located in California and otherwiselimiting the amount of a deficiency judgment which may berecovered following completion of judicial foreclosure byreference to the "fair value" of the foreclosed collateral. 10. ADVICE OF COUNSEL. Each of the Borrowersacknowledges that it has entered into this AgreementSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.voluntarily and that it has had the full opportunity to obtainand consult with counsel of its own choice to advise it in thenegotiations for, and in the execution of, this Agreement andthe documents to be executed pursuant hereto. Each of theBorrowers further acknowledges that it has read this Agreement,that it is fully aware of the contents of this Agreement andits legal effect and that it has not relied upon any advice,representation or warranty of any kind whatsoever fromAnsbacher or its counsel. 11. COUNTERPARTS. This Agreement may be executed inmultiple counterparts, each of which shall be deemed anoriginal but all of which shall constitute one and the sameinstrument. 12. INTEGRATION; NO THIRD PARTY BENEFICIARIES. ThisAgreement and the documents and agreements to be executedpursuant to the terms and provisions of this Agreement togetherconstitute the entire agreement among Ansbacher and Borrowerswith respect to the making of the Additional Advance and thisAgreement and such documents supersede any prior orcontemporaneous oral or written agreements with respectthereto. This Agreement may be modified only by an instrumentin writing signed by Ansbacher, Cadiz and CVDC. There are nothird party beneficiaries to this Agreement. 13. EXHIBITS. All exhibits attached to this Agreementare hereby incorporated in full into this Agreement by thisreference. 14. WAIVER OF JURY. CVDC, CADIZ AND ANSBACHER DOHEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTTO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING,DEFENSE OR COUNTERCLAIM BASED ON THIS AGREEMENT, OR ANYAGREEMENT, INSTRUMENT OR OTHER DOCUMENT EXECUTED IN CONNECTIONWITH THE OBLIGATIONS (OR ANY OF THEM), THE LETTER OF CREDIT, ORTHIS AGREEMENT OR ANY COURSE OF CONDUCT, STATEMENTS (WHETHERVERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANYSECURITY DOCUMENT RELATING TO THE OBLIGATIONS (OR ANY OF THEM). THE WAIVERS SET FORTH IN THIS PARAGRAPH 14 ARE A MATERIALINDUCEMENT FOR ANSBACHER ENTERING INTO THIS AGREEMENT. Cadiz' Initials: _______ CVDC's Initials: _______ Ansbacher's Initials: _______ 15. APPLICABLE LAW; SUCCESSORS. This Agreement shallin all respects be governed and construed in accordance withthe laws of the State of California. This Agreement shall bebinding upon and inure to the benefit of Ansbacher and Cadizand their respective successors and assigns; provided, however,Borrowers shall in no event have the right to assign any oftheir rights, obligations or interests hereunder withoutAnsbacher's prior written consent (which consent Ansbacher maygrant or withhold in its sole and absolute discretion). 16. ATTORNEYS' FEES. The prevailing party in anyaction to interpret or enforce the terms of this Agreementshall be entitled to its costs of suit, including, but notlimited to, fees and disbursements of its attorneys', courtcosts and fees and fees of expert witnesses, including any suchfees and costs incurred in connection with any bankruptcy orsimilar proceeding initiated by or against Cadiz and/or CVDC. 17. INTERPRETATION. To the extent of any inconsistencybetween the terms and provisions of any instrument, document oragreement heretofore executed in connection with the CadizLoan, CVDC Loan, Reimbursement Agreement, and Guarantee or anyof them (collectively, the "Existing Loan Documents") and thoseof this Agreement or any document executed pursuant to theterms of this Agreement, the terms and provisions of thisAgreement or such document executed pursuant to the terms ofthis Agreement shall govern and control. Except to suchSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.extent, the terms, provisions and obligations of the ExistingLoan Documents shall be unchanged and shall remain in fullforce and effect. 18. NOTICES. Except where otherwise required by law,all notices required to be given hereunder shall be servedpersonally, sent via telefax or mailed by first-class UnitedStates mail, certified or registered, or by courier servicewith return receipt requested, postage prepaid, and addressedto the parties as follows: To Ansbacher: Henry Ansbacher & Co. Limited One Mitre Square London, EC3A 5AN England Attention: Messrs. Paul Cragg and Nick Horne Fax No. 011-44-71-626-0850 With a copy to: Pachulski, Stang, Ziehl & Young 10100 Santa Monica Boulevard 11th Floor Los Angeles, California 90067 Attention: Richard J. Gruber Fax No. (310) 201-0760 To Cadiz or CVDC: 10535 Foothill Boulevard, Ste. 150 Rancho Cucamonga, CA 91730 Attention: Mr. Keith Brackpool Chief Executive Officer Fax No. (909) 980-6738 With a copy to: Miller & Holguin 1060 Century Plaza Towers 2029 Century Park East Los Angeles, California 90067 Attention: Howard Unterberger, Esq. Fax No. (310) 557-2205 Any party hereto may change its mailing address at anytime by giving written notice of such change to the other partyin the manner provided above. All notices under this Agreementshall, unless otherwise provided by law, be deemed given,received or communicated on the date personal delivery iseffected or, if mailed, on the delivery date or attempteddelivery date shown on the return receipt, or if by facsimiletransmission, upon confirmation by the sending machine that thereceiving machine has received the transmission. 19. REMEDIES. Each of the rights, remedies or optionsprovided for herein or available at law or in equity which maybe exercised by Ansbacher may be exercised separately orconcurrently with any one or more other options, rights orremedies. Ansbacher's failure to exercise any option, right orremedy shall not constitute a waiver of Ansbacher's right toexercise such option, right or remedy in the event of or withrespect to any prior, subsequent or concurrent transaction oroccurrence of the same or a different kind or character. 20. ESCROW. Borrowers acknowledge and agree that to theextent Ansbacher determines that it is necessary or would bedesirable for the Closing to occur concurrently with theconsummation of the transactions contemplated by the RabobankAgreement or that the Closing should occur through an escrowfor any other reason, an escrow shall be established withChicago Title Company or such other escrow holder as may beacceptable to Ansbacher. With regard to any or all of the funds, documents and other materials to be delivered byBorrowers (or either of them) to Ansbacher as conditionsprecedent to Ansbacher's obligations to consummate thetransactions contemplated herein, Ansbacher may require thatsuch documents and materials be delivered through escrow. Allcosts, fees and expenses of such escrow shall be borne and paidby Borrowers.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. IN WITNESS WHEREOF, the parties hereto have executed thisLoan Agreement as of the day and year first above written. Henry Ansbacher & Co. Limited, a corporation organized under the laws of England By: /s/ Stewart Dick ------------------ Name: Stewart Dick Title: Director By: /s/ Gillian Keeler --------------------- Name: Gillian Keeler Title: Manager "Ansbacher" or "Lender" Cadiz Land Company, Inc., a Delaware corporation By: /s/ Keith Brackpool ----------------------- Name: Keith Brackpool Title: Chief Executive Officer "Cadiz" Cadiz Valley Development Corporation a California Corporation By: /s/ Keith Brackpool ------------------------ Name: Keith Brackpool Title: Chief Executive Officer "CVDC" EXHIBIT "A"That certain real property situated in the County of SanBernardino, State of California, and described as follows:Parcel No. 1:Section 1, Township 5 North, Range 13 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Parcel No. 2:Section 13, Township 5 North, Range 13 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Except therefrom that portion conveyed to California, Arizona,and Santa Fe Railway Company by deed recorded March 16, 1914 inBook 548 of Deeds, Page 29.Also except therefrom that portion conveyed to California,Arizona and Santa Fe Railway Company by Deed recorded November26, 1913 in Book 542 of Deeds Page 1.Parcel No. 3:Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Section 13, Township 4 North, Range 14 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Parcel No. 4:Sections 5 and 9, Township 5 North, Range 14 East, SanBernardino Meridian, in the County of San Bernardino, State ofCalifornia, according to the official plat thereof.Parcel No. 5:Section 13, Township 5 North, Range 14 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Except therefrom that portion conveyed to California, Arizonaand Santa Fe Railway Company by Deed recorded March 16, 1914 inBook 548 of Deeds Page 29.Also except therefrom that portion conveyed to California,Arizona and Santa Fe Railway Company by Deed recorded November26, 1913 in Book 542 of Deeds Page 1.Also except therefrom that portion conveyed to California,Arizona and Santa Fe Railway Company by Deed recorded August 8,1936, in Book 1155 Page 155 of Official Records.Parcel No. 6:Sections 25 and 35, Township 5 North, Range 14 East, SanBernardino Meridian, in the County of San Bernardino, State ofCalifornia, according to the official plat thereof.Except from said Section 25 that portion conveyed toCalifornia, Arizona and Santa Fe Railway Company by Deedrecorded July 18, 1914 in Book 554 of Deeds Page 155.Parcel No. 7:Section 17, Township 4 North, Range 15 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Parcel No. 8:Section 5, Township 5 North Range 15 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Except therefrom that portion conveyed to California, Arizona,and Santa Fe Railway Company by Deed recorded March 16, 1914 inBook 548 of Deeds Page 29.Parcel No. 9:The North one-half and the West one-half of the West one-halfof the Northwest one-quarter of the Southwest one-quarter andthe Northeast one-quarter of the Southeast one-quarter and theSouthwest one-quarter of the Southeast one-quarter and the Eastone-half of the Northwest one-quarter of the Southeast one-quarter and the East one-half of the West one-half of theNorthwest one-quarter of the Southeast one-quarter all inSection 9, Township 5 North, Range 15 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Parcel No. 10:Section 17, Township 5 North, Range 15 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Parcel No. 11:Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Section 1, Township 6 North, Range 15 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Except therefrom the Southeast one-quarter of the Northeast one-quarter of the Northeast one-quarter of said Section 1.Parcel No. 12:The West one-half of Section 13, Township 6 North, Range 15East, San Bernardino Meridian, in the County of San Bernardino,State of California, according to the official plat thereof.Except therefrom that portion conveyed to California, Arizona,and Santa Fe Railway Company by Deed recorded March 16, 1914 inBook 548 of Deeds Page 29.Also except therefrom that portion conveyed to California,Arizona and Santa Fe Railway Company by Deed recorded November26, 1913 in Book 542 of Deeds Page 1.Parcel No. 13:Sections 21, 29 and 33, Township 6 North Range 15 East, SanBernardino Meridian, in the County of San Bernardino, State ofCalifornia, according to the official plat thereof.Except from said Section 33 that portion conveyed toCalifornia, Arizona, and Santa Fe Railway Company by Deedrecorded March 16, 1914 in Book 548 of Deeds Page 29.Parcel No. 14:Section 4, Township 4 North, Range 14 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Parcel No. 15:Section 8, Township 5 North, Range 15 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Excepting therefrom any portion of the above described parcelsof land lying within the 200 foot right of way granted toSouthern Pacific Railroad Company by Act of Congress approvedJuly 27, 1866.Parcel No. 16:Section 3, Township 4 North, Range 14 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof:Parcel No. 17:Sections 8, 17, 18, 19, 20, 22, 23, 24, 28 and 29, and theNortheast One-Quarter, the West One-half, and the North One-Half of the Southeast One-Quarter of Section 26, Township 5North, Range 14 East, San Bernardino Meridian, in the County ofSan Bernardino, State of California, according to the officialplat thereof.Excepting from said Section 17 that portion conveyed toCalifornia, Arizona and Santa Fe Railway Company by Deedrecorded August 16, 1914 in Book 548 of Deeds, Page 29.Also except from said Section 17 that portion conveyed toCalifornia, Arizona and Santa Fe Railway Company by Deedrecorded November 26, 1913 in Book 542 of Deeds, Page 1.Excepting therefrom any portion of the above described parcelsof land lying within the 200 foot right of way granted toSouthern Pacific Railroad Company by Act of Congress approvedSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.July 27, 1866.Parcel No. 18:Section 18, Township 5 North, Range 15 East, San BernardinoMeridian, in the County of San Bernardino, State of California,according to the official plat thereof.Excepting therefrom any portion of the above described landlying within the 200 foot right of way granted to SouthernPacific Railroad Company by Act of Congress approved July 27,1866. EXHIBIT "B"PARCEL NO. 1:SECTION 13, TOWNSHIP 10 NORTH, RANGE 19 EAST, SAN BERNARDINOBASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.PARCEL NO. 2:SECTION 25, TOWNSHIP 10 NORTH, RANGE 19 EAST, SAN BERNARDINOBASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.PARCEL NO. 3:SECTION 21, TOWNSHIP 10 NORTH, RANGE 20 EAST, SAN BERNARDINOBASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.PARCEL NO. 4:SECTION 29, TOWNSHIP 10 NORTH, RANGE 20 EAST, SAN BERNARDINOBASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.PARCEL NO. 5:GOVERNMENT TRACT 38, TOWNSHIP 11 NORTH, RANGE 20 EAST, SANBERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA, AS PER GOVERNMENT RESURVEY DATED SEPTEMBER29, 1924.EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TOALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALSORES, BASE METAL ORES, INDUSTRIAL-GRADE SILICATES ANDCARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, ANDALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OROTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE ORINDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THEDEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BEFOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALLNOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THESUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFICPROPERTIES, INC., A DELAWARE CORPORATION, RECORDED JANUARY 6,1993, INSTRUMENT NO. 93-000748, OFFICIAL RECORDS.PARCEL NO. 6:GOVERNMENT TRACT 42, TOWNSHIP 11 NORTH, RANGE 20 EAST, SANBERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA, ACCORDING TO GOVERNMENT RESURVEY, DATEDSEPTEMBER 29, 1924.EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TOALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALSORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES ANDCARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, ANDSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.ALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OROTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE ORINDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THEDEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BEFOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALLNOT HAVE THE RIGHT FOR ANY PROPOSE WHATSOEVER TO ENTER UPON,INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THESUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFICPROPERTIES, INC., A DELAWARE CORPORATION, RECORDED JANUARY 6,1993, INSTRUMENT NO. 93-000748, OFFICIAL RECORDS.PARCEL NO. 7:LOTS 1, 2, 3, 4 AND 5 AND THE NORTH 1/2 OF SECTION 29, TOWNSHIP12 NORTH, RANGE 20 EAST, SAN BERNARDINO BASE AND MERIDIAN, INTHE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TOGOVERNMENT SURVEY.EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TOALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALSORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES ANDCARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, ANDALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OROTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE ORINDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THEDEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BEFOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALLNOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THESUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFICPROPERTIES, INC., A DELAWARE CORPORATION, RECORDED JANUARY 6,1993, INSTRUMENT NO. 93-000748, OFFICIAL RECORDS.PARCEL NO. 8:LOTS 1, 2 AND 3 AND THE EAST 1/2 AND THE EAST 1/2 OF THE WEST1/2 AND THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 33,TOWNSHIP 12 NORTH, RANGE 20 EAST, SAN BERNARDINO BASE ANDMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO GOVERNMENT SURVEY.EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TOALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALSORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES ANDCARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, ANDALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OROTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE ORINDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THEDEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BEFOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALLNOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THESUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFICPROPERTIES, INC., A DELAWARE CORPORATION, RECORDED JANUARY 6,1993, INSTRUMENT NO. 93-000748, OFFICIAL RECORDS.PARCEL NO. 9:GOVERNMENT TRACT 39, TOWNSHIP 11 NORTH, RANGE 20 EAST, SANBERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA, ACCORDING TO GOVERNMENT RESURVEY DATEDSEPTEMBER 29, 1924.EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TOALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALSORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES ANDCARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, ANDALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OROTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE ORINDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THEDEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BESource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.FOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALLNOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THESUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFICPROPERTIES, INC., A DELAWARE CORPORATION, RECORDED JANUARY 6,1993, INSTRUMENT NO. 93-000748, OFFICIAL RECORDS.PARCEL NO. 10: PARCEL 4 OF PARCEL MAP NO. 10131, IN THE UNINCORPORATEDAREA OF SAN BERNARDINO COUNTY, AS PER PLAT RECORDED IN BOOK108, OF PARCEL MAPS, PAGE 55, RECORDS OF SAID COUNTY. EXHIBIT "C"PARCEL NO. 1:SECTIONS 32 AND 34, TOWNSHIP 5 NORTH, RANGE 14 EAST, SANBERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.PARCEL NO. 2:THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWESTQUARTER, SECTION 12, TOWNSHIP 2 NORTH, RANGE 18 EAST, SANBERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM 50% OF ALL OIL, GAS, MINERAL, URANIUM, ANDOTHER HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND, ASRESERVED IN THE DEED RECORDED JUNE 7, 1962, IN BOOK 5712, PAGE338, OFFICIAL RECORDS.PARCEL NO. 3:THE NORTHWEST ONE-QUARTER AND THE NORTHEAST ONE-QUARTER AND THENORTH ONE-HALF OF THE SOUTHWEST ONE-QUARTER AND THE NORTH ONE-HALFOF THE SOUTHEAST ONE-QUARTER OF SECTION 21, TOWNSHIP 5NORTH, RANGE 14 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OFSAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIALPLAT THEREOF.PARCEL NO. 4:ALL OF SECTION 16, TOWNSHIP 5 NORTH, RANGE 14 EAST, SANBERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM A RECTANGULAR PARCEL OF LAND IN THENORTHEAST ONE-QUARTER OF THE SOUTHEAST ONE-QUARTER OF SAIDSECTION 16 DESCRIBED AS FOLLOWS:BEGINNING AT A POINT IN THE NORTHERN RIGHT OF WAY LINE OF THECALIFORNIA, ARIZONA AND SANTA FE RAILWAY COMPANY, DISTANT 86FEET NORTHERLY, AT RIGHT ANGLES FROM THE CENTER LINE OFWESTBOUND MAIN TRACT OF SAID RAILWAY COMPANY, SAID POINT BEING546.1 FEET WESTERLY ALONG SAID RIGHT OF WAY LINE FROM ITSINTERSECTION WITH THE EAST LINE OF SAID SECTION 16, DISTANT365.6 FEET SOUTH ON SAID EAST LINE FROM THE EAST 1/4 CORNER OFSAID SECTION;THENCE WESTERLY ALONG SAID RIGHT OF WAY LINE, 363 FEET;THENCE NORTHERLY AT RIGHT ANGLES, 120 FEET;THENCE EASTERLY, PARALLEL WITH SAID NORTHERN RIGHT OF WAY LINE,363 FEET;THENCE SOUTHERLY AT RIGHT ANGLES, 120 FEET TO THE POINT OFBEGINNING.ALSO EXCEPTING THEREFROM A RECTANGULAR PARCEL OF LAND IN THENORTHEAST ONE-QUARTER OF THE SOUTHEAST ONE-QUARTER OF SECTION16, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO BASE AND MERIDIAN, DESCRIBED AS FOLLOWS:BEGINNING AT A POINT IN THE NORTHERN RIGHT OF WAY LINE OF THESource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CALIFORNIA, ARIZONA AND SANTA FE RAILWAY COMPANY, DISTANT 86FEET NORTHERLY, AT RIGHT ANGLES FROM THE CENTER LINE OF THEWESTBOUND MAIN TRACK OF SAID RAILWAY COMPANY, SAID POINT BEINGDISTANT 183.1 FEET WESTERLY ALONG SAID RIGHT OF WAY LINE FROMITS INTERSECTION WITH THE EAST LINE OF SAID SECTION 16, DISTANT165.6 FEET SOUTH ON SAID EAST LINE FROM THE EAST 1/4 CORNER OFSAID SECTION;THENCE WESTERLY ALONG SAID RIGHT OF WAY LINE, 363 FEET TO THESOUTHEAST CORNER OF THE LAND CONVEYED BY W.F. ZIEGLER AND OLIVAM. ZIEGLER BY DEED RECORDED IN BOOK 677, PAGE 159, OFFICIALRECORDS;THENCE NORTHERLY AT RIGHT ANGLES ALONG THE EASTERLY LINE OF THELAND CONVEYED BY DEED JUST REFERRED TO, 120 FEET;THENCE EASTERLY, PARALLEL WITH SAID NORTHERN RIGHT OF WAY LINE,363 FEET;THENCE SOUTHERLY AT RIGHT ANGLES, 120 FEET TO THE POINT OFBEGINNING.ALSO EXCEPTING THEREFROM:FIRST: A STRIP OF LAND, 50 FEET WIDE, LYING SOUTH OF ANDADJACENT TO THE SOUTHERN PACIFIC RAILWAY COMPANY'S 200-FOOTRIGHT OF WAY THROUGH SECTION 16, TOWNSHIP 5 NORTH, RANGE 14EAST, SAN BERNARDINO BASE AND MERIDIAN.SECOND: A PIECE OR PARCEL OF LAND LYING IN THE SOUTHEAST ONE-QUARTER OF SAID SECTION 16, BOUNDED AND DESCRIBED AS FOLLOWS:BEGINNING AT A POINT IN THE SOUTHERLY BOUNDARY OF THE ABOVEDESCRIBED PIECE OF LAND, DISTANT 770 FEET WESTERLY ALONG SAIDSOUTHERLY LINE FROM THE EAST LINE OF SAID SECTION 16;THENCE SOUTHWESTERLY ALONG SAID SOUTHERLY LINE FROM THE EASTLINE OF SAID SECTION 16;THENCE SOUTHWESTERLY ON A CURVE CONCAVE SOUTHEASTERLY, WITH ARADIUS OF 739.49 FEET, A DISTANCE OF 750 FEET;THENCE SOUTH 5 24' WEST, A DISTANCE OF 1481 FEET, MORE OR LESS,TO A POINT IN THE SOUTH LINE OF SAID SECTION 16;THENCE WEST ALONG SAID SOUTH LINE, 50.2 FEET;THENCE NORTH 5 24' EAST, A DISTANCE OF 2389 FEET;THENCE NORTHWESTERLY ON A CURVE CONCAVE SOUTHWESTERLY WITH ARADIUS OF 739.49 FEET, A DISTANCE OF 998 FEET, MORE OR LESS, TOA POINT IN THE SOUTHERLY BOUNDARY LINE OF THE ABOVE FIRSTDESCRIBED PIECE OF LAND;THENCE EASTERLY ALONG SAID SOUTHERLY BOUNDARY LINE, A DISTANCEOF 975 FEET, MORE OR LESS, TO THE POINT OF BEGINNING.PARCEL NO. 5:ALL OF SECTION 36, TOWNSHIP 3 NORTH, RANGE 18 EAST, SANBERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.PARCEL NO. 6:THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHEASTQUARTER OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SANBERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF ON FILE INTHE DISTRICT LAND OFFICE.EXCEPT THEREFROM ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE,SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINEDIN SAID LAND, AND FURTHER RESERVING TO THE STATE OF CALIFORNIAAND PERSONS AUTHORIZED BY THE STATE, THE RIGHT TO DRILL FOR ANDEXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECTFOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAIDLANDS AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAIDLANDS AS MAY BE REQUIRED THEREFOR, UPON COMPLIANCE WITH THECONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OFCHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, ASRESERVED IN THE PATENT RECORDED APRIL 12, 1960, IN BOOK 5109,PAGE 174, OFFICIAL RECORDS.PARCEL NO. 7:Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.THE WEST HALF OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTEROF SECTION 12, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOBASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM ONE-FOURTH OF ALL MINERALS, OIL, GAS,CARBON AND HYDROCARBON SUBSTANCES ON AND UNDER SAID LAND, ASRESERVED IN THE DEED FORM HOMER S. KNOWLES, ETUX., RECORDEDJANUARY 13, 1958 IN BOOK 4410 PAGE 475 OFFICIAL RECORDS.PARCEL NO. 8:THE NORTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SECTION 23,TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, INTHE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TOTHE OFFICIAL PLAT THEREOF.PARCEL NO. 9: THE NORTH 1/2 OF THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOBASE AND MERIDIAN.EXCEPTING THEREFROM ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE,SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINEDIN SAID LANDS, AND FURTHER RESERVING TO THE STATE OF CALIFORNIAAND PERSONS AUTHORIZED BY THE STATE, THE RIGHT TO DRILL FOR ANDEXTRACT SUCH DEPOSITS OF AIL AND GAS, OR GAS AND TO PROSPECTFOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAIDLANDS AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAIDLANDS AS MAY BE REQUIRED THEREFOR, UPON COMPLIANCE WITH THECONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OFCHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, ASRESERVED IN THE PATENT RECORDED APRIL 12, 1960 IN BOOK 5109,PAGE 174, OFFICIAL RECORDS.PARCEL NO. 10:THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOBASE AND MERIDIAN.EXCEPTING THEREFORE THOSE PORTIONS OF A STRIP OF LAND 400 FEETIN WIDTH WHICH ARE LOCATED WITHIN THE NORTHWEST 1/4 ANDSOUTHWEST 1/4 AND THE SOUTHWEST 1/4 OF SECTION 16, TOWNSHIP, 2NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN,CONTINUED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAIDSECTION 16 TO THE SOUTH LINE OF SAID SECTION 16, ONE BEINGLOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER BEING LOCATED330 FEET SOUTHWESTERLY FROM AND BOTH LINES BEING PARALLEL TOTHE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED SOUTH 89 DEGREES 42' 40" EAST, 1112.42 FEETFROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST, 5348.94 FEET, MORE ORLESS, TO A POINT ON THE SOUTH LINE OF SAID SECTION, WHICH ISLOCATE SOUTH 89 DEGREES 14' 56" EAST, 147.60 FEET FROM THESOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THEMETROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, BYINSTRUMENT DATED SEPTEMBER 15, 1934, RECORDED SEPTEMBER 26,1954 IN BOOK 996, PAGE 160, OFFICIAL RECORDS, EXECUTED ONBEHALF OF THE STATE OF CALIFORNIA BY THE CHIEF OF THE DIVISIONOF STATE LANDS PURSUANT TO THE PROVISIONS OF CHAPTER 507 OF THESTATUTES OF CALIFORNIA, 1933.EXCEPTING THEREFROM ALL OIL GAS, OIL SHALE, COAL, PHOSPHATE,SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINEDIN SAID LANDS, AND FURTHER RESERVING TO THE STATE OF CALIFORNIAAND PERSONS AUTHORIZED BY THE STATE, THE RIGHT TO DRILL FOR ANDEXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECTFOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAIDLANDS AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAIDLANDS AS MAY BE REQUIRED THEREFORE, UPON COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OFSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, ASRESERVED IN THE PATENT RECORDED APRIL 12, 1960 ON BOOK 5109,PAGE 174, OFFICIAL RECORDS.PARCEL NO. 11:THE SOUTH 1/2 OF THE NORTHWEST 1/4 OF SECTION 16, TOWNSHIP 2NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN.EXCEPTING THEREFROM THOSE PORTIONS OF A STRIP OF LAND 400 FEETIN WIDTH WHICH ARE LOCATED WITHIN THE NORTHWEST 1/4 AND THESOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 16, TOWNSHIP 2NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN,CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAIDSECTION 16 TO THE SOUTH LINE OF SAID SECTION 16, ONE LINE BEINGLOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER BEING LOCATED330 FEET SOUTHWESTERLY FROM AND BOTH LINES BEING PARALLEL TOTHE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED SOUTH 89 DEGREES 42' 40" EAST, 1112.42 FEETFROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST, 5349.94 FEET, MORE ORLESS, TO A POINT ON THE SOUTH LINE OF SAID SECTION, WHICH ISLOCATED SOUTH 89 DEGREES 14' 56" EAST, 147.60 FEET FROM THESOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THEMETROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, BYINSTRUMENT DATED SEPTEMBER 15, 1954 IN BOOK 996, PAGE 160,OFFICIAL RECORDS EXECUTED ON BEHALF OF THE STATE OF CALIFORNIABY THE CHIEF OF THE DIVISION OF STATE LANDS PURSUANT TO THEPROVISIONS OF CHAPTER 507 OF THE STATUTES OF CALIFORNIA, 1933.FURTHER EXCEPTING THEREFROM THOSE PORTIONS OF A STRIP OF LAND200 FEET IN WIDTH WHICH ARE LOCATED WITHIN THE SOUTHWEST 1/4 OFTHE NORTHWEST 1/4 AND THE SOUTHWEST 1/4 OF THE SOUTHEAST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOBASE AND MERIDIAN, LYING 100 FEET ON EACH SIDE OF THE FOLLOWINGDESCRIBED CENTER LINE, EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED NORTH 46 DEGREES 42' WEST, 69,424.5 FEETFROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH,RANGE 19 EAST, SAN BERNARDINO BASE AND MERIDIAN; THENCE NORTH47 DEGREES 57' WEST, 3879.8 FEET, MORE OR LESS, TO A POINT ONTHE WEST LINE OF SAID SECTION 16, AS GRANTED TO THE ARIZONA ANDCALIFORNIA RAILWAY COMPANY BY PERMIT DATED FEBRUARY 4, 1910,EXECUTED BY THE SURVEYOR GENERAL OF THE STATE OF CALIFORNIA,PURSUANT TO SECTION 478 OF THE CALIFORNIA CIVIL CODE.EXCEPTING THEREFROM ALL OIL, GAS, OIL, SHALE, COAL, PHOSPHATE,SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINEDIN SAID LANDS, AND FURTHER RESERVING TO THE STATE OF CALIFORNIAAND PERSONS AUTHORIZED BY THE STATE, THE RIGHT TO DRILL FOR ANDEXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECTFOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAIDLANDS AND TO OCCUPY AND USE SO MUSH OF THE SURFACE OF SAID LANDS AS MAY BE REQUIRED THEREFOR, UPON COMPLIANCE WITH THECONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OFCHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, ASRESERVED IN THE PATENT RECORDED APRIL 12, 1960 IN BOOK 5109,PAGE 174, OFFICIAL RECORDS.PARCEL NO. 12:THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE SOUTHEAST 1/4 OFSECTION 36, TOWNSHIP 2 NORTH, RANGE 18, EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR ;AND EXTRACT SUCHDEPOSITS OF OIL AND GAS OR GAS, AND TO PROSPECT FOR, MINE, ANDREMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TOOCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BESource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS ANDSUBJECT TO THE PROVISIONS AND LIMITATIONS OF THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFOFFICIAL RECORDS, PAGE 174.ALSO EXCEPTING THEREFROM A STRIP OF LAND 200 FEET IN WIDTH INTHE SOUTHEAST QUARTER OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18EAST, SAN BERNARDINO BASE AND MERIDIAN, LYING 100 FEET ON EACHSIDE OF THE FOLLOWING DESCRIBED CENTER LINE, EXTENDED:BEGINNING AT A POINT O THE SOUTH LINE OF SAID SECTION 36, SAIDPOINT BEING LOCATED NORTH 46 DEGREES 03' WEST 45,738.1 FEETFROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH,RANGE 19 EAST, SAN BERNARDINO MERIDIAN;THENCE NORTH 47 DEGREES 57' WEST 2500 FEET, MORE OR LESS, TO APOINT ON THE WEST LINE THE SOUTHEAST QUARTER OF SECTION 36,TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, ASGRANTED TO THE ARIZONA AND CALIFORNIA RAILWAY COMPANY BY PERMITDATED FEBRUARY 4, 1910, EXECUTED BY THE SURVEYOR GENERAL OF THESTATE OF CALIFORNIA PURSUANT TO SECTION 478 OF THE CALIFORNIACIVIL CODE.PARCEL NO. 13:THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, ANDREMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TOOCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BEREQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS ANDSUBJECT TO THE PROVISIONS ADD LIMITATIONS OF CHAPTER 5, PART I,DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THESTATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPTING THEREFROM A STRIP OF LAND 200 FEET IN WIDTH INTHE SOUTHEAST QUARTER OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18EAST, SAN BERNARDINO BASE AND MERIDIAN, LYING 100 FEET ON EACH SIDE OF THE FOLLOWING DESCRIBED CENTER LINE, EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 36, SAIDPOINT BEING LOCATED NORTH 46 DEGREES, 03' WEST 45,738.1 FEETFROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH,RANGE 19 EAST, SAN BERNARDINO MERIDIAN;THENCE NORTH 47 DEGREES 57' WEST 2500 FEET, MORE OR LESS, TO APOINT ON THE WEST LINE OF THE SOUTHEAST QUARTER OF SECTION 36,TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, ASGRANTED TO THE ARIZONA AND CALIFORNIA RAILWAY COMPANY BY PERMITDATED FEBRUARY 4, 1910, EXECUTED BY THE SURVEYOR GENERAL OF THESTATE OF CALIFORNIA PURSUANT TO SECTION 478 OF THE CALIFORNIACIVIL CODE.PARCEL NO. 13:THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT DEPOSITSOF OIL AND GAS, OR GAS, AND TO PROSPECT FOR MINE, AND REMOVESUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPYAND USE SO MUCH O THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR , UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TOTHE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART 1, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.OFFICIAL RECORDS, PAGE 174.ALSO EXCEPT THOSE PORTIONS OF A STRIP OF LAND 400 FEET IN WIDTHWHICH ARE LOCATED WITHIN THE NORTHWEST QUARTER AND THESOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 16,TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN,CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAIDSECTION 16, TO THE SOUTH LINE OF SAID SECTION 16, ONE LINEBEING LOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER LINEBEING LOCATED 330 FEET SOUTHEASTERLY FROM AND BOTH LINES BEINGPARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED SOUTH 89 DEGREES 42' 40" EAST 1112.42 FEETFROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST 5348.94 FEET, MORE ORLESS, TO A POINT ON THE SOUTH LINE OF SAID SECTION WHICH ISLOCATED SOUTH 89 DEGREES 14' 56" EAST 147.60 FEET FROM THESOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THEMETROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA BYINSTRUMENT DATED SEPTEMBER 15, 1934, EXECUTED ON BEHALF OF THESTATE OF CALIFORNIA 507 OF THE STATUTES OF CALIFORNIA, 1933.PARCEL NO. 14:THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OIL AND GAS, OR HAS, AND TO PROSPECT FOR, MINE, ANDREMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TOOCCUPY AN USE SO MUCH OF THE SURFACE OF THE SAID LAND AS MAY BEREQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS ANDSUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I,DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THESTATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPT THOSE PORTIONS OF A STRIP OF LAND 400 FEET IN WIDTHWHICH ARE LOCATED WITHIN THE NORTHWEST QUARTER AND THESOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 16,TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN,CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAIDSECTION 16, TO THE SOUTH LINE OF SAID SECTION 16, ONE LINEBEING LOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER LINEBEING LOCATED 330 FEET SOUTHEASTERLY FROM THE BOTH LINES BEINGPARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED SOUTH 89 DEGREES 42' 40" EAST 1112.42 FEETFROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST 5348.94 FEET, MORE ORLESS, TO A POINT ON THE SOUTH LINE OF SAID SECTION WHICH ISLOCATED SOUTH 89 DEGREES 14' 56" EAST 147.60 FEET FROM THESOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THEMETROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA BYINSTRUMENT DATED SEPTEMBER 15, 1934, EXECUTED ON BEHALF OF THESTATE OF CALIFORNIA BY THE CHIEF OF THE DIVISION OF STAT LANDSPURSUANT TO THE PROVISIONS OF CHAPTER 507 OF THE STATUTES OFCALIFORNIA, 1933.ALSO EXCEPT THOSE PORTIONS OF A STRIP OF LAND 200 FEET IN WITHWHICH ARE LOCATED WITHIN THE SOUTHWEST QUARTER OF THE NORTHWESTQUARTER ADD THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, LYING 100 FEET ON EACH SIDE OF THE FOLLOWINGDESCRIBED CENTER LINE EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED NORTH 46 DEGREES 42' WEST 69,424.5 FEETFROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH,Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.RANGE, 19 EAST, SAN BERNARDINO MERIDIAN;THENCE NORTH 47 DEGREES 57' WEST 3879.8 FEET, MORE OR LESS, TOA POINT ON THE WEST LINE OF SAID SECTION 16, AS GRANTED TO THEARIZONA AND CALIFORNIA RAILWAY COMPANY BY PERMIT DATED FEBRUARY4, 1910, EXECUTED BY THE SURVEYOR GENERAL OF THE STATE OFCALIFORNIA PURSUANT TO SECTION 478 OF THE CALIFORNIA CIVILCODE.PARCEL NO. 15:THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHEAST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OIL AND GAS, OR HS, AND TO PROSPECT FOR, MINE, ANDREMOVE DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPYAND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AN SUBJECT TOTEH PROVISIONS AN LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TOO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OROFFICIAL RECORDS, PAGE 174.PARCEL NO. 16:THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, ANDREMOVE DEPOSITS OF OTHER MINERALS FROM SAID LAND AS MAY BEREQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS ANDSUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PARTI, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THESTATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPT THOSE PORTIONS OF STRIP OF LAND 400 FEET IN WIDTHWHICH ARE LOCATED WITHIN THE NORTHWEST QUARTER AND THESOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 16,TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN,CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAIDSECTION 16, TO THE SOUTH LINE OF SAID SECTION 16, ONE LINEBEING LOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER LINEBEING LOCATED 330 FEET SOUTHEASTERLY FROM AND BOTH LINES BEINGPARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED SOUTH 89 DEGREES 42' 40" EAST 1112.42 FEETFROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST 5348.94 FEET MORE OR LESS,TO A POINT ON THE SOUTH LINE OF SAID SECTION WHICH IS LOCATEDSOUTH 89 DEGREES 14' 56" EAST 147.60 FEET FROM THE SOUTHWESTCORNER OF SAID SECTION 16, AS GRANTED TO THE METROPOLITAN WATERDISTRICT OF SOUTHERN CALIFORNIA BY INSTRUMENT DATED SEPTEMBER15, 1934, EXECUTED ON BEHALF OF THE STATE OF CALIFORNIA BY THECHIEF OF THE DIVISION OF STATE LANDS PURSUANT TO THE PROVISIONS OF CHAPTER 507 OF THE STATUTES OF CALIFORNIA, 1933.PARCEL NO. 17:THE NORTH 1/2 OF THE NORTHEAST 1/4 OF THE SOUTHEAST 1/4 OFSECTION 36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY ANDUSE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TOTHE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFOFFICIAL RECORDS, PAGE 174.PARCEL NO. 18:THE NORTH 1/2 OF THE SOUTHEAST 1/4 OF THE SOUTHEAST 1/4 OFSECTION 36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY ANDUSE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TOTHE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFOFFICIAL RECORDS, PAGE 174.ALSO EXCEPTING THEREFROM A STRIP OF LAND 200 FEET IN WIDTH INTHE SOUTHEAST QUARTER OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18EAST, SAN BERNARDINO BASE AND MERIDIAN, LYING 100 FEET ON EACHSIDE OF THE FOLLOWING DESCRIBED CENTER LINE, EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAIDPOINT BEING LOCATED NORTH 46 DEGREES 03' WEST 45,738.1 FEETFROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH,RANGE 19 EAST, SAN BERNARDINO MERIDIAN;THENCE NORTH 47 DEGREES 57' WEST 2500 FEET, MORE OR LESS, TO APOINT ON THE WEST LINE OF THE SOUTHEAST QUARTER OF SAID SECTION36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN,AS GRANTED TO THE ARIZONA AND CALIFORNIA RAILWAY COMPANY BYPERMIT DATED FEBRUARY 4, 1910, EXECUTED BY THE SURVEYOR GENERALOF THE STATE OF CALIFORNIA PURSUANT TO SECTION 478 OF THECALIFORNIA CIVIL CODE.PARCEL NO. 19:THE SOUTH 1/2 OF THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY ANDUSE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TOTHE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFOFFICIAL RECORDS, PAGE 174.PARCEL NO. 20:THE SOUTH 1/2 OF THE SOUTHEAST 1/4 OF THE NORTH EAST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY ANDSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TOTHE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFOFFICIAL RECORDS, PAGE 174.PARCEL NO 21:THE SOUTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY ANDUSE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TOTHE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFOFFICIAL RECORDS, PAGE 174.PARCEL NO. 22:THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OFSECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM,GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAIDLAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCHDEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY ANDUSE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIREDTHEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TOTHE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OFCALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OFOFFICIAL RECORDS, PAGE 174.PARCEL NO. 23:THE EAST ONE-HALF OF THE NORTHWEST ONE-QUARTER OF THE NORTHWESTONE-QUARTER SECTION 12, TOWNSHIP 2 NORTH, RANGE 18 EAST, SANBERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM ONE-QUARTER OF ALL MINERALS, OIL, GAS,CARBONS, AND HYDROCARBON SUBSTANCES ON AND UNDER SAID LAND. EXHIBIT "D"PARCEL NO. 1:THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHEAST 1/4 AND THESOUTHWEST 1/4 OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4 OFSECTION 31, TOWNSHIP 6 NORTH, RANGE 14 EAST, SAN BERNARDINOBASE AND MERIDIAN, ACCORDING TO THE OFFICIAL PLAT OF SAID LAND.PARCEL NO. 2:SECTION 27, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINOMERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM ANY PORTION OF THE ABOVE DESCRIBED PARCELSOF LAND LYING WITHIN THE 200 FOOT RIGHT OF WAY GRANTED TOSOUTHERN PACIFIC RAILROAD COMPANY BY ACT OF CONGRESS APPROVEDJULY 27, 1866. EXHIBIT "E"Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. HENRY ANSBACHER & CO. LIMITED SECURED PROMISSORY NOTE$3,000,000.00 Los Angeles, California March 29, 1995 For value received, Cadiz Land Company, Inc., a Delawarecorporation ("CLCI") and Cadiz Valley Development Corporation,a California corporation ("CVDC") (the "Maker"), promise to payto the order of HENRY ANSBACHER & CO. LIMITED (herein, togetherwith its successors and assigns, including each and every ownerand holder of this Note, referred to as the "Holder"), at itsoffice located at One Mitre Square, London EC3A 5AN, England,or at such other place as may hereafter be designated byHolder, without any offset or deduction whatsoever (whether onaccount of counterclaims, setoff, withholding taxes, orotherwise) the principal sum of Three Million and 00/100Dollars ($3,000,000.00) (or such greater or lesser amount ofprincipal as may be outstanding hereunder pursuant to the termshereof), together with interest at the Interest Rate (asdefined in Section 3.M below) on the principal from time totime outstanding hereunder. At the expiration of each InterestPeriod (as defined in Section 3.M below) until the indebtednessevidenced by this Note has been paid in full, all then accruedbut unpaid interest hereunder shall be added to principal andshall thereafter bear interest at the Interest Rate. Principaland interest are payable at the times and in the mannerhereinafter set forth. This Note is secured by, inter alia, that certain(i) Fourth Deed of Trust, Assignment of Rents, SecurityAgreement and Fixture Filing dated March 29, 1995 (the "CadizFourth Deed of Trust"), executed by CLCI in favor of Holder;(ii) Fourth Deed of Trust, Assignment of Rents, SecurityAgreement and Fixture Filing dated March 29, 1995 (CVDC) (the"Fourth CVDC Deed of Trust"), executed by CVDC, in favor ofHolder; (iii) Fourth Assignment, Pledge and Security Agreementdated March 29, 1995 (the "Cadiz Fourth Pledge"), executed byCLCI in favor of Holder; and (iv) Fourth Assignment, Pledge andSecurity Agreement dated March 29, 1995 (the "Fourth CVDCPledge"), executed by CVDC in favor of Holder. The CadizFourth Deed of Trust, Fourth CVDC Deed of Trust, Cadiz FourthPledge and Fourth CVDC Pledge are sometimes collectivelyreferred to in this Note as the "Collateral Documents". 1. PRINCIPAL AND INTEREST. Interest for all purposes hereunder shall be calculatedon the basis of a 360 day year and actual days elapsed. Principal and interest shall be payable in lawful money of theUnited States in immediately available funds. A. All accrued but unpaid interest and all thenunpaid principal shall be due and payable in full on January31, 1997 (the "Maturity Date"). B. Each payment hereunder (including anyprepayment pursuant to Section 2 hereof) shall be applied firstto any late charges and other fees and costs then owinghereunder, next to any Break Costs (as defined in Section 2below) payable pursuant to the provisions of Section 2 hereof,then to any accrued but unpaid interest and the balance, ifany, shall be applied in reduction of the principal. C. Upon the occurrence of an Event of Default(as defined in Section 1.E below), Holder shall automaticallybe released and relieved of any obligation to make any furtherdisbursements to Maker under the loan evidenced by this Noteand may, at its option and without notice to Maker (whichnotice is hereby expressly waived), accelerate the maturityhereof and declare the entire amount of principal, interest,and all other sums payable by Maker hereunder to be immediatelydue and payable, notwithstanding the stated Maturity Date. Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. D. Commencing upon the occurrence of an Eventof Default and continuing until the date on which allindebtedness evidenced by this Note is paid in full, the unpaidprincipal balance hereof (including, without limitation, allinterest theretofore or thereafter added to principal asprovided in this Note) shall bear interest at a per annuminterest rate (the "Default Rate") equal to the sum of theInterest Rate (as the Interest Rate may from time to timeadjust), plus 4 percent (4%). E. Each of the following events shall constitutean "Event of Default" hereunder: (1) Maker's failure to pay or cause to bepaid, when due, any interest or principal, or other sum, underthis Note; (2) Maker's failure to perform or observeany promise, obligation or condition under this Note or theoccurrence of any other default under this Note; (3) A default (or an event which withnotice or the passage of time, or both, would constitute adefault) occurs under (i) any Collateral Document, (ii) thatcertain Loan Agreement dated as of March 15, 1995 (the "LoanAgreement"), among Maker and Holder, and/or (iii) any otherdocument, certificate or agreement executed or delivered inconnection with or relating to the loan evidenced by this Note(this Note, the Loan Agreement, the Collateral Documents andsuch other documents, agreements and certificates arecollectively referred to herein as the "Loan Documents"); (4) Any representation or warranty by CLCIand/or CVDC to Holder with respect to CLCI's and/or CVDC'sfinancial condition or credit standing or any other representation or warranty of CLCI and/or CVDC set forth inthis Note or in any other Loan Document proves to have beenfalse or misleading in any material respect when made orreaffirmed; (5) A default (or event which with noticeor the passage of time, or both, would constitute a default)occurs under that certain (i) Secured Promissory Note datedJanuary 11, 1994, made by CLCI in favor of Holder in theoriginal principal amount of $2,397,424.08; (ii) SecuredPromissory Note dated January 11, 1994, made by CVDC in favorof Holder in the original principal amount of $2,546,783.06;and/or (iii) Reimbursement Agreement dated January 11, 1994,executed by CLCI in favor of Holder; (6) The making of any order or the entryof any decree by a court of competent jurisdiction enjoining orprohibiting Maker (or either entity comprising Maker) fromperforming or satisfying its covenants, obligations orconditions contained herein and such proceedings are notdiscontinued or such order or decree is not vacated withinsixty (60) days after the making or granting thereof; (7) CLCI or CVDC neglects, fails orrefuses to keep in full force and effect any required permit,license, or approval with respect to the ownership andoperation of the property (collectively, the "Property")encumbered by the Cadiz Fourth Deed of Trust and the FourthCVDC Deed of Trust (or any portion thereof), any policy orpolicies of insurance, or otherwise fails to perform any otherundertaking required hereunder or under any Loan Document; (8) The occurrence of any default or anyevent which with notice or the passage of time, or both, wouldconstitute a default under any other obligation of CLCI and/orCVDC to Holder, whether now existing or hereafter arising; or (9) Maker at any time ceases for any reasonwhatsoever to be the general partner of Southwest Fruit GrowersL.P., without first obtaining Holder's written consent thereto.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 2. PREPAYMENT. Upon not less than thirty (30) calendar days'written notice to Holder, Maker shall have the privilege ofprepaying the principal balance of this Note, in whole or inpart, without penalty or premium; provided that (i) in noevent shall any prepayment be in an integral amount of lessthan $100,000, and (ii) if Holder incurs any costs or loss as aconsequence of any such prepayment (including, withoutlimitation, any costs, penalties, losses, or reduced yields onthe prepaid amount to the Maturity Date), then Maker shall payto Holder on demand and in addition to all other sums payableby Maker hereunder a prepayment premium (the "Break Costs") inan amount equal to the total amount of the loss and costs soincurred by reason of such prepayment. Maker expresslyacknowledges and agrees that the Break Costs will be payable to Holder as provided herein whether Maker voluntarily makes theapplicable prepayment or the prepayment results from anacceleration of the Maturity Date following the occurrence ofan Event of Default. A statement as to the amount of any BreakCosts submitted to Maker by Holder shall, in the absence ofmanifest error, be conclusive and binding for all purposes. BY INITIALING WHERE INDICATED BELOW, MAKEREXPRESSLY ACKNOWLEDGES THAT, PURSUANT TO THE TERMS ANDPROVISIONS OF THIS NOTE, MAKER HAS AGREED THAT IT SHALL BELIABLE FOR THE PAYMENT OF A PREPAYMENT PREMIUM AS PROVIDEDABOVE IN THIS SECTION 2 FOLLOWING ANY VOLUNTARY PREPAYMENT ASWELL AS ANY PREPAYMENT RESULTING FROM THE ACCELERATION OF THEMATURITY DATE BY REASON OF AN EVENT OF DEFAULT, INCLUDING,WITHOUT LIMITATION, AN EVENT OF DEFAULT ARISING FROM THECONVEYANCE OF ANY RIGHT, TITLE OR INTEREST IN THE PROPERTY (ORANY PORTION THEREOF). FURTHERMORE, BY INITIALING WHEREINDICATED BELOW, MAKER WAIVES ANY RIGHTS IT MAY HAVE UNDERSECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSORSTATUTE, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT THEHOLDER HAS MADE THE LOAN EVIDENCED BY THIS NOTE IN RELIANCEUPON THESE AGREEMENTS AND WAIVER BY MAKER AND THAT HOLDER WOULDNOT HAVE MADE THE LOAN EVIDENCED HEREBY WITHOUT SUCH AGREEMENTSAND WAIVER BY MAKER. CLCI'S INITIALS: __________ CVDC'S INITIALS: __________ 3. MISCELLANEOUS PROVISIONS. A. Each of the rights, remedies or optionsprovided herein or available at law or in equity which may beexercised by Holder may be exercised separately or concurrentlywith any one or more other options, rights, or remedies. Suchrights, powers and remedies shall not be exhausted by anyexercise thereof but may be exercised as often as occasiontherefor shall occur. Holder shall not by any act of omissionor commission be deemed to waive any of its rights, powers orremedies under this Note unless such waiver be in writing andsigned by Holder and then only to the extent specifically setforth therein. Failure to exercise any option, right, orremedy shall not constitute a waiver of the right of the Holderto exercise such option, right or remedy in the event of orwith respect to any prior, subsequent or concurrent transactionor occurrence of the same or a different kind or character. Holder's acceptance of any partial payment after the time whensuch payment becomes due and payable hereunder shall not beheld to establish a custom, or to waive any of Holder's rightsto enforce prompt payment of this Note or any of Holder's otherrights hereunder. B. Maker agrees to pay on demand attorneys' feesand all other out-of-pocket expenses of the Holder paid toothers which may be incurred in connection with the collectionof this Note or any installment hereof, including all appeals,or the exercise or enforcement of any right, remedy or option under or in connection with this Note or any of the other LoanSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Documents, whether or not suit is filed hereon or thereon(including, without limitation, all such fees and expenses asmay be incurred by Holder in or in connection with anybankruptcy or insolvency proceeding filed by or against CLCIand/or CVDC). C. Maker and the endorsers, guarantors andsureties of this Note severally waive diligence, presentment,demand, protest, notice of protest, notice of dishonor, andnonpayment of this Note; expressly agree that this Note, or thedue date of any one or more payments hereunder may be extendedfrom time to time; and consent to the acceptance and/orrelease of any security for this Note; all without in any wayaffecting the liability of the Maker, endorser, guarantors andsureties hereof. D. Unless applicable law requires a differentmethod of giving notice, any notice that Holder desires or isrequired to give to Maker under or in connection with this Noteshall be given either by personal delivery, facsimiletransmission sent to Maker at (909) 980-6738, or by mailing itby first class mail, postage prepaid, addressed to Maker at10535 Foothill Boulevard, Suite 150, Rancho Cucamonga,California 91730, Attention: Mr. Keith Brackpool, ChiefExecutive Officer, or at such different address as Maker mayhereafter designate for such purpose in the manner providedherein for the giving of notice to Holder. Any notice whichMaker desires or is required to give to Holder under or inconnection with this Note shall be given either by personaldelivery, by facsimile transmission sent to Holder at 011-44-71-626-0850 or by mailing it by certified mail, return receipt requested, postage prepaid, to the Holder at One Mitre Square, London EC3A 5AN, England, Attention: Mr. Paul Cragg, Director, or Mr. Nick Horne, Assistant Director, or at suchdifferent address as Holder may hereafter designate for such purpose in the manner provided herein for the giving of notice to Maker. All notices under this Note shall be deemed given, received or communicated on the date personal delivery is effected or, if mailed, on the delivery date or attempted delivery date shown on the return receipt, or if by facsimile transmission, subject to the provisions of Section 3.M(ii) below, upon confirmation by the sending machine that the receiving machine has received the transmission. E. Whenever possible, each provision of thisNote shall be interpreted in such manner as to be effective andvalid under applicable law, but if any provision of this Noteshall be prohibited by or invalid under applicable law, suchprovision shall be ineffective only to the extent of suchprohibition or invalidity, and shall not invalidate theremainder of such provision or the remaining provisions of thisNote. F. Time is of the essence with respect to the performance of all obligations of Maker hereunder. CLCI and CVDC shall be jointly and severally liable for the performance of the Maker's obligations under this Note. G. Whenever the context hereof so requires, thesingular shall include the plural, the male gender shallinclude the female gender and the neuter, and vice versa. H. The headings and captions contained in thisNote are for reference purposes only and shall in no way affectthe meaning or interpretation hereof. I. Maker acknowledges that Maker has either beenadvised by counsel of its choice with respect to the loantransaction evidenced by this Note or has voluntarily andindependently elected not to seek such advice. J. This Note shall be governed by and construedin accordance with the laws of the State of California. K. None of the terms and provisions contained inSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.this Note, or in any document or instrument related heretoshall ever be construed to create a contract for the use,forbearance or detention of money requiring payment of interestat a rate in excess of the maximum interest rate permitted tobe charged under California law (the "Usury Laws"). Makershall never be required to pay interest on this Note in excessof the maximum interest that may be lawfully charged under suchUsury Laws, as made applicable by the final judgment of a courtof competent jurisdiction, and the provisions of this Section3.K shall control over all other provisions hereof and of anyother instrument at any time executed in connection herewith orexecuted to secure the indebtedness evidenced hereby, which maybe in apparent conflict with this Section 3.K. If Holdercollects monies which are deemed to constitute interest whichwould otherwise increase the effective interest rate under thisNote to a rate in excess of that permitted to be charged bysuch Usury Laws, all such sums deemed to constitute interest inexcess of the maximum rate shall, at the option of Holder,either be credited to the payment of principal or returned toMaker. L. If either (i) the introduction of or any change(including, without limitation, any change by way of impositionor increase of reserve requirements) in, or in theinterpretation of, any law or regulation or (ii) the complianceby the Holder with any guideline or request from any centralbank or other governmental authority (whether or not having theforce of law), shall result in any increase in the cost to theHolder of maintaining or funding the indebtedness evidencedhereby, then Maker shall from time to time, upon demand byHolder, pay to Holder additional amounts sufficient toindemnify the Holder against such increased cost; provided,however, that nothing in this Section 3.L. shall obligate Makerto indemnify the Holder for increased costs due to generaloverhead of the Holder. A certificate as to the amount of any such increased cost submitted to Maker by Holder which includes an explanation of the manner in which such amount was computed, shall, in the absence of manifest error, be conclusive and binding for all purposes. M. Certain Provisions Relating to Interest. (i) Certain Definitions. As used in this Note,the following terms shall have the following meanings: (a) "Banking Day" means a day other than a Saturdayor a Sunday when commercial banks are open for the transactionof normal banking business in the City of London, England andNew York City, New York. (b) "LIBOR Rate" shall mean, for any InterestPeriod, the rate per annum at which Holder is offered dollardeposits in the London Interbank Market at approximately 11:30a.m. (London time) of the first day of the relevant InterestPeriod, for the number of months comprised therein and in anamount equal to the amount of the indebtedness to beoutstanding hereunder during such Interest Period. (c) "Interest Period" means a period from the datehereof (or from the date of the expiration of the then currentInterest Period) of one (1), three (3) or six (6) monthsthereafter (at Maker's option as provided in Section 3.M(ii)below), subject to the following: (x) if any Interest Period would otherwise end on aday which is not a Banking Day, that Interest Period shall beextended to the next succeeding Banking Day, unless the resultof such extension would be to extend such Interest Period intoanother calendar month, in which event such Interest Periodshall end on the immediately preceding Banking Day; (y) any Interest Period that would otherwise extendbeyond the Maturity Date shall end on the Maturity Date or, ifthe Maturity Date shall not be a Banking Day, on the nextpreceding Banking Day; and Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (z) any principal disbursed hereunder during any Interest Period shall have an Interest Period coterminous withthe then applicable Interest Period, to the effect that allunexpired Interest Periods hereunder shall be coterminous; and (d) "Interest Rate" shall mean a fluctuating rateper annum equal to the sum of (x) the LIBOR Rate for theapplicable Interest Period, plus (y) one percent (1.0%); and (ii) Maker's Notice Regarding Interest Period. Notlater than three (3) Banking Days prior to the expiration ofthe then applicable Interest Period hereunder, Maker shalldeliver to the Holder (in the manner provided for the deliveryof notice in Section 3.D above) a written notice (a "SelectionNotice") which shall state the length of the Interest PeriodMaker elects for the next ensuing Interest Period. Notwithstanding anything to the contrary in Section 3.D above or any other provision of this Note, any Selection Notice delivered to Holder pursuant to this Section 3.M shall be deemed delivered to Holder upon receipt only if it is delivered to Holder during the hours of 9:00 a.m. to 5:00 p.m. London time on a Banking Day. Selection Notices received by Holder during hours other than those specified in the immediately preceding sentence or on a day other than a Banking Day shall be deemed to have been delivered to Holder on the Banking Day next succeeding Maker's delivery thereof. Selection Notices delivered pursuant to this Section 3.M(ii) shall be irrevocableand shall constitute an unconditional election by Maker thatsuch Interest Period shall be of the length set forth in theSelection Notice. In the event that the Maker fails timely todeliver any Selection Notice, Maker shall conclusively be deemed to have elected to have the next ensuing InterestPeriod be for a period equal to the shorter of (x) one (1)month, or (y) the period remaining to the Maturity Date. Executed on the day and year first hereinabove set forth. Cadiz Land Company, Inc., a Delaware corporation By: /s/ Keith Brackpool --------------------------- Name: Keith Brackpool Title: Chief Executive Officer Cadiz Valley Development Corporation, a California corporation By: /s/ Keith Brackpool -------------------------- Name: Keith Brackpool Title: Chief Executive Officer EXHIBIT "F" The term "Water Assets" is defined as follows: All right, title and interest of CVDC and/or Cadiz,whether now existing or hereafter arising or acquired, whetherdirect or indirect, whether owned legally, of record, equitablyor beneficially, whether constituting real or personal property(or subject to any other characterizations), whether created orauthorized under existing or future laws or regulations, andSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.however arising, including without limitation, the following,which shall collectively be called "Water Assets": (a) All water (including any water inventory instorage), water rights and entitlements, other rights to waterand other rights to receive water or water rights of every kindor nature whatsoever including, without limitation, (i) theground water on, under, pumped from or otherwise available tothe real property described in any Cadiz Deed of Trust, CVDCDeed of Trust, any other deed of trust or mortgage which mayhereafter be given by CVDC, Cadiz or any other party to securethe Obligations, and/or any other real property in which Cadizand/or CVDC or any affiliate of either may now have orhereafter acquire an interest (collectively, the "RealProperty"), whether as the result of ground water rights,contractual rights or otherwise, (ii) CVDC's or Cadiz's rightto remove and extract any such ground water including anypermits, rights or licenses granted by any governmentalauthority or agency or any rights granted or created by anyuse, easement, covenant, agreement, or contract with any personor entity, (iii) any rights to which the Real Property isentitled with respect to surface water, whether such right isappropriative, riparian, prescriptive, decreed or otherwise andwhether or not pursuant to permit or other governmentalauthorization, or the right to store any such water, (iv) anywater, water right, water allocation, distribution right,delivery right, water storage right, or other water-relatedentitlement appurtenant or otherwise applicable to the RealProperty by virtue of the Real Property being situated withinthe boundaries of any district, agency, or other governmentalentity or within the boundaries of any private water company,mutual water company, or other non-governmental entity and (v)all pumping plants, pipes, flumes and all rights in ditches forirrigation of the Real Property; (b) All stock, interest or rights (including anywater allocations, voting or decision rights) in any entity,together with any and all rights from any entity or otherperson to acquire, receive, exchange, sell, lease or otherwisetransfer any water or other Water Assets, to store, deposit orotherwise create water credits in a water bank or similar orother arrangements for allocating water, to transport ordeliver water, or otherwise to deal with any Water Asset; (c) All licenses, permits, approvals, contracts,decrees, rights and interests to acquire or appropriate anywater or other Water Assets, water bank or other creditsevidencing any right to water or other Water Assets, to store,carry, transport or deliver water or other Water Assets, tosell, lease, exchange, or otherwise transfer any water or otherWater Assets, or to change the point for diversion of water,the location of any water or Water Asset, the place of use ofany water or Water Asset, or the purpose of the use of anywater or Water Asset; (d) All rights, claims, causes of action,judgments, awards, and other judicial, arbiter oradministrative relief in any way relating to any water or WaterAsset; (e) All storage and treatment rights for anywater or any other Water Asset, whether on or off the RealProperty or other property of CVDC or Cadiz, together with allstorage tanks, and other equipment used or usable in connectionwith such storage and any water bank deposit credits, depositaccounts; (f) All rights to transport, carry, allocate orotherwise deliver water or other Water Assets by any meanswherever located; (g) All guaranties, warranties, marketing,management or service contracts, indemnity agreements, andwater right agreements, other water related contracts and waterreallocation rights, all insurance policies regarding orSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.relating to any Water Asset; (h) All rents, issues, profits, proceeds and otheraccounts, instruments, chattel paper, contract rights, generalintangibles, deposit accounts, and other rights to paymentarising from or on account of any use, nonuse, sale, lease,transfer or other disposition of any Water Asset; and (i) The references to "water" and "water assets"are used herein in the broadest and most comprehensive sense ofthe terms. The term "water" includes water rights and rightsto water or whatever rights to money, proceeds, property orother benefits are exchanged or received for or on account ofany Water Assets or any conservation or other nonuse of water,including whatever rights are achieved by depositing shares ofany Water Asset in any water bank or with any water authority,or any other water reallocation rights.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 10.42 FOURTH LOAN MODIFICATION AGREEMENT Dated as of March 15, 1995 This FOURTH LOAN MODIFICATION AGREEMENT ("Agreement") is made by and between CADIZ LAND COMPANY, INC., a Delaware corporation ("CLCI"), successor by merger to Pacific Agricultural Holdings, Inc., a California corporation ("PAH"), CADIZ VALLEY DEVELOPMENT CORPORATION, a California corporation ("CVDC," and together with CLCI being referred to herein as the "Borrowers"), and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland," New York Branch (the "Bank"), who agreeas follows: 1. RECITALS. This Agreement is made with reference to the following facts and objectives: 1.1 The Borrowers and the Bank entered into that certain Loan Modification Agreement dated as of December 16, 1991, as modified(the "First Modification Agreement"), pursuant to which the Borrowers and the Bank agreed to modify and consolidate certain loan and financing agreements in effect between them, which Consolidation (as defined in the First Modification Agreement) became effective October 15, 1992. 1.2 The Borrowers and the Bank subsequently entered into that certain Second Loan Modification Agreement dated as of September 15, 1993(the "Second Modification Agreement"), pursuant to which the Borrowers and the Bank agreed to restate and further modify the terms of the Bank's loan to the Borrowers. 1.3 The loan modification contemplated by the Second Modification Agreement (the "Second Loan Modification") became effective as of December 30, 1993. 1.4 The Borrowers and the Bank subsequently entered into that certain Third Loan Modification Agreement dated as of January 12, 1994 (the "Third Modification Agreement"), pursuant to which the Bank agreed to further modify the terms of the Bank's loan to the Borrowersin consideration for, inter alia, the Borrowers' agreement to make a partial prepayment toward the outstanding principal balance of the loan. 1.5 The loan modification contemplated by the Third Modification Agreement (the "Third Loan Modification") became effective as of February 11, 1994. In connection with the Third Loan Modification, the Second Modification Agreement was amended by the Third Modification Agreement (which Second Modification Agreement, as so amended, shall be referred to herein as the "Third Modified Loan Agreement") and the Borrowers delivered to the Bank that Amended and Restated Promissory Note dated January 12, 1994, in the original principal amount of $8,681,474.03 (the "Restated Note"). 1.6 The obligations of the Borrowers under the Third Modified Loan Agreement and the Restated Note are secured by, inter alia: (a) that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of August 1, 1992, which was recorded on October 14, 1992 in the Official Records of San Bernardino County, California (the "Official Records"), as Instrument No. 92-423533 (the "Trust Deed"), as amended by (i) that Amendment to Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of September 15, 1993, which was recorded on December 30, 1993 in the Official Records as Instrument No. 93-570154 and (ii) that Second Amendment to Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated as of January 12, 1994, which was recorded on February 11, 1994 in the Official Records as Instrument No. 94-058715 (the Trust Deed, as so amended, being referred to herein as the "Rabobank Trust Deed"); (b) that certain Security Agreement dated March 17, 1989, executed by PAH in favor of the Bank (the "3/89 Security Agreement");Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(c) that certain Security Agreement dated as of September 8, 1989, executed by PAH in favor of the Bank (the "9/89 Security Agreement"); (d) that Amended and Restated Security Agreement and Agreement to Pledge executed as of September 15, 1993 by CLCI and the Bank, as amended by that Reaffirmation of Amended and Restated Security Agreement and Agreement to Pledge executed as of January 12, 1994 by CLCI and the Bank (the "Restated CLCI Pledge"); and (e) that Amended and Restated Security Agreement and Agreement to Pledge executed as of September 15,1993 by CVDC and the Bank, as amended by that Reaffirmation of Amended and Restated Security Agreement and Agreement to Pledge executed as of January 12, 1994 by CVDC and the Bank (the "Restated CVDC Pledge"). The Rabobank Trust Deed, 3/89 Security Agreement, 9/89 Security Agreement, Restated CLCI Pledge and Restated CVDC Pledge shall be referred to collectively herein as the "Rabobank Security Documents," and the security interests granted to the Bank thereby shall be referred to collectively herein as the "Rabobank Security Interests." 1.7 In connection with the Third Loan Modification: (a) the Bank and Henry Ansbacher & Co. Limited ("Ansbacher") entered into that Personal Property Subordination Agreement dated January 11, 1994 (the "1994 Personal Property Subordination Agreement"); (b) the Bank and CLCI, for the benefit of Ansbacher, entered into that Subordination Agreement dated January 11, 1994, which was recorded on February 11, 1994 in the Official Records as Instrument No. 94-058714 (the "1994 CLCI Real Property Subordination Agreement"); and (c) the Bank andCVDC, for the benefit of Ansbacher, entered into that Subordination Agreement dated January 11, 1994, which was recorded on February 11, 1994 in the Official Records as Instrument No. 94-058713, which Subordination Agreement was subsequently replaced and superseded by that Subordination Agreement dated July 5, 1994, which was recorded on July 28, 1994 in the Official Records as Instrument No. 94-322981 (the "1994 CVDC Real Property Subordination Agreement"). In connection with the Second Loan Modification, the Bank and Ansbacher entered into that Appointment of Special Agent for Possession of Promissory Notes dated as of September 15, 1993, which was amended by that Amendment to Appointment of Special Agent for Possession of Promissory Notes dated as of January 12, 1994 (which agreement, as so amended, shall be referred to herein as the "Appointment" and, together with the 1994 Personal Property Subordination Agreement, the 1994 CLCI Real Property Subordination Agreement and the 1994 CVDC Real Property Subordination shall be referred to herein as the "1994 SubordinationAgreements"). Pursuant to the 1994 Subordination Agreements, certain of the Rabobank Security Interests were subordinated to the Senior Interests (as defined in the 1994 Subordination Agreements) held byAnsbacher as security for the Superior Obligations (as defined in the 1994 Subordination Agreements) of the Borrowers, or either of them, to Ansbacher. 1.8 The Bank has agreed: (a) to subordinate to Ansbacher's Senior Interests certain of the Rabobank Security Interests not previously subordinated thereto, including, without limitation, the Rabobank Security Interests in those parcels of real property described in the attached Exhibit A; and (b) that Ansbacher's Senior Interests shall also secure an additional loan of up to $3,000,000 to be made by Ansbacher to CLCI and CVDC in accordance with the terms of that certain Loan Agreement dated March 15, 1995 among Ansbacher and theBorrowers (the "3/95 Ansbacher Loan") (the agreements by the Bank described in items (a) and (b) of this paragraph to be referred to herein as the "Additional Subordinations"), all in consideration for the Borrowers' agreement to make a partial prepayment of principal under the Restated Note, to grant additional security interests to the Bank, and to provide other consideration to the Bank, all on the terms and conditions set forth herein. 1.9 All capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned to them in the Third Modification Agreement or, if not defined therein, as assigned to them in the Second Modification Agreement. 2. SUBORDINATION. The Bank agrees, on the terms and conditions set forth herein, to effect the Additional Subordinations by executing and delivering such written agreements relating thereto between, among and/or in favor of the Bank, CLCI, CVDC and/or Ansbacher as such parties may, in their discretion, agree.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. 3. AMENDMENT OF PRIOR MODIFICATION AGREEMENTS. 3.1 Fourth Loan Modification. The Additional Subordinations, theagreements between the parties in connection therewith and the satisfaction ofall conditions thereto shall be referred to herein as the "Fourth LoanModification," and the Bank shall notify the Borrowers of the effective datethereof if and when all conditions thereto have been satisfied. If the FourthLoan Modification is not effected on or before March 31, 1995 (the "TerminationDate"), then, unless such failure is due in no way or part to any failure of the Borrowers to satisfy the conditions precedent to the Fourth Loan Modification set forth herein or to any Event of Default or other act or omission of the Borrowers, the Bank shall have no obligation to effect the Fourth Loan Modification and this Agreement shall, as of such date, be deemed terminated and of no further force or effect unless the Bank notifies the Borrowers otherwise. Until such time, if any, as the Fourth Loan Modification becomes effective pursuant to the terms of this Agreement, the Third Modified Loan Agreement and the obligations of the Borrowers thereunder shall remain in full force and effect, unmodified by this Agreement. In the event and to the extent of any conflict or inconsistency between the terms and provisions of the Third Modified Loan Agreement and the terms and provisions of this Agreement, the terms and provisions of this Agreement shall prevail. Except to such extent and as otherwise modified and amended hereby, the terms, provisions and obligations of the Third Modified Loan Agreement shall remain unchanged and in full force andeffect, and the Borrowers do hereby acknowledge and reaffirm all of theagreements, covenants (affirmative and negative), obligations, terms andprovisions of the Third Modified Loan Agreement. 3.2 Amendments to Prior Modification Agreements. (a) Ansbacher Restructuring. The reference in Section 4.02 ofthe Second Modification Agreement, as modified by Section 1.02(b)(iii) of theThird Modification Agreement, to the Ansbacher Restructuring shall be deemed to also refer to the 3/95 Ansbacher Loan. (b) Ansbacher Debt Instruments. The reference in Section 4.02 of the Second Modification Agreement, as modified by Section 1.02(b)(iii) of the Third Modification Agreement, to the Ansbacher Debt Instruments shall be deemed to also refer to that Secured Promissory Note dated March 29, 1995, inthe face amount of $3,000,000.00 to be executed by CLCI and CVDC and delivered to Ansbacher in connection with the 3/95 Ansbacher Loan (the "3/95 Ansbacher Note"), and in form and content as may be approved by the Bank. The reference in Section 1.02(c)(i) of the Third Modification Agreement to the1/94 Ansbacher Debt Instruments shall be deemed to also refer to the 3/95 Ansbacher Note. (c) Ansbacher Indebtedness. The reference in Section 1.02(c)(v) of the Third Modification Agreement to the 1/94 Ansbacher Indebtedness shall be deemed to also refer to the obligations of the Borrowers under the 3/95 Ansbacher Note and under any document, instrumentor agreement securing the obligations evidenced by or arising under the3/95 Ansbacher Note (the "3/95 Ansbacher Indebtedness"). The reference in Section 1.02(d)(i) of the Third Modification Agreement to the 1/94 Ansbacher Indebtedness shall be deemed to also refer to the 3/95 Ansbacher Indebtedness. (d) Affirmative Covenants of the Borrowers. (i) Section 4.01(c) of the Second Modification Agreement is hereby modified to read in full as follows: Furnish to the Bank when due as provided in this Section 4.01(c) the following financial information: (i) within fifteen (15) days following filing with the Securities and Exchange Commission (the "SEC"), a true, correct and complete copy of each Quarterly Report on Form 10-Q fromtime to time filed by CLCI; (ii) on or before March 1 and August 1 of each year, a statement of projected cash flow of CLCI and its subsidiaries for the next ensuing twelve (12) month period from April 1 through March 31 (as to the statement due on or before each March 1) and for the next ensuing twelve(12) month period from September 1 through August 31 (as to the statement due on or before each August 1); (iii) within forty-five (45) days following the end of each calendar quarter, a variance analysis (in form and content satisfactory to the Bank) setting forth the variances in CLCI's actual results of operation from its budgeted results of operation; (iv) within Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.fifteen (15) days of filing with the SEC, a true, correct and complete copy of each Annual Report on Form 10-K from time to time filed by CLCI; (v) not later than the commencement of each fiscal year, CLCI's operatingbudget for such fiscal year, which budget for the fiscal year ending March 31,1997, shall show as an expense item and in accordance with Section 1.02(e)(vi)of the Third Modification Agreement, all interest projected to be due on January 31, 1997 under the Restated Note for the period from and after January 1, 1995, in excess of $853,000; (vi) such other information concerning the financial condition or operations of CLCI, CVDC, or any other subsidiaries of either of them as the Bank may from time to time reasonably request; and (vii) as soon as possible, notice of the creation of any lien, security interest or other charge or encumbrance or any othertype of preferential arrangement, or the assignment of any right to receive income, in each case to secure the Debt (as hereinafter defined) of any person or entity. All of the foregoing information shall be prepared in accordance with generally accepted accounting principles consistentlyapplied and all information provided pursuant to Sections 4.01(c)(i) through(iii) shall be certified by CLCI's Chief Financial Officer. So long as CLCI,CVDC and CLCI's other subsidiaries prepare the financial information requiredpursuant to this Section 4.01(c) only on a consolidated basis, then the timelydelivery of all such information prepared on a consolidated basis for CLCI, CVDC and all such subsidiaries shall be deemed to satisfy the Borrower's obligations pursuant to this Section 4.01(c). (ii) The first sentence of Section 1.02(c)(i) of the Third Modification Agreement is hereby modified to read in full as follows: Provide the Bank, as additional security for the Borrowers'obligations under the Restated Note, with security interests (pursuant tosecurity documents satisfactory to the Bank) in all property (or intereststherein, including, without limitation, option rights to acquire such property,to the extent the Borrowers have the right to pledge or encumber such optionrights) now owned or hereafter acquired by the Borrowers, or either of them,and cause any subsidiary or other affiliate of the Borrowers, or either of them, which acquires any such property (or interest therein) to so provide the Bank with such security interests. (iii) The definition of "Water Assets" set forth in Exhibit B to the Third Modification Agreement and as referred to in Section 1.02(c)(iv) and other provisions of the Third Modification Agreement is hereby modified to read in full as defined in the Restated Rabobank Trust Deed. (e) Negative Covenants of the Borrowers. (i) Section 1.02(d)(ii) of the Third Modified Loan Agreement is hereby modified to read in full as follows: Encumber or grant any other security interest in favor of anythird party (other than to Ansbacher pursuant to that certain Loan Agreementdated March 15, 1995 among Ansbacher and the Borrowers) in or to any property (or interest therein), wherever located, acquired by the Borrowers, or either of them, or by any subsidiary or affiliate of either of them; provided, however, that nothing in this Section 1.02(d)(ii) shall be deemed to prohibit the Borrowers, or either of them, from granting security interests in growing crops to non-affiliated third parties who are conducting farming operations onthe real property encumbered by the Restated Rabobank Trust Deed or by the deed of trust securing the SWFG Replacement Note pursuant to bona fide, armslength agreements with the Borrowers, or either of them. (ii) The last sentence of Section 1.02(d)(iii) of the Third Modification Agreement is hereby modified to read as follows: Notwithstanding any other provisions herein to the contrary: (aa) the Borrowers may convey or enter into contracts regarding the Water Assets so long as (xx) no such single conveyance or contract involves more than twenty-five (25) acre feet of water and (yy) the cumulative total of all such conveyances or contracts in any one year does not exceed two hundred (200) acre feet of water; and (bb) the Bank will not unreasonably withhold its consent to any proposed contract or agreement pursuant to which water would be sold and delivered by the Borrowers, or either of them, to a third party; and (iii) the restrictions on the sale of water provided in this Section 1.02(d)(iii) shall not apply to water transferred to third parties all of which is used solely for irrigation purposes in connection with agricultural operations conducted by such third party on the real property Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.encumbered by the Restated Rabobank Trust Deed and/or by the deed of trust securing the SWFG Replacement Note. (f) Events of Default. "Events of Default" shall be as defined in Section 5.01 of the Second Modification Agreement, as modified bySection 1.02(e) of the Third Modification Agreement and as follows: (i) The representations and warranties referred to inSection 5.01(b) shall be deemed to include, in addition, any representation orwarranty made by a Borrower (or any of its officers) under or in connection with this Agreement or any document, instrument, or agreement executed and delivered by the Borrowers to the Bank in connection with the Fourth Loan Modification (collectively, the "Fourth Modified Loan Documents"). (ii) The reference to any Second Modified Loan Document in Section 5.01(c) shall be deemed to include, in addition, any Fourth Modified Loan Document. (iii) In the last clause of Section 5.01 following Section 5.01(k), the references to the Second Loan Modification shall be deemed to refer to the Fourth Loan Modification. (g) Miscellaneous. Article VI of the Second ModificationAgreement, as modified by Section 1.02(f) of the Third Modification Agreement,shall be further modified as follows: (i) In Sections 6.01, 6.02, 6.03, 6.05, 6.06 and 6.07(a) of the Second Modification Agreement, any references to the Second Modified Loan Document(s) shall be deemed to refer to the Second Modified Loan Document(s), Third Modified Loan Document(s) and/or Fourth Modified Loan Documents. (ii) In Section 6.02 of the Second Modification Agreement,CLCI's address for notices shall be changed to 10535 Foothill Boulevard, Suite150, Rancho Cucamonga, California 91730, Attention: Chief Financial Officer, and notices to the Bank shall be sent to 245 Park Avenue, New York, New York 10167, Attention: Corporate Services Department. (iii) The second sentence of Section 6.03 of the SecondModification Agreement shall be modified by adding to the end of such sentence"including, without limitation, the Third Modified Loan Documents and/or theFourth Modified Loan Documents." 4. CONDITIONS PRECEDENT TO FOURTH LOAN MODIFICATION. 4.1 Deliveries to the Bank. The obligation of the Bank to effect the Fourth Loan Modification is subject to the condition precedent that the Bank shall have received, on or before the effective date of the Fourth LoanModification, and in any event on or before the Termination Date, the following, in form and substance satisfactory to the Bank in its sole discretion, duly executed and/or in recordable form, where appropriate, and all at the Borrowers' cost: (a) The sum of Two Hundred Fifty Thousand Dollars ($250,000), Two Hundred Thousand Dollars ($200,000) of which shall constitute reimbursement for legal fees and expenses previously incurred by the Bank in connection with this loan and for legal fees and expenses incurred by the Bank in connection with the Fourth Loan Modification, and the balanceof which shall be applied as partial prepayment of the principal balance ofthe Restated Note. Notwithstanding such reimbursement, Borrowers agree thatthey shall be and remain obligated to reimburse the Bank for any and all other fees, costs and expenses of counsel for the Bank pursuant to Section 6.05(a) of the Second Modification Agreement, as modified by Section 3.2(g)(i) of this Agreement. (b) With regard to the Rabobank Trust Deed, a modification thereof or a replacement therefor adding to the property covered thereby thatreal property described in the attached Exhibit B and such personal property as the Bank may require (the "Restated Rabobank Trust Deed"). (c) With regard to the Restated Rabobank Trust Deed, anendorsement to the Bank's existing lender's title insurance policy covering the Rabobank Trust Deed or, at the Bank's election, a new lender's title insurance policy (such endorsed existing policy or such new policy, as thecase may be, being referred to herein as the "Rabobank Policy") issued by Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.a title insurance company selected by the Bank, assuring the Bank that theRestated Rabobank Trust Deed secures the obligations of the Borrowers under the Restated Note and as otherwise set forth in this Agreement, and is a valid and enforceable mortgage lien on the property mortgaged thereby, subject only to the those exceptions as may be approved by the Bank (and which shall, if approved by the Bank, include the security interests of Ansbacher securing the 1/94 Ansbacher Indebtedness and the 3/95 Ansbacher Indebtedness), which policy shall include endorsements for such mattersas the Bank in its sole discretion may request. (d) A certificate concerning the absence of hazardouswaste on the real property covered by the Restated Rabobank Trust Deed. (e) Evidence that all insurance required under theRestated Rabobank Trust Deed is in full force and effect. (f) Evidence of the payment of any fees and chargesin connection with the transactions contemplated in this Agreement, including without limitation insurance premiums and title insurancepremiums. (g) If so request by the Bank, an independent,unsecured environmental indemnity agreement with respect to the realproperty covered by the Restated Rabobank Trust Deed. (h) Such UCC financing statements, or amendments to existing financing statements, as the Bank may require to perfect and protect the security interests created in favor of the Bank pursuant to the Restated Rabobank Trust Deed or any other RabobankSecurity Documents. (i) Certified copies of the resolutions of the Boards of Directors of the Borrowers approving this Agreement and any and all actions to be taken in connection herewith and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and such other actions. (j) A certificate of the Secretary or an Assistant Secretary of each Borrower certifying the names and true signatures of its officers authorized to sign this Agreement and the other documents to be delivered by it hereunder. (k) A favorable opinion of Miller & Holguin, counsel for the Borrowers, with respect to such matters relating to the transactions contemplated by this Agreement as the Bank may reasonably request. (l) Duly authorized and issued warrants in the form and content of the 1994 Replacement Warrants (as defined in Section 2.01(j) of the Third Modification Agreement) granting to the holder thereof the right to purchase, for a period of three (3) years from and after the effective date of the Fourth Loan Modification, thirty-five thousand (35,000) shares of common stock of CLCI for the purchase price of five cents ($0.05) per share (the "1995 Warrants"). The common shares subject to the 1995 Warrants shall, when issued, be duly and validly issued, fully paid and nonassessable. (m) A certified copy of the resolution of the Board of Directors of CLCI that sufficient shares of CLCI common stock have been authorized and reserved to allow the Bank to exercise the 1994 ReplacementWarrants and the 1995 Warrants as to all two hundred ten thousand (210,000) shares covered thereby. (n) A certificate of an officer of CLCI stating the total number of authorized shares of common stock of CLCI, the total number of issued and outstanding shares, and the total number of shares subject to issued and outstanding warrants and other options. (o) A certification identifying all the real property owned by the Borrowers, or either of them, or in which the Borrowers, or either of them, has an interest (whether by virtue of a purchase agreement, an option to acquire, or otherwise). (p) Such other approvals, opinions, instruments, agreements,writings and other documents as the Bank may reasonably request in connectionwith the creation or continuation of any security interest(s) granted to or Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.held by the Bank in furtherance of the transactions contemplated by this Agreement or as the Bank may otherwise require in connection with the consummation of such transactions (including, without limitation, estoppel certificates, security agreements, financing statements, pledges, assignments, subordination agreements, intercreditor agreements, endorsements, certificates, certifications, reports, and studies). The Bank may, in its sole and absolute discretion, waive therequirement that any of the foregoing documents or other items be delivered to it as a condition to the effectiveness of the Fourth Loan Modification, it being understood and agreed that any such waiver shall only be effectiveif made in writing by the Bank. 4.2 Additional Conditions Precedent to Fourth Loan Modification. The obligation of the Bank to effect the Fourth Loan Modification shall be subject to the further conditions precedent that on the effective date of the Fourth Loan Modification: (a) The following statements shall be true (and the effectiveness of the Fourth Loan Modification shall be deemed to constitute a representation and warranty by the Borrowers that such statements are trueas of the date thereof): (i) The representations and warranties contained in Section 5 of this Agreement, in Section 3.01 of the Second Modification Agreement, in Sections 2.02 and 3.01 of the Third Modification Agreement, in Article I of the Restated Rabobank Trust Deed, in Article 1 of each of the Pledge Agreements, or in any other Second Modified Loan Document, Third Modified Loan Document or Fourth Modified Loan Document are correct on and as of the date of the Third Loan Modification as though made on and as of such date; and (ii) No event has occurred and is continuing, or would result from the Fourth Loan Modification, that constitutes an Eventof Default or would constitute an Event of Default but for the requirement that notice be given or time elapse or both. (b) The Borrowers shall have effected (or shall effect,concurrently with the Fourth Loan Modification) the 3/95 Ansbacher Restructuring. To the extent the Bank deems it necessary or desirable in order to effect the Fourth Loan Modification concurrently with the 3/95 Ansbacher Restructuring, an escrow shall be established with Chicago Title Company or such other escrow holder as may be acceptable to the Bank. Withregard to any or all of the funds, documents and other materials to be delivered by the Borrowers to the Bank as conditions precedent to the Bank's obligation to effect the Fourth Loan Modification, the Bank may require that such documents and materials be delivered through escrow. All costs, fees and expenses of such escrow shall be paid by the Borrowers. (c) All real property taxes with respect to the propertyencumbered by the Restated Rabobank Trust Deed shall have been paid current. 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. Each Borrowerrepresents and warrants as follows: (a) Such Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction indicated at the beginning of this Agreement. (b) The execution, delivery and performance by such Borrower of each of the Fourth Modified Loan Documents to which it is or will be a partyare within such Borrower's corporate powers, have been duly authorized by allnecessary corporate action, do not contravene (i) such Borrower's charter orby-laws or (ii) law or any contractual restriction binding on or affecting such Borrower, and do not result in or require the creation of any lien, security interest or other charge or encumbrance (other than pursuant hereto and to the Restated Rabobank Trust Deed, Security Agreements and Pledge Agreements) upon or with respect to any of its properties. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by such Borrower of any Fourth Modified Loan Document to which it is or will be a party.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (d) This Agreement is, and each of the other Fourth Modified Loan Documents to which such Borrower is or will be a party when delivered hereunder will be, legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with their respective terms. (e) Except as disclosed in (i) that letter dated June 10, 1994, from Miller & Holguin to Price Waterhouse, (ii) that letter dated June 10, 1994, from William D. Baker of Ellis, Baker & Porter, Ltd., to Price Waterhouse, (iii) that letter dated March 21, 1995, from James D. Burnside of Caswell, Bell, Hillison, Burnside & Greer, to Susan K. Chapman at CLCI, and (iv) that letter dated March 28, 1995, from Howard J. Unterberger of Miller & Holguin, to the Bank, there is no pending or, to the best of such Borrower's knowledge, threatened action or proceeding affecting such Borrower or any of its subsidiaries before any court, governmental agency or arbitrator, which could result in a material adverse judgment against such Borrower or any subsidiary. 6. ADDITIONAL COVENANTS OF THE BORROWERS. 6.1 With respect to that certain Option Agreement dated December 29, 1993 (the "SF Option"), between CLCI, as optionee, and S.F. Pacific Properties, Inc. ("SF"), as optionor, covering approximately 5,652 acres in the so-called Cadiz Basin and that certain Option Agreement dated June 20, 1994 (the "Piute Option"), between CLCI, as optionee, and SF, as optionor, covering approximately 3,358 acres of land, CLCI shall (a) use its best efforts during the forty-five (45)-day period following the effective date of the Fourth Loan Modification to obtain the optionor's consent, if required, to the pledge to the Bank of CLCI's option rights under the SF Option and the Piute Option and (b) provide the Bank promptly following CLCI's transmission or receipt, as the case may be, with copies of all correspondence relevant to such requests for consent. 6.2 On or before July 31, 1995, the Borrowers shall deliver to the Bank a true, correct and complete copy of an appraisal (the "D&T Appraisal") of the properties (collectively, the "SWFG Properties") encumbered by those deeds of trust securing the SWFG Farming Note and the SWFG Replacement Note (as such notes are defined in Sections 2.01(k)(i) and (ii) of the Second Modification Agreement) prepared by Deloitte & Touche and any other information or documentation relating to the value of such properties as the Banks may request; provided that in the event the D&T Appraisal has not been completed by July 31, 1995, then the Borrowers shall deliver a true, correct and complete copy of the most current draft of the D&T Appraisal on such date. 6.3 Within one hundred twenty (120) days following the effective date of the Fourth Loan Modification, the Borrowers shall obtain, at their sole cost and expense, and provide to the Bank a true, correct and complete copy of an appraisal (the "Appraisal") of (i) the real property covered by the Restated Rabobank Trust Deed, (ii) the SWFG Properties, (iii) the Harweal Property and (iv) the real property covered by the deed of trust securing the PSWRI Note (the "Appraised Properties") prepared by an appraiser or appraisers satisfactory to the Bank. The Appraisal shall, among other things, value the Appraised Properties based both upon their current usage and upon the assumption that the Water Assets attributable to the Appraised Properties are and can be fully exploited by the Borrowers. 6.4 On or before December 31, 1995, the Borrowers shall provide the Bank with an opinion letter prepared by the Borrowers' water rights counsel concerning the CLCI's rights with respect to the Water Assets associated with the approximately 2,955 acres of land owned by CLCI at Piute. 7. MISCELLANEOUS. 7.1 Binding Effect; Governing Law; Joint and Several Liability. This Agreement shall be binding upon and inure to the benefit of the Borrowers and the Bank and their respective successors and assigns, except that the Borrowers shall not have the right to assign their rights hereunder or any interest herein without the prior written consent of the Bank. All obligations of the Borrowers hereunder shall be joint and several. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California. 7.2 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.to be an original and all of which when taken together shall constitute but one and the same agreement. 7.3 General Release. As additional consideration for the Bank'sentering into this Agreement, the Borrowers hereby release and forever discharge the Bank, its agents, servants, employees, directors, officers, attorneys, branches, affiliates, subsidiaries, successors and assigns and all persons, firms, corporations, and organizations acting on its behalf (collectively,"Representatives"), of and from all damage, loss, claims, demands, liabilities, obligations, actions and causes of action whatsoever that the Borrowers may now have or claim to have against the Bank and/or theBank's Representatives, whether presently known or unknown, and of every nature and extent whatsoever on account of or in any way concerning, arising out of, related to or founded upon the Existing Loan Documents (as defined in the First Modification Agreement), the First Modification Agreement, theExisting Note, the Second Modified Loan Documents, the Third Modified Loan Documents and/or the Fourth Modified Loan Documents, including, without limitation, all such loss or damage of any kind heretofore sustained, or that may arise as a consequence of the dealings between the parties up to and including the effective date of this Agreement. This agreement and covenant on the part of the Borrowers is contractual, and not a mere recital. It is further understood and agreed that the foregoing general release extends to all claims of every kind and nature whatsoever, known, unknown, suspected or unsuspected, liquidated or contingent, foreseen or unforeseen, and the Borrowers, on behalf of themselves and their respective agents, successors, assigns, subsidiaries, partners and affiliates, hereby waive all rights under Section 1542 of the California Civil Code. Section 1542 of the California Civil Code provides as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR. Provided, however, that nothing herein shall be deemed to release the Bank or the Bank's Representatives from any liability or obligation arising in connection with facts or circumstances that occur or arise for the first time after the effective date of this Agreement. 7.4 Waiver of Anti-Deficiency Protection. In consideration for the Bank's entering into this Agreement and agreeing to effect the Additional Subordinations, the Borrowers, and each of them, hereby waives, as to any and all documents heretofore executed in connection with this loan and as to any and all documents or agreements executed by the Borrowers, or either of them, pursuant to this Agreement, any defense, protection or right under: (a) California Code of Civil Procedure ("CCP") Section 580dconcerning the bar against rendition of a deficiency judgment following anonjudicial foreclosure under a power of sale in a deed of trust; (b) CCP Section 580a purporting to limit the amount of adeficiency judgment which may be obtained following a nonjudicial foreclosureunder a power of sale in a deed of trust; and (c) CCP Section 726 concerning exhaustion of collateral (the"security first rule"), the form of an action to enforce an obligation securedby a deed of trust on real property located in California (the "one form of action rule") and otherwise limiting the amount of a deficiency judgment that may be recovered following completion of judicial foreclosure by reference to the "fair value" of the foreclosed collateral (the "fair value limitation"). 7.5 Attorneys' Fees. In the event of any action or proceeding arising out of or in connection with this Agreement or the enforcement of the terms hereof, the prevailing party shall be entitled to collect and receive its attorneys' fees and costs of suit. 7.6 Incorporation. The Recitals set forth above and all exhibitsattached hereto are a part of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beexecuted by their respective officers thereunto duly authorized, as of the date first above written. CADIZ LAND COMPANY, INC.,Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. a Delaware corporation By: /s/ Keith Brackpool ---------------------- Keith Brackpool Chief Executive Officer CADIZ VALLEY DEVELOPMENT CORPORATION, a California corporation By: /s/ Keith Brackpool ----------------------- Keith Brackpool Chief Executive Officer COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "Rabobank Nederland," New York Branch By: /s/ Michel de Konkoly Thege --------------------------- Authorized Officer By: /s/ James Mahon ---------------------------- Authorized Officer EXHIBIT A [Legal Descriptions of 1,760 acres, Citrus property and Labor Camp]1,760 Acres: (Parcels 17B and 19 of Order No. 9511026)The land is situated in the State of California, County of San Bernardino, and is described as follows:SECTIONS 32 AND 34, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO MERIDIAN, INTHE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.THE NORTHWEST ONE-QUARTER AND THE NORTHEAST ONE-QUARTER AND THE NORTH ONE-HALF OF THE SOUTHWEST ONE-QUARTER AND THE NORTH ONE-HALF OF THE SOUTHEAST ONE-QUARTER OF SECTION 21, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.Citrus Property:The land is situated in the State of California, County of San Bernardino, and is described as follows:SECTION 27, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.Labor Camp: (Parcel 21 of Order No. 9511026)The land is situated in the State of California, County of San Bernardino, and is described as follows:ALL OF SECTION 16, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO BASE ANDSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM A RECTANGULAR PARCEL OF LAND IN THE NORTHEAST ONE-QUARTER OF THE SOUTHEAST ONE-QUARTER OF SAID SECTION 16 DESCRIBED AS FOLLOWS:BEGINNING AT A POINT IN THE NORTHERN RIGHT OF WAY LINE OF THE CALIFORNIA, ARIZONA AND SANTA FE RAILWAY COMPANY, DISTANT 86 FEET NORTHERLY, AT RIGHT ANGLES FROM THE CENTER LINE OF WESTBOUND MAIN TRACT OF SAID RAILWAY COMPANY, SAID POINT BEING 546.1 FEET WESTERLY ALONG SAID RIGHT OF WAY LINE FROM ITS INTERSECTION WITH THE EAST LINE OF SAID SECTION 16, DISTANT 365.6 FEET SOUTH ON SAID EAST LINE FROM THE EAST 1/4 CORNER OF SAID SECTION;THENCE WESTERLY ALONG SAID RIGHT OF WAY LINE, 363 FEET;THENCE NORTHERLY AT RIGHT ANGLES, 120 FEET;THENCE EASTERLY, PARALLEL WITH SAID NORTHERN RIGHT OF WAY LINE, 363 FEET;THENCE SOUTHERLY AT RIGHT ANGLES, 120 FEET TO THE POINT OF BEGINNING.ALSO EXCEPTING THEREFROM A RECTANGULAR PARCEL OF LAND IN THE NORTHEASTONE-QUARTER OF THE SOUTHEAST ONE-QUARTER OF SECTION 16, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO BASE AND MERIDIAN, DESCRIBED AS FOLLOWS:BEGINNING AT A POINT IN THE NORTHERN RIGHT OF WAY LINE OF WAY THE CALIFORNIA,ARIZONA AND SANTA FE RAILWAY COMPANY, DISTANT 86 FEET NORTHERLY, AT RIGHT ANGLES FROM THE CENTER LINE OF THE WESTBOUND MAIN TRACK OF SAID RAILWAY COMPANY, SAID POINT BEING DISTANT 183.1 FEET WESTERLY ALONG SAID RIGHT OF WAY LINE FROM ITS INTERSECTION WITH THE EAST LINE OF SAID SECTION 16, DISTANT 165.6 FEET SOUTH ON SAID EAST LINE FROM THE EAST 1/4 CORNER OF SAID SECTION;THENCE WESTERLY ALONG SAID RIGHT OF WAY LINE, 363 FEET TO THE SOUTHEAST CORNER OF THE LAND CONVEYED BY W.F. ZIEGLER AND OLIVA M. ZIEGLER BY DEED RECORDED IN BOOK 677, PAGE 159, OFFICIAL RECORDS;THENCE NORTHERLY AT RIGHT ANGLES ALONG THE EASTERLY LINE OF THE LAND CONVEYEDBY DEED JUST REFERRED TO, 120 FEET;THENCE EASTERLY, PARALLEL WITH SAID NORTHERN RIGHT OF WAY LINE, 363 FEET; THENCE SOUTHERLY AT RIGHT ANGLES, 120 FEET TO THE POINT OF BEGINNING.ALSO EXCEPTING THEREFROM:FIRST: A STRIP OF LAND, 50 FEET WIDE, LYING SOUTH OF AND ADJACENT TO THESOUTHERN PACIFIC RAILWAY COMPANY'S 200-FOOT RIGHT OF WAY THROUGH SECTION 16,TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO BASE AND MERIDIAN.SECOND: A PIECE OR PARCEL OF LAND LYING IN THE SOUTHEAST ONE-QUARTER OF SAIDSECTION 16, BOUNDED AND DESCRIBED AS FOLLOWS:BEGINNING AT A POINT IN THE SOUTHERLY BOUNDARY OF THE ABOVE DESCRIBED PIECE OFLAND, DISTANT 770 FEET WESTERLY ALONG SAID SOUTHERLY LINE FROM THE EAST LINE OF SAID SECTION 16;THENCE SOUTHWESTERLY ALONG SAID SOUTHERLY LINE FROM THE EAST LINE OF SAID SECTION 16;THENCE SOUTHEASTERLY ON A CURVE CONCAVE SOUTHEASTERLY, WITH A RADIUS OF 739.49 FEET, A DISTANCE OF 750 FEET;THENCE SOUTH 5 DEGREES 24' WEST, A DISTANCE OF 1481 FEET, MORE OR LESS, TO A POINT IN THE SOUTH LINE OF SAID SECTION 16;THENCE WEST ALONG SAID SOUTH LINE, 50.2 FEET;THENCE NORTH 5 DEGREES 24' EAST, A DISTANCE OF 2389 FEET;THENCE NORTHWESTERLY ON A CURVE CONCAVE SOUTHWESTERLY WITH A RADIUS OF 739.49FEET, A DISTANCE OF 998 FEET, MORE OR LESS, TO A POINT IN THE SOUTHERLY BOUNDARY LINE OF THE ABOVE FIRST DESCRIBED PIECE OF LAND;THENCE EASTERLY ALONG SAID SOUTHERLY BOUNDARY LINE, A DISTANCE OF 975 FEET, MORE OR LESS, TO THE POINT OF BEGINNING. EXHIBIT B [Legal Descriptions of Cadiz Office Site and Ward Valley Property]Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Cadiz Office Site: (Order No. 9511032)The land is situated in the State of California, County of San Bernardino, andis described as follows:THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHEAST 1/4 AND THE SOUTHWEST 1/4 OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 31, TOWNSHIP 6 NORTH, RANGE 14 EAST, SAN BERNARDINO BASE AND MERIDIAN, ACCORDING TO THE OFFICIAL PLAT OF SAID LAND.Ward Valley Property: (Order Nos. 9512203, 9512213, 9512216, 9512210, 9512214, 9512209, 9512217, and 9512215)The land is situated in the State of California, County of San Bernardino, and is described as follows:THE WEST HALF OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 12, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM ONE-FOURTH OF ALL MINERALS, OIL, GAS, CARBON AND HYDROCARBON SUBSTANCES ON AND UNDER SAID LAND, AS RESERVED IN THE DEED FROM HOMER S. KNOWLES, ETUX., RECORDED JANUARY 13, 1958 IN BOX 4410 PAGE 475 OFFICIAL RECORDS.ALSO EXCEPTING THEREFROM ONE-FOURTH OF ALL MINERALS, OIL, GAS, CARBON ANDHYDROCARBON SUBSTANCES ON AND UNDER SAID LAND, AS RESERVED IN THE DEED FROM JOAN L. ZMINA, TRUSTEE, RECORDED OCTOBER 12, 1994 AS INSTRUMENT NO. 94-415289 OFFICIAL RECORDS.THE EAST ONE-HALF OF THE NORTHWEST ONE-QUARTER OF THE NORTHWEST ONE-QUARTERSECTION 12, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIALPLAT THEREOF.EXCEPTING THEREFROM ONE-QUARTER OF ALL MINERALS, OIL, GAS, CARBONS ANDHYDROCARBON SUBSTANCES ON AND UNDER SAID LAND, AS RESERVED IN THE DEED FROM HOMER S. KNOWLES, ETUX., RECORDED JANUARY 16, 1958 IN BOOK 4414 PAGE 237 OFFICIAL RECORDS.ALSO EXCEPTING THEREFROM ONE-FOURTH OF ALL MINERALS, OIL, GAS, CARBONS ANDHYDROCARBON SUBSTANCES ON AND UNDER SAID LAND, AS RESERVED IN THE DEED FROM CAROL O. ALLEN, ETAL., RECORDED OCTOBER 7, 1994 AS INSTRUMENT NO. 94-411051 OFFICIAL RECORDS.THE NORTH ONE-HALF OF THE NORTHEAST ONE-QUARTER OF SECTION 23, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.ALL OF SECTION 36, TOWNSHIP 3 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN,IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO GOVERNMENTSURVEY.THE NORTH HALF OF THE NORTHWEST QUARTER OF THE SOUTHWEST QUARTER, SECTION 12, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING THEREFROM 50% OF ALL OIL, GAS, MINERAL, URANIUM, AND OTHER HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND, AS RESERVED IN THE DEED RECORDED JUNE 7, 1962, IN BOOK 5712, PAGE 338 OFFICIAL RECORDS.PARCEL NO. 1:THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE SOUTHEAST 1/4 OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18, EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPTING THEREFROM A STRIP OF LAND 200 FEET IN WIDTH IN THE SOUTHEASTQUARTER OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, LYING 100 FEET ON EACH SIDE OF THE FOLLOWING DESCRIBED CENTER LINE, EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 36, SAID POINT BEINGLOCATED NORTH 46 DEGREES 03' WEST 45,738.1 FEET FROM THE SOUTHWEST CORNER OR SECTION 36, TOWNSHIP 1 NORTH, RANGE 19 EAST, SAN BERNARDINO MERIDIAN; THENCE NORTH 47 DEGREES 57'WEST 2,500 FEET, MORE OR LESS, TO A POINT ON THE WEST LINE.THE SOUTHEAST QUARTER OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SANBERNARDINO MERIDIAN, AS GRANTED TO THE ARIZONA AND CALIFORNIA RAILWAY COMPANY BY PERMIT DATED FEBRUARY 4, 1910, EXECUTED BY THE SURVEYOR GENERAL OF THE STATE OF CALIFORNIA PURSUANT TO SECTION 478 OF THE CALIFORNIA CIVIL CODE.PARCEL NO. 2:THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTYOF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHARE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPT THOSE PORTIONS OF A STRIP OF LAND 400 FEET IN WIDTH WHICH ARE LOCATED WITHIN THE NORTHWEST QUARTER AND THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAID SECTION 16, TO THE SOUTH LINE OF SAID SECTION 16, ONE LINE BEING LOCATED 70 FEET NORTHWESTERLY FROM THE OTHER LINE BEING LOCATED 330 FEET SOUTHEASTERLY FROM AND BOTH LINES BEING PARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED SOUTH 89 DEGREES 42' 40" EAST 1112.42 FEET FROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST 5348.94 FEET, MORE OR LESS, TO A POINT ON THE SOUTH LINE OF SAID SECTION WHICH IS LOCATED SOUTH 89 DEGREES 14' 56" EAST 147.60 FEET FROM THE SOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA BY INSTRUMENT DATED SEPTEMBER 15, 1934, EXECUTED ON BEHALF OF THE STATE OF CALIFORNIA BY THE CHIEF OF THE DIVISION OF STATE LANDS PURSUANT TO THE PROVISIONS OF CHAPTER 507 OF THE STATUTES OF CALIFORNIA, 1933. PARCEL NO. 3:THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 16,TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHARE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPT THOSE PORTIONS OF A STRIP OF LAND 400 FEET IN WIDTH WHICH ARE LOCATED WITHIN THE NORTHWEST QUARTER AND THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAID SECTION 16, TO THE SOUTH LINE OF SAID SECTION 16, ONE LINE BEING LOCATED 70 FEET NORTHWESTERLY FROM THE OTHER LINE BEING LOCATED 330 FEET SOUTHEASTERLY FROM THE BOTH LINES BEING PARALLEL TO THE FOLLOWING DESCRIBEDLINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED SOUTH 89 DEGREES 42' 40" EAST 1112.42 FEET FROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST 5348.94 FEET, MORE OR LESS, TO A POINT ON THE SOUTH LINE OF SAID SECTION WHICH IS LOCATED SOUTH 89 DEGREES 14' 56" EAST 147.60 FEET FROM THE SOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA BY INSTRUMENT DATED SEPTEMBER 15, 1934, EXECUTED ON BEHALF OF THE STATE OF CALIFORNIA BY THE CHIEF OF THE DIVISION OF STATE LANDS PURSUANT TO THE PROVISIONS OF CHAPTER 507 OF THE STATUTES OF CALIFORNIA, 1933.ALSO EXCEPT THOSE PORTIONS OF A STRIP OF LAND 200 FEET IN WIDTH WHICH ARE LOCATED WITHIN THE SOUTHWEST QUARTER OF THE NORTHWEST QUARTER AND THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, LYING 100 FEET ON EACH SIDE OF THEFOLLOWING DESCRIBED CENTER LINE EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED NORTH 46 DEGREES 42" WEST 69,424.5 FEET FROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH, RANGE 19 EAST, SAN BERNARDINO MERIDIAN;THENCE NORTH 47 DEGREES 57' WEST 3879.8, MORE OR LESS, TO A POINT ON THE WEST LINE OF SAID SECTION 16, AS GRANTED TO THE ARIZONA AND CALIFORNIA RAILWAY COMPANY BY PERMIT DATED FEBRUARY 4, 1910, EXECUTED BY THE SURVEYOR GENERAL OF THE STATE OF CALIFORNIA PURSUANT TO SECTION 478 OF THE CALIFORNIA CIVIL CODE.PARCEL NO. 4:THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHARE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.PARCEL NO. 5:THE NORTH 1/2 OF THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHARE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPT THOSE PORTIONS OF A STRIP OF LAND 400 FEET IN WIDTH WHICH ARE LOCATED WITHIN THE NORTHWEST QUARTER AND THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAID SECTION 16, TO THE SOUTH LINE OF SAID SECTION 16, ONE LINE Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.BEING LOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER LINE BEING LOCATED 330 FEET SOUTHEASTERLY FROM AND BOTH LINES BEING PARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED SOUTH 89 DEGREES 42' 40" EAST 1112.42 FEET FROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST 5348.94 FEET, MORE OR LESS, TO A POINTON THE SOUTH LINE OF SAID SECTION WHICH IS LOCATED SOUTH 89 DEGREES 14' 56" EAST 147.60 FEET FROM THE SOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA BY INSTRUMENT DATED SEPTEMBER 15, 1934, EXECUTED ON BEHALF OF THE STATE OF CALIFORNIA BY THE CHIEF OF THE DIVISION OF STATE LANDS PURSUANT TO THE PROVISIONS OF CHAPTER507 OF THE STATUTES OF CALIFORNIA, 1933.PARCEL NO. 6:THE NORTH 1/2 OF THE NORTHEAST 1/4 OF THE SOUTHEAST 1/4 OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTYOF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.PARCEL NO. 7:THE NORTH 1/2 OF THE SOUTHEAST 1/4 OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OFCALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.ALSO EXCEPTING THEREFROM A STRIP OF LAND 200 FEET IN WIDTH IN THE SOUTHEASTQUARTER OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, LYING 100 FEET ON EACH SIDE OF THE FOLLOWING DESCRIBED CENTER LINE, EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED NORTH 46 DEGREES 03' WEST 45,738.1 FEET FROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH, RANGE 19 EAST, SAN BERNARDINO MERIDIAN; THENCE NORTH 47 DEGREES 57' WEST 2500 FEET, MORE OR LESS, TO A POINT ON THE WEST LINE OF THE SOUTHEAST QUARTER OF SAID SECTION 36, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, AS GRANTED TO THE ARIZONA AND CALIFORNIA RAILWAY COMPANY BY PERMIT DATED FEBRUARY 4, 1910, EXECUTED BY THE SURVEYOR GENERAL OF THE STATE OF CALIFORNIA PURSUANT TO SECTION 478 OF THE CALIFORNIA CIVIL CODE.PARCEL NO. 8:THE SOUTH 1/2 OF THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTYOF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND ASSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.PARCEL NO. 9:THE SOUTH 1/2 OF THE SOUTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND ASMAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.PARCEL NO. 10:THE SOUTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THERIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.PARCEL NO. 11:THE NORTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTYOF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.EXCEPTING ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS CONTAINED IN SAID LAND, TOGETHER WITH THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE, AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LAND AS MAY BE REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED TO THE STATE OF CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OF OFFICIAL RECORDS, PAGE 174.THE SOUTH HALF OF THE SOUTHWEST QUARTER OF THE NORTHEAST QUARTER OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF ON FILE IN THE DISTRICT LAND OFFICE.EXCEPT THEREFROM ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD, SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINED IN SAID LAND, AND FURTHER RESERVING TO THE STATE OF CALIFORNIA AND PERSONS AUTHORIZED BY THE STATE,THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS, AND TO PROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LANDS AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LANDS AS MAY BE REQUIRED THEREFOR, UPON COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED IN THE PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, PAGE 174, OFFICIAL RECORDS.PARCEL NO. 1:Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.THE NORTH 1/2 OF THE NORTHEAST 1/4 OF THE NORTHEAST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN.EXCEPTING THEREFROM ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD,SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINED IN SAID LANDS, AND FURTHERRESERVING TO THE STATE OF CALIFORNIA AND PERSONS AUTHORIZED BY THE STATE, THERIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS AND TOPROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LANDS AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LANDS AS MAY BE REQUIRED THEREFOR, UPON COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED IN THE PATENT RECORDED APRIL 12, 1960 IN BOOK 5109, PAGE 174, OFFICIAL RECORDS.PARCEL NO. 2:THE SOUTH 1/2 OF THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN.EXCEPTING THEREFROM THOSE PORTIONS OF A STRIP OF LAND 400 FEET IN WIDTHWHICH ARE LOCATED WITHIN THE NORTHWEST 1/4 AND THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAID SECTION 16 TO THE SOUTH LINE OF SAID SECTION 16, ONE BEING LOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER LINE BEING LOCATED 330 FEET SOUTHWESTERLY FROM AND BOTH LINES BEING PARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED SOUTH 89 DEGREES 42' 40" EAST, 1112.42 FEET FROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST, 5348.94 FEET, MORE OR LESS, TO A POINTON THE SOUTH LINE OF SAID SECTION, WHICH IS LOCATED SOUTH 89 DEGREES 14' 56" EAST, 147.60 FEET FROM THE SOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, BY INSTRUMENT DATED SEPTEMBER 15, 1934, RECORDED SEPTEMBER 26, 1954 IN BOOK 996, PAGE 160, OFFICIAL RECORDS, EXECUTED ON BEHALF OF THE STATE OF CALIFORNIA BY THE CHIEF OF THE DIVISION OF STATE LANDS PURSUANT TO THE PROVISIONS OF CHAPTER 507 OF THE STATUTES OF CALIFORNIA, 1933.EXCEPTING THEREFROM ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD,SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINED IN SAID LANDS, AND FURTHERRESERVING TO THE STATE OF CALIFORNIA AND PERSONS AUTHORIZED BY THE STATE, THE RIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS AND TO PROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LANDS AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LANDS AS MAY BE REQUIRED THEREFOR, UPON COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE, AS RESERVED IN THE PATENT RECORDED APRIL 12, 1960 IN BOOK 5109, PAGE 174, OFFICIAL RECORDS.PARCEL NO. 3:THE SOUTH 1/2 OF THE NORTHWEST 1/4 OF THE NORTHWEST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN.EXCEPTING THEREFROM THOSE PORTIONS OF A STRIP OF LAND 400 FEET IN WIDTH WHICH ARE LOCATED WITHIN THE NORTHWEST 1/4 AND THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, CONTAINED BETWEEN TWO LINES DRAWN FROM THE NORTH LINE OF SAID SECTION 16 TO THE SOUTH LINE OF SAID SECTION 16, ONE LINE BEING LOCATED 70 FEET NORTHWESTERLY FROM AND THE OTHER BEING LOCATED 330 FEET SOUTHWESTERLY FROM AND BOTH LINES BEING PARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED SOUTH 89 DEGREES 42' 40" EAST, 1112.42 FEET FROM THE NORTHWEST CORNER OF SAID SECTION 16;THENCE SOUTH 11 DEGREES 10' 04" WEST, 5348.94 FEET, MORE OR LESS, TO A POINT ON THE SOUTH LINE OF SAID SECTION, WHICH IS LOCATED SOUTH 89 DEGREES 14' 56" EAST, 147.60 FEET FROM THE SOUTHWEST CORNER OF SAID SECTION 16, AS GRANTED TO THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, BY INSTRUMENT DATED SEPTEMBER 15, 1934, RECORDED SEPTEMBER 26, 1954 IN BOOK 996, PAGE 160, OFFICIAL RECORDS EXECUTED ON BEHALF OF THE STATE OF CALIFORNIA BY THE CHIEF OF THE DIVISION OF STATE LANDS PURSUANT TO THE PROVISIONS OF CHAPTER 507 OF Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.THE STATUTES OF CALIFORNIA, 1933.FURTHER EXCEPTING THEREFROM THOSE PORTIONS OF A STRIP OF LAND 200 FEET IN WIDTH WHICH ARE LOCATED WITHIN THE SOUTHWEST 1/4 OF THE NORTHWEST 1/4 AND THE SOUTHWEST 1/4 OF THE SOUTHEAST 1/4 OF SECTION 16, TOWNSHIP 2 NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN, LYING 100 FEET ON EACH SIDE OF THE FOLLOWING DESCRIBED CENTER LINE, EXTENDED:BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAID POINT BEINGLOCATED NORTH 46 DEGREES 42' WEST, 69,424.5 FEET FROM THE SOUTHEAST CORNER OF SECTION 36, TOWNSHIP 1 NORTH, RANGE 19 EAST, SAN BERNARDINO BASE AND MERIDIAN; THENCE NORTH 47 DEGREES 57' WEST 3879.8 FEET, MORE OR LESS, TO A POINT ON THE WEST LINE OF SAID SECTION 16, AS GRANTED TO THE ARIZONA AND CALIFORNIA RAILWAY COMPANY BY PERMIT DATED FEBRUARY 4, 1910, EXECUTED BY THE SURVEYOR GENERALOF THE STATE OF CALIFORNIA, PURSUANT TO SECTION 478 OF THE CALIFORNIA CIVIL CODE.EXCEPTING THEREFROM ALL OIL, GAS, OIL SHALE, COAL, PHOSPHATE, SODIUM, GOLD,SILVER AND ALL OTHER MINERAL DEPOSITS, CONTAINED IN SAID LANDS, AND FURTHERRESERVING TO THE STATE OF CALIFORNIA AND PERSONS AUTHORIZED BY THE STATE, THERIGHT TO DRILL FOR AND EXTRACT SUCH DEPOSITS OF OIL AND GAS, OR GAS AND TOPROSPECT FOR, MINE AND REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LANDS AND TO OCCUPY AND USE SO MUCH OF THE SURFACE OF SAID LANDS AS MAY BE REQUIREDTHEREFOR, UPON COMPLIANCE WITH THE CONDITIONS AND SUBJECT TO THE PROVISIONS AND LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6 OF THE PUBLIC RESOURCES CODE,AS RESERVED IN THE PATENT RECORDED APRIL 12, 1960 IN BOOK 5109, PAGE 174, OFFICIAL RECORDS.Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 10.43 OPTION AGREEMENT THIS AGREEMENT is made effective as of April 20, 1995, by and between David Peterson (hereinafter referred to as "Optionee"), and Cadiz Land Company, Inc., a Delaware corporation (hereinafter referred to as "Company") RECITALS WHEREAS, to provide additional incentive for the diligent performance by Optionee of his duties for the Company, the Company desires to grant to Optionee and Optionee is desirous of acquiring an option to purchase shares of the common stock of the Company, subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, the parties hereby agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set forth, the Company hereby gives and grants to Optionee the right and option to purchase all or any part of an aggregate of 50,000 shares of the authorized but unissued common shares of the Company (the "Shares") at the purchase price of $4.25 per share. The options granted hereby shall be conditional and shall vest, if at all, and shall be immediately exercisable by Optionee, at the discretion of the Board of Directors of the Company, based upon the Board's good faith evaluation of the performance of the agricultural operations of the Company under Optionee's supervision. Such evaluation will take into account, among other things, Optionee's ability to meet the goals and timetables for the Company's agricultural operations as provided in the company's business plan, in light of the resources allocated by the Company to such operations and external market conditions affecting such operations. The Board may also examine such additional objective and subjective criteria as may be deemed relevant by the Board from time to time. It shall be a further condition to the vesting of the conditional options described herein that, at the time of vesting, Optionee shall be an active employee of the Company. These conditional options shall expire five (5) years from the date hereof. 2. Exercise of Option. Optionee may exercise any option granted hereunder subsequent to the vesting thereof by notifying the Company in writing of his intention to exercise such option. A closing date shall then be agreed to in good faith no later than 30 days after the notice, at which time Optionee shall pay the purchase price of the Shares being purchased, and the Company shall deliver to Optionee the certificates for shares duly endorsed. Optionee may purchase all or any part of the Shares subject to options granted hereby subsequent to the vesting thereof. 3. Representations. The Company represents and warrants to Optionee that Optionee, upon proper exercise, shall receive good and marketable title to the Shares underlying the options being granted hereby, free of all pledges, liens and encumbrances, except as provided in paragraph 4. 4. Representations and Warranties of Optionee. Optionee hereby represents and warrants that: A. The options granted hereby and the Shares which will be purchased by and delivered to Optionee upon exercise of such options are being acquired by Optionee for his own account and not with a view to resale or other disposition thereof. B. The options granted hereunder and any Shares which may be issued to Optionee upon the exercise of options granted Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.hereunder are restricted securities, and are not freely tradeable. Optionee will not sell, transfer, or make any other disposition of any option or the Shares to be purchased and delivered to Optionee hereunder upon the exercise of such option unless and until (a) such option or Shares, as applicable, are included ina registration statement or a post-effective amendment under the Securities Act which has been filed by the Company and declared effective by the Securities and Exchange Commission (the "SEC"), or (b) in the opinion of counsel for the Company, no such registration statement or post-effective amendment is required, or (c) the SEC has first issued a "no action" letter regarding any such proposed disposition of any option or the Shares. 5. Federal and State Securities Law Requirements. The obligation of the Company to deliver and transfer the Shares to the Optionee upon any exercise of any option shall be subject tothe following: A. The Company may require Optionee, as an additional condition of its obligation to deliver the Shares upon exercise of any option hereunder, to make any representations and warranties (including without limit those set forth in Paragraph 4 hereof) with respect to the Shares as may, in the opinion of counsel to the Company, be required to ensure compliance with the Securities Act, the securities laws of any state, or any other applicable law, regulation, or rule of any governmental agency. B. Each certificate representing the Shares issued pursuant to this Agreement shall bear whatever legends are required by federal or state law or by any governmental agency. In particular, unless an appropriate registration statement is filed pursuant to the Securities Act with respect to the Shares, each certificate representing such Shares shall be endorsed on its face with the following legend or its equivalent: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SECURITIES MAY BE SOLD OR TRANSFERRED ONLY IF THEY HAVE BEEN REGISTERED UNDER SAID ACT OR THERE EXISTS AN EXEMPTION FROM REGISTRATION UNDER SAID ACT OR THE RULES AND REGULATIONS THEREUNDER EVIDENCED BY A NO-ACTION LETTER OR AN OPINION OF COUNSEL TO THE ISSUER OR TO THE HOLDER HEREOF REASONABLY SATISFACTORY TO THE ISSUER. 6. Restrictions. Optionee: A. Shall not be entitled to any type of dividend declared by the Company, unless and until an option is exercised; and B. Shall not be entitled to any voting rights by virtue of an option; and C. Acknowledges that the options granted hereby are personal to Optionee and that Optionee may not sell, assign, transfer or otherwise dispose of such options to any other person. 7. Anti-Dilution. If prior to the exercise of any option granted hereunder the Company shall have effected one or more stock split-ups, stock dividends, or other increases or reductions of the number of shares of its common stock outstanding without receiving compensation therefor in money, services or property, the number of Shares of common stock subject to the options herebygranted shall (a) if a net increase shall have been effected in thenumber of outstanding shares of the Company's common stock, be proportionately increased and the cash consideration payable per Share shall be proportionately reduced; and (b) if a net reduction shall have been effected in the number of outstanding Shares of the Company's common stock, be proportionately reduced and the cashconsideration payable per Share be proportionately increased. 8. Piggyback Registration Rights. If, during the time which the Optionee is eligible to exercise any options granted hereunder, the Company proposes to file with the Securities and Exchange Commission a registration statement for registration under the Act, the Company will use its best efforts to include in any Source: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.such filing the Shares underlying Optionee's vested options upon terms and conditions substantially similar to those granted to other holders of the Company's securities who have been granted piggyback registration rights. 9. Agreement to Perform Necessary Acts. The parties hereto agree to cooperate fully with one another in executing all documents, certificates, notices, filings and the like and performing all acts reasonably necessary to carry out the intent of this agreement. 10. Amendments. This agreement may not be modified, amended or changed except by an instrument in writing signed by the parties hereto. 11. Applicable Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California. 12. Successors. The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors, transferees and assignees of the Optionee. 13. Counterparts. This Agreement may be executed in any number of identical counterparts, each of which shall be deemed acomplete original in itself and may be introduced in evidence or used for any other purpose without the production of any other counterparts. 14. Litigation and Attorneys' Fees. In the event of any litigation between the parties hereto in connection with this Agreement or to enforce any provision or right hereunder, the unsuccessful party to such litigation shall pay to the successfulparty the reasonable legal expenses, to include without limitation, attorney's fees, costs and necessary disbursements incurred by thesuccessful party, which costs, expenses and attorneys' fees shall be included as a part of any judgment rendered in such action in addition to any other relief to which the successful party may be entitled. IN WITNESS WHEREOF, the parties have executed this Option Agreement as of the day and year first above written. OPTIONOR CADIZ LAND COMPANY, INC. By: /s/ Keith Brackpool ----------------------------------------- Keith Brackpool, Chief Executive Officer OPTIONEE By: /s/ David Peterson ----------------------------------------- David PetersonSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 21.1 SUBSIDIARIES OF THE COMPANYPacific Real Estate, Inc.Cadiz Valley Development CorporationRanch Cadiz Mutual Water CompanySouthwest Fruit Growers, LPPacific Packing, Inc.PSWRI LimitedSource: CADIZ INC, 10-K405, June 29, 1995Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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