<PAGE>
================================================================================
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 required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K ((S)220.405 of this chapter) is not contained herein, and will
not be contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. YES X NO
--- ---
As of June 23, 1995, the registrant had 17,053,455 shares of Common Stock
outstanding. The aggregate market value of the Common Stock held by
nonaffiliates as of June 23, 1995, was approximately $76,432,060 based on the
last sales price on that date.
DOCUMENTS INCORPORATED BY REFERENCE
NOTICE OF 1995 ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
(INCORPORATED INTO PART III)
================================================================================
<PAGE>
PART I
ITEM 1. BUSINESS
Cadiz Land Company, Inc. (the "Company") identifies, acquires and develops
properties (to date in the desert regions of Southern California) which have
significant indigenous supplies of water. The Company currently owns or controls
approximately 41,700 acres, with its largest property totalling approximately
31,800 acres at Cadiz, California.
The Company's primary objective is to maximize the long-term value of each of
its properties through strategic use of the water resources associated with the
properties. Management believes that, with the increasing scarcity of water
supplies in California and increasing demand, the value of properties with
sizable assured supplies of water will continue to appreciate. The various
means by which the land and water resources available to these properties can be
used are evaluated by management on an ongoing basis. The alternatives
available to the Company include the transfer of water to third party users
and/or the development of the properties, using indigenous water sources, for
agricultural, commercial or residential purposes.
The transfer of water to third party users, both from the Cadiz property and
from other Company properties, is being actively pursued by the Company. During
the past year the Company has made significant progress in developing its water
transfer project at Cadiz. Various independent studies and analyses pertaining
to the design and financing of the proposed project have been completed. These
analyses and reports are a necessary precursor for the regulatory approvals
required prior to commencing construction of a water delivery project at Cadiz.
It is expected that water from the project will be sold to various California
water agencies pursuant to water delivery contracts which the Company is
currently 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 compared
to other agricultural properties operating in similar climates, the Company is
at a cost advantage in agricultural development. Therefore, in addition to its
water transfer activities, the Company has developed 1,600 acres of agricultural
land at Cadiz to date, and plans to develop additional agricultural land, with
related residential and commercial facilities. Not only has this agricultural
development helped, in management's opinion, to increase the value of the
Company's surrounding landholdings, it also is expected to provide a return on
capital during the next fiscal year. Agricultural operations are conducted
largely through joint ventures and lease arrangements with third party growers,
so as to obtain the best expertise available as well as to reduce the exposure
of the Company to the performance of any single given crop. In each case, the
Company retains ownership of the land and associated water resources.
-1-
<PAGE>
In furtherance of the Company's strategic business plan to maximize the value
of the Company's assets, 54% of total cash used during fiscal 1995 and 40% of
total cash used during each of the two preceding fiscal years was applied to
investing activities. Such investment activities related to development of the
water transfer project at Cadiz and a second water transfer project at Piute
(See discussion at Item 1, "Resource Development - Piute"), as well as the
development of seven production wells, state-of-the-art drip and micro spray
irrigation systems, other necessary residential and commercial facilities and
acquisition of additional acreage.
The Company will continue to seek additional properties for acquisition. To
be considered suitable for acquisition, these properties must possess rights to
commercially usable quantities of water. Properties with previously unexploited
water resources will be identified through the use of the Company's expertise in
identifying undeveloped ground water basins in arid regions. The Company will
also consider acquiring developed properties with established water supplies in
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") for
the purpose of identifying arid or semi-arid properties with underground water
resources with a view to acquiring such properties for development. AridTech,
in its search for underground water resources, applied advanced geological
survey techniques derived, for the most part, from commercially available
Landsat and U2 high altitude photographic surveys. In mid-1983, the Company
identified a geological structure indicating a horseshoe shaped mountainous
catchment area known as the Cadiz Valley consisting of about 1,400 square miles
located 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 purchase
approximately 25,000 acres in this area which were owned in one square mile
sections alternately by the Bureau of Land Management ("BLM") and the Southern
Pacific Railroad. The options to purchase the land were exercised in 1986 and
1988.
Initially, the Company did not have the capability to develop such raw land
through its internal operations, and the Company therefore entered into a series
of development agreements with a Fresno, California based agricultural
development and farm management company named Pacific Agricultural Services,
Inc. ("PAS"). On May 9, 1988, the Company merged with PAS. Simultaneously, the
name of the Company was changed to Pacific Agricultural Holdings, Inc. ("PAH").
With this merger, the Company's pre-existing operations were combined with those
of PAS and the Company's corporate offices were relocated to Fresno, California.
In the years immediately following the merger, the Company sought to combine
its landholdings with the development and third party farm management businesses
acquired from PAS thereby creating a vertically integrated agribusiness
concentrating on permanent specialty crops. However, the Company's third party
farm management operations did not prove self-sufficient during this period,
leading to significant operating losses and a re-evaluation by the Company of
the desirability of continuing these agribusiness activities. In December 1990,
the Company decided to limit its further exposure to agricultural risks by
terminating the agribusiness activities acquired from PAS, and to conduct future
farming operations, when possible, through lease or joint venture arrangements
with third parties. All assets acquired in connection with the merger have been
sold or written off.
-2-
<PAGE>
As part of its current business plan, the Company's land acquisition and
development activities are conducted for the purpose of enhancing the long-term
appreciation of its properties. See "Narrative Description of Business", below.
In May 1992, the Company's shareholders approved the reincorporation of the
Company into Delaware under the name Cadiz Land Company, Inc. As a part of the
reincorporation, the Company's common stock was reverse split on a one-for-five
basis, giving each shareholder of the Company one share of Cadiz Land Company,
Inc. stock for every five shares of Pacific Agricultural Holdings, Inc. stock
held at the time of the reincorporation.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
During its fiscal year ended March 31, 1995, the Company operated in one
industry 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 of
its properties through the development of the land and water resources
associated with these properties. The Company seeks to determine, for each of
its properties, the form of development for the property's land and water
resources which will maximize the property's long-term value. Development
alternatives include the transfer of a portion of water resources from the
property and/or development for agricultural, commercial or residential
purposes. Currently, the Company is engaged in both water resource development
and agricultural development.
WATER RESOURCE DEVELOPMENT
The Company's resource development activities include planning for the
development 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 1,400
square miles. The water is of excellent quality and well within recommended
guidelines for drinking water. The Company proposes to sell to third party
users water from this basin which is surplus to both the present and projected
agricultural development requirements of the Company. To this end, the Company
plans to transfer between 30,000 and 50,000 acre-feet of surplus water per year
from the Company's well field to the Colorado River Aqueduct via a 30-mile
pipeline, the capital cost of which is projected to total approximately
$50,000,000, although the final design criteria will determine the total capital
cost. The Company has retained an investment banking firm to perform various
economic analyses and advise the Company as to various alternative means of
implementing this project. Based upon the results of analyses performed by its
investment banker, management believes several alternative long-term financing
arrangements are available to the Company which will be further evaluated once
funding responsibility and ownership alternatives are determined. The various
alternatives available for structuring the delivery of this water to third
parties include the construction by the Company of a water delivery system for
off-site delivery to third party purchasers, as well as the sale of water at the
well head or in ground reserve with the purchaser or another third party
assuming responsibility for transport of the water off-site. The investment
banking firm is continuing to assist management in evaluating these delivery
alternatives and in determining which alternatives maximize the Company's profit
potential in addition to assisting in determining which financial structure will
best accommodate such a plan.
-3-
<PAGE>
Based on preliminary negotiations to date, the Company expects to be able to
enter into agreements with approximately four separate agencies to transfer
approximately 30,000 acre-feet per year. Although, a final price formula for
delivered water has not yet been finalized, the Company believes the price per
acre-foot (net of capital amortization costs) will be at a premium to otherwise
similar multi-year contracts in the San Joaquin Valley and will include
provisions 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 water
transfer project, the Company is pursuing such approvals concurrently with its
negotiation 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 significant
progress. In June 1994, the MWA Board of Directors, by unanimous approval,
authorized MWA staff to proceed with the environmental assessment of the
proposed Cadiz water transfer project and to serve as Lead Agency for purposes
of complying with the California Environmental Quality Act ("CEQA") upon
completion and acceptance of a Final Draft Feasibility Report. The Final Draft
Feasibility Report, prepared for the project under the joint review of the
Company and MWA, included the various results of independent studies conducted
throughout the year. Such independent studies included engineering alternatives
for developing the ground water transfer system, as well as routing and designs
of the transmission pipeline from the Company's well field to the Colorado River
Aqueduct or other suitable points of delivery. Also included were results of
production well drilling and computer modeling of a well field suitable for the
proposed transfer project, evaluations of suitable power sources and evaluation
of the feasibility for temporary banking of imported water. These independent
reports and analyses, which were incorporated into a Final Draft Feasibility
Report, confirmed the engineering feasibility of the project. The Company has
submitted to MWA both this report and a Conceptual Ground Water Management Plan
which clarifies many of the hydrological features and resource management
concepts of the proposed water transfer project. The Company expects that all
remaining required environmental reports will be filed within nine months. In
addition, the specific terms of the Company's proposals with the water agencies
are expected to be submitted for public review during this same time period.
In order to receive all necessary regulatory approvals and permits, the
Company will be subject to various waiting periods applicable to required
submissions and responses. There is a risk that delays in this process will
result in delays in completion of the Cadiz water project. Given the currently
anticipated 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 in
vigorously 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 from
the Colorado River near the town of Needles, California. See Item 2,
"Properties - The Piute Property". Following the drilling of a production well
on the property in February 1995, and the results of preliminary engineering
tests, the Company has determined both the quantity and the quality of the
underlying water to be suitable for commercial development. In addition, it has
been determined that the depth of the ground water table allows for economic
production of ground water.
-4-
<PAGE>
A feasibility study on the transfer of water from the Piute property, which is
a necessary precursor to serious negotiations on the sale of water from the
property, has recently been completed. This study, together with other analyses,
demonstrates that the Piute water transfer project is both technically and
economically feasible. Several delivery alternatives are available and the
Company is currently analyzing which option is preferable. The Company expects
that the Piute water transfer project will be capable of transferring
approximately 10,000 to 15,000 acre-feet per year via a pipeline, which could
range in length from approximately 10 to 30 miles, depending upon route and
delivery point selected.
The Company also expects it will be able to enter into water transfer
agreements with a net profit per acre-foot similar to or greater than for the
Cadiz project, although no assurances can be given. The Company also believes
that much of the development work being performed for the Cadiz project will be
transferable to the Piute project, thus making it possible for water transfers
from Piute to begin in parallel or shortly after Cadiz.
AGRICULTURAL DEVELOPMENT
Agricultural development has been an integral part of the Company's ongoing
business strategy as a means of maximizing the value of the Company's
landholdings and a way to generate cash flow from such landholdings. As of
March 31, 1995, approximately $17 million has been invested by the Company in
the agricultural development of its Cadiz properties, where 800 acres have been
developed to table grapes, 560 acres have been developed to citrus, and 240
acres have been planted to various row crops. In addition to the land
improvements, seven production wells, state-of-the-art drip and micro spray
irrigation systems and facilities to accommodate a temporary contract labor
force have been installed. In 1994, the Company received approval from San
Bernardino County to develop up to 9,600 acres of its Cadiz property to
agriculture. See Item 2, "Properties - The Cadiz Property".
As a result of the above, the Company has been able to attract third party
growers with significant expertise in their respective purview and to enter into
joint venture or leasing arrangements for the farming of crops on its
properties. By associating with these third party growers, the Company is able
to elevate the farming expertise available to its agricultural operations. In
addition, the Company is able, through these joint ventures and lease
arrangements with third party growers, to reduce the exposure of the Company to
the performance of any single given crop.
Management believes that the terms of these arrangements and the crops which
will be grown under these arrangements will vary from growing period to growing
period. It is expected, however, that under such arrangements the grower will
provide the growing expertise, seeds and crop marketing, and that the Company
will provide the land, water, and facilities to accommodate the growers and
marketers. In each case, the Company will continue to maintain management of
the infrastructure associated with the Cadiz project as an integral part of its
strategy to control the ultimate use of the resources associated with this
property.
Since December 1992, the Company has leased its table grape vineyard to an
independent operator in return for both a fixed minimum income stream and a
percentage of the gross revenue stream. Given the success of this arrangement
for both the Company and the operator, both parties are currently renegotiating
for an additional three-year term at an increased rate to the Company, although
no assurances can be given.
-5-
<PAGE>
The 560-acre citrus orchard at Cadiz produced its first harvest in fiscal
1995, although the Company expects improved results during the 1996 fiscal year
as the trees continue to mature. The Company currently markets the citrus
through a large international marketing conglomerate.
In the winter of 1994-1995, the Company, in partnership with established row
crop growers, concluded trial plantings of a variety of crops. Following the
successful completion of these plantings, the Company entered into four separate
ventures whereby a total of 240 acres at Cadiz were successfully planted to row
crops such as honeydew melons, seedless watermelons, tomatoes and radicchio.
Such crops generally develop to the point of harvest within several months of
planting and generate multiple harvests from the same acreage each year. The
first harvest has been completed successfully. A second planting will commence
in autumn 1995 with harvest occurring approximately 100 days later.
The Company expects to develop a further 160 acres during the fiscal year
ending March 31, 1996 to field or row crops. As discussed above, such
development to row crops allows for multiple harvests from the same acreage each
year, thus providing the Company with an opportunity for an immediate return on
capital invested in the infrastructure. The Company has not yet determined the
specific amount of acreage or which mix of crop it will choose for development
in the longer term, however, the Company intends to cultivate the remaining
acreage, along with related residential and commercial infrastructure as
additional 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 expect
that contracts entered into for the transfer of water will provide for revenue
payments varying significantly from season to season. In addition, the
Company's intended development of additional acreage to field and row crops
allows for double and sometimes triple - cropping, whereby two and sometimes
three different crops can be raised and harvested sequentially from the same
acreage during one year. This type of agricultural development should provide a
revenue stream that does not significantly vary between seasons.
COMPETITION
The Company faces competition for the acquisition, development and sale of its
properties from a number of competitors, some of which have significantly
greater resources than the Company. The Company may face competition in the
development of water resources associated with its properties. Since California
has scarce water resources and an increasing demand for available water, the
Company believes that price and reliability of delivery are the principal
competitive factors affecting transfers of water in California. In this regard,
the ability of the Company to price its water on a competitive basis will depend
upon the cost of constructing and maintaining delivery systems for its surplus
water. Management of the Company believes, however, that the geographic
proximity of its available water supplies to its potential customers, coupled
with the Company's ability to guarantee long-term access to its water supplies,
will provide the Company with a competitive advantage with respect to such
customers.
-6-
<PAGE>
The Company may also face substantial competition from existing agricultural
producers in the sales of its produce, which could affect the successful
agricultural development of the Cadiz property, although such competition may be
reduced in the future by urban encroachment in competing agricultural areas.
The Company believes that factors such as climate and water quality and
availability may provide the Company's Cadiz property with significant
competitive advantages for agricultural development. In addition, many of the
competitors of the Cadiz property rely on federally subsidized sources of water.
If those subsidies are reduced or gradually eliminated, the Cadiz property,
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 in
general and administrative activities and 21 were engaged in support of the
Company's infrastructure and land development. The Company from time to time
engages various part-time and seasonal employees. The Company's employees are
not represented by a labor union, and the Company has not had any work
stoppages, strikes or organization attempts. The Company believes that its
employee relations are good.
REGULATION
Certain segments of the Company's operations are subject to varying degrees of
federal, state and local laws and regulations. For example, farm operations
such as those conducted on Company properties are subject to federal, state and
local laws and regulations controlling the discharge of materials into the
environment or otherwise relating to the protection of the environment.
Existing environmental regulations have not, in the past, had a materially
adverse effect upon the operations of the Company, and the Company believes that
existing environmental regulations will not, in the future, have a materially
adverse effect upon its operations. There can be no assurances, however, as to
the effect of any environmental regulations which may be adopted in the future.
As the Company proceeds with the development of its properties, including
related infrastructure, the Company will be required to satisfy various
regulatory authorities that it is in compliance with the laws, regulations and
policies enforced by such authorities. Ground water development, and the export
of surplus ground water for sale to single entities such as public water
agencies, are not subject to regulation by existing statutes, other than general
environmental statutes applicable to all development projects. Although
applicable laws, regulations and policies have not had a materially adverse
effect upon the ability of the Company to develop its Cadiz or other properties
to date, management cannot predict with certainty what requirements, if any, may
be imposed by regulators upon future development. In addition, the time and
costs associated with obtaining regulatory approvals for resource development
are significant, and there can be no assurance that the Company will receive
desired approvals for future development plans.
ITEM 2. PROPERTIES
The principal properties owned or controlled by the Company and its affiliates
are located in the desert regions of Southern California.
-7-
<PAGE>
THE CADIZ PROPERTY
In 1984, the Company conducted an investigation of the feasibility of the
agricultural development of land located in the Mojave desert near Cadiz,
California, and confirmed the availability of prime quality water in commercial
quantities. Since 1985, the Company has acquired over 26,000 acres and the
right to purchase an additional 5,652 acres in the Cadiz vicinity.
The Company has determined that the ground water basin which underlies the
Cadiz property contains more water than is needed for both the present and
projected agricultural development requirements of the property. The Company
therefore proposes to transfer water from this basin to third party users. See
Item 1, "Business - Narrative Description of Business - Water Resource
Development".
In November 1993, the San Bernardino County Board of Supervisors unanimously
approved a General Plan Amendment establishing an agricultural land use
designation for 9,600 acres at Cadiz. This Board action represented the largest
land use approval on behalf of a single property holder in the County's known
history. This action also approved permits to construct infrastructure and
facilities to house as many as 1,150 seasonal workers and 170 permanent
residents (employees and their families) and allows for the withdrawal of more
than 1,000,000 acre-feet of ground water from the Company's underground water
basin.
To date, 1,600 acres of the Cadiz property have been developed for table
grapes, citrus and row crops. See Item 1, "Business - Narrative Description of
Business - Agricultural Development".
A total of 680 acres of the table grape vineyard and 2,560 acres of
undeveloped land at Cadiz are held by Southwest Fruit Growers, L.P. ("SWFG"), a
limited partnership in which the Company acts as general partner. SWFG was
formed as a part of the restructuring of certain entities which had invested
with PAS and PAH in table grape properties at Cadiz and at Hyder, Arizona. The
Company holds a 65.4 percent limited partnership interest in SWFG.
Substantially all other Cadiz acreage is held directly by the Company or
through 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 60
miles east of Cadiz and approximately 15 miles west of the Colorado River and
Laughlin, Nevada, a fast growing town with hotels, casinos and water recreation
facilities. The Piute property was identified for acquisition by the Company by
a combination of the satellite imaging and geological techniques which were used
by 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 and
Interstate 40 is approximately 12 miles to the south. The property is held by
the Company in fee title as to approximately 3,000 acres, with the remaining
acreage under option.
The Company has commenced the development of the water resources of this
property. See Item 1, "Business - Narrative Description of Business - Water
Resource Development".
-8-
<PAGE>
THE HOMER PROPERTY
The Homer property, consisting of approximately 2,500 acres held in fee, is
located approximately six miles southwest of Piute in an ecologically protected
area. The value of the Homer land as part of an ecologically protected area
should allow the Company, if it so chooses, to exchange the property for land
elsewhere or to allow for consolidation of other areas of ownership.
OTHER PROPERTIES
In addition to the Cadiz, Piute and Homer properties, the Company owns
approximately 1,079 additional acres in the Mojave Desert as to which
development has not yet commenced. The Company will continue to seek to acquire
additional properties both in Southern California desert regions and elsewhere
which are believed to be suitable for development.
All of the Company's fee property is subject to encumbrances in favor of the
Company's two primary lenders as security for loans with outstanding balances
aggregating 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 western
border of the Cadiz property. The Company has raised objections to the
Rail.Cycle Project on a number of grounds, and contends that the project, as
currently designed, poses environmental risks both to the Company's agricultural
operations at Cadiz and to the ground water basin underlying the Cadiz property.
In early 1995, the San Bernardino County Planning Commission (the "Planning
Commission") recommended approval of the Rail.Cycle Project, with four of the
seven members of the Planning Commission voting in favor of approval and the
remaining three members abstaining. The Company has appealed this decision. The
Board of Supervisors, which is hearing this appeal, has decided to consolidate
the appeal with its decision on the proposed Rail.Cycle Project. At its most
recent meeting, the Board of Supervisors announced that there would be no
further public hearings on this appeal, and that the Board's consideration of
the matter would be continued due to the need for more time to review all of the
information presented by both opponents and proponents of the proposed project.
The Board of Supervisors also indicated that it would take no further action on
this matter until the latter part of the summer.
The Company intends to continue its opposition to the Rail.Cycle Project
through a variety of available legal means. In addition, the Company has joined
a local coalition which aims to put a county-wide initiative on the ballot at
the next general election. This initiative, if approved, would require that no
large solid waste landfill shall overlie or be located within 10 miles from the
point of extraction of a significant water resource, unless such a facility had
been fully permitted, constructed or operational as of March 14, 1995.
-9-
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
On April 8, 1992, the Company, SWFG and CVDC, among others, were named in an
action filed by Percy R. and Helen H. Turner and by James R. and Susan Turner
Steen in the Superior Court of Maricopa County, Arizona. The complaint alleged
various claims arising from the purchase by the plaintiffs of several
agricultural properties (including properties purchased prior to the 1988 Merger
from affiliates of PAS), the farming of these properties subsequent to purchase,
and the formation of SWFG. The complaint requested damages in an unspecified
amount, 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 cannot
be asserted again. On June 23, 1994, the Company was awarded full reimbursement
for all of its legal fees and costs incurred in defending this action.
Subsequently, the plaintiffs filed several motions for a new trial, all of which
were denied. In October 1994, plaintiffs filed an appeal from the Court's
judgement. The briefing schedule was completed May 18, 1995. A decision is
expected 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 from
which the Company will collect its judgement if the trial court's decisions are
affirmed.
-10-
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the Nasdaq Stock Market under the
symbol "CLCI". Since July 1994, the Company's common stock has been traded as a
National Market System security. The following table reflects, for periods up
until the period ended June 30, 1994, inter-dealer quotations, without retail
markup, markdown or commission, and may not necessarily represent actual
transactions. For the periods ended September 30, 1994 and thereafter, the
table reflects actual sales transactions. The high and low range of the common
stock and bid prices, where applicable, for the dates indicated have been
provided by Nasdaq.
<TABLE>
<CAPTION>
QUARTER ENDED BID PRICES ASKED PRICES
------------- --------------------------- --------------------------
HIGH LOW HIGH LOW
----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
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
<CAPTION>
HIGH LOW
SALES PRICE SALES PRICE
----------- -----------
<S> <C> <C>
September 30 $5.2500 $ 3.75
December 31 $5.2500 $ 4.25
1995:
March 31 $5.4375 $4.125
</TABLE>
On June 23, 1995, the high, low and last sales prices for the shares, as
reported by Nasdaq, were $4.75, $4.625 and $4.75, respectively.
The Company has also authorized a class of preferred stock, although no shares
of preferred stock have yet been issued. The estimated number of beneficial
owners of the Company's common stock is approximately 1,300 and the number of
stockholders of record on June 23, 1995, was 196.
To date, the Company has never paid a cash dividend and currently, the
Company's ability to pay cash dividends is restricted by agreements with the
Company's lenders. The Company has retained an investment banking firm to,
among other things, advise the Company as to the most tax-efficient means of
distributing revenues from the Company's operations to its shareholders when
revenues from the transfer of water commence.
-11-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data insofar as it relates to each of the
years ended March 31, 1995, 1994, 1993, 1992 and 1991 has been derived from
financial statements audited by Price Waterhouse LLP, independent accountants.
Consolidated balance sheets at March 31, 1995 and 1994 and the related
consolidated statements of operations and of cash flows for the three years
ended March 31, 1995 and notes thereto appear elsewhere herein. See also Item
7, "Management's Discussion and Analysis".
-12-
<PAGE>
CADIZ LAND COMPANY, INC.
Selected Financial Data
(In thousands, except for per share data)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
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) from
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
<CAPTION>
AS OF MARCH 31,
-------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
_______________
/1/ In December 1990, the Company committed to a plan to eliminate all
agribusiness operations. See "Business - General Development of Business".
-13-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Cadiz Land Company, Inc. (formerly known as Pacific Agricultural Holdings,
Inc.) was incorporated in Delaware on May 26, 1992. On May 6, 1992, the
shareholders of Pacific Agricultural Holdings, Inc. approved its reincorporation
as a Delaware corporation, a one-for-five reverse stock split, and the change of
its 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 have
affected the Company's financial condition and results of operations included in
the 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 $4,591,000
as compared to a net loss of $3,751,000 during the previous year. The following
table summarizes the net loss for both periods (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
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 of
discontinued segment -0- (145)
Gain on debt settlement (115) (343)
------ ------
Net loss $4,591 $3,751
====== ======
</TABLE>
REVENUES. Revenue was recognized from the Company's resource development as a
--------
result of its agricultural operations. A combination of gross crop proceeds
from the citrus orchard and both rent and a percentage of gross crop proceeds
from 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 will
increase over the next several years as a result of increased revenues from
existing developed acreage and the further development of additional acreage.
-14-
<PAGE>
RESOURCE DEVELOPMENT. The Company, in furtherance of its strategic plan to
--------------------
develop the resources associated with its properties so as to maximize the value
of the Company's landholdings, incurred costs related to the development and
planning of the Company's transfer water projects, overhead related to
management of the Cadiz agricultural development and legal and other expenses
related to development activities. The Company is planning for the development
and transfer of water from its Cadiz and Piute properties. See Item, "Business
- - Narrative Description of Business - Water Resource Development". The Company
believes it will enter into binding contracts with third parties which will
provide for the realization by the Company of a revenue stream from its land and
water resources commencing in calendar year 1997, although no assurance can be
given.
Resource development expenses increased in 1995 by $799,000 as compared to the
prior year primarily due to an overall increase in resource development, largely
resulting from activities related to the water transfer project, and the
establishment of an Agricultural Development Department in April 1994. In
addition, depreciation on the citrus orchard commenced in April 1994 when
management determined that the crop had matured sufficiently to produce the
first commercial harvest. As a result, depreciation expense increased $180,000.
It is expected that agricultural operations, exclusive of overhead and
depreciation, will be cash flow positive in 1996 and are expected to remain cash
flow positive.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses for
-----------------------------------
both periods consisted primarily of salaries and professional fees. These
expenses decreased by $357,000 for the year ended March 31, 1995 compared to the
same period last year. Professional fees declined from $970,000 in 1994 to
$768,000 in 1995, primarily as a result of the favorable conclusion of
litigation 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. The
following table summarizes the components of interest expense for the years
ended March 31, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
Interest expense on outstanding debt $ 842 $ 831
Interest on citrus orchard capitalized -0- (252)
Amortization of financing costs 479 340
Interest income (113) (66)
------ -----
Net Expense $1,208 $ 853
====== =====
</TABLE>
Interest expense on outstanding debt increased due to higher interest
rates on the Rabobank loan and an increase in Ansbacher debt outstanding. See
"Liquidity and Capital Resources - Current Financing Arrangements". Interest
expense related to the citrus orchard was capitalized in 1994, as the orchard
had not yet reached maturity during the period. As the orchard is no longer in
the developmental stage, such interest is no longer capitalized. The
amortization of debt issue costs and debt discount increased $139,000 in 1995
compared to 1994 due to the costs related to the refinancing of the Rabobank and
Ansbacher loans in January 1994. Such costs are amortized over the life of the
debt arrangement, which matures on January 31, 1997. Interest income increased
in 1995 compared to 1994 due to higher cash balances throughout 1995.
-15-
<PAGE>
GAIN ON DISPOSAL OF DISCONTINUED SEGMENT. There were no such
----------------------------------------
transactions during the fiscal year ended March 31, 1995. However, during the
fiscal year ended March 31, 1994, the Company reversed valuation reserves and
liabilities related to discontinued operations totalling $145,000. Of this
amount, $75,000 resulted from a reduction in a reserve no longer necessary
following the disposition of a cooler property in Arizona as part of a
settlement of a $925,000 note obligation, as discussed under "Gain on Debt
Settlement", below. In addition, approximately $70,000 resulted from a write-
off of an accrued liability for certain crop advances previously received by the
Company which the Company determined would not be claimed by the advancing
party.
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 amount
resulting 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 in
December 1996. During the quarter ended June 1993, the Company concluded a
settlement agreement regarding a $925,000 note obligation which resulted in a
extraordinary 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". In
addition, during the third quarter of fiscal year 1994, the Company recorded an
additional extraordinary gain of $43,000 which resulted from the forgiveness of
debt 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 $3,751,000
as compared to a net loss of $4,087,000 during the previous year. The following
table summarizes the net loss for both periods (in thousands):
<TABLE>
<CAPTION>
1994 1993
------- ------
<S> <C> <C>
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
====== ======
</TABLE>
REVENUES. Revenue of $213,000 was recognized from the Company's
--------
resource development activity for the year ended March 31, 1994.
-16-
<PAGE>
RESOURCE DEVELOPMENT. Resource development expenses, which include
--------------------
overhead related to management of the Cadiz agricultural development, legal and
other expenses related to development activities, increased in 1994 by $665,000
as compared to the prior year. This increase was due to establishment of the
Resource Development Department during December 1992 which resulted in four
quarters of activity in fiscal 1994 as compared to one quarter of activity in
fiscal 1993 and an overall increase in development. In addition, depreciation
of the Cadiz vineyard which totalled $163,000 was included in expense for fiscal
year 1994, whereas such depreciation was included in growing crops inventory
until 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 expenses
totalled $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 declined
from $1,145,000 for fiscal year 1993 to $970,000 for fiscal year 1994 as a
result of lower legal and consulting fees. In addition, general and
administrative expenses were reduced by approximately $52,000 due to the write-
off of payables resulting from a negotiated reduction in banking and legal fees
previously accrued. The decline in professional expenses was offset, in part,
by an increase in facilities cost resulting from the establishment of the
Company's new Rancho Cucamonga headquarters office and the inclusion of expenses
relating to the operations of the Company's Los Angeles office, which expenses
had been recorded as real estate expenses prior to the relocation of the
Company's real estate operations from Los Angeles to Rancho Cucamonga. As a
result of all of the foregoing, general and administrative expenses declined by
a 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, 1993
due to lower interest rates; however, this was partially offset by the fixing of
Rabobank's interest rate through 1994 in anticipation of a general interest rate
increase. The amortization of warrants of approximately $246,000 and $137,000
for the years ended March 31, 1994 and 1993, respectively, is also included in
interest expense as such warrants were issued to lenders in consideration for
reduced 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 liabilities
related to discontinued operations totalling $145,000. For a further
discussion, 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 a
revised agreement with the holder of a purchase money mortgage related to
certain commercial property owned by the Company for the satisfaction of this
obligation. See "Year ended March 31, 1995 Compared to Year ended March 31,
1994 - Gain on Debt Settlement". In connection with this transaction, the
Company recorded an extraordinary gain of $300,000 during the year ended March
31, 1994.
In addition, during the third quarter of fiscal year 1994, the Company
recorded an additional extraordinary gain of $43,000 which resulted from the
forgiveness of debt due under a note payable issued several years earlier.
-17-
<PAGE>
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 development
operations in that year. As discussed above, agribusiness revenues and expenses
for all years presented have been reclassified to discontinued operations.
RESOURCE DEVELOPMENT. The resource development segment operating loss
--------------------
amounted to $702,000. Although as a part of its business strategy the Company
did not complete any significant sales transactions during the year, certain
costs related to resource development activities were incurred amounting to
$702,000. Such costs principally related to overhead expenses and include legal
and 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, wages
and 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 RESOURCES
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to its business strategy, the Company utilizes its working capital
primarily for development purposes; that is, for purposes designed to increase
the long term value of its properties. A substantial portion of these
developmental expenses are being incurred in connection with the development of
the Company's water transfer projects at Cadiz and Piute. As the Company does
not expect to receive significant revenues from these water transfer projects
until 1997, the Company has been required to obtain financing to bridge the gap
between the time development expenses are incurred and the time that a revenue
stream will commence. Accordingly, the Company has looked to outside funding
sources to address its liquidity and working capital needs. Since the beginning
of the 1992 fiscal year, the Company has addressed these needs primarily through
secured debt financing arrangements with its lenders, private equity placements
and the exercise of outstanding stock options.
With the implementation of the Company's program to conduct agricultural
operations on its properties primarily through third party leasing and joint
ventures operations, agricultural operations are expected to be cash flow
positive in 1996 and subsequent years.
CURRENT FINANCING ARRANGEMENTS. The Company's two primary lenders are
------------------------------
Cooperative Centrale Raiffeisen-Boerenleenbank B.A., a Netherlands commercial
bank ("Rabobank") and Henry Ansbacher & Co. Limited, a banking corporation
organized under the laws of England ("Ansbacher") (collectively, the "Banks").
At March 31, 1995, the Company's obligations to Rabobank and Ansbacher amounted
to $9.1 million and $7.7 million, respectively. Ansbacher and Rabobank hold
senior and subordinate deeds of trust, respectively, on substantially all of the
Company's property.
-18-
<PAGE>
In furtherance of the Company's business strategy and in light of the
Company's progress with its business plan, in January 1994, the Banks completed
arrangements 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 December
1994. Ansbacher agreed to accrue and capitalize interest through maturity and
further 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 January
1995. In addition, the Company reduced its obligation to Rabobank by $4,000,000
by way of a $2,000,000 advance from Ansbacher, together with $2,000,000 of
proceeds 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 Company
used $250,000 to reduce the Company's existing Rabobank loan and to reimburse
Rabobank for various fees and expenses with the applied to be used towards the
Company's estimated working capital requirements through March 31, 1996. The
remaining $550,000 of this facility is expected to be drawn down April 1, 1996
for application towards the Company's estimated working capital requirements for
the fiscal year ending March 31, 1997. Ansbacher agreed to accrue and capitalize
interest on the outstanding principal amount of these advances through January
1997. In connection with this facility, the Company issued 110,000 shares of
common stock to Ansbacher and issued to Rabobank 35,000 common stock purchase
warrants 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 water
projects will be obtained. See Item 1, "Description of Business - Narrative
Description of Business - Water Resource Development". The nature of such
additional financing for the water transfer projects will depend upon how the
development and ownership of each project is ultimately structured, and how much
of each project's funding will be the Company's responsibility. Should the
Company determine that it will be able to maximize its profit potential through
construction and ownership of the water delivery systems used in the project,
the Company will be required to obtain long term project financing. Based upon
the results of analyses performed by the Company's investment banking firm,
management believes that several alternative long-term financing arrangements
are available to the Company which will be further evaluated once funding
responsibility 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 of
outstanding stock options and warrants. The Company utilized such proceeds to
fund its capital projects related to development of its water transfer projects,
production well development, development of further agricultural acreage and
purchase of additional acreage.
WORKING CAPITAL RESOURCES. The Company has adopted an unclassified
-------------------------
balance sheet (eliminating the distinction between current assets and long-term
assets and current liabilities and long-term liabilities). Accordingly, any
historical or forward looking discussion of the Company's working capital
resources should focus on the receipt and use of cash as opposed to the broader
concepts of working capital and current ratio.
-19-
<PAGE>
The following table summarizes the Company's cash position for the
periods indicated (amounts in thousands):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------
1995 1994
--------- --------
<S> <C> <C>
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
======= =======
</TABLE>
CASH USED FOR OPERATING ACTIVITIES. During the year ended March 31, 1995, net
----------------------------------
cash used for continuing operations decreased to $2.89 million from $3.427
million during the 1994 period. Net cash provided by discontinued operating
activities totalled $57,000 and $52,000 during the year ended March 31, 1995 and
1994, respectively. Net cash used for operating activities totalled $2.833
million and $3.375 million for the year ended March 31, 1995 and 1994,
respectively, resulting in a decrease of $542,000. This decrease is primarily
due to less cash expended in 1995 for the settlement of legal matters than
during the 1994 period.
The Company currently pays no income taxes. As of March 31, 1995, the Company
has a net operating loss (NOL) carryforward of approximately $48 million for
federal and $20 million for state income tax purposes. Such carryforwards
expire in varying amounts through the year 2010. In accordance with the Tax
Reform Act of 1986, NOL utilization may be subject to an annual limitation. As
a result at March 31, 1995, approximately $15 million of federal NOL is
currently available to offset federal taxable income in future years. Similar
limitations 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 ended
March 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 to
developmental expenses incurred in connection with the development of the
Company's water transfer projects, well development, development of further
agricultural acreage and purchase of additional acreage.
During fiscal year 1995, the Company continued its development of the water
transfer project at Cadiz. In addition, the Company began development of a
second water transfer project in the Piute valley by drilling a production well
and the retention of an independent engineering firm to complete a feasibility
study for the project.
-20-
<PAGE>
During 1995, the Company also developed 240 acres of land to row crops,
developed two new production wells, and improved the existing facilities. These
improvements have enabled the Company to attract third party agricultural
entities 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 and
commercial improvements which will support the increase in agricultural
development. The Company also intends to develop additional acreage to row
crops in the coming year which will allow for double and sometimes triple
cropping, whereby two and sometimes three different crops can be planted and
harvested sequentially from the same acreage during one year. This type of
agricultural development has proven to be successful and provides the
possibility 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 primarily
from proceeds resulting from the exercise of stock options and warrants granted
in prior years totalling $2.3 million and the completion of additional financing
from Ansbacher in the amount of $2.45 million. During 1995, the Company reduced
debt payable to Rabobank and other notes payable by $530,000.
SHORT-TERM OUTLOOK
During fiscal 1995, the Company's working capital requirements were funded
primarily from available cash at the beginning of the year and from the proceeds
from the exercise of outstanding stock options. The $2.45 million in proceeds
received in March 1995 from the additional loan facility provided by Ansbacher
will be applied toward the Company's working capital requirements through March
31, 1996. The Company most likely will require additional funds in pursuit of
the various environmental and entitlement approvals required as a prerequisite
to the commencement of construction of the Cadiz water delivery project and
capital obligations relating to continuing agricultural development at Cadiz.
The Company will work with its investment banking firm in choosing the form of
funding most appropriate under the circumstances. As stock options with an
aggregate exercise price of approximately $9.5 million are currently
outstanding, any remaining working capital needs during fiscal 1996 can
potentially be met through the exercise of outstanding stock options. Other
possible alternatives include deposits from water agencies or other pre-sale
arrangements related to the Company's water transfer projects. Private equity
placements to institutional shareholders may be undertaken, but only to the
extent necessary so as to minimize the dilutive effect of any such placements
upon the Company's existing shareholders.
LONG-TERM OUTLOOK
Historically, the Company has financed both its working capital and property
acquisition cash requirements from outside resources via a combination of debt
and equity placements. Although the Company expects the revenue stream from its
agricultural operations will increase in fiscal 1996 and a revenue stream from
its other landholdings and associated resources will commence in calendar 1997,
no assurance can be given as to whether such revenues will be of sufficient
levels by the end of fiscal 1996 to fund the Company's ongoing cash
requirements. Such cash requirements will be dependent, in large part, upon the
form of the arrangements utilized by the Company for the development of its
resources.
-21-
<PAGE>
As the Company is actively pursuing the development of its water resources, it
is seeking finalization of the regulatory approvals needed to commence
construction of a water delivery project at Cadiz. The Company is also
negotiating the terms of water delivery contracts with various California water
agencies, which terms include institutional arrangements, financing, pricing
concepts and formulas and ownership of the pipeline and the delivery system.
The Company's investment banking firm has performed various economic analyses
of the Company's Cadiz water transfer project and has advised the Company as to
various alternative means of implementing this project. The various
alternatives available for structuring the delivery of this water to third
parties include the construction by the Company of a water delivery system for
off-site delivery to third party purchasers as well as the sale of water at the
well head or as in-ground reserve, with the purchaser or another third party
assuming responsibility for transport of the water off-site. The Company's
investment banking firm is continuing to assist management in evaluating these
delivery alternatives and in determining which alternatives maximize the
Company's profit potential in addition to assisting in determining which
financial structure will best accommodate such a plan.
In addition, as a result of San Bernardino County's approval of a General Plan
Amendment covering 9,600 acres of the Company's landholdings at Cadiz and the
increased grower interest in Cadiz as an agricultural area, the Company expects
to continue further development of its landholdings to agriculture. Such
development will be systematic and in furtherance of the Company's business
strategy to provide for maximization of the value of its assets. Such
development is expected to be accomplished through negotiated arrangements with
third parties, which will significantly reduce any capital outlay required of a
Company 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 either
on the costs of materials required in the development of property and/or in
labor costs. Similarly, the value of the Company's real property has not been
materially impacted by inflation. In the event the rate of inflation should
accelerate in the future, the Company believes the increase in the value of its
real 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 IV
hereof. See the Index to Consolidated Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
-22-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this Item is incorporated herein by reference to
the definitive proxy statement involving the election of directors which the
Company intends to file with the Commission pursuant to Regulation 14A under the
Securities 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 to
the definitive proxy statement involving the election of directors which the
Company intends to file with the Commission pursuant to Regulation 14A under the
Securities 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 to
the definitive proxy statement involving the election of directors which the
Company intends to file with the Commission pursuant to Regulation 14A under the
Securities 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 by
reference to the definitive proxy statement involving the election of directors
which the Company intends to file with the Commission pursuant to Regulation 14A
under the Securities Exchange Act of 1934 not later than 120 days after March
31, 1995.
-23-
<PAGE>
PART IV
ITEM 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 this
Registration Statement.
<TABLE>
<C> <S>
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,
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)/
</TABLE>
-24-
<PAGE>
<TABLE>
<C> <S>
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 between
the Company and the Mojave Water Agency./(7)/
</TABLE>
-25-
<PAGE>
<TABLE>
<C> <S>
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.
</TABLE>
-26-
<PAGE>
<TABLE>
<C> <S>
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.
23.1 - Consent of Independent Accountants (included in Part IV of the
Form 10-K).
</TABLE>
_______________________
/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-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, 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, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities and on the dates
indicated.
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 Financial
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-
<PAGE>
CADIZ LAND COMPANY, INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page (s)
--------
<S> <C>
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
</TABLE>
(Schedules other than those listed above have been omitted since they are either
not required, inapplicable, or the required information is included on the
financial statements or notes thereto.)
-29-
<PAGE>
[PRICE WATERHOUSE LLP]
LETTERHEAD
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
Cadiz Land Company, Inc.
In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Cadiz Land
Company, Inc. and its subsidiaries at March 31, 1995 and 1994, and the results
of their operations and their cash flows for each of the three years in the
period ended March 31, 1995, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Los Angeles, California
June 9, 1995
-30-
<PAGE>
CADIZ LAND COMPANY, INC.
CONSOLIDATED BALANCE SHEET
ASSETS
($ in thousands)
<TABLE>
<CAPTION>
MARCH 31,
-------------------
1995 1994
--------- --------
<S> <C> <C>
Cash and cash equivalents $ 2,454 $ 4,408
Inventory 198 -0-
Net assets of discontinued segment -0- 57
Property 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 5,623
Debt issue costs and other assets 1,268 1,009
------- -------
$34,888 $34,058
======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
-31-
<PAGE>
CADIZ LAND COMPANY, INC.
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
($ in thousands)
<TABLE>
<CAPTION>
MARCH 31,
--------------------
1995 1994
-------- ---------
<S> <C> <C>
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
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
-32-
<PAGE>
CADIZ LAND COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
------------------------------------
1995 1994 1993
------- -------- -------
<S> <C> <C> <C>
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)
------- -------- -------
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
======= ======== =======
</TABLE>
See accompanying notes to the consolidated financial statements.
-33-
<PAGE>
CADIZ LAND COMPANY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
($ in thousands except per share data)
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
------------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
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)
======= ======= =======
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)
======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements.
-34-
<PAGE>
CADIZ LAND COMPANY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
($ in thousands)
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
------------------------------ PAID-IN ACCUMULATED STOCKHOLDERS
SHARES AMOUNT CAPITAL DEFICIT EQUITY
--------------- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C>
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
========== ==== ======= ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
-35-
<PAGE>
CADIZ LAND COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - CURRENT STATUS AND DESCRIPTION OF BUSINESS
- ---------------------------------------------------
BUSINESS OF THE COMPANY
- -----------------------
Cadiz Land Company, Inc. (the "Company") identifies, acquires and develops
properties (to date in the desert regions of Southern California) which have
significant indigenous supplies of water. The Company currently owns or controls
approximately 41,700 acres, with its largest property totalling approximately
31,800 acres at Cadiz, California.
The Company's primary objective is to maximize the long-term value of each of
its properties through strategic use of the water resources associated with the
properties. Management believes that, with the increasing scarcity of water
supplies in California and increasing demand, the value of properties with
sizable assured supplies of water will continue to appreciate. The various
means by which the land and water resources available to these properties can be
used are evaluated by management on an ongoing basis. The alternatives
available to the Company include the transfer of water to third party users
and/or the development of the properties, using indigenous water sources, for
agricultural, commercial or residential purposes.
CURRENT OPERATING ENVIRONMENT
- -----------------------------
The transfer of water to third party users, both from the Cadiz property and
from other Company properties, is being actively pursued by the Company. It is
expected that water from the Cadiz water transfer project will be sold to
various California water agencies pursuant to water delivery contracts which the
Company is currently negotiating. The Company expects that this water delivery
project, when completed, will be capable of delivering between 30,000 and 50,000
acre-feet of water per year under long-term water delivery contracts. The
Company has also commenced water development operations at its landholdings in
the Piute valley which are expected to be capable of delivering approximately
10,000 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 MWA
staff to proceed with the environmental assessment of the proposed Cadiz water
transfer project and to serve as Lead Agency for purposes of complying with the
California Environmental Quality Act ("CEQA") upon completion and acceptance of
a Final Draft Feasibility Report. The Final Draft Feasibility Report, prepared
for the project under the joint review of the Company and MWA, included the
various results of independent studies conducted throughout the year. The
Company has submitted to MWA both this report and a Conceptual Ground Water
Management Plan which clarifies many of the hydrological features and resource
management concepts of the proposed water transfer project. The Company expects
that all remaining required environmental reports will be filed within fiscal
1996. In addition, the specific terms of the Company's proposals with the water
agencies are expected to be submitted for public review during this same time
period.
-36-
<PAGE>
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 landholdings
in the Piute valley, which is located approximately 12 miles from the Colorado
River near the town of Needles, California. Following the drilling of a
production well on the property in February 1995, and the results of preliminary
engineering tests, the Company has determined both the quantity and the quality
of the underlying water to be suitable for commercial development and that the
depth of the ground water table allows for economic production of ground water.
The Company believes that the Piute water transfer project is both technically
and economically feasible and is currently analyzing its options for
development.
Additionally, agricultural development has been an integral part of the
Company's ongoing business strategy as a means of maximizing the value of the
Company'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 acres
have been developed to citrus, and 240 acres have been planted to various row
crops. In addition to the land improvements, seven production wells, drip and
micro spray irrigation systems and facilities to accommodate a temporary
contract labor force have been installed.
The Company has raised objections to a proposed waste landfill project to be
located adjacent to its Cadiz landholdings. It is management's opinion that the
proposed project, as currently designed, poses environmental risks both to the
Company's agricultural operations at Cadiz and to the ground water basin
underlying the Cadiz property.
Pursuant to its business strategy, the Company utilizes its working capital
primarily for development purposes; that is, for purposes designed to increase
long-term value of its properties. As the Company does not expect to receive
significant revenues from its water transfer projects until 1997, the Company
has been required to obtain financing to bridge the gap between the time
development expenses are incurred and the time that a revenue stream will
commence. During the fiscal years ended March 31, 1994 and 1993, the Company
raised $11.9 million and $4.2 million, respectively, from external sources which
was used for debt reduction, the purchase and development of land, and working
capital. In March 1995, the Company received $2.45 million from an additional
loan facility provided by its primary lender which is expected to fund the
majority of the Company's working capital requirements for the next fiscal year.
As stock options with an aggregate exercise price of approximately $9.5 million
are currently outstanding, any remaining working capital needs during fiscal
1996 can potentially be met through the exercise of these stock options. Other
possible alternatives include deposits from water agencies or other pre-sale
arrangements related to the Company's water transfer projects or via a
combination of debt or equity placements. Management is confident that
sufficient working capital can be raised to allow the Company to continue to
pursue its business strategies during fiscal 1996, although no assurance can be
made.
-37-
<PAGE>
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 of
Delaware, on May 26, 1992, Pacific Agricultural Holdings, Inc. ("PAH"), as the
Company was formerly known, merged with and into its wholly owned subsidiary,
Cadiz Land Company, Inc. ("CLCI"), with CLCI the surviving entity. Concurrently
with the reincorporation, the Company authorized 100,000 preferred shares and
approved a one-for-five reverse stock split of the common shares. CLCI did not
conduct 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 and
its wholly-owned subsidiaries, Cadiz Valley Development Corporation, Inc. and
Southwest Fruit Growers Limited Partnership, a limited partnership ("SWFG") in
which the Company is the general partner and has an approximate 65.4 percent
partnership interest. SWFG owns a total of 680 acres of table grape vineyard
and 2,560 acres of undeveloped land at Cadiz, California. Allocable losses
incurred in the year ended March 31, 1991 served to eliminate the minority
interest. All material intercompany balances and activity have been eliminated
from the consolidated financial statements.
DEVELOPED PROPERTY
- ------------------
Developed property is stated at cost which management believes is less than net
realizable value. Cost includes land acquisitions and improvements, and, during
development periods, interest and direct holding costs which consist principally
of net farming costs. The development costs associated with mature properties
are depreciated on a straight-line basis over the estimated productive life of
the property.
UNIMPROVED LAND
- ---------------
Unimproved land consists of approximately 40,280 acres of undeveloped land in
Cadiz, Piute and other desert regions of California. Unimproved land is stated
at cost, which management believes is less than net realizable value.
-38-
<PAGE>
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 the
straight-line method over the estimated useful lives of the assets, generally
five to fifteen years for land improvements and buildings, seven years for
machinery and equipment, two to six years for autos and trucks and four years
for office furniture and equipment.
WATER TRANSFER PROJECTS
- -----------------------
The water transfer projects are stated at cost, which management believes is
less than net realizable value. Costs directly attributable to the development
of 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 consists
of 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 the
rate 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 and
1994, respectively. The Company reviews the recoverability of intangible assets
by comparing projected operating income on an undiscounted basis to the net book
value of the related assets.
DEBT ISSUE COSTS
- ----------------
Debt issue costs relate to the March 1995 and January 1994 debt agreements as
described in Note 6. These charges totalled approximately $593,000 and
$850,000, respectively, and are being amortized over the remaining life of the
debt. The accumulated amortization at March 31, 1995 is $361,000.
-39-
<PAGE>
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 highly
liquid debt instruments purchased with an original maturity date of three months
or less to be cash equivalents. Cash paid for interest, during 1995, 1994, and
1993 was $6,000, $131,000, and $789,000, respectively. Interest capitalized and
added to principal, in accordance with debt arrangements, totalled $734,000 and
$760,000 in 1995 and 1994, respectively. In addition, interest of approximately
$250,000 was capitalized as part of the development cost of the citrus orchard
in 1994 and 1993. Interest related to the citrus orchard was not capitalized in
1995 as the orchard produced its first harvest in fiscal 1995.
Non-cash transactions have been excluded from the statement of cash flows in
all years presented. There were no significant non-cash transactions in 1995,
however, significant non-cash transactions in 1994 consisted of assets exchanged
for debt ($.4 million), stock issued for debt ($1.4 million), stock issued for
property ($.2 million) and stock issued for fees ($.5 million) and in 1993, the
cancellation of debt in exchange for assets ($1.2 million). Cash provided by or
used for the Company's discontinued agribusiness segment is recorded net in the
consolidated statement of cash flows.
INCOME TAXES
- ------------
Income taxes are accounted for using an asset and liability approach which
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of temporary differences between the financial statement
and 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 weighted
average number of shares outstanding during the year. The weighted average
number of shares outstanding used to calculate earnings per share were
approximately 16.5 million, 12.8 million and 8.7 million, for the years ended
March 31, 1995, 1994, and 1993, respectively.
DISCONTINUED OPERATIONS
- -----------------------
In December 1990, the Company decided to terminate its agribusiness operations
which involved farm management and farm contract services in connection with the
development and maintenance of certain permanent specialty crops. These
operations were not profitable and at the same time required substantial working
capital. Agribusiness assets and liabilities pertaining to discontinued
operations are included on the balance sheet as "Net assets of discontinued
segment". Agribusiness revenue and expenses pertaining to discontinued
operations are charged to applicable reserves or are included on the statement
of operations as "Gain (loss) on disposal of discontinued segment".
-40-
<PAGE>
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 of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"). SFAS
No. 121 establishes new guidance in accounting for the impairment of long-lived
assets, including identifiable intangibles. When circumstances indicate that
the carrying amount of the asset may not be recoverable as demonstrated by
estimated cash inflows, an impairment loss shall be recorded based on fair
value. Management believes SFAS No. 121 will have no material effect on the
financial statements of the Company upon adoption in fiscal 1997.
RECLASSIFICATIONS
- -----------------
Certain reclassifications have been made to the March 31, 1994 balances to
conform with the March 31, 1995 presentation.
NOTE 3 - PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment consisted of the following (net of accumulated
depreciation, in thousands):
<TABLE>
<CAPTION>
MARCH 31,
------------------
1995 1994
-------- -------
<S> <C> <C>
Land improvements $ 1,732 $ 735
Buildings 730 543
Equipment 365 346
Autos and trucks 303 178
Office furniture and equipment 292 160
------- ------
3,422 1,962
Less accumulated depreciation (1,114) (825)
------- ------
$ 2,308 $1,137
======= ======
</TABLE>
-41-
<PAGE>
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):
<TABLE>
<CAPTION>
MARCH 31,
-------------------
1995 1994
-------- --------
<S> <C> <C>
Land $ 2,307 $ 2,307
Citrus orchard 3,613 3,599
Vineyard 4,885 4,885
------- -------
10,805 10,791
Less accumulated depreciation (1,090) (747)
------- -------
$ 9,715 $10,044
======= =======
</TABLE>
Unimproved land consisted of the costs directly related to the acquisition of
approximately 40,000 acres, such as the cost to purchase, commissions, real
estate taxes and legal and other professional fees.
NOTE 5 - WATER TRANSFER PROJECTS
- --------------------------------
The Company currently has two water transfer projects under development. All
costs directly attributable to the development of the water transfer projects
are being capitalized by the Company. These costs consist of drilling costs,
hydrological costs, consulting fees for various engineering, environmental and
feasibility studies, and other professional and legal fees. Both water transfer
projects are stated at cost, which management believes is less than net
realizable value.
NOTE 6 - LONG-TERM DEBT
- -----------------------
The Company maintains its primary financing relationships with Cooperative
Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) and Henry Ansbacher & Co.
Limited (Ansbacher), collectively the "Banks". At March 31, 1995, the Company's
obligations to Rabobank and Ansbacher amounted to $9.1 million and $7.7 million,
respectively. Ansbacher and Rabobank hold senior and subordinate deeds of
trust, respectively, on substantially all of the Company's property.
-42-
<PAGE>
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 as
follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Rabobank $ 9,100 $ 8,807
Ansbacher 7,713 4,944
Other 48 544
------- ------
16,861 14,295
Debt discount (480) (555)
------- -------
$16,381 $13,740
======= =======
</TABLE>
In furtherance of the Company's business strategy and in light of the Company's
progress with its business plan, in 1993, the Banks completed arrangements which
allowed for both banks to accrue and capitalize monthly interest payments
through December 31, 1994, the maturity date of the loans. In consideration of
this restructuring, the Company issued each of the Banks 125,000 warrants to
purchase the Company's common stock at $.05 per share exercisable for three
years following the date of issuance. In addition, Ansbacher and Rabobank
received additional collateral in the form of senior and subordinate deeds of
trust, respectively, on the Homer and Piute properties.
In January 1994 the Banks entered into a further arrangement regarding the
Company's debt. Under terms of this arrangement, the Banks extended the
maturity dates of the Company's debt until January 31, 1997, and fixed the
interest rates for the period. Rabobank and Ansbacher agreed to accrue and
capitalize interest payments through December 1994 and January 1997,
respectively. In connection with this arrangement, interest was capitalized
during 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 of
approximately $800,000 which may be used to pay interest quarterly to Rabobank
with effect from January 1995 and which will expire on March 3, 1997. In
addition, the Company reduced its obligation to Rabobank by $4,000,000 by way of
a $2,000,000 advance from Ansbacher, together with $2,000,000 of proceeds raised
from a private placement in January 1994.
In consideration for the above mentioned arrangements Rabobank returned and
cancelled 533,000 outstanding warrants in exchange for new warrants exercisable
as to a total of 175,000 shares of common stock. The total value of these
warrants, $604,000, has been recorded as a debt discount and will be amortized
over the remaining term of the debt. Ansbacher received 100,000 shares of
common stock as an arrangement fee and 50,000 shares of common stock as an
advisory fee valued at $3.50 per share. Additionally, the Company agreed to
convert $770,000 of debt to Ansbacher into 220,000 shares of common stock.
-43-
<PAGE>
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 would
provide a loan facility in two separate advances, both of which in the aggregate
will total $3,000,000. The first advance in the amount of $2,450,000, issued on
March 31, 1995, was used to reduce the Company's existing obligation to Rabobank
and to reimburse Rabobank for various fees and expenses from this and previous
arrangements in the amount of $250,000 and provide the Company with $2,200,000
to be applied toward the Company's estimated working capital requirements
through March 31, 1996. The second advance in the amount of $550,000, which the
Company expects to draw down on April 1, 1996, is anticipated to be applied
toward the Company's estimated working capital requirements for the fiscal year
ending March 31, 1997. Ansbacher agreed to accrue and capitalize interest on
the outstanding principal amount of these advances through January 1997.
In consideration for the above agreement, Ansbacher received 110,000 shares of
common stock valued at $3.50 per share. The Company also issued to Rabobank
35,000 warrants to purchase the Company's common stock at $.05 per share
exercisable for three years following the date of issuance. The total value of
these warrants, $121,000, has been recorded as a debt discount and will be
amortized over the remaining term of the debt. In addition, Rabobank agreed to
subordinate to Ansbacher's senior security interests in substantially all of the
Company's property.
In June 1994, the Company retired a note payable in the amount of $249,000 to an
individual at a discounted amount, resulting in an extraordinary gain of
$115,000. The note, which originated in 1985, was scheduled to be retired with
a balloon payment in December 1996.
In June 1993, the Company entered into a transaction by which debt was exchanged
for commercial property resulting in a gain of $300,000. In addition, during
December 1993, the Company recorded an additional gain of $43,000 on the
settlement of a debt at less than book value. The total gain from these two
transaction resulted in an extraordinary gain of $343,000 and was recorded as
such for the year ended March 31, 1994.
The rate in effect on the Rabobank debt was 4.81 percent at March 31, 1995. The
average 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 are
approximately as follows: 1996 - $34,000; 1997 -$16,820,000; 1998 - $7,000 and
none thereafter.
-44-
<PAGE>
CADIZ LAND COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - INCOME TAXES
- ---------------------
As of March 31, 1995, the Company has a net operating loss (NOL) carryforward of
approximately $48,300,000 for federal and $20,100,000 for state income tax
purposes. For financial statement purposes, as of March 31, 1995, the Company
has a net operating loss carryforward of $42,500,000 and $17,900,000 for federal
and state purposes, respectively. Such carryforwards expire in varying amounts
through the year 2010. For financial reporting purposes, the tax benefit
resulting from utilization of such NOL carryforward will be applied to reduce
the excess of purchase price over net assets acquired.
In accordance with the Tax Reform Act of 1986, NOL utilization may be subject to
an annual limitation. When there is a change in ownership of more than 50
percent (as defined) of a corporation, the use of any NOL existing at the date
of 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 PAS
and stock issuances subsequent to that merger, use of approximately $42,300,000
of the federal NOL is limited to approximately $2,200,000 per year. From the
date 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 financial
statement and tax basis of assets and liabilities and available carryforwards.
Temporary differences and carryforwards which give rise to a significant portion
of deferred tax assets and liabilities for the year end March 31, 1995 were as
follows (in thousands):
<TABLE>
<S> <C>
Basis difference in partnership interest $ (3,884)
Net operating loss 18,275
State taxes (364)
Other 194
--------
Net deferred tax asset $ 14,221
========
Valuation allowance $(14,221)
========
</TABLE>
-45-
<PAGE>
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 statutory
federal income tax rate is as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-------------------------------
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
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 1,310
Amortization 79 79 79
Other nondeductible expenses 14 -0- -0-
------- ------- -------
$ -0- $ -0- $ -0-
======= ======= =======
</TABLE>
NOTE 8 - STOCK OPTIONS AND WARRANTS
- -----------------------------------
The Company issues stock options which are not pursuant to a plan. During the
year ended March 31, 1995, the Board of Directors of the Company granted options
to purchase 1,872,000 shares of the Company's common stock at an exercise price
of $4.00 per share to $5.00 per share of which 400,000 options are conditional
based upon terms of employment and certain performance criteria. The recipients
of all such options were officers, directors, consultants, and employees of the
Company. During the fiscal year ended March 31, 1995, 1,447,590 shares of the
Company's common stock were issued as a result of the exercise of stock options
and 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 were
issued through the exercise of outstanding options resulting in gross proceeds
to the Company of $50,000. In addition, subsequent to March 31, 1995, the
Company granted options to purchase 100,000 shares of the Company's common stock
at an exercise price of $4.25 per share to an officer and an employee of the
Company. These options are conditional based upon terms of employment and
certain performance criteria.
-46-
<PAGE>
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 were
issued to officers, directors, consultants and other employees.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING PRICE
NUMBER RANGE
------------------- -----
<S> <C> <C>
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
==========
</TABLE>
(*) 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 damages
are asserted. However, on May 2, 1994, the plaintiffs' claims in this action
were dismissed with prejudice and cannot be asserted again. In addition, the
Company was awarded full reimbursement for all of its legal fees and costs
incurred in defending this action. Subsequently, the plaintiffs filed several
motions for a new trial, all of which were denied. The plaintiffs recently
filed an appeal from the court judgement which is currently pending. A decision
is 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 from
which the Company can collect its judgement if the trial court's decisions are
affirmed. The Company has not recorded a gain contingency in connection with
this matter.
-47-
<PAGE>
[PRICE WATERHOUSE LLP]
LETTERHEAD
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
and Shareholders of
Cadiz Land Company, Inc.
Our audits of the consolidated financial statements referred to in our report
dated June 9, 1995 appearing with the consolidated financial statements included
in this Form 10-K also included an audit of the Financial Statement Schedules
listed in the index on page 29 of this Form 10-K. In our opinion, these
Financial Statement Schedules present fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
/s/ Price Waterhouse LLP
- -------------------------
PRICE WATERHOUSE LLP
Los Angeles, California
June 9, 1995
-48-
<PAGE>
CADIZ LAND COMPANY, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
For the years ended March 31, 1995, 1994 & 1993
(in thousands)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT ----------------------------------- BALANCE
BEGINNING CHARGED TO CHARGED TO AT END
OF PERIOD COSTS AND EXPENSES OTHER ACCOUNTS DEDUCTIONS OF PERIOD
---------- ------------------ -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
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-
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
====== ==== ===== ====== ======
</TABLE>
-49-
<PAGE>
CADIZ LAND COMPANY, INC.
SCHEDULE XI
REAL ESTATE AND ACCUMULATED DEPRECIATION
March 31, 1995
(in thousands)
<TABLE>
<CAPTION>
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
- -------------------------- ------------ ------------ --------------- -------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
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
======= ====== ====== ======= =======
</TABLE>
(1) Included in collateral securing debt totalling $16.8 million.
-50-
<PAGE>
CADIZ LAND COMPANY, INC.
NOTE TO SCHEDULE XI
Real Estate and Accumulated Depreciation
(in thousands)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MARCH 31,
---------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
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
======= ======= =======
</TABLE>
-51-
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-73936) of Cadiz Land Company, Inc. of our report
dated June 9, 1995 appearing with the Consolidated Financial Statements included
in this Form 10-K. We also consent to the incorporation by reference of our
report on the Financial Statement Schedules, which appears on page 30 of this
Form 10-K.
/s/ Price Waterhouse LLP
- -------------------------------------
PRICE WATERHOUSE LLP
Los Angeles, California
June 27, 1995
-52-
<PAGE>
EXHIBIT 10.38
[PRUDENTIAL SECURITIES INCORPORATED]
LETTERHEAD
August 31, 1994
Mr. Keith Brackpool
Chief Executive Officer
Cadiz Land Company, Inc.
10470 Foothill Boulevard, Suite 200
Rancho Cucamonga, CA 91730
Dear 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, and
agenting 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 to
transport 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 Placement
Memorandum (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 material
fact 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 Company
will furnish Prudential Securities with any information concerning
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 that
Prudential 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 signing
of 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 whom
Prudential 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 retained
by Prudential Securities. External legal and advisory fees will
be capped at a level to be mutually agreed upon by the Company and
Prudential 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 any
time, 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 them
of such termination.
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 Prudential
Securities 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. Woods
AGREED:
Cadiz Land Company, Inc.
By: /s/ Keith Brackpool
----------------------
Keith Brackpool
[PRUDENTIAL SECURITIES INCORPORATED]
LETTERHEAD
Date: August 31, 1994
PRUDENTIAL SECURITIES INCORPORATED
One Seaport Plaza
New 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 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 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 Prudential Securities
nor any other Indemnified Person shall have any liability
to 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 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
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 in
such 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
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 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 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: CEO
AGREED AND ACCEPTED:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ James C. Woods
---------------------
Title: Managing Director
<PAGE>
EXHIBIT 10.39
[PRUDENTIAL SECURITIES INCORPORATED]
LETTERHEAD
October 5, 1994
Mr. Larry Friend
L.H. Friend, Weinress, Frankson, Inc.
333 Michelson Drive
Suite 650
Irvine, CA 92715
Dear 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, 1994
PRUDENTIAL SECURITIES INCORPORATED
One Seaport Plaza
New 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 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 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 will
reimburse 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 Prudential
Securities nor any other Indemnified Person shall have any
liability to 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 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 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 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 in
such 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 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 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 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: CEO
AGREED AND ACCEPTED:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ James C. Woods
--------------------------
Title: Managing Director
<PAGE>
EXHIBIT 10.40
[L.H. FRIEND, WEINRESS & FRANKSON, INC.]
LETTERHEAD
PERSONAL & CONFIDENTIAL
February 1, 1995
Mr. Keith Brackpool
Chief Executive Officer
Cadiz Land Company, Inc.
10535 Foothill Blvd.
Suite 150
Rancho Cucamonga, CA 91730
Dear 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 purpose
of providing the Company with investment banking services to
structure 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, financial
conditions and prospects of the Company;
(b) Assist the Company in negotiating a water transfer contract
with the City of Needles and other third parties.
3. In connection with Friend's engagement, the Company will furnish
Friend with any information concerning the Company which Friend
reasonably 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 information
supplied 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 of
the 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 and
incidental expenses, incurred during the term of its engagement
hereunder. This provision is subject to prior approval by the
Company.
6. The term of Friend's engagement hereunder as the Company's
financial 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,
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 Friend
under this Agreement, shall not be publicly disclosed or made
available to third parties without Friend's prior consent. In
addition, Friend may not be publicly referred to without its prior
consent.
8. This Agreement may not be amended or modified except in writing
and 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 to
accept this engagement and looks forward to working with you and
Cadiz Land Company, Inc. Please confirm that the foregoing
correctly 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
President
AGREED:
By: /s/ Keith Brackpool
----------------------
Keith Brackpool
President & CEO
Cadiz Land Company, Inc.
<PAGE>
EXHIBIT 10.41
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is entered into as
of 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 Valley
Development Corporation, a California corporation ("CVDC") and
Cadiz Land Company, Inc., a Delaware corporation ("Cadiz")
(CVDC and Cadiz are sometimes collectively referred to herein
as the "Borrowers"), on the other, with respect to the
following facts and objectives:
A. Pursuant to the terms and provisions of that
certain 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 Note
Secured By Deed of Trust dated January 11, 1994, in favor of
Ansbacher 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, Security
Agreement and Fixture Filing dated January 11, 1994 (the "First
CVDC Deed of Trust"), executed by CVDC in favor of Lender which
was recorded on May 23, 1994, as Instrument No. 94233573 in the
Official Records of San Bernardino County, California (the
"Official Records") and which encumbers the real property (the
"CVDC Land") described in Exhibit "A" attached hereto and
incorporated herein by this reference; and (ii) that certain
First Assignment, Pledge and Security Agreement dated January
11, 1994, executed by CVDC in favor of Ansbacher (collectively,
the "First CVDC Security Agreement"). CVDC's obligations under
the loan (the "CVDC Loan") evidenced by the CVDC Note have been
guaranteed pursuant to that certain Amended and Restated
Guarantee dated January 11, 1994, executed by Cadiz in favor of
Ansbacher (the "Guarantee"). The Guarantee is secured, inter
alia, by (i) that certain Second Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing
(Homer/Piute/Hammack) dated January 11, 1994 (the "Cadiz Second
Deed of Trust"), executed by Cadiz in favor of Ansbacher, which
was recorded on February 11, 1994, as Instrument No. 94058717
in the Official Records and which encumbers the real property
(the "Cadiz Property") described in Exhibit "B" attached to
this Agreement and incorporated herein by this reference; and
(ii) that certain First Assignment, Pledge and Security
Agreement dated January 11, 1994 (the "Cadiz First
Assignment"), executed by Cadiz in favor of Ansbacher.
B. Also pursuant to the terms and provisions of the
1994 Loan Agreement, Cadiz has heretofore executed that certain
Secured Promissory Note dated January 11, 1994 (the "Cadiz
Note"), in favor of Ansbacher in the original principal amount
of $2,397,424.08. The loan evidenced by the Cadiz Note is
sometimes referred to in this Agreement as the "Cadiz Loan."
The Cadiz Note is secured, inter alia, by (i) that certain
First Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (Homer/Piute/Hammack) dated January 11, 1994
(the "Cadiz First Deed of Trust"), executed by Cadiz in favor
of Ansbacher which was recorded on February 11, 1994, as
Instrument No. 94058716 in the Official Records and which
encumbers the Cadiz Property; (ii) that certain Second Deed of
Trust, Assignment of Rents, Security Agreement and Fixture
Filing (CVDC) dated January 11, 1994 (the "Second CVDC Deed of
Trust"), executed by CVDC in favor of Ansbacher which was
recorded on May 23, 1994, as Instrument No. 94233574 in the
Official Records and which encumbers the CVDC Land; (iii) that
certain Second Assignment, Pledge and Security Agreement dated
January 11, 1994, executed by Cadiz in favor of Ansbacher (the
"Cadiz Second Assignment"); and (iv) that certain Second
Assignment, Pledge and Security Agreement dated January 11,
1994 (the "Second CVDC Security Agreement"), executed by CVDC
in favor of Ansbacher.
C. Pursuant to the terms of the 1994 Loan Agreement,
Ansbacher issued a letter of credit (the "Letter of Credit") in
favor of Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland" ("Rabobank") in the maximum amount of
$853,000 with respect to certain interest payable under that
certain promissory note dated January 12, 1994 (the "Rabobank
Note"), executed by Cadiz and CVDC in favor of Rabobank in the
original principal amount of $8,681,474.03. In conjunction
with Ansbacher's issuance of the Letter of Credit, Cadiz
executed that certain Reimbursement Agreement dated January 11,
1994 (the "Reimbursement Agreement"), in favor of Ansbacher.
The performance of Cadiz' obligations under the Reimbursement
Agreement is secured by, among other things, (i) that certain
Third Deed of Trust, Assignment of Rents, Security Agreement
and Fixture Filing (Homer/Piute/Hammack) dated January 11,
1994, which was recorded on February 11, 1994 (the "Cadiz Third
Deed of Trust"), as Instrument No. 94058718 in the Official
Records and which encumbers the Cadiz Property; (ii) that
certain Third Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing (CVDC) dated January 11, 1994 (the
"Third CVDC Deed of Trust"), executed by CVDC in favor of
Ansbacher which was recorded on May 23, 1994, as Instrument No.
94233575 in the Official Records and which encumbers the CVDC
Land; (iii) that certain Third Assignment, Pledge and Security
Agreement dated January 11, 1994 (the "Cadiz Third
Assignment"), executed by Cadiz in favor of Ansbacher; and (iv)
that certain Third Assignment, Pledge and Security Agreement
dated January 11, 1994 (the "Third CVDC Security Agreement"),
executed by CVDC in favor of Ansbacher.
D. In addition to their respective obligations to
Ansbacher in connection with the Obligations (as defined in
Paragraph 3(a) below), Borrowers have requested that Ansbacher
make an additional loan to Borrowers in the amount of
$3,000,000 (the "Additional Advance Loan"). Ansbacher has
expressed a willingness to make the Additional Advance Loan as
requested, subject to the terms and conditions set forth in
greater detail below, including, without limitation, (i) Cadiz
granting Ansbacher security interests in the real property (the
"Additional Cadiz Property") described on Exhibit "C" attached
hereto and incorporated herein by this reference as additional
security for the CVDC Loan, the Cadiz Loan, the Reimbursement
Agreement and the Additional Advance Loan and (ii) CVDC
granting Ansbacher security interests in the real property (the
"Additional CVDC Property") described on Exhibit "D" attached
hereto and incorporated herein by this reference as additional
security for the CVDC Loan, the Cadiz Loan, the Reimbursement
Agreement and the Additional Advance Loan and such security
interests described in clauses (i) and (ii) of this sentence
being of a priority relative to any liens or security interests
granted to Rabobank or any other party with respect to the
Additional Cadiz Property (or any portion thereof) or the
Additional CVDC Property (or any portion thereof), as the case
may be, satisfactory to Ansbacher (in Ansbacher's sole and
absolute discretion). The Additional Cadiz Property and the
Cadiz Property are sometimes collectively referred to herein as
the "CLCI Real Property."
The CVDC Land and the Additional CVDC Property are sometimes
referred to in this Agreement as the "CVDC Real Property."
NOW, THEREFORE, Ansbacher, CVDC and Cadiz hereby agree as
follows:
1. CERTAIN ACKNOWLEDGMENTS. Cadiz (as to all of the
matters described in this Paragraph 1) and CVDC (as to the
matters described in subparagraph (b) of this Paragraph 1)
hereby acknowledge and agree that as of March 15, 1995, the
outstanding indebtedness under (a) the Cadiz Loan was
$2,578,706.24 (representing $2,551,244.92 of principal
(inclusive of all interest theretofore added to principal as
provided in the Cadiz Note) and $27,461.32 of accrued interest
which had not yet been added to principal), and (b) the CVDC
Loan was $2,741,235.43 (representing $2,712,043.30 of principal
(inclusive of all interest theretofore added to principal as
provided in the CVDC Note) and $29,192.13 of accrued interest
which had not yet been added to principal).
2. NO SATISFACTION. Cadiz and CVDC hereby expressly
acknowledge and agree that nothing in this Agreement or in any
document or instrument executed in connection with or pursuant
to this Agreement shall constitute a satisfaction of or a
novation as to all or any portion of CVDC's indebtedness under
the CVDC Loan or Cadiz' indebtedness under the Cadiz Loan, the
Guarantee or the Reimbursement Agreement. Cadiz hereby
unconditionally reaffirms, reconfirms and restates its
obligation to pay in full the indebtedness arising under the
Cadiz Loan, the Reimbursement Agreement and the Guarantee
(collectively, the "Existing Cadiz Indebtedness"). CVDC hereby
unconditionally reaffirms, reconfirms and restates its
obligation to pay in full the indebtedness arising under the
CVDC Loan. Cadiz (as to the Existing Cadiz Indebtedness) and
CVDC (as to the CVDC Loan and CVDC's obligations under the
documents and agreements CVDC has heretofore executed which
secure or relate to the Cadiz Existing Indebtedness) each
hereby further acknowledge and agree that they have no defenses
to the enforcement of such obligations (or any portion thereof)
nor any counter-claims or claims of offset whatsoever and that
neither this Agreement nor the consummation of the transactions
contemplated herein will give rise to any such defenses,
counter-claims or claims of offset.
3. ADDITIONAL ADVANCE.
(a) Borrowers' obligation to repay the Additional Advance
Loan shall be joint and several and shall be evidenced by
Borrower's execution and delivery of a promissory note (the
"Additional Advance Note") substantially in the form and
content attached as Exhibit "E" hereto and incorporated herein
by this reference. The Additional Advance Note shall be
secured by, inter alia, the deeds of trust, assignments and
security agreements described in Paragraphs 5(b)(ii),
5(b)(iii), 5(c)(ii), and 5(c)(v) hereof. The Additional
Advance Loan, the Cadiz Loan and the CVDC Loan shall sometimes
collectively be referred to herein as the "Loans." The Loans
and the obligations evidenced by the Reimbursement Agreement
and the Guarantee are sometimes collectively referred to herein
as the "Obligations."
(b) ADVANCE TO CADIZ AT CLOSING. The Additional Advance
is 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 Second
Advance shall be disbursed in accordance with and subject to
the conditions provided in subparagraphs (i) and (ii) of this
Paragraph 3(b):
(i) DISBURSEMENT OF FIRST ADVANCE. Upon
satisfaction of all of the conditions to Ansbacher's
obligations under this Agreement and the consummation (the
"Closing") of the transaction contemplated herein, Ansbacher
shall disburse the First Advance to the Borrowers. Borrowers
shall use the First Advance only for the purposes of (i) paying
$250,000 to Rabobank, $200,000.00 of which represents
reimbursement of costs and attorneys' fees theretofore incurred
by Rabobank in connection with the restructuring of the
indebtedness (the "Rabobank Loan") evidenced by the Rabobank
Note and the balance of which shall be credited and applied in
reduction 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 Advance
Loan and a portion of Cadiz' other projected working capital
requirements through March 31, 1996.
(ii) DISBURSEMENT OF SECOND ADVANCE. Ansbacher
shall disburse the Second Advance to Borrowers following
Borrowers' written request therefor only if each of the
following conditions has been fully satisfied:
(1) The Closing shall have occurred;
(2) No default or event which with notice
and/or the passage of time, or both, would constitute a default
shall have occurred under this Agreement, the CVDC Note, the
Cadiz Note, the Reimbursement Agreement, the Guarantee, the
Additional Advance Note, or any other document, agreement,
certificate, undertaking or instrument securing, evidencing or
otherwise relating to the Obligations (collectively, the "Loan
Documents"), or any of them;
(3) Cadiz shall have delivered to Ansbacher
the Appraisal (as defined in Paragraph 6(d) below) and the D&T
Appraisal (as defined in Paragraph 6(e) below) in accordance
with the provisions and requirements set forth in Paragraphs
6(d) and 6(e) hereof;
(4) Borrowers shall have furnished to
Ansbacher and Ansbacher shall have approved, in Ansbacher's
sole and absolute discretion, Cadiz' operating budget for the
fiscal year commencing April 1, 1996 and ending on March 31,
1997;
(5) Borrowers shall have executed such
additional documents and taken such actions as Ansbacher may
require in order to reaffirm and reconfirm Borrowers'
respective obligations and all of Ansbacher's rights and
interests arising under or in connection with the Loan
Documents (including, without limitation, providing Ansbacher,
at Borrowers' sole cost and expense, with such title
endorsements and other evidence satisfactory to Ansbacher as
Ansbacher may require to reconfirm the continuing priority of
the liens of the Cadiz Deeds of Trust (as defined in Paragraph
5(b)(ii) below), the CVDC Deeds of Trust (as defined in
Paragraph 5(c)(ii) below), and the other instruments and
agreements securing the Obligations); and
(6) Ansbacher shall in no event be required
to 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 are
timely satisfied in accordance with the provisions of this
Paragraph 3(b)(ii), Ansbacher shall disburse the Second Advance
to Borrowers promptly following the satisfaction of the last of
such conditions. If and when advanced to Cadiz pursuant to this
Paragraph 3(b)(ii), Cadiz shall use the Second Advance only for
the purpose of funding Cadiz projected working capital
requirements 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 Loan
in accordance with and subject to the terms and provisions of
this Agreement, Ansbacher has no obligation to make any
additional advances or loans whatsoever to Borrowers (or either
of them).
4. CONSIDERATION TO ANSBACHER. In consideration of
the agreements set forth in this Agreement, including, without
limitation, Ansbacher's agreement to make the Additional
Advance Loan, Cadiz shall (without payment of additional
consideration by Ansbacher) issue to Ansbacher concurrently
with the Closing 110,000 shares of common stock of Cadiz
(collectively, the "Shares"). The Shares shall be issued to
Ansbacher pursuant to Regulation S of the Securities and
Exchange Act of 1933, as amended. Concurrently with the mutual
execution and delivery of this Agreement, Cadiz shall also
provide Ansbacher with evidence in form and content
satisfactory to Ansbacher that sufficient shares of Cadiz'
common stock have been duly authorized to enable Cadiz to issue
to Ansbacher the Shares. When issued to Ansbacher, the Shares
shall be duly and validly issued, fully paid and nonassessable.
5. CONDITIONS TO EFFECTIVENESS OF AGREEMENT.
Ansbacher's obligation to consummate the transactions
contemplated hereby are expressly conditioned upon satisfaction
of all of the following conditions on or prior to March 31,
1995 (the "Termination Date"), all of which conditions
Borrowers shall use their best efforts to satisfy by the
Termination Date:
(a) If requested by Ansbacher, Cadiz shall execute and
deliver to Ansbacher a Reaffirmation of Guarantee in form and
content satisfactory to Ansbacher (in Ansbacher's sole and
absolute discretion) (the "Reaffirmation"), pursuant to which
Cadiz will further unconditionally reaffirm its obligations to
Ansbacher under the Guarantee;
(b) Cadiz shall execute and deliver to Ansbacher (in
recordable form, where appropriate, and otherwise in form and
content satisfactory to Ansbacher) each of the following
documents, instruments, agreements and other writings:
(i) Amendments to each of the Cadiz First Deed of
Trust, Cadiz Second Deed of Trust and Cadiz Third Deed of Trust
(the "Existing Cadiz Trust Deeds"), pursuant to which, among
other things, the Additional Cadiz Property will be added to
the real property encumbered by the Existing Cadiz Deeds of
Trust;
(ii) A deed of trust (the "New Cadiz Deed of
Trust" and, together with the Existing Cadiz Trust Deeds, the
"Cadiz Deeds of Trust") encumbering the CLCI Real Property as
security for the Additional Advance Note and having a lien
priority satisfactory to Ansbacher (in Ansbacher's sole and
absolute discretion);
(iii) A fourth lien security agreement (the "Cadiz
Fourth Assignment") pursuant to which Cadiz will grant to
Ansbacher a fourth priority security interest in and to, among
other things, (xx) that certain promissory note dated March 28,
1990 (the "SWFG Note"), executed by SWFG in favor of Pacific
Agricultural Holdings ("PAH"), Cadiz' predecessor in interest,
in the original principal amount of $4,934,922 and in and to
that certain deed of trust of even date therewith (the "SWFG
Deed of Trust") securing the SWFG Note (the SWFG Note and SWFG
Deed of Trust are sometimes collectively referred to in this
Agreement as the "SWFG Collateral"); (yy) that certain
promissory note dated March 28, 1990 (the "Farming Note"),
executed by SWFG in favor of PAH in the original principal
amount of $3,141,344.00 and in and to that certain deed of
trust of even date therewith (the "Farming Deed of Trust")
securing the Farming Note (the Farming Note and Farming Deed of
Trust are sometimes collectively referred to in this Agreement
as the "Farming Collateral"); and (zz) that certain promissory
note dated March 31, 1988 (the "EVCO Note"), executed by EVCO
Limited in favor of PAH in the original principal amount of
$342,600 and in and to that certain deed of trust of even date
therewith (the "EVCO Deed of Trust") securing the EVCO Note
(the EVCO Note and EVCO Deed of Trust are sometimes
collectively referred to in this Agreement as the "EVCO
Collateral"), such security interests being granted as security
for the Additional Advance Note;
(iv) With respect to all Cadiz Deeds of Trust,
environmental certificates confirming the absence of hazardous
waste on or environmental contamination of the Cadiz Real
Property and evidence that Cadiz has obtained and is
maintaining in full force and effect all insurance policies
required pursuant to the terms and provisions of the Cadiz
Deeds of Trust;
(v) If requested by Ansbacher, an independent,
unsecured environmental indemnity agreement in favor of
Ansbacher with respect to each of the Cadiz Deeds of Trust;
(vi) Representations and warranties regarding such
matters as Ansbacher may require;
(vii) The Additional Advance Note; and
(viii) If requested by Ansbacher, general security
agreements pursuant to which Cadiz will grant to Ansbacher or
reaffirm and restate, as the case may be, security interests in
personal property of Cadiz to secure the Cadiz Note, the
Guarantee, the Reimbursement Agreement and the Additional
Advance Note, respectively, which security interests shall
apply to such personal property of Cadiz and be of a priority
satisfactory to Ansbacher (in Ansbacher's sole and absolute
discretion).
(c) CVDC shall execute and deliver to Ansbacher (in
recordable form, where appropriate, and otherwise in form and
content satisfactory to Ansbacher) the following documents,
instruments, agreements and other writings:
(i) Amendments to each of the First CVDC Deed of
Trust, Second CVDC Deed of Trust, and Third CVDC Deed of Trust
(collectively, the "Existing CVDC Deeds of Trust"), pursuant to
which, among other things, the Additional CVDC Property will be
added to the real property encumbered by the Existing CVDC
Deeds of Trust;
(ii) A deed of trust (the "New CVDC Deed of Trust"
and, together with the Existing CVDC Deeds of Trust, the "CVDC
Deeds of Trust") encumbering the CVDC Real Property as security
for the CVDC Note and having a lien priority satisfactory to
Ansbacher (in Ansbacher's sole and absolute discretion);
(iii) Representations and warranties regarding such
matters as Ansbacher may require;
(iv) With respect to each of the CVDC Deeds of
Trust, environmental certificates confirming the absence of
hazardous waste on or environmental contamination of the CVDC
Real Property and evidence that CVDC has obtained and is
maintaining in full force and effect all insurance policies
required pursuant to the terms and provisions of the CVDC Deeds
of Trust;
(v) A fourth lien security agreement (the "Fourth
CVDC Security Agreement") pursuant to which CVDC will grant to
Ansbacher a fourth priority security interest in and to, among
other things, (xx) that certain promissory note dated March 10,
1988, in the original principal amount of $262,000, made by
P.S.W.R. I Limited in favor of CVDC (the "PSWR Note"), which
PSWR Note is secured by that certain deed of trust dated March
10, 1988, which encumbers the property described therein (the
"PSWR Property") and which was recorded on October 11, 1988, as
Instrument No. 88-340268 in the Official Records (the "PSWR
Deed of Trust" and together with the PSWR Note, the "PSWR
Collateral"), and (yy) that certain promissory note dated March
31, 1988 (the "Harweal Note"), executed by Harweal Investments
Limited in favor of CVDC in the original principal amount of
$262,000, which Harweal Note is secured by that certain deed of
trust dated March 31, 1988 (the "Harweal Deed of Trust" and
together with the Harweal Note, the "Harweal Collateral"),
which encumbers the property described therein (the "Harweal
Property") and recorded on December 13, 1988, as Instrument No.
88-434719 in the Official Records, such security interests
being granted to Ansbacher as partial security for the
Additional Advance Note; and
(vi) The Additional Advance Note;
(vii) If requested, an independent, unsecured
environmental indemnity agreement in favor of Ansbacher,
relating to each of the CVDC Deeds of Trust; and
(viii) If requested by Ansbacher, general security
agreements 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, the
Cadiz Note, the Reimbursement Agreement and the Additional
Advance Note, respectively, which security interests shall
apply to such personal property of CVDC and be of a priority
satisfactory to Ansbacher (in Ansbacher's sole and absolute
discretion).
(d) Borrowers shall obtain and deliver to Ansbacher an
opinion of Miller & Holguin (in form and content satisfactory
to Ansbacher) with respect to such matters relating to the
transactions contemplated by this Agreement as Ansbacher may
require;
(e) With respect to each of the Cadiz Deeds of Trust
and the CVDC Deeds of Trust, Borrowers shall obtain (at
Borrowers' sole cost and expense) such title insurance/or title
endorsements as Ansbacher may require in order to insure, among
other things, that the Cadiz Deeds of Trust and CVDC Deeds of
Trust secure the applicable obligations, and that the liens of
the Cadiz Deeds of Trust and CVDC Deeds of Trust are valid and
enforceable liens on the CLCI Real Property and the CVDC Real
Property, respectively, subject only to those matters and
exceptions hereafter approved in writing by Ansbacher. Such
title insurance and endorsements shall be issued by a title
company or companies satisfactory to Ansbacher and shall
include insurance for mechanic's liens and any other matter
Ansbacher may (in its sole and absolute discretion) require;
(f) Ansbacher shall have received certified copies of
the resolutions (in form and content satisfactory to Ansbacher)
of the Boards of Directors of each of Cadiz and CVDC, approving
and authorizing this Agreement and the transactions
contemplated herein and any and all actions to be taken by
Cadiz and/or CVDC in furtherance of or in connection with this
Agreement;
(g) Ansbacher shall have received from the Delaware
Secretary of State a Certificates of Good Standing with respect
to Cadiz and from the California Secretary of State a
Certificate of Good Standing with respect to CVDC and a
certificate evidencing that Cadiz is qualified to do business
in California, all of which Certificates must be in form and
content satisfactory to Ansbacher;
(h) Ansbacher shall have received a certificate (in
form and content satisfactory to Ansbacher) of the Secretary of
each of Cadiz and CVDC, certifying as to the names and
signatures of the officers authorized to sign this Agreement
and the other documents to be executed and delivered on its
behalf pursuant to this Agreement;
(i) Borrowers shall have delivered to Ansbacher a
certification (in form and content satisfactory to Ansbacher)
certifying both on an aggregate basis and on a parcel by parcel
basis as to the acreage owned by Cadiz, SWFG and/or CVDC or in
which Cadiz, SWFG and/or CVDC has an interest (whether by
virtue of a purchase agreement, a deed of trust, an option to
acquire, or otherwise);
(j) Borrowers shall have furnished to Ansbacher and to
the title company insuring any deed of trust securing the
Obligations (or any of them), as the case may be, such
documentation as may be necessary or appropriate in order to
confirm that Cadiz, by virtue of the merger of PAH with Cadiz,
is the successor to (i) all assets, rights, powers and property
of PAH, including, without limitation, the SWFG Collateral, the
Farming Collateral and the EVCO Collateral, and (ii) all debts,
liabilities and obligations of PAH, including, without
limitation, the debts, liabilities and obligations evidenced by
the Guarantee;
(k) All real property taxes with respect to the
property encumbered by the Cadiz Deeds of Trust and/or the CVDC
Deeds of Trust (or any of them), as well as all real property
taxes affecting the property encumbered by any and all deeds of
trust pledged or assigned to Ansbacher as security for the
Obligations (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 terms
the transaction contemplated by that certain Fourth Loan
Modification Agreement dated as of March 15, 1995 (the
"Rabobank Agreement"), among Rabobank, Borrowers and Ansbacher;
(m) Borrowers shall have caused appropriate officers of
Borrowers to execute and deliver to Ansbacher such additional
certificates with respect to matters relating to the
transactions contemplated herein as Ansbacher may require;
(n) Borrowers shall have delivered to Ansbacher their
joint undertaking not to borrow any money or incur any other
debts (except trade debts incurred in the ordinary course of
business) without first obtaining Ansbacher's express written
consent;
(o) Cadiz shall have delivered to Ansbacher a
reaffirmation of its undertaking, pursuant to which Cadiz has
heretofore agreed to provide to Ansbacher all such financial
and other information as Ansbacher may from time to time
require concerning the Water Assets (as such term is defined in
Exhibit "F" hereto);
(p) Borrowers shall have delivered to Ansbacher their
joint undertaking to (i) provide Ansbacher with first, second,
third and fourth lien security interests in all property which
either hereafter acquires or in which either Cadiz or CVDC
presently has or hereafter obtains any interest; provided,
however, that (xx) Cadiz' obligations with respect to that
certain Option Agreement dated December 29, 1993 (the "SF
Option"), between Cadiz, 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 Cadiz, as optionee, and SF, as optionor, covering
approximately 3,358 acres of land, shall be to use its best
efforts during the 45-day period following the Closing to
obtain the optionor's consent, if required, to the pledge to
Ansbacher of Cadiz' option rights under the SF Option and the
Piute Option and to provide Ansbacher with copies of all
correspondence relevant to such requests for consent; (yy)
Cadiz shall in no event assign, pledge or transfer such option
rights 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 to
pledge such options if they are assignable; and (ii) refrain
from encumbering or granting any security interest to any third
party (other than a security interest to Rabobank, which shall
in any event be junior to all security interests granted to
Ansbacher to secure the Obligations) in any property which
Cadiz and/or CVDC hereafter acquires or in which Cadiz and/or
CVDC hereafter acquires any other interest (whether by virtue
of a purchase agreement, option agreement or otherwise);
(q) Borrowers shall have reaffirmed their joint
undertaking to use their best efforts to substitute direct
first, second, third and fourth lien deeds of trust for the
security interests currently held by Ansbacher in the SWFG
Collateral, Farming Collateral, EVCO Collateral, PSWR
Collateral, and Harweal Collateral;
(r) Rabobank shall have executed and delivered to
Ansbacher an agreement (in form and content satisfactory to
Ansbacher) pursuant to which Rabobank agrees to subordinate in
favor of Ansbacher its right to receive any voluntary
prepayments under the Rabobank Loan until such time as
Ansbacher has received an amount not less than all principal
and other sums from time to time outstanding under the
Additional Advance Loan, plus all accrued but unpaid interest
thereon;
(s) Borrowers shall have executed and delivered or
caused the appropriate third parties to execute and/or deliver
(in recordable form, where appropriate, and otherwise in form
and content satisfactory to Ansbacher) such other documents,
instruments, agreements and writings as Ansbacher may require
in connection with the creation or continuation of any security
interest(s) granted to Ansbacher in furtherance of the
transactions contemplated by this Agreement or as Ansbacher may
otherwise require in connection with the consummation of such
transactions (including, without limitation, current estoppel
certificates relating to the SWFG Collateral, the Farming
Collateral, 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; and
studies); and
(t) Borrowers shall have furnished to Ansbacher and
Ansbacher 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 Paragraph
5 shall be waivable by Ansbacher in its sole and absolute
discretion, it being understood and agreed that any such waiver
shall only be valid if made in writing by Ansbacher. In the
event that each of the conditions set forth in this Paragraph 5
has not either been satisfied or so waived prior to the
Termination Date, then, at Ansbacher's sole option, this
Agreement (and all of Ansbacher's obligations hereunder) shall
terminate and be of no further force or effect. Following any
such termination of this Agreement, the Cadiz Loan, CVDC Loan,
the Reimbursement Agreement, and the Guarantee shall be
unmodified and unchanged and CVDC's and Cadiz' respective
obligations thereunder shall be determined as though this
Agreement had never been executed.
6. CERTAIN ADDITIONAL COVENANTS.
(a) Until such time as all of the Obligations have been
satisfied in full, Borrowers shall furnish to Ansbacher (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 from time
to time filed by Cadiz, (ii) on or before March 1 and August 1
of each year, a statement of projected cash flow of Cadiz 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 Ansbacher)
setting forth the variances in Cadiz' actual results of
operation from its budgeted results of operation, (iv) within
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 Cadiz, and (v) such other information concerning
the financial condition or operations of Cadiz, CVDC, or any of
Cadiz' other subsidiaries as Ansbacher may from time to time
reasonably request. All financial information furnished to
Ansbacher pursuant to this Paragraph 6(a) shall be prepared in
accordance with GAAP and the information provided pursuant to
Paragraph 6(a)(i) through (iii) shall be certified by Cadiz'
Chief Financial Officer.
(b) Cadiz shall continue timely to file all materials
required to be filed with the Securities and Exchange
Commission (the "SEC") pursuant to Section 13 (a) of the
Securities and Exchange Act of 1934 (the "Act").
(c) Borrowers hereby agree that they will not, without
first obtaining Ansbacher's express written consent, transfer,
assign, sell, agree to sell, convey, exchange, gift, encumber,
pledge, hypothecate, alienate, grant an option to purchase or
acquire, or otherwise dispose of, directly, indirectly or in
trust, voluntarily or involuntarily, by operation of law or
otherwise, or enter into an agreement to do any of the
foregoing, with respect to all or any part of any existing or
hereinafter created or acquired Water Assets, including,
without limitation, any future agreement for the transfer of
any Water Assets as contemplated by the Memorandum of
Understanding dated January 11, 1994, between Cadiz and the
Mojave Water Agency (the "Memorandum"). Notwithstanding any
other provision herein to the contrary, (i) Cadiz and/or CVDC
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 acre feet of water; and (yy) the
cumulative total of all such conveyances or contracts in one
year does not exceed two hundred (200) acre feet of water; (ii)
Ansbacher will not unreasonably withhold its consent to any
proposed contract or agreement pursuant to which water would be
sold and delivered by CVDC and/or Cadiz to a third party; and
(iii) the restrictions on the sale of water provided in
this Paragraph 6(c) 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 CLCI Real Property, the CVDC Real
Property, and/or the real property encumbered by the SWFG Deed
of Trust.
(d) Within one hundred twenty (120) days following the
Closing, Borrowers shall obtain, at Borrowers' sole cost and
expense, and provide to Ansbacher a true, correct and complete
copy of an appraisal (the "Appraisal") of the CVDC Real
Property, CLCI Real Property, and the real property encumbered
by the deeds of trust which secure the SWFG Note, the Farming
Note, the EVCO and Harweal Notes, and the PSWR Note
(collectively, the "Appraised Properties") prepared by an
appraiser or appraisers satisfactory to Ansbacher. 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 Borrowers.
(e) On or before July 31, 1995, Borrowers shall deliver
to Ansbacher a true, correct and complete copy of an appraisal
(the "D&T Appraisal") of the properties encumbered by the
Farming Deed of Trust and SWFG Deed of Trust prepared by
Deloitte & Touche and any other information or documentation
relating to the value of such properties as Ansbacher may
request; provided that, without in any manner modifying the
condition set forth in Paragraph 3(b)(ii)(3) above, in the
event that the D&T Appraisal has not been completed by July 31,
1995, then Borrowers shall deliver a true, correct and complete
copy of the most current draft of the D&T Appraisal on such
date.
(f) Neither Borrowers, nor either of them, shall
hereafter make, cause or permit any voluntary prepayment to be
made under the Rabobank Loan until such time as Ansbacher has
received an amount not less than all principal and other sums
from time to time outstanding under the Additional Advance
Loan, plus all accrued but unpaid interest thereon.
(g) On or before December 31, 1995, Borrowers shall
provide Ansbacher with an opinion letter prepared by Borrowers'
water rights counsel concerning Cadiz' rights with respect to
the Water Assets associated with the approximately 2,955 acres
of land owned by Cadiz at Piute.
7. CERTAIN REPRESENTATIONS OF BORROWERS.
(a) Borrowers hereby make the following representations
and warranties to Ansbacher, each of which (i) is materially
relied upon by Ansbacher in making its determination to enter
into this Agreement; (ii) Borrowers represent and warrant to be
true in all respects as of the execution date hereof and as of
the Closing; (iii) shall survive mutual execution and delivery
of this Agreement as well as any future transfer of any real
property or other collateral for the Obligations (or any of
them) to Ansbacher or any transferee, successor or assignee of
Ansbacher; and (iv) along with all other representations and
warranties made or given by Borrowers (or either of them) in
connection with the transactions contemplated by this Loan
Agreement, shall be deemed to be reaffirmed and remade as
though they were made and given as of the date of disbursement,
if any, of the Second Advance and the expiration of each
Interest Period (as defined in the Additional Advance Note)
under the Additional Advance Note; provided, however, Borrowers
shall not be deemed to be in default under this Agreement or
under any of the other Loan Documents or to have failed to
satisfy a condition to the disbursement of the Second Advance
by reason of any inaccuracy in any representation or warranty
set forth in clause (i) below so reaffirmed so long as the
matter making such representation or warranty inaccurate would
not have a material adverse effect on the financial or
operating condition of Borrowers (or either of them) or have a
material adverse effect on any collateral for the Obligations
(or any of them):
(i) Except as otherwise disclosed in (vv) that
certain letter dated June 10, 1994, from Miller & Holguin
("M&H") to Price Waterhouse, (xx) that certain letter dated
June 10, 1994, from William D. Baker of Ellis, Baker & Porter,
Ltd. to Price Waterhouse, (yy) that certain letter dated March
21, 1995, from James D. Burnside of Caswell, Bell, Hillison,
Burnside & Greer to Susan K. Chapman of Cadiz, and (zz) that
certain letter dated as of the Closing from Howard J.
Unterberger of M&H to Ansbacher, there are no pending or, to
the best of Borrowers' knowledge, threatened litigation,
proceedings, lawsuits or claims, whether for personal injury,
property damage, property taxes, contractual disputes or
otherwise, which do or may affect the property or other
collateral securing the Obligations (or any of them),
including, without limitation, pending proceedings in
condemnation or eminent domain, and there are no actions or
proceedings pending or, to the best of Borrowers' knowledge,
threatened against CVDC and/or Cadiz before any court or
administrative agency in any way connected with such property
or collateral;
(ii) Neither the entering into of this Agreement
nor the consummation of the transactions contemplated hereby
will constitute or result in (i) a violation or breach by Cadiz
and/or CVDC of any judgment, order, writ, injunction or decree
issued against or imposed upon it; or (ii) any default or event
of default that with notice or lapse of time, or both, would be
a default, breach or violation of any lease, mortgage, deed of
trust or other agreement, instrument or arrangement by which
Cadiz and/or CVDC or any property or other collateral securing
the Obligations (or any of them) are bound;
(iii) All financial information of CVDC and Cadiz
provided to Ansbacher is true and correct in all material
respects;
(iv) No representations, warranties or covenants
made by CVDC and/or Cadiz or any statements furnished or to be
furnished by Cadiz and/or CVDC hereunder or in connection with
the transactions contemplated herein or in the Rabobank
Agreement contains, or will contain, any untrue statement of a
material fact or omits, or will omit, a material fact thereby
making the statements contained therein misleading. Borrowers
have disclosed all information concerning the real property and
other collateral securing the Obligations (or any of them) of
which CVDC and/or Cadiz is aware which may materially affect
the value of such real property or other collateral;
(v) 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 CVDC and/or Cadiz of any document to which
it is or will be a party in connection with the Obligations;
and
(vi) Except for (aa) the Memorandum, (bb) such
security interests as have heretofore been granted to Ansbacher
and Rabobank in connection with the Obligations and the
indebtedness evidenced by the Rabobank Note, as the case may
be, and (cc) prior transfers of Water Assets in connection with
prior transfers by Cadiz and/or CVDC of real property, as to
which real property (together with the Water Assets arising
from or in connection therewith) Cadiz and/or CVDC (xx) has
subsequently reacquired and presently hold the fee interest, or
(yy) presently hold a security interest, neither Cadiz nor CVDC
has heretofore transferred, assigned, sold, conveyed,
encumbered, pledged, hypothecated or otherwise disposed of any
Water Assets (or entered into an agreement to do any of the
foregoing).
(b) In addition to the representations set forth in
Paragraph 7(a) above, Cadiz hereby makes the following
representations and warranties to Ansbacher, each of which (xx)
is materially relied upon by Ansbacher in making its
determination to enter into this Agreement and make the
Additional Advance Loan, (yy) Cadiz represents and warrants
to be true and correct in all respects as of the execution date
hereof and as of the Closing, and (zz) shall survive the mutual
execution and delivery of this Agreement and any future
transfer of any real property or other collateral for the
Obligations (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 or
indirectly, arising out of the transactions contemplated by
this Agreement or the transactions contemplated by the Rabobank
Agreement (collectively, the "Current Transactions"):
(xx) employed any device, scheme or
artifice to defraud;
(yy) made any untrue statement of a
material fact, or omitted to state a material fact, necessary
in order to make the statements made in light of the
circumstances under which they were made, not misleading, or
(zz) engaged in any act, practice or course
of business which operates or would operate as a fraud or
deceit upon any person in connection with the purchase or sale
of any security;
(ii) To the best knowledge of Cadiz' current
officers, Cadiz has not, in connection with the purchase,
issuance or sale of any of its securities in any transaction
engaged in any of the acts or done any of the things described
in Paragraphs 7(b)(i)(xx) through (zz) above, with respect to
which the applicable statutes of limitations have not run;
provided, however, nothing in this Paragraph 7(b)(ii) shall in
any 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 to
be filed with the SEC pursuant to Section 13 (a) of the Act.
All representations and warranties made hereunder
are in addition to any representations and warranties implied
by law, set forth in any document heretofore executed in
connection with the Obligations (or any of them) or in any
document executed in connection with this Agreement and in no
event shall this Paragraph 7 be construed to limit, diminish or
reduce any obligation of disclosure implied upon CVDC and/or
Cadiz by law. The representations and warranties set forth in
this Agreement shall survive indefinitely the consummation of
the transactions contemplated hereby.
8. GENERAL RELEASE. In consideration of the
Additional Advance and the other terms and provisions of this
Agreement, Borrowers, on behalf of themselves, their respective
agents, successors, assigns, subsidiaries, partners and
affiliates hereby fully release and forever discharge Ansbacher
and 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 any
of their respective agents, successors, assigns, subsidiaries,
partners and/or affiliates ever had or may have against
Ansbacher or Ansbacher's Affiliates, including, without
limitation, all claims arising under or in connection with the
Cadiz Loan, CVDC Loan, Reimbursement Agreement, Additional
Advance Loan, and/or the Guarantee and/or in connection with
the dealings between the parties up to and including the
Closing of the transactions contemplated in this Agreement and
all claims which have arisen or may arise in any other way
whatsoever; provided that nothing herein shall be deemed to
release Ansbacher or any Ansbacher Affiliate from any liability
or obligation arising in connection with facts or circumstances
which occur or arise for the first time after the Closing of
the transaction contemplated by this Agreement.
It is further understood and agreed that the
foregoing general release extends to all claims of every kind
and nature whatsoever, known, suspected or unsuspected,
liquidated or contingent, foreseen or unforeseen, and CVDC and
Cadiz, 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 DEBTOR."
9. WAIVER OF ANTI-DEFICIENCY PROTECTION. Cadiz and
CVDC each hereby waives, as to this Agreement and any and all
documents heretofore executed in connection with the Cadiz
Loan, the CVDC Loan, the Guarantee, and/or the Reimbursement
Agreement, and as to the Additional Advance Note and any and
all other documents or agreements executed by Cadiz and/or CVDC
pursuant to this Agreement, any defense, protection or right
under:
(a) California Code of Civil Procedure ("CCP") Section
580(d) concerning the bar against rendition of a deficiency
judgment after foreclosure under a power of sale;
(b) CCP Section 580(a) purporting to limit the amount
of a deficiency judgment which may be obtained following exercise
of a power of sale under a deed of trust; and
(c) CCP Section 726 concerning exhaustion of
collateral, the form of foreclosure proceedings with respect to
real property security located in California and otherwise
limiting the amount of a deficiency judgment which may be
recovered following completion of judicial foreclosure by
reference to the "fair value" of the foreclosed collateral.
10. ADVICE OF COUNSEL. Each of the Borrowers
acknowledges that it has entered into this Agreement
voluntarily and that it has had the full opportunity to obtain
and consult with counsel of its own choice to advise it in the
negotiations for, and in the execution of, this Agreement and
the documents to be executed pursuant hereto. Each of the
Borrowers further acknowledges that it has read this Agreement,
that it is fully aware of the contents of this Agreement and
its legal effect and that it has not relied upon any advice,
representation or warranty of any kind whatsoever from
Ansbacher or its counsel.
11. COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same
instrument.
12. INTEGRATION; NO THIRD PARTY BENEFICIARIES. This
Agreement and the documents and agreements to be executed
pursuant to the terms and provisions of this Agreement together
constitute the entire agreement among Ansbacher and Borrowers
with respect to the making of the Additional Advance and this
Agreement and such documents supersede any prior or
contemporaneous oral or written agreements with respect
thereto. This Agreement may be modified only by an instrument
in writing signed by Ansbacher, Cadiz and CVDC. There are no
third party beneficiaries to this Agreement.
13. EXHIBITS. All exhibits attached to this Agreement
are hereby incorporated in full into this Agreement by this
reference.
14. WAIVER OF JURY. CVDC, CADIZ AND ANSBACHER DO
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING,
DEFENSE OR COUNTERCLAIM BASED ON THIS AGREEMENT, OR ANY
AGREEMENT, INSTRUMENT OR OTHER DOCUMENT EXECUTED IN CONNECTION
WITH THE OBLIGATIONS (OR ANY OF THEM), THE LETTER OF CREDIT, OR
THIS AGREEMENT OR ANY COURSE OF CONDUCT, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY
SECURITY DOCUMENT RELATING TO THE OBLIGATIONS (OR ANY OF THEM).
THE WAIVERS SET FORTH IN THIS PARAGRAPH 14 ARE A MATERIAL
INDUCEMENT FOR ANSBACHER ENTERING INTO THIS AGREEMENT.
Cadiz' Initials: _______
CVDC's Initials: _______
Ansbacher's Initials: _______
15. APPLICABLE LAW; SUCCESSORS. This Agreement shall
in all respects be governed and construed in accordance with
the laws of the State of California. This Agreement shall be
binding upon and inure to the benefit of Ansbacher and Cadiz
and their respective successors and assigns; provided, however,
Borrowers shall in no event have the right to assign any of
their rights, obligations or interests hereunder without
Ansbacher's prior written consent (which consent Ansbacher may
grant or withhold in its sole and absolute discretion).
16. ATTORNEYS' FEES. The prevailing party in any
action to interpret or enforce the terms of this Agreement
shall be entitled to its costs of suit, including, but not
limited to, fees and disbursements of its attorneys', court
costs and fees and fees of expert witnesses, including any such
fees and costs incurred in connection with any bankruptcy or
similar proceeding initiated by or against Cadiz and/or CVDC.
17. INTERPRETATION. To the extent of any inconsistency
between the terms and provisions of any instrument, document or
agreement heretofore executed in connection with the Cadiz
Loan, CVDC Loan, Reimbursement Agreement, and Guarantee or any
of them (collectively, the "Existing Loan Documents") and those
of this Agreement or any document executed pursuant to the
terms of this Agreement, the terms and provisions of this
Agreement or such document executed pursuant to the terms of
this Agreement shall govern and control. Except to such
extent, the terms, provisions and obligations of the Existing
Loan Documents shall be unchanged and shall remain in full
force and effect.
18. NOTICES. Except where otherwise required by law,
all notices required to be given hereunder shall be served
personally, sent via telefax or mailed by first-class United
States mail, certified or registered, or by courier service
with return receipt requested, postage prepaid, and addressed
to 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 any
time by giving written notice of such change to the other party
in the manner provided above. All notices under this Agreement
shall, unless otherwise provided by law, 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, upon confirmation by the sending machine that the
receiving machine has received the transmission.
19. REMEDIES. Each of the rights, remedies or options
provided for herein or available at law or in equity which may
be exercised by Ansbacher may be exercised separately or
concurrently with any one or more other options, rights or
remedies. Ansbacher's failure to exercise any option, right or
remedy shall not constitute a waiver of Ansbacher's right to
exercise such option, right or remedy in the event of or with
respect to any prior, subsequent or concurrent transaction or
occurrence of the same or a different kind or character.
20. ESCROW. Borrowers acknowledge and agree that to the
extent Ansbacher determines that it is necessary or would be
desirable for the Closing to occur concurrently with the
consummation of the transactions contemplated by the Rabobank
Agreement or that the Closing should occur through an escrow
for any other reason, an escrow shall be established with
Chicago Title Company or such other escrow holder as may be
acceptable to Ansbacher. With regard to any or all of the
funds, documents and other materials to be delivered by
Borrowers (or either of them) to Ansbacher as conditions
precedent to Ansbacher's obligations to consummate the
transactions contemplated herein, Ansbacher may require that
such documents and materials be delivered through escrow. All
costs, fees and expenses of such escrow shall be borne and paid
by Borrowers.
IN WITNESS WHEREOF, the parties hereto have executed this
Loan 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 San
Bernardino, State of California, and described as follows:
Parcel No. 1:
Section 1, Township 5 North, Range 13 East, San Bernardino
Meridian, 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 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 in
Book 548 of Deeds, Page 29.
Also except therefrom that portion conveyed to California,
Arizona and Santa Fe Railway Company by Deed recorded November
26, 1913 in Book 542 of Deeds Page 1.
Parcel No. 3:
Section 13, Township 4 North, Range 14 East, San Bernardino
Meridian, 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, San
Bernardino Meridian, in the County of San Bernardino, State of
California, according to the official plat thereof.
Parcel No. 5:
Section 13, Township 5 North, Range 14 East, 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 in
Book 548 of Deeds Page 29.
Also except therefrom that portion conveyed to California,
Arizona and Santa Fe Railway Company by Deed recorded November
26, 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, San
Bernardino Meridian, in the County of San Bernardino, State of
California, according to the official plat thereof.
Except from said Section 25 that portion conveyed to
California, Arizona and Santa Fe Railway Company by Deed
recorded July 18, 1914 in Book 554 of Deeds Page 155.
Parcel No. 7:
Section 17, Township 4 North, Range 15 East, San Bernardino
Meridian, 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 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 in
Book 548 of Deeds Page 29.
Parcel No. 9:
The North one-half and the West one-half of the West one-half
of the Northwest one-quarter of the Southwest one-quarter and
the Northeast one-quarter of the Southeast one-quarter and the
Southwest one-quarter of the Southeast one-quarter and the East
one-half of the Northwest one-quarter of the Southeast one-quarter
and the East one-half of the West one-half of the
Northwest one-quarter of the Southeast one-quarter all in
Section 9, Township 5 North, Range 15 East, San Bernardino
Meridian, 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 Bernardino
Meridian, in the County of San Bernardino, State of California,
according to the official plat thereof.
Parcel No. 11:
Section 1, Township 6 North, Range 15 East, San Bernardino
Meridian, 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 15
East, 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 in
Book 548 of Deeds Page 29.
Also except therefrom that portion conveyed to California,
Arizona and Santa Fe Railway Company by Deed recorded November
26, 1913 in Book 542 of Deeds Page 1.
Parcel No. 13:
Sections 21, 29 and 33, Township 6 North Range 15 East, San
Bernardino Meridian, in the County of San Bernardino, State of
California, according to the official plat thereof.
Except from said Section 33 that portion conveyed to
California, Arizona, and Santa Fe Railway Company by Deed
recorded March 16, 1914 in Book 548 of Deeds Page 29.
Parcel No. 14:
Section 4, Township 4 North, Range 14 East, San Bernardino
Meridian, 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 Bernardino
Meridian, in the County of San Bernardino, State of California,
according to the official plat thereof.
Excepting therefrom any portion of the above described parcels
of land lying within the 200 foot right of way granted to
Southern Pacific Railroad Company by Act of Congress approved
July 27, 1866.
Parcel No. 16:
Section 3, Township 4 North, Range 14 East, San Bernardino
Meridian, 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 the
Northeast One-Quarter, the West One-half, and the North One-Half
of the Southeast One-Quarter of Section 26, Township 5
North, Range 14 East, San Bernardino Meridian, in the County of
San Bernardino, State of California, according to the official
plat thereof.
Excepting from said Section 17 that portion conveyed to
California, Arizona and Santa Fe Railway Company by Deed
recorded August 16, 1914 in Book 548 of Deeds, Page 29.
Also except from said Section 17 that portion conveyed to
California, Arizona and Santa Fe Railway Company by Deed
recorded November 26, 1913 in Book 542 of Deeds, Page 1.
Excepting therefrom any portion of the above described parcels
of land lying within the 200 foot right of way granted to
Southern Pacific Railroad Company by Act of Congress approved
July 27, 1866.
Parcel No. 18:
Section 18, Township 5 North, Range 15 East, San Bernardino
Meridian, in the County of San Bernardino, State of California,
according to the official plat thereof.
Excepting therefrom any portion of the above described land
lying within the 200 foot right of way granted to Southern
Pacific Railroad Company by Act of Congress approved July 27,
1866.
EXHIBIT "B"
PARCEL NO. 1:
SECTION 13, TOWNSHIP 10 NORTH, RANGE 19 EAST, SAN BERNARDINO
BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.
PARCEL NO. 2:
SECTION 25, TOWNSHIP 10 NORTH, RANGE 19 EAST, SAN BERNARDINO
BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.
PARCEL NO. 3:
SECTION 21, TOWNSHIP 10 NORTH, RANGE 20 EAST, SAN BERNARDINO
BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.
PARCEL NO. 4:
SECTION 29, TOWNSHIP 10 NORTH, RANGE 20 EAST, SAN BERNARDINO
BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.
PARCEL NO. 5:
GOVERNMENT TRACT 38, TOWNSHIP 11 NORTH, RANGE 20 EAST, SAN
BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,
STATE OF CALIFORNIA, AS PER GOVERNMENT RESURVEY DATED SEPTEMBER
29, 1924.
EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TO
ALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALS
ORES, BASE METAL ORES, INDUSTRIAL-GRADE SILICATES AND
CARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, AND
ALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OR
OTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE OR
INDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,
WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THE
DEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BE
FOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALL
NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,
INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THE
SUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFIC
PROPERTIES, 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, SAN
BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,
STATE OF CALIFORNIA, ACCORDING TO GOVERNMENT RESURVEY, DATED
SEPTEMBER 29, 1924.
EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TO
ALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALS
ORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES AND
CARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, AND
ALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OR
OTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE OR
INDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,
WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THE
DEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BE
FOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALL
NOT HAVE THE RIGHT FOR ANY PROPOSE WHATSOEVER TO ENTER UPON,
INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THE
SUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFIC
PROPERTIES, 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, TOWNSHIP
12 NORTH, RANGE 20 EAST, SAN BERNARDINO BASE AND MERIDIAN, IN
THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO
GOVERNMENT SURVEY.
EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TO
ALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALS
ORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES AND
CARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, AND
ALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OR
OTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE OR
INDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,
WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THE
DEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BE
FOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALL
NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,
INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THE
SUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFIC
PROPERTIES, 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 WEST
1/2 AND THE SOUTHWEST 1/4 OF THE SOUTHWEST 1/4 OF SECTION 33,
TOWNSHIP 12 NORTH, RANGE 20 EAST, SAN BERNARDINO BASE AND
MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,
ACCORDING TO GOVERNMENT SURVEY.
EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TO
ALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALS
ORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES AND
CARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, AND
ALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OR
OTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE OR
INDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,
WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THE
DEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BE
FOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALL
NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,
INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THE
SUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFIC
PROPERTIES, 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, SAN
BERNARDINO BASE AND MERIDIAN, IN THE COUNTY OF SAN BERNARDINO,
STATE OF CALIFORNIA, ACCORDING TO GOVERNMENT RESURVEY DATED
SEPTEMBER 29, 1924.
EXCEPTING THEREFROM, ALL RIGHT, TITLE AND INTEREST IN AND TO
ALL COAL, HYDROCARBONS, GEOTHERMAL RESOURCES, PRECIOUS METALS
ORES, BASE METALS ORES, INDUSTRIAL-GRADE SILICATES AND
CARBONATES, FISSIONABLE MINERALS, SAND, GRAVEL, AGGREGATES, AND
ALL OTHER MINERALS OF EVERY KIND AND CHARACTER, METALLIC OR
OTHERWISE, WHETHER OR NOT PRESENTLY KNOWN TO SCIENCE OR
INDUSTRY, NOW KNOW TO EXIST OR HEREAFTER DISCOVERED UPON,
WITHIN OR UNDERLYING THE SURFACE OF SAID LAND REGARDLESS OF THE
DEPTH BELOW THE SURFACE AT WHICH ANY SUCH SUBSTANCE MAY BE
FOUND; HOWEVER, GRANTOR OR ITS SUCCESSORS AND ASSIGNS, SHALL
NOT HAVE THE RIGHT FOR ANY PURPOSE WHATSOEVER TO ENTER UPON,
INTO OR THROUGH THE SURFACE OR THE FIRST 300 FEET OR THE
SUBSURFACE OF THE PROPERTY AS RESERVED BY SF PACIFIC
PROPERTIES, 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 UNINCORPORATED
AREA OF SAN BERNARDINO COUNTY, AS PER PLAT RECORDED IN BOOK
108, OF PARCEL MAPS, PAGE 55, RECORDS OF SAID COUNTY.
EXHIBIT "C"
PARCEL NO. 1:
SECTIONS 32 AND 34, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN
BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF.
PARCEL NO. 2:
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. 3:
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.
PARCEL NO. 4:
ALL OF SECTION 16, 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.
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
NORTHEAST ONE-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 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 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 OF
BEGINNING.
ALSO EXCEPTING THEREFROM:
FIRST: A STRIP OF LAND, 50 FEET WIDE, LYING SOUTH OF AND
ADJACENT TO THE SOUTHERN 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 SAID SECTION 16, BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTHERLY BOUNDARY OF THE ABOVE
DESCRIBED PIECE OF LAND, 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 SOUTHWESTERLY ON A CURVE CONCAVE SOUTHEASTERLY, WITH A
RADIUS 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 A
RADIUS OF 739.49 FEET, 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.
PARCEL NO. 5:
ALL OF SECTION 36, TOWNSHIP 3 NORTH, RANGE 18 EAST, SAN
BERNARDINO MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF
CALIFORNIA, ACCORDING TO GOVERNMENT SURVEY.
PARCEL NO. 6:
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. 7:
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 FORM HOMER S. KNOWLES, ETUX., RECORDED
JANUARY 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, IN
THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, ACCORDING TO
THE OFFICIAL PLAT THEREOF.
PARCEL NO. 9:
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 FURTHER RESERVING TO THE STATE OF CALIFORNIA
AND PERSONS AUTHORIZED BY THE STATE, THE RIGHT TO DRILL FOR AND
EXTRACT SUCH DEPOSITS OF AIL 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. 10:
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 THEREFORE THOSE PORTIONS OF A STRIP OF LAND 400 FEET
IN WIDTH WHICH ARE LOCATED WITHIN THE NORTHWEST 1/4 AND
SOUTHWEST 1/4 AND THE SOUTHWEST 1/4 OF SECTION 16, TOWNSHIP, 2
NORTH, RANGE 18 EAST, SAN BERNARDINO BASE AND MERIDIAN,
CONTINUED 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 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 BEING LOCATED 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
LOCATE 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 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 THEREFORE, 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 ON BOOK 5109,
PAGE 174, OFFICIAL RECORDS.
PARCEL NO. 11:
THE SOUTH 1/2 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 BEING LOCATED SOUTH 89 DEGREES 42' 40" EAST, 1112.42 FEET
FROM THE NORTHWEST CORNER OF SAID SECTION 16;
THENCE SOUTH 11 DEGREES 10' 04" WEST, 5349.94 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, 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.
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 BEING LOCATED 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 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, CONTAINED
IN SAID LANDS, 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 MUSH 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. 12:
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 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 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 SOUTHEAST QUARTER 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 O THE SOUTH LINE OF SAID SECTION 36, SAID
POINT BEING LOCATED 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 THE SOUTHEAST QUARTER OF 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. 13:
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 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 AS MAY BE
REQUIRED THEREFOR, UPON, COMPLIANCE WITH THE CONDITIONS AND
SUBJECT TO THE PROVISIONS ADD 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 SOUTHEAST QUARTER 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 BEING LOCATED 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 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. 13:
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 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 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 O 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 1, 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 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 BEING LOCATED 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 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 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 HAS, AND TO PROSPECT FOR, MINE, AND
REMOVE SUCH DEPOSITS OF OTHER MINERALS FROM SAID LAND, AND TO
OCCUPY AN USE SO MUCH OF THE SURFACE OF THE 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 AND THE OTHER LINE
BEING LOCATED 330 FEET SOUTHEASTERLY FROM THE BOTH LINES BEING
PARALLEL TO THE FOLLOWING DESCRIBED LINE, EXTENDED:
BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAID
POINT BEING LOCATED 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 STAT 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 WITH
WHICH ARE LOCATED WITHIN THE SOUTHWEST QUARTER OF THE NORTHWEST
QUARTER ADD 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 THE FOLLOWING
DESCRIBED CENTER LINE EXTENDED:
BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAID
POINT BEING LOCATED 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 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 GENERAL OF THE STATE OF
CALIFORNIA PURSUANT TO SECTION 478 OF THE CALIFORNIA CIVIL
CODE.
PARCEL NO. 15:
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 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 HS, AND TO PROSPECT FOR, MINE, AND
REMOVE 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 AN SUBJECT TOT
EH PROVISIONS AN LIMITATIONS OF CHAPTER 5, PART I, DIVISION 6
OF THE PUBLIC RESOURCES CODE, AS RESERVED TOO THE STATE OF
CALIFORNIA, BY PATENT RECORDED APRIL 12, 1960, IN BOOK 5109, OR
OFFICIAL RECORDS, PAGE 174.
PARCEL NO. 16:
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 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 DEPOSITS OF OTHER MINERALS FROM 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 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 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 BEING LOCATED 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. 17:
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 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 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. 18:
THE NORTH 1/2 OF THE SOUTHEAST 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 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 SOUTHEAST QUARTER 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 BEING LOCATED 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. 19:
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 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 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. 20:
THE SOUTH 1/2 OF THE SOUTHEAST 1/4 OF THE NORTH EAST 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 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 21:
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 THE RIGHT TO DRILL FOR AND EXTRACT 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. 22:
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 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 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. 23:
THE EAST ONE-HALF OF THE NORTHWEST ONE-QUARTER OF THE NORTHWEST
ONE-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 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 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.
PARCEL NO. 2:
SECTION 27, TOWNSHIP 5 NORTH, RANGE 14 EAST, SAN BERNARDINO
MERIDIAN, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA,
ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM ANY PORTION OF THE ABOVE DESCRIBED PARCELS
OF LAND LYING WITHIN THE 200 FOOT RIGHT OF WAY GRANTED TO
SOUTHERN PACIFIC RAILROAD COMPANY BY ACT OF CONGRESS APPROVED
JULY 27, 1866.
EXHIBIT "E"
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 Delaware
corporation ("CLCI") and Cadiz Valley Development Corporation,
a California corporation ("CVDC") (the "Maker"), promise to pay
to the order of HENRY ANSBACHER & CO. LIMITED (herein, together
with its successors and assigns, including each and every owner
and holder of this Note, referred to as the "Holder"), at its
office located at One Mitre Square, London EC3A 5AN, England,
or at such other place as may hereafter be designated by
Holder, without any offset or deduction whatsoever (whether on
account of counterclaims, setoff, withholding taxes, or
otherwise) the principal sum of Three Million and 00/100
Dollars ($3,000,000.00) (or such greater or lesser amount of
principal as may be outstanding hereunder pursuant to the terms
hereof), together with interest at the Interest Rate (as
defined in Section 3.M below) on the principal from time to
time outstanding hereunder. At the expiration of each Interest
Period (as defined in Section 3.M below) until the indebtedness
evidenced by this Note has been paid in full, all then accrued
but unpaid interest hereunder shall be added to principal and
shall thereafter bear interest at the Interest Rate. Principal
and interest are payable at the times and in the manner
hereinafter set forth.
This Note is secured by, inter alia, that certain
(i) Fourth Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing dated March 29, 1995 (the "Cadiz
Fourth Deed of Trust"), executed by CLCI in favor of Holder;
(ii) Fourth Deed of Trust, Assignment of Rents, Security
Agreement and Fixture Filing dated March 29, 1995 (CVDC) (the
"Fourth CVDC Deed of Trust"), executed by CVDC, in favor of
Holder; (iii) Fourth Assignment, Pledge and Security Agreement
dated March 29, 1995 (the "Cadiz Fourth Pledge"), executed by
CLCI in favor of Holder; and (iv) Fourth Assignment, Pledge and
Security Agreement dated March 29, 1995 (the "Fourth CVDC
Pledge"), executed by CVDC in favor of Holder. The Cadiz
Fourth Deed of Trust, Fourth CVDC Deed of Trust, Cadiz Fourth
Pledge and Fourth CVDC Pledge are sometimes collectively
referred to in this Note as the "Collateral Documents".
1. PRINCIPAL AND INTEREST.
Interest for all purposes hereunder shall be calculated
on the basis of a 360 day year and actual days elapsed.
Principal and interest shall be payable in lawful money of the
United States in immediately available funds.
A. All accrued but unpaid interest and all then
unpaid principal shall be due and payable in full on January
31, 1997 (the "Maturity Date").
B. Each payment hereunder (including any
prepayment pursuant to Section 2 hereof) shall be applied first
to any late charges and other fees and costs then owing
hereunder, next to any Break Costs (as defined in Section 2
below) payable pursuant to the provisions of Section 2 hereof,
then to any accrued but unpaid interest and the balance, if
any, 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 automatically
be released and relieved of any obligation to make any further
disbursements to Maker under the loan evidenced by this Note
and may, at its option and without notice to Maker (which
notice is hereby expressly waived), accelerate the maturity
hereof and declare the entire amount of principal, interest,
and all other sums payable by Maker hereunder to be immediately
due and payable, notwithstanding the stated Maturity Date.
D. Commencing upon the occurrence of an Event
of Default and continuing until the date on which all
indebtedness evidenced by this Note is paid in full, the unpaid
principal balance hereof (including, without limitation, all
interest theretofore or thereafter added to principal as
provided in this Note) shall bear interest at a per annum
interest rate (the "Default Rate") equal to the sum of the
Interest Rate (as the Interest Rate may from time to time
adjust), plus 4 percent (4%).
E. Each of the following events shall constitute
an "Event of Default" hereunder:
(1) Maker's failure to pay or cause to be
paid, when due, any interest or principal, or other sum, under
this Note;
(2) Maker's failure to perform or observe
any promise, obligation or condition under this Note or the
occurrence of any other default under this Note;
(3) A default (or an event which with
notice or the passage of time, or both, would constitute a
default) occurs under (i) any Collateral Document, (ii) that
certain Loan Agreement dated as of March 15, 1995 (the "Loan
Agreement"), among Maker and Holder, and/or (iii) any other
document, certificate or agreement executed or delivered in
connection with or relating to the loan evidenced by this Note
(this Note, the Loan Agreement, the Collateral Documents and
such other documents, agreements and certificates are
collectively referred to herein as the "Loan Documents");
(4) Any representation or warranty by CLCI
and/or CVDC to Holder with respect to CLCI's and/or CVDC's
financial condition or credit standing or any other
representation or warranty of CLCI and/or CVDC set forth in
this Note or in any other Loan Document proves to have been
false or misleading in any material respect when made or
reaffirmed;
(5) A default (or event which with notice
or the passage of time, or both, would constitute a default)
occurs under that certain (i) Secured Promissory Note dated
January 11, 1994, made by CLCI in favor of Holder in the
original principal amount of $2,397,424.08; (ii) Secured
Promissory Note dated January 11, 1994, made by CVDC in favor
of 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 entry
of any decree by a court of competent jurisdiction enjoining or
prohibiting Maker (or either entity comprising Maker) from
performing or satisfying its covenants, obligations or
conditions contained herein and such proceedings are not
discontinued or such order or decree is not vacated within
sixty (60) days after the making or granting thereof;
(7) CLCI or CVDC neglects, fails or
refuses to keep in full force and effect any required permit,
license, or approval with respect to the ownership and
operation of the property (collectively, the "Property")
encumbered by the Cadiz Fourth Deed of Trust and the Fourth
CVDC Deed of Trust (or any portion thereof), any policy or
policies of insurance, or otherwise fails to perform any other
undertaking required hereunder or under any Loan Document;
(8) The occurrence of any default or any
event which with notice or the passage of time, or both, would
constitute a default under any other obligation of CLCI and/or
CVDC to Holder, whether now existing or hereafter arising; or
(9) Maker at any time ceases for any reason
whatsoever to be the general partner of Southwest Fruit Growers
L.P., without first obtaining Holder's written consent thereto.
2. PREPAYMENT.
Upon not less than thirty (30) calendar days'
written notice to Holder, Maker shall have the privilege of
prepaying the principal balance of this Note, in whole or in
part, without penalty or premium; provided that (i) in no
event shall any prepayment be in an integral amount of less
than $100,000, and (ii) if Holder incurs any costs or loss as a
consequence of any such prepayment (including, without
limitation, any costs, penalties, losses, or reduced yields on
the prepaid amount to the Maturity Date), then Maker shall pay
to Holder on demand and in addition to all other sums payable
by Maker hereunder a prepayment premium (the "Break Costs") in
an amount equal to the total amount of the loss and costs so
incurred by reason of such prepayment. Maker expressly
acknowledges and agrees that the Break Costs will be payable
to Holder as provided herein whether Maker voluntarily makes the
applicable prepayment or the prepayment results from an
acceleration of the Maturity Date following the occurrence of
an Event of Default. A statement as to the amount of any Break
Costs submitted to Maker by Holder shall, in the absence of
manifest error, be conclusive and binding for all purposes.
BY INITIALING WHERE INDICATED BELOW, MAKER
EXPRESSLY ACKNOWLEDGES THAT, PURSUANT TO THE TERMS AND
PROVISIONS OF THIS NOTE, MAKER HAS AGREED THAT IT SHALL BE
LIABLE FOR THE PAYMENT OF A PREPAYMENT PREMIUM AS PROVIDED
ABOVE IN THIS SECTION 2 FOLLOWING ANY VOLUNTARY PREPAYMENT AS
WELL AS ANY PREPAYMENT RESULTING FROM THE ACCELERATION OF THE
MATURITY DATE BY REASON OF AN EVENT OF DEFAULT, INCLUDING,
WITHOUT LIMITATION, AN EVENT OF DEFAULT ARISING FROM THE
CONVEYANCE OF ANY RIGHT, TITLE OR INTEREST IN THE PROPERTY (OR
ANY PORTION THEREOF). FURTHERMORE, BY INITIALING WHERE
INDICATED BELOW, MAKER WAIVES ANY RIGHTS IT MAY HAVE UNDER
SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR
STATUTE, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT THE
HOLDER HAS MADE THE LOAN EVIDENCED BY THIS NOTE IN RELIANCE
UPON THESE AGREEMENTS AND WAIVER BY MAKER AND THAT HOLDER WOULD
NOT HAVE MADE THE LOAN EVIDENCED HEREBY WITHOUT SUCH AGREEMENTS
AND WAIVER BY MAKER.
CLCI'S INITIALS: __________
CVDC'S INITIALS: __________
3. MISCELLANEOUS PROVISIONS.
A. Each of the rights, remedies or options
provided herein or available at law or in equity which may be
exercised by Holder may be exercised separately or concurrently
with any one or more other options, rights, or remedies. Such
rights, powers and remedies shall not be exhausted by any
exercise thereof but may be exercised as often as occasion
therefor shall occur. Holder shall not by any act of omission
or commission be deemed to waive any of its rights, powers or
remedies under this Note unless such waiver be in writing and
signed by Holder and then only to the extent specifically set
forth therein. Failure to exercise any option, right, or
remedy shall not constitute a waiver of the right of the Holder
to exercise such option, right or remedy in the event of or
with respect to any prior, subsequent or concurrent transaction
or occurrence of the same or a different kind or character.
Holder's acceptance of any partial payment after the time when
such payment becomes due and payable hereunder shall not be
held to establish a custom, or to waive any of Holder's rights
to enforce prompt payment of this Note or any of Holder's other
rights hereunder.
B. Maker agrees to pay on demand attorneys' fees
and all other out-of-pocket expenses of the Holder paid to
others which may be incurred in connection with the collection
of 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 Loan
Documents, whether or not suit is filed hereon or thereon
(including, without limitation, all such fees and expenses as
may be incurred by Holder in or in connection with any
bankruptcy or insolvency proceeding filed by or against CLCI
and/or CVDC).
C. Maker and the endorsers, guarantors and
sureties of this Note severally waive diligence, presentment,
demand, protest, notice of protest, notice of dishonor, and
nonpayment of this Note; expressly agree that this Note, or the
due date of any one or more payments hereunder may be extended
from time to time; and consent to the acceptance and/or
release of any security for this Note; all without in any way
affecting the liability of the Maker, endorser, guarantors and
sureties hereof.
D. Unless applicable law requires a different
method of giving notice, any notice that Holder desires or is
required to give to Maker under or in connection with this Note
shall be given either by personal delivery, facsimile
transmission sent to Maker at (909) 980-6738, or by mailing it
by first class mail, postage prepaid, addressed to Maker at
10535 Foothill Boulevard, Suite 150, Rancho Cucamonga,
California 91730, Attention: Mr. Keith Brackpool, Chief
Executive Officer, or at such different address as Maker may
hereafter designate for such purpose in the manner provided
herein for the giving of notice to Holder. Any notice which
Maker desires or is required to give to Holder under or in
connection with this Note shall be given either by personal
delivery, 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 such
different 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 this
Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Note
shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such
prohibition or invalidity, and shall not invalidate the
remainder of such provision or the remaining provisions of this
Note.
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, the
singular shall include the plural, the male gender shall
include the female gender and the neuter, and vice versa.
H. The headings and captions contained in this
Note are for reference purposes only and shall in no way affect
the meaning or interpretation hereof.
I. Maker acknowledges that Maker has either been
advised by counsel of its choice with respect to the loan
transaction evidenced by this Note or has voluntarily and
independently elected not to seek such advice.
J. This Note shall be governed by and construed
in accordance with the laws of the State of California.
K. None of the terms and provisions contained in
this Note, or in any document or instrument related hereto
shall ever be construed to create a contract for the use,
forbearance or detention of money requiring payment of interest
at a rate in excess of the maximum interest rate permitted to
be charged under California law (the "Usury Laws"). Maker
shall never be required to pay interest on this Note in excess
of the maximum interest that may be lawfully charged under such
Usury Laws, as made applicable by the final judgment of a court
of competent jurisdiction, and the provisions of this Section
3.K shall control over all other provisions hereof and of any
other instrument at any time executed in connection herewith or
executed to secure the indebtedness evidenced hereby, which may
be in apparent conflict with this Section 3.K. If Holder
collects monies which are deemed to constitute interest which
would otherwise increase the effective interest rate under this
Note to a rate in excess of that permitted to be charged by
such Usury Laws, all such sums deemed to constitute interest in
excess of the maximum rate shall, at the option of Holder,
either be credited to the payment of principal or returned to
Maker.
L. If either (i) the introduction of or any change
(including, without limitation, any change by way of imposition
or increase of reserve requirements) in, or in the
interpretation of, any law or regulation or (ii) the compliance
by the Holder with any guideline or request from any central
bank or other governmental authority (whether or not having the
force of law), shall result in any increase in the cost to the
Holder of maintaining or funding the indebtedness evidenced
hereby, then Maker shall from time to time, upon demand by
Holder, pay to Holder additional amounts sufficient to
indemnify the Holder against such increased cost; provided,
however, that nothing in this Section 3.L. shall obligate Maker
to indemnify the Holder for increased costs due to general
overhead 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 Saturday
or a Sunday when commercial banks are open for the transaction
of normal banking business in the City of London, England and
New York City, New York.
(b) "LIBOR Rate" shall mean, for any Interest
Period, the rate per annum at which Holder is offered dollar
deposits in the London Interbank Market at approximately 11:30
a.m. (London time) of the first day of the relevant Interest
Period, for the number of months comprised therein and in an
amount equal to the amount of the indebtedness to be
outstanding hereunder during such Interest Period.
(c) "Interest Period" means a period from the date
hereof (or from the date of the expiration of the then current
Interest Period) of one (1), three (3) or six (6) months
thereafter (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 a
day which is not a Banking Day, that Interest Period shall be
extended to the next succeeding Banking Day, unless the result
of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period
shall end on the immediately preceding Banking Day;
(y) any Interest Period that would otherwise extend
beyond the Maturity Date shall end on the Maturity Date or, if
the Maturity Date shall not be a Banking Day, on the next
preceding Banking Day; and
(z) any principal disbursed hereunder during any
Interest Period shall have an Interest Period coterminous with
the then applicable Interest Period, to the effect that all
unexpired Interest Periods hereunder shall be coterminous; and
(d) "Interest Rate" shall mean a fluctuating rate
per annum equal to the sum of (x) the LIBOR Rate for the
applicable Interest Period, plus (y) one percent (1.0%); and
(ii) Maker's Notice Regarding Interest Period. Not
later than three (3) Banking Days prior to the expiration of
the then applicable Interest Period hereunder, Maker shall
deliver to the Holder (in the manner provided for the delivery
of notice in Section 3.D above) a written notice (a "Selection
Notice") which shall state the length of the Interest Period
Maker 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 irrevocable
and shall constitute an unconditional election by Maker that
such Interest Period shall be of the length set forth in the
Selection Notice. In the event that the Maker fails timely to
deliver any Selection Notice, Maker shall conclusively
be deemed to have elected to have the next ensuing Interest
Period 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, whether
direct or indirect, whether owned legally, of record, equitably
or beneficially, whether constituting real or personal property
(or subject to any other characterizations), whether created or
authorized under existing or future laws or regulations, and
however arising, including without limitation, the following,
which shall collectively be called "Water Assets":
(a) All water (including any water inventory in
storage), water rights and entitlements, other rights to water
and other rights to receive water or water rights of every kind
or nature whatsoever including, without limitation, (i) the
ground water on, under, pumped from or otherwise available to
the real property described in any Cadiz Deed of Trust, CVDC
Deed of Trust, any other deed of trust or mortgage which may
hereafter be given by CVDC, Cadiz or any other party to secure
the Obligations, and/or any other real property in which Cadiz
and/or CVDC or any affiliate of either may now have or
hereafter acquire an interest (collectively, the "Real
Property"), whether as the result of ground water rights,
contractual rights or otherwise, (ii) CVDC's or Cadiz's right
to remove and extract any such ground water including any
permits, rights or licenses granted by any governmental
authority or agency or any rights granted or created by any
use, easement, covenant, agreement, or contract with any person
or entity, (iii) any rights to which the Real Property is
entitled with respect to surface water, whether such right is
appropriative, riparian, prescriptive, decreed or otherwise and
whether or not pursuant to permit or other governmental
authorization, or the right to store any such water, (iv) any
water, water right, water allocation, distribution right,
delivery right, water storage right, or other water-related
entitlement appurtenant or otherwise applicable to the Real
Property by virtue of the Real Property being situated within
the boundaries of any district, agency, or other governmental
entity 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 for
irrigation of the Real Property;
(b) All stock, interest or rights (including any
water allocations, voting or decision rights) in any entity,
together with any and all rights from any entity or other
person to acquire, receive, exchange, sell, lease or otherwise
transfer any water or other Water Assets, to store, deposit or
otherwise create water credits in a water bank or similar or
other arrangements for allocating water, to transport or
deliver water, or otherwise to deal with any Water Asset;
(c) All licenses, permits, approvals, contracts,
decrees, rights and interests to acquire or appropriate any
water or other Water Assets, water bank or other credits
evidencing any right to water or other Water Assets, to store,
carry, transport or deliver water or other Water Assets, to
sell, lease, exchange, or otherwise transfer any water or other
Water Assets, or to change the point for diversion of water,
the location of any water or Water Asset, the place of use of
any water or Water Asset, or the purpose of the use of any
water or Water Asset;
(d) All rights, claims, causes of action,
judgments, awards, and other judicial, arbiter or
administrative relief in any way relating to any water or Water
Asset;
(e) All storage and treatment rights for any
water or any other Water Asset, whether on or off the Real
Property or other property of CVDC or Cadiz, together with all
storage tanks, and other equipment used or usable in connection
with such storage and any water bank deposit credits, deposit
accounts;
(f) All rights to transport, carry, allocate or
otherwise deliver water or other Water Assets by any means
wherever located;
(g) All guaranties, warranties, marketing,
management or service contracts, indemnity agreements, and
water right agreements, other water related contracts and water
reallocation rights, all insurance policies regarding or
relating to any Water Asset;
(h) All rents, issues, profits, proceeds and other
accounts, instruments, chattel paper, contract rights, general
intangibles, deposit accounts, and other rights to payment
arising 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 of
the terms. The term "water" includes water rights and rights
to water or whatever rights to money, proceeds, property or
other benefits are exchanged or received for or on account of
any Water Assets or any conservation or other nonuse of water,
including whatever rights are achieved by depositing shares of
any Water Asset in any water bank or with any water authority,
or any other water reallocation rights.
<PAGE>
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 agree
as 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 Borrowers
in 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");
(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 and
CVDC, 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 Subordination
Agreements"). 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 by
Ansbacher 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 the
Borrowers (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.
3. AMENDMENT OF PRIOR MODIFICATION AGREEMENTS.
3.1 Fourth Loan Modification. The Additional Subordinations, the
agreements between the parties in connection therewith and the satisfaction of
all conditions thereto shall be referred to herein as the "Fourth Loan
Modification," and the Bank shall notify the Borrowers of the effective date
thereof if and when all conditions thereto have been satisfied. If the Fourth
Loan Modification is not effected on or before March 31, 1995 (the "Termination
Date"), 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 and
effect, and the Borrowers do hereby acknowledge and reaffirm all of the
agreements, covenants (affirmative and negative), obligations, terms and
provisions of the Third Modified Loan Agreement.
3.2 Amendments to Prior Modification Agreements.
(a) Ansbacher Restructuring. 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 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, in
the 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 the
1/94 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, instrument
or agreement securing the obligations evidenced by or arising under the
3/95 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 from
time 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
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 operating
budget 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 other
type 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 consistently
applied 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 required
pursuant to this Section 4.01(c) only on a consolidated basis, then the timely
delivery 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 to
security documents satisfactory to the Bank) in all property (or interests
therein, including, without limitation, option rights to acquire such property,
to the extent the Borrowers have the right to pledge or encumber such option
rights) 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 any
third party (other than to Ansbacher pursuant to that certain Loan Agreement
dated 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 on
the real property encumbered by the Restated Rabobank Trust Deed or by the
deed of trust securing the SWFG Replacement Note pursuant to bona fide, arms
length 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
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 by
Section 1.02(e) of the Third Modification Agreement and as follows:
(i) The representations and warranties referred to in
Section 5.01(b) shall be deemed to include, in addition, any representation or
warranty 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 Modification
Agreement, 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, Suite
150, 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 Second
Modification Agreement shall be modified by adding to the end of such sentence
"including, without limitation, the Third Modified Loan Documents and/or the
Fourth 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 Loan
Modification, 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 balance
of which shall be applied as partial prepayment of the principal balance of
the Restated Note. Notwithstanding such reimbursement, Borrowers agree that
they 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 that
real 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, an
endorsement 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 the
case may be, being referred to herein as the "Rabobank Policy") issued by
a title insurance company selected by the Bank, assuring the Bank that the
Restated 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 matters
as the Bank in its sole discretion may request.
(d) A certificate concerning the absence of hazardous
waste on the real property covered by the Restated Rabobank Trust Deed.
(e) Evidence that all insurance required under the
Restated Rabobank Trust Deed is in full force and effect.
(f) Evidence of the payment of any fees and charges
in connection with the transactions contemplated in this Agreement,
including without limitation insurance premiums and title insurance
premiums.
(g) If so request by the Bank, an independent,
unsecured environmental indemnity agreement with respect to the real
property 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 Rabobank
Security 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 Replacement
Warrants 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 connection
with the creation or continuation of any security interest(s) granted to or
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 the
requirement 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 effective
if 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 true
as 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 Event
of 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. With
regard 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 property
encumbered by the Restated Rabobank Trust Deed shall have been paid current.
5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. Each Borrower
represents 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 party
are within such Borrower's corporate powers, have been duly authorized by all
necessary corporate action, do not contravene (i) such Borrower's charter or
by-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.
(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
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's
entering 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 the
Bank'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, the
Existing 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 580d
concerning the bar against rendition of a deficiency judgment following a
nonjudicial foreclosure under a power of sale in a deed of trust;
(b) CCP Section 580a purporting to limit the amount of a
deficiency judgment which may be obtained following a nonjudicial foreclosure
under 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 secured
by 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 exhibits
attached hereto are a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
CADIZ LAND COMPANY, INC.,
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, IN
THE 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 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 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 NORTHEAST
ONE-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 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 OF BEGINNING.
ALSO EXCEPTING THEREFROM:
FIRST: A STRIP OF LAND, 50 FEET WIDE, LYING SOUTH OF AND ADJACENT TO THE
SOUTHERN 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 SAID
SECTION 16, BOUNDED AND DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE SOUTHERLY BOUNDARY OF THE ABOVE DESCRIBED PIECE OF
LAND, 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 739.49
FEET, 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]
Cadiz Office Site: (Order No. 9511032)
The land is situated in the State of California, County of San Bernardino, and
is 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 AND
HYDROCARBON 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-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 ONE-QUARTER OF ALL MINERALS, OIL, GAS, CARBONS AND
HYDROCARBON 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 AND
HYDROCARBON 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 GOVERNMENT
SURVEY.
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
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 SOUTHEAST
QUARTER 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 BEING
LOCATED 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, 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. 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 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 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 BEING
LOCATED 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
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 DESCRIBED
LINE, EXTENDED:
BEGINNING AT A POINT ON THE NORTH LINE OF SAID SECTION 16, SAID POINT BEING
LOCATED 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 THE
FOLLOWING DESCRIBED CENTER LINE EXTENDED:
BEGINNING AT A POINT ON THE SOUTH LINE OF SAID SECTION 16, SAID POINT BEING
LOCATED 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
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 BEING
LOCATED 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. 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 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 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 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 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 SOUTHEAST
QUARTER 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 BEING
LOCATED 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 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 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. 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 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. 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 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. 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 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 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:
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 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. 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 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 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 BEING
LOCATED 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
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 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. 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 BEING
LOCATED 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
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 BEING
LOCATED 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 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, CONTAINED IN SAID LANDS, 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.
<PAGE>
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
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 in
a 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 to
the 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 hereby
granted shall (a) if a net increase shall have been effected in the
number 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 cash
consideration 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
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 a
complete 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 successful
party the reasonable legal expenses, to include without limitation,
attorney's fees, costs and necessary disbursements incurred by the
successful 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 Peterson
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
Pacific Real Estate, Inc.
Cadiz Valley Development Corporation
Ranch Cadiz Mutual Water Company
Southwest Fruit Growers, LP
Pacific Packing, Inc.
PSWRI Limited
