SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from............to............
Commission File Number 0-12114
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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, CA 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
Name of Each Exchange
Title of Each Class 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
----- -----
The number of shares outstanding of each of the Registrant's classes of
Common Stock at February 16, 1996 was 18,322,611 shares of Common Stock,
par value $0.01.
CADIZ LAND COMPANY, INC.
For the Nine Months Ended December 31, 1995
TABLE OF CONTENTS
-----------------
Page(s)
-------
I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Balance Sheet . . . . . . . . . . . . . . . . 1-2
B. Statement of Cash Flows . . . . . . . . . . . . 3
C. Statement of Operations . . . . . . . . . . . . 4-5
D. Statement of Stockholders' Equity . . . . . . . 6
E. Notes . . . . . . . . . . . . . . . . . . . . . 7-9
II. SUPPLEMENTARY INFORMATION
A. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . 10-20
B. Other Information . . . . . . . . . . . . . . . . 21-22
C. Signatures . . . . . . . . . . . . . . . . . . . . 23
<TABLE>
CADIZ LAND COMPANY, INC.
Condensed Consolidated Balance Sheet
Assets
(in thousands)
<CAPTION>
December 31, March 31,
1995 1995
----------- ---------
(unaudited)
<S> <C> <C>
Cash (Note 3) $ 2,600 $ 2,454
Accounts receivable 402 131
Inventory 188 198
Property and equipment, net 2,216 2,308
Land and improvements:
Developed property, net 9,515 9,715
Unimproved land 12,012 11,792
Water transfer projects 2,392 1,764
Excess of purchase price over
net assets acquired, net 5,214 5,389
Debt issue costs and other assets 955 1,137
------- -------
$35,494 $34,888
------- -------
------- -------
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<TABLE>
CADIZ LAND COMPANY, INC.
Condensed Consolidated Balance Sheet
Liabilities and Stockholders' Equity
(in thousands except number of shares)
<CAPTION>
December 31, March 31,
1995 1995
----------- ---------
(unaudited)
<S> <C> <C>
Accounts payable $ 857 $ 1,174
Other liabilities 493 385
Debt 17,308 16,381
Contingencies (Note 5)
Stockholders' equity:
Common stock - $.01 par value;
shares issued and outstanding -
18,322,611 at December 31, 1995
and 16,988,454 at March 31, 1995 183 170
Additional paid-in capital 67,908 62,687
Accumulated deficit (51,255) (45,909)
------- -------
Total stockholders' equity 16,836 16,948
------- -------
$35,494 $34,888
------- -------
------- -------
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<TABLE>
CADIZ LAND COMPANY, INC.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
<CAPTION>
Nine Months Ended
December 31,
----------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Loss from continuing operations $(5,346) $(3,250)
Adjustments to reconcile loss from
continuing operations to net cash
used for continuing operating
activities:
Depreciation and amortization 1,427 1,085
Interest capitalized to debt 380 651
Extraordinary gain on debt settlement - (115)
The effect on net cash used for
continuing operating activities
from changes in assets and
liabilities:
Inventory and accounts receivable (262) 96
Debt issue costs and other assets (253) (196)
Accounts payable and other
liabilities (209) (841)
------ ------
Net cash used for continuing operating
activities (4,263) (2,570)
Net cash provided by discontinued
operating activities - 57
------ ------
Net cash used for operating activities (4,263) (2,513)
------ ------
Cash flows from investing activities:
Land purchase and development (331) (342)
Water transfer projects (628) (973)
Additions to property and equipment (217) (563)
------ ------
Net cash used for investing activities (1,176) (1,878)
------ ------
Cash flows from financing activities:
Net proceeds from issuance of
common stock 5,234 2,088
Proceeds from issuance of debt 376 -
Principal payments on debt (25) (399)
------ ------
Net cash provided by financing activities 5,585 1,689
------ ------
Net increase (decrease) in cash 146 (2,702)
Cash, beginning of year 2,454 4,408
------ ------
Cash, end of period $2,600 $1,706
------ ------
------ ------
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<TABLE>
CADIZ LAND COMPANY, INC.
Condensed Consolidated Statement of Operations
(in thousands except per share data)
(unaudited)
<CAPTION>
Three Months Ended
December 31,
-----------
1995 1994
---- ----
<S> <C> <C>
Revenues $ 470 $ 383
------- -------
Costs and expenses:
Resource development 967 702
Landfill prevention activities (Note 5) 140 -
General and administrative 514 312
Amortization 58 58
------- -------
1,679 1,072
------- -------
Operating loss (1,209) (689)
Interest expense, net 451 315
------- -------
Net loss $(1,660) $(1,004)
------- -------
------- -------
Loss per share:
Net loss per share $ (0.10) $ (0.06)
------- -------
------- -------
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<TABLE>
CADIZ LAND COMPANY, INC.
Condensed Consolidated Statement of Operations
(in thousands except per share data)
(unaudited)
<CAPTION>
Nine Months Ended
December 31,
------------
1995 1994
---- ----
<S> <C> <C>
Revenues $ 1,120 $ 448
------- -------
Costs and expenses:
Resource development 2,881 1,604
Landfill prevention activities (Note 5) 671 -
General and administrative 1,405 1,134
Amortization 175 175
------- -------
5,132 2,913
------- -------
Operating loss (4,012) (2,465)
Interest expense, net 1,334 900
------- -------
Loss before extraordinary item (5,346) (3,365)
Extraordinary item:
Gain on debt settlement - 115
------- -------
Net loss $(5,346) $(3,250)
------- -------
------- -------
Loss per share:
Loss before extraordinary item $ (0.31) $ (0.21)
Extraordinary item - 0.01
------- -------
Net loss per share $ (0.31) $ (0.20)
------- -------
------- -------
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<TABLE>
CADIZ LAND COMPANY, INC.
Condensed Consolidated Statement of Stockholders' Equity
For the Nine months Ended December 31, 1995
(in thousands except number of shares)
(unaudited)
<CAPTION>
Total
Common Stock Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
Balance as of
March 31, 1995 16,988,454 $170 $62,687 $(45,909) $16,948
Exercise of
stock options
(Note 4) 120,000 1 301 302
Issuance of
shares in
connection
with private
placement
(Note 4) 1,214,157 12 4,920 4,932
Net loss (5,346) (5,346)
---------- ---- ------- -------- -------
Balance as of
December 31, 1995 18,322,611 $183 $67,908 $(51,255) $16,836
---------- ---- ------- -------- -------
---------- ---- ------- -------- -------
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
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 41,750 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. The alternatives
available to the Company, which are evaluated by management on an
ongoing basis, 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.
The Company proposes to sell water from the Cadiz basin which is
surplus to both the present and projected agricultural requirements
of the Company. Negotiations relative to specific terms of water
delivery arrangements are continuing with several California water
agencies with respect to this project. The Company is also in
discussions with prospective purchasers of its water from the Piute
project.
In addition, agricultural development at Cadiz has been an integral
part of the Company's ongoing business strategy as a means of
maximizing the value of the Company's landholding as a way to
generate cash flow from such landholding. To date, 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. The
Company has been able to enter into joint venture or leasing
arrangements for the farming of these crops on its properties.
Basis of Presentation
- ---------------------
The Condensed Consolidated Financial Statements have been prepared
by the Company without audit and should be read in conjunction with
the consolidated financial statements and notes thereto included in
the Company's latest Form 10-K for the year ended March 31, 1995.
The foregoing Condensed Consolidated Financial Statements include
all adjustments, consisting only of normal recurring adjustments
which the Company considers necessary for a fair presentation. The
results of operations for the nine months ended December 31, 1995 are
not necessarily indicative of the results to be expected for the full
fiscal year.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
See Note 2 to the Condensed Consolidated Financial Statements
included in the Company's latest Form 10-K for a discussion of
the Company's accounting policies.
NOTE 3 - ACQUISITION OF SUN WORLD INTERNATIONAL, INC.
- -----------------------------------------------------
On December 11, 1995, the Company executed a Plan Support Agreement
with the Official Committee of Creditors Holding Unsecured Claims (the
"Committee") in the Chapter 11 case of Sun World International, Inc.
("SWI"), whereby the Company proposed to purchase the assets of SWI
or submit a joint Plan of Reorganization (the "Plan") with the
Committee in which the unsecured creditors of SWI would receive
subordinated notes or a cash alternative and existing shareholders
of SWI would receive notes convertible into shares of stock in the
Company after a period of time. Concurrent with the execution of
the Plan Support Agreement, the Company delivered $1 million,
representing a deposit to the trust account of the attorney for the
Committee which is recorded as Cash in the accompanying Balance
Sheet. Upon completion of the acquisition, the deposit will be
dispersed to either the reorganized SWI or to the Company. However,
if the acquisition is not completed, then under certain circumstances,
the cash will be used to purchase, on a pro rata basis, interest in
the claims of unsecured creditors in the SWI Chapter 11 case. The
Company has been proceeding with its due diligence investigation of
SWI and is continuing to negotiate with the various constituent
parties in an effort to obtain a consensual plan. Before the
acquisition can be completed, the United States Bankruptcy Court
must confirm the Plan.
NOTE 4 - STOCK OPTIONS EXERCISED AND PRIVATE PLACEMENTS
- -------------------------------------------------------
During the nine months ended December 31, 1995, 120,000 previously
outstanding stock options were exercised resulting in gross proceeds
to the Company of $304,000.
During the quarter ended December 31, 1995, the Company completed
private placements of 764,157 shares of its common stock resulting
in gross proceeds to the Company of $3,176.000.
NOTE 5 - CONTINGENCIES
- ----------------------
As further discussed in Note 9 to the Condensed Consolidated
Financial Statements included in the Company's latest Form 10-K,
the Company was awarded full reimbursement for its legal fees and
costs incurred in defending a legal action for which the plaintiffs
filed an appeal. In August 1995, the Arizona Court of Appeals
ruled in favor of the trial court's judgment upholding the award for
full reimbursement to the Company for such legal fees and costs
incurred. In addition, the Court of Appeals has awarded the Company
reimbursement for legal fees on appeal, the amount of which has yet
to be determined. The Company has not yet recorded a gain contingency
in connection with this matter, however, the plaintiffs have posted a
cash bond from which the Company will collect its judgment which is
estimated at approximately $400,000.
In addition, on December 29, 1995, the Company filed an action
relative to the proposed construction and operation of a landfill
to be located adjacent to Company property, with the Superior Court
in San Bernardino County against the County of San Bernardino and
Rail Cycle , L.P., among others. The Company alleges the County
of San Bernardino did not comply with the guidelines prescribed by
the California Environmental Quality Act and violated state planning
and zoning laws when approving a General Plan Amendment and granting
a conditional use permit for the proposed landfill. The Company is
seeking specific action and compensatory damages in excess of
$75,000,000. See "Other Information - Item 1 - Legal Proceedings".
CADIZ LAND COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(unaudited)
RESULTS OF OPERATIONS
Quarter Ended December 31, 1995 Compared to Quarter ended December 31, 1994
- ---------------------------------------------------------------------------
During the quarter ended December 31, 1995, the Company incurred a net
loss of $1,660,000 compared to a loss of $1,004,000 during the same
period in 1994. The following table summarizes the net loss for both
periods (in thousands):
1995 1994
---- ----
Revenues $ 470 $ 383
------ ------
Resource development 967 702
Landfill prevention activities 140 -
General and administrative 514 312
Amortization 58 58
Interest expense, net 451 315
------ ------
$1,660 $1,004
------ ------
------ ------
Revenues
- --------
Revenues are recognized from the Company's resource development as a
result of the Company's ability to enter into joint venture or leasing
arrangements with third party growers for the farming of crops on its
properties. A combination of gross crop proceeds from the citrus
orchard and both rent and percentage of gross crop proceeds from the
vineyard totalled $441,000 and $383,000 for the quarter ended December 31,
1995 and 1994, respectively.
Resource Development
- --------------------
Expenses recorded in this category consist of costs incurred in the
agricultural, land and water resource development of the Company's
landholdings. As an integral part of its strategy to control the
ultimate use of the resources associated with the Cadiz project,
the Company continues to maintain control of management of both the
infrastructure associated with these properties as well as the
development of the area for agricultural use. Accordingly, costs
related to the Company's management of its infrastructure and
agricultural development are included in Resource Development, as
well as the Company's share of joint venture crop costs. Additionally,
operating costs associated with the Company's produce brokerage and
the Company's continual evaluation of additional potential land
acquisition sites, such as overhead, legal and travel are included
within this category.
Resource development expenses totalled $967,000 for the quarter
ended December 31, 1995 as compared to $702,000 for the same period
in 1994. During 1995, the Company undertook work on several water
projects as compared to only one project in 1994. Therefore, costs
associated with such activities increased from the prior year. In
addition, crop production costs totalled approximately $360,000 and
$253,000 during the quarters ended December 31, 1995 and 1994,
respectively. Costs related to ranch overhead increased with the
additional acres to row crops put into production during the current
fiscal year. Also included in resource development are operating
expenses attributable to the Company's produce brokerage, which
was created in April 1995, and costs associated with evaluation of
the potential acquisition of additional sites.
Landfill Prevention Activities
- ------------------------------
The Company is engaged in vigorous opposition to the proposed
construction and operation of a landfill proposed to be located
adjacent to Company property, and has filed a lawsuit seeking, among
other things, to set aside regulatory approvals for the landfill
project. See "Other Information - Item 1 - Legal Proceedings".
During the quarter ended December 31, 1995, expenses incurred in
connection with activities in opposition to the project totalled
$140,000, including litigation costs, professional fees and expenses,
and contributions in support of an initiative to be considered by the
voters of San Bernardino County on March 26, 1996 (the "Landfill
Initiative") which, if approved, would require that no large solid
waste landfill shall overlie or be located within ten 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.
General and Administrative
- --------------------------
During the 1995 period, the Company was engaged in evaluating the
possible acquisition of Sun World International, Inc. ("SWI"), one of
California's largest permanent crop companies, negotiations and/or
discussions with prospective purchasers regarding several of the
Company's water transfer projects and management of its permanent
crops, as well as production of additional acreage to row crops in
its farming operation. In 1994, such activities pertained to
evaluation of only one water transfer project and management of
the Company's permanent crops. As a result of this increased level
of activity, the Company has accordingly incurred an increase in
costs related to overhead, professional fees, salaries and travel,
among others.
Interest Expense
- ----------------
Net interest expense totalled $451,000 during the quarter ended
December 31, 1995 as compared to $315,000 during the same period in
1994. The following table summarizes the components of net interest
expense for the three month periods ended December 31, 1995 and 1994
(in thousands):
1995 1994
---- ----
Interest expense on outstanding debt $ 254 $ 217
Amortization of financing costs 210 120
Interest income (13) (22)
----- -----
Net interest expense $ 451 $ 315
----- -----
----- -----
Interest expense on outstanding debt increased during the period as
a result of an increased level of borrowing. Amortization of financing
costs increased as a result of debt issue costs incurred in connection
with the March 1995 additional loan as further discussed in the Company's
latest Form 10-K.
Nine Months Ended December 31, 1995 Compared to Nine Months Ended
December 31, 1994
- -----------------------------------------------------------------
During the nine months ended December 31, 1995, the Company incurred
a net loss of $5,346,000 compared to a loss of $3,250,000 during the
same period in 1994. The following table summarizes the net loss for
both periods (in thousands):
1995 1994
---- ----
Revenues $1,120 $ 448
------ ------
Resource development 2,881 1,604
Landfill prevention activities 671 -
General and administrative 1,405 1,134
Amortization 175 175
Interest expense, net 1,334 900
Gain on debt settlement - (115)
------ ------
$5,346 $3,250
------ ------
------ ------
Revenues
- --------
As a result of the additional acreage put into row crop production
during the 1995 period, the Company was able to generate additional
revenue during the nine months ended December 31, 1995 in an amount
totalling approximately $564,000 from the honeydew melon, seedless
watermelon and radicchio joint venture operations. Revenues from
other sources (including the lemon harvest, vineyard and produce
brokerage) contributed to the increase in revenues by approximately
$98,000.
Resource Development
- --------------------
Resource development expenses totalled $2,881,000 for the nine
months ended December 31, 1995 as compared to $1,604,000 for the
same period in 1994. As activities were taking place on multiple
water projects during the nine months ended December 31, 1995, costs
associated with this development increased as compared to the 1994
period when the Company was involved in only the Cadiz water transfer
project. In addition, with the development of an additional 240
acres to row crops at the beginning of the current fiscal year, the
Company has attracted third party growers to enter into joint venture
and similar arrangements with the Company for multiple harvests
throughout the year. As a result, the Company has incurred its share
of joint venture production costs associated with the various row
crops, as well as an increase in costs associated with management of
the Cadiz ranch, as it pertains to oversight of the additional acreage.
Landfill Prevention Activities
- ------------------------------
Expenses incurred during the nine months ended December 31, 1995 in
connection with the Company's opposition to a proposed waste landfill
project adjacent to its Cadiz landholdings were $671,000, which
included litigation costs, professional fees and expenses, and
contributions in support of the Landfill Initiative.
General and Administration
- --------------------------
General and administrative expenses during both periods consisted
primarily of corporate operating expenses, professional fees and
salaries. These expenses increased by $270,000 during the nine
months ended December 31, 1995, as compared to the same period
in 1994. This increase was primarily due to costs incurred in
evaluating the potential acquisition of SWI and an increase in
corporate operating expenses related to the increased level of
activity associated with the Company's water transfer projects
and agricultural operations offset by reduced legal fees related
to litigation.
Interest Expense
- ----------------
The following table summarizes the components of net interest
expense for the nine month periods ended December 31, 1995 and
1994 (in thousands):
1995 1994
---- ----
Interest expense on outstanding debt $ 744 $ 640
Amortization of financing costs 631 360
Interest income (41) (100)
------ ------
Net interest expense $1,334 $ 900
------ ------
------ ------
Interest expense on outstanding debt increased during the period
as a result of an increased level of borrowing. Amortization of
financing costs increased as a result of debt issue costs incurred
in connection with the March 1995 additional loan as further
discussed in the Company's latest Form 10-K.
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.
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to its business strategy, the Company has historically
utilized 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 before 1997, the Company has been required to obtain
financing to bridge the gap between the time development expenses
are incurred and the time 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 placements
and the exercise of outstanding stock options.
The Company is currently evaluating the possible acquisition of SWI,
which is now in Chapter 11 reorganization proceedings. SWI, with
annual revenues in excess of $150 million, is one of California's
largest permanent crop companies. The acquisition, if completed, will
result in the addition of approximately 20,000 acres of developed land
primarily in the Central Valley of California, and will provide assets
complimentary to the Company in agriculture, produce marketing and water
rights. However, regardless of whether or not this acquisition is
completed, the Company will continue to develop its existing properties.
The Company's projected working capital needs therefore relate both to
the continued development of its existing properties, on the one hand,
and to the acquisition of SWI, on the other hand.
Operational Requirements
- ------------------------
WATER TRANSFER PROJECTS - The Company proposes to sell to third
party users water from the Cadiz basin which is surplus to both the
present and projected agricultural requirements of the Company. In
1993, the County of San Bernardino certified an Environmental Impact
Report allowing for the withdrawal from the Cadiz basin of 30,000
acre-feet of groundwater per year for 40 years for agricultural and
domestic use. Currently, total agricultural and domestic water use
in the Cadiz area is approximately 5,000 acre-fee per year. As an
alternative to the full expansion of agricultural development, the
Company will allocate a portion of its unused water resources for
transfer to several public agencies that require supplemental sources of
water. The Company is continuing to negotiate the specific terms of
water delivery arrangements with several California water agencies with
respect to this project.
The Environmental Impact Statement/Environmental Impact Report
("EIS/EIR") to be prepared for the water transfer project will, as
required, evaluate the environmental impacts associated with the
transfer of water both at the currently projected level of 20,000
acre-feet per year and at reasonable alternative amounts. A
groundwater management plan will be developed as part of the EIS/EIR
under which a groundwater management entity will have authority to
implement a management program for usage of the basin's water and
will monitor compliance with the plan on an ongoing basis.
Although the length of the regulatory review process cannot be
predicted with certainty, the Company expects completion of the
EIS/EIR process in mid to late 1997 and completion of the necessary
delivery system within several months, thereafter, although no
assurance can be given.
The Company is also in discussion with prospective purchasers of its
water from the Piute project.
Funding for preparatory work to date on the Company's water transfer
projects has come from the Company's working capital. However, the
substantial majority of the capital costs associated with these
projects, which have yet to be incurred, will be funded through
separate project financings. The nature of the additional financings
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.
AGRICULTURAL OPERATIONS - Agricultural development continues to be
an integral part of the Company's ongoing business strategy as a means
of maximizing the value of the Company's landholdings and as a way to
generate cash flow from such landholdings. 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. With the
implementation of the Company's program to conduct agricultural
operations on its properties primarily through third party leasing
and joint venture operations and the establishment of its produce
brokerage, agricultural operations are anticipated to require
substantially less operating funds in 1996.
Sun World Acquisition
- ---------------------
In December 1995, the Company executed a Plan Support Agreement with
the Official Committee Holding Unsecured Claims (the "Committee") in
the SWI Chapter 11 case. Under this Agreement, the Committee pledged
to support a plan of reorganization which, in broad terms, would result
in the acquisition of SWI by the Company and would provide for the
Company to enter into renegotiated lending arrangements with SWI's
secured lenders, to issue to SWI's unsecured creditors subordinated
notes in the proven amount of their claims (or, alternatively, cash
at a 60% discount to the amount of the notes), and to issue to SWI's
equity holders a total of $10 million in convertible notes. Pursuant
to the Agreement, the Company has placed $1 million as a deposit to the
trust account of the attorneys for the Committee.
The Company expects that the fundamental provisions of the formal
plan of reorganization ("Plan") to be submitted to the U.S. Bankruptcy
Court will be consistent with those outlined in the Plan Support
Agreement. The Company is continuing its negotiations with the other
parties to the SWI bankruptcy proceedings in an effort to reach a
consensual agreement on the terms of the Plan, although the Company
may continue to pursue the SWI acquisition whether or not full
consensual agreement can be reached. Approval of the Plan by the
Bankruptcy Court will be required before the acquisition of SWI by
the Company can be completed.
The Company intends as part of the proposed SWI plan of reorganization
to make capital available to SWI upon closing of the acquisition in an
amount estimated as necessary to enable SWI to be self-sufficient
thereafter for working capital purposes. This capital is expected to
include cash of approximately $15 million to be used to discharge SWI's
obligations to unsecured creditors. The Company intends to raise such
capital through a separate placing of securities, the closing of which
will be conditioned upon final approval of the Plan and completion of the
SWI acquisition.
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").
As previously reported in the Company's latest Form 10-K, 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 balance to
be applied 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. Interest rates on outstanding debt to the Banks, with
the exception of the March 1995 additional loan facility, are fixed
until January 1997, the maturity date under the current financing
arrangements. Interest on the Ansbacher portion is accrued and
capitalized until maturity. Rabobank interest is paid quarterly
through draw downs against a letter of credit provided by Ansbacher
for that purpose.
The Company and the Banks have, in the past, structured their
financing arrangements with a view towards effective implementation of
the Company's business plan. The Company may, if it deems necessary,
seek adjustments to these existing arrangements to accommodate previously
unforeseen developments, such as the SWI acquisition and/or any changes
in the timetable for regulatory approvals of the water transfer projects.
Equity Placements
- -----------------
During the fiscal year ended March 31, 1995, the Company raised gross
proceeds of approximately $2.3 million through the exercise of
outstanding stock options and warrants. In addition, the Company
raised gross proceeds of $304,000 through the exercise of outstanding
stock options during the nine months ended December 31, 1995.
During the quarter ended December 31, 1995, the Company completed
private placements of 764,157 shares of its common stock resulting in
gross proceeds of $3,224,000. In July 1995, the Company completed a
private placement of 450,000 shares of its common stock to several
institutions thereby receiving gross proceeds of $1,800,000. The
Company will utilize such proceeds to fund its capital projects
related to development of its water transfer projects, purchase of
additional acreage and for operating requirements.
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.
Cash used for continuing operating activities totalled $4,263,000
for the nine month period ended December 31, 1995 as compared to
$2,570,000 for the same period in 1994. In furtherance of the
Company's primary objective to maximize the long-term value of each
of its properties through strategic use of the water resources
associated with the properties, the Company initiated work on
development of several water projects during the 1995 period. As a
result, overhead associated with such development increased throughout
the nine months ended December 31, 1995 as compared to the same
period in 1994. In addition, as 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, an additional 240 acres were
developed to row crops at the beginning of the current fiscal year.
Following completion of this further agricultural development, the
Company was able to attract third party growers thus allowing the
Company to reduce its exposure to the performance of any single given
crop and generate additional cash flow from its share of crop proceeds
(offset by its share of crop production costs) resulting, however, in
an increase in costs relating to the management of this additional
acreage. In addition, in April 1995, the Company established a produce
brokerage to market fresh fruit and vegetables, which management expects
will be cash flow positive in the next fiscal year. Professional fees and
other costs totalling $671,000 incurred in the Company's opposition to a
proposed waste landfill project adjacent to its Cadiz landholdings also
served to increase the cash used for continuing operations for the nine
month period ended December 31, 1995 as compared to the same period in
1994. The cash provided by discontinued operating activities during
the 1994 quarter resulted from the sale of property during that period.
Cash used for investing activities totalled $1,176,000 during the
nine months ended December 31, 1995 as compared to $1,878,000 for the
same period in 1994. Although the Company commenced serious evaluation
of the Cadiz water transfer project as early as 1994, the Company is
pleased with the progress made to-date. Much progress has been made
with regard to the exhaustive studies required by the various water
agencies before they may enter into multi-year arrangements. In
addition, the Company commenced water development operations at its
landholdings in the Piute valley in February 1995 and at other
locations during the current fiscal year. Costs of $628,000 associated
with the Company's water transfer projects during 1995 related primarily
to fees associated with specific environmental studies, environmental
analyses, evaluation of the quantity and quality of the water resources
and development of institutional arrangements. Costs related to the
Company's water projects incurred in 1994 were associated with the
drilling of test and production wells and fees associated with the
evaluation and documentation of the feasibility of the Cadiz water
transfer project. In addition, in 1995 the Company converted a
warehouse into a housing facility, purchased required farming
equipment and a weather station for the ranch and installed a new
computer system. During 1994, property and equipment additions
included costs related to the drilling of a production well and
construction of an irrigation manifold system necessary for the
development of an additional 240 acres.
Financing activities provided $5,585,000 for the nine months ended
December 31, 1995 as compared to $1,689,000 during the nine months
ended December 31, 1994. Proceeds from the issuance of common stock
as a result of private placements and the exercise of previously
existing stock options totalled $5,234,000 and $2,088,000 during the
1995 and 1994 periods, respectively. Proceeds from the issuance of
debt increased by $376,000 during the 1995 period and principal
payments on debt decreased by $374,000 compared to the 1994 period.
SHORT-TERM OUTLOOK
During fiscal 1996, the Company has funded its working capital
requirements from the remaining balance of the $2.45 million in
proceeds received in March 1995 from the additional loan facility
provided by Ansbacher, the $2.081 million received by the Company
through the exercise of stock options and warrants during the prior
year and the completion of private placements in July 1995 and December
1995 (See Note 3 to the Condensed Consolidated Financial Statements).
These 1996 working capital requirements were an integral means of not
only advancing the Cadiz water transfer project through the lengthy
regulatory review process and closer to the point where the actual
movement of water will generate revenue sufficient to meet the
operating requirements of the Company, but also provided the necessary
capital to develop additional acreage to row crops which allows for
multiple harvests from the same acreage each year, thus providing the
Company an opportunity for an immediate return in capital invested.
However, as a result of expenditures incurred by the Company in
connection with the proposed SWI acquisition (including the $1 million
deposit, professional fees and due diligence expenses) the Company's
requirement for additional working capital in the short-term has
increased. Therefore, the Company expects to raise additional funds
to meet its short-term working capital needs either through an increase
in borrowings or an additional private placement of equity, as needed.
Although a portion of the funds raised in such placement would be used
to fund expenses related to the SWI acquisition, such placement would
not be conditioned upon the completion of the SWI acquisition, so that
the funds will be available to the Company whether or not the acquisition
is completed. Management believes that funds available from these
sources combined with the additional revenue from the Company's current
agricultural operations and possible deposits from water agencies or
other pre-sale arrangements related to the Company's water transfer
projects would be sufficient to meet the Company's working capital
requirements through the next year, although no assurances can be given.
The funding to be made available by the Company upon the closing of
the SWI acquisition will, as noted previously, be obtained via a
separate placement of securities which will be conditioned upon Plan
confirmation and the completion of the acquisition.
LONG-TERM OUTLOOK
Historically, the Company has financed both its working capital and
property acquisitions cash requirements from outside resources via a
combination of debt and equity placements. However, the Company does
not anticipate it will rely on such funding combinations in the future
as a result of the progress made to date in the Company's various
development activities.
The Company believes that an acquisition of SWI upon the terms
currently proposed will enable SWI to be self-sufficient thereafter
for working capital purposes. The Company intends as part of the
proposed SWI plan of reorganization to make capital available to SWI
at closing in an amount estimated as necessary to achieve this result.
However, the Company does not expect, in the foreseeable future, to
make additional capital contributions to SWI, but to the contrary,
expects SWI to generate a return to the Company on its initial capital
investment, although until the acquisition is completed and the final
structure is determined, no assurances can be given.
As the Company is actively pursuing the development of its water
resources, it is seeking the finalization of the regulatory approvals
needed to commence construction of a water delivery project at Cadiz.
Once the lengthy regulatory review process is finalized and construction
of the necessary delivery system has commenced, the Company anticipates
to generate a revenue stream within less than a year thereafter which
will be sufficient to meet the operating requirements of the Company,
although no assurances can be given. Concurrently with the regulatory
review process, the Company is also negotiating the terms of water
delivery arrangements with various California water agencies, which
include issues such as financing, pricing concepts and formulas and
ownership of the pipeline and the delivery system.
In addition to the development of its water resources, the Company
is actively involved in further agricultural development of its
landholding 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. 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 continue to be accomplished through negotiated arrangements with
third parities, which will significantly reduce any capital outlay
required of the Company in connection with such development activities
and provide a revenue stream in the future.
As a result of the above, the Company expects in 1996 SWI to generate
a return to the Company on its initial capital investment, assuming
the acquisition takes place, and an increase in the revenue generated
from its agricultural operations. Additionally, the Company anticipates
a revenue stream to commence in calendar 1997 from its other landholding
and associated resources. However, no assurances can be made as to the
amount of such revenues or whether such revenues will be of sufficient
levels by the end of fiscal 1997 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.
CADIZ LAND COMPANY, INC.
OTHER INFORMATION
Item 1 - Legal Proceedings
-----------------
On November 21, 1995, the San Bernardino County Board
of Supervisors certified the Environmental Impact
Report/Environmental Impact Statement ("EIR/EIS") for
the proposed construction and operation of a substantial
landfill on the shore of Bristol Lake near Amboy, California
(the "Rail Cycle" Project). On November 28, 1995, the Board
of Supervisors by a 3-2 vote approved, among other things, a
Conditional Use Permit to Rail Cycle, L.P. ("Rail Cycle ") to
construct and operate the Rail Cycle Project. The general
partner of Rail Cycle is controlled by WMX Technologies, Inc.
("WMX") (formerly Waste Management, Inc.). The Rail Cycle
Project would be located within a few miles of 9,600 acres of
land owned by the Company at Cadiz, California, which the
County of San Bernardino has designated for agricultural use
in its General Plan.
On December 29, 1995, an action styled CADIZ LAND COMPANY,
INC. VS. COUNTY OF SAN BERNARDINO, ET. AL. CASE NO. BCV
02341 was filed by the Company in Superior Court in San
Bernardino County. The action challenges the various decisions
by the County of San Bernardino relative to the Rail Cycle
Project. Named in this action, in addition to the County
of San Bernardino, were the Board of Supervisors of the county
of San Bernardino, three individual members of the Board of
Supervisors, an employee of the County, and Rail Cycle. On
February 1, 1996, Rail Cycle and the County removed the case
to Federal District Court for the Central District of
California (Case No. CV-96-740-JGD [BQRX]).
The Company alleges that the actions of the County did not
comply with the guidelines prescribed by the California
Environmental Quality Act ("CEQA") and violated state
planning and zoning laws. The action seeks to set aside
the County's certification of the EIR/EIS and approval of
the proposed Rail Cycle Project. The Company continues to
believe that the proposed Rail Cycle Project, if constructed
and operated as currently designed, poses environmental risks
both to the Company's agricultural operations at Cadiz and to
the groundwater basin underlying the Cadiz property.
Accordingly, the Company intends to pursue a claim for
damages against the County of San Bernardino and Rail Cycle
and therefore, the action also seeks compensatory damages in
excess of $75 million.
On March 26, 1996, an initiative will be considered by the voters
of San Bernardino County which, if approved, would require that no
large solid waste landfill shall overlie or be located within ten
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. However, the Company was unable
to consider the outcome of the vote on this upcoming initiative
and its effect upon construction of the Rail Cycle Project before
commencing the action, as under CEQA procedures the Company was
required to file the suit within thirty days of the Board of
Supervisors' actions in order for the Company to preserve its
rights.
Item 2 - Change in Securities
--------------------
Not applicable.
Item 3 - Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4 - Submission of Matter to a Vote of Security Holders
--------------------------------------------------
Not applicable.
Item 5 - Other Information
-----------------
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
A. Exhibits
--------
1. Exhibit 27 - Financial Data Schedule
2. Exhibit 10.44 - Plan Support Agreement
dated December 11, 1995
3. Exhibit 10.45 - Waiver of Certain Provisions of Plan
Support Agreement dated January 12, 1996
B. Reports on Form 8-K
-------------------
1. None
CADIZ LAND COMPANY, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CADIZ LAND COMPANY, INC.
By: /s/ Keith Brackpool February 19, 1996
------------------------------------- ------------------
Keith Brackpool Date
Chief Executive Officer and Director
By: /s/ Susan K. Chapman February 19, 1996
------------------------------------- ------------------
Susan K. Chapman Date
Chief Financial Officer and Secretary
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EXHIBIT 10.44
-------------
PLAN SUPPORT AGREEMENT
This Plan Support Agreement (the "Agreement"), is dated as of
December 11, 1995, and is entered into by and among Cadiz Land
Company, Inc. ("Cadiz") and the Official Committee of Creditors
Holding Unsecured Claims in the jointly administered Chapter 11
cases of Sun World International, Inc. and Sun World, Inc., Case
No. SB 94-23212 DN, U.S.B.C., C.D. Cal. (the "Committee" and,
together with Cadiz, the "Parties").
This Agreement is entered into in light of each of the
following facts.
A. Sun World has filed a plan of reorganization entitled the
Second Amended Consolidated Plan of Reorganization Dated November
16, 1995 (the "Current Plan").
B. The Current Plan provides for two alternative means of
reorganizing Sun World: (i) a stand-alone reorganization which
accords unsecured creditors and shareholders stock in reorganized
Sun World ("Stand-alone Option"), or (ii) a reorganization in which
a third party buys some or all of Sun World's assets and/or invests
capital into Sun World in exchange for some or all of the equity
in reorganized Sun World and unsecured creditors and existing
shareholders receive a package of consideration which may include
Cash, Cash equivalents or other property (as defined in the Current
Plan), including shares in reorganized Sun World and/or portions of
the purchase price consideration ("Sale Option").
C. The Current Plan provides that exercise of the Sale Option
shall be mandatory if a Buyer (as defined in the Current Plan)
agrees to contribute to Classes 8-10, at least $27 million in Cash,
Cash equivalents or other property acceptable to the Committee.
D. Sun World currently has the exclusive right to file a plan
and to solicit acceptances thereto pursuant to 11 U. S . C. Section
1121 until January 19, 1996.
E. Cadiz has performed preliminary due diligence in the form
of a review of publicly-available information, and has executed a
confidentiality agreement with Sun World to obtain access to
non-public information to continue with its due diligence.
F. Cadiz wishes to cause Sun World to modify the Current Plan
in a manner which incorporates the terms and conditions of Exhibit
A, or to sponsor a separate, competing plan of reorganization
proposed by either Cadiz or the Committee which incorporates the
material terms and conditions of such a modification of the Current
Plan. Subject to the terms hereof, the Committee is willing to
sponsor Cadiz as the Buyer in the modified Current Plan or a
separate competing plan.
In light of the foregoing, and in consideration of the
premises and the mutual covenants herein contained, the Parties
agree as follows:
1. DEFINITIONS.
When used in this Agreement, the following terms shall have
the meanings set forth below. Undefined terms that are used in the
Bankruptcy Code or Bankruptcy Rules shall be accorded the meanings
given them in the Bankruptcy Code.
1.1 BANKRUPTCY CODE means Title 11 of the United States Code
Section 101 et seq., as amended from time to time.
1.2 CHAPTER 11 CASES means the proceedings for reorganization
of Sun World under Chapter 11 of the Bankruptcy Code, which are
currently procedurally consolidated under Case No. SB 94-23212 DN,
U.S.B.C., C.D. Cal.
1.3 COURT means the United States Bankruptcy Court for the
Central District of California or such other court as may exercise
jurisdiction over the Chapter 11 Cases or any part thereof.
1.4 EFFECTIVE DATE shall have the meaning ascribed to it in
the Current Plan or in the New Plan, as applicable.
1.5 FINAL ORDER means an order or judgment of the Court, as
entered by the Clerk thereof on the docket in or related to the
Chapter 11 Cases, the effect of which has not been stayed, and as
to which the time to appeal or petition for review or rehearing
has expired and from which no appeal or petition for review or
rehearing has been filed, or from which any appeal or petition for
review or rehearing has been finally determined or dismissed.
1.6 NEW PLAN means the Current Plan, as modified by Exhibit
A hereto or any plan of reorganization proposed by Cadiz or
proposed by the Committee and supported by Cadiz that materially
conforms to the Current Plan as modified by Exhibit A, together
with any modification required to comply with the Code or that
increases the prospects for confirmation and that does not have a
material adverse effect on Cadiz .
1.7 PLEADINGS means any and all pleadings, notices, reports,
schedules, statements or other documents filed or lodged with the
Court or the United States Trustee in connection with the Chapter
11 Cases or any adversary proceeding, contested matter or other
request to the Court, whether commenced by complaint, motion,
application or other similar document.
1.8 SUN WORLD means Sun World International, Inc., Sun
World, Inc., Coachella Growers, Sun Desert, Inc., and AAI
Services, Inc.
2. AGREEMENTS OF COMMITTEE.
The Committee agrees, if Cadiz has deposited the Special
Deposit, and so long as this Agreement has not been terminated and
Cadiz is not in default hereunder, as follows.
2.1 LETTER OF SUPPORT. If, on or before January 12, 1996
Cadiz commits in writing to be the Buyer under the New Plan and to
support confirmation thereof or to cause Sun World to modify the
Current Plan to conform with the terms of Exhibit A or to sponsor a
competing plan (which will be filed immediately after exclusivity
is terminated) proposed by Cadiz or the Committee which will
conform to the terms set forth in Exhibit A, subject to no
contingency save material adverse change in the operations of Sun
World, the Committee shall deliver a letter requesting that Sun
World modify the Current Plan in accordance with Exhibit A hereto
and designate Cadiz as the Buyer under the Sale Option under the
New Plan (the "Letter of Support").
2.2 EXCLUSIVITY AND NEW PLAN. If Sun World (i) refuses in
writing to modify the Current Plan or to designate Cadiz as the
Buyer under the Sale Option or (ii) has not agreed in writing to do
so within fourteen (14) days of the delivery of the Letter of
Support, then the Committee agrees to object to further extensions
of exclusivity, and, if permitted by the Court, to propose the New
Plan or to support the New Plan proposed by Cadiz.
2.3 "NO SHOPPING".
(a) The Committee shall not solicit any other
proposals by third parties to act as Buyer under the Sale Option,
to invest in Sun World, to purchase its assets or any substantial
portion thereof, or to purchase the unsecured claims against Sun
World (collectively, a "Competing Offer"). This section shall not
restrict the Committee from any discussions with existing creditors
and shareholders of Sun World over the terms of a consensual
restructuring of claims under the Stand-alone Option under the
Current Plan or any other plan.
(b) Subject to Section 6.1 hereof, the Committee shall
be permitted (but not required) to contact all entities with whom
it has had discussions concerning a Competing Offer and all other
parties in interest in these Chapter 11 Cases to advise them of the
terms of this Agreement and of the restrictions that the Agreement
imposes on the Committee.
(c) The Committee shall notify Cadiz of all entities
with whom the Committee has had communications concerning a
Competing Offer and the substance and status of those
communications. The Committee shall, within three (3) business
days of its receipt by the Committee, provide Cadiz with copies
of any written communication received by the Committee after
execution of this Agreement concerning a Competing Offer.
(d) The Committee shall be permitted to respond to
communications, requests for information and inquiries concerning a
Competing Offer and shall, at Cadiz' request, provide Cadiz with
copies of all information furnished by the Committee in response to
the communication.
(e) Nothing in this Agreement shall require the
Committee to disclose any information received or discussion held
pursuant to any presently-existing confidentiality agreement, but
the Committee shall not, from and after the effective date of this
Agreement and continuing until it has been terminated, enter into
any further confidentiality agreements which would limit the
Committee's ability to provide information to Cadiz hereunder.
2.4 COMMITTEE COOPERATION.
(a) PLEADINGS. Pending confirmation of the Plan, the
Committee shall furnish Cadiz with copies of all Pleadings received
or initiated by the Committee in connection with the Chapter 11
Cases.
(b) FINANCIAL INFORMATION. The Committee shall comply
with Cadiz' reasonable requests for information concerning Sun
World and its financial affairs, including analyses the Committee
has performed with respect to the confirmability of a plan of
reorganization or claims against third parties and any
presently-existing or subsequently-prepared analysis of the claims
against Sun World.
(c) SUPPORT OF THE SALE AND THE PLAN. In the absence
of an Overbid that complies with Section 5.1 hereof, the Committee
shall support confirmation of the New Plan and/or implementation of
the Sale Option with Cadiz as Buyer, shall recommend that unsecured
creditors vote in favor of the New Plan and/or shall recommend that
the New Plan under the Sale Option with Cadiz as Buyer be confirmed.
The Committee shall take reasonable steps to assist Cadiz in securing
the confirmation of the New Plan and/or approval and implementation
of the Sale Option including, without limitation, filing pleadings
in support of the New Plan or that advance the process of confirming
the New Plan.
(d) Notwithstanding any other provision of this
Agreement, the Committee shall be permitted to object to the treatment
afforded unsecured creditors under the Stand-alone Option under the
Current Plan or the New Plan, and shall be permitted to take such
acts, including negotiation, to obtain superior treatment for
unsecured creditors under the Stand-alone Option.
3. AGREEMENTS OF CADIZ.
Cadiz agrees, so long as this Agreement has not been terminated
and the Committee is not in default hereunder, as follows.
3.1 SPECIAL DEPOSIT OF FUNDS. Concurrent with the execution
of this Agreement, Cadiz shall deliver $1 million to the Committee,
which shall be held in the client trust account of Sidley & Austin,
to be disbursed in accordance with Section 4 of this Agreement (the
"Special Deposit"). The Special Deposit shall not constitute an asset
of Sun World, and shall not be subject to claims of Sun World's
creditors save in accordance with Section 4 of this Agreement. (For
purposes of clarity, any disposition of the Special Deposit shall
include any interest actually earned thereon from and after the deposit.)
3.2 PROPOSED TRANSACTION.
(a) No later than January 12, 1996, Cadiz shall
irrevocably (subject only to a material adverse change in Sun World's
operations) and in writing request that Sun World modify the Current
Plan to conform to the New Plan. Such a writing shall include Cadiz'
commitment to perform the obligations of the Buyer under the New Plan
and to satisfy the Feasibility Test.
(b) If the Court permits the Committee to propose a
plan, then Cadiz shall commit to support confirmation and act as
Buyer under the Sale Option under the New Plan as proposed by the
Committee (collectively, Cadiz' obligations under sections 3.2(a)
and (b)are the "Firm Proposal").
3.3 ABILITY TO PERFORM.
(a) Cadiz shall keep the Committee apprised of all
material developments concerning its ability to perform under the
Firm Proposal and the New Plan and shall, at the Committee's request,
provide written or oral reports addressing how much capital will be
provided by Cadiz, the source of such funds, the steps taken to raise
such funds, and future steps that will be taken to secure such funds
and all material developments concerning Cadiz' ability to raise money
and obtain the commitments required under the New Plan to pay Class
8 creditors, to provide seasonal crop financing, and to provide
working capital to Sun World.(together, the "Feasibility Test").
(b) If, at any point, the Committee believes that Cadiz
has not demonstrated its ability to comply with the Feasibility
Test, then the Committee shall be permitted to send Cadiz a notice
of default. The Committee may, five (5) days after giving its notice
of default, notice a termination of this Agreement if Cadiz has
failed, within the five day notice of default period, to establish
its ability to comply with the Feasibility Test. Either Party may,
within the five day notice of default period, file a motion
requesting that the Court determine, as a contested matter, whether
Cadiz has established its ability to comply with the Feasibility
Test. If such a motion is filed then termination of the Agreement
shall not be effective until the motion has been resolved by a
Final Order of the Court.
3.4 DILIGENT PURSUIT OF CONFIRMATION. In the absence of an
Overbid, Cadiz shall diligently support confirmation of the New
Plan and consummation and implementation of the Firm Proposal and
shall diligently seek to comply with the Feasibility Test. Cadiz
shall take reasonable steps to advance the confirmation of the New
Plan including, without limitation, filing pleadings in support of
the New Plan or that advance the process of confirming the New Plan.
3.5 NO RELIANCE ON COMMITTEE. Cadiz acknowledges that it
is not relying on and will not rely on financial information,
assurances or representations provided by the Committee.
3.6 CONFIDENTIALITY OF INFORMATION. Cadiz shall keep all
information provided by the Committee private and confidential in
accordance with confidentiality agreements to be entered into by
the Parties.
4. DISPOSITION OF THE SPECIAL DEPOSIT.
4.1 DISPOSITION UPON CONFIRMATION OF THE NEW PLAN. If the
New Plan is confirmed and consummated in accordance with the terms
hereof and the Sale Option is implemented with Cadiz as Buyer, then
the Special Deposit shall be disbursed to reorganized Sun World or
Cadiz on the Effective Date of the New Plan.
4.2 DISPOSITION TO CADIZ. The Special Deposit shall be
disbursed to Cadiz if any of the following takes place or fails to
take place, as the case may be:
(a) Cadiz does not make a Firm Proposal by January 12,
1996 because its due diligence reveals that the financial
information contained in Sun World's [Proposed] Disclosure
Statement Dated November 16, 1995 is materially inaccurate.
(b) The Court has not approved this Agreement by Final
Order entered by January 12, 1996.
(c) The New Plan is not confirmed by Final Order
entered prior to June 30, 1996 (or such later date which the
Committee may from time to time designate in writing) and Cadiz
has complied with all of its obligations hereunder.
(d) Cadiz terminates the Agreement on account of a
material default by the Committee.
(e) Cadiz withdraws the Firm Proposal after a material
adverse change in Sun World's operations.
(f) The New Plan is confirmed with an Overbid or with
the Stand-alone Option.
(g) The New Plan is not confirmed solely because (i)
the Claims Estimation Order estimates the ultimate amount of allowed
Class 8 claims to exceed $32 million, and (ii) the Committee invokes
option (x) on Exhibit A.
4.3 DISPOSITION TO UNSECURED CREDITORS.
(a) GROUNDS FOR DISPOSITION OF THE SPECIAL DEPOSIT TO
UNSECURED CREDITORS. If any of the events described in this
section takes place or fails to take place, as the case may be,
then the Special Deposit shall be disbursed to unsecured creditors
in accordance with Section 4.3(b) hereof.
(i) The Committee terminates this Agreement on
account of a material default by Cadiz.
(ii) Cadiz fails to make a Firm Proposal by
January 12, 1996 and Section 4.2(a) does not apply.
(iii) Cadiz withdraws a Firm Proposal and there
has been no material adverse change in Sun World's operations.
(iv) Sun World declines to designate Cadiz the
Buyer under the Sale Option and Cadiz does not support termination
of exclusivity, does not support the New Plan with the Committee or
withdraws its support of the New Plan when there has been no
material adverse change in Sun World's operations.
(v) The New Plan is not confirmed by Final
Order entered prior to June 30, 1996 (or such later deadline as the
Committee may from time to time designate) and Cadiz has not
complied with all of its obligations hereunder.
(vi) Cadiz materially alters its Firm Proposal
without consent or agreement from the Committee. (For these purposes,
a material alteration shall include any cap on or reduction in the
amount paid to Class 8 Creditors or any increase in the amounts paid
or benefits provided to members of Classes 9-10 (other than an increase
that is attributable to an increase in the value of Cadiz' stock).)
(vii) Cadiz declines to make non-material changes
in the terms of the Firm Proposal or to consent to non-material
modifications to the Current Plan or to the New Plan that increase the
prospects for confirming the Plan and implementing the Sale Option.
(viii) Cadiz fails to raise or to commit the funds
required to confirm the New Plan or to comply with the Feasibility
Test. It is expressly acknowledged that, from and after making a
Firm Proposal, Cadiz assumes the risks associated with raising the
funds required to confirm the New Plan and to implement the Sale
Option such that, in the absence of a material adverse change in
Sun World's operations, any failure by Cadiz to raise the funds
required to implement the Sale Option by the Effective Date shall
result in a disposition of the Special Deposit to unsecured creditors.
(b) MECHANICS FOR DISTRIBUTION TO UNSECURED CREDITORS.
If the Special Deposit is to be distributed to unsecured creditors,
then this section 4.3(b) shall apply.
(i) As and when all unsecured claims that were
filed or deemed filed against Sun World in the Chapter 11 Cases have
been and are allowed, then the Special Deposit (after deduction of
expenses associated with the distribution) shall be distributed pro
rata to holders of all allowed unsecured claims (excluding Sun World
or any direct or indirect wholly-owned subsidiary), and the claims of
all recipients of the distribution shall be reduced, dollar-for-dollar,
by any such payment.
(ii) Any reasonable and necessary expense
associated with the distribution to unsecured creditors may be
deducted from the Special Deposit.
(iii) As and when the Special Deposit is
distributed to unsecured creditors, Cadiz shall have an allowed
unsecured claim against Sun World in the amount so disbursed.
(c) If there is a dispute over the Special Deposit or any
part thereof, the Committee and/or Sidley & Austin shall be permitted
to interplead the Special Deposit (or portion in dispute) with the
Court. The Committee and/or Sidley & Austin shall be permitted to
satisfy its reasonable attorneys fees and costs in such an interpleader
action from the Special Deposit. The Court shall have sole jurisdiction
over any such interpleader action or any other dispute relating to the
Special Deposit or its disposition.
5. OVERBIDS/EXPENSE REIMBURSEMENT.
5.1 AMOUNT OF OVERBIDS. The Parties agree to the following
overbid procedure and will seek Court approval thereof. Any overbid
("Overbid") must be presented in writing to the Court and served so that
it is received by counsel to the Committee, the United States Trustee,
Sun World, Howard Marguleas, John Hancock Mutual Life Insurance
Company and Caisse Nationale de Credit Agricole no later than (5)
business days prior to the commencement of the hearing on confirmation
of the New Plan. It should be accompanied by evidence demonstrating
an ability to timely perform the obligations to all constituencies
and consummate the proposed sale or other transaction. Any Overbid
must be determined by the Court to have an aggregate value of not
less than $4 million more than the Firm Proposal by Cadiz, of which
not less than the greater of $3.5 million or 87.5% of the excess value
shall be additional consideration to Class 8 creditors, up to the
allowed amount of unsecured claims plus post-petition interest, if allowed.
5.2 EXPENSE REIMBURSEMENT. The Parties agree to the following
protections for Cadiz in the event of an Overbid and will seek Court
approval thereof. The Committee acknowledges that, in making its
proposal, Cadiz is contributing significant value to the estates and
unsecured creditors. Accordingly, if Cadiz makes a Firm Proposal and,
while the Firm Proposal has not been withdrawn and the Agreement has
not been terminated and Cadiz is not in default hereunder, there is
a successful Overbid, then Sun World shall reimburse Cadiz for its
reasonable and actual third-party charges, up to $1 million, incurred
in connection with the preparation and pursuit of its Firm Proposal.
Such charges shall include, without limitation, attorneys' fees,
investment banking fees and accounting fees and expenses, but shall
exclude any charge for the time and services of Cadiz employees.
6. COURT APPROVAL AND CONFIDENTIALITY.
6.1 The Committee agrees not to disclose the consideration
promised to Class 8 creditors under this Agreement and the New Plan
(including the Special Deposit) until December 22, 1995, provided
that the Committee shall be permitted to disclose and discuss all
terms of this Agreement with any party to whom Cadiz has disclosed
the consideration promised to Class 8 creditors or the Special Deposit.
Cadiz shall promptly notify the Committee in writing of any entities
to whom it has disclosed such matters.
6.2 The Committee shall file a motion seeking court approval
of this Agreement no earlier than December 22, 1995, and shall seek
a hearing date on December 29, 1995, to enable Cadiz to meet with
other creditors before the terms of this Agreement become public.
7. REPRESENTATIONS; WARRANTIES; AND FURTHER AGREEMENTS.
7.1 Cadiz represents, warrants, acknowledges and agrees that
it has authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
7.2 The Committee represents, warrants and acknowledges that
it has authority to enter into this Agreement and to consummate the
transactions contemplated hereby, subject only to approval by the
Court.
7.3 The Parties have consulted with counsel and relied upon
counsel's advice in connection with the negotiation and execution
of this Agreement. The Parties have negotiated this Agreement
freely such that there is no implication that any Party is the
author hereof in a fashion that would result in the Agreement being
construed against such Party.
8. TERMINATION; EXCUSE FROM PERFORMANCE; REMEDIES.
8.1 BY CADIZ. Cadiz may declare this Agreement terminated:
(a) By written notice to the Committee if any of the
conditions precedent to the effectiveness of the Sale or of the New
Plan (as contained in the New Plan) become incapable of satisfaction
and such condition has not been waived by Cadiz;
(b) If the Court enters an order dismissing the Chapter
11 Cases or converting the Chapter 11 Cases to Chapter 7 of the
Bankruptcy Code, or appoints a trustee;
(c) By written notice to the Committee if the
Committee fails to perform its obligations hereunder in a manner
that deprives Cadiz of the benefit of its bargain; or
(d) By written notice to the Committee if Sun World
withdraws or declines to propose the New Plan and the Committee is
not permitted to file the New Plan.
8.2 BY THE COMMITTEE. The Committee may terminate this
Agreement by written notice to Cadiz upon the occurrence of any of
the following:
(a) It is or becomes unlawful or in violation of any ruling,
regulation or request of a governmental authority to perform any material
obligation of Sun World or of the Committee under this Agreement;
(b) The Court enters an order to dismiss the Chapter 11
Cases or to convert the Chapter 11 Cases to cases under Chapter 7 of
the Code, or appoints a trustee;
(c) Cadiz fails to perform its obligations hereunder in a
manner that deprives the Committee of the benefit of its bargain;
(d) The Court has failed to approve the Agreement by
Final Order entered by January 12, 1996.
8.3 COURT APPROVAL. In the event either Party seeks to
terminate the Agreement, the Party so seeking shall be permitted, but
not required, to commence a proceeding in the Court to establish the
grounds for termination. The Parties agree that such a proceeding may
be commenced by way of motion and prosecuted as a contested matter.
8.4 REMEDIES FOR BREACH. The sole remedy of one Party to
this Agreement for the breach or default by the other Party or for
the failure by the other Party to perform its obligations hereunder
shall be to terminate this Agreement and all then-unperformed
obligations thereunder, except as provided in this Section. The
provisions of Section 4 shall survive any termination of the
Agreement, and shall control the disposition of the Special
Deposit. Neither Party shall be entitled, in law or in equity, to
any remedy of damages. In particular, without limiting the
generality of the foregoing, Committee members, agents and
professionals shall not be individually or personally liable to
Cadiz in connection with the Committee's obligations under this
Agreement. The Parties consent to the jurisdiction of the Court to
enforce the terms of this Agreement, including entry of orders to
compel one or both of the Parties to perform in accordance with the
terms hereof. Other than as set forth above, the Parties agree that
termination of this Agreement is an adequate remedy for any breach
or failure to perform by any other party hereto.
9. MISCELLANEOUS.
9.1 AMENDMENT AND WAIVER. This Agreement may not be amended
except by an instrument in writing signed on behalf of the
Committee and Cadiz. Any agreement on the part of any Party hereto
to any such amendment or waiver shall be valid only to the extent set
forth in such instrument of amendment. Amendments and waivers shall be
effective upon receipt of facsimile signatures so long as original
signatures are subsequently provided in the ordinary course of business.
9.2 HEADINGS. Headings and captions in this Agreement are for
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.3 BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the Parties and their respective
assigns only. The Parties do not intend, and expressly disavow, any
intention to enter into this Agreement for the benefit of a third party.
9.4 ASSIGNMENT. This Agreement may not be assigned by any
Party without the written consent of the other Parties hereto.
9.5 COUNTERPARTS. This Agreement may be executed in any
number of counterparts each of which so executed shall be deemed to
be an original; but such counterparts together shall constitute but
one and the same instrument.
9.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California
without giving effect to principles of conflict of laws. The parties
hereto agree to submit to the sole jurisdiction of the Court in any
action or proceeding arising out of or relating to this Agreement.
9.7 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable,
(i) the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and (ii) to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, all portions of any Section of this Agreement containing
any such provision held to be invalid, illegal or unenforceable that
are not themselves invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the
provision held invalid, illegal or unenforceable.
9.8 NOTICES. Any notice or communication hereunder may be
given by hand delivery, by certified mail (return receipt requested),
by overnight courier or by telecopy. Any such notice or communication
shall be deemed given only upon actual receipt thereof by the addressee
at the address or telecopy number set forth below.
If to the Committee: Michael D. McKee
Executive Vice President
The Irvine Company
550 Newport Center Drive, 9th Floor
Newport Beach, CA 92660
Telecopy: (714) 720-2810
with a copy to: Richard W. Havel, Esq.
Sidley & Austin
555 West Fifth Street, Suite 4000
Los Angeles, CA 90013
Telecopy: (213) 896-6600
If to Cadiz: Keith Brackpool
Chief Executive Officer
Cadiz Land Company, Inc.
10535 Foothill Blvd., Suite 150
Rancho Cucamonga, CA 97730
Telecopy: (909) 980-6738
with a copy to: Dale Miller, Esq.
Miller & Holquin
2029 Century Park East, Suite 1060
Los Angeles, CA 90067
Telecopy: (310) 557-2205
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first above written.
CADIZ LAND COMPANY, INC.
a Delaware Corporation
By: /s/ Keith Brackpool
---------------------------
Keith Brackpool
Chief Executive Officer
THE OFFICIAL COMMITTEE OF CREDITORS
HOLDING UNSECURED CLAIMS
By: /s/ Michael D. McKee
---------------------------
Michael D. McKee
Chairman
EXHIBIT A -- PLAN SUMMARY
1. p. 39, the treatment of Credit Agricole under the Sale
Option shall be amended to provide as follows:
In the absence of agreement with Credit Agricole, Credit
Agricole shall receive no worse treatment than proposed under
Article IV of the Plan, and the words "provided that the lien on
personal property shall be subordinate to the lien of the Seasonal
Lender" shall be deleted.
2. p. 39, the first paragraph describing the treatment for
Class 8 creditors shall be deleted and replaced with the following:
1. At each creditors' option, either (i) a note
issued by reorganized Sun World in the allowed amount of such claim
paying interest at 8%, with interest-only for three years, and the
principal thereof paid in equal installments during the fourth
through seventh years or (ii) either (u) 60% of the allowed amount
of such creditor's claim in cash upon the Effective Date or (v) an
amount in accordance with the following paragraph.
2.a. In connection with confirmation of the New Plan,
the Parties shall seek a Court order estimating the ultimate amount
of the allowed Class 8 claims. If the Court determines by entry of
a Final Order (the "Claims Estimation Order") that the estimated
ultimate amount of the allowed Class 8 claims (excluding claims of
insiders, as described below) exceeds $32 million (the "Claims
Estimate"), then (i) Cadiz shall have the right, within five (5)
business days after the Claims Estimation Order becomes a Final
Order, by written notice to the Committee and other parties in
interest, to agree to pay all Class 8 creditors 60 cents per dollar
of allowed claim. If Cadiz does not timely send such a written notice,
then the Committee shall have the right, by written notice provided
to Cadiz and other parties in interest within ten (10) business days
after entry of the Final Order, either (x) upon such notice,
disclosure and/or resolicitation as the Committee may deem
appropriate or the Court may order, to terminate this Agreement
(thereby entitling Cadiz to a return of the Special Deposit) and
thereby prevent confirmation of the New Plan absent compliance with
Section 1129(b) of the Bankruptcy Code, or (y) to agree to accept,
on behalf of Class 8 creditors, $19 million (or such other greater
amount as Cadiz may agree to provide), to be shared pro rata among
all allowed Class 8 claims. If no timely notice is sent, then the
Committee shall be deemed to have made a notice in accordance with
option (x). Pending the sending and receipt of notices permitted by
this paragraph, no order confirming the New Plan shall be entered.
b. If the Committee timely sends a notice selecting
option (y), then the Committee shall continue post-confirmation at
the expense of reorganized Sun World for the purpose of objecting,
along with reorganized Sun World, to disputed Class 8 claims and
shall be given the power as representative of the estate along with
reorganized Sun World under section 1123(b)(3)(B) of the Bankruptcy
Code to assert defenses to claims and counterclaims thereto,
including those that arise under Sections 544-550 of the Bankruptcy
Code, and reorganized Sun World shall provide all information
required by the Committee to interpose such objections and pursue
such counterclaims. If the Committee continues to exist after the
order confirming the New Plan is a Final Order, then, upon entry of
a Final Order determining that the total amount of allowed Class 8
claims will not exceed $32 million, the Committee shall be
disbanded and its powers as representative of the estate
transferred to reorganized Sun World.
c. For purposes of these sections 2 and 3 only (and not
for purposes of section 1), Class 8 claims shall exclude any and all
claims held by insiders of Sun World. For these purposes, a claim by
an insider shall include any and all claims asserted by any entity
who falls within the definition of "insider" under the Bankruptcy
Code, to the extent such claim arose while the entity was an insider
or is based upon an agreement executed while the entity was an insider.
3. In addition to the rights in section 2, if the Committee
determines, after due consideration of the written claims analyses
which have disclosed to Cadiz, that the Committee's Claims Estimate
exceeds $32 million, then the Committee may send a notice to Cadiz
setting forth that fact and the basis therefore. Within five (5)
business days after receiving such notice, Cadiz may, by written
notice to the Committee, agree to pay all allowed Class 8 claims
60 cents per dollar of allowed claim. If Cadiz does not timely send
such a written notice, then the Committee shall have the right, by
written notice provided to Cadiz within ten (10) business days
after first sending the notice to Cadiz, either (x) upon such
notice, disclosure and/or resolicitation as the Committee may deem
appropriate or the Court may order, to terminate this Agreement, or
(y) to agree to accept, on behalf of Class 8 creditors, $19 million
(or such other greater amount as Cadiz may agree to provide), to be
shared pro rata among all allowed Class 8 claims. If no timely
notice is sent, then the Committee shall be deemed to have made a
notice in accordance with option (x). Pending the sending and
receipt of notices permitted by this paragraph, no order confirming
the New Plan shall be entered.
3. p. 40, the description of treatment for Classes 9 and 10 shall
be deleted and replaced with the following:
The total consideration to holders of claims or interests in
Classes 9 and 10 paid from Reorganized Sun World or Cadiz shall be
not more than $10 million in value, based upon the face value of
the consideration and based upon the value of Cadiz stock as of
December 5, 1995, in the form of convertible promissory notes
issued by Cadiz, to be allocated among the members of such Classes
in accordance with an agreement involving the members of such
Classes, settlement or Court order.
4. p. 41, "Litigation Recoveries" shall be amended to provide
that all Litigation Recoveries shall be Retained Claims.
EXHIBIT 10.45
-------------
WAIVER OF CERTAIN PROVISIONS OF
PLAN SUPPORT AGREEMENT
This Waiver of Certain Provisions of Plan Support Agreement (the
"Waiver" and "Agreement"), dated as of January 12, 1996, is entered
into by and between Cadiz Land Company, Inc. ("Cadiz") and the
Official Committee of Creditors Holding Unsecured Claims in the
jointly administered Chapter 11 cases of Sun World International,
Inc. and Sun World, Inc. Case No. SB 94-23212, U.S.B.C., C.D. Cal.
(the "Committee" and, together with Cadiz, the "Parties").
This Waiver is entered into in light of each of the following facts:
A. The Parties entered into the PSA as of December 11, 1995.
B. Section 8.2(d) of the Agreement provides in part that the
"Committee may terminate th[e] Agreement by written notice to Cadiz
upon the occurrence of any of the following: . . . The Court has
failed to approve the Agreement by Final Order entered by January 12,
1996."
C. Section 4.2(b) of the Agreement provides in part that "[t]he
Special Deposit shall be disbursed to Cadiz if any of the following
takes place or fails to take place, as the case may be: . . . The
Court has not approved this Agreement by Final Order entered by
January 12, 1996."
D. Section 1.5 of the Agreement provides in part that "Final
Order means an "order or judgment of the Court . . . from which no
appeal . . . has been filed."
E. On January 2, 1996, the Court entered its "Order
Authorizing Creditors' Committee to Enter into Plan Support
Agreement with Cadiz Land Company, Inc.; and (2) Approving Overbid
Procedures, Expense Reimbursement to Cadiz Land Company, Inc. and
Disposition of Special Deposit" (the "Order"). The Order reflects
certain modifications to the Agreement to which the Parties consented.
F. On or about January 12, 1996, Caisse Nationale de Credit
Agricole filed a Notice of Appeal of the Order (the "Appeal").
G. Notwithstanding the pendency of the Appeal, the Parties wish
to proceed in accordance with the Agreement and the Order.
In light of the foregoing, the Parties agree as follows:
1. DEFINITIONS.
-----------
Capitalized terms in this Waiver shall have the meanings
ascribed to them herein or in the Agreement. Undefined terms that
are used in the Bankruptcy Code or Rules shall be accorded the
meanings given them in the Bankruptcy Code or Rules, as applicable.
2. AGREEMENT OF COMMITTEE
-----------------------
The Committee hereby irrevocable waives its right pursuant to
Section 8.2 to terminate the Agreement on account of the pendency of
the Appeal.
3. AGREEMENT OF CADIZ
------------------
Cadiz hereby irrevocably waives any right it might have to
disbursement of the Special Deposit to it pursuant to Section 4.2 on
account of the pendency of the Appeal.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first above written.
CADIZ LAND COMPANY, INC.
a Delaware corporation
By: /s/ Keith Brackpool
----------------------------------
Keith Brackpool
Chief Executive Officer
THE OFFICIAL COMMITTEE OF CREDITORS
HOLDING UNSECURED CLAIMS
By: /s/ Michael D. McKee
---------------------------------
Michael D. McKee
Chairman
