SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ ] QUARTERLY REPORT PURSUANT TO SECTION
13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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
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 No
The number of shares outstanding of each of the Registrant's classes of Common
Stock at November 13, 1996 was 22,192,714 shares of Common Stock, par value
$0.01. <PAGE>
Cadiz Land Company, Inc.
Index to the Condensed Consolidated Financial Statements
For the Six Months Ended September 30, 1996 Page(s)
I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Balance Sheet. . . . . . . . . . . . . . . . . . .1-2
B. Statement of Cash Flows. . . . . . . . . . . . . .3
C. Statement of Operations . . . . . . . . . . . . 4-5
D. Statement of Stockholders' Equity. . . . . . . . .6
E. Notes . . . . . . . . . . . . . . . . . . . . . ..7-13
II. SUPPLEMENTARY INFORMATION
A. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . 13-22
B. Other Information. . . . . . . . . . . . . . . . 23-24
C. Signatures . . . . . . . . . . . . . . . . . . . 25
<TABLE> Cadiz Land Company, Inc.
Condensed Consolidated Balance Sheet
<CAPTION>
September 30, March 31,
Assets: 1996 1996
($ in thousands) (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 40,083 $ 5,153
Receivables, net 17,424 443
Assets held for sale 17,888 -0-
Inventory 11,031 266
Prepaid expense 1,726 -0-
-------- --------
Total current assets 88,152 5,862
Investment in affiliates 4,822 -0-
Property, plant and equipment, net 124,086 11,681
Land held for development 12,433 12,236
Water rights and transfer and
storage projects 4,770 2,496
Other assets 1,465 1,233
Intangible assets 19,474 5,155
--------- ---------
Total assets $ 255,202 $ 38,663
========= ========
<FN>
See accompany notes to the consolidated financial statements.
</TABLE>
<TABLE> Cadiz Land Company, Inc.
Condensed Consolidated Balance Sheet
<CAPTION>
September 30, March 31,
Liabilities and Stockholders' Equity: 1996 1996
($ in thousands except number of shares) (Unaudited)
<S> <C> <C>
Current liabilities:
Trade accounts payable $ 11,566 $ 1,772
Accrued liabilities 4,162 521
Long-term debt, current portion 18,436 17,617
Other current liabilities 13,808 -0-
--------- -------
Total current liabilities 47,972 19,910
Long-term debt 148,839 -0-
Deferred income taxes 4,000 -0-
Other accrued and long
term liabilities 55 -0-
------- -------
Total liabilities 200,866 19,910
Contingencies (Note 9)
Stockholders' equity:
Common stock - $.01 par value;
24,000,000 shares authorized;
shares issued and outstanding -
21,835,503 at September 30, 1996
and 19,247,611 at March 31, 1996 218 192
Preferred stock - $.01 par value;
100,000 shares authorized;
28,217 shares outstanding
Additional paid-in capital 112,988 72,957
Accumulated deficit (58,870) (54,396)
--------- ---------
Total stockholders' equity 54,336 18,753
--------- ----------
Total liabilities and stockholders'
equity $ 255,202 $ 38,663
======== =========
<FN>
See accompany notes to the consolidated financial statements.
</TABLE>
<TABLE> Cadiz Land Company, Inc.
Condensed Consolidated Statement of Cash Flows
<CAPTION>
For the Six Months Ended September 30, 1996 1995
($ in thousands)
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss from operations $ (4,429) $ (3,686)
Adjustments to reconcile loss from operations
to cash used for operating activities:
Depreciation and amortization 1,041 949
Reserve adjustments (87) -0-
Interest capitalized to debt 344 244
Share of partnership operations (11) -0-
Changes in operating assets and liabilities,
net of acquisition of Sun World:
(Increase) decrease in accounts receivable 1,365 (280)
(Increase) decrease in inventory 2,392 (124)
(Increase) decrease in prepaid expenses and other (552) (52)
Increase (decrease) in accounts payable (5,634) (213)
Increase (decrease) in accrued liabilities 1,145 140
Increase (decrease) in deferred revenue (5) -0-
------- -------
Net cash used for operating activities (4,431) (3,022)
Cash flows from investing activities:
Additions to property, plant and equipment (27) (234)
Land purchase and development (233) (175)
Water transfer projects (139) (474)
Other assets (26) -0-
Acquisition of Sun World, net of cash acquired 2,123 -0-
-------- --------
Net cash provided (used) for investing activities 1,698 (883)
Cash flows from financing activities:
Net proceeds from issuance of stock 39,918 2,059
Principal payments on long-term debt (2,442) -0-
Proceeds from short-term debt 221 265
Principal payments on short-term debt (15) (4)
Dividends paid on preferred stock (19) -0-
--------- --------
Net cash provided by financing activities 37,663 2,320
Net increase in cash 34,930 (1,585)
Cash and cash equivalents at beginning of period 5,153 2,454
--------- --------
Cash and cash equivalents at end of period $ 40,083 $ 869
======= ======
<FN>
See accompany notes to the consolidated financial statements.
</TABLE>
<TABLE> Cadiz Land Company, Inc.
Condensed Consolidated Statement of Operations
<CAPTION>
For the Three Months Ended September 30, 1996 1995
($ in thousands except per share data)
(unaudited)
<S> <C> <C>
Revenues $ 4,738 $ 596
------ -------
Costs and expenses:
Cost of sales 3,723 -0-
Resource development 865 1,135
Landfill prevention activities 135 175
General and administrative 1,004 410
Depreciation 281 209
Amortization 100 59
----- -------
Total costs and expenses 6,108 1,988
------- -------
Operating loss (1,370) (1,392)
Interest expense, net (1,137) (443)
Litigation settlement (Note 9) 65 -0-
-------- --------
Net loss $ (2,442) $ (1,835)
========== ===========
Net loss per common share:
Primary loss per common share $ (.11) $ (.10)
========== ===========
Fully diluted loss per common share $ (.10) $ (.10)
========== ===========
<FN>
See accompany notes to the consolidated financial statements.
</TABLE>
<TABLE> Cadiz Land Company, Inc.
Condensed Consolidated Statement of Operations
<CAPTION>
For the Six Months Ended September 30, 1996 1995
($ in thousands except per share data)
(unaudited)
<S> <C> <C>
Revenues $ 4,820 $ 650
-------- -------
Costs and expenses:
Cost of sales 3,723 -0-
Resource development 1,445 1,569
Landfill prevention activities 262 531
General and administrative 1,938 826
Depreciation 481 410
Amortization 158 117
-------- -------
Total costs and expenses 8,007 3,453
Operating loss (3,187) (2,803)
Interest expense, net (1,576) (883)
Litigation settlement (Note 5) 334 -0-
--------- --------
Net loss $ (4,429) $ (3,686)
========= =======
Net loss per common share:
Primary loss per common share $ (.23) $ (.21)
========== =========
Fully diluted loss per common share $ (.19) $ (.21)
========== ==========
<FN>
See accompany notes to the consolidated financial statements.
</TABLE>
<TABLE> Cadiz Land Company, Inc.
Condensed Consolidated Statement of Stockholders' Equity
<CAPTION>
For the Six Months Ended September 30, 1996
($ in thousands except number of shares)
(unaudited)
Additional Total
Common Stock Preferred Stock Paid-In Accumulated Stockholders'
Shares Amount Shares Amount Capital Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as
of March
31, 1996 19,247,611 $192 -0- $ -0- $ 72,957 $ (54,396) $ 18,753
Exercise of
stock options
(Note 8) 325,000 3 914 917
Common stock
issued at
acquisition
of Sun
World 1,090,908 11 3,262 3,273
Proceeds from
private
placement
of preferred
stock, net 26,770 33,846 33,846
Cash dividends
paid at 6% on
conversion of
preferred stock
plus cash in
lieu of
fractional shares (19) (19)
Dividends paid
in common stock
at 6% on
conversion of
preferred
stock 6,905 26 (26) -0-
Preferred shares
issued for fees 1,881 1,881 1,881
Conversion of
preferred stock
to common
stock 1,165,079 12 (434) (12) -0-
Issuance of
stock warrants
for services 114 114
Net loss (4,429) (4,429)
-------- ---- -------- ---------- --------- --------
Balance
as of
September
30,
1996 21,835,503 $218 28,217 $ -0- $112,988 $ (58,870) $ 54,336
========= ===== ====== ===== ======== ========= =========
<FN>
See accompany notes to the consolidated financial statements.
</TABLE>
CADIZ LAND COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 DESCRIPTION OF BUSINESS
- ---------------------------------
Business of the Company
- ------------------------
The strategy of Cadiz Land Company, Inc. (the "Company") is to
create a portfolio of landholdings, water resources, and
agricultural operations within central and southern California which
possess sizable assured supplies of water. Management believes
that, with both the increasing scarcity of water supplies in
California and the increasing demand for water, the Company's access
to water will provide it with a competitive advantage both as a
major agricultural concern and as a supplier of water which will
lead to continued appreciation in the value of the Company's
portfolio.
With its September 13, 1996 acquisition of Sun World International,
Inc. ("Sun World"), the Company has become one of the largest fully
integrated agricultural companies in California. The Sun World
acquisition added to the Company's portfolio more than 21,000 acres
of prime agricultural land, packing facilities, marketing expertise,
proprietary agricultural products and the highly regarded Sun World
brand name. Sun World is renown for developing or acquiring
specialty produce varieties with unique characteristics which
differentiates them from commodity produce varieties. Sun World
owns patents and holds trademarks on a variety of plant and fruit
varieties and, as a result of its Research and Development Center,
has a long history of product innovation.
In addition to the above, the acquisition of Sun World provided the
Company senior water rights throughout the central and southern
valleys of California. The Company's portfolio also includes more
than 43,000 acres of land in eastern San Bernardino County. These
landholdings are underlain by excellent groundwater resources. The
largest property totals approximately 31,800 acres at Cadiz,
California, 1,600 acres of which have been developed for cultivation
of citrus orchards, table grape vineyards and row crops.
The Company's landholdings, which now total more than 64,000 acres
are located adjacent to the major aqueduct systems of central and
southern California, and in close proximity to the Colorado River.
The Company expects to participate in a broad variety of water
transfer and storage projects, including the transfer of surplus
water to public agencies which require supplemental sources of
water.
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, 1996.
The foregoing Condensed Consolidated Financial Statements include
all adjustments, consisting only of normal recurring adjustments
which the Company considers necessary for a fair presentation.
Throughout the remainder of this document, when reference is made to
"Sun World," it will henceforth mean the operations pertaining to
Sun World International, Inc. and its subsidiaries only. When
reference is made to "Cadiz," it will henceforth mean the operations
of the Company other than those of Sun World (including those
operations conducted by the Company prior to acquisition of Sun
World). When reference is made to the "Company," it will henceforth
mean, with respect to operations subsequent to the acquisition of
Sun World, the consolidated operations of Cadiz Land Company, Inc.
and its subsidiaries including Sun World International, Inc.
<PAGE>
On September 13, 1996, Cadiz acquired all of the outstanding capital
stock of Sun World. Cadiz' acquisition of Sun World is accounted
for under the purchase method of accounting. The Consolidated
Financial Statements include Sun World from the date of acquisition.
As the financial statements set forth herein reflect the operations
of Sun World for the period September 14, 1996 through September 30,
1996, the results of operations for the six months ended September
30, 1996 are not indicative of the results to be expected for the
full fiscal year nor are they reflective of operations on a go
forward basis.
Prior to the acquisition of Sun World, Cadiz had utilized an
unclassified balance sheet (eliminating the distinction between
current assets and long term assets and current liabilities and long
term liabilities). The financial statements set forth herein
utilize a classified balance sheet, thus requiring certain
reclassifications to be made to the prior period balances to conform
with the September 30, 1996 presentation.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------
Upon the acquisition of Sun World, the following accounting policies
were adopted by the Company in addition to those previously followed
by Cadiz as discussed in Note 2 to the Condensed Consolidated
Financial Statements included in the Cadiz' latest Form 10 K.
Investment in Partnerships
- --------------------------
Wholly owned subsidiaries of Sun World have investments in various
partnerships. Sun World's two principal partnerships are American
Sunmelon and Sun Date, both of which are 50% owned. American
Sunmelon is engaged in proprietary seed development, production, and
marketing of seedless watermelons. Sun Date is engaged in the
marketing, processing, and farming of dates. These partnership
investments are accounted for using the equity method.
Assets Held for Sale
- --------------------
As part of the acquisition of Sun World, specific properties were
identified to be sold. These properties, which are included in the
accompanying consolidated balance sheet at the lower of cost or net
realizable value, consist of both farmland and facilities that were
determined not core to the Company's continuing operations.
Intangible Assets
- -----------------
Intangible assets consist of (i) the excess of purchase price over
net assets acquired and (ii) costs such as legal and professional
fees to establish and defend Sun World owned patents and trademarks
both domestically and internationally.
Revenue Recognition
- -------------------
Sun World recognizes crop sale revenue after harvest and delivery to
customers. Packing revenues are recognized as units are packed.
Marketing commission revenues are recognized at the time of product
shipment.
<PAGE>
Research and Development
- ------------------------
Sun World incurs costs to research and develop new varieties of
proprietary products. Research and development costs are expensed
as incurred.
Net Loss per Common Share
- --------------------------
Primary loss per common share is computed for each period presented
using the weighted average number of common shares outstanding of
19,628,997 and 17,235,066 for the six month periods ending September
30, 1996 and 1995, respectively. On a fully diluted basis, both net
loss and shares outstanding are adjusted to assume the conversion of
the Company's outstanding convertible preferred stock and the
exercise of outstanding stock options.
NOTE 3 ACQUISITION OF SUN WORLD INTERNATIONAL, INC.
- ------------------------------------------------------
On September 13, 1996, Cadiz acquired all of the stock of a
reorganized Sun World pursuant to a consensual plan of
reorganization (Debtors' Modified Fourth Amended Consolidated Plan
of Reorganization dated June 3, 1996 (Modified) which was confirmed
by the U.S. Bankruptcy Court at a hearing on July 12, 1996 (the
"Plan"). The acquisition of Sun World was accounted for as a
purchase. Accordingly, the purchase price was allocated to the net
assets acquired based upon management's preliminary estimate of
their fair values. The value as presently allocated to intangible
assets is approximately $14.435 million and subject to further
possible revision. Since the purchase price allocation is based on
preliminary estimates it will most likely be revised at a later
date.
Total consideration was approximately $179 million of which
approximately $156 million was represented by a restructuring of
previously existing debt with Sun World's existing secured lenders.
In addition, Cadiz made a capital contribution of $15 million to Sun
World, with the intent of eliminating the requirement for Sun World
to have any additional debt facilities beyond those owed to its
existing secured creditors.
The total cash requirements of Cadiz related to the acquisition were
funded from: (i) the issuance by Cadiz of $27.631 million of newly
authorized Convertible Series A Preferred Stock; (ii) the issuance
by Cadiz of $7.6 million of newly authorized 6% Convertible Series
B Preferred Stock; (iii) the issuance by Cadiz of $2.6 million of
newly authorized 6% Convertible Series C Preferred Stock; and (iv)
$1 million previously deposited by Cadiz from its working capital in
trust with the Official Committee Holding Unsecured Claims. Of such
funds, approximately $35 million was applied to cash disbursements
required at closing under the Plan, including the $15 million
capital contribution referred to above and approximately $5.5
million of principal reduction to Sun World's existing secured
lenders. The remainder has been utilized by Cadiz substantially for
the payment of expenses relating to the acquisition.
The consideration paid by Cadiz was determined in arms length
negotiations between Cadiz and the various constituents of the Sun
World bankruptcy case. As required under the Plan, a total of $3
million in cash and 829,090 shares of newly issued common stock was
delivered to the previous holders of the stock of Sun World upon
transfer of such stock to Cadiz. None of such holders were
affiliates of Cadiz at the time of the transaction.
Pursuant to the Plan, the Company agreed to establish and maintain
a trusteed unsecured claims reserve account and disbursement
account, whereby the claims of unsecured creditors as determined
during reorganization would be paid once the amounts of such claims
were allowed. Therefore, at the closing of the acquisition of Sun
World, Cadiz made an initial deposit of $11,000,000 into the trust
account. As of September 30, 1996, $3,150,000 had been disbursed to
satisfy certain unsecured claims, leaving a balance of $7,850,000
which is recorded as Cash and Cash Equivalents on the Balance Sheet.
Management estimates that an additional deposit of approximately
$1,500,000 will be required to satisfy the remaining unsecured
claims. The total amount of these obligations are included in Other
Current Liabilities on the Balance Sheet.
The acquisition of Sun World enabled the Company to become one of
California's leading fully integrated agricultural companies. For
the year ended December 31, 1995, Sun World recorded revenues of
approximately $118,000,000 and earnings before interest, taxes,
depreciation and amortization (EBITDA) in excess of $20,000,000.
Sun World ships approximately 75 varieties of fresh produce to
nearly every state in the United States and exports fresh fruits and
vegetables to over thirty foreign countries. Sun World's farming
operations produce approximately 7 million units of fruits and
vegetables annually, while its packing facilities handle
approximately 9 million units of produce annually. Sun World's
marketing operations include selling, merchandising and promoting
Sun World grown products as well as providing such services to a
sizable and highly diverse world wide customer base which
domestically includes national retailers, club stores and food
service distributors.
In addition, Sun World operates Cadiz' 1,600 acres of developed
agricultural property in the Cadiz Valley under an agricultural
lease entered into concurrently with the Sun World acquisition. The
Company believes its Cadiz Valley agricultural operations will
benefit by virtue of the ability of the Company to grow, pack and
market its Cadiz produce under the Sun World umbrella.
The following unaudited pro forma summary combines the consolidated
results of operations of Cadiz and Sun World as if the acquisition
had occurred on April 1, 1996, the beginning of the Company's fiscal
year, after giving effect to certain proforma adjustments,
including, among others, the amortization of intangible assets,
decreased interest expense as a result of the refinancing of Sun
World's existing secured lenders, increased interest income due the
$15 million cash infusion at acquisition, increased depreciation as a result
of the purchase price allocation and elimination of reorganization
costs, such as professional fees and adequate protection fees. This
pro forma financial information is presented for informational
purposes only and may not be indicative of the results of operations
as they would have been if Cadiz and Sun World had been a single
entity during the six months ended September 30, 1996, nor is it
indicative of the results of operations which may occur in the
future.
For the six months ended September 30, 1996
(in thousands except per share data)
(unaudited)
Actual Pro forma
--------- ----------
Revenue $ 4,820 $ 79,181
Net income (loss) $ (4,429) $ 91
Primary income(loss)
per common share $ (.23) $ .01
Pro forma summary information for the comparable period of the prior
year is not presented as the required data to compute the summary
information is not available.
NOTE 4 ACCOUNTS RECEIVABLE
- ----------------------------
As of September 30, 1996, accounts receivable consisted of the
following ($000's omitted):
Trade receivables $ 11,905
Due from unaffiliated growers 893
Other 4,807
-------
17,605
Less allowance for doubtful accounts (181)
-------
$ 17,424
=======
Substantially all domestic receivables are unsecured and are from
large national and regional supermarket chain stores and produce
brokers. Amounts due from unaffiliated growers represent
receivables for services (harvest, haul and pack) provided on
behalf of growers under agreement with Sun World and are recovered
from proceeds of product sales. Other receivables primarily
include by product sales, grape sales to wineries, and accounts
receivable from joint venture partners.
NOTE 5 INVENTORIES
- ---------------------
Inventories at September 30, 1996 consisted of the following
($000's omitted):
Growing crops $5,528
Pepper seed, net 2,217
Harvested product 1,375
Materials and supplies 1,911
------
$11,031
========
Pepper seed is net of a valuation allowance of $395,000 as of
September 30, 1996 to reduce such inventory to its net realizable
value. In addition, costs related to management of the
infrastructure at Cadiz, California are included beginning
September 14, 1996 pursuant to an agricultural lease between Cadiz
and Sun World executed concurrently with the Sun World
acquisition.
NOTE 6 ASSETS HELD FOR SALE
- -----------------------------
In conjunction with the Sun World acquisition, certain assets have
been identified as either idle facilities, fallow land or farming
operations which have experienced consistently low returns on
investment. As of September 30, 1996, assets totalling
$17,888,000 have been identified which the Company reasonably
believes can be sold within one year and accordingly, have been
included as a current asset.
NOTE 7 DEBT
- ---------------
Cadiz has agreed to terms with one of its secured lenders which
will allow the Company to, among other things, extend the maturity
of $9,100,000 of debt for two one year periods beyond the original
January 31, 1997 maturity date. The Company is in the process of
replacing the debt obligation to Cadiz' other secured lender prior
to January 31, 1997, its maturity date. In addition, Sun World
entered into new financing arrangements with its existing secured
lenders concurrently with Cadiz' acquisition of Sun World. A
summary of long term debt as of September 30, 1996 follows ($000's
omitted):
Cadiz obligations:
Ansbacher $ 9,196
Rabobank 9,100
Other 89
Unamortized warrants (201)
Sun World obligations:
Credit Agricole 54,198
John Hancock 89,566
Other 5,327
------
167,275
Less current portion
of debt 18,436
--------
Long term portion
of debt $ 148,839
========
NOTE 8 STOCK OPTIONS EXERCISED AND PRIVATE PLACEMENTS
- -------------------------------------------------------
During the three months ended September 30, 1996, previously
outstanding stock options of 172,222 were exercised resulting in
gross proceeds to the Company of $287,500.
During the quarter ended September 30, 1996, Cadiz completed a
private placement of 27,631 shares of Series A Preferred Stock,
760 shares of 6% Convertible Series B Preferred Stock, and 260
shares of 6% Convertible Series C Preferred Stock resulting in
gross proceeds to Cadiz of $27,631,000, $7,600,000 and $2,600,000,
respectively.
NOTE 9 CONTINGENCIES
- ----------------------
Cadiz was awarded full reimbursement for its legal fees and costs
incurred in defending a legal action for which Cadiz collected its
judgment of approximately $269,000 in July 1996 and an additional
$65,000 in September 1996.
As further discussed in Note 9 to the Condensed Consolidated
Financial Statements included in Cadiz' latest Form 10-K, Cadiz
filed an action relative to the proposed construction and
operation of a landfill to be located adjacent to its property in
Cadiz, California (the Rail Cycle Project), with the Superior
Court in San Bernardino County against the County of San
Bernardino and Rail Cycle, L.P., among others. The action is
currently in the discovery phase and the Company intends to
continue to prosecute its claims in this matter.
The Internal Revenue Service (IRS) has filed claims against Sun
World and certain subsidiaries, for taxes refunded to Sun World
for certain workers that the IRS claims were employees. Sun World
contends that the workers are excluded from the definition of
employment under the Internal Revenue Code. Sun World intends to
object to the Claims asserted by the IRS. The total amount of
claims filed against Sun World are approximately $6,100,000
including tax deficiency, interest and penalties. Sun World has
recorded a reserve for these claims representing management's
estimate of the ultimate amount that will be paid.
CADIZ LAND COMPANY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(unaudited)
The following discussion contains trend analysis and other forward
looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results could
differ materially from those projected in the forward looking
statements throughout this document.
GENERAL
- --------
On September 13, 1996, Cadiz acquired all of the outstanding capital
stock of Sun World. The Company's acquisition of Sun World will be
accounted for on a consolidated basis in the Company's financial
statements for periods ending after September 13, 1996 under the
purchase method of accounting. The Consolidated Financial
Statements include Sun World from the date of acquisition.
The financial statements set forth herein for the period ending
September 30, 1996 are the first financial statements of the Company
to reflect Cadiz' acquisition of Sun World. The operations of Sun
World have, and will continue to have, a significant impact upon the
Company's financial statements.
Prior to the acquisition of Sun World, Cadiz had utilized an
unclassified balance sheet (eliminating the distinction between
current assets and long term assets and current liabilities and long
term liabilities). The financial statements set forth herein
utilize a classified balance sheet, thus requiring certain
classifications to be made to the prior period balances to conform
with the September 30, 1996 presentation.
RESULTS OF OPERATIONS
- ---------------------
The Company's results of operations for the period ended September
30, 1996 include the results of operations of Sun World for the
period September 14, 1996 through September 30, 1996. The results
of operations of Sun World prior to September 14, 1996 have not been
consolidated with those of the Company. As a result of the
foregoing, direct comparisons of the Company's consolidated results
of operations for the three months and six months ended September
30, 1996 with results for the three months and six months ended
September 30, 1995 will not, in the view of management of the
Company, prove meaningful. Instead, a summary of the elements which
management of the Company believes essential to an analysis of the
results of operations for such periods, and the likely effect of the
Sun World acquisition upon such elements, is presented below. For
purposes of this summary, the term Sun World will be used with
respect to the operations and activities of the Company's Sun World
subsidiary, and the term Cadiz will be used with respect to those
operations and activities of the Company not involving Sun World.
Quarter Ended September 30, 1996 Compared to Quarter Ended September
- --------------------------------------------------------------------
30, 1995
- --------
During the quarter ended September 30, 1996, the Company incurred a
net loss of $2,442,000 compared to a loss of $1,835,000 during the
same period in 1995. The following table summarizes the net loss
for both periods ($000's omitted):
1996 1995
Revenues $ 4,738 $ 596
------- ------
Costs and expenses:
Cost of sales 3,723 -0-
Resource development 865 1,135
Landfill prevention
activities 135 175
General and
administrative 1,004 410
Depreciation 281 209
Amortization 100 59
Interest expense, net 1,137 443
Litigation settlement (65) -0-
------ ------
Net loss $ 2,442 $ 1,835
======== ======
The operations of Sun World for the period September 14 through
September 30, 1996 are included above; however, due to the
seasonality of the operations of Sun World, this is not indicative
of the results of operations should a full quarter of activity be
included.
Revenues
- ---------------
During the period ended September 30, 1996, the Company recorded
revenues from Sun World operations of $4,662,000, all of which were
recognized in the seventeen day period September 14, 1996 through
September 30, 1996. Such revenues consisted of farming, packing,
marketing and other revenue of $3,960,000, $370,000, $292,000, and
$40,000, respectively. The balance of the Company's revenues were
recognized from the resource development activities of Cadiz.
Revenues of the Company will grow significantly in future periods as
a result of the acquisition of Sun World, which had in excess of
$100 million in revenues in each of its last two fiscal years.
Until such time as Cadiz generates a revenue stream from its
resource development operations (see "Liquidity and Capital
Resources Outlook" below), revenues from the Company's non Sun
World operations are not expected to be material to the Company.
Cost of Sales
- -----------------
Cost of sales for the period ended September 30, 1996 consisted of
all direct costs and an allocation of indirect costs related to
revenue generated by Sun World for the seventeen day period ended
September 30, 1996. No cost of sales was recognized in the period
with respect to the operations of Cadiz. Cost of sales will
increase significantly in future periods with the inclusion of Sun
World's operations for the full period.
Resource Development
- -------------------
Resource development expenses, which consist of costs incurred in
the agricultural, land and water resource development of Cadiz'
landholdings, totalled $865,000 for the quarter ended September 30,
1996 as compared to $1,135,000 for the same period in 1995. The
decrease in resource development expenses was due to a reduced level
of agricultural activity in 1996 at the Cadiz ranch.
Landfill Prevention Activities
- -------------------------------
Cadiz is engaged in opposition to the proposed construction and
operation of a landfill proposed to be located adjacent to the
Company's Cadiz property, and has filed a lawsuit seeking, among
other things, to set aside regulatory approvals for the landfill
project. See "Item 3 Legal Proceedings" in the Company's latest
Form 10 K. During the quarter ended September 30, 1996, expenses
incurred in connection with activities in opposition to the project,
such as litigation costs and professional fees and expenses,
totalled $135,000 as compared to $175,000 during the same period of
the prior year. The landfill prevention activities of Cadiz are not
expected to be affected by the Company's acquisition of Sun World;
however, the expenses incurred in connection with such activities
will bear less relative significance to the Company's overall
operations.
General and Aadministrative
- ---------------------------
General and administrative expenses during both periods consisted
primarily of corporate operating expenses, professional fees and
salaries. These expenses increased by $594,000 during the quarter
ended September 30, 1996 as compared to the same period in 1995
primarily due to the addition of corporate and administrative costs
related to Sun World in the amount of $279,000 for the period
September 14, 1996 through September 30, 1996. The balance of the
increase is attributable to an increased level of activity primarily
as a result of the acquisition of Sun World. General and
administrative expenses will increase in future periods as a result
of the acquisition of Sun World.
Depreciation
- -----------------
Depreciation totalled $281,000 for the quarter ended September 30,
1996 as compared to $209,000 for the quarter ended September 30,
1995. The increase is primarily attributable to depreciation for
the seventeen day period ending September 30, 1996 related to the
consolidation of Sun World owned assets.
Interest Expense
- -----------------------
Net interest expense totalled $1,137,000 during the quarter ended
September 30, 1996 as compared to $443,000 during the same period in
1995. The following table summarizes the components of net interest
expense for the three month periods ended September 30, 1996 and
1995 ($000's omitted):
1996 1995
------ -----
Interest expense on outstanding debt $ 995 $ 245
Amortization of financing costs 210 210
Interest income (68) (12)
------ ------
$ 1,137 $ 443
====== =====
As a part of Sun World acquisition, Sun World restructured
existing debt of approximately $156 million with its secured
lenders. The increase in interest expense on outstanding debt
during the period ended September 30, 1996 is attributable to Sun
World debt service subsequent to the acquisition. Financing costs
are amortized over the life of the debt agreement. Interest on
the Sun World debt will continue to constitute the largest portion
of the Company's net interest expense.
Litigation Settlement
- ---------------------
During the period ended September 30, 1996, Cadiz was awarded and
received approximately $65,000 as final payment toward full
reimbursement of its legal fees and costs incurred in defending a
legal action in addition to $269,000 received previously.
Six Months Ended September 30, 1996 Compared to Six Months Ended
- -------------------------------------------------------
September 30, 1995
- ------------------
During the six months ended September 30, 1996, the Company
incurred a net loss of $4,429,000 compared to a loss of $3,686,000
during the same period in 1995. The following table summarizes
the net loss for both periods ($000's omitted):
1996 1995
--------- --------
Revenues $ 4,820 $ 650
------ ------
Costs and expenses:
Cost of sales 3,723 -0-
Resource development 1,445 1,569
Landfill prevention
activities 262 531
General and
administrative 1,938 826
Depreciation 481 410
Amortization 158 117
Interest expense, net 1,576 883
Litigation settlement (334) -0-
------ ------
Net loss $ 4,429 $ 3,686
====== ======
The operations of Sun World for the period September 14 through
September 30, 1996 are included above; however, due to the
seasonality of the operations of Sun World, this is not indicative
of the results of operations should a full six months of activity
be included.
Revenues
- ------------
Of the $4,820,000 in revenues recognized by the Company for the
six months ended September 30, 1996, $4,662,000 related to the
operations of Sun World in the seventeen day period September 14,
1996 through September 30, 1996. The balance of the Company's
revenues were recognized from the resource development activities
of Cadiz, consisting primarily of gross crop proceeds from the
Cadiz ranch.
Cost of Sales
- -----------------
Cost of sales for the six months ended September 30, 1996
consisted of all direct costs and an allocation of indirect costs
related to revenue generated by Sun World for the seventeen day
period ended September 30, 1996.
Resource Development
- ----------------------------------------
Resource development expenses, which consist of costs incurred in
the agricultural, land and water development of Cadiz'
landholdings, totalled $1,445,000 for the six months ended
September 30, 1996 as compared to $1,569,000 for the same period
in 1995.
Landfill Prevention Activities
- ----------------------------------------
Cadiz is engaged in opposition to the proposed construction and
operation of a landfill proposed to be located adjacent to the
Company's Cadiz property, and has filed a lawsuit seeking, among
other things, to set aside regulatory approvals for the landfill
project. See "Item 3 Legal Proceedings" in the Company's latest
Form 10 K. During the six months ended September 30, 1996,
expenses incurred in connection with activities in opposition to
the project, such as litigation costs and professional fees and
expenses, totalled $262,000 as compared to $531,000 during the
same period of the prior year.
General and Administrative
- ----------------------------------------
General and administrative expenses during both periods consisted
primarily of corporate operating expenses, professional fees and
salaries. These expenses increased by $1,112,000 during the six
months ended September 30, 1996 as compared to the same period in
1995 due to an increased level of activity primarily as a result
of the acquisition of Sun World and due to the addition of corporate
and administrative costs related to Sun World in the amount of
$279,000 for the period September 14, 1996 through September 30, 1996.
Depreciation
- -----------------
Depreciation totalled $481,000 for the six months ended September
30, 1996 as compared to $410,000 for the six months ended
September 30, 1995. The increase is primarily attributable to
depreciation for the seventeen day period ending September 30,
1996 related to the consolidation of Sun World owned assets.
Interest Expense
- ---------------------
Net interest expense totalled $1,576,000 during the six months
ended September 30, 1996 as compared to $883,000 during the same
period in 1995. The following table summarizes the components of
net interest expense for the six month periods ended September 30,
1996 and 1995 ($ 000's omitted):
1996 1995
-------- --------
Interest expense on outstanding debt $ 1,251 $ 490
Amortization of financing costs 420 421
Interest income (95) (28)
------- -----
$ 1,576 $ 883
====== =====
The increase in interest expense on outstanding debt during the
period ended September 30, 1996 is attributable to Sun World debt
service subsequent to the acquisition. Financing costs are
amortized over the life of the debt agreement.
Litigation Settlement
- ---------------------
During the period ended September 30, 1996, Cadiz was awarded and
received approximately $334,000 as final payment toward full
reimbursement of its legal fees and costs incurred in defending a
legal action.
LIQUIDITY AND CAPITAL RESOURCES
- ------------------------------
Pursuant to its business strategy, the Company has, other than in
connection with the Sun World acquisition, utilized its working
capital primarily for development purposes; that is, for purposes
designed to increase the long term value of its properties. As
the Company has not received significant revenues from its
development operations to date, 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.
Historically, 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. See "Current Financing Arrangements" and "Equity
Placements", below.
On September 13, 1996, the Company acquired all of the stock of
Sun World. Total consideration was approximately $179 million of
which approximately $156 million was represented by a
restructuring of previously existing debt with Sun World's secured
lenders. See "Current Financing Arrangements", below.
Substantially all of the remainder of the purchase price, as well
as a cash capital contribution of $15 million into Sun World, was
funded by the Company from the proceeds of the issuance of
preferred stock. See "Equity Placements", below. The $15 million
cash capital contribution was made by the Company with the intent
of eliminating the requirement for Sun World to have any
additional debt facilities beyond those owed to its existing
secured creditors. As a result, the Company believes that
additional outside funding will not be needed to meet the working
capital requirements of Sun World's operations, although no
assurances can be given.
Current Financing Arrangements
- ------------------------------
Cadiz' two primary lenders are Cooperatieve 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"). Cadiz' obligations to Rabobank and
Ansbacher totalling approximately $18,000,000 mature in January
1997. In September 1996, Rabobank agreed to grant to Cadiz two
one year extensions provided the total debt outstanding to
Rabobank at January 31, 1997 does not exceed $8.5 million. In
consideration for this agreement, Cadiz paid an initial commitment
fee of $150,000 and issued 30,000 warrants to purchase the
Company's common stock at $.05 per share exercisable for five
years following the date of issuance. Upon exercise of the first
and second extension, Cadiz would be required to pay Rabobank
certain fees. The interest rate in effect pursuant to this
agreement will be at Rabobank's cost of funds plus one and one
quarter percent (1 1/4%). Cadiz also currently intends to replace
or renegotiate the terms of its current obligations to Ansbacher
prior to January 31, 1997. Ansbacher and Rabobank hold senior and
subordinate deeds of trust, respectively, on substantially all of
the Company's non Sun World related property.
Sun World's two primary lenders are John Hancock Mutual Life
Insurance Company ("John Hancock") and Caisse Nationale de Credit
Agricole, acting through its Grand Cayman branch (Credit
Agricole") (collectively, the "Sun World Lenders"). Sun World's
obligations to John Hancock and Credit Agricole totalling
approximately $143,784,000 mature in September 2006.
Substantially all of the assets of Sun World are encumbered in
favor of one or both of the Sun World Lenders.
As the Company continues to aggressively pursue its business
strategy, additional financing specifically in connection with the
Company's water projects will be required. The nature of such
additional financing for the water transfer and/or storage
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
and/or storage systems used in the project, the Company will be
required to obtain long-term project financing. Based upon the
results of analyses performed by an investment banking firm
retained by the Company, 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 six month period ended September 30, 1996, Cadiz
utilized equity placements to fund its acquisition of Sun World.
The total cash requirements of Cadiz related to the Sun World
acquisition were funded from: (i) the issuance by Cadiz of $27.631
million of newly authorized Convertible Series A Preferred Stock
("Series A Preferred Stock"); (ii) the issuance by Cadiz of $7.6
million of newly authorized 6% Convertible Series B Preferred
Stock ("Series B Preferred Stock"); (iii) the issuance by Cadiz
$2.6 million of newly authorized 6% Convertible Series C Preferred
Stock ("Series C Preferred Stock"); and (iv) $1 million previously
deposited by Cadiz from its working capital in trust with the
Official Committee Holding Unsecured Claims in the Sun World
bankruptcy case. Of such funds, approximately $35 million was
applied to cash disbursements required at closing under the Sun
World plan of reorganization, including the $15 million capital
contribution referred to above and approximately $5.5 million of
principal reduction to secured lenders. The remainder has been
utilized by Cadiz substantially for the payment of expenses
relating to the acquisition, as well as for the capital and
operating requirements of Cadiz.
During the six month period ended September 30, 1996, Cadiz
received gross proceeds of $916,500 through the exercise of
previously outstanding stock options.
During the fiscal year ended March 31, 1996, the Company completed
private placements of 2,114,157 shares of its common stock,
resulting in gross proceeds of $9,932,000. In addition, the Cadiz
received proceeds of approximately $360,000 through the exercise
of outstanding stock options and warrants. Cadiz utilized such
proceeds to fund its capital projects related to development of
its water transfer projects, for the purchase of additional
acreage and for operating requirements, including the payment of
expenses incurred in connection with the acquisition of Sun World.
The Series A Preferred Stock is convertible into shares of common
stock, at the option of the holder, at a price of $3.75 per share.
Holders are entitled to cumulative dividends payable at a rate of
six percent (6%) per annum. Both the Series B Preferred Stock and
the Series C Preferred Stock are convertible into shares of common
stock at a price equal to the lower of (a) $5.8125 per share or
(b) eighty-five percent (85%) of the average closing bid price
over the ten trading-day period ending on the day prior to the
submission of any conversion notice. Holders will also be
entitled to cumulative dividends at the rate of six percent (6%)
per annum until conversion. The Company reserves the right to
redeem any convertible shares for their full cash equivalent by
giving the investors five (5) days notice. As of September 30,
1996, $4,340,000 of Series B Preferred Stock had been converted
into a total of 1,165,079 shares of the Company's common stock.
No Series C Preferred Stock had been converted.
Working Capital Resources
- --------------------------
As noted above, subsequent to the Sun World acquisition, the
Company adopted a classified balance sheet thereby requiring the
distinction between current assets and long term assets and
current liabilities and long term liabilities. As a result, on a
consolidated basis, the Company had, at September 30, 1996,
working capital of $40,180,000, cash of $40,083,000 and a current
ratio of approximately two to one.
Cash used for operating activities totalled $4,431,000 for the six
month period ended September 30, 1996 as compared to $3,022,000
for the same period in 1995. The increase in cash used for
operating activities primarily resulted from the decrease in
accounts payable of $5,634,000 of which $3,150,000 was paid to
satisfy certain of Sun World's unsecured creditors pursuant to the
Plan, net of the decrease in accounts receivable and inventory
attributable to Sun World operations. The balance of the net cash
used for operating activities resulted from the increased activity
level of Cadiz during 1996. During the 1996 period, the Company
has been engaged in, among other things, the acquisition of Sun
World; negotiations and/or discussions with prospective purchasers
regarding several of the Cadiz' water transfer projects and
management of Cadiz' permanent and seasonal crops. In 1995, by
contrast, activities pertained to evaluation of only one water
transfer project and management of Cadiz' permanent and seasonal
crops. In addition, Sun World's operations for the seventeen day
period ending September 30, 1996 are included in the 1996 period.
Cash provided by investing activities totalled $1,698,000 during
the six months ended September 30, 1996 as compared to cash used
for investing activities of $883,000 for the same period in 1995.
Cadiz invested $425,000 in the purchase of land, property, plant
and equipment and in furtherance of its water transfer and storage
projects. In addition the acquisition of Sun World resulted in
net cash provided to the Company of $2,123,000 as shown below
($000's omitted):
Investment in Sun World $ 43,127
Less:
Initial cash deposit with
trustee for payment
of unsecured creditor claims (11,000)
Accrued additional cash
requirement for creditor
claims to be provided
by the Company (1,695)
Cost of acquisition incurred
prior to April 1, 1996 (692)
--------
29,740
Less:
Cash contributed to Sun World
at acquisition
for working capital (15,000)
Cash balance of Sun World acquired (16,863)
----------
Net cash provided from
acquisition of Sun World,
net of cash acquired $ 2,123
=======
Financing activities provided $37,663,000 for the six months ended
September 30, 1996 as compared to $2,320,000 during the six months
ended September 30, 1995. Net proceeds from the issuance of
common and preferred stock totalled $39,000,000 during the six
month period ended September 30, 1996. Proceeds from the issuance
of common stock as a result of the exercise of previously
outstanding stock options totalled $917,500 during the same
period. Principal payments on long term debt totalled $2,442,000.
OUTLOOK
- ----------------
The Company believes that the operations of Sun World are
self-sufficient for working capital purposes on an ongoing basis.
Cadiz does not expect, in the foreseeable future, to make
additional capital contributions to Sun World, although no
assurances can be given. However, the working capital available
to Sun World is generally not available to Cadiz for use in
connection with its operations. Concurrently with the Sun World
acquisition, Cadiz entered into agreements with both its existing
lenders and with Sun World's principal secured lenders which
restrict the amount of cash that can flow from Cadiz to Sun World
and vice versa.
In the short term, Cadiz expects to meet its ordinary
working capital needs through a combination of quarterly
management fee payments from Sun World, payments from Sun World
under an agricultural lease whereby Sun World now operates the
Company's 1,600 acres of developed agricultural property at Cadiz,
California, and the possible exercise of outstanding stock
options.
Shortly before completion of the Sun World acquisition, the
Company was able to successfully negotiate a reduction in the
required initial cash deposit into the trusteed unsecured claims
reserve account from $15 million (as originally required
under the Sun World plan of reorganization) to $11 million,
thereby effectively reducing by $4 million the amount of preferred
stock issued by the Company prior to the acquisition. The
reduction was agreed upon in recognition, first, of the likelihood
that payments to unsecured creditors from the trusteed account
would ultimately be less than $15 million, and second, of the
Company's desire to defer any need to issue additional equity
securities until final claims amounts could more accurately be
determined, thereby minimizing the dilutive effects of such
issuances. At this time the Company believes that additional funds
will be required in the short term for the funding of remaining
required payments to the trusteed unsecured claims reserve account
in the Sun World bankruptcy case in an amount not to exceed $2.5 million.
The Company may elect to issue additional equity
securities as required to meet these additional short term working
capital needs. However, the amount of securities issued for this
purpose will still be less than the additional amount which the Company
would have needed to issue prior to the Sun World acquisition if
the amount of the initial cash deposit had not been reduced.
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
and/or storage project at Cadiz. Once the lengthy regulatory
review process is finalized and construction of the necessary
delivery and/or storage system has commenced, the Company
anticipates generating a revenue stream within less than a year
thereafter which will be sufficient to meet the then existing
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 and/or
storage arrangements with various California water agencies, which
include issues such as financing, pricing concepts and formulas
and ownership of the pipeline and the delivery and/or storage
system.
In addition to the development of its water resources, the Company
is actively involved in further agricultural development of its
landholdings as a result of San Bernardino County's approval of a
General Plan Amendment covering 9,600 acres of the Company's
landholding 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 its Sun World
subsidiary or negotiated arrangements with third parties 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.
<PAGE>
OTHER INFORMATION
- -------------------
ITEM 1 Legal Proceedings
-------------------------
See "Item 3. Legal Proceedings" included in the Company's latest
Form 10 K for a complete discussion.
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
--------------------------------------------------------
A. The annual meeting of the stockholders of the Company was
held on November 8, 1996. The stockholders took the
following action at the meeting:
1. Re elected Dwight W. Makins, Keith Brackpool, Russ
Hammond and Stephen D. Weinress to the Company's
Board of Directors. Mr. Makins was elected by the
vote of 15,064,776 in favor and 295,730 against, with
no one abstaining and no broker non votes. Mr.
Brackpool was elected by the vote of 15,064,726 in
favor and 295,780 against with no one abstaining and
no broker non votes. Mr. Hammond was elected by the
vote of 15,064,776 in favor and 295,730 against, with
no one abstaining and no broker non votes. Mr.
Weinress was elected by the vote of 15,062,276 in
favor and 298,280 against, with no one abstaining and
no broker non votes.
2. Approved the amendment of the Company's Certificate
of Incorporation to increase the number of authorized
shares of common stock from 24,000,000 to 45,000,000
by the vote of 13,063,352 in favor and 192,914
against with 16,323 abstaining and 2,037,917 broker
non votes.
3. Approved the adoption of the Company's 1996 Stock
Option Plan by the vote of 8,578,831 in favor and
943,787 against with 17,557 abstaining and 5,820,331
broker non votes.
4. Ratified the selection by the Company's Board of
Directors of Price Waterhouse LLP to continue as the
Company's independent auditors for fiscal year 1997
by the vote of 15,389,566 in favor and 6,426 against,
with 14,514 abstaining and no broker non votes.
ITEM 5 Other Information
--------------------------
Not applicable.
ITEM 6 Exhibits and Reports on Form 8K
A. Exhibits
-------------
1. Exhibit 27 Financial Data Schedule
2. Exhibit 3.1 Certificate of Amendment of
Certificate of Incorporation dated
November 8, 1996
3. Exhibit 10.1 Amended and Restated Credit
Agreement between Sun World
International, Inc. and Caisse
Nationale de Credit Agricole dated
September 13, 1996
4. Exhibit 10.2 Promissory Note between Sun World
International, Inc. and Caisse
Nationale de Credit Agricole dated
September 13, 1996
5. Exhibit 10.3 New Hancock Credit Agreement
between Sun World International,
Inc. and John Hancock Mutual Life
Insurance Company dated September
13, 1996
6. Exhibit 10.4 Secured Promissory note between Sun
World International, Inc. and John
Hancock Mutual Life Insurance
Company dated September 13, 1996
B. Reports on Form 8K
------------------
1. Report on Form 8K dated September 13, 1996,
describing the acquisition by the Company of Sun
World International, 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 November 14, 1996
------------------------- ------------------
Chief Executive Officer and Director Date
BY: /S/ Susan K. Chapman November 14, 1996
------------------------- ------------------
Chief Financial Officer and Secretary Date
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 40,083
<SECURITIES> 0
<RECEIVABLES> 17,424
<ALLOWANCES> 0
<INVENTORY> 11,031
<CURRENT-ASSETS> 88,152
<PP&E> 124,086
<DEPRECIATION> 0
<TOTAL-ASSETS> 255,202
<CURRENT-LIABILITIES> 47,972
<BONDS> 0
0
0
<COMMON> 218
<OTHER-SE> 112,988
<TOTAL-LIABILITY-AND-EQUITY> 255,202
<SALES> 4,820
<TOTAL-REVENUES> 4,820
<CGS> 3,723
<TOTAL-COSTS> 3,723
<OTHER-EXPENSES> 4,284
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,576
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,429)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,429)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.19)
</TABLE>
EXHIBIT 3.1
------------
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
CADIZ LAND COMPANY, INC.
a Delaware Corporation
CADIZ LAND COMPANY, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of Cadiz
Land Company, Inc. resolutions were duly adopted setting forth a
proposed amendment to the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and calling
a meeting of the stockholders of said corporation for consideration
thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, That the Certificate of Incorporation of this
corporation be amended by changing Subsection A of the Fourth
Article thereof so that, as amended Subsection A of said
Article shall be and read as follows:
"Fourth:
A. The total number of shares of all classes of stock
which the Corporation shall have the authority to issue is
Forty Five Million One Hundred Thousand (45,100,000),
consisting of:
(1) Forty Five million (45,000,000) shares of
Common Stock, par value one cent ($.01) per share (the
"Common Stock"); and
(2) One Hundred Thousand (100,000) shares of
Preferred Stock, par value one cent ($.01) per share (the
"Preferred Stock").
SECOND: That thereafter, pursuant to a resolution of its
Board of Directors, an annual meeting of the stockholders of said
corporation was duly called and held, upon notice in accordance
with Section 222 of the General Corporation Law of the State of
Delaware at which meeting the necessary number of shares as
required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
IN WITNESS WHEREOF, said Cadiz Land Company, Inc. has caused
this certificate to be signed by Keith Brackpool, its Chief
Executive Officer and Susan K. Chapman, its Secretary, this 8th day
of November, 1996.
By: /S/ Keith Brackpool
--------------------------
Chief Executive Officer
ATTEST:
By: /S/ Susan K. Chapman
-------------------------
Secretary
EXHIBIT 10.1
------------
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
September 13, 1996
between
SUN WORLD INTERNATIONAL, INC.
and
CAISSE NATIONALE DE CREDIT AGRICOLE,
ACTING THROUGH ITS GRAND CAYMAN BRANCH
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Definitions . . . . . . . . . . . . . . . . . . . . . . 2
2. Amount and Term of Restructured Loan. . . . . . . . . . 21
2.1 The Restructured Loan. . . . . . . . . . . . . . . 21
2.2 The Note . . . . . . . . . . . . . . . . . . . . . 23
2.3 Interest . . . . . . . . . . . . . . . . . . . . . 23
2.4 Principal Payments; Interest Payments. . . . . . . 24
2.4.1 Principal Payments . . . . . . . . . . . 24
2.4.2 Interest Payments. . . . . . . . . . . . 25
2.5 Voluntary Prepayment . . . . . . . . . . . . . . . 25
2.6 Breakage Fees. . . . . . . . . . . . . . . . . . . 25
2.7 Payments Generally . . . . . . . . . . . . . . . . 26
2.8 Payment on Non-Business Days . . . . . . . . . . . 27
2.9 Notations. . . . . . . . . . . . . . . . . . . . . 27
2.10 Special Provisions Regarding LIBOR . . . . . . . . 27
2.10.1 Interest Periods . . . . . . . . . . . . 27
2.10.2 Illegality or Impossibility. . . . . . . 28
2.10.3 Special Costs. . . . . . . . . . . . . . 28
2.11 Capital Requirements . . . . . . . . . . . . . . . 29
2.12 Released Claims. . . . . . . . . . . . . . . . . . 29
3. Conditions Precedent. . . . . . . . . . . . . . . . . . 29
3.1 Effective Date . . . . . . . . . . . . . . . . . . 30
3.2 Cadiz Payment. . . . . . . . . . . . . . . . . 30
3.3 Working Capital Contribution . . . . . . . . . 30
3.4 Pro Forma Balance Sheets; Opening Financial
Position; Certain Financial Results. . . . . . 30
3.5 DIP Credit Agreement . . . . . . . . . . . . . 31
3.6 John Hancock Credit Agreement. . . . . . . . . 31
3.7 Intercreditor Agreement. . . . . . . . . . . . 32
3.8 Rayo Water Rights. . . . . . . . . . . . . . . 32
3.9 Marketing Agreements; Certain Information. . . 32
3.10 Mutual Releases. . . . . . . . . . . . . . . . 33
3.10.1 Borrower . . . . . . . . . . . . . . 33
3.10.2 John Hancock . . . . . . . . . . . . 34
3.10.3 Former Stockholders. . . . . . . . . 34
3.10.4 Certain Other Persons. . . . . . . . 34
3.10.5 Cadiz. . . . . . . . . . . . . . . . 35
3.11 Initial Interest Period. . . . . . . . . . . . 35
3.12 Executed Documents . . . . . . . . . . . . . . 35
3.13 Related Agreements . . . . . . . . . . . . . . 37
3.14 Minimum Release Price Schedule . . . . . . . . 38
3.15 Title Insurance. . . . . . . . . . . . . . . . 38
3.16 Corporate Actions. . . . . . . . . . . . . . . 38
3.17 Evidence of Insurance. . . . . . . . . . . . . 39
3.18 Evidence of Required Licenses. . . . . . . . . 39
3.19 Environmental Studies. . . . . . . . . . . . . 39
3.20 Material Adverse Effect. . . . . . . . . . . . 40
3.21 Legal Opinions . . . . . . . . . . . . . . . . 40
3.21.1 Water Rights . . . . . . . . . . . . 40
3.21.2 Intellectual Property. . . . . . . . 40
3.21.3 Cadiz Opinion. . . . . . . . . . . . 40
3.21.4 Borrower Opinion . . . . . . . . . . 40
3.21.5 HPM Opinion. . . . . . . . . . . . . 40
3.22 No Defaults. . . . . . . . . . . . . . . . . . 40
3.23 Representations and Warranties . . . . . . . . 40
3.24 Bringdown Certificates . . . . . . . . . . . . 40
3.25 . . . . . . . . . . . . . . . . . . . . . . . 41
3.27 Lending Relationships. . . . . . . . . . . . . 41
3.28 Other Approvals, Consents, Documents and Opinions 41
4. Representations and Warranties. . . . . . . . . . . 41
4.1 Corporate Status; Power and Authority. . . . . 41
4.1.1 Corporate Status . . . . . . . . . . 41
4.1.2 Power and Authority. . . . . . . . . 42
4.2 Legally Enforceable Agreements . . . . . . . . 42
4.3 Stock; Subsidiaries. . . . . . . . . . . . . . 43
4.3.1 Stock. . . . . . . . . . . . . . . . 43
4.3.2 Subsidiaries . . . . . . . . . . . . 43
4.4 Properties and Assets. . . . . . . . . . . . . 43
4.5 Debt; Liens; Other Obligations . . . . . . . . 44
4.6 Major Account Debtors. . . . . . . . . . . . . 44
4.7 Withholding Taxes. . . . . . . . . . . . . . . 45
4.8 Other Taxes. . . . . . . . . . . . . . . . . . 45
4.9 Labor Disputes and Acts of God . . . . . . . . 45
4.10 No Defaults on Outstanding Judgments or Orders 45
4.11 ERISA. . . . . . . . . . . . . . . . . . . . . 45
4.12 Operation of Business. . . . . . . . . . . . . 46
4.13 Litigation . . . . . . . . . . . . . . . . . . 46
4.14 Environmental Conditions . . . . . . . . . . . 46
4.15 Investment Company Act . . . . . . . . . . . . 47
4.16 Full Disclosure. . . . . . . . . . . . . . . . 47
5. Affirmative Covenants . . . . . . . . . . . . . . . 48
5.1 Maintenance of Records . . . . . . . . . . . . 48
5.2 Maintenance of Properties and Collateral . . . 48
5.3 Maintenance of Insurance . . . . . . . . . . . 49
5.4 Cash Account . . . . . . . . . . . . . . . . . 51
5.5 Compliance with Laws and Orders. . . . . . . . 52
5.6 Payroll Withholding. . . . . . . . . . . . . . 52
5.7 Officers; Directors. . . . . . . . . . . . . . 52
5.7.1 Chief Executive Officer. . . . . . . 52
5.7.2 Chief Financial Officer. . . . . . . 53
5.7.3 Independent Board. . . . . . . . . . 53
5.8 Maintenance of Separate Existence. . . . . . . 54
5.9 Marketing Agreements . . . . . . . . . . . . . 54
5.10 Financial Covenants. . . . . . . . . . . . . . 54
5.10.1 Working Capital. . . . . . . . . . . 54
5.10.2 Current Ratio. . . . . . . . . . . . 55
5.10.3 Debt Service Coverage Ratio. . . . . 56
5.10.4 Interest Coverage Ratio. . . . . . . 56
5.10.5 Debt to EBITDA Ratio . . . . . . . . 56
5.10.6 Tangible Net Worth . . . . . . . . . 57
5.10.7 Debt to Equity Ratio . . . . . . . . 57
5.10.8 Compliance . . . . . . . . . . . . . 58
5.11 Reporting Requirements . . . . . . . . . . . . 58
5.11.1 Business Plan; Crop Development Plan 58
5.11.2 Monthly Financial Statements . . . . 59
5.11.3 Annual Financial Statements. . . . . 60
5.11.4 Management Letters . . . . . . . . . 60
5.11.5 Certificate of No Default. . . . . . 60
5.11.6 Notice of Litigation . . . . . . . . 60
5.11.7 Notice of Defaults and
Events of Default. . . . . . . . . . 61
5.11.8 ERISA Reports. . . . . . . . . . . . 61
5.11.9 Environmental Matters. . . . . . . . 61
5.11.10 Debtors' Audited Financial Statements 61
5.11.11 Property Sales . . . . . . . . . . . 61
5.11.12 Blythe Ranch Cash Flow . . . . . . . 61
5.11.13 Notices to Hancock . . . . . . . . . 62
5.11.14 General Information. . . . . . . . . 62
5.12 Cancellation of Preferred Stock. . . . . . . . 62
5.13 Sale of Blythe Ranch . . . . . . . . . . . . . 62
5.14 AAI. . . . . . . . . . . . . . . . . . . . . . 62
5.15 PACA License . . . . . . . . . . . . . . . . . 63
5.16 Legal Opinion. . . . . . . . . . . . . . . . . 63
5.17 Leasehold Documents. . . . . . . . . . . . . . 63
5.18 Further Assurances . . . . . . . . . . . . . . 63
5.19 Access to Information. . . . . . . . . . . . . 63
6. Negative Covenants. . . . . . . . . . . . . . . . . 64
6.1 Inactive Subsidiaries. . . . . . . . . . . . . 64
6.2 Liens and Claims . . . . . . . . . . . . . . . 64
6.3 Debt . . . . . . . . . . . . . . . . . . . . . 66
6.4 Leases; Other Acquisitions . . . . . . . . . . 68
6.5 Dividends; Distributions; Other Payments
and Actions. . . . . . . . . . . . . . . . . . 68
6.6 Dispositions of Assets . . . . . . . . . . . . 69
6.7 Payments of Debt; Other Obligations. . . . . . 72
6.8 Guaranties . . . . . . . . . . . . . . . . . . 72
6.9 Investments; Funds . . . . . . . . . . . . . . 73
6.9.1 Investments. . . . . . . . . . . . . 73
6.9.2 Subsidiaries; Joint Ventures . . . . 74
6.9.3 Funds. . . . . . . . . . . . . . . . 74
6.10 Mergers and Consolidations . . . . . . . . . . 74
6.11 Transactions with Insiders or Affiliates . . . 74
6.12 Stock of Subsidiaries. . . . . . . . . . . . . 75
6.13 Amendments to Governing Documents or Plans . . 75
6.14 Changes in Business. . . . . . . . . . . . . . 76
6.15 Capital Expenditures; Research and Development
Expenditures. . . . . . . . . . . . . . . . . . 76
6.16 Certain Obligations. . . . . . . . . . . . . . 76
6.17 Change in Chief Executive Offices. . . . . . . 76
6.18 Change in Fiscal Year. . . . . . . . . . . . . 76
6.19 Inspection Policies and Procedures . . . . . . 77
7. Events of Default . . . . . . . . . . . . . . . . . 77
7.1 Events of Default. . . . . . . . . . . . . . . 77
7.2 Consequences of Default. . . . . . . . . . . . 81
8. Miscellaneous . . . . . . . . . . . . . . . . . . . 81
8.1 Amendments and Waivers . . . . . . . . . . . . 81
8.2 Notices, Etc.. . . . . . . . . . . . . . . . . 81
8.3 Independence of Covenants; Effect of Execution
and Delivery of John Hancock Loan Documents. . 83
8.5 Survival . . . . . . . . . . . . . . . . . . . 83
8.6 Successors and Assigns . . . . . . . . . . . . 84
8.7 Certain Participations and Assignments . . . . 84
8.8 Costs, Expenses and Taxes. . . . . . . . . . . 84
8.9 Right of Set off . . . . . . . . . . . . . . . 85
8.10 Severability of Provisions . . . . . . . . . . 85
8.11 Headings . . . . . . . . . . . . . . . . . . . 86
8.12 Certain Interpretations. . . . . . . . . . . . 86
8.13 Governing Law. . . . . . . . . . . . . . . . . 86
8.14 Counterparts . . . . . . . . . . . . . . . . . 86
8.15 Entire Agreement; No Novation. . . . . . . . . 86
8.16 Indemnity. . . . . . . . . . . . . . . . . . . 86
8.17 Consent to Jurisdiction; Waiver of Right
to Jury Trial. . . . . . . . . . . . . . . . . 88
<PAGE>
SCHEDULES AND EXHIBITS
SCHEDULES:
1. . . . . . . . . . . . . . . . . .Calculation of Funded Crop Costs
3.9. . . . . . . . . . .Persons Under Control of Howard P. Marguleas
4.3. . . . . . . . . . . . . . . . . . . . . . . Stock; Subsidiaries
4.4. . . . . . . . . . . . . . . . . . . . . . Properties and Assets
4.5.1. . . . . . . . . . . . . . . . . . . . . . . . Debts and Liens
4.8. . . . . . . . . . . . . . . . . . . . . . . . . . . Tax Matters
4.10 . . . . . . . . . . . . . . . . . . . . . . . Certain Judgments
4.11 . . . . . . . . . . . . . . . . . . . . . Certain ERISA Matters
4.12 . . . . . . . . . . . . . . . . . . . . Operation of Businesses
4.13 . . . . . . . . . . . . . . . . . . . . . . Material Litigation
4.14 . . . . . . . . . . . . . . . . . . . Environmental Disclosures
5.3. . . . . . . . . . . . . . . . . . . .Maximum Insurance Premiums
EXHIBITS:
A. . . . . . . . . . . . . . . . . . . . . . . . . . . .Form of Note
B. . . . . . . . . . . . . . . . . . . . Form of Subsidiary Guaranty
C. . . . . . . . . . . . . . . . . . . . . . Form of Cadiz Agreement
D 1, D 2 . . . . . . . . . . . . . . . . . . Forms of Deeds of Trust
E 1, E 2 . . . . . . . . . . . . . Forms of Leasehold Deeds of Trust
F 1, F 2 . . . .Forms of Amendments to Lease with Lender Cure Rights
G 1, G 2 . . . . . . . . . . . . . . . .Forms of Security Agreements
H 1, H 2 . . . . . . . . . . . . . .Forms of Stock Pledge Agreements
I. . . . . . . . . Formula for Determination of Minimum Cash Balance
J. . . . . . . . . . . . . . . .Form of Opinion of Counsel for Cadiz
K. . . . . . . . . . . . . . Form of Opinion of Counsel for Borrower
L. . . . . . . . . . . . . . . . . . . . Form of Agency Provisions
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement")
is dated as of September 13, 1996, between SUN WORLD INTERNATIONAL,
INC., a Delaware corporation ("Borrower"), and CAISSE NATIONALE DE
CREDIT AGRICOLE, ACTING THROUGH ITS GRAND CAYMAN BRANCH, a banking
corporation organized and existing under the laws of France
("Lender").
RECITALS
A. Borrower is the surviving corporation in the merger
between Sun World International, Inc. ("SWII") and Sun World, Inc.
("SWI"). Lender provided a revolving credit facility to SWI,
guarantied by SWII, pursuant to the Amended and Restated Revolving
Credit Agreement dated December 8, 1989 (as amended as of the
Petition Date, the "Pre Petition Revolving Credit Agreement").
B. Lender also provided certain term loans to SWI, supported
by SWII's guaranty, pursuant to the Credit Agreement dated as of
December 8, 1989 (as amended as of the Petition Date, the "Pre
Petition Term Credit Agreement").
C. The obligations of SWI and SWII and certain of their
Subsidiaries and Affiliates in respect of the revolving credit
facility and term loans so provided by Lender are evidenced by the
Loan Documents, as defined in either the Pre Petition Revolving
Credit Agreement or the Pre Petition Term Credit Agreement
(collectively, the "Pre Petition Loan Documents", and including
each of the Pre Petition Revolving Credit Agreement and the Pre
Petition Term Credit Agreement and each other agreement, document
or instrument executed and delivered by SWII, SWI or any Subsidiary
or Affiliate of either SWII or SWI to Lender or any Bank (as
defined therein) pursuant to or in connection with the Pre Petition
Revolving Credit Agreement or the Pre Petition Term Credit
Agreement and the transactions contemplated thereby, and each other
agreement entered into at any time prior to the Petition Date
identifying itself as a Loan Document, in each case, as amended,
supplemented or modified as of the Petition Date).
D. Pursuant to the Debtors' Modified Fourth Amended
Consolidated Plan of Reorganization dated June 3, 1996 (As Amended)
(the "Plan"), confirmed in the jointly administered bankruptcy
proceedings (administered under Case No. SB94-23212 DN, in the
United States Bankruptcy Court for the Central District of
California) of SWII, SWI, Coachella Growers and Sun Desert, Inc. as
Debtors and Debtors-In-Possession, the obligations of SWII and SWI
and their Subsidiaries and Affiliates pursuant to the Pre Petition
Loan Documents are being restructured as provided herein, and this
Agreement amends and restates both the Pre Petition Revolving
Credit Agreement and the Pre Petition Term Credit Agreement.
NOW, THEREFORE, BORROWER (THE "REORGANIZED SUN WORLD"
REFERRED TO IN THE PLAN) AND LENDER HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS. The following terms have the following
meanings (terms defined in the singular to have the same meaning
when used in the plural and vice versa):
"AAI" means AAI Services, Inc., a California corporation and a
wholly owned Subsidiary of Borrower.
"Acquisition" means the acquisition by Cadiz of all of the
outstanding capital stock of Borrower pursuant to the Plan.
"Adjusted Original Amount" means the initial amount of the
Restructured Loan, determined in accordance with Section 2.1.1, as
reduced pursuant to Section 2.4.1(a).
"Affiliate" means, with respect to a Person, any Person (i)
which directly or indirectly controls, or is controlled by, or is
under common control with, such Person; (ii) which (as of the date
of this Agreement or at any time thereafter) directly or indirectly
beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person or any Subsidiary of such Person; or
(iii) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by such Person or
any Subsidiary of such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or
otherwise.
"Aggregate Capital Expenditures" means, for any period,
determined on a Consolidated basis, the sum of (i) Borrower's
aggregate Capital Expenditures, other than Crop Development Costs,
for such period, plus (ii) Net Crop Development Costs for such
period.
"Agreement" means this Amended and Restated Credit Agreement,
as amended, supplemented or modified from time to time.
"Amendments to Lease with Lender Cure Rights" means the
Amendments to Lease with Lender Cure Rights executed by Borrower
and each lessor of Land to Borrower (or amendment and restatement
or reaffirmation of an existing such agreement between SWI and such
lessor), in favor of Lender, with respect to each leasehold
interest subject to a Leasehold Deed of Trust, in substantially the
form of Exhibit F 1 or F 2, as the case may be, as amended,
supplemented or modified from time to time.
"Ansbacher" means Henry Ansbacher & Co. Limited.
"Asset Sales Proceeds" means, with respect to any sale of a
Pre Identified Asset, the difference between (i) the gross
consideration for the sale of such Pre Identified Asset (provided
that, in determining the Asset Sales Proceeds relating to any sale
of a Pre Identified Asset together with crops growing thereon, the
gross consideration for the sale of such Pre Identified Asset shall
not include the Crop Value ascribed to such crops), and (ii) all
Sales Costs pertaining to such sale.
"Available Cash" means, for Borrower and its Subsidiaries,
determined on a Consolidated basis, the total of all (i) cash
(including all funds held in deposit or other accounts), and (ii)
Permitted Cash Investments.
"Bankruptcy Code" means the provisions of Title 11, United
States Code, as from time to time in effect.
"Base Period Financial Statements" means the opening position
financial statements of Borrower delivered to Lender in accordance
with Section 3.4.1.
"Blythe Ranch" means that certain Land (together with all
related fixtures and appurtenant Water Rights), located in
Riverside County, California, commonly known as "Blythe Ranch."
"Blythe Ranch Cash Flow" means, for any year, the actual "Cash
Flow" of Blythe Ranch for such year, calculated in the same manner
as the Projected Blythe Ranch Cash Flow for such year.
"Blythe Ranch Projections" means the operating projections for
Blythe Ranch submitted by Cadiz to Lender under cover of a letter
dated June 12, 1996.
"Blythe Ranch Release Price" means the release price for
Blythe Ranch set forth on the Minimum Release Price Schedule.
"Borrower" means Sun World International, Inc., a Delaware
Corporation, the "Reorganized Sun World" referred to in the Plan,
and, except where the context otherwise requires, Borrower's
predecessor Debtors.
"Branch Office" means Lender's branch office at Mid
Continental Plaza Building, 55 East Monroe Street, Chicago,
Illinois 60603.
"Business Day" means any day other than Saturday, Sunday, or
other day on which commercial banks are authorized or required to
close under the laws of the State of California, the State of
Illinois or the State of New York.
"Business Plan" means, with respect to the fiscal year ending
December 31, 1996, the "1996 Business Plan" in effect under the DIP
Credit Agreement immediately prior to the Effective Date, and with
respect to any subsequent fiscal year, the final business plan
delivered to Lender pursuant to Section 5.11.1, in each case, as
amended, modified or supplemented from time to time with Lender's
prior written consent.
"Cadiz" means Cadiz Land Company, Inc., a Delaware
corporation, and any successor, by merger, succession, acquisition
of assets, or otherwise.
"Cadiz Agreement" means the Cadiz Agreement, dated as of the
Effective Date, executed by Cadiz for the benefit of Lender, in
substantially the form of Exhibit C, as amended, modified or
supplemented from time to time.
"Cadiz Lease" means the lease executed by Cadiz, Southwest
Fruit Growers, L.P., a Delaware Limited Partnership, Cadiz Land
Valley Development Corporation, a Delaware corporation, and
Borrower pursuant to the Cadiz Services Agreement, as amended,
modified or supplemented from time to time.
"Cadiz Payment" means the cash payment, in the amount of
$3,500,000, to be made by Cadiz to Lender on the Effective Date
pursuant to Section 3.2.
"Cadiz Preferred Stock" means the Series A Preferred Stock,
par value $.01 per share, the Series B Preferred Stock, par value
$.01 per share, and the Series C Preferred Stock, par value $.01
per share, of Cadiz.
"Cadiz Services Agreement" means the agreement between Cadiz
and Borrower, dated as of the Effective Date, relating to the
provision of certain services to Borrower by Cadiz, in form and
substance acceptable to Lender, as amended, modified or
supplemented from time to time.
"Cadiz Working Capital Contribution Amount" means $15,000,000.
"Capital Contribution" means a contribution to the equity of
Borrower, either (i) without consideration or (ii) solely in
respect of the issuance of common stock of Borrower.
"Capital Expenditure" means (i) any expense that would be
classified as a capital expenditure under GAAP, and (ii) any Crop
Development Cost, whether or not it would be classified as a
capital expenditure under GAAP.
"Capital Expenditure Rollover Amount" means, with respect to
any fiscal year of Borrower, the difference between (i) the maximum
Aggregate Capital Expenditures Borrower and its Subsidiaries were
permitted to make during the immediately preceding fiscal year in
accordance with Section 6.15 (without regard to any Capital
Expenditure Rollover Amount applicable to such preceding fiscal
year), and (ii) if less, the actual Aggregate Capital Expenditures
of Borrower and its Subsidiaries for such preceding fiscal year.
"Capital Lease" means a lease that has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Cash Account" means a deposit account maintained pursuant to
this Agreement with the Chicago Branch, pursuant to documentation
in form and substance acceptable to Lender.
"Change of Control" means (i) any transaction or series of
related transactions in which any Person or two or more Persons
acting in concert shall acquire beneficial ownership, directly or
indirectly, of securities of Cadiz (or other securities convertible
into such securities) representing forty percent (40%) or more of
the combined voting power of all securities of Cadiz entitled to
vote in the election of directors; or (ii) during any period of
twelve (12) consecutive months, commencing on the Effective Date,
individuals who at the beginning of such twelve month period were
directors of Cadiz shall cease for any reason to constitute a
majority of the Board of Directors of Cadiz and the Persons
replacing such individuals shall not have been nominated by the
Board of Directors of Cadiz.
"Chapter 11 Case" means Case Nos. SB94-23212 DN and SB94-23213
DN commenced on October 3, 1994 in the Court, being jointly
administered.
"Coachella Growers" means Coachella Growers, a California non
profit agricultural cooperative association, of which Sun Desert is
the sole member.
"Collateral" means all of the real property and personal
property assets of Borrower and each of the Guarantors, whether now
owned or hereafter acquired, other than (i) the Unsecured Claims
Disbursement Account and (ii) the undivided 50% interest in Blythe
Ranch to be subjected to a Lien in favor of Zenith pursuant to the
Plan as security for the Zenith Note. "Collateral" shall not
include the Released Claims to be released as of the Effective
Date.
"Concentration Account" means the account, maintained by
Borrower with the Collection Account Bank pursuant to Section 5.4,
into which all collections under the Concentration Account
Agreement are to be initially deposited.
"Concentration Account Agreement" means an agreement, in form
and substance satisfactory to Lender, between Borrower (as
successor to any one or more Debtors or otherwise) and the
Concentration Account Bank governing the administration of a
collection, or lockbox, arrangement with respect to Borrower's and
its Subsidiaries' funds, as at any time amended, supplemented or
modified.
"Concentration Account Bank" means, at any time, the financial
institution with which the Concentration Account is then
maintained, acting in its capacity as the collecting bank under the
Concentration Account Agreement.
"Consolidated" means, when used with respect to any of the
terms defined herein, such term as reflected in a consolidation of
the accounts or other items of Borrower and of the accounts or
other items of Borrower's Subsidiaries in conformity with GAAP.
"Contract Period" has the meaning given to it in the
definition of Permitted Water Sale.
"Court" means the United States Bankruptcy Court for the
Central District of California.
"Crop Value" has the meaning ascribed to it in Section
6.6.4(c).
"Crop Development Cost" means each expenditure of Borrower or
any of its Subsidiaries for the acquisition, planting or
cultivation or other maintenance of a vine, tree or other permanent
planting that is not reasonably expected to produce a crop that can
be commercially marketed during the crop year during which such
expenditure is incurred.
"Crop Development Plan" means, with respect to the fiscal year
ending December 31, 1996, the crop development plan delivered to
Lender in accordance with Section 3.26, and with respect to any
subsequent fiscal year, the crop development plan delivered to
Lender pursuant to Section 5.11.1, in the form approved by Lender
in writing, in each case, as amended, modified or supplemented from
time to time with Lender's prior written consent.
"Current Assets" means, on a Consolidated basis, as of any
date of determination, all assets of Borrower and its Subsidiaries
that are treated as current assets in accordance with GAAP
consistent with GAAP used in the preparation of the Base Period
Financial Statements, excluding, however, from the determination of
current assets, loans or advances to directors, officers, employees
or Affiliates.
"Current Liabilities" means on a Consolidated basis, as of any
date of determination, all liabilities of Borrower and its
Subsidiaries that are treated as current liabilities in accordance
with GAAP consistent with GAAP used in the preparation of the Base
Period Financial Statements, including, without limitation, (i) all
obligations payable on demand or within one year after the date on
which the determination is made, and (ii) sinking fund or mandatory
redemption payments required to be made within one year after the
date on which the determination is made, but excluding all such
liabilities or obligations that, pursuant to written agreement, are
renewable or extendable at the option of the debtor to a date more
than one year from the date of the determination.
"Debt" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments and all securities providing for
noncontingent, mandatory payments of money, (iii) all obligations
of such Person pursuant to revolving credit agreements or similar
arrangements, (iv) all obligations of such Person to pay the
deferred purchase price of property or services, except trade
accounts payable (including trade accounts payable to
professionals) arising in the ordinary course of business
(including, without limitation, in connection with the Chapter 11
Case), (v) all obligations of such Person as lessee under Capital
Leases, (vi) all obligations of such Person to reimburse or prepay
any bank or other Person in respect of amounts paid under a letter
of credit, banker's acceptance or similar instrument, whether drawn
or undrawn, (vii) to the extent not included in clause (iv) hereof,
all obligations of such Person to purchase securities (or other
property) which arise out of or in connection with the sale of the
same or substantially similar securities or property, (viii)
recourse or repurchase obligations in connection with the sale of
receivables, (ix) all debt of others Guarantied by such Person, and
(x) all obligations of such Person of the character described in
the foregoing clauses (i) through (ix) to the extent that such
Person remains legally liable in respect thereof notwithstanding
that such obligation is deemed under GAAP to have been
extinguished.
"Debt Service Coverage Ratio" means, with respect to any
fiscal year of Borrower, the ratio of (i) EBITDA for such fiscal
year, to (ii) the sum of Consolidated interest expense of Borrower
and its Subsidiaries for such fiscal year, plus scheduled payments
of principal on Debt of Borrower and its Subsidiaries (after giving
effect to the application of prepayments of principal pursuant to
this Agreement and to the John Hancock Credit Agreement) for the
immediately succeeding fiscal year.
"Debtors" means each debtor and debtor-in-possession in the
Chapter 11 Case, and each Subsidiary of any other Debtor that is
also a debtor or debtor in possession in any bankruptcy proceeding
as of the Effective Date.
"Deed of Trust" means (i) each Deed of Trust executed as
security for Lender's pre petition claims with respect to any fee
interest in Land retained by Borrower after the Effective Date, as
amended and restated in substantially the form of Exhibit D 1, and
(ii) each other Deed of Trust encumbering the interest of Borrower
or any Subsidiary in any fee, in substantially the form of Exhibit
D 2 (or in such other form as may be approved in writing by
Lender), entered into pursuant to this Agreement or any Security
Document and securing the payment and performance of the
obligations of (1) Borrower under the Loan Documents or (2) one or
more Guarantors under the Subsidiary Guaranty, in any such case, as
amended, supplemented or modified from time to time.
"Default" means any event which, with the giving of notice or
the lapse of time, or both, would constitute an Event of Default.
"Default Rate" means, as of any date, a rate of interest per
annum equal to the greater of (i) 12.6% and (ii) sum of the Prime
Rate plus 400 basis points.
"Deferral Period" means the period commencing on, and
including, the day after the last Business Day of March in each
year, and ending on, and including, the last Business Day of July
in each year.
"Dinuba" means Dinuba Packing Corporation, a California
corporation and a wholly owned subsidiary of Borrower.
"DIP Credit Agreement" means the Amended and Restated Debtor
in Possession Credit Agreement dated as of February 28, 1996, among
SWII, SWI and Lender, as amended, supplemented or modified from
time to time.
"Dual Pledged Securities" means the capital stock of Sun World
Brands, a California corporation, Sun World/Rayo, a California
corporation, Sun World Management Corporation, a California
corporation, Dinuba, SFENV and SFEBV.
"EBITDA" means, on a Consolidated basis, for any fiscal
period, (i) the total amount of Borrower's income before interest
and taxes, plus (ii) to the extent deducted in determining such
income, depreciation, amortization, and other similar non cash
charges, plus (iii) to the extent recognized in determining such
income, charges not arising from operations, minus (iv) to the
extent recognized in determining such income, gains not arising
from operations, in each case for such fiscal period; provided that
EBITDA shall be determined without giving effect to minority
interests.
"Effective Date" means the first date on which (i) the
Effective Date, as defined in the Plan, has occurred, and (ii) each
of the conditions precedent set forth in Section 3 has been
satisfied or, in Lender's sole discretion, waived.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder
and published interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with Borrower, would be treated as a
single employer under Section 4001 of ERISA.
"ERISA Plan" means any pension or employee benefit plan
established, maintained, or to which contributions have been made
by Borrower or any ERISA Affiliate.
"Ernst & Young" means Ernst & Young LLP.
"Ernst & Young Claims" means the claims and causes of action
of Borrower (as successor to any one or more Debtors or otherwise)
against Ernst & Young, its former independent public accountants,
based on any and all theories of liability which may be available
to Borrower, and including all rights to recover all monetary
damages of any kind and amount which Borrower may be entitled to
recover from Ernst & Young in connection with any and all
professional services rendered by Ernst & Young or any of its
predecessors to any Debtor (or predecessor of a Debtor) at any
time, and including all defenses available to Borrower under the
Plan, the Bankruptcy Code or other applicable law.
"Event of Default" has the meaning set forth in Section 7.1.
"Exception Ranch" means the Pre Identified Asset identified on
the Exception Ranch on the Minimum Release Price Schedule.
"Excess Cash" means the excess, as of December 31 of each
year, of (i) Available Cash over the sum of (ii) (a) the Minimum
Cash Balance, (b) funds held by or on behalf of Borrower as
deposits with respect to the sale of Land, (c) proceeds of the sale
of any security for the John Hancock Obligations required to be
remitted to John Hancock, (d) the Capital Expenditure Rollover
Amount, if any, applicable to the next succeeding fiscal year, (e)
funds held in the Unsecured Claims Disbursement Account, and (f)
the regularly scheduled installment of principal and interest (if
any) due and payable to John Hancock on the next succeeding January
1 (or, if applicable under the John Hancock Credit Agreement, the
next succeeding Business Day).
"Excess Water" means, with respect to either a given parcel or
parcels of real property, or all parcels of real property, located
within a given water district, that volume of water (after giving
effect to all other existing or proposed Permitted Water Sales)
that (i) Borrower is entitled to own, use or consume, pursuant to
any law, regulation, rule, permit, contract, lease, deed or any
other arrangement of any nature whatsoever, and (ii) will not be
needed by Borrower or any of its Subsidiaries during the relevant
Contract Period (A) to maintain, farm, cultivate, use or otherwise
operate such parcel or parcels in compliance with the Loan
Documents and the John Hancock Loan Documents, or (B) to satisfy
any other lawful commitment or obligation of Borrower or any of its
Subsidiaries.
"Final Order" means any order of the Court that has been
entered and as to which (i) the time for appeal has expired without
any appeal having been filed, or (ii) any appeal that was timely
filed has been resolved in a manner affirming such order and the
time for any further appeal has expired.
"Foreign Grower Policies and Procedures" means the policies
and procedures governing advances to Growers located outside the
United States of America delivered to Lender pursuant to Section
3.9.3, as from time to time amended with Lender's prior written
consent.
"Funded Crop Costs" means, with respect to any crops growing
on an identified parcel or parcels of Land, those costs and
expenses (excluding costs and expenses that are, or will or are
required to be, capitalized by Borrower under GAAP) that are
directly attributable to such growing crops and are accounted for
in Borrower's books and records within any of the categories of
"direct expenses" set forth on Schedule 1 hereto; in each case,
determined and accounted for in accordance with the accounting and
budgeting practices of Debtors prior to the Effective Date,
regardless of whether such practices conformed to GAAP.
"GAAP" means generally accepted accounting principles in the
United States.
"Grower" means each Person engaged in the farming of produce
for whom Borrower provides marketing services, whether or not
Borrower also provides harvesting, hauling and packing services to
such Person.
"Grower Advances" has the meaning ascribed to it in Section
6.9.1.
"Guarantor" means each of the Subsidiaries of Borrower other
than Sun World (Europe) B.V.
"Insurance Summary" has the meaning ascribed to it in Section
5.3.1(b).
"Intercreditor Agreement" has the meaning ascribed to it in
Section 3.7.
"Interest Coverage Ratio" means, with respect to any fiscal
period, the ratio of (i) EBITDA for such fiscal period, to (ii) the
sum of Consolidated interest expense of Borrower and its
Subsidiaries for such fiscal period.
"Interest Payment Date" means the last Business Day of each of
January, February, March, August, September, October, November and
December of each year, commencing with the first such date to occur
after the Effective Date, and the Maturity Date.
"Interest Period" means, at any time that the Default Rate
does not apply, a period of one (1), two (2), three (3) or nine (9)
months, as elected by Borrower in accordance with the provisions of
this Agreement; provided, however, that (i) the initial Interest
Period may not begin on any day other than the first day of a
calendar month, (ii) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period shall be
extended to the next succeeding Business 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 Business Day; and (iii) no Interest
Period shall (a) end during the Deferral Period of any year, or (b)
extend beyond the next succeeding Principal Payment Date.
"Investment" has the meaning set forth in Section 6.9.1.
"John Hancock" means John Hancock Mutual Life Insurance
Company.
"John Hancock Cadiz Agreement" means the "Cadiz Agreement",
dated as of the Effective Date, executed by Cadiz for the benefit
of John Hancock pursuant to the John Hancock Credit Agreement, as
amended, modified or supplemented from time to time.
"John Hancock Credit Agreement" means that certain New Credit
Agreement entered into by and between Borrower and John Hancock
pursuant to the Plan with respect to John Hancock's secured claim
against the Debtors, as amended, supplemented or modified from time
to time.
"John Hancock Liens" means the Liens in favor of John Hancock
granted or confirmed pursuant to the John Hancock Credit Agreement
or any other John Hancock Loan Document.
"John Hancock Loan Documents" means the John Hancock Credit
Agreement, the John Hancock Cadiz Agreement and each other
agreement, document or instrument executed and delivered by
Borrower or any of its Subsidiaries or Affiliates to John Hancock
pursuant to the John Hancock Credit Agreement or in connection with
the transactions contemplated thereby, in each case, as amended,
supplemented or modified from time to time. Each reference in this
Agreement to any John Hancock Loan Document, unless the context
otherwise clearly requires, shall be deemed a reference to such
John Hancock Loan Document as amended, supplemented or modified
from time to time.
"John Hancock Obligations" means the obligations of Borrower
or any of its Subsidiaries to John Hancock under the John Hancock
Credit Agreement and the other John Hancock Loan Documents.
"John Hancock Re Advance" has the meaning ascribed to it in
Section 6.2.2 (f).
"Joint Venture" means any special purpose corporation,
partnership (whether a general, limited or limited liability
partnership), limited liability company, trust, estate or other
entity created by (i) Borrower or any of its Subsidiaries, and (ii)
any Person or Persons other than Borrower or any of its
Subsidiaries, in order to conduct a common business enterprise with
such Person or Persons.
"Land" means all real property (including all improvements
thereon), now owned or hereafter acquired, by Borrower or any
Guarantor, or in which Borrower or any Guarantor now has or
hereafter acquires any interest, including, without limitation, all
leasehold interests of Borrower or any Guarantor.
"Leasehold Deeds of Trust" means (i) each Leasehold Deed of
Trust executed as security for Lender's pre petition claims with
respect to any leasehold interest retained by Borrower (as lessee)
after the Effective Date, as amended and restated in substantially
the form of Exhibit E 1, and (ii) each other Leasehold Deed of
Trust encumbering the interest of Borrower or any Subsidiary (as
lessee) in any leasehold, in substantially the form of Exhibit E 2
(or in such other form as may be approved in writing by Lender),
entered into pursuant to this Agreement or any Security Document,
in any such case, as amended, supplemented or modified from time to
time.
"Lender" means Caisse Nationale de Credit Agricole, acting
through its Grand Cayman Branch, a banking corporation organized
and existing under the laws of France.
"LIBOR" means, with respect to any Interest Period, the rate
per annum determined by Lender to be the rate quoted, on an
immediately available funds basis, to Lender, at approximately 8:00
a.m., Chicago time, on the date two (2) Business Days prior to the
first day of such Interest Period, for the offering by banks in the
London interbank market of United States Dollar deposits with
Lender in an amount comparable to the outstanding principal amount
of the Restructured Loan and for a period comparable to such
Interest Period.
"LIBOR (Adjusted) Rate" means, with respect to any Interest
Period, a rate per annum (rounded upward to the nearest 1/16 of 1%)
determined pursuant to the following formula:
LIBOR (Adjusted) Rate = LIBOR
1 LIBOR Reserve Requirement
(expressed as a fraction)
"LIBOR Reserve Requirement" means, with respect to any
Interest Period, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained
during such Interest Period by Lender against Eurocurrency
liabilities but without benefit of credit proration, exemptions, or
offsets that might otherwise be available to Lender from time to
time under Regulation D of the Board of Governors of the Federal
Reserve Systems. Without limiting the effect of the foregoing, the
LIBOR Reserve Requirement shall reflect any other reserves required
to be maintained by Lender against (i) any category of liabilities
that includes deposits by reference to which the LIBOR (Adjusted)
Rate is to be determined; or (ii) any category of extension of
credit or other assets which includes all or any portion of the
Restructured Loan.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), preference, or other
security agreement or preferential arrangement, charge, or
encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction to evidence any of the foregoing).
"Loan Documents" means this Agreement, the Note, the
Subsidiary Guaranty, the Cadiz Agreement, the Security Documents,
the assignment of the Ernst & Young Claims delivered pursuant to
Section 3.12.14, the agreement setting forth the Minimum Release
Price Schedule executed and delivered pursuant to Section 3.14 and
each other agreement, document or instrument executed and delivered
by Borrower (or any Debtor or Subsidiary of a Debtor, in the case
of Loan Documents constituting amendments or amendments and
restatements) or any of its Subsidiaries or Affiliates to Lender
pursuant hereto or in connection with the transactions contemplated
hereby, and each other agreement, at any time entered into,
identifying itself as a Loan Document, in each case, as amended,
supplemented or modified from time to time. Each reference in this
Agreement to any Loan Document, unless the context otherwise
clearly requires, shall be deemed a reference to such Loan Document
as amended, supplemented or modified from time to time.
"Long Term Debt" means, on a Consolidated basis, as of any
date of determination, all Debt of Borrower and its Subsidiaries
which is payable more than one (1) year after the date on which the
determination is being made and which is shown on the balance sheet
as a liability in accordance with GAAP consistent with GAAP used in
the preparation of the Base Period Financial Statements. Any
obligation shall be treated as Long Term Debt if it is renewable,
pursuant to written agreement, at the option of the debtor, under
the terms thereof or of a revolving credit, to a date more than one
(1) year after the date of the determination.
"Marketing Agreement" means each written agreement between
Borrower (as successor to any Debtor or otherwise) and a Grower
pursuant to which (i) Borrower agrees to purchase produce from such
Grower for resale or (ii) Borrower agrees to market such Grower's
produce, on consignment or otherwise, whether or not such agreement
contemplates that Borrower shall provide harvesting, hauling or
packing services to such Grower and whether or not such agreement
provides that Borrower shall have an interest in such produce.
"Material Adverse Effect" means (i) a material adverse effect
on (A) the value of the Collateral, considered as a whole, (B) the
ability of Borrower or any of its Subsidiaries to perform such
Person's obligations under the Loan Documents, (C) the current or
future Consolidated business, operations or financial condition of
Borrower and its Subsidiaries, taken as a whole, (D) the ability of
SWII or Cadiz to consummate the Plan, or (E) the validity or
enforceability of any material provision of the Loan Documents or
any material right or material remedy of Lender thereunder; or (ii)
the effect of imposing any material liability on Lender.
"Maturity Date" means the date that is the tenth anniversary
of the Effective Date.
"Merger" means the merger of SWII and SWI, pursuant to which
SWI will be (or has become) the surviving corporation and will be
(or has been) renamed Sun World International, Inc., provided for
under the Plan.
"Minimum Cash Balance" means, as of any date of determination,
the lesser of (i) $36,000,000, and (ii) $38,000,000 minus the sum
of the products of (a) for each type of acreage identified on
Exhibit I, the number of acres of such type included in each Pre
Identified Asset sold by Borrower or any of its Subsidiaries after
the Effective Date but on or before the date of determination,
times (b) the per acre adjustment set forth on Exhibit I for such
type of acreage; provided, however, that in no event shall the
Minimum Cash Balance be less than (x) if the Exception Ranch is
sold, $34,690,000, or (y) in any other case, $35,000,000.
"Minimum Release Price" means, with respect to any Pre
Identified Asset, the amount specified therefor on the Minimum
Release Price Schedule.
"Minimum Release Price Schedule" means the schedule relating
to Minimum Release Prices and the Blythe Ranch Release Price agreed
to by Borrower, Lender and John Hancock on or before the Effective
Date, identifying the Pre Identified Assets and classifying certain
of them as Tier A Pre Identified Assets or Tier B Pre Identified
Assets, listing the applicable Minimum Release Price for each such
Pre Identified Asset and the Blythe Ranch Release Price and setting
forth, for illustrative purposes only, the aggregate adjustment to
the Minimum Cash Balance (subject to the limitation set forth in
the proviso included in the definition of Minimum Cash Balance)
that would result from the sale of such Pre Identified Asset in its
entirety, based on the circumstances existing as of June 30, 1996.
"Minimum Sales Price" means, with respect to any Pre
Identified Asset, an amount equal to the sum of (i) the Minimum
Release Price for such Pre Identified Asset, (ii) any applicable
Crop Value, and (iii) the Sales Costs associated with the sale of
such Pre Identified Asset.
"Multiemployer Plan" means a Plan described in Section
4001(a)(3) of ERISA that covers employees of Borrower or ERISA
Affiliate.
"Net Crop Development Costs" means, with respect to any period
(determined on a Consolidated basis), (i) Borrower's aggregate Crop
Development Costs for such period, less (ii) all revenues derived
by Borrower during such period from the sale of any non commercial
crops in respect of which Crop Development Costs were incurred.
"Net Income" means, with respect to any period, Borrower's net
income for such period, determined on a Consolidated basis and in
accordance with GAAP.
"Note" means the promissory note, in substantially the form of
Exhibit A, evidencing the Restructured Loan, as amended,
supplemented or modified from time to time.
"PACA" means the Perishable Agricultural Commodities Act (7
U.S.C. Section 499a et seq.), as amended from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to ERISA or any entity succeeding to any or
all of its functions under ERISA.
"Permitted Cash Investments" means each of the following
Investments, provided that, as of the date of acquisition thereof,
such Investment has a remaining maturity of six months or less:
(i) securities issued or fully guarantied or insured by the United
States Government or any agency thereof; (ii) certificates of
deposit, overnight bank deposits, bankers' acceptances and
repurchase agreements of Lender or any other commercial bank whose
unsecured short term debt obligations are rated at least A 1 by
Standard & Poor's Corporation or P 1 by Moody's Investors Service,
Inc.; and (iii) commercial paper or other securities rated at least
A 1 by Standard & Poor's Corporation or P 1 by Moody's Investors
Services, Inc.
"Permitted Lien" means any Lien permitted to exist under
Section 6.2.
"Permitted Water Sale" means a sale or exchange by Borrower,
in compliance with applicable law, of Excess Water, for cash or
other consideration, pursuant to an arm's length contract
("Contract") satisfying each of the following conditions:
(i) Borrower shall not have not entered into, or otherwise
become legally obligated or bound under, such Contract
more than fifteen (15) days in advance of the date on
which the buyer's rights to use Excess Water under such
Contract commence;
(ii) the period during which the buyer shall have rights to
use Excess Water under such Contract (including all
extension or renewal periods available to the buyer
thereunder) (the "Contract Period") shall not exceed
twelve (12) months; and
(iii) such Contract shall be in writing and shall include
provisions substantively identical to the following:
"(A) Unless sooner terminated or expired in
accordance with the terms hereof, this agreement
shall, automatically and without further oral or
written notice to anyone, expire and be of no
further force or effect on the date that is twelve
(12) calendar months after the date hereof.
"(B) The parties hereto acknowledge that
Caisse Nationale de Credit Agricole, acting through
its Grand Cayman Branch ("Credit Agricole"), has
been granted a security interest in and/or lien upon
(1) the water and/or water rights covered by this
agreement, and (2) the rights of seller hereunder.
Under no circumstances shall this agreement be
deemed to create, nor shall buyer otherwise be
deemed to hold by reason of the transactions
contemplated hereby or the performance or
nonperformance of either party hereunder, any
security interest or lien upon all or any portion of
the assets of seller (including, without limitation,
the water and/or water rights that are the subject
of this agreement).
"(C) Any provision herein or other actual
or purported understanding between the parties
hereto that is contrary to, or inconsistent with,
either of the foregoing paragraphs (A) and (B) shall
be null and void and of no force and effect."
"Person" means an individual, partnership (general, limited or
limited liability), corporation, limited liability company,
business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority, or other entity
of whatever nature.
"Petition Date" means October 3, 1994.
"Plan" means the Debtors' Modified Fourth Amended Consolidated
Plan of Reorganization dated June 3, 1996 (As Amended), as
confirmed by a Final Order.
"Pre Identified Asset" has the meaning ascribed to it in
Section 6.6.4(a).
"Pre Petition Debt" means Debt and other obligations of any
Debtor or any Subsidiary of a Debtor incurred prior to, or
outstanding on, the Petition Date.
"Prime Rate" means the floating commercial lending rate
announced by Lender at its Branch Office as its "prime rate", as in
effect from time to time, it being understood that the Prime Rate
is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer, and that Lender may
make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
"Principal Payment Date" means each of (i) the Effective Date,
(ii) the last Business Day of each of the months of March, August
and December of each year, commencing with the first such date to
occur after the Effective Date, and (iii) the Maturity Date.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code
of 1954, as amended from time to time.
"Projected Blythe Ranch Cash Flow" means, for any year, the
"Cash Flow" of Blythe Ranch projected for such year, as reflected
in the Blythe Ranch Projections.
"Rabobank" means Cooperatieve Centrale Raiffeisen
Boerenleenbank B.A.
"Re Advance" has the meaning ascribed to it in Section 2.1.2.
"Recorded Tax Lien" means any Lien of the United States, the
State of California or any other taxing authority in respect of
taxes alleged to be due and payable by Borrower or any of its
Subsidiaries, or any Debtor, and affecting any Collateral or any
other property, real or personal, of Borrower, or any of its
Affiliates, filed or recorded in the office of the Secretary of
State of California, in the office of any recorder for any county
in the State of California, or in any other place, the effect of
which is to give record notice of, or to perfect, such Lien.
"Released Claims" means the claims and causes of action of the
Debtors and their Subsidiaries, existing prior to the Effective
Date, released pursuant to the Plan.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Research and Development Expenditure" means each expenditure
(without netting, or otherwise adjusting for, any revenue) of
Borrower and its Subsidiaries that (i) (A) in accordance with GAAP
consistent with GAAP used in the preparation of the Base Period
Financial Statements, would be classified as a research and
development cost, or (B) regardless of how such expenditure is
recorded on the books and records of Borrower (including, without
limitation, as an administrative expense), otherwise constitutes an
expenditure reasonably allocable (by a method of allocation
consistent with that employed in the preparation of the 1996
Business Plan) to Borrower's research and development activities,
including, without limitation, (1) the salary, wages or benefits of
any individual engaged in research and development activities on
behalf of Borrower or any of its Subsidiaries, and (2) cultivation
costs at Borrower's research and development facilities; or (ii) is
an expenditure in respect of intellectual property, whether or not
such expenditure is, or is intended by Borrower to be, capitalized.
"Restructured Loan" has the meaning ascribed to it in Section
2.1.1.
"Sales Costs" means, with respect to any sale of a Pre
Identified Asset, all bona fide out of pocket costs or expenses
paid or incurred by Borrower or any Subsidiary of Borrower to one
or more third parties directly in connection with the sale of such
Pre Identified Asset, including, without limitation, reasonable
attorneys' fees, escrow costs and fees, title and insurance
premiums, brokerage or finder's fees, filing and recordation costs
and transfer taxes, but excluding (i) delinquent real estate taxes
or assessments, if any, (ii) Borrower's (or the relevant
Subsidiary's) share of any pro rated non delinquent real estate
taxes or assessments, and (iii) expenditures (paid by Borrower or
the relevant Subsidiary through the escrow of such sale) necessary
to cause such Pre Identified Asset to comply with applicable law.
In determining the Sales Costs relating to a sale of a Pre
Identified Asset together with crops growing thereon, neither
(1) costs and expenses clearly allocable to the sale of
such crops, as opposed to the sale of such Pre Identified Asset,
nor
(2) if any costs and expenses related to the sale of such
Pre Identified Asset together with such growing crops are not
clearly allocable to either the real property component or the crop
component of such sale, that portion of such unallocable costs and
expenses equal to the product of (x) the total of such unallocable
costs and expenses times (y) a fraction, the numerator of which is
the Crop Value ascribed to such crops and the denominator of which
is the sum of such Crop Value and the gross consideration for such
Pre Identified Asset,
shall be considered costs or expenses incurred directly in
connection with the sale of such Pre Identified Asset.
"Security Agreement" means each security agreement (or an
amendment or restatement of an existing security agreement, and
including the security agreement so amended or restated), executed
by Borrower or any Subsidiary of Borrower pursuant to this
Agreement in substantially the form of Exhibit G 1 or G 2, as the
case may be, in any such case, as amended, supplemented or modified
from time to time.
"Security Documents" means the Security Agreements, the Stock
Pledge Agreements, the Deeds of Trust, the Leasehold Deeds of
Trust, the Amendments to Lease with Lender Cure Rights and each
other document creating, evidencing or perfecting the security
interests provided for herein.
"SFEBV" means Superior Farming Europe B.V., a Netherlands
corporation and a wholly owned subsidiary of Borrower.
"SFENV" means Superior Farming Europe N.V., a Netherlands
Antilles corporation and a wholly owned subsidiary of Borrower.
"Stock Pledge Agreements" means each of (i) the Amended and
Restated Stock Pledge Agreement executed by Borrower under the
terms of this Agreement in favor of Lender, in substantially the
form of Exhibit H 1 and (ii) the Stock Pledge Agreement executed by
Cadiz under the terms of this Agreement in favor of Lender, in
substantially the form of Exhibit H 2, in each case, as amended,
supplemented or modified from time to time.
"Subsidiary" means, as to any Person, (i) a corporation of
which shares of stock having ordinary voting power (other than
stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such
Person and/or by one or more Subsidiaries of such Person, (ii) a
partnership a majority of the equity interests in which is owned,
or the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such
Person or by any one or more Subsidiaries of such Person, (iii) as
to Borrower and Sun Desert, Coachella Growers, and (iv) as to
Borrower, Sun World (Europe) B.V.
"Subsidiary Guaranty" means, collectively, each of the
Subsidiary Guaranties executed by one or more Guarantors under the
terms of this Agreement in favor of Lender, in substantially the
form of Exhibit B, as amended, supplemented or modified from time
to time.
"Sun Desert" means Sun Desert, Inc., a Delaware corporation
and a wholly-owned Subsidiary of Borrower.
"Sun World/North" means Sun World/North, a California general
partnership between Borrower and Dinuba.
"Tangible Assets" means, as of the date of its calculation,
the Consolidated assets of Borrower and its Subsidiaries,
determined in accordance with GAAP consistent with GAAP applied in
the preparation of the Base Period Financial Statements; excluding,
however, all assets that would be classified as intangible assets
under GAAP consistent with GAAP applied in the preparation of the
Base Period Financial Statements (including, without limitation,
goodwill, patents, trademarks, trade names, copyrights and
franchises).
"Tangible Net Worth" means, on a Consolidated basis as of any
date of determination, for Borrower and its Subsidiaries, the
excess of (i) Tangible Assets over (ii) total liabilities
determined in accordance with GAAP consistent with GAAP applied in
the preparation of the Base Period Financial Statements.
"Tax Sharing Agreement" means the agreement between Cadiz and
Borrower, dated as of the Effective Date, relating to the sharing
of certain income tax obligations, in form and substance acceptable
to Lender, as amended, modified or supplemented from time to time.
"Tier A Pre Identified Asset" means a Pre Identified Asset
identified as such on the Minimum Release Price Schedule.
"Tier B Pre Identified Asset" means a Pre Identified Asset
identified as such on the Minimum Release Price Schedule.
"UCC" means the Uniform Commercial Code, as from time to time
in effect in any relevant jurisdiction.
"Unsecured Claims Disbursement Account" means the "Unsecured
Claims Disbursement Account" established and maintained by Borrower
pursuant to the Plan.
"Unsecured Claims Reserve Account" means the "Unsecured Claims
Reserve Account" established and maintained by Cadiz pursuant to
the Plan.
"Water Rights" means, with respect to any Person, all right,
title and interest of such Person in and to all water, water rights
and entitlements, and other rights to water or water rights of
every kind or nature whatsoever, including all water inventory and
rights to use, acquire, appropriate, exchange or otherwise obtain
the benefit of any water, such as: (i) ground or subsurface water
(including groundwater or water stored in a groundwater basin that
is made available to such Person through any water district or
company or other Person, or otherwise), wherever located, whether
or not subject to pumping or other extraction from real property or
from any underground river, aquifer, storage basin or other source,
whether or not subject to removal, use or extraction pursuant to
any easement, license, contract, servitude, covenant running with
any land or other property, permit, approval, consent, judicial or
water authority decision, by operation of law or other basis of
right, including pursuant to any water related contract, water
approval, or water reallocation right or otherwise; (ii) surface
water from any source, whether based upon any appropriative,
riparian, prescriptive or other right, or water approval, water
related contract or water reallocation right, whether
"preconsolidation" water from the California aqueduct or other
water authority water or subsequent to any such consolidation,
whether based upon any easement, license, contract, servitude,
covenant running with the land or other property, permit, approval,
consent, judicial or water authority decision, by operation of law
or other basis of right, including rights accruing because of the
location of any real property within the boundaries of any water
district or other water authority, ownership of any securities or
equity or other interest in any water company or other water
authority or otherwise; and (iii) any right to acquire or transfer
any water or water right, any water allocation or distribution
right, any storage, delivery or transportation right, or other
right, whether or not appurtenant to any real property, whether
based upon any water related contract or any ownership or other
interests in any real property, any stock securities or other
equity or other interests in any water company or other water
authority, any nonuse of any allocable share of water creating any
credit or right from any water bank or other water authority
(including any water reallocation right), or otherwise. For
purposes of this definition, the term "water" includes water rights
and rights to water or whatever rights to money, property or other
benefits are exchanged or received for or on account of any water
or any conservation or other nonuse of water, including whatever
rights are achieved by depositing one's share of any water in any
water bank or with any water authority, and any other water
reallocation rights.
"Working Capital" means, at any time, the excess of Current
Assets over Current Liabilities.
"Zenith" means Zenith Insurance Company.
"Zenith Note" means the promissory note issued to Zenith
pursuant to the Plan, as amended, supplemented or modified from
time to time.
"Zenith Intercreditor Agreement" means the Intercreditor
Agreement, dated as of the Effective Date, between Lender and
Zenith, as amended, supplemented or modified from time to time.
2. AMOUNT AND TERM OF RESTRUCTURED LOAN.
2.1 THE RESTRUCTURED LOAN.
2.1.1 On the Effective Date Lender's claims
against the Debtors in respect of the loans made pursuant to the
Pre Petition Loan Documents shall be restructured as a secured
claim against Borrower in the original principal amount of
$55,386,583.29 (i.e., the sum of (a) $50,569,799.05 (the
outstanding principal balance of such pre petition claims as of the
Petition Date), less any and all payments made in respect of the
principal of such pre petition claims prior to the Effective Date;
plus (b) interest accrued on Lender's pre petition claims
(including, as applicable, interest at the default rate provided in
the Pre Petition Revolving Credit Agreement) and remaining unpaid
as of the Petition Date, in the amount of $2,918,525.15, plus (c)
interest accrued on Lender's pre petition claims, at the default
rate provided in the Pre Petition Revolving Loan Agreement, from
and including the Petition Date to and including the Effective
Date; plus (d) costs and expenses invoiced to or otherwise incurred
by Lender in respect of its pre petition claims and remaining
unpaid as of the Petition Date, in the amount of $1,500,365.55;
plus (e) to the extent reasonably determinable as of the Effective
Date, costs and expenses invoiced to or otherwise incurred by
Lender in respect of its pre petition claims from and including the
Petition Date to and including August 31, 1996; minus (f) any and
all adequate protection payments received by the Lender with
respect to its pre petition claims as of the Effective Date; and
minus (g) any and all other payments received by the Lender with
respect to its pre petition claims (other than in respect of
principal) prior to the Effective Date) (such secured claim,
including the Re Advance, if any, the "Restructured Loan").
2.1.2
(a) If, in the case of an event described
in either clause (i) or clause (iii) of Section 3(b) of the Cadiz
Agreement, (i) Cadiz pays in full the $2,000,000 payment it is
required to make to Lender thereunder; and (ii) thereafter, both
(A) the Restructured Loan is reinstated and (B) on or before the
third anniversary of the Effective Date, John Hancock has received
Asset Sales Proceeds (including at least $5,000,000 in Asset Sales
Proceeds from the sale of Tier B Pre Identified Assets) in an
aggregate amount equal to at least $30,000,000; then, subject to
the satisfaction of the conditions precedent set forth in Section
2.1.2(b), (x) Lender shall readvance to Borrower the sum of
$2,000,000 (the "Re Advance") by transferring the amount thereof
into the Cash Account, and (y) Borrower shall be permitted to
distribute such amount to Cadiz in accordance with Section 6.5.1.
(b) Lender's obligation to make the Re
Advance shall be subject to the satisfaction of the following
conditions precedent (the satisfaction of which shall be
determined, and may be waived, by Lender on or prior to the date on
which the Re Advance is funded (which shall, in any event, be the
first day of an Interest Period)):
(i) The Lender shall have received a
drawdown request, executed by Borrower, no later than 11:00 a.m.,
Chicago time, at least four (4) Business Days prior to the date on
which Borrower desires the Re Advance to be funded, requesting that
the Re Advance be funded on the first day of the next succeeding
Interest Period.
(ii) All representations and
warranties of Cadiz or Borrower or any Subsidiary of either Cadiz
or Borrower set forth in any Loan Document (other than those that
speak as of a specific date) shall be true and correct in all
material respects as if made on and as of the date of the Re
Advance.
(iii) As of the date of the Re
Advance, there shall not have occurred and then be continuing (or
would exist immediately after the Re Advance is made and the
proceeds thereof are used by Borrower) any Default or Event of
Default.
(iv) Borrower shall have provided to
Lender, at Borrower's sole cost and expense, such endorsements
dated as of the date of the Re Advance, in form and substance
satisfactory to Lender, to the existing policy of title insurance
insuring the Liens of the Deeds of Trust as Lender may reasonably
request, including, without limitation, endorsements insuring
Lender that the Liens on real property provided for therein
continue to constitute valid Liens upon the real property interests
covered thereby securing the Note in the full amount of the
outstanding principal of the Restructured Loan after giving effect
to the Re Advance, subject only to such title exceptions as Lender
approved in writing in connection with the Effective Date.
(v) Lender shall have received
evidence, reasonably satisfactory to Lender, that the John Hancock
Re Advance has been made, or will be made concurrently with the Re
Advance.
On the date on which the Re Advance is funded, Borrower shall be
deemed to have represented and warranted to Lender that each of the
conditions precedent to the funding of the Re Advance not waived in
writing by Lender has been satisfied.
2.2 THE NOTE. Borrower's obligation to repay the
Restructured Loan shall be evidenced by the Note. The Note shall
be payable to the order of Lender and shall be in a face amount
equal to the Adjusted Original Amount.
2.3 INTEREST.
2.3.1 Subject to the provisions of Section 2.3.2,
the principal amount of the Restructured Loan outstanding hereunder
from time to time shall bear interest at a rate per annum equal to
(a) the sum of (i) the LIBOR (Adjusted) Rate applicable to the
Interest Period then in effect, plus (ii) three percent (3%) per
annum, or (b) at any time that no Interest Period is in effect, the
sum of (i) the Prime Rate in effect from time to time, plus (ii)
two percent (2%) per annum.
2.3.2 Any payment in respect of the Restructured
Loan not paid when due, whether of principal, interest or any other
amount and whether on a scheduled payment date, at stated maturity,
by acceleration or otherwise, shall thereafter bear interest (after
as well as before judgment, and during the pendency of any
bankruptcy proceedings), payable upon demand, at the Default Rate.
In addition, during the continuance of any Default or Event of
Default, the entire outstanding principal amount of the
Restructured Loan shall bear interest (after as well as before
judgment, and during the pendency of any bankruptcy proceedings) at
the Default Rate.
2.3.3 On the last Business Day of each month
occurring during the Deferral Period, interest accrued on the
Restructured Loan but remaining unpaid as of such date shall
commence to bear interest itself, commencing on such date and
continuing until paid in full, compounded monthly, at the rate per
annum applicable to the Restructured Loan. Such interest shall be
due and payable in accordance with Section 2.4.2.
2.3.4 All interest shall be computed on the basis
of a 360-day year and the actual number of days elapsed in the
period during which it accrues.
2.4 PRINCIPAL PAYMENTS; INTEREST PAYMENTS.
2.4.1 PRINCIPAL PAYMENTS. Principal of the
Restructured Loan shall be due and payable as follows:
(a) On the Effective Date, an amount
equal to the Cadiz Payment shall be credited to payment of the
principal of the Restructured Loan, and the initial principal
amount of the Restructured Loan shall be reduced by such amount.
(b) On each Principal Payment Date,
Borrower shall pay to Lender an amount equal to (i) if such
Principal Payment Date occurs on or before March 31, 1999, one and
two thirds percent (1 2/3%) of the Adjusted Original Amount; (ii)
if such Principal Payment Date occurs at any time after March 31,
1999 but prior to the Maturity Date, two and one half percent (2
1/2%) of the Adjusted Original Amount; and (iii) if such Principal
Payment Date is the Maturity Date, the remaining unpaid principal
balance of the Restructured Loan. The Adjusted Original Amount
shall not be reduced on account of the installment of principal due
on the Effective Date.
(c) In addition to the other payments of
principal provided for herein, on the fifth Business Day of each
year, commencing with the fifth Business Day of January, 1997,
Borrower shall pay to Lender an amount equal to Excess Cash,
determined as of the immediately preceding December 31, to be
applied to the payment of the principal of the Restructured Loan as
follows: (i) 50% to the installments of principal due under
Section 2.4.1(b), in the order of their maturity, and (ii) 50% to
the installments of principal due under Section 2.4.1(b), in the
inverse order of their maturity, together with a certificate of the
Chief Executive Officer and Chief Financial Officer of Borrower
setting forth in reasonable detail the computations pursuant to
which the amount of Excess Cash was calculated.
(d) In addition to the other payments of
principal provided for herein, in the event of any sale of the
Blythe Ranch, Borrower shall pay to Lender an amount equal to the
net proceeds to Borrower of such sale, less any amount due and
payable to Zenith in respect of the Zenith Note in accordance with
the Zenith Intercreditor Agreement, in any such case to be applied:
(i) if Blythe Ranch is sold on or before the third anniversary of
the Effective Date, then (A) 50% to the payment of the installments
of principal due under Section 2.4.1(b), in the order of their
maturity, and (B) 50% to the payment of the installments of
principal due under Section 2.4.1(b), in the inverse order of their
maturity; and (ii) in any other case, to the payment of the
installments of principal due under Section 2.4.1(b) in the inverse
order of their maturity.
(e) Any payment made by Cadiz to Lender
under the Cadiz Agreement in respect of John Hancock's failure to
receive, on or before the third anniversary of the Effective Date,
principal payments aggregating at least $30,000,000 in Asset Sales
Proceeds from the sale of Pre Identified Assets (including at least
$5,000,000 in Asset Sales Proceeds from the sale of Tier B Pre
Identified Assets) shall be credited towards payment of the
installments of principal due under Section 2.4.1(b) in the inverse
order of their maturity.
2.4.2 INTEREST PAYMENTS. Accrued and unpaid
interest shall be due and payable on each Interest Payment Date;
provided that (a) one half of the aggregate interest accrued during
each Deferral Period (excluding interest accrued thereon pursuant
to Section 2.3.3) shall be due and payable on the Interest Payment
Date occurring in August of the year in which such Deferral Period
occurred (together with all interest accrued under Section 2.3.3
and unpaid as of such Interest Payment Date); and (b) all interest
accrued during any Deferral Period and remaining unpaid as of the
Interest Payment Date occurring in September of the year in which
such Deferral Period occurred (together with all interest accrued
under Section 2.3.3 and unpaid as of such Interest Payment Date)
shall be due and payable on such Interest Payment Date.
2.5 VOLUNTARY PREPAYMENT. Borrower may, upon prior
written or telephonic (promptly confirmed in writing) notice to
Lender, no later than 11:00 a.m., Chicago time, at least three (3)
Business Days prior to the date of prepayment, which notice shall
be irrevocable, at any time prepay the Restructured Loan in whole
or in part in multiples of $100,000, together with accrued and
unpaid interest on the amount so prepaid, without penalty or
premium other than the breakage fees described in Section 2.6
applicable to any prepayment on a date other than the last day of
an Interest Period.
2.6 BREAKAGE FEES. Borrower acknowledges that if any
repayment of any portion of the Restructured Loan, whether pursuant
to Section 2.5 (other than prepayment on the last day of the
applicable Interest Period), pursuant to any provision of Section
2.4, by reason of acceleration or otherwise, is effected on a date
other than the last day of the applicable Interest Period, such
repayment may result in Lender's incurring additional costs,
expenses, liabilities or losses, including, without limitation,
funding losses or loss of anticipated profits, and therefore agrees
to pay to Lender, within ten (10) days after Lender's demand, a fee
equal to the sum of the discounted monthly differences for each
month from the month of prepayment through the month in which such
Interest Period matures, calculated as follows for each such month:
2.6.1 Lender shall first determine the amount of
interest that would have accrued each month on the amount so repaid
at the interest rate applicable to such amount had it remained
outstanding until the last day of the applicable Interest Period.
2.6.2 Lender shall then subtract from the amount
determined in Section 2.6.1 the amount of interest that would
accrue for the same month on the amount so repaid for the remaining
term of the applicable Interest Period at the LIBOR (Adjusted) Rate
in effect on the date of such repayment for a new loan made for
such term and in a principal amount equal to the amount so repaid.
2.6.3 If the difference so determined by Lender
for any month is greater than zero, Lender shall discount that
difference by the LIBOR (Adjusted) Rate used in Section 2.6.2.
Borrower agrees that said amount represents a reasonable estimate
of the costs, expenses, liabilities and losses of Lender attendant
upon any repayment of principal occurring on a date other than the
last day of an Interest Period.
2.7 PAYMENTS GENERALLY.
2.7.1 All payments of principal, interest and
fees hereunder and under the Notes shall be made in immediately
available funds and delivered (a) to Lender not later than either
(i) 11:00 a.m., Chicago time or (ii) if Borrower delivers to Lender
prior to 11:00 a.m. Chicago time notice of the amount to be paid,
12:00 p.m. (i.e., noon), Chicago time on the date due; and (b) to
the account of Lender indicated on the signature pages hereto, or
such other place as shall have been designated in writing by
Lender.
2.7.2 Without limiting in any manner the
obligation of Borrower to pay, as and when due under the relevant
Loan Document, all amounts due and payable in respect of the
Restructured Loan: on each day on which any amount is due and
payable under this Agreement or any other Loan Document, Lender may
debit the Cash Account and apply the amount so debited to the
payment of the amount then so due and payable. Borrower hereby
irrevocably authorizes Lender to debit the Cash Account directly as
provided herein. No application of funds so debited as provided
herein or in any other Loan Document shall constitute a recovery in
violation of any one action or anti deficiency statute, law, rule
or regulation of the State of California or any other jurisdiction.
2.7.3 Provided that no Default or Event of
Default shall have occurred and be continuing, all payments shall
be applied first to the payment of fees, costs and expenses then
due and payable for which demand has been made to Borrower, second
to the payment of interest then due and payable; and third to the
payment of principal.
2.7.4 Borrower acknowledges that, under the terms
of the Amended and Restated Intercreditor Agreement between Lender
and John Hancock, Lender may be required to turn over to John
Hancock certain amounts debited by, or otherwise paid to, Lender in
respect of Borrower's obligations under the Loan Documents, and
agrees that, in any such event, Borrower's obligation to pay to
Lender the amount so turned over to John Hancock shall be
reinstated (and interest shall resume accruing thereon commencing
as of the date of such turnover to John Hancock), all as though
such amount had never been debited by or paid to Lender. Lender
shall give notice to Borrower of the date on which any amount is so
turned over to John Hancock and of the amount thereof; provided,
however, that Lender's failure to give such notice shall not limit
or otherwise affect the obligation of Borrower hereunder with
respect to such turnover.
2.8 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment
to be made hereunder or under the Note shall be stated to be due on
a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall in
such case be included in the computation of the payment of interest
hereunder or under the Notes, as the case may be.
2.9 NOTATIONS. Lender is hereby authorized to note on
Lender's books and records (either manually or by electronic
entry), on a schedule attached to the Note, or both, the amounts
and dates of all payments with respect to the Restructured Loan
made by Borrower hereunder; provided, however, that failure to make
a notation or the inaccuracy of any notation shall not limit or
otherwise affect the obligations of Borrower hereunder or under the
Note or any other Loan Document.
2.10 SPECIAL PROVISIONS REGARDING LIBOR.
2.10.1 INTEREST PERIODS. Borrower shall designate
to Lender in writing (or telephonically, promptly confirmed in
writing), no later than 11:00 a.m., Chicago time, at least four (4)
Business Days prior to (a) the Effective Date (or, if the Effective
Date does not occur on the first day of a calendar month, the first
day of the calendar month next succeeding the month in which the
Effective Date occurs), with respect to the initial Interest
Period, or (b) in any other case, the last day of any Interest
Period then applicable to the Restructured Loan (or, if at any time
after the initial Interest Period, there is no Interest Period, the
first day of the next calendar month as of which an Interest Period
may be selected), a new Interest Period therefor. If the Company
shall fail to elect the initial Interest Period or any succeeding
Interest Period pursuant to this Section 2.10.1, the initial (or
such succeeding) Interest Period (but without limiting the effect
of Section 2.3.2) shall be identical to the preceding Interest
Period; provided, however, that (x) if there is an insufficient
number of months left between the last day of the expiring Interest
Period and the next succeeding Principal Payment Date, such
succeeding Interest Period shall have a term of one (1) month, and
(y) if there is less than one (1) month left between the last day
of the expiring Interest Period and the next succeeding Principal
Payment Date, there shall be no immediately succeeding Interest
Period, but (absent a timely election by Borrower of an Interest
Period having a different duration) a new Interest Period, having a
duration identical to the preceding Interest Period, shall commence
on the first day of the next succeeding calendar month.
2.10.2 ILLEGALITY OR IMPOSSIBILITY.
Notwithstanding any other provision of this Agreement, in the event
that (a) Lender determines in its reasonable opinion that the
introduction of, any change in, or any change in the interpretation
of, any law or regulation applicable to it shall make it unlawful
for Lender to fund or maintain or charge interest determined with
respect to LIBOR, or (b) Lender determines in good faith that by
reason of circumstances affecting the applicable interbank market,
adequate and reasonable methods do not exist for determining the
LIBOR (Adjusted) Rate that would otherwise be applicable to the
Restructured Loan, or (c) Lender determines in good faith that
deposits of United States Dollars in the relevant amount for the
applicable Interest Period are not available in the London
Eurodollar interbank market, then Lender shall promptly give notice
of such determination to Borrower (which notice shall be conclusive
and binding). Upon such notification, (x) no election of an
Interest Period shall be made thereafter until Lender determines
that such illegality or other circumstance no longer exists, and
(y) if Lender cannot lawfully maintain the Restructured Loan on the
basis of an interest rate determined with respect to LIBOR, then
the Restructured Loan shall, at the option of Lender, instead bear
interest at a rate per annum equal to the sum of (i) the Prime
Rate, as it may change from time to time, plus (ii) two percent
(2%) per annum; provided, however, that if any such introduction or
change shall permit the Restructured Loan to continue to bear
interest determined with respect to LIBOR until the expiration of
the Interest Period then applicable thereto, then the Restructured
Loan shall continue to earn interest at the rate determined in
accordance with Section 2.3.1 until the end of such Interest
Period. In the event the Restructured Loan is converted to a lower
rate in accordance with the foregoing terms prior to the last day
of the applicable Interest Period, Borrower, in addition to all
other amounts payable to Lender with respect thereto, shall pay to
Lender, within ten (10) days after demand by Lender (which demand
shall set forth in reasonable detail the basis for requesting such
amount or amounts), such amount or amounts as may be necessary to
compensate Lender for any loss in connection therewith.
2.10.3 SPECIAL COSTS. Upon notice from Lender
(which notice shall set forth in reasonable detail the basis for
requesting such reimbursement), Borrower shall promptly reimburse
Lender for any increase in its costs (which shall include, but not
be limited to, taxes, other than income, franchise, or other
similar taxes imposed on the overall net income of Lender, fees,
charges, and/or reserve requirements, after taking into account any
reserve requirements reflected in the determination of the LIBOR
(Adjusted) Rate) directly or indirectly resulting due to any
circumstances from the maintaining of the Restructured Loan as a
credit for which interest is determined with respect to LIBOR. The
amount of such costs shall be determined by Lender based upon the
assumption that Lender funded 100% of the Restructured Loan in the
London Eurodollar interbank market. In attributing Lender's
general costs relating to its operations to any transaction under
this Agreement, or averaging any costs over a period of time,
Lender may use any reasonable attribution or averaging methods
which it deems appropriate and practical.
2.11 CAPITAL REQUIREMENTS. Notwithstanding any other
provision of this Agreement, in the event Lender determines in good
faith that, after the date of this Agreement, either (a) the
introduction of, any change in, or any change in the interpretation
or administration of, any law or regulation by any governmental
authority charged with the interpretation or administration thereof
or (b) any compliance (not required as of the date of this
Agreement) with any guideline or request from any such governmental
authority (whether or not having the force of law) has or would
have the effect of reducing the rate of return on the capital of
Lender as a consequence of or with reference to Lender's making or
maintaining any commitment, or other transaction hereunder below
the rate that Lender could have achieved but for such introduction,
change or compliance (taking into account the policies of Lender
with regard to capital), then Borrower shall pay to Lender within
ten (10) days after Lender's demand, such additional amounts as may
be sufficient to compensate it for such reduction. A certificate
as to such amounts, together with the detailed calculations
therefor, submitted to Borrower by Lender, shall be conclusive and
binding for all purposes, absent manifest error. Lender agrees
promptly to notify Borrower of any circumstances that might cause
Borrower to pay additional amounts pursuant to this Section 2.11;
provided, however, that the failure to give such notice shall not
affect Borrower's obligation to pay such additional amounts
hereunder.
2.12 RELEASED CLAIMS. Effective on the Effective Date
and in consideration of the payment to Lender by Cadiz of
$2,000,000 in cash (constituting a portion of the Cadiz Payment),
Lender hereby releases its Liens on the Released Claims.
3. CONDITIONS PRECEDENT. The effectiveness of Section 2 of
this Agreement is subject to the satisfaction of the following
conditions precedent (the satisfaction of which shall be
determined, and may be waived, by Lender) on or prior to the
Effective Date; provided, however, that AAI shall not be required
to have executed and delivered (and Borrower shall not be required
to have delivered with respect to AAI) any document, and neither
Borrower nor AAI shall be required to have taken any action with
respect to AAI, that it would otherwise be required to have
executed and delivered, or to have taken, as a condition precedent
to the effectiveness of Section 2:
3.1 EFFECTIVE DATE. (a) An order shall have been
entered, and shall have become a Final Order, confirming the Plan
in form and substance satisfactory to Lender; and (b) all
conditions precedent to the occurrence of the Effective Date
(including, without limitation, the consummation of each of the
Acquisition and the Merger in accordance with the terms of the
Plan), other than those set forth herein, shall have been
satisfied, or waived by the Person or Persons entitled to the
benefit thereof. Without limiting the generality of the foregoing:
3.1.1 Cadiz shall have paid in full, as provided
in the Plan, the $3,000,000 in aggregate payments to be made under
the Plan to the holders of Interests in Classes 9 and 10, as
defined in the Plan.
3.1.2 Cadiz shall have funded at least
$11,000,000 into the Unsecured Claims Reserve Account.
3.1.3 In addition to the amount required to be
funded under Section 3.1.2, Cadiz shall have funded into the
Unsecured Claims Reserve Account an amount equal to the aggregate
amount required to be paid under the Plan on the Effective Date in
respect of Class 6 Claims.
3.1.4 Cadiz shall have paid to John Hancock, in
cash, the $2,000,000 to be paid to John Hancock on the Effective
Date under the John Hancock Credit Agreement.
3.1.5 The sum of all amounts due in respect of
the DIP Credit Agreement as of the Effective Date shall not exceed
$15,000,000.
3.1.6 At least eighty percent (80%) of the
outstanding stock of Borrower held by Cadiz upon consummation of
the Acquisition and the Merger shall have been acquired by Cadiz
from the former stockholders of SWII.
3.2 CADIZ PAYMENT. Cadiz shall have paid to Lender the
Cadiz Payment.
3.3 WORKING CAPITAL CONTRIBUTION. Cadiz shall have
deposited into the Cash Account, as a Capital Contribution to
Borrower, the Cadiz Working Capital Contribution Amount.
3.4 PRO FORMA BALANCE SHEETS; OPENING FINANCIAL
POSITION; CERTAIN FINANCIAL RESULTS.
3.4.1 Lender shall have received pro forma (a)
Consolidated and consolidating balance sheets of Borrower and its
Subsidiaries, and (b) a Consolidated balance sheet of Cadiz and its
Subsidiaries (including Borrower and Borrower's Subsidiaries), in
each case (x) prepared on a purchase accounting basis as of the
Effective Date and immediately after giving effect to the
consummation of the Plan and of all transactions contemplated by
the Plan to be consummated thereon (including, without limitation,
the Acquisition and the Merger, all Capital Contributions to be
made to Borrower by Cadiz on the Effective Date pursuant to the
Plan, all payments to be made by Debtors or Cadiz on the Effective
Date pursuant to the Plan, the payment of any tax liability arising
by reason of or otherwise in connection with the Acquisition, and
the restructuring of the pre petition claims of Lender and John
Hancock as contemplated hereby); and (y) excluding (i) any amounts
remaining in the Debtors' bankruptcy estates and (ii) any
obligations that remain obligations of such estates, rather than of
Borrower or any Subsidiary of Borrower; in each case, together with
a certification by the Chief Executive Officer and Chief Financial
Officer of Borrower or Cadiz, as the case may be, to the effect
that (p) such pro forma balance sheets (1) are reasonably stated in
light of the actual (to the extent available) or reasonably
anticipated (to the extent that actual results are not available)
yields and prices of crops as of the Effective Date and (2) have
been prepared on a purchase accounting basis in accordance with
GAAP; (q) such pro forma balance sheets have been reviewed by Price
Waterhouse LLP in connection with such accountants' standard
procedures relating to the preparation of audited financial
statements for Cadiz for the fiscal year ending March 31, 1997; and
(r) such accountants have orally informed such officers that such
pro forma balance sheets appear to have been properly prepared.
3.4.2 Lender shall have received evidence, in
form and substance reasonably acceptable to it, that as of July 31,
1996, determined (i) on a Consolidated basis in accordance with the
DIP Credit Agreement, and (ii) as if the Effective Date had
occurred thereon (and, without limitation, reflecting Borrower's
expenditure of all amounts required to obtain all bonds necessary
to secure the issuance of all licenses, under PACA or other
applicable law, required for the conduct of Borrower's business),
the total of all (x) cash (including all funds held in deposit or
other accounts) of Debtors and their Subsidiaries and (y)
investments of Debtors and their Subsidiaries that would have
qualified as Permitted Cash Investments under this Agreement had
such investments been held by Borrower as of the Effective Date,
was at least $5,000,000.
3.5 DIP CREDIT AGREEMENT. The commitment of Lender
under the DIP Credit Agreement shall have been terminated, all
amounts payable in connection therewith shall have been paid in
full and all outstanding letters of credit under the DIP Credit
Agreement, if any, shall have been cash collateralized in
accordance with the provisions thereof.
3.6 JOHN HANCOCK CREDIT AGREEMENT. (a) (i) The John
Hancock Credit Agreement, and each other John Hancock Loan Document
required to have been executed and delivered thereunder as of the
Effective Date, shall have been executed and delivered by all
parties thereto, in such form as shall have been approved by Lender
in writing, and all conditions precedent to the full effectiveness
of the John Hancock Credit Agreement shall have been satisfied, or
waived by John Hancock on terms and conditions satisfactory to
Lender; and (ii) Lender shall have received a certificate from John
Hancock, in form and substance reasonably satisfactory to Lender,
confirming such satisfaction or waiver; and (b) the initial
principal amount of the John Hancock Obligations shall not exceed
$91,083,853.95.
3.7 INTERCREDITOR AGREEMENT. Lender and John Hancock
shall have executed and delivered an intercreditor agreement and
subordination agreement (as amended, supplemented or modified from
time to time, the "Intercreditor Agreement") providing that their
respective Liens shall have the same relative priorities as
provided in the Intercreditor and Subordination Agreement executed
and delivered in connection with their pre-petition claims against
the Debtor and its Affiliates, irrespective of the order in which
such Liens may have been perfected.
3.8 RAYO WATER RIGHTS. Cadiz shall have vested, or
caused to be vested, in Borrower, pursuant to documentation in form
and substance satisfactory to Lender, full and indefeasible title
to the "Marguleas Rayo Water Rights", as defined in the Plan,
including all claims and causes of action (and any proceeds
therefrom, in settlement or otherwise), arising out of or in
connection with any and all underlying contract rights.
3.9 MARKETING AGREEMENTS; CERTAIN INFORMATION.
3.9.1
(a) Borrower shall have entered into, and
shall have recorded in the real estate records in each county in
which any property affected thereby is located, a memorandum of, a
Marketing Agreement with (i) Howard P. Marguleas, with respect to
all farming acreage owned, leased or otherwise operated by Howard
P. Marguleas, and (ii) with each other Person under the control of
Howard P. Marguleas, including each limited or general partnership
of which Howard P. Marguleas or any Affiliate of Howard P.
Marguleas is a general partner (including each Person listed on
Schedule 3.9) (each such Person, a "Marguleas Controlled Grower"),
with respect to all farming acreage owned, leased or otherwise
operated by such Person. Each such Marketing Agreement (and each
memorandum of a Marketing Agreement) shall be on terms and
conditions satisfactory to Lender, including, without limitation,
in the case of a Marketing Agreement, providing (x) that such
Marketing Agreement shall remain in effect for a term of at least
five years after the Effective Date and that the Grower party
thereto shall not convey the real property subject thereto except
to a Person that assumes such Marketing Agreement, (y) for the
release by the Grower party thereto of all of its claims and causes
of action against Borrower or any of its Subsidiaries arising prior
to the Effective Date, and (z) for the release by Borrower and its
Subsidiaries of their respective claims and causes of action
against the Grower party thereto arising prior to the Effective
Date. The release by Borrower and such Subsidiaries shall take
effect annually in twenty percent (20%) increments so that the
value of the claims and causes of action being released by Borrower
and its Subsidiaries increases as Borrower records marketing and
packing revenue from such Marketing Agreement; provided, however,
that the release by Borrower and its Subsidiaries of Howard P.
Marguleas shall take effect only for so long as Howard P. Marguleas
does not default under the provisions of his Stock Purchase
Agreement with Cadiz (pursuant to which Cadiz has acquired his
capital stock of SWII) relating to his obligations to enter into,
or to cause certain other Persons to enter into, Marketing
Agreements), and then only to the extent that the Marketing
Agreements entered into with all Marguleas Controlled Growers
(other than Marguleas Controlled Growers that, over the opposition
of Howard P. Marguleas, (p) sell all or any portion of the farming
acreage covered by the Marketing Agreements to which they are party
or (q) remove Howard P. Marguleas (or his Affiliate, as the case
may be) from his (or such Affiliate's) position as managing general
partner (or other relevant control position)) remain in effect.
(b) Borrower shall have delivered to
Lender (i) copies of the partnership agreement or other
organizational documents of each Marguleas Controlled Grower,
certified by Howard P. Marguleas as a true and correct copy of the
original thereof, (ii) in the case of any Marguleas Controlled
Grower that is a limited partnership, a copy of such Person's Form
LP 1, certified by the California Secretary of State, and (iii)
evidence, in form and substance reasonably acceptable to Lender, of
the due authorization and execution by such Marguleas Controlled
Entity of both the Marketing Agreement and the release in favor of
Lender to which such Marguleas Controlled Grower is a party.
3.9.2 Borrower shall have delivered to Lender (a)
the schedule of Marketing Agreements referred to in Section 4.4,
and (b) the schedule of major account debtors referred to in
Section 4.6.
3.9.3 Borrower shall have delivered to Lender the
set of policies and procedures, in form and substance acceptable to
Lender, that will apply initially to Borrower's making of advances
to Growers located outside the United States of America including,
among other things, separate aggregate dollar limits on cultural,
packing and crossing advances.
3.10 MUTUAL RELEASES.
3.10.1 BORROWER. Lender and Borrower and each of
its Subsidiaries, on behalf of themselves and their respective
controlled Affiliates and their and such Affiliates' respective
predecessors, successors and assigns, shall have executed and
delivered mutual general releases of each other and their
respective Affiliates and their and such Affiliates' respective
stockholders, directors, employees, agents, representatives and
attorneys, and the predecessors, successors, assigns and personal
representatives of each of the foregoing Persons, with respect to
any and all claims and other obligations or liabilities, of any
nature whatsoever, whether known or unknown, in any way relating to
the credit relationship between Lender and any of its Affiliates
and Borrower and any of its Affiliates, or to the Debtors'
bankruptcy proceedings, and arising from any action or omission
occurring on or before the Effective Date; provided, however, that
such releases shall not include any claims, obligations or
liabilities arising under documents executed in connection with the
consummation of the Plan.
3.10.2 JOHN HANCOCK. Lender and John Hancock, on
behalf of themselves and their respective predecessors, successors
and assigns, shall have executed and delivered mutual general
releases of each other and their respective stockholders,
directors, employees, agents, representatives and attorneys, and
the predecessors, successors, assigns and personal representatives
of each of the foregoing Persons, with respect to any and all
claims and other obligations or liabilities, of any nature
whatsoever, whether known or unknown, in any way relating to their
respective claims against Borrower or any Affiliate of Borrower, or
to the Debtors' bankruptcy proceedings, and arising from any action
or omission occurring on or before the Effective Date; provided,
however, that such releases shall not include any claims,
obligations or liabilities arising under documents executed in
connection with the consummation of the Plan.
3.10.3 FORMER STOCKHOLDERS. Lender and each of
the former stockholders of SWII other than the Robert and Charlotte
J. Nies Revocable Trust dated 6 15 88, on behalf of themselves and
their respective controlled Affiliates and their and such
Affiliates' respective predecessors, successors and assigns, shall
have executed and delivered mutual general releases of each other
and their respective Affiliates and their and such Affiliates'
respective stockholders, directors, employees, agents,
representatives and attorneys, and the predecessors, successors,
assigns and personal representatives of each of the foregoing
Persons, with respect to any and all claims and other obligations
or liabilities, of any nature whatsoever, whether known or unknown,
in any way relating to the credit relationship between Lender and
any of its Affiliates and Borrower and any of its Affiliates, to
any transaction between Borrower or any of its Affiliates and such
other Person, or to the Debtors' bankruptcy proceedings, and
arising from any action or omission occurring on or before the
Effective Date; provided, however, that such releases shall not
include any claims, obligations or liabilities arising under
documents executed in connection with the consummation of the Plan.
3.10.4 CERTAIN OTHER PERSONS. (a) Lender and The
Irvine Company, and (b) Lender and Zenith, on behalf of themselves
and their respective controlled Affiliates and their and such
Affiliates' respective predecessors, successors and assigns, shall
have executed and delivered mutual general releases of each other
and their respective Affiliates and their and such Affiliates'
respective stockholders, directors, employees, agents,
representatives and attorneys, and the predecessors, successors,
assigns and personal representatives of each of the foregoing
Persons, with respect to any and all claims and other obligations
or liabilities, of any nature whatsoever, whether known or unknown,
in any way relating to the credit relationship between Lender and
any of its Affiliates and Borrower and any of its Affiliates, to
the transactions between The Irvine Company or Zenith,
respectively, and Borrower or any of its Affiliates, or to the
Debtors' bankruptcy proceedings, and arising from any action or
omission occurring on or before the Effective Date; provided,
however, that such releases shall not include any claims,
obligations or liabilities arising under documents executed in
connection with the consummation of the Plan.
3.10.5 CADIZ. Lender and Cadiz, on behalf of
themselves and their respective controlled Affiliates and their and
such Affiliates' respective predecessors, successors and assigns,
shall have executed and delivered mutual general releases of each
other and their respective Affiliates and their and such
Affiliates' respective stockholders, directors, employees, agents,
representatives and attorneys, and the predecessors, successors,
assigns and personal representatives of each of the foregoing
Persons, with respect to any and all claims and other obligations
or liabilities, of any nature whatsoever, whether known or unknown,
in any way relating to the Acquisition, the Merger or the other
transactions contemplated thereby, or to the credit relationship
between Lender and any of its Affiliates and Borrower and any of
its Affiliates, or to the Debtors' bankruptcy proceedings, in each
case, arising from any action or omission occurring on or before
the Effective Date; provided, however, that such releases shall not
include any claims, obligations or liabilities arising under
documents executed in connection with the consummation of the Plan.
3.11 INITIAL INTEREST PERIOD. If the Effective Date
occurs on the first day of a calendar month, Borrower shall have
timely notified Lender of the initial Interest Period.
3.12 EXECUTED DOCUMENTS. In addition to those documents
the delivery of which is otherwise required under the Agreement,
Borrower shall have delivered, or caused to be delivered, to Lender
the following documents, duly executed by all parties thereto and
in form and substance acceptable to Lender:
3.12.1 The Note.
3.12.2 The Subsidiary Guaranty.
3.12.3 The Security Agreements.
3.12.4 The Stock Pledge Agreements.
3.12.5 A Deed of Trust with respect to each fee
interest identified on Schedule 4.4.
3.12.6 The Cadiz Agreement.
3.12.7 (a) A Leasehold Deed of Trust, and (b) an
Amendment to Lease With Lender Cure Rights, with respect to each
leasehold interest identified on Schedule 4.4, together with
evidence, reasonably satisfactory to Lender, that each such
leasehold interest has been placed of record in the county in which
the real property subject thereto is located.
3.12.8 Executed UCC-1 financing statements (or
amendments to existing financing statements) from Cadiz, Borrower
and each Guarantor in proper form for filing in all jurisdictions
in which filing may be necessary to perfect the Liens provided for
in the Security Documents.
3.12.9 With respect to each Grower to whom
Borrower contemplates making (or will have outstanding, as of the
Effective Date) Grower Advances: (a) an original counterpart of
the security agreement between Borrower and such Grower granting to
Borrower the security interest required to be obtained by Borrower
pursuant to Section 6.9.1, certified by Borrower as being a true
and complete such counterpart; (b) acknowledgment copies of
financing statements filed or recorded by Borrower, sufficient to
perfect such security interests; and (c) an assignment to Lender of
all rights thereunder.
3.12.10 Copies of (i) notices to all depository
institutions with which Borrower or any Guarantor maintains one or
more accounts, as listed on Schedule 4.4, informing such depository
institutions of Lender's Liens thereon, acknowledged as having been
received by each such depository institution and (ii) such
agreements as may be reasonably required by Lender to provide for
the establishment of the Cash Account and the Concentration Account
and for the collection, concentration and transfer of Borrower's
and its Subsidiaries' funds in accordance with Section 5.4.
3.12.11 A Patent, Trademark and Copyright Security
Agreement, executed on behalf of Borrower and each Guarantor owning
any interest in patents, trademarks or copyrights, in form
appropriate for filing with the United States Patent and Trademark
Office and with the United States Copyright Office.
3.12.12 A collateral assignment of each keyman life
insurance policy identified in the Insurance Summary as insuring
Howard P. Marguleas.
3.12.13 (a) To the extent not already in Lender's
possession, certificates representing all shares of stock subject
to either Stock Pledge Agreement (other than Dual Pledged
Securities), together with appropriately endorsed stock
assignments, and (b) with respect to the Dual Pledged Securities,
an executed notice from Borrower to John Hancock advising John
Hancock of the Lien thereon in favor of Lender, countersigned by
John Hancock to acknowledge its receipt of such notice and that it
holds the Dual Pledged Securities as bailee of Lender as well as in
its own capacity.
3.12.14 (a) An assignment to Lender of the Ernst &
Young Claims and (b) a tolling agreement among Borrower, Lender,
and Ernst & Young, in each instance in form and substance also
acceptable to Gordon & Rees, special counsel to Lender regarding
the Ernst & Young Claims.
3.13 RELATED AGREEMENTS. Borrower shall have delivered,
or shall have caused to be delivered, to Lender, duly executed and
delivered by each Person party thereto, copies of the following
documents, (i) duly certified as of the Effective Date as being
true and complete copies of the originals thereof and in full force
and effect, without amendment, and (ii) in form and substance
acceptable to Lender:
3.13.1 The Cadiz Services Agreement.
3.13.2 The Cadiz Lease.
3.13.3 The Tax Sharing Agreement.
3.13.4 The consent of each of Rabobank and
Ansbacher to the Acquisition and the Merger and to Cadiz'
execution, delivery and performance of each of the Loan Documents
and each of the John Hancock Loan Documents.
3.13.5 Each consent of any other Person required
for the execution and delivery by Borrower or any Guarantor of the
Loan Documents required to be executed and delivered by it under
this Agreement or for the consummation of the transactions
contemplated hereby (including, without limitation, the consent of
the Bank of Scotland to the transfer to Cadiz of Howard Marguleas's
capital stock of SWII).
3.13.6 Documentation providing for the
restructuring of Cadiz' obligations to Rabobank to extend the
maturity date of Cadiz' obligations to Rabobank to a date no
earlier than the second anniversary of the Effective Date.
3.13.7 Documentation effecting the settlement by
Borrower of its disputes with Zenith, on terms and conditions
providing, among other things, for the release by Zenith of (a) its
Lien on Howard Marguleas's capital stock of SWII and (b) all of its
claims against Borrower and its Subsidiaries.
3.13.8 If Borrower has reached a settlement with
LSL Biotechnologies, Inc., documentation effecting the settlement
by Borrower of its disputes with LSL Biotechnologies, Inc. on terms
and conditions providing, among other things, for the release by
LSL Biotechnologies, Inc. of all of its claims against Borrower and
its Subsidiaries.
3.13.9 If Borrower has reached a settlement with
the Internal Revenue Service with respect to the outstanding FICA
tax claims, documentation effecting such settlement.
3.13.10 The agreement between Cadiz and the
depository institution with which the Unsecured Claims Reserve
Account is established providing for the establishment and
maintenance thereof.
3.14 MINIMUM RELEASE PRICE SCHEDULE. An agreement
setting forth the Minimum Release Price Schedule shall have been
executed and delivered by Borrower, Lender and John Hancock.
3.15 TITLE INSURANCE. Borrower shall have provided to
Lender, at Borrower's sole cost and expense, such endorsements, in
form and substance satisfactory to Lender, to the policies of title
insurance insuring the validity and priority of the existing Deeds
of Trust as Lender may request, insuring Lender that the Liens on
real property provided for herein, including, without limitation,
the Blythe Ranch, constitute valid Liens upon the real property
interests covered thereby securing the Note and the other
obligations of Borrower or the Guarantors under the Loan Documents,
as the case may be, subject only to the Liens of John Hancock with
respect to all fee estates in real property other than Blythe Ranch
and to such other Liens as Lender may approve in writing.
3.16 CORPORATE ACTIONS. Borrower shall have delivered
(or caused to be delivered) to Lender:
3.16.1 resolutions of the Board of Directors of
each of Cadiz, Borrower and each Guarantor authorizing (a) the
execution, delivery and performance of such of the Loan Documents
as have been or are to be executed by such Person (on behalf of
itself or any other Person, as a general partner thereof), (b) the
consummation of the transactions contemplated hereby and thereby,
and (c) all other actions to be taken by such Person (or any
partnership of which such Person is a general partner) in
connection herewith, each certified by the secretary or an
assistant secretary of such Person as being in full force and
effect, without amendment, as of the Effective Date; and
3.16.2 a certificate of the Secretary or Assistant
Secretary of each of Cadiz, Borrower and each Guarantor certifying
the incumbency, names and true signatures of the officers of such
Person authorized to sign such of the Loan Documents to which such
Person is or is to become a party pursuant hereto;
3.16.3 a copy of each of (a) the Certificate or
Articles of Incorporation and (b) bylaws of each of Cadiz, Borrower
and each Guarantor, certified by the Secretary or an Assistant
Secretary of such Person as being a true and complete copy thereof,
including all amendments, as in full force and effect on the
Effective Date and after giving effect to the Merger;
3.16.4 a certificate or certificates of the
Secretary of State or other appropriate official of the State of
incorporation of each of Cadiz, Borrower and each Guarantor, and of
each other State in which such Person is qualified to do business,
dated as of a date close to the Effective Date, to the effect that
(a) such Person is validly existing (or qualified to do business,
as the case may be) and in good standing in such State, or the
equivalent thereof, and (b) if generally available in such State,
to the effect that such Person is in good standing with the tax
authorities of such State, or the equivalent thereof; and
3.16.5 A copy of the Agreement of Merger between
SW and SWII giving effect to the Merger, certified by the Secretary
of State of the State of Delaware as being a true and correct copy
of the original, as filed.
3.17 EVIDENCE OF INSURANCE. Borrower shall have
provided Lender with certificates of insurance evidencing the
continued maintenance of the insurance required to be maintained
pursuant to Section 5.3, reflecting Lender as a loss payee or
additional insured, as the case may be, in accordance with Section
5.3, and otherwise in form and substance satisfactory to Lender.
3.18 EVIDENCE OF REQUIRED LICENSES. Borrower shall have
provided Lender with evidence, satisfactory to Lender, that, on the
Effective Date, Borrower holds (i) all licenses required under the
laws of the State of California to permit the marketing by Borrower
of produce on behalf of Growers, and (ii) a written commitment,
from the United States Department of Agriculture and in form and
substance acceptable to Lender, of the license required under PACA
to permit the marketing by Borrower of produce on behalf of
Growers.
3.19 ENVIRONMENTAL STUDIES. Lender shall have received
copies, certified by Borrower as true and complete copies of the
originals thereof, of each assessment, report, study or other
investigation, produced at any time after December 8, 1989 and
prior to the Effective Date, regarding the actual, alleged or
possible production, use, presence, treatment, storage,
transportation, disposal, release or threatened release of any
hazardous substance or hazardous waste (defined in Section 4.14)
at, on or about any real property or personal property currently or
formerly owned, leased or operated by Borrower or any Subsidiary of
Borrower.
3.20 MATERIAL ADVERSE EFFECT. No Material Adverse
Effect shall have occurred since December 31, 1995.
3.21 LEGAL OPINIONS.
3.21.1 WATER RIGHTS. Borrower shall have
provided Lender with a favorable opinion of special counsel to
Borrower (or, in Lender's discretion, to Lender) satisfactory to
Lender, in form and substance satisfactory to Lender, with respect
to such matters regarding Borrower's Water Rights as Lender may
reasonably request.
3.21.2 INTELLECTUAL PROPERTY. Lender shall have
received, at Borrower's expense, a favorable opinion of special
counsel to Borrower satisfactory to Lender, in form and substance
satisfactory to Lender, with respect to such matters regarding
Patents, Trademarks and Copyrights (each, as defined in the
Security Agreements) as Lender may reasonably request.
3.21.3 CADIZ OPINION. Cadiz shall have provided
Lender with a favorable opinion (or opinions) from outside legal
counsel to Cadiz satisfactory to Lender, in substantially the form
of Exhibit J.
3.21.4 BORROWER OPINION. Borrower shall have
provided Lender with a favorable opinion (or opinions) from outside
legal counsel to Borrower satisfactory to Lender, in substantially
the form of Exhibit K.
3.21.5 HPM OPINION. Howard P. Marguleas shall
have provided Lender with a favorable opinion (or opinions) from
Stutman, Triester & Glatt or other legal counsel to Howard P.
Marguleas satisfactory to Lender, in form and substance
satisfactory to Lender, with respect to such matters as Lender may
reasonably request.
3.22 NO DEFAULTS. No Default or Event of Default shall
have occurred and be continuing or shall exist immediately
following the effectiveness of Section 2.
3.23 REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Borrower or any Subsidiary of
Borrower or of Cadiz set forth herein or in any other Loan Document
(other than those that speak as of a specific date) shall be true
and correct in all material respects as if made on and as of the
date of such effectiveness.
3.24 BRINGDOWN CERTIFICATES. Lender shall have
received a certificate, dated as of the Effective Date and in form
and substance satisfactory to Lender, of (a) the Chief Executive
Officer and Chief Financial Officer of Borrower, to the effect that
(i) no Default or Event of Default shall have occurred and be
continuing or shall exist immediately following the effectiveness
of Section 2; (ii) all representations and warranties of such
Person or any Subsidiary such Person set forth herein or in any
other Loan Document (other than those that speak as of a specific
date) are true and correct in all material respects on the
Effective Date as if made on and as of the Effective Date; and
(iii) all other conditions precedent set forth in this Section 3
have been satisfied; and (b) the Chief Executive Officer and Chief
Financial Officer of Cadiz, to the effect that (i) no Default or
Event of Default with respect to Cadiz or any of its Subsidiaries
other than Borrower and Borrower's Subsidiaries shall have occurred
and be continuing or shall exist immediately following the
effectiveness of Section 2; and (ii) all representations and
warranties of Cadiz set forth in the Cadiz Agreement or in any
other Loan Document (other than those that speak as of a specific
date) executed and delivered by Cadiz are true and correct in all
material respects on the Effective Date as if made on and as of the
Effective Date.
3.25 [INTENTIONALLY OMITTED.]
3.26 CROP DEVELOPMENT PLAN. Lender shall have received
Borrower's crop development plan for the remainder of the fiscal
year ending December 31, 1996, in form and substance reasonably
acceptable to Lender.
3.27 LENDING RELATIONSHIPS. Lender shall have
determined that Cadiz's business relationships and agreements with
its principal creditors (including, without limitation, Ansbacher)
are satisfactory to Lender.
3.28 OTHER APPROVALS, CONSENTS, DOCUMENTS AND OPINIONS.
Lender shall have received such other approvals, consents,
opinions, and/or documents as Lender may reasonably request.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender (as of the date hereof and as of each subsequent
date as of which Borrower is required to make (or is deemed to have
made) such representation and warranty, as a condition or otherwise
(and including, without limitation, the Effective Date and the date
of any Re Advance)) that:
4.1 CORPORATE STATUS; POWER AND AUTHORITY.
4.1.1 CORPORATE STATUS. Borrower is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, is duly qualified to do
business and is in good standing in every jurisdiction where the
nature of its business requires it to be so qualified (except where
the failure to so qualify would not have a Material Adverse
Effect), and has all requisite power and authority to conduct its
business, to own, lease, sell or otherwise dispose of its
properties, and to execute and deliver this Agreement, each of the
other Loan Documents and any other instruments or documents
executed and delivered, or to be executed and delivered, by
Borrower in connection with the consummation of the Plan and the
transactions contemplated thereby, and to perform its obligations
thereunder. Each Subsidiary of Borrower is a corporation (or
partnership, as the case may be) duly organized, and except for Sun
Harvest, Inc. and Pacific Farm Service, Inc. (neither of which
holds any material assets and neither of which currently engages in
any business whatsoever), validly existing and in good standing
under, the laws of the State of its organization (as indicated on
Schedule 4.3), is duly qualified to do business and is in good
standing in every jurisdiction where the nature of its business
requires it to be so qualified (except where the failure to so
qualify would not have a Material Adverse Effect), and has all
requisite power and authority to conduct its business, to own,
lease, sell or otherwise dispose of its properties, and to execute
and deliver each of the Loan Documents to which it is or is to
become a party and any other instruments or documents executed and
delivered, or to be executed and delivered, by such Subsidiary in
connection with the consummation of the Plan and the transactions
contemplated thereby, and to perform its obligations thereunder.
Sun World (Europe) B.V. has no significant assets and is inactive;
Borrower, acting alone or together with one or more of its
Subsidiaries, has no authority to cause the direction of Sun World
(Europe) B.V.'s management.
4.1.2 POWER AND AUTHORITY. The execution,
delivery, and performance by Borrower of each of this Agreement and
the other Loan Documents to be executed and delivered it in
connection herewith or pursuant hereto, and the execution, delivery
and performance by Cadiz and by each Guarantor of the Loan
Documents to be executed and delivered by it in connection herewith
or pursuant hereto, have been duly authorized by all necessary
corporate or partnership action on the part of such Person and do
not and will not (a) require any consent or approval of the
stockholders or partners of such Person or of any other Person,
except such consents as shall have obtained on or before the
Effective Date; (b) contravene such Person's charter or bylaws or
partnership agreement, as applicable; (c) violate any provision of
any law, rule, regulation (including, without limitation,
Regulation of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination,
or award presently in effect having applicability to such Person;
(d) except to the extent excused by the Bankruptcy Code or a lawful
order of the Court, result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other
material agreement, lease, or instrument to which such Person is a
party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien
(except for Permitted Liens), upon or with respect to any of the
properties now owned or hereafter acquired by such Person; or (f)
cause such Person to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award.
4.2 LEGALLY ENFORCEABLE AGREEMENTS. This Agreement is,
and each of the other Loan Documents executed and delivered, or to
be executed and delivered, by Borrower, by Cadiz or by any
Guarantor, is, or when delivered under this Agreement, will be, a
legal, valid, and binding obligation of each such Person party
thereto, enforceable against such Person in accordance with its
respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar
laws affecting creditors' rights generally, or otherwise limited by
general principles of equity.
4.3 STOCK; SUBSIDIARIES.
4.3.1 STOCK. The authorized and outstanding
capital stock of Borrower upon consummation of the Plan, after
giving effect to the Acquisition and the Merger, will be as set
forth on Schedule 4.3. All of the outstanding shares of capital
stock of Borrower are, and, upon consummation of the Plan, the
Acquisition and the Merger, will be, (a) validly issued, fully paid
and nonassessable, and (b) owned by Cadiz.
4.3.2 SUBSIDIARIES. A true and correct list of
all Subsidiaries of Borrower as of the date of this Agreement,
indicating, for each such Subsidiary (a) its true corporate or
partnership name, (b) its jurisdiction of organization, (c) the
name of each record holder of all or any portion of its outstanding
capital stock or other outstanding equity interests and the
percentage of such capital stock or equity interest held by each
such record holder, (d) whether such Subsidiary is active or
inactive, and (e) whether or not it holds assets having a fair
market value in excess of $500,000, is set forth on Schedule 4.3.
4.4 PROPERTIES AND ASSETS. Schedule 4.4 sets forth,
with respect to Borrower and each Subsidiary of Borrower, as of the
date of this Agreement, a complete and correct list of (a) each
patent, patent application, trademark, copyright, tradename,
license, permit relating to intellectual property, franchise or
other right of such Person; (b) each deposit or other account in
which such Person holds any funds, identifying the number of each
such account and the name and address of the depository institution
with which such account is maintained; (c) all tradenames under
which such Person currently conducts, or has within the last five
years conducted, business; (d) the addresses of all locations at
which such Person conducts any portion of its business; (e) all
real property owned or leased by such Person and indicating on
which parcels such Person grows, or intends to grow, crops; (f) all
Investments of such Person, and (g) all insurance policies under
which such Person is either a loss payee or an additional insured.
Borrower has heretofore delivered to Lender a schedule of all
Marketing Agreements to which any such Person is a party as of the
date of this Agreement, including, with respect to each such
Marketing Agreement, the names of the parties thereto, the crops
and number of acres to which it applies, the term and payment terms
thereof, the date by which such Marketing Agreement must be renewed
or replaced by a new Marketing Agreement with the Grower party
thereto with respect to the next succeeding crop cycle, and the
percentage of the total units of produce projected to be sold by
Borrower under Marketing Agreements during the fiscal year ending
December 31, 1996 represented by such Marketing Agreement.
Borrower, and each Subsidiary of Borrower, owns title to, or valid
leasehold interests in, all of its properties and assets, real and
personal, free and clear of any Lien other than Permitted Liens.
Borrower, and each Subsidiary of Borrower, has received all
assignments, bills of sale and other documents necessary to
establish, protect and perfect such Person's right, title and
interest in and to all of the property described in the foregoing
clause (a), except where the failure so to receive any such
assignment, bill of sale or other document, individually or in the
aggregate, does not conflict with the rights of others so as to
result in a material and adverse effect on the condition or
prospects, financial or otherwise, of Borrower and its
Subsidiaries, taken as a whole. Borrower, and each of its
Subsidiaries, has duly effected all filings, recordings and other
actions necessary in the reasonable judgment of Borrower to
establish, protect and perfect any such Person's right, title and
interest in and to all of the property described in the foregoing
clause (a). Borrower's chief executive office and chief place of
business is located at the address for notices set forth for
Borrower in Section 8.2.
4.5 DEBT; LIENS; OTHER OBLIGATIONS.
4.5.1 Schedule 4.5.1 is a complete and correct
list, as of the date of this Agreement, of (a) (i) all credit
agreements, indentures, purchase agreements, guaranties, Capital
Leases, and other investments, agreements and arrangements
presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of
letters of credit or for acceptance financing) in respect of which
any Debtor, or any Subsidiary of a Debtor, is or was in any manner
directly or contingently obligated and that will remain in effect
as obligations of Borrower or any Subsidiary of Borrower after the
Effective Date; and (ii) the maximum principal or face amounts of
the credit in question, which are outstanding and which can be
outstanding; (b) to the extent not included under the foregoing
clause (a), all other Pre Petition Debt that will remain in effect
after the Effective Date; and (c) all Liens of any nature given or
agreed to be given as security for any of the foregoing or
otherwise affecting any property or assets of such Person and that
will remain in effect after the Effective Date.
4.5.2 There exists no nondischargeable liability
of any Debtor that, as of the Effective Date, will become an
obligation of Borrower or any of its Subsidiaries, except for such
liabilities as have been expressly provided for under the Plan.
4.6 MAJOR ACCOUNT DEBTORS. Borrower has heretofore
delivered to Lender a complete and correct list, including the
name, address and (where available) telecopy number, of each Person
who has incurred any liability or liabilities, in excess of $15,000
in the aggregate, to any Debtor or any Subsidiary of a Debtor
within the twelve months preceding the date of this Agreement
arising from the sale of produce to such Person.
4.7 WITHHOLDING TAXES. Since at least January 1, 1992,
SWI, SWII or the relevant Subsidiary of SWII has withheld and paid,
as and when due in connection with any wages payable by any such
Person, to the United States and to the State of California, and to
each other taxing authority to which payment was due, in accordance
with applicable law: all taxes and other amounts required to be
withheld from wages paid with funds of (or provided for that
purpose by) the relevant Person (determined, in the case of
nonimmigrant recipients of such wages, whether such recipients were
classified for purposes of United States immigration law as "A9",
"A09", or otherwise, as if such employees were residents of the
United States).
4.8 OTHER TAXES. Except as disclosed on Schedule 4.8,
each Debtor, and each Subsidiary of any Debtor, has filed all tax
returns (foreign, federal, state, and local) required to be filed,
or has received all appropriate extensions of time to file, and has
paid all taxes, assessments, and governmental charges and levies
thereon, including interest and penalties.
4.9 LABOR DISPUTES AND ACTS OF GOD. Neither the
business, the real property nor the personal property of Borrower
or of any Subsidiary of Borrower is affected by any fire,
explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the
public enemy, or other casualty (whether or not covered by
insurance) materially and adversely affecting such business or
properties or the operations of Borrower or of such Subsidiary.
4.10 NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS.
Except as set forth on Schedule 4.10, Borrower, and each Subsidiary
of Borrower, will have satisfied, as of the Effective Date, all
judgments, and neither Borrower nor any Subsidiary of Borrower is
in default with respect to any judgment, writ, injunction, decree,
rule, or regulation of any court, arbitrator, or federal, state,
municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign.
4.11 ERISA. Borrower, and each Subsidiary of Borrower,
is in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any
ERISA Plan; no notice of intent to terminate an ERISA Plan has been
filed, nor has any ERISA Plan been terminated; no circumstances
exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administrate, an ERISA Plan, nor has the PBGC
instituted any such proceedings; neither Borrower nor any ERISA
Affiliate (nor any Debtor or Person that was previously treated as
a single employer with any Debtor under Section 4001 of ERISA) has
completely or partially withdrawn under Sections 4201 or 4204 or
ERISA from a Multiemployer Plan (except as set forth on Schedule
4.11); Borrower, and each ERISA Affiliate (and each Debtor or
Person that was previously treated as a single employer with any
Debtor under Section 4001 of ERISA), has met its minimum funding
requirements under ERISA with respect to all of its ERISA Plans and
the present value of all vested benefits under each such ERISA Plan
exceeds the fair market value of all ERISA Plan assets allocable to
such benefits, as determined on the most recent valuation date of
the ERISA Plan and in accordance with the provisions of ERISA for
calculating the potential liability of Borrower or any ERISA
Affiliate (or of any Debtor or Person that was previously treated
as a single employer with any Debtor under Section 4001 of ERISA)
to the PBGC or the ERISA Plan under Title IV of ERISA; and neither
Borrower nor any ERISA Affiliate (nor any Debtor or Person that was
previously treated as a single employer with any Debtor under
Section 4001 of ERISA) has incurred any liability to the PBGC under
ERISA.
4.12 OPERATION OF BUSINESS. Except as set forth on
Schedule 4.12: (a) Borrower, and each Subsidiary of Borrower (and
each Debtor and any Subsidiary of a Debtor), has been and is
conducting its business and operations in compliance with all
applicable laws and directives of governmental authorities having
the force of law, except to the extent that noncompliance would not
be reasonably likely to have a Material Adverse Effect; and (b) (i)
Borrower, and each Subsidiary of Borrower, possesses all rights and
authorizations, including, without limitation, Water Rights
(including rights to any required irrigation water), licenses,
permits, franchises, patents, copyrights, trademarks, and trade
names, or rights thereto, to conduct its respective business
substantially as now conducted and as presently proposed to be
conducted, and (ii) neither Borrower nor any Subsidiary of Borrower
is in violation of any such rights or authorizations or any valid
rights of any other Person with respect to any of the foregoing,
except to the extent that such violation would not be reasonably
likely to have a Material Adverse Effect.
4.13 LITIGATION. Except as set forth on Schedule 4.13,
as of the date of this Agreement, there is no pending or threatened
action or proceeding against Borrower or any Subsidiary of Borrower
(or against any Debtor or Subsidiary of a Debtor) before any court,
governmental agency, or arbitrator which, in any one case or in the
aggregate, if decided adversely to such Person, could expose such
Person to a net uninsured liability in excess of $1,000,000.
4.14 ENVIRONMENTAL CONDITIONS. Except as set forth on
Schedule 4.14, as of the date of this Agreement there are no
conditions presently or potentially posing a significant hazard to
human health or the environment, whether or not in compliance with
law, existing on or in the vicinity of, or otherwise affecting, the
real property or personal property currently or formerly owned,
leased or operated by Borrower or any Subsidiary of Borrower (or
any Debtor or Subsidiary of a Debtor), and, except in the course of
normal agricultural operations conducted in full compliance with
all applicable laws and regulations, there has been no production,
use, presence, treatment, storage, transportation, disposal,
release or threatened release of any hazardous substance or
hazardous waste (as hereinafter defined) at or on such property or
real property. "Hazardous waste" and "hazardous substance" shall
have the meanings set forth in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq. ("CERCLA") and the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901
et seq., and the regulations adopted pursuant thereto, except that
the term "hazardous substance," as used herein, shall, in addition
to its definition under CERCLA, also include petroleum, petroleum
products and any substance classified as "hazardous" or "toxic"
under any applicable state law or regulation.
4.15 INVESTMENT COMPANY ACT. Neither Borrower nor any
Subsidiary of Borrower is an "investment company", or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
4.16 FULL DISCLOSURE. All information in the nature of
facts or statements of fact heretofore or hereafter furnished by or
under the supervision of any officer or acting officer of Borrower
or any Subsidiary of Borrower (or any Debtor or Subsidiary of a
Debtor), or by any of their respective agents, to Lender for
purposes of or in connection with this Agreement or any transaction
contemplated hereby was (or will be, as the case may be) true and
accurate in all material respects on the date as of which such
information was (or is) stated or certified and not incomplete by
omitting to state any material fact known to any officer of
Borrower or any Subsidiary of Borrower necessary to make such
information not misleading. Each written projection heretofore
delivered to Lender, and each other written projection delivered
hereafter to Lender, by or on behalf of Borrower, SWII or SWI in
connection with the transactions contemplated by this Agreement,
upon delivery to Lender, will be, prepared on the basis of the
assumptions set forth therein, such assumptions are (or will be, as
the case may be) reasonable in light of the financial condition and
prospects of Borrower; and each projection heretofore delivered to
Lender represented, and each such projection hereafter delivered to
Lender will represent, the good faith opinion of the Chief
Executive Officer and the Chief Financial Officer of Borrower or
SWII, as the case may be, at the time of delivery thereof to
Lender, as to the course of business of Borrower or the Debtors
during the period covered thereby.
4.17 NO SIDE AGREEMENTS. There are no agreements,
understandings, or arrangements of any kind, oral or written,
between, among, or binding upon any of Cadiz, Borrower, any of
Borrower's Subsidiaries, or any Affiliate of any such Person, on
the one hand, and John Hancock, Zenith, LSL Biotechnologies, Inc.,
The Irvine Company, Howard P. Marguleas, any other former
shareholder of SWII, Rabobank, Ansbacher, Bank of Scotland, any
past or present member of the Unsecured Creditors' Committee, or
any Affiliate of any such Person, on the other hand, which have not
been fully disclosed by Borrower to Lender (including by delivery
of copies of all relevant writings) or are not a matter of public
record.
5. AFFIRMATIVE COVENANTS. So long as the Note or any other
amount payable by Borrower under any of the Loan Documents shall
remain unpaid, Borrower agrees that it shall:
5.1 MAINTENANCE OF RECORDS. Keep, and cause each of
its Subsidiaries to keep, adequate records and books of account,
separate from the records and books of account maintained by Cadiz
and its other Subsidiaries, in which complete entries will be made
in accordance with GAAP consistently applied, reflecting all
financial transactions of Borrower and its Subsidiaries.
5.2 MAINTENANCE OF PROPERTIES AND COLLATERAL. Except
to the extent that the failure to do so would not be reasonably
likely to have a Material Adverse Effect:
5.2.1 Except for sales or other dispositions
expressly permitted under this Agreement, maintain, keep, and
preserve, and cause each of its Subsidiaries to maintain, keep, and
preserve, all of its real property and personal property (tangible
and intangible) necessary or useful in the proper conduct of its
business and in good working order and condition, ordinary wear and
tear excepted, including, without limitation, maintain in full
force and effect all permits and licenses necessary to the conduct
of such Person's business as presently conducted, including,
without limitation, "Produce Dealer" and "Processor" licenses
issued by the California Department of Food and Agriculture and all
licenses required to operate in compliance with PACA. Without
limiting the generality of the foregoing, Borrower shall cause
copies of the documentation filed with the Delaware Secretary of
State to effect the Merger, and of any other documentation required
to be filed or recorded in order to reflect the Merger and the
Acquisition and to protect Borrower's (or any of its Subsidiaries')
rights to patents, trademarks and copyrights, to be recorded (a)
with the United States Patent and Trademark Office within sixty
(60) days after the Effective Date, (b) with the United States
Copyright Office within fifteen (15) days after the date hereof,
and (iii) with such foreign patent and trademarks offices as may be
reasonably necessary for such purpose.
5.2.2 Keep in force, and cause each of its
Subsidiaries to keep in force, each lease on which Borrower or any
Subsidiary of Borrower is at any time growing crops, until such
crops have been harvested and removed from the land subject
thereto.
5.2.3 Keep in force, and cause each of its
Subsidiaries to keep in force, all Water Rights held by such
Person, including, without limitation, all rights to irrigation
water. Without limiting the generality of the foregoing, Borrower
shall cause an appropriately completed Form 7 2181 to be filed with
the Arvin Edison Water Storage District within thirty (30) days
after the Effective Date.
5.3 MAINTENANCE OF INSURANCE.
5.3.1 Maintain, and cause each of its
Subsidiaries to maintain, in full force and effect at all time,
such levels of insurance, and against such risks, as are commonly
maintained by prudently managed companies engaging in businesses,
and having properties, the same as or similar to those engaged in
or owned or operated by Borrower, which insurance shall in any
event include:
(a) insurance against loss or damage to
any of the Collateral by fire or any of the risks covered by
insurance known as "all risk coverage", in an amount not less than
the full replacement cost thereof (in the case of real property,
exclusive of the cost of excavations, foundations and footings
below the lowest basement floor), each such policy to contain a
replacement cost endorsement reasonably satisfactory to Lender;
(b) business interruption insurance
and/or loss of rental value insurance in amounts at least equal to
those currently in effect, as reflected in the Insurance Summary,
dated August 5, 1996, prepared by Aon Risk Services, Inc. with
respect to insurance coverages maintained by the Debtors (the
"Insurance Summary");
(c) comprehensive public liability
insurance against claims for personal injury, including, without
limitation, bodily injury, death or property damage occurring on,
in or about any real property and adjoining streets, in amounts at
least equal to those reflected in the Insurance Summary;
(d) products liability and contractual
liability insurance coverage or endorsements in amounts at least
equal to those reflected in the Insurance Summary;
(e) to the extent required to do so under
the John Hancock Loan Documents, "keyman" life insurance coverage
with respect to Howard P. Marguleas' life, in an aggregate amount
no greater than $13,000,000 and, with respect to Policy Nos. C
11634064L and C 11640005L issued by Aurora National Life Assurance
Company (or any replacement policies therefor) at a premium cost
not to exceed for any coverage period the maximum amount set forth
opposite such coverage period on Schedule 5.3;
(f) insurance providing such other
coverages, and in such amounts, as are reflected in the Insurance
Summary;
(g) such other insurance providing such
other coverages, and in such amounts, as Lender may from time to
time reasonably request; and
(h) directors' and officers' insurance,
providing aggregate coverage for claims brought during the then
current annual policy period in an amount no less than $5,000,000.
5.3.2 If Borrower shall fail to maintain or cause
to be maintained any of the foregoing insurance as and when
required hereby, or if any such insurance shall be materially
reduced, canceled, surrendered or not renewed, Lender may (but is
not required to do so), in its own name only, for its own benefit
or for the benefit of Borrower, or both, obtain all or a portion of
such insurance from any carrier selected by Lender in its sole
discretion, and Borrower shall reimburse Lender, within ten (10)
days after Lender's demand, for any premiums or other costs
associated with obtaining such insurance. Sums paid by Lender
hereunder shall bear interest at the Default Rate.
5.3.3 All insurance required by this Section 5.3
shall be provided by policies written in terms, and amounts, and by
companies, reasonably satisfactory to Lender; provided that (a)
Lender shall not require that directors' and officers' insurance be
required in an amount greater than $5,000,000; (b) Borrower and its
Subsidiaries may maintain a system of self insurance in an
aggregate amount, and with respect to such risks, as are both (i)
customary for prudently managed corporations engaged in the same or
similar businesses as Borrower and its Subsidiaries, owning or
operating similar properties as Borrower and its Subsidiaries, and
having a credit standing similar to that of Borrower and its
Subsidiaries, and (ii) acceptable to Lender; (c) Lender shall be
named as additional insured on all liability policies, as its
interests may appear; and (d) losses under all policies (including,
without limitation, policies covering the Collateral but for the
benefit of other creditors), other than policies of directors' and
officers' insurance, shall be payable to Lender, as its interests
may appear, pursuant to a loss payee endorsement reasonably
satisfactory to Lender.
5.3.4 At least thirty (30) days prior to the
expiration of each such policy, Borrower shall furnish Lender with
evidence reasonably satisfactory to Lender of the payment of
premiums and the reissuance of a policy or policies continuing such
coverages in force as are required by this Agreement. All such
policies shall contain provisions to the effect that (a) except in
the case of liability insurance, they shall provide coverage to
Lender notwithstanding any breach by Borrower or any Subsidiary of
Borrower (or by any predecessor of Borrower or of any Subsidiary of
Borrower) of any representation or warranty, (b) there shall be no
recourse to Lender for payment of premiums or other amounts with
respect thereto, (c) they shall not be subject to co insurance, (e)
they may not be canceled (except for non payment of premiums or
fraud), or amended to reduce any limitation of liability, to
increase the amount of any deductible or co insurance, or to add
any exclusions to the coverage provided thereunder, without at
least thirty (30) days' prior written notice to Lender, and (f)
they may not be canceled for non payment of premiums or for fraud
without at least ten (10) days' prior written notice to Lender.
Upon Lender's request, Borrower shall cause all bills, statements
or other documents relating to the foregoing insurance to be sent
or mailed directly to Lender, and shall give notice to each insurer
providing any such insurance policy (other than directors' and
officers' insurance) of Lender's security interest therein.
5.4 CASH ACCOUNT.
5.4.1 At all times maintain the Cash Account, and
(subject to Section 5.4.2) maintain all of its and its
Subsidiaries' cash on deposit in the Cash Account, except for (a)
Permitted Cash Investments in which Lender holds a perfected Lien,
(b) such amounts as may be transferred to one or more demand
deposit accounts in which Lender holds a perfected Lien, as
reasonably necessary to permit the clearance of checks or other
payment orders drawn on such accounts, and (c) such immaterial
amount of cash as may be retained by Borrower and its Subsidiaries
as "petty cash". The Cash Account shall be an unrestricted
account. So long as no Event of Default has occurred and is
continuing (i) Borrower shall be free to withdraw funds from the
Cash Account for any use not in contravention of this Agreement or
any other Loan Document, and (ii) Lender shall follow Borrower's
requests and instructions regarding the acquisition or disposition
of Permitted Cash Investments (it being understood and agreed that,
under the custodial arrangements contemplated by Section 6.9,
Borrower shall not have any right to instruct the custodian holding
the Permitted Cash Investments).
5.4.2 (a) Instruct, and cause each Guarantor to
instruct, each Person (i) that regularly remits payments to
Borrower or such Guarantor by check or other instrument, or (ii)
that Borrower reasonably anticipates will remit to Borrower or such
Guarantor checks or other instruments in an aggregate face amount
in excess of $15,000, to remit all such payments to the post office
box maintained pursuant to the Concentration Account Agreement; (b)
instruct, and cause each Guarantor to instruct, each Person that
Borrower or such Guarantor reasonably anticipates to remit payments
to it by wire or other electronic transfer to remit all such
payments to the Concentration Account; (c) subject to John
Hancock's right to receive Asset Sales Proceeds in accordance with
Section 6.6.4, deposit, and cause each Guarantor to deposit, all
other cash, collections and proceeds of any property immediately in
kind into the Concentration Account; and (d) instruct the
Concentration Account Bank to initiate, or itself initiate, daily
wire transfers of all collected funds in the Concentration Account
to the Cash Account; provided, however, that funds may be
transferred directly from the Unsecured Claims Reserve Account into
the Unsecured Claims Disbursement Account in accordance with
Section 6.5.4.
5.5 COMPLIANCE WITH LAWS AND ORDERS. Except to the
extent that noncompliance would not be reasonably likely to have a
Material Adverse Effect: comply, and cause each of its
Subsidiaries to comply, with all applicable laws, rules,
regulations, and orders, such compliance to include, without
limitation, paying before the same become delinquent all taxes,
assessments, and government charges imposed upon it or upon its
property.
5.6 PAYROLL WITHHOLDING. Pay as and when due in
connection with any wages payable by Borrower or any Subsidiary of
Borrower: (a) to the United States and to the State of California,
and to each other taxing authority to which payment is due, in
accordance with applicable law, all taxes and other amounts
required to be withheld from wages paid with funds of (or provided
for that purpose by) Borrower or any Subsidiary of Borrower
(determined, in the case of nonimmigrant recipients of such wages,
whether such recipients were classified for purposes of United
States immigration law as "A9", "A09", or otherwise, as if such
employees were residents of the United States); and (b) to the
person or entity to whom such funds are to be remitted (in
accordance with applicable law, any applicable agreement or as
otherwise required), all other amounts required to be withheld
from, or paid with respect to, wages paid with funds of (or
provided for that purpose by) Borrower or any Subsidiary of
Borrower, including, without limitation, payments in respect of
union dues, medical insurance or union medical contributions and
disability insurance.
5.7 OFFICERS; DIRECTORS.
5.7.1 CHIEF EXECUTIVE OFFICER.
(a) Employ at all times, as Chief
Executive Officer of Borrower, a person having experience in the
management of companies engaged in agriculture and in marketing
activities such as those currently engaged in by Borrower, as may
be reasonably acceptable to Lender. The Chief Executive Officer
shall have the chief executive authority for Borrower and each
Subsidiary of Borrower. An individual employed by Borrower,
reasonably satisfactory to Lender and designated by the Chief
Executive Officer, shall have chief financial authority for
Borrower and shall review and approve all operating plans,
strategic plans and capital expenditure programs. The Chief
Executive Officer shall report only to Borrower's Board of
Directors. The Chief Executive Officer shall be accessible to
Lender and its counsel and consultants to discuss Borrower's
strategic and operating plans, capital expenditure programs, and
other aspects of the business and financial affairs of Borrower and
its Subsidiaries. Borrower may terminate the Chief Executive
Officer with cause, or without cause with the prior written consent
of Lender. If the Chief Executive Officer is terminated or
resigns, Borrower shall replace him or her within sixty (60)
Business Days after such termination or resignation with another
Chief Executive Officer possessing the qualifications described
above and reasonably acceptable to Lender.
(b) As of the date of his or her
employment by Borrower, the Chief Executive Officer shall not be or
have been a director or stockholder of, or employed in any capacity
by: (i) Cadiz or any of its Subsidiaries or Affiliates (other than
Timothy Shaheen or another individual with respect to whom Lender
concludes, in its sole discretion, that his or her employment by
Borrower will not impair either (A) the continued separation
between the operations of Cadiz and its other Subsidiaries, on the
one hand, and of Borrower and its Subsidiaries, on the other hand,
or (B) the perception of Cadiz and Borrower, by their respective
creditors, as distinct entities); or (ii) any Debtor or Subsidiary
or Affiliate of a Debtor, or the Debtors' independent accountants,
at any time prior to the Effective Date.
5.7.2 CHIEF FINANCIAL OFFICER. Employ at all
times, as chief financial officer, a person who (i) as of the date
of his or her employment by Borrower in such capacity, (A) has
never been a director or stockholder of Borrower or any Debtor, and
(B) has not been a director of, or employed in any capacity by,
Cadiz or any of its Subsidiaries or Affiliates (other than an
employee of Borrower, to the extent permitted under the following
clause (ii), or Stanley Speer or another individual with respect to
whom Lender concludes, in its sole discretion, that his or her
employment by Borrower will not impair either (A) the continued
separation between the operations of Cadiz and its other
Subsidiaries, on the one hand, and of Borrower and its
Subsidiaries, on the other hand, or (B) the perception of Cadiz and
Borrower, by their respective creditors, as distinct entities), and
(ii) was not a director of, or employed in any capacity by, any
Debtor or Subsidiary or Affiliate of a Debtor, or the Debtors'
independent accountants, at any time prior to the Effective Date.
5.7.3 INDEPENDENT BOARD. Maintain at all times a
Board of Directors (a) a majority of the members of which are
"independent" within the meaning of that term as used in Section 3
of the New York Stock Exchange Listed Company Manual, and (b) none
of whom was at any time a director or shareholder of any Debtor or
any Subsidiary of a Debtor. For purposes of this Section 5.7.3:
(x) Dwight Makins, current chair of the Board of Directors of
Cadiz, shall be deemed independent notwithstanding the foregoing
sentence, but (y) no other person who, at the time he or she
becomes a director of Borrower or any of its Subsidiaries, is (or
becomes) or has been a director or officer or other employee of
Cadiz or any of its Affiliates (including Borrower and its
Subsidiaries) shall be considered independent, and (z) no person
who, after becoming a director of Borrower or any of its
Subsidiaries, becomes (i) a director or officer or other employee
of Cadiz or any of its Affiliates (other than Borrower and its
Subsidiaries) or (ii) an officer or other employee of Borrower or
any of its Subsidiaries, shall be considered independent.
5.8 MAINTENANCE OF SEPARATE EXISTENCE.
5.8.1 Hold regular corporate meetings and
otherwise observe corporate formalities, and cause each of its
Subsidiaries to observe corporate formalities.
5.8.2 Maintain its assets, and cause the assets
of each of its Subsidiaries to be maintained, separately from the
assets of Cadiz or any Affiliate of Cadiz other than Borrower or
its Subsidiaries, including, without limitation, by maintaining
bank accounts separate from those maintained by Cadiz and such
other Affiliates of Cadiz and by not commingling any such assets
with those of Cadiz or any such other Affiliate of Cadiz.
5.8.3 (a) Conduct, and cause each of its
Subsidiaries to conduct, all business correspondence and other
communications of Borrower or any of its Subsidiaries in Borrower's
(or such Subsidiary's) own name, on its own stationery; (b)
maintain a separately listed telephone number from that of Cadiz;
and (c) otherwise present itself to the public as a Person separate
from Cadiz, independently engaged in the businesses in which it is
engaged in accordance with the provisions of the Loan Documents.
5.9 MARKETING AGREEMENTS. Maintain Marketing
Agreements with each Grower for whom Borrower provides marketing
services, and keep in force, and diligently perform its obligations
and enforce its rights under, all Marketing Agreements, including,
without limitation, by all appropriate legal proceedings and
without waiver or amendment except with Lender's prior written
consent.
5.10 FINANCIAL COVENANTS.
5.10.1 WORKING CAPITAL.
(a) Cause Working Capital at the end of
each fiscal year set forth below to be at least equal to the amount
set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM WORKING CAPITAL
December 31, 1996 $35.2 million
December 31, 1997 34.5 million
December 31, 1998 34.4 million
December 31, 1999 34.1 million
December 31, 2000 34.0 million
December 31, 2001 36.0 million
December 31, 2002 36.0 million
December 31, 2003 36.0 million
December 31, 2004 36.0 million
December 31, 2005 36.0 million
(b) Cause Working Capital at the end of
each fiscal quarter set forth below to be at least equal to the
amount set forth opposite fiscal quarter:
FISCAL QUARTER ENDING MINIMUM WORKING CAPITAL
March 31 of any
fiscal year $25.0 million
June 30 of any
fiscal year 10.0 million
September 30 of any
fiscal year ending 27.0 million
5.10.2 CURRENT RATIO.
(a) Cause the ratio of Current Assets to
Current Liabilities at the end of each fiscal year set forth below
to be at least equal to the ratio set forth opposite such fiscal
year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 3.16 to 1
December 31, 1997 3.06 to 1
December 31, 1998 2.93 to 1
December 31, 1999 2.72 to 1
December 31, 2000 2.67 to 1
December 31, 2001 2.71 to 1
December 31, 2002 2.71 to 1
December 31, 2003 2.71 to 1
December 31, 2004 2.71 to 1
December 31, 2005 2.71 to 1
(b) Cause the ratio of Current Assets to
Current Liabilities at the end of each fiscal quarter set forth
below to be at least equal to the ratio set forth opposite such
fiscal quarter:
FISCAL QUARTER ENDING MINIMUM RATIO
March 31 of any
fiscal year 2.50 to 1
June 30 of any
fiscal year 1.22 to 1
September 30 of any
fiscal year 2.30 to 1
5.10.3 DEBT SERVICE COVERAGE RATIO. Cause the
Debt Service Coverage Ratio for each fiscal year set forth below to
be at least equal to the ratio set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 0.68 to 1
December 31, 1997 1.01 to 1
December 31, 1998 1.16 to 1
December 31, 1999 1.12 to 1
December 31, 2000 1.05 to 1
December 31, 2001 1.25 to 1
December 31, 2002 1.25 to 1
December 31, 2003 1.25 to 1
December 31, 2004 1.25 to 1
December 31, 2005 1.25 to 1
5.10.4 INTEREST COVERAGE RATIO. Cause the
Interest Coverage Ratio for each fiscal year set forth below to be
at least equal to the ratio set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 1.10 to 1
December 31, 1997 1.38 to 1
December 31, 1998 1.73 to 1
December 31, 1999 2.01 to 1
December 31, 2000 2.33 to 1
December 31, 2001 2.94 to 1
December 31, 2002 2.94 to 1
December 31, 2003 2.94 to 1
December 31, 2004 2.94 to 1
December 31, 2005 2.94 to 1
5.10.5 DEBT TO EBITDA RATIO. Cause the ratio of
(a) Consolidated Debt of Borrower and its Subsidiaries at the end
of each fiscal year set forth below to (b) EBITDA for such fiscal
year to be no greater than the ratio set forth opposite such fiscal
year:
FISCAL YEAR ENDING MAXIMUM RATIO
December 31, 1996 8.69 to 1
December 31, 1997 6.81 to 1
December 31, 1998 5.42 to 1
December 31, 1999 4.54 to 1
December 31, 2000 3.85 to 1
December 31, 2001 2.99 to 1
December 31, 2002 2.99 to 1
December 31, 2003 2.99 to 1
December 31, 2004 2.99 to 1
December 31, 2005 2.99 to 1
5.10.6 TANGIBLE NET WORTH. Cause Tangible Net
Worth at the end of each fiscal year set forth below to be at least
equal to the amount set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM TANGIBLE NET WORTH
December 31, 1996 $20.0 million
December 31, 1997 22.5 million
December 31, 1998 26.5 million
December 31, 1999 31.9 million
December 31, 2000 37.7 million
December 31, 2001 45.3 million
December 31, 2002
through December 31,
2005 $45.3 million plus one hundred
percent (100%) of the cumulative
aggregate Consolidated Net
Income of Borrower and its
Subsidiaries for each fiscal
year of Borrower beginning with
and including fiscal year 2002.
5.10.7 DEBT TO EQUITY RATIO. Cause the ratio of
(a) Consolidated Debt of Borrower and its Subsidiaries at the end
of each fiscal year set forth below to (b) Consolidated
stockholders' equity of Borrower and its Subsidiaries at the end of
such fiscal year, determined in accordance with GAAP consistent
with GAAP used in the preparation of the Base Period Financial
Statements, to be no greater than the ratio set forth opposite such
fiscal year:
FISCAL YEAR ENDING MAXIMUM RATIO
December 31, 1996 5.76 to 1
December 31, 1997 4.59 to 1
December 31, 1998 3.53 to 1
December 31, 1999 2.84 to 1
December 31, 2000 2.21 to 1
December 31, 2001 1.66 to 1
December 31, 2002 1.66 to 1
December 31, 2003 1.66 to 1
December 31, 2004 1.66 to 1
December 31, 2005 1.66 to 1
5.10.8 COMPLIANCE. For purposes of determining
Borrower's compliance with any of Sections 5.10.3, 5.10.4 and
5.10.5 with respect to the fiscal year ending December 31, 1996,
(a) all calculations shall be based on Borrower's (including
Debtors') Consolidated operations for the entire calendar year
1996, excluding (i) the effects of (A) the Acquisition and (B) the
application of purchase accounting; (ii) (A) adequate protection
payments made in the Debtors' bankruptcy cases and recorded as
expenses on the Debtors' income statement, (B) professional fees
paid in connection with the Debtors' bankruptcy cases, (C) (without
duplication of amounts excluded under clause (ii)(A)) expenses
recorded by the Debtors to reflect increases in liabilities
relating to (1) interest accruals at contracted default rates and
contractually reimbursable costs and expenses (including, without
limitation, professional fees) incurred by third parties, and (2)
adjudication or settlement of claims against the Debtors in amounts
greater than the amount recorded by the Debtors for such claims on
their financial statements, and (D) income arising from the
adjudication or settlement of claims against the Debtors in amounts
less than the amounts recorded by the Debtors for such claims on
their financial statements; and (b) interest expense for the period
from January 1, 1996 through September 13, 1996 shall be deemed to
be $11,227,374.
5.11 REPORTING REQUIREMENTS. Furnish (or cause to be
furnished) to Lender:
5.11.1 BUSINESS PLAN; CROP DEVELOPMENT PLAN.
(a) No later than December 1 of each year,
(i) a final business plan for the fiscal year ending December 31 of
the following calendar year, (A) (1) based on the then current
Business Plan, revised to take into account asset sales,
abandonments, new plantings and other known changes, (2) including
any then available operating budgets for such succeeding fiscal
year, (3) reflecting estimated maximum expenditures during such
succeeding fiscal year in respect of Grower Advances, land leases
and long term contracts for the purchase of packaging materials,
chemicals and other supplies, based on then current contract
negotiations, and (4) explaining in reasonable detail all variances
from the then current Business Plan; and (B) certified by the Chief
Financial Officer of Borrower as having been (1) approved by
Borrower's Board of Directors in final form, (2) prepared on the
basis of reasonable assumptions and (3) representing the good faith
opinion of the Chief Executive Officer and the Chief Financial
Officer of Borrower, at the time of delivery thereof to Lender, as
to the course of business of Borrower during the period covered
thereby; and (ii) a final crop development plan for the fiscal year
ending December 31 of the following calendar year, in form and
substance reasonably satisfactory to Lender, based on the then
current Crop Development Plan, (A) revised to take into account
asset sales, abandonments, new plantings and other known changes,
and (B) explaining in reasonable detail all variances from the then
current Crop Development Plan;
(b) on June 1 and September 15 of each
year, commencing with 1997, a reforecast of Borrower's projected
results for the fiscal year ending December 31 of such year,
including a comparison to the projections included in the then
current Business Plan;
(c) promptly following each (i)
allocation or reallocation of costs or other amounts under the
Cadiz Services Agreement, (ii) determination of any amount payable
to or by Borrower under the Tax Sharing Agreement or (iii)
determination of the annual rent payable under the Cadiz Lease,
notice thereof; and
(d) no later than two (2) Business Days
prior to effecting any payment from the Unsecured Claims
Disbursement Account, notice of the amount to be so paid, together
with evidence, reasonably satisfactory to Lender, that sufficient
funds (i) have been made available to Borrower by Cadiz from the
Unsecured Claims Reserve Account, as a Capital Contribution, and
(ii) are held in the Unsecured Claims Disbursement Account, to
effect such payment.
5.11.2 MONTHLY FINANCIAL STATEMENTS. (a) With
respect to each of the fiscal months of Borrower ending on or
before the first anniversary of the Effective Date (other than the
last fiscal month of Borrower's fiscal year): (i) as soon as
available and in any event within thirty (30) days after the end of
each of such month, monthly and year to date financial statements,
prepared in a manner consistent with those delivered by the Debtors
during the year immediately preceding the Effective Date, and (ii)
as soon as available and in any event within sixty (60) days after
the end of each such month, monthly and year to date financial
statements, prepared in accordance with GAAP consistent with GAAP
applied in the preparation of the Base Period Financial Statements
(subject to normal year end adjustments) and so certified by
Borrower's Chief Financial Officer; and (b) with respect to each of
Borrower's fiscal months ending after the first anniversary of the
Effective Date (other than the last fiscal month of a fiscal year):
as soon as available and in any event within thirty (30) days after
the end of each such month, monthly and year to date financial
statements, prepared in accordance with GAAP consistent with GAAP
applied in the preparation of the Base Period Financial Statements
(subject to normal year end adjustments) and so certified by
Borrower's Chief Financial Officer. Such financial statements,
whether delivered pursuant to clause (a) or clause (b) of this
Section 5.11.2, shall include profit and loss statements and a
balance sheet of Borrower and its Subsidiaries, on a Consolidated
basis, as of the end of such month, together with a comparison and
reconciliation of Borrower's actual performance for such month to
the then current Business Plan;
5.11.3 ANNUAL FINANCIAL STATEMENTS. As soon as
available and in any event no later than one hundred nine (109)
days after the end of each of Borrower's fiscal years: (a) a
consolidated and consolidating balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and (to the extent
applicable) of the preceding fiscal year, (b) a consolidated and
consolidating statement of income and retained earnings of Borrower
and its Subsidiaries for such fiscal year and (to the extent
applicable) each of the two preceding fiscal years, and (c) a
consolidated statement of cash flows of Borrower and its
Subsidiaries for such fiscal year and (to the extent applicable)
each of the two preceding fiscal years, all in reasonable detail
and stating in comparative form the respective consolidated and
consolidating figures for the corresponding date and period in the
prior fiscal year, and all prepared in accordance with GAAP
consistently applied and certified without qualification as to
going concern or scope by Price Waterhouse LLP or Deloitte & Touche
LLP or other independent accountants selected by Borrower and
reasonably acceptable to Lender;
5.11.4 MANAGEMENT LETTERS. Promptly upon receipt
thereof, copies of any reports submitted to Borrower or any of its
Subsidiaries by independent certified public accountants in
connection with the examination of the financial statements of
Borrower or any of its Subsidiaries made by such accountants;
5.11.5 CERTIFICATE OF NO DEFAULT. As soon as
possible and in any event within fifty five (55) days after the end
of each fiscal quarter of Borrower, a certificate of the Chief
Executive Officer and the Chief Financial Officer of Borrower
(accompanied by calculations sufficient in detail to establish
compliance with each of the covenants set forth in each of (i) in
the case of the first three quarters of any fiscal year, Sections
5.10.1(b) and 5.10.2(b), and (ii) in the case of the last quarter
of a fiscal year, Sections 5.10.1(a), 5.10.2(a) and 5.10.3 through
5.10.7, 6.3.4, 6.4(a), 6.5.6 and 6.16) certifying that, to the best
of their knowledge following diligent inquiry, no Default or Event
of Default has occurred and is continuing or, if a Default or Event
of Default has occurred and is continuing, a statement as to the
nature thereof and the action which is proposed to be taken with
respect thereto;
5.11.6 NOTICE OF LITIGATION. Promptly after the
commencement thereof, notice of all actions, suits, and proceedings
before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting
Borrower or any of its Subsidiaries;
5.11.7 NOTICE OF DEFAULTS AND EVENTS OF DEFAULT.
Immediately upon obtaining knowledge of the occurrence of any
Default or Event of Default, a written notice setting forth the
details of such Default or Event of Default and the action which is
proposed to be taken by Borrower with respect thereto;
5.11.8 ERISA REPORTS. Promptly after the filing
or receipt thereof, copies of all reports (including annual
reports) and notices that Borrower or any Subsidiary of Borrower
files with or receives from the PBGC or the U.S. Department of
Labor under ERISA; and as soon as possible after Borrower or any
Subsidiary of Borrower knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with
respect to any ERISA Plan or that the PBGC or Borrower or any such
Subsidiary has instituted or will institute proceedings under Title
IV of ERISA to terminate any ERISA Plan, a certificate of the Chief
Executive Officer setting forth details as to such Reportable Event
or Prohibited Transaction or ERISA Plan termination and the action
Borrower proposes to take with respect thereto;
5.11.9 ENVIRONMENTAL MATTERS. Promptly after the
receipt thereof, copies of any notice received from any
governmental authority or other Person asserting that Borrower or
any Subsidiary of Borrower is responsible or potentially
responsible for any release or threatened release of any hazardous
waste or hazardous substance (as such terms are defined in Section
4.14);
5.11.10 DEBTORS' AUDITED FINANCIAL STATEMENTS. No
later than October 25, 1996, audited financial statements for each
of the fiscal years of Debtors ended December 31, 1994, and
December 31, 1995, certified by Deloitte & Touche LLP or other
independent accountants selected by Borrower and reasonably
acceptable to Lender;
5.11.11 PROPERTY SALES. No later than the date on
which any sale of a Pre Identified Asset by Borrower or any
Subsidiary of Borrower closes, a notice thereof, executed on behalf
of Borrower by its Chief Executive Officer, certifying as to (i)
the number of acres of farming acreage of each type listed on
Exhibit I included in such sale, and (ii) a computation of the
Minimum Cash Balance reflecting such sale;
5.11.12 BLYTHE RANCH CASH FLOW. No later than June
30 of each year, a certificate, executed on behalf of Borrower by
its Chief Executive Officer and Chief Financial Officer, attaching,
and certifying as to the accuracy and completeness of, (a) a
calculation, in reasonable detail and using the methodology used in
preparing the Blythe Ranch Projections, of the Blythe Ranch Cash
Flow for the crop season then most recently ended, and (b) a
comparison of such Blythe Ranch Cash Flow, and of the Blythe Ranch
Cash Flow for any prior years covered by the Blythe Ranch
Projections, to the Projected Blythe Ranch Cash Flow for each of
such years and such prior years.
5.11.13 NOTICES TO HANCOCK. Concurrently with the
delivery thereof to John Hancock, a copy of each notice or other
communication required to be delivered to John Hancock under the
John Hancock Loan Documents; and
5.11.14 GENERAL INFORMATION. Such other
information respecting the condition or operations, financial or
otherwise, of Borrower or any Subsidiary of Borrower as Lender may
from time to time reasonably request, including, without
limitation, updates of any or all of the Schedules hereto.
5.12 CANCELLATION OF PREFERRED STOCK. No later than the
date that is thirty (30) days after the Effective Date, cancel
(without the payment of any amount, by way of dividend or other
distribution thereon or otherwise) all outstanding shares of
Borrower's preferred stock, including all rights to any accrued but
unpaid dividends, and deliver to Lender copies, certified by
Borrower's Secretary as true and complete copies of the originals,
of all actions of Borrower's stockholder and board of directors
giving effect to such cancellation.
5.13 SALE OF BLYTHE RANCH. When and as provided in Part
2 of the Minimum Release Price Schedule (but subject to Section
6.6.3): promptly commence (and thereafter continue) diligent
efforts to sell Blythe Ranch, marketing it (x) actively and
extensively, (y) to as broad a range of potential purchasers as is
reasonably possible and (z) in a manner designed to consummate the
sale of Blythe Ranch at a purchase price equal to or greater than
the Blythe Ranch Release Price. Provided that Borrower has, in
Lender's judgment (reasonably applied), made diligent efforts to
market Blythe Ranch to Persons other than Affiliates of Cadiz,
Borrower may, with Lender's prior written consent, not to be
unreasonably withheld or delayed, sell Blythe Ranch to Cadiz at a
price equal to the higher of (p) the Blythe Ranch Release Price and
(q) the highest bona fide offer for Blythe Ranch, if any, received
from a Person other than an Affiliate of Cadiz.
5.14 AAI. No later than December 13, 1996, (a) cause
the pending bankruptcy proceedings of AAI to be dismissed in
accordance with the Bankruptcy Code, and (b) deliver to Lender, and
cause AAI to execute and deliver to Lender, each of the documents
that would have been required to be delivered by or with respect to
AAI as a condition precedent to the effectiveness of Section 2 but
for the proviso set forth in the first paragraph of Section 3; and
(b) take each of the acts with respect to AAI, and cause AAI to
take each of the acts AAI would have been required to take, as a
condition precedent to the effectiveness of Section 2 but for the
proviso set forth in the first paragraph of Section 3.
5.15 PACA LICENSE. No later than October 15, 1996, (a)
obtain the license from the United States Department of Agriculture
the issuance of which was provided for under the commitment
delivered pursuant to Section 3.18, and (b) deliver a copy thereof
to Lender.
5.16 LEGAL OPINION. No later than November 15, 1996,
deliver to Lender an opinion of Miller & Holguin (a) as to whether
or not the capital stock of each of Borrower's Subsidiaries has
been duly authorized and validly issued and is fully paid and
nonassessable; and (b) if the capital stock of any Subsidiary of
Borrower is not duly authorized and validly issued, or is not fully
paid and nonassessable, explaining the reasons for such opinion.
5.17 LEASEHOLD DOCUMENTS. Use reasonably diligent
efforts to obtain and to deliver to Lender, by October 15, 1996,
each of the Amendments to Lease With Lender Cure Rights and related
memoranda of leases that were not delivered on the Effective Date,
together with the related Leasehold Deed of Trust.
5.18 FURTHER ASSURANCES. Execute, deliver, record,
register and file or take, and cause each of its Subsidiaries to
execute, deliver, record, register and file or take, all such
notices, statements and other documents and other steps, including
but not limited to the amendment of the Loan Documents and any
financing statements prepared thereunder, as may be reasonably
necessary or advisable, or that Lender may reasonably request, to
render fully valid and enforceable, under all applicable laws, the
rights, Liens and priorities of Lender with respect to all security
from time to time furnished under this Agreement or any other Loan
Document or intended to be so furnished or otherwise in order more
fully to carry out the provisions and intentions of this Agreement,
in each case in such form and at such times as shall be reasonably
satisfactory to Lender; and, without limiting the generality of the
foregoing: if any Collateral (or collateral subject to a security
interest created pursuant to the Security Document) is evidenced by
a promissory note, negotiable document, chattel paper or
instrument, deliver and pledge to Lender hereunder or under the
relevant Security Document (or cause the relevant Guarantor to
deliver and pledge to Lender pursuant to the relevant Security
Document) such note, document, chattel paper or instrument, duly
indorsed and accompanied by duly executed instruments of transfer
or assignment, all in form and substance satisfactory to Lender.
5.19 ACCESS TO INFORMATION. At any time and from time
to time, permit (and cause each of its Subsidiaries to permit)
Lender, or any agent or representative of or consultant to Lender
or its counsel (including, without limitation, any employee,
principal or other representative of any consultant to Lender or
its counsel), the reasonable costs of which shall be paid by
Borrower within ten (10) days after Lender's demand, to examine and
make copies of and abstracts from the records and books of account
of, and visit the real property and other assets of, Borrower and
any of its Subsidiaries, and to discuss the status of the growing
crops and the affairs, finances and accounts of Borrower and its
Subsidiaries, with any of their respective officers, directors or
other personnel and their respective independent accountants. This
Section 5.14 shall constitute Borrower's irrevocable authorization
and direction to such officers, directors, other personnel and
independent accountants to make such records available and to
discuss such matters with Lender or its representatives.
6. NEGATIVE COVENANTS. So long as the Note or any other
amount payable by Borrower under any of the Loan Documents shall
remain unpaid, Borrower agrees that it shall not:
6.1 INACTIVE SUBSIDIARIES. Cause or permit (a) either
of Sun Harvest, Inc. and Pacific Farm Service, Inc., unless and
until it is restored to the status of a corporation validly
existing and qualified to do business and in good standing under
the laws of the State of California, to enter into any transaction
whatsoever; or (b) Sun World (Europe) B.V., or any other Subsidiary
of Borrower described on Schedule 4.3 as being inactive to acquire
or dispose of any assets or to enter into any other transaction
that would be material with respect to such Subsidiary.
6.2 LIENS AND CLAIMS. Create, incur, assume or suffer
to exist, or permit any Subsidiary of Borrower to create, incur,
assume or suffer to exist:
6.2.1 any Lien or claim with respect to any of
such Person's properties that would be pari passu with or senior to
the Liens in favor of Lender provided for herein or Lender's claim
against Borrower in respect of the obligations arising under this
Agreement and the other Loan Documents, other than (a) such senior
Liens as may be expressly permitted by Lender, as listed in the
title policy endorsements delivered to Lender in accordance with
Section 3.15; (b) Liens that were prior to Lender's pre petition
Liens as of the Petition Date, securing an amount not in excess of
the principal amount thereof as of the Effective Date, as reduced
from time to time by any payments of principal made thereon, and
accrued and unpaid interest thereon and other costs, expenses and
fees and other amounts payable under the documentation governing
the obligations secured thereby; (c) the John Hancock Liens, to the
extent such Liens (i) are permitted to exist under Section 6.2.2(f)
and (ii) have priority over the Liens in favor of Lender pursuant
to the Intercreditor Agreement; (d) purchase money security
interests in personal property (i) securing purchase money Debt
incurred after the Effective Date in accordance with the provisions
of this Agreement, in an amount not in excess of the original
principal amount thereof, as reduced from time to time by any
payments of principal made thereon, and accrued and unpaid interest
thereon and other costs, expenses and fees and other amounts
payable under the documentation governing such Debt, and (ii)
covering only the property so acquired; and (e) Liens described in
Section 6.2.2(b), 6.2.2(c) or 6.2.2(e), in any such case, to the
extent such Liens (i) are permitted to exist under such Section and
(ii) have priority over the Liens in favor of Lender by operation
of law;
6.2.2 any other Lien with respect to any of such
Person's properties, except for the following:
(a) Liens in favor of Lender;
(b) Liens, other than Recorded Tax Liens,
for taxes or assessments or other government charges or levies that
are not yet due and payable or, if due and payable, that are being
contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(c) Liens imposed by law, such as
producers', mechanics', materialmen's, landlords', warehousemen's,
carriers' and agricultural Liens (including, without limitation,
the rights of growers and vendors of perishable farm products under
PACA), and other similar Liens, securing obligations incurred in
the ordinary course of business, provided that the aggregate amount
of such Liens that are both (i) more than thirty (30) days past due
and (ii) not being contested in good faith by appropriate
proceedings, for which appropriate reserves have been established,
does not exceed $100,000;
(d) Liens under worker's compensation,
unemployment insurance, social security, or similar legislation;
(e) Liens, deposits, or pledges, in any
case, made in the ordinary course of business, to secure (i) the
performance of bids, tenders, contracts (other than contracts for
the payment of money), or public or statutory obligations; (ii)
surety, stay, appeal, indemnity, performance, or other similar
bonds (including Borrower's pledge of cash collateral, in an amount
not exceeding $1,180,000, to the Department of Agriculture or to
the issuer of any bond delivered to the Department of Agriculture
in lieu of a cash deposit, as required to obtain the issuance of
(or to maintain thereafter) Borrower's license under PACA); or
(iii) other similar obligations.
(f) the John Hancock Liens securing the
John Hancock Obligations in an amount not in excess of (i) the
principal amount thereof as of the Effective Date, as reduced from
time to time by any payments of principal made thereon (but without
limiting in any manner the provisions of Section 6.7 and subject to
an increase, on a single occasion, in the amount of $2,000,000
arising from John Hancock's making of a re advance to Borrower in
that amount (the "John Hancock Re Advance") in connection with
Lender's making of the Re Advance), and (ii) accrued and unpaid
interest thereon (including, when applicable under the John Hancock
Loan Documents, interest at the Default Rate provided for therein)
and (iii) other costs, expenses and fees and other amounts that,
under the John Hancock Loan Documents, are (A) payable by any
Debtor (as defined in the John Hancock Credit Agreement ("John
Hancock Debtor")) and (B) secured by the John Hancock Liens,
including, but not limited to: (W) any late charges or Make Whole
Amounts or other prepayment premiums, (X) any and all amounts
advanced by Hancock for the protection or preservation of property
subject to the John Hancock Liens, including, but not limited to,
payment of real property taxes and assessments, insurance premiums,
attorneys' fees, fees for receivers, consultants' fees, and all
other fees, costs or expenses incurred or expended by John Hancock
in connection with the enforcement of any rights, remedies or
options it may have under the John Hancock Loan Documents; (Y) any
environmental damages due under any secured environmental indemnity
agreement; and (Z) any damages, claims, actions or causes of
actions that John Hancock may have against the John Hancock
Debtors; but not (x) the grant by Borrower or any of its
Subsidiaries to John Hancock of additional security in respect of
environmental issues, or (y) any other extension of the John
Hancock Liens to other property, except for After Acquired Property
(as defined in the John Hancock Credit Agreement as in effect on
the Effective Date) and proceeds of property subject to the John
Hancock Liens as permitted hereunder;
(g) any other Lien listed on Schedule
4.5.1 (including the Lien on an undivided one half interest in
Blythe Ranch and related fixtures and equipment granted to Zenith
pursuant to the Plan), securing the obligation it is identified as
securing thereon, in an amount not in excess of the principal
amount thereof as of the Effective Date (as indicated on Schedule
4.5.1, if so indicated), as reduced from time to time by any
payments of principal made thereon (but without limiting in any
manner the provisions of Section 6.7), and accrued and unpaid
interest thereon, but not the extension of such Liens to other
property, except for proceeds of property subject to such Lien as
of the Effective Date; or
(h) Easements, rights of way,
restrictions, and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use,
and enjoyment by Borrower or any Subsidiary of Borrower of any real
property or other property or assets encumbered thereby in the
normal course of its business or materially impair the value of the
property subject thereto.
6.3 DEBT. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur, assume, or
suffer to exist, any trade debt, any unfunded liabilities under
ERISA Plans, or any Debt of any kind (including, without
limitation, under any Capitalized Lease), other than:
6.3.1 (a) the obligations of Borrower to Lender
under the Loan Documents; (b) the John Hancock Obligations,
provided that the principal amount thereof shall not exceed the
principal amount thereof as of the Effective Date, as reduced from
time to time by any payments of principal made thereon (but without
limiting in any manner the provisions of Section 6.7 and subject to
an increase, on a single occasion, in the amount of $2,000,000
arising from John Hancock's making of the John Hancock Re Advance);
and (c) other Debt that exists as of the Effective Date and is
listed on Schedule 4.5.1, provided that the principal amount
thereof shall not exceed the principal amount thereof as of the
Effective Date, as reduced from time to time by any payments of
principal made thereon (but without limiting in any manner the
provisions of Section 6.7);
6.3.2 accounts payable to trade creditors for
goods or services which are not aged more than one hundred twenty
(120) days from billing date, and current operating liabilities
(other than for borrowed money), in each case incurred in the
ordinary course of business; provided that the aggregate amount of
such accounts payable or other current operating liabilities that
are both (a) more than sixty (60) days past due and (b) not being
contested in good faith by appropriate acts or proceedings, for
which appropriate reserves have been established, does not exceed
$100,000;
6.3.3 current liabilities with respect to
unfunded vested benefits under any ERISA Plan that are not material
in amount; or
6.3.4 Debt (a) incurred from and after January 1,
1997, in an aggregate amount not exceeding, in any fiscal year of
Borrower, the lesser of (i) $1,500,000, and (ii) the excess, if
any, of (A) Borrower's consolidated Capital Expenditures for such
fiscal year over (B) Borrower's consolidated Capital Expenditures
for such fiscal year used to improve or maintain assets subject to
the John Hancock Liens or to acquire assets that, upon Borrower's
(or the acquiring Subsidiary's) acquisition of rights therein,
become subject to the John Hancock Liens, (b) owed to vendors in
respect of personal property (other than property the cost of which
constitutes a Crop Development Cost), not previously owned by
Borrower, any Subsidiary of Borrower or Cadiz or any other
Subsidiary or Affiliate of Cadiz, purchased from such vendors and
as to which, in respect of any individual acquisition: (w) the
amount of the related Debt does not exceed the fair market value of
the property so acquired, (x) the terms of such Debt require the
payment of regular installments of principal that approximate, in
the reasonable good faith judgment of the Chief Financial Officer,
the diminution in the fair market value of such property over time,
(y) any Lien securing such Debt is limited to the property so
acquired, and (z) if such Debt had been incurred on the first day
of the fiscal year preceding the fiscal year in which it is
actually incurred, Borrower would have been in compliance, as of
the last day of such preceding fiscal year, with each of the
financial covenants contained in Section 5.10 required to be
measured as of the last day of such preceding fiscal year.
6.4 LEASES; OTHER ACQUISITIONS.
(a) Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur, assume, or
suffer to exist, any obligation (as lessee, licensee or otherwise)
for the rental, hire or use of (i) any personal property, other
than in the ordinary course of business; or (ii) any real property,
other than (A) (1) to replace Land owned or leased as of the
Effective Date (or Land subsequently leased to replace such Land in
accordance with this Section 6.4) for the growing of row crops and
(2) provided that (a) the then current Business Plan calls for such
row crops to continue to be grown in quantities necessitating
Borrower's entry into such replacement lease, (b) the lessor
thereunder agrees to place a memorandum of such lease of record,
and (c) Borrower executes and acknowledges (or causes to be so
executed and acknowledged), and causes to be recorded, both a
Leasehold Deed of Trust and an Amendment to Lease with Lender Cure
Rights with respect thereto; or (B) temporary rentals in the
ordinary course of business for the storage of equipment or
inventory and like purposes, provided that aggregate rentals paid
or incurred by Borrower and its Subsidiaries under such leases
during any fiscal year of Borrower do not exceed $100,000; or
(b) acquire, or permit any Subsidiary of Borrower
to acquire, any fee interest in real property.
6.5 DIVIDENDS; DISTRIBUTIONS; OTHER PAYMENTS AND
ACTIONS.
6.5.1 Declare or pay any dividends or other
distributions, of any nature whatsoever (other than dividends or
distributions payable solely in shares of Borrower's common stock),
on any shares of Borrower's capital stock, or purchase, redeem or
otherwise retire any shares of Borrower's capital stock, or agree
to do so; provided, however, that, provided that there shall not
have occurred and then be continuing (or would exist immediately
thereafter) any Default or Event of Default, Borrower may
distribute the Re Advance and the John Hancock Re Advance to Cadiz;
6.5.2 pay to Cadiz on a Consolidated basis, in
respect of management services provided under the Cadiz Services
Agreement, an amount in excess of $375,000 per calendar quarter;
6.5.3 (a) at any time during (i) the period
commencing on the first day of the Deferral Period and ending on
the date on which all interest accrued in respect of the
Restructured Loan during the Deferral Period has been paid in full
or (ii) during the continuance of any Default or Event of Default:
pay (or cause to be paid) any amount to Cadiz (or any Subsidiary of
Cadiz that is not a Subsidiary of Borrower) in respect of any
obligation, including, without limitation, any amount due under the
Cadiz Services Agreement, the Tax Sharing Agreement or the Cadiz
Lease; or (b) pay, prior to the due date thereof, any amount owed
under the Cadiz Services Agreement, the Tax Sharing Agreement, the
Cadiz Lease or any other agreement with Cadiz or any Subsidiary of
Cadiz that is not a Subsidiary of Borrower;
6.5.4 pay, or permit any Subsidiary of Borrower
to pay, any amount in respect of any Class 6 Claim or Class 8 Claim
(including, without limitation, any amount payable to LSL
Biotechnologies, Inc., pursuant to a settlement of its claims or
otherwise, with respect to its pre petition claims against the
Debtors) except (a) from funds transferred to the Unsecured Claims
Disbursement Account from the Unsecured Claims Reserve Account, as
a Capital Contribution by Cadiz to Borrower, and (b) following
compliance with Section 5.11.1(d), or pay or incur (or permit any
Subsidiary of Borrower to pay or incur) any expense of resolving
any Disputed Claim (as defined in the Plan);
6.5.5 issue any securities other than common
stock; or
6.5.6 pay, or permit any Subsidiary of Borrower
to pay, any amount to any Grower in the nature of a "rendering up"
payment; provided, however, that this provision shall not prohibit
Borrower and its Subsidiaries from making payments to Growers, not
exceeding $150,000 in the aggregate for all Growers during any
calendar year, in respect of (a) produce damaged, or other errors
or omissions in the marketing of produce, by Borrower or any of its
Subsidiaries, or (b) the failure of any buyer of a Grower's produce
to pay the purchase price in full where, under the relevant
Marketing Agreement, the risk of such nonpayment has been assumed
by Borrower.
6.6 DISPOSITIONS OF ASSETS. Sell, lease, assign,
transfer, or otherwise dispose of, or permit any Subsidiary of
Borrower to sell, lease, assign, transfer, or otherwise dispose of,
any asset, including, without limitation, any shares of any capital
stock of any Subsidiary of such Person and Water Rights; provided
that:
6.6.1 Borrower and its Subsidiaries may, in the
ordinary course of business and on commercially reasonable terms,
(a) sell inventory, (b) effect Permitted Water Sales or (c) license
Trademarks or Patents to third parties;
6.6.2 Borrower and its Subsidiaries may lease
real property to others in the ordinary course of business, for a
term (including all extensions and renewals) not to exceed three
(3) years;
6.6.3 Provided that Borrower causes to be paid to
Lender, from escrow, the amount required to be paid to Lender under
Section 2.4.1(d), Borrower may sell Blythe Ranch at a price,
payable in cash at the close of sale, equal to at least the Blythe
Ranch Release Price; and
6.6.4 (a) Subject to Sections 6.6.4(b) and (c),
Borrower may sell any asset listed on the Minimum Release Price
Schedule ("Pre Identified Asset"; provided that such term shall
exclude Blythe Ranch), at a price equal to at least the Minimum
Sales Price for such Pre Identified Asset and on terms requiring
that the full sales price be paid, in cash, by the close of sale.
(b) Asset Sales Proceeds from any sale
permitted under Section 6.6.4(a) shall be paid to John Hancock to
be applied to reduction of the principal of the John Hancock
Obligations, as follows:
(i) if the relevant Pre Identified
Asset is sold on or before the third anniversary of the Effective
Date, (x) 50% towards the payment of the next required installments
of principal due under the John Hancock Obligations, in the order
of their maturity, and (y) 50% toward the payment of the
installments (including the final balloon payment) of principal due
under the John Hancock Obligations in the inverse order of their
maturity, until an aggregate amount of $30,000,000 has been so
applied in accordance with this clause (i); provided that (p) no
more than $25,000,000 in Asset Sales Proceeds from the sale of Tier
A Pre Identified Assets shall be so applied; and (q) if such Asset
Sales Proceeds are received:
(A) at a time when the John Hancock
Obligations have been accelerated; or
(B) at a time when (1) there has
occurred any default in (a) the payment when due of any scheduled
installment of principal or interest under the John Hancock
Obligations, or (b) the payment, within ten (10) days after written
demand therefor, of other amounts due under the John Hancock
Obligations aggregating at least $250,000, and (2) the overdue
payment(s) have not been made (from funds other than such Asset
Sales Proceeds); or
(C) at a time when the Restructured
Loan has been accelerated and such acceleration has not been
rescinded; or
(D) after the occurrence of any of
the following:
(1) the receipt by Lender, and
application by Lender to the payment of the obligations of Borrower
under the Loan Documents, of any dividends, cash, securities,
instruments or other property or distributions under Section 3 of
the Stock Pledge Agreement executed by Cadiz in favor of Lender, or
the exercise (by proxy or otherwise) by Lender of any voting or
other consensual rights with respect to the stock of Borrower
pursuant to Section 4 of such Stock Pledge Agreement,
(2) the exercise by Lender,
prior to acceleration of the Restructured Loan, of any right or
remedy arising upon or after a Default that (a) results in
Borrower's loss of use or control of any assets (other than the
Cash Account or the cash therein) such that Borrower is rendered
unable to conduct business substantially in the ordinary course, or
(b) constitutes a liquidation by Lender of any material assets
(other than property subject to the John Hancock Liens) into cash
proceeds for the benefit of Lender, or
(3) the exercise by Lender of
any right of set off Lender may have with respect to assets of
Borrower or any Subsidiary of Borrower, under Section 8.9 or
otherwise;
then John Hancock may allocate the entire amount of such Asset
Sales Proceeds to the payment of amounts due under the John Hancock
Obligations in accordance with the provisions of the John Hancock
Loan Documents; and
(ii) to the extent that (A) Asset
Sales Proceeds from the sale of Tier A Pre Identified Assets exceed
$25,000,000, (B) Asset Sales Proceeds from all sales of Pre
Identified Assets (other than that portion of Asset Sales Proceeds
from the sale of Tier A Pre Identified Assets in excess of
$25,000,000) exceed $30,000,000, or (C) the relevant Pre Identified
Asset is sold after the third anniversary of the Effective Date,
toward the payment of the installments of principal (including the
final balloon payment) due under the John Hancock Obligations in
the inverse order of their maturity.
For purposes of this Agreement, a Pre Identified Asset shall be
deemed to have been "sold" on or before the third anniversary of
the Effective Date if (r) the sale of such Pre Identified Asset
closes on or before such third anniversary, or (s) (A) a contract
for the sale of such Pre Identified Asset has been executed and
delivered, and an escrow for such sale has been opened, on or
before the third anniversary of the Effective Date, and (B) such
sale closes on or before the date that is six months after the date
on which escrow was opened.
(c) Notwithstanding the foregoing, if any
sale of a Pre Identified Asset permitted under Section 6.6.4
includes a sale of crops growing on such Pre Identified Asset at
the time of closing of such sale: (i) Borrower (or the relevant
Subsidiary) and the purchaser shall agree upon in good faith and on
arm's length terms, and reflect in writing, a separate purchase
price for such growing crops (the "Crop Value"); and (ii) if the
Crop Value is less than 80% of the Funded Crop Costs allocable to
such Pre Identified Asset, then Borrower (or relevant Subsidiary,
if applicable) shall not sell such Pre Identified Asset together
with such growing crops except with Lender's express prior written
consent.
6.7 PAYMENTS OF DEBT; OTHER OBLIGATIONS.
6.7.1 Prepay, or permit any Subsidiary of
Borrower to prepay, any amount in respect of any Debt other than
(a) the Restructured Loan; (b) solely from Asset Sales Proceeds as
permitted under Section 6.6.4, the John Hancock Obligations (and,
without limiting the generality of the foregoing, no prepayment of
the John Hancock Obligations shall be effected in connection with
any "Change of Control," as defined in the John Hancock Credit
Agreement); or (c) solely from the net proceeds of a sale of Blythe
Ranch permitted under Section 6.6.3, the Zenith Note;
6.7.2 Except with Lender's prior written consent:
(a) consent, or permit any Subsidiary of Borrower to consent, to
any amendment, modification, supplement, waiver or termination of
any of the documentation governing any Debt, or (b) enter into, or
otherwise agree to, any settlement of claims asserted by or against
LSL Biotechnologies, Inc.;
6.7.3 (a) Pay, or permit any Subsidiary of
Borrower to pay, more than three (3) days prior to its due date,
any amount due in respect of an operating lease, or (b) pay, or
permit any Subsidiary to pay, prior to the date that is twenty five
(25) days after the date of the relevant invoice, any amount due
under an account payable owed to a trade creditor, except to the
extent that such payment would be made prior to such date in the
ordinary course of Borrower's or such Subsidiary's business; or (c)
taking into account Borrower's and its Subsidiaries' reasonably
expected seasonal requirements in the ordinary course of business,
make any other expenditure of cash that would give rise to current
assets outside the ordinary course of business.
6.8 GUARANTIES. Assume, guaranty, endorse, or
otherwise be or become directly or contingently responsible or
liable, or permit any Subsidiary of Borrower to assume, guarantee,
endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement
to purchase any obligation, stock, assets, goods, or services, or
to supply or advance any funds, assets, goods, or services, or to
maintain or cause such Person to maintain a minimum working capital
or net worth, or otherwise to assure the creditors of any Person
against loss) for obligations of any Person (any of the foregoing,
a "Guaranty"), except (i) Guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business; (ii) the assumption by Borrower,
pursuant to Marketing Agreements entered into in the ordinary
course of business, of the risk of nonpayment by buyers of produce
marketed by Borrower on behalf of Growers, (iii) Guaranties by
Borrower of any Debt of any of its wholly owned Subsidiaries, if
such Debt exists, or is incurred, in accordance with the provisions
of this Agreement; (iv) the Guaranties of the John Hancock
Obligations, as required under the John Hancock Credit Agreement,
by Sun Desert and by those other Subsidiaries of Borrower the stock
of which constitutes the Dual Pledged Securities; and (v)
Guaranties in favor of Lender.
6.9 INVESTMENTS; FUNDS.
6.9.1 INVESTMENTS. Make, or permit any
Subsidiary of Borrower to make, any loan or advance to any Person,
or purchase or otherwise acquire, or permit any such Subsidiary to
purchase or otherwise acquire, any capital stock, obligations, or
other securities of, make any Capital Contribution to, or otherwise
invest in or acquire all or substantially all of the assets or the
business of any Person, or acquire any interest in any Person
(each, an "Investment"), except: (a) Permitted Cash Investments
held in a custodial account with the Bankers Trust Company, or
another financial institution reasonably acceptable to Lender, in
which Lender holds a perfected Lien; (b) investments existing as of
the Effective Date and listed on Schedule 4.4; (c) advances by
Borrower to any of its Subsidiaries consisting of the payment, on
behalf of such Subsidiary, of expenses incurred in the ordinary
course of such Subsidiary's business; (d) (i) the performance, by
the employees of Borrower, in a prudent manner consistent with
standard industry practices, of harvest, haul and pack services for
any Grower, or (ii) the payment by Borrower of a Grower's labor
expenses incurred in harvesting a crop to be marketed by Borrower,
in each case, pursuant to a Marketing Agreement permitting Borrower
to deduct its charges for such services or to deduct amounts so
advanced by Borrower in respect of harvesting expenses before
remitting to such Grower such Grower's share of the proceeds of
sale of produce subject to such Marketing Agreement; and (e)
Investments consisting of (i) working capital "grower advances", in
accordance with standard industry practice ("Grower Advances"), (A)
(1) to growers located in the United States that at the time of
their entry into Marketing Agreements are not, and have not
previously been, Affiliates of Borrower or any Debtor, provided
that such Grower Advances are secured by a perfected security
interest of first priority in those crops and such perfected
security interest is assigned to Lender, or (2) to Growers located
in Mexico, Chile or South Africa, made substantially in accordance
with the Foreign Grower Policies and Procedures (but in an
aggregate amount, for all such Growers, in no event in excess of
the then current maximum aggregate amount set forth in the Foreign
Grower Policies and Procedures); (B) solely pursuant to Marketing
Agreements that permit Borrower to deduct all amounts owed to it
before remitting to such Growers their respective shares of the
proceeds of sale of crops marketed pursuant to such Marketing
Agreements; and (C) provided that such advances are used by the
Growers to finance their respective working capital needs directly
relating to the crops subject to such Marketing Agreements; or (ii)
advances in the form of seed provided to Growers (A) made
substantially in accordance with the Foreign Grower Policies and
Procedures; (B) solely pursuant to Marketing Agreements that permit
Borrower to deduct all amounts owed to it before remitting to such
Growers their respective shares of the proceeds of sale of crops
marketed pursuant to such Marketing Agreements; (C) in an amount,
in each instance, that is commercially reasonable for a single crop
cycle; and (D) provided that such seed is used by such Growers to
produce a crop that will be marketed by Borrower pursuant to a
Marketing Agreement in effect at the time of such advance.
6.9.2 SUBSIDIARIES; JOINT VENTURES. (a) Create
or acquire, or permit any Subsidiary of Borrower to create or
acquire, any Subsidiary; or (b) enter into or remain a party to, or
permit and Subsidiary of Borrower to enter into or remain a party
to, any Joint Venture other than (i) Joint Ventures consisting of
partnerships existing as of the Effective Date and listed on
Schedule 4.4, and (ii) Joint Ventures with Growers relating to the
production and sale of row crops, entered into in the ordinary
course of business and substantially in accordance with Debtors'
past practices.
6.9.3 FUNDS. (a) Except (i) to the extent of
funds required under the Plan to be transferred by or on behalf of
Cadiz into the Unsecured Claims Disbursement Account, and (ii)
subject to the provisions of any escrow opened in connection with a
permitted sale of Collateral: maintain, make or cause, or permit
any Subsidiary of Borrower to maintain, make or cause, any deposit
of funds of such Person into an account other than one in which
Lender holds a perfected, first priority Lien; or (b) except with
the Lender's prior written consent, amend, modify, cancel,
terminate or replace the Concentration Account Agreement.
6.10 MERGERS AND CONSOLIDATIONS. Merge (whether as the
disappearing or the surviving Person) or consolidate with, or sell,
assign, lease, or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person, or
permit any Subsidiary of Borrower to do so.
6.11 TRANSACTIONS WITH INSIDERS OR AFFILIATES.
6.11.1 (a) Enter into or continue any transaction,
including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate
(including, without limitation, Cadiz), or permit any Subsidiary of
Borrower to enter into or continue any transaction, including,
without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, except (i) if
otherwise not prohibited by this Agreement and with an Affiliate
that is (A) Borrower or a Subsidiary of Borrower, or (B) an
Affiliate of Cadiz that owns ten percent (10%) or less of the
outstanding voting securities of Cadiz: (x) upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary
than those which would obtain in a comparable arm's length
transaction with a Person not an Affiliate and (y) in the ordinary
course of Borrower's (or such Subsidiary's) business; or (ii) if
such Affiliate is (A) Cadiz or a Subsidiary of Cadiz other than
Borrower or any of its Subsidiaries, or (B) an Affiliate of Cadiz
that owns more than ten percent (10%) of the outstanding voting
securities of Cadiz: (X) pursuant to a Marketing Agreement upon
fair and reasonable terms no less favorable to Borrower or such
Subsidiary than those which would obtain in a comparable arm's
length transaction with a Person not an Affiliate, or (Y) in
accordance with the Cadiz Services Agreement, the Tax Sharing
Agreement or the Cadiz Lease; or (b) except with Lender's prior
written consent, amend, supplement or otherwise modify the Cadiz
Services Agreement, the Tax Sharing Agreement or the Cadiz Lease in
any respect. Without limiting the generality of the foregoing,
Borrower shall not (x) cause or permit Cadiz or any Affiliate of
Cadiz to be involved in the day to day management of Borrower; or
(y) grant, or permit any Subsidiary of Borrower to grant, Howard
Marguleas authority to (i) act as an agent for Borrower or any
Subsidiary with authority to bind such Person, or (ii) exercise
control over the disposition of any funds of Borrower or any
Subsidiary or otherwise to engage in the management of Borrower's
or any of its Subsidiary's financial affairs.
6.11.2 Except in accordance with the Cadiz
Services Agreement, the Tax Sharing Agreement or the Cadiz Lease,
permit, or permit any Subsidiary of Borrower to permit, Cadiz or
any Affiliate of Cadiz other than Borrower or its Subsidiaries, to
(a) pay Borrower's or such Subsidiary's expenses; (b) except to the
extent expressly provided in the Loan Documents, guaranty
Borrower's (or any Subsidiary's) obligations; or (c) advance funds
to Borrower or such Subsidiary, for the payment of expenses or
otherwise; provided, however, that Cadiz may from time to time make
Capital Contributions to Borrower (including, without limitation,
in connection with the transfer of funds into the Unsecured Claims
Reserve Account as required to comply with its obligations under
the Plan).
6.11.3 (a) Act, or permit any Subsidiary of
Borrower to act, as agent for Cadiz, or (b) except in accordance
with either the Cadiz Services Agreement or the Tax Sharing
Agreement, take any action or permit any action to be taken on its
behalf, or permit any Subsidiary of Borrower to take any action or
permit any action to be taken on its behalf (or, in either such
case, fail to take any action or cause any action to be taken on
its behalf) if the effect of taking or not taking such action, as
the case may be, could result in Borrower's being substantively
consolidated in the estate of another Person in the event of a
bankruptcy or insolvency of any such Person.
6.12 STOCK OF SUBSIDIARIES. Sell or otherwise dispose
of any shares of capital stock of any Subsidiary of Borrower, or
permit any Subsidiary of Borrower to issue any additional shares of
its capital stock.
6.13 AMENDMENTS TO GOVERNING DOCUMENTS OR PLANS. (a)
Amend, or permit any Subsidiary of Borrower to amend, the articles
or certificate of incorporation or bylaws, or the partnership
agreement, of Borrower or any Subsidiary of Borrower; or (b) except
with Lender's prior written consent (not to be unreasonably
withheld), amend the then current Business Plan or Crop Development
Plan.
6.14 CHANGES IN BUSINESS. Engage, or permit any
Subsidiary of Borrower to engage, in any line of business in which
the Debtors did not historically engage during the twelve months
preceding the date of this Agreement; or, except with Lender's
prior written consent (which shall not be unreasonably withheld)
deviate, or permit any Subsidiary of Borrower to deviate,
materially from the then current Business Plan.
6.15 CAPITAL EXPENDITURES; RESEARCH AND DEVELOPMENT
EXPENDITURES. Make or incur, or permit any Subsidiary of Borrower
to make or incur, any (a) Capital Expenditure (i) during the period
commencing on the Effective Date and ending December 31, 1996, to
the extent that, including such Capital Expenditure, Aggregate
Capital Expenditures made or incurred on or after the Effective
Date by Borrower or any of its Subsidiaries, would exceed
$1,538,000; or (ii) in any fiscal year commencing with the fiscal
year ending December 31, 1997, to the extent that, including such
Capital Expenditure, Aggregate Capital Expenditures made or
incurred during such fiscal year would exceed the sum of (A)
$4,000,000, and (B) the Capital Expenditure Rollover Amount
applicable to such fiscal year; or (b) Research and Development
Expenditure (i) during the period commencing on the Effective Date
and ending December 31, 1996, to the extent that such Research and
Development Expenditure, when aggregated with all other Research
and Development Expenditures made or incurred on or after the
Effective Date by Borrower or any of its Subsidiaries, would exceed
$300,000; or (ii) in any fiscal year commencing with the fiscal
year ending December 31, 1997, to the extent that such Research and
Development Expenditure, when aggregated with all other Research
and Development Expenditures made or incurred during such fiscal
year, would exceed the sum of (A) $1,100,000 plus (B) for each
fiscal year commencing with the fiscal year ending December 31,
1998, the product of (1) $50,000 times (2) the number of fiscal
years of Borrower that have commenced since January 1, 1998.
6.16 CERTAIN OBLIGATIONS. Enter into or otherwise
incur, or permit to exist, any obligation in respect of any
interest rate or currency swap, collar, floor or cap or other
similar agreement, whether or not such agreement would be accounted
for as a hedging obligation under GAAP.
6.17 CHANGE IN CHIEF EXECUTIVE OFFICES. Move its chief
executive office to a state other than California, or permit any
Subsidiary of Borrower to move its chief executive office to a
state other than California.
6.18 CHANGE IN FISCAL YEAR. Change Borrower's or any
Subsidiary's fiscal year to one ending on a date other than
December 31.
6.19 INSPECTION POLICIES AND PROCEDURES. Adopt any
policy or procedure relating to inspections or other investigations
of the Collateral that would permit any material portion of the
Collateral to be destroyed or damaged in the course of any
inspection or investigation.
7. EVENTS OF DEFAULT.
7.1 EVENTS OF DEFAULT. The occurrence of any of the
following (for any reason whatsoever, whether voluntarily or by
compulsion of law or otherwise), shall constitute an Event of
Default:
7.1.1 (a) Borrower shall fail to pay (i) any
installment of the principal on the Note as and when due and
payable, (ii) any interest on the Note within three (3) Business
Days after such interest first becomes due and payable, or (iii)
any other amount due under this Agreement or any other Loan
Document as and when due and payable (or, if no due date is
specified, within ten (10) days after Lender's demand therefor); or
(b) Cadiz shall fail to pay when due (or, if no due date is
specified, within ten (10) days after Lender's demand therefor) any
amount required to be paid by Cadiz under the Cadiz Agreement or
any other Loan Document; or (c) any Subsidiary of Borrower shall
fail to pay when due (or, if no due date is specified, within ten
(10) days after Lender's demand therefor) any amount required to be
paid by such Subsidiary under the Subsidiary Guaranty or any other
Loan Document.
7.1.2 Any representation or warranty made or
deemed made in this Agreement, or any other Loan Document, or which
is contained in any certificate, document, opinion, or financial or
other statement furnished at any time under or in connection with
this Agreement or any other Loan Document, by Borrower, by Cadiz or
by any Subsidiary or Affiliate of either Borrower or Cadiz, shall
prove to have been incorrect or misleading in any material respect
on or as of the date made or deemed made.
7.1.3 (a) Borrower shall fail to perform or
observe any term, provision, covenant or agreement contained in any
of Sections 5.2, 5.4, 5.5, 5.6(a), 5.7, 5.8.1, 5.8.2, 5.8.3(b),
5.8.3(c), 5.10, 5.11.1 through 5.11.3, 5.11.5, 5.11.10, 5.13 and 6;
or (b) Borrower shall fail to perform or observe any term,
provision, covenant or agreement contained in this Agreement, other
than one specifically addressed in the foregoing clause (a) or
another subsection of this Section 7.1, and such failure shall
continue for more than fifteen (15) days after the earlier of (i)
written notice from Lender, and (ii) the date on which Borrower's
Chairman, Chief Executive Officer, Chief Financial Officer or
General Counsel, or any Vice President of Borrower, first becomes
aware of such failure; or (c) Borrower shall fail to perform or
observe any term, provision, covenant or agreement contained in any
other Loan Document to which Borrower is or is to become a party,
other than one specifically addressed in another subsection of this
Section 7.1, and such failure shall continue beyond the expiration
of any applicable grace or cure period provided for thereunder; or
(d) Cadiz shall fail to perform or observe any term, provision,
covenant or agreement contained in the Cadiz Agreement or any other
Loan Document to which Cadiz is or is to become a party, other than
one specifically addressed in another subsection of this Section
7.1, and such failure shall continue beyond the expiration of any
applicable grace or cure period provided for thereunder; or (e) any
Subsidiary of Borrower shall fail to perform or observe any term,
provision, covenant or agreement contained in the Subsidiary
Guaranty or any other Loan Document to which such Subsidiary is or
is to become a party, other than one specifically addressed in
another subsection of this Section 7.1, and such failure shall
continue beyond the expiration of any applicable grace or cure
period provided for thereunder.
7.1.4 Borrower shall fail to maintain any
insurance required to be maintained under Section 5.3 and such
failure shall continue for a period of five (5) consecutive
Business Days after Borrower first becomes aware of such failure,
by notice from Lender or otherwise.
7.1.5 (a) This Agreement, or any other Loan
Document executed and delivered in connection herewith, fails to be
the valid and binding obligation of Borrower, any Subsidiary of
Borrower, or Cadiz, or any other Person party thereto, or (b) the
Liens in Lender's favor provided for under any Loan Document shall
fail, with respect to Collateral having an aggregate fair market
value in excess of $25,000, to have the priority required pursuant
to the terms hereof, or (c) (i) the validity or enforceability of
any Loan Document shall be contested by Borrower, any Subsidiary of
Borrower, or Cadiz, or any other Person party thereto, or (ii)
Borrower, any Subsidiary of Borrower, Cadiz or any other such
Person shall deny it has any further liability or obligation under
any Loan Document to which it is party.
7.1.6 (a) Borrower, any Subsidiary of Borrower or
Cadiz or any Subsidiary of Cadiz shall fail to pay at maturity any
other Debt in an outstanding principal amount in excess of
$250,000; or (b) any event occurs that, with or without the giving
of notice, the passage of time, or both, would cause or permit (A)
the John Hancock Obligations or (B) any other Debt of Borrower or
any of its Subsidiaries or of Cadiz or any of its Subsidiaries (in
an aggregate principal amount in excess of $250,000), to become, or
be declared to be, due and payable prior to maturity or to be
purchased, redeemed or otherwise acquired by Borrower or any of its
Subsidiaries or by Cadiz or any of its Subsidiaries.
7.1.7 Any "Default" or "Event of Default", as
defined in any John Hancock Loan Document, as in effect on the
Effective Date (i.e., irrespective of any waivers, consents,
amendments, supplements or other modifications becoming effective
thereafter) shall occur.
7.1.8 One or more judgments, decrees, or orders
for the payment of money as to which Borrower's or Cadiz' maximum
aggregate liability (determined on a consolidated basis) not fully
covered by insurance exceeds $250,000 shall be rendered against
Borrower or any of its Subsidiaries or Cadiz or any of its
Subsidiaries and such judgments, decrees, or orders shall continue
unsatisfied and in effect for a period of thirty (30) consecutive
days without being vacated, discharged, satisfied, or stayed or
bonded pending appeal.
7.1.9 Any of the following events occur or exist
with respect to Borrower or any ERISA Affiliate: (a) any Prohibited
Transaction involving any ERISA Plan; (b) any Reportable Event with
respect to any ERISA Plan; (c) the filing under Section 4041 of
ERISA of a notice of intent to terminate any ERISA Plan or the
termination of any ERISA Plan; (d) any event or circumstance that
might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or
for the appointment of a trustee to administer, any ERISA Plan, or
the institution by the PBGC of any such proceedings; (e) complete
or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or
termination of a Multiemployer Plan; and in each any such case,
such event or condition, together with all other events or
conditions, if any, could in the opinion of Lender subject Borrower
to any tax, penalty, or other liability to an ERISA Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate exceed or may exceed $50,000.
7.1.10 Any attachment, execution, garnishment, tax
lien or any other Lien shall be issued against any property of
Borrower or Cadiz any of their respective Subsidiaries for an
amount in excess of $250,000 and shall not be vacated, discharged,
satisfied or stayed or bonded pending appeal within thirty (30)
days after such issuance.
7.1.11 (x) Cadiz and its Subsidiaries, on a
Consolidated basis, or (y) Borrower and its Subsidiaries, on a
Consolidated basis, shall, in any fiscal year:
(a) become liable, pursuant to one or
more orders or judgments of one or more courts or governmental
agencies (except to the extent that such liability is being
contested in good faith by appropriate proceedings and for which an
adequate reserve has been established and is maintained in
accordance with GAAP) for, or
(b) admit liability or otherwise agree to
expend in remediation of hazardous substances or hazardous waste
claims or to pay,
as damages, fines, other penalties or otherwise, in respect of
hazardous substances or hazardous waste claims, an aggregate amount
that, together with the costs of investigating or defending claims
relating to hazardous substances or hazardous waste incurred by
Cadiz and its Subsidiaries or Borrower and its Subsidiaries, as the
case may be, during such fiscal year, exceeds $1,000,000.
7.1.12 (a) As of December 31, 1996, the
stockholders of Cadiz have failed to authorize the issuance of
sufficient additional shares of the common stock of Cadiz to permit
the full conversion, into such common stock, of (i) all of the
Cadiz Preferred Stock issued in connection with the Acquisition,
and (ii) all other outstanding warrants, options or other rights to
acquire, or to cause the issuance of, Cadiz' common stock; or (b)
as of the date that is six months prior to the mandatory redemption
date of any shares of the Cadiz Preferred Stock, all of the Cadiz
Preferred Stock has not been converted into common stock of Cadiz.
7.1.13 A Change of Control shall occur.
7.1.14 Borrower shall fail to be a wholly owned
Subsidiary of Cadiz.
7.1.15 Cadiz or Borrower or any of their
respective Subsidiaries (a) shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as
such debts become due; or (b) shall make an assignment for the
benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (c) shall commence any
proceeding under any bankruptcy, reorganization, arrangements,
readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (d) shall
have any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or
adjudication or appointment is made and which remains undismissed
for a period of thirty (30) days or more; or (e) by any act or
omission to act shall indicate its consent to, approval of, or
acquiescence in, any such petition, application, or proceeding, or
order for relief, or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties; or (f)
shall suffer any such custodianship, receivership, or trusteeship
to continue undischarged for a period of thirty (30) days or more;
provided that the currently pending chapter 11 case in which AAI is
a debtor and debtor in possession shall not constitute an Event of
Default.
7.1.16 Borrower, Cadiz or any Subsidiary of either
of them shall file (or otherwise commence) any adversary proceeding
against Lender or any of its Affiliates in respect of any matter
arising out of or related to the Loan Documents or the transactions
contemplated by the Loan Documents.
7.1.17 Borrower shall not have sold, on or before
the third anniversary of the Effective Date, sufficient Tier B Pre
Identified Assets to produce Asset Sales Proceeds payable to John
Hancock in an aggregate amount equal to at least $5,000,000.
7.2 CONSEQUENCES OF DEFAULT. If an Event of Default
shall occur, Lender may, by notice to Borrower, declare the Note,
all interest thereon, and all other amounts payable under this
Agreement or any other Loan Document to be forthwith due and
payable, whereupon the Note, all such interest, and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of
which are hereby expressly waived by Borrower; provided that if an
event described in Section 7.1.15 shall occur, acceleration of the
Restructured Loan shall occur automatically, without the giving of
any notice by Lender; and if an Event of Default shall occur,
Lender may immediately, whether or not the actions referred to
above in this Section 7.2 have been taken, exercise any or all of
its rights and remedies under the Loan Documents. The enumeration
of the foregoing rights and remedies is not intended to be
exhaustive, and the exercise of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of which
shall be cumulative and not alternative.
8. MISCELLANEOUS.
8.1 AMENDMENTS AND WAIVERS. No amendment or
modification of any provision of this Agreement, the Note or any
other Loan Document shall be effective without the written
agreement of Lender and Borrower. No waiver of any provision of
this Agreement shall be effective unless set forth in a writing
executed by the Person against whom it is sought to be enforced.
8.2 NOTICES, ETC. All notices, demands and other
communications provided for under this Agreement and under the
other Loan Documents, or which any party may desire to deliver to
another party, shall be in writing and mailed, telecopied, telexed
or delivered:
8.2.1 if to Borrower, at its address at:
Sun World International, Inc.
5544 California Avenue, #280
Bakersfield, California 93309
Attention: Chief Executive Officer
Telecopier: (805) 328 6241
Telephone: (805) 833 6460
with a copy to:
Cadiz Land Company, Inc.:
1330 Park View Avenue
Manhattan Beach, CA 90266
Attention: Keith Brackpool
Telecopier: (310) 546 7542
Telephone: (310) 546 3049
and to:
Howard J. Unterberger, Esq.
Miller & Holguin
1801 Century Park E., 7th Floor
Los Angeles, CA 90067
Telecopier: (310) 557 2205
Telephone: (310) 556 1990
8.2.2 if to Lender, at its address at:
Caisse Nationale de Credit Agricole
520 Madison Street, 42nd Floor
New York, New York 10022
Attention: Head of Special Asset Management
Telecopier: (212) 418-7004
Telephone: (212) 418-7001
with a copy to:
Credit Agricole, Representative Office
101 California Street, Suite 4390
San Francisco, California 94111
Attention: Manager
Telecopier: (415) 986-4116
Telephone: (415) 391-0810
and to:
David A. Rosinus, Esq.
Jerome A. Grossman, Esq.
Heller, Ehrman, White & McAuliffe
333 Bush Street, Suite 3000
San Francisco, California 94194
Telecopier: 415-772-6268
Telephone: 415-772-6000
or, as to each party, at such other address as shall be designated
by such party in a written notice to the other party complying as
to delivery with the terms of this Section 8.2. All such notices
and communications shall, when mailed, telecopied or personally
delivered, be effective on receipt and, if sent by telex, when the
telex is sent and the appropriate answerback is received.
8.3 INDEPENDENCE OF COVENANTS; EFFECT OF EXECUTION AND
DELIVERY OF JOHN HANCOCK LOAN DOCUMENTS.
8.3.1 All covenants hereunder shall be given
independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of
an Event of Default or Default if such action is taken or such
condition exists.
8.3.2 Neither the satisfaction of Section 3.6,
nor any waiver thereof by Lender, shall (i) constitute a waiver by
Lender of any other provision of this Agreement or of any other
Loan Document, (ii) impair in any manner Lender's right to exercise
any and all of its rights and remedies arising out of the failure
of any other provision, covenant or condition of any Loan Document
to be observed, performed, complied with or satisfied, or (iii)
constitute an acknowledgment by Lender of any matter asserted or
represented in any John Hancock Loan Document, including, without
limitation, assertions relating to the scope or priority of any
Lien securing the John Hancock Obligations or Borrower's or Cadiz's
obligations to Lender. If a particular action or condition is not
permitted to be taken, or to exist, under the Loan Documents, the
fact that it would be permitted to be taken or to exist, or is
required to be taken or to exist, under the John Hancock Loan
Documents shall not avoid the occurrence of a Default or an Event
of Default if such action is taken or such condition exists; and
(2) if a particular action or condition is required to be taken, or
to exist, under the Loan Documents, the fact that it would not be
permitted to be taken or to exist, or is prohibited from being
taken or from existing, under the John Hancock Loan Documents shall
not avoid the occurrence of Default or an Event of Default if such
action is not taken or such condition fails to exist.
8.4 NO WAIVER; REMEDIES. No failure on the part of
Lender to exercise, and no delay in exercising, any right, power,
or remedy under any Loan Document shall operate as a waiver
thereof; nor shall any waiver of, or single or partial exercise of,
any right, power or remedy under any Loan Document preclude any
other or further exercise thereof or the exercise of any other
right. The remedies provided in the Loan Documents are cumulative
and not exclusive of any remedies provided by law or otherwise
available to Lender.
8.5 SURVIVAL. Except as otherwise expressly provided
for in the Loan Documents: no termination or cancellation
(regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the powers,
obligations, duties, rights and liabilities of Borrower, Cadiz and
the Guarantors or the rights of Lender relating to any transaction
or event occurring prior to such termination or cancellation.
8.6 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of Borrower and Lender and
their respective successors and assigns, except that Borrower may
not assign or transfer any of its rights under any Loan Document
without the prior written consent of Lender.
8.7 CERTAIN PARTICIPATIONS AND ASSIGNMENTS.
Notwithstanding any other provisions of this Agreement, Borrower
agrees that Lender may, at any time, transfer participations or
other interests in all or any part of its interest in the
Restructured Loan to one or more financial institutions. Lender
shall give Borrower prompt notice of any transfer, other than the
transfer of a participation, of all or any part of its interest in
the Restructured Loan, provided that Lender's failure to deliver
such notice shall not impair any rights of either Lender or its
assignee under the Loan Documents. It is expressly agreed that, in
connection with the sale and transfer of any participations or
other interests in the Restructured Loan or the Note, or offers
therefor, Lender may provide such information pertaining to
Borrower and its Subsidiaries, or any Affiliate of Borrower, as
Lender may deem appropriate, and to the extent such information is
not publicly available, Lender shall obtain the agreement of the
recipient to hold such information so obtained in confidence except
as disclosure might be required by governmental authorities,
pursuant to legal process or otherwise by law or governmental
regulation. Upon the assignment by Lender of an interest in the
Restructured Loan, Borrower shall (and shall cause each of its
Subsidiaries), at Lender's request, enter into one or more
amendments to this Agreement and the other Loan Documents
incorporating the agency provisions set forth on Exhibit L and
making such other amendments to this Agreement and such other Loan
Documents as Lender may reasonably deem necessary to reflect
Lender's status as agent for itself and each assignee of an
interest in the Restructured Loan.
8.8 COSTS, EXPENSES AND TAXES. Borrower agrees to pay
to Lender, within ten (10) days after Lender's demand, whether or
not the Effective Date occurs, (a) to the extent not included in
the principal amount of the Restructured Loan pursuant to Section
2.1.1, all reasonable out-of-pocket costs and expenses of Lender in
connection with the preparation, review, execution, delivery,
filing and recording of this Agreement and the other Loan Documents
and any other documents to be delivered hereunder or thereunder,
including, without limitation, the reasonable fees and
out-of-pocket expenses of consultants to and counsel for Lender,
including local or special counsel or consultants who may be
retained by said counsel, with respect thereto; (b) all reasonable
costs and expenses of Lender in connection with the administration
of this Agreement and the other Loan Documents and each other
document to be delivered hereunder or thereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses
of consultants to and counsel for Lender, including local or
special counsel or consultants who may be retained by said counsel
with respect to advising Lender as to the rights and
responsibilities of Lender under this Agreement, the other Loan
Documents and such other documents; (c) all reasonable
out-of-pocket costs and expenses of Lender, if any, in connection
with the enforcement of this Agreement, the other Loan Documents
and such other documents, including, without limitation, the fees
and out-of-pocket expenses of counsel for Lender and of any
consultants retained by Lender or its counsel with respect to
advising Lender with respect to the Restructured Loan or any other
aspect of the credit relationship among Lender and Borrower or
their respective Subsidiaries and Affiliates; and (d) all
reasonable out-of-pocket costs and expenses of Lender, if any, in
connection with any bankruptcy or other insolvency proceeding
involving Borrower or any of its Subsidiaries, Affiliates or
stockholders, including, without limitation, the fees and
out-of-pocket expenses of counsel for Lender and of any consultants
retained by Lender or its counsel with respect to any such
proceeding. In addition, Borrower shall pay to Lender, within ten
(10) days after Lender's demand, any property, excise, sales or
other tax, assessment or governmental charge (other than income,
franchise and other similar taxes relating solely to the gross
income of Lender) to which Lender may be subject as a result of any
transaction contemplated by this Agreement, and Borrower agrees to
hold Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay
such taxes.
8.9 RIGHT OF SET OFF. Upon the occurrence and during
the continuance of any Event of Default, Lender, and any of the
Affiliates of Lender, is hereby authorized at any time and from
time to time, without notice to Borrower, any Guarantor or any
other Person (any such notice being expressly waived by Borrower,
and, by execution and delivery of the Loan Documents to be
delivered by them on the Effective Date, Cadiz and each Guarantor)
and to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by Lender to or for the credit or the account of
Borrower or any Guarantor against any and all of the obligations of
the Company or any Guarantor now or hereafter existing under this
Agreement, the Note and the Security Documents, irrespective of
whether or not Lender shall have made any demand under this
Agreement, the Note or the Security Documents and although such
obligations may be unmatured. Lender agrees promptly to notify
Borrower after any such set off and application; provided, however,
that the failure to give such notice shall not affect the validity
of such set off and application. The rights of Lender under this
Section 8.9 are in addition to other rights and remedies
(including, without limitation, other rights of set off) which
Lender may have.
8.10 SEVERABILITY OF PROVISIONS. Any provision of any
Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be amended so as to
achieve the intent of the parties to the extent possible, and if
not amendable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions of such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.11 HEADINGS. Article and section headings in the Loan
Documents are included in such Loan Documents for the convenience
of reference only and shall not constitute a part of the applicable
Loan Documents for any other purpose.
8.12 CERTAIN INTERPRETATIONS. All words used herein in
the plural shall be deemed to have been used in the singular, and
all words used herein in the singular shall been deemed to have
been used in the plural, where the context and construction so
require. In interpreting the meaning of this Agreement and of any
other Loan Document: (a) "includes" and "including" shall not be
limiting; (b) "or" shall not be exclusive; and (c) "all" includes
"any" and "any" includes "all."
8.13 GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws and decisions of the
State of California without regard to principles of conflicts of
law.
8.14 COUNTERPARTS. This Agreement may be signed in any
number of counterparts, and by different parties hereto in separate
counterparts, with the same effect as if the signatures to each
such counterpart were upon a single instrument. All counterparts
shall be deemed an original of this Agreement.
8.15 ENTIRE AGREEMENT; NO NOVATION. This Agreement, the
Note, the Security Documents and the other Loan Documents, and any
other documents required to be executed and delivered hereunder or
thereunder, contain all of the terms and conditions required by the
Plan and agreed upon by the parties relating to the subject matter
of this Agreement and supersede any and all prior and
contemporaneous agreements, negotiations, correspondence,
understandings and communications of the parties, whether oral or
written, respecting that subject matter. In the event of any
conflict between the provisions of the Plan and of this Agreement
or any other Loan Document, the provisions of this Agreement or of
the relevant Loan Document, as the case may be, shall control.
This Agreement and the other Loan Documents are not intended to
effect a satisfaction or novation of Lender's pre petition claims
against the Debtors, but rather to restructure, in their entirety,
the obligations of Borrower and its Affiliates relating thereto.
8.16 INDEMNITY. Borrower shall indemnify, defend and
hold Lender harmless from and against any and all losses, costs,
claims, damages, liabilities and/or causes of action (including
attorneys' and expert witnesses' fees and costs) that Lender may
incur to any Person as a direct or indirect consequence of: (a)
the restructuring of the Debtors' obligations to Lender as provided
herein, except for violations of banking laws or regulations by
Lender; (b) the failure of Borrower to perform any obligations on
its part to be performed as and when required by this Agreement or
any of the Loan Documents; (c) any failure at any time of any
representations and warranties of Borrower to be true and correct;
(d) any act or omission by Borrower or any contractor, agent,
employee or representative of Borrower with respect to any of the
Collateral; (e) the Acquisition, the Merger or the Plan, or any
other transaction contemplated by this Agreement or any other Loan
Document, including, without limitation, any matters, claims or
losses relating to the execution and delivery of this Agreement or
any other Loan Document; and (f) any action taken or omitted to be
taken by Lender in its capacity as such under this Agreement.
Notwithstanding the foregoing, Borrower shall not be obligated to
indemnify, defend or hold Lender harmless from or against losses,
costs, claims, damages or liabilities resulting from Lender's own
gross negligence or willful misconduct. Borrower shall pay to
Lender, within ten (10) days after Lender's demand, any amounts
owing under this indemnity together with interest from the date of
Lender's demand at the Default Rate until paid.
[The rest of this page has been left blank intentionally]
<PAGE>
8.17 CONSENT TO JURISDICTION; WAIVER OF RIGHT TO JURY
TRIAL.
8.17.1 BORROWER HEREBY CONSENTS AND SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE COURTS IN THE
STATE OF CALIFORNIA FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF BORROWER
AND LENDER AGREES THAT SUCH COURTS SHALL HAVE JURISDICTION FOR ALL
SUCH LEGAL PROCEEDINGS. EACH OF BORROWER AND LENDER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF THE AFOREMENTIONED COURTS
IN ANY SUCH LEGAL PROCEEDING BY THE MAILING OF COPIES THEREOF, BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS
ADDRESS FOR NOTICES DETERMINED IN ACCORDANCE WITH SECTION 8.2 IN
ACCORDANCE WITH RULES OF THE RELEVANT COURT. NOTHING HEREIN SHALL
ADVERSELY AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER OR ANY OF THE COLLATERAL IN ANY
OTHER JURISDICTION.
8.17.2 EACH OF BORROWER AND LENDER HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR OTHER DOCUMENT REFERRED TO HEREIN OR
DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH
THE RESTRUCTURED LOAN OR ANY LOAN DOCUMENT OR OTHER SUCH DOCUMENT,
IN ANY SUCH CASE, WHETHER SOUNDING IN TORT OR CONTRACT OR
OTHERWISE. EACH OF BORROWER AND LENDER HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
SECTION 8.17.2 WITH ANY COURT OR OTHER GOVERNMENTAL BODY AS
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER: SUN WORLD INTERNATIONAL, INC.
By:/S/ Stanley E. Speer
----------------------------
Title: Chief Financial Officer
LENDER: CAISSE NATIONALE DE
CREDIT AGRICOLE, ACTING THROUGH
ITS GRAND CAYMAN BRANCH
By: /S/ Marcy S. Lyons
------------------------------
Title: Vice President
INITIAL ACCOUNT FOR PAYMENTS:
Morgan Guaranty Trust Company
New York, N.Y.
ABA #021 000 238
Acct #630 00 205
CNCA Chicago
Ref: SUNWORLD
EXHIBIT 10.2
---------------
PROMISSORY NOTE
San Francisco, California
$55,386,582.29 September 13, 1996
FOR VALUE RECEIVED, the undersigned, SUN WORLD
INTERNATIONAL, INC., a Delaware corporation and successor by
merger between Sun World International, Inc. and Sun World, Inc.
("Borrower"), DOES HEREBY PROMISE to pay to the order of CAISSE
NATIONALE DE CREDIT AGRICOLE, ACTING THROUGH ITS GRAND CAYMAN
BRANCH (the "Bank"), at its office determined in accordance with
the Credit Agreement referred to below, in lawful money of the
United States and in immediately available funds, the principal
amount of FIFTY FIVE MILLION, THREE HUNDRED EIGHTY SIX THOUSAND,
FIVE HUNDRED EIGHTY TWO DOLLARS AND TWENTY NINE CENTS
($55,386,582.29) pursuant to the Credit Agreement hereinafter
referred to and in accordance with Schedule I attached hereto,
and to pay interest (computed on the basis of a year of 360 days
and for the actual number of days elapsed) from the date hereof
on the unpaid principal amount hereof, in like money, at said
office, at a rate or rates per annum determined in accordance
with Section 2.3 of the Credit Agreement, payable in accordance
with the provisions of the Credit Agreement. Any amount
hereunder, including, without limitation, any amount of
principal, interest or fees, which is not paid when due, whether
at stated maturity, by acceleration, or otherwise, shall bear
interest from the date when due until said amount is paid in
full, payable on demand, at a rate per annum equal at all times
to the rate set forth in Section 2.3 of the Credit Agreement.
Any change in the interest rate resulting from a change in the
Prime Rate (as defined in the Credit Agreement) shall be
effective at the beginning of the day on which such change in the
Prime Rate becomes effective. Under certain circumstances, the
Credit Agreement provides for the making of a Re Advance. The Re
Advance, if made, shall constitute a portion of the outstanding
principal of the Restructured Loan and of this Note, and
Borrower's obligation to repay the Re Advance shall be evidenced
by this Note.
This Note (i) is the Note referred to in the Amended and
Restated Credit Agreement dated as of September 13, 1996, between
Borrower and the Bank (as at any time amended, supplemented or
modified, the "Credit Agreement"), which is hereby incorporated
herein by reference, (ii) is executed in connection with the
restructuring of the obligations of Borrower and its predecessors
under the Pre Petition Loan Documents referred to therein, and
(iii) is issued in replacement of the promissory notes heretofore
evidencing such obligations to evidence the Restructured Loan.
The restructuring of the obligations of Borrower and its
predecessors under such Pre Petition Loan Documents in accordance
with the Credit Agreement is not intended to effect a novation of
such obligations, which, as modified pursuant to the Credit
Agreement, this Note and the other Loan Documents, shall survive
the execution and delivery of the Credit Agreement, this Note and
the Loan Documents as obligations of Borrower. Capitalized terms
use in this Note without definition have the meanings ascribed to
them in the Credit Agreement.
The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the
happening of certain stated events and also for prepayments on
account of the principal of this Note prior to the maturity of
the Note upon the terms and conditions specified in the Credit
Agreement. This Note is secured by a Security Agreement and the
Deeds of Trust and other security documents referred to in the
Credit Agreement, and reference is hereby made to the Credit
Agreement, the Security Agreement, the Deeds of Trust and such
other security documents for a description of such security.
This Note shall be governed by the laws of the State of
California; provided, however, that, as to the maximum rate of
interest which may be charged or collected, if the laws
applicable to the Bank permit it to charge or collect a higher
rate than do the laws of the State of California, then such law
applicable to the Bank shall apply to the Bank under this Note.
SUN WORLD INTERNATIONAL, INC.
By /S/ Timothy J. Shaheen
Title: Chief Executive Officer
<PAGE>
SCHEDULE I TO PROMISSORY NOTE
Principal Payment Date Amount
September 13, 1996 $ 923,109.70
Effective Date
The Last Business Day of $ 923,109.70
December 1996
The Last Business Day of $ 923,109.70
March 1997
The Last Business Day of $ 923,109.70
August 1997
The Last Business Day of $ 923,109.70
December 1997
The Last Business Day of $ 923,109.70
March 1998
The Last Business Day of $ 923,109.70
August 1998
The Last Business Day of $ 923,109.70
December 1998
The Last Business Day of $ 923,109.70
March 1999
The Last Business Day of $ 1,384,664.58
August 1999
The Last Business Day of $ 1,384,664.58
December 1999
The Last Business Day of $ 1,384,664.58
March 2000
The Last Business Day of $ 1,384,664.58
August 2000
<PAGE>
The Last Business Day of $ 1,384,664.58
December 2000
The Last Business Day of $ 1,384,664.58
March 2001
The Last Business Day of $ 1,384,664.58
August 2001
The Last Business Day of $ 1,384,664.58
December 2001
The Last Business Day of $ 1,384,664.58
March 2002
The Last Business Day of $ 1,384,664.58
August 2002
The Last Business Day of $ 1,384,664.58
December 2002
The Last Business Day of $ 1,384,664.58
March 2003
The Last Business Day of $ 1,384,664.58
August 2003
The Last Business Day of $ 1,384,664.58
December 2003
The Last Business Day of $ 1,384,664.58
March 2004
The Last Business Day of $ 1,384,664.58
August 2004
The Last Business Day of $ 1,384,664.58
December 2004
The Last Business Day of $ 1,384,664.58
March 2005
The Last Business Day of $ 1,384,664.58
August 2005
The Last Business Day of $ 1,384,664.58
December 2005
The Last Business Day of $ 1,384,664.58
March 2006
The Last Business Day of $ 1,384,664.58
August 2006
September 13, 2006 All principal
then remaining outstanding
EXHIBIT 10.3
-------------
NEW HANCOCK
CREDIT AGREEMENT
by and between
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY,
a Massachusetts Mutual Life Insurance Company<PAGE>
TABLE OF CONTENTS
Page
R E C I T A L S. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . 2
SECTION 1.2 Accounting Terms and Determinations 21
SECTION 1.3 Singular and Plural Terms . . . . . . . . . 21
ARTICLE 2 THE NEW HANCOCK LOAN. . . . . . . . . . . . . . . . 21
SECTION 2.1 Post Reorganization Indebtedness 21
SECTION 2.2 New Hancock Note. . . . . . . . . . . . . . 22
SECTION 2.3 New Hancock Loan Security and
Priority Thereof. . . . . . . . . . . . . . 23
SECTION 2.4 Guaranties. . . . . . . . . . . . . . . . . 24
SECTION 2.5 Environmental Indemnity Agreement . . 24
SECTION 2.6 Subordination Agreement . . . . . . . . . . 24
SECTION 2.7 Financing Statements. . . . . . . . . . . . 25
SECTION 2.8 [Intentionally reserved]. . . . . . . . . . 25
SECTION 2.9 Closing . . . . . . . . . . . . . . . . . . 25
SECTION 2.10 Payments. . . . . . . . . . . . . . . . . . 25
SECTION 2.11 Interest. . . . . . . . . . . . . . . . . . 26
SECTION 2.12 Prepayments . . . . . . . . . . . . . . . . 27
SECTION 2.13 Principal Amortization. . . . . . . . . . . 29
ARTICLE 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . 29
SECTION 3.1 Corporate Existence and Power . . . . . . . 29
SECTION 3.2 Corporate and Governmental
Authorization: No Contravention. . . . . . 29
SECTION 3.3 Binding Effect. . . . . . . . . . . . . . . 30
SECTION 3.4 Litigation. . . . . . . . . . . . . . . . . 30
SECTION 3.5 Compliance with ERISA.. . . . . . . . . . . 30
SECTION 3.6 Taxes.. . . . . . . . . . . . . . . . . . . 31
SECTION 3.7 Compliance with Laws. . . . . . . . . . . . 31
SECTION 3.8 Investment Company Act; Certain Regulations 31
SECTION 3.9 Possession of Franchises, Licenses, etc. . .31
SECTION 3.10 Full Disclosure.. . . . . . . . . . . . . . 31
SECTION 3.11 Labor Disputes and Acts of God.. . . . . . 32
SECTION 3.12 Environmental Matters.. . . . . . . . . . .32
SECTION 3.13 Brokers' Fees.. . . . . . . . . . . . . . . 34
SECTION 3.14 Capitalization of Borrower. . . . . . . . . 34
SECTION 3.15 Subsidiaries and Ownership of Stock. . . . .34
SECTION 3.16 Properties and Assets . . . . . . . . . . . 35
SECTION 3.17 Preservation of Lender Rights . . . . . . . 35
SECTION 3.18 No Side Agreements. . . . . . . . . . . . . 35
ARTICLE 4 COVENANTS . . . . . . . . . . . . . . . . . . . . . .36
SECTION 4.1 Information.. . . . . . . . . . . . . . . . 36
SECTION 4.2 Payment of Obligations. . . . . . . . .. . . 40
SECTION 4.3 Maintenance and Preservation of Collateral. .40
SECTION 4.4 Insurance.. . . . . . . . . . . . . . . . . .43
SECTION 4.5 Inspection of Property, Books and Records. . 45
SECTION 4.6 Conduct of Business and
Maintenance of Subsidiaries. . . . . . . . . 46
SECTION 4.7 Debt; Debt Repayments and Cancellations. . . 47
SECTION 4.8 Liens.. . . . . . . . . . . . . . . . . . . .48
SECTION 4.9 Consolidations, Mergers,
Acquisitions and Dispositions of
Assets. . . . . . . . . . . . .. . . . . . . 48
SECTION 4.10 Further Assurances. . . . . . . . . . .. . . 48
SECTION 4.11 Restricted Payments.. . . . . . . . . . . . .48
SECTION 4.12 Financial Covenants.. . . . . . . . . . . . .48
SECTION 4.13 Limitations on Investments. . . . . . . . . .52
SECTION 4.14 Fiscal Year; Accounting Practices. .. 52
SECTION 4.15 Amendment of Debt, Corporate and
other Documents. . . . . . . . . . . .. . . 52
SECTION 4.16 Leases. . . . . . . . . . . . . . . . . . . .52
SECTION 4.17 Transactions with Affiliates. . . . . . . . .53
SECTION 4.18 Compliance with ERISA.. . . . . . . . . . . .54
SECTION 4.19 Sales and Leasebacks. . . . . . . . . . . . 54
SECTION 4.20 Other Payment Restrictions
Affecting Subsidiaries. . . . . .. . . . . . 54
SECTION 4.21 Compliance with Laws. . . . . . .. . . . . . 54
SECTION 4.22 Agricultural Consultant Review. . . . . . . .54
SECTION 4.23 Senior Executive Management . . . . . . . . .55
SECTION 4.24 Limitations on Dispositions of Collateral. . 55
SECTION 4.25 Equity Infusion.. . . . . . . . . . . . . . .57
SECTION 4.26 New Credit Agricole Obligations.. . . . . . .57
SECTION 4.27 Change of Control.. . . . . . . . . . . . . .57
SECTION 4.28 E & Y Causes of Action. . . . . . . . . . . .59
SECTION 4.29 Independent Boards of Directors . . . . . . .59
SECTION 4.30 Capital Expenditures. . . . . . . . . . . . .59
SECTION 4.31 Swaps and Similar Arrangements. . . . . . . .59
SECTION 4.32 Certain Insurance Policies. . . . . . . . . .60
SECTION 4.33 Title Insurance Commitment. . . . . .. . . . 60
ARTICLE 5 CONDITIONS. . . . . . . . . . . . . . . . . . . . . .60
SECTION 5.1 Lender's Conditions . . . . . . . . . . . . .60
ARTICLE 6 EVENTS OF DEFAULTS. . . . . . . . . . . . . . . . . .65
SECTION 6.1 Events of Defaults. . . . . . . . . . . . . 65
SECTION 6.2 Acceleration. . . . . . . . . . . . . . . . 68
SECTION 6.3 Remedies Upon an Event of Default.. . . . . 68
SECTION 6.4 Rescission of Acceleration. . . . . . . . . .69
ARTICLE 7 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . .70
SECTION 7.1 Notices.. . . . . . . . . . . . . . . . . . .70
SECTION 7.2 No Waivers. . . . . . . . . . . . . . . . . .70
SECTION 7.3 Expenses; Documentary Taxes;
Indemnification.. . . . . . . . . .. . . . . 70
SECTION 7.4 Amendments and Waivers. . . . . . . . . . .. 72
SECTION 7.5 Successors and Assigns;
Participations. . . . .. . . . . . . . . . . 72
SECTION 7.6 Governing Law; Jurisdiction;
Waiver of Jury Trial. . . . . . . .. . . . . 72
SECTION 7.7 Effectiveness.. . . . . . . . . . . . . . .. 73
SECTION 7.8 Collateral. . . . . . . . . . . . . . . . . .73
SECTION 7.9 Independence of Covenants.. . . . . . . . . .74
SECTION 7.10 Survival. . . . . . . . . . . . . . . . . . 74
SECTION 7.11 Incorporations; Captions. . . . . . . . . . .74
SECTION 7.12 Investigation.. . . . . . . . . . . . . . . .74
SECTION 7.13 Time is of the Essence. . . . . . . . . . . .74
SECTION 7.14 Prior Understandings. . . . . . . . . . . . 74
SECTION 7.15 Fair Construction.. . . . . . . . . . . . . .74
SECTION 7.16 Lender Borrower Relationship. . . . . . . . .75
SECTION 7.17 Lender as Attorney In Fact. . . . . . . . . .75
SECTION 7.18 Revival of Obligations. . . . . . . . . . . .76
SECTION 7.19 Submission of Agreement . . . . . . . . . . .76
SECTION 7.20 Third-Party Consultants . . . . . . . . . . 76
SECTION 7.21 Inconsistencies with Loan Documents. . . . . 77
SECTION 7.22 Counterparts. . . . . . . . . . . . . . . . .77
SECTION 7.23 No Novation . . . . . . . . . . . . . . . . .77
SECTION 7.24 Registration, Etc. of New Hancock Note. . . 77
SECTION 7.25 Waiver of Appraisement, Valuation, etc. . . .78
SECTION 7.26 Waiver of Marshalling and Other Defense. . . 78<PAGE>
SCHEDULES
1.1. . . . . . . . . . . . . . .Legal Description Of Blythe Ranch
1.1. . . . . . . . . . . . . . . . . . Crop Development Plan Data
1.1. . . . . . . . . . . . . . .List Of Debtors (Except Borrower)
1.1. . . . . . . . . . . . . . . . . . . . . . . . . . Make Whole
1.1. . . . . . . . . . . . . . . . . . . . . . MetLife Personalty
1.1. . . . . . . . . . . . .List of Certain Permitted Investments
as of the Effective Date
1.1. . . . . . . . . . . . . . . .List of Certain Permitted Liens
1.1. . . . . . . . . . . . . . . . . . . . Short Term Water Sales
2.10 . . . . . . . . . . . . . Hancock Wire Transfer Instructions
2.13 . . . . . . . . . . . . . . . . . . . .Amortization Schedule
3.4. . . . . . . . . . .List of Pending and Threatened Litigation
3.5. . . . . . . . . . . . . . . .List of ERISA Plan Terminations
3.6. . . . . . . . . . . . . . . . . . . . . .Certain Tax Matters
3.11 . . . . . . . . . . . . . . Collective Bargaining Agreements
3.12 . . . . . . . . . . . . . . . .Certain Environmental Matters
3.15 . . . . . . . . . . . .List of Borrower and all Subsidiaries
3.16 . . . . . . . . . . . . . . . .List of Properties and Assets
4.3(b)(xvi). . . . . . . . . . List of Key Man Insurance Policies
4.6(c) . . . . . . . . . . . . . . . . . . List of Joint Ventures
4.7. . . . . . . . . . . . . . . . . . . . Certain Permitted Debt
4.18 . . . . . . . . . . . . . . . . List of Existing ERISA Plans
4.24(b)(iv). . . . . . . . . . . . . . . .List of Direct Expenses
4.30 . . . . . . . . . . . . .Permanent Crop Capital Expenditures
4.32 . . . . . . . . . . . . . . . . . .Aurora Insurance Premiums
4.33 . . . . . . . . . . . . . . . . . Title Insurance Commitment
5.1(g) . . . . . . . . . . . . . . . . . .Title Commitment Letter
5.1(j) . . . . . . . . . . . . . . . . . . . . .Corporate Actions
5.1(v) . . . . . . . . . . . . . . . . . . . . . . . . . Releases
7.1. . . . . . . . . . . . . . . . . . . . .Addresses For Notices
EXHIBIT A. . . . . . . . . . . . .Form of Secured Promissory Note
<PAGE>
NEW HANCOCK
CREDIT AGREEMENT
This New Hancock Credit Agreement ("Credit Agreement")
dated as of September 13, 1996 is made by and between SUN
WORLD INTERNATIONAL, INC., a Delaware corporation and the
successor by merger on and after the Effective Date (as
defined below) to Sun World International, Inc. ("Old SWII")
and Sun World, Inc. ("Old SWI"), both Delaware corporations
and debtors in possession in the Chapter 11 Case (as defined
below), as borrower (the "Borrower"); and JOHN HANCOCK MUTUAL
LIFE INSURANCE COMPANY, a Massachusetts mutual life insurance
company, as lender (the "Lender").
R E C I T A L S
A. The Borrower and the Lender (singly sometimes a
"Party," and collectively sometimes, the "Parties") are
entering into this Credit Agreement pursuant to the Debtors'
Fourth Amended Consolidated Plan of Reorganization (As
Amended) dated June 3, 1996 and the Debtors' Disclosure
Statement with respect thereto (singly and collectively, said
Plan and Disclosure Statement, the "Plan") filed in Chapter 11
Case (as defined below) pending before the United States
Bankruptcy Court for the Central District of California.
B. The Lender has a loan (the "Original Loan")
outstanding to Old SWI, pursuant to that (among other things)
certain Credit Agreement dated October 31, 1990 (the "Original
Credit Agreement") and that certain Promissory Note dated
October 31, 1990 in the original principal amount of Eighty
Two Million Dollars ($82,000,000) (the "Original Note").
C. This Credit Agreement constitutes (among other
things) a restatement and amendment of the Original Loan, the
Original Credit Agreement and the Original Note as
contemplated by Section IV.B.1. of the Plan, whereby (among
other things and in addition to certain other Collateral as
set forth below) the Lender shall have, and continue to have,
a security interest in and on all the collateral that as of
the Effective Date secured the Original Loan, with the same
priority as such security interest had.
D. The Lender is not advancing (or agreeing to advance)
new monies to the Borrower or any Affiliate (as defined below)
thereof pursuant hereto or otherwise, subject only to a
possible Re Advance (as defined below).
E. The execution and delivery of this Credit Agreement
and the other New Hancock Loan Documents (as defined below) by
all the parties hereto and thereto is a condition to the
Effective Date (as defined below), and the New Hancock Loan
Documents shall not be deemed legally delivered by the Parties
hereto or thereto, or otherwise effective, until and unless
such Effective Date occurs.
AGREEMENT
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms, as used herein, have
the following meanings:
"Acquisition" means the acquisition by Cadiz of all the
outstanding capital stock of Borrower pursuant to the Plan.
"Additional Interest" has the meaning set forth in
Section 2.11(d) hereof.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or
under common control with such Person. As used in this
definition of "AFFILIATE," the term "CONTROL" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by
contract or otherwise.
"After Acquired Property" has the meaning set forth in
Section 2.3(b) hereof.
"Bankruptcy Code" means the provisions of Title 11,
United States Code, as the same may be amended from time to
time.
"Bankruptcy Court" means the United States Bankruptcy
Court for the Central District of California, wherein the
Chapter 11 Case is pending.
"Bank of Boston" means The First National Bank of Boston,
N.A., located at 100 Federal Street, Boston, Massachusetts
(02110).
"Blythe Ranch" means that certain parcel of real property
located in Riverside County, California, in which the Borrower
holds an ownership interest, more specifically identified in
Schedule 1.1 (Blythe Ranch) hereto, including the equipment
and fixtures therein, thereon or attached thereto and all
Water Rights appurtenant thereto.
"Borrower" means Sun World International, Inc., a
Delaware corporation, as described at the beginning of this
Credit Agreement, and, except where the context otherwise
requires, Old SWI and Old SWII.
"Business Day" means any day on which the Bank of Boston is
open for business.
"Business Plan" means, with respect to the Fiscal Year
ending December 31, 1996, the "1996 Business Plan" approved by
Lender pursuant to Section 5.1(k) hereof, and with respect to
any subsequent Fiscal Year, the final business plan delivered
to Lender pursuant to Section 4.1(a), in each case, as
amended, modified or supplemented from time to time with
Lender's reasonable prior written consent.
"Cadiz" means the Cadiz Land Company, Inc., a publicly
held Delaware corporation (NASDAQ symbol: CLCI), and any
successor, by merger, succession, acquisition of assets or
otherwise.
"Cadiz Lease" means the ranch lease executed by Cadiz,
Cadiz Valley Development Corporation, a California
corporation, Southwest Fruit Growers, L.P., a Delaware Limited
Partnership, and Borrower pursuant to the Cadiz Services
Agreement, as (subject to Section 4.15 hereof) amended,
modified or supplemented from time to time.
"Cadiz Agreement" means that certain agreement, dated as
of the date hereof, executed and delivered by Cadiz for the
benefit of Lender, in such form and substance as the Lender
may (in its sole and absolute discretion) require.
"Cadiz Services Agreement" means the agreement between
Cadiz and Borrower, dated as of the Effective Date, relating
to the provision of certain services to Borrower from Cadiz,
in form and substance satisfactory to Lender (in its sole and
absolute discretion), as (subject to Section 4.15 hereof)
amended, modified or supplemented from time to time.
"Capital Contribution" means a contribution to the equity
of Borrower, either (i) without consideration or (ii) solely
in respect of the issuance of common stock of Borrower.
"Capital Expenditures" means, for any period,
expenditures on capital assets (determined on a Consolidated
Basis) as the same would be characterized in accordance with
GAAP.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal or mixed) by
that Person as lessee that, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that
Person.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as heretofore or
hereafter amended or any successor statute.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability and Information System, as
heretofore or hereafter amended or any successor system.
"Change of Control" means the failure of Cadiz, for any
reason at any time (i) to hold, beneficially and (except for
the pledge to Credit Agricole under the New Credit Agricole
Documents until an exercise by Credit Agricole of its voting
or foreclosure rights or remedies thereunder) of record, one
hundred percent (100%) of the issued and outstanding equity
and voting shares of the Borrower (including all voting and
other rights or privileges appurtenant thereto), free and
clear of all Liens, encumbrances, options, rights of first
refusal or other rights of other Persons; or (ii) to be
legally entitled to vote such shares; or (iii) to be entitled
to elect all of the Borrower's Board of Directors or otherwise
to direct or cause the direction of the Borrower's management
and policies.
"Chapter 11 Case" means Case Nos. SB 94 23212 DN and SB
94 23213 DN commenced on October 3, 1994 in the Bankruptcy
Court, being jointly administered.
"Code" means the Internal Revenue Code of 1986, as
heretofore and hereafter amended, or any successor statute.
"Collateral" means all the real property and personal
property identified as collateral or security for the New
Hancock Loan in the New Hancock Security Documents, which real
property and personal property shall include (without
limitation): (i) all the real property and personal property
of Old SWII or Old SWI that secured the Original Loan,
including, without limitation, Water Rights, except for (a)
such portions thereof that the Lender may have voluntarily
reconveyed or released from its Lien under the Original Loan
prior to the Effective Date, and (b) that certain parcel of
real property known as Fairchild Acres and located in
Riverside County, California, which was previously owned and
conveyed by Old SWI to Fairchild Acres, a general partnership,
on or about December 23, 1991;(ii) the Marguleas Rayo Water
Rights; (iii) Blythe Ranch (except the undivided fifty percent
(50%) interest therein to be subject to a Lien in favor of
Zenith as security for the note issued thereto, all pursuant
to the Plan); (iv) the assets of each Debtor (other than
Borrower and Sun Desert, Inc.); (v) the MetLife Personalty;
(vi) the Intellectual Property Collateral; and (vii) After
Acquired Property.
"Commonly Controlled Entity" means an entity, whether or
not incorporated, which is under common control with the
Borrower or any of its Subsidiaries within the meaning of
Section 414(b), (c) or (o) of the Code.
"Computation Date" means the end of each quarter of the
Borrower's Fiscal Year.
"Condition" means, with respect to any Person, the
business, prospects, management, ownership, operations,
properties, assets or condition (financial or otherwise) of
such Person. For the purpose of this definition of Condition,
"prospects" refers to events that, in the foreseeable future,
will have, or can reasonably be expected to have, a material
effect on the other factors included in this definition of
Condition.
"Confirmation Order" means the order of the Bankruptcy
Court as entered on the docket in the Chapter 11 Case
confirming the Plan under Section 1129 of the Bankruptcy Code.
"Consolidated Basis" means that the assets, liabilities
and equities of the Borrower and its Subsidiaries shall be
deemed to be one for accounting purposes, and all intercompany
items shall be eliminated in accordance with GAAP.
"Control Event" means (i) the execution by Cadiz, the
Borrower or any of its Subsidiaries or Affiliates of any
agreement or letter of intent with respect to any proposed
transaction or event or series of transactions or events
which, individually or in the aggregate, may reasonably be
expected to result in a Change of Control, or (ii) the
execution of any written agreement which, when fully performed
by the parties thereto, would result in a Change of Control.
"Credit Agricole" means Caisse Nationale de Credit
Agricole, acting through its Grand Cayman Branch, a banking
corporation organized and existing under the laws of France.
"Credit Agricole Prime Rate" means the floating
commercial lending rate announced by Credit Agricole at its
branch office at Mid Continental Plaza Building, 55 East
Monroe Street, Chicago, Illinois (60603) as its "prime rate",
as in effect from time to time, it being understood that the
Credit Agricole Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged
to any customer, and that Credit Agricole may make commercial
loans or other loans at rates of interest at, above or below
the Credit Agricole Prime Rate.
"Crop Development Plan" means, with respect to the Fiscal
Year ending December 31, 1996, the crop development plan
delivered to Lender in accordance with Section 5.1(k), and
with respect to any subsequent Fiscal Year, the crop
development plan delivered to Lender pursuant to Section
4.1(a)(ii), in the form approved by Lender in writing, in each
case, as amended, modified or supplemented from time to time
with Lender's prior written consent; provided that in any case
each crop development plan shall contain the information
specified in Schedule 1.1 (Crop Development Plan Data) hereto
and any such other information as Lender may reasonably
require.
"Crop Value" has the meaning set forth in Section 4.24(b)
hereof.
"Current Assets" means on a Consolidated Basis, as of any
date of determination, all assets of Borrower and its
Subsidiaries that are treated as current assets in accordance
with GAAP, excluding, however, from the determination of
current assets, loans or advances to directors, officers,
employees or Affiliates.
"Current Liabilities" means on a Consolidated Basis, as
of any date of determination, all liabilities of Borrower and
its Subsidiaries that are treated as current liabilities in
accordance with GAAP, including, without limitation, (i) all
obligations payable on demand or within one (1) year after the
date on which the determination is made, and (ii) sinking fund
or mandatory redemption payments scheduled to be made within
one (1) year after the date on which the determination is
made, but excluding all such liabilities or obligations that,
pursuant to written agreement, are renewable or extendable at
the option of the debtor to a date more than one (1) year from
the date of the determination.
"Debt" of any Person means, at any date, without
duplication: (i) all obligations of such Person for borrowed
money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments and all
securities providing for mandatory payments of money, whether
or not contingent; (iii) all obligations of such Person
pursuant to revolving credit agreements or similar
arrangements; (iv) all obligations of such Person to pay the
deferred purchase price of property or services, except trade
accounts payable (including, trade accounts payable to
professionals) arising in the ordinary course of business
(including, without limitation, in connection with the Chapter
11 Case); (v) all obligations of such Person as lessee under
Capital Leases; (vi) all obligations of such Person to
reimburse or prepay any bank, financial institution or other
Person in respect of amounts paid under a letter of credit,
banker's acceptance or similar instrument, whether drawn or
undrawn; (vii) to the extent not included in clause (iv), all
obligations of such Person to purchase securities (or other
property) which arise out of or in connection with the sale of
the same or substantially similar securities or property;
(viii) recourse or repurchase obligations in connection with
the sale of receivables; (ix) all liabilities of the type
described in any of clauses (i) through (viii) above of others
Guarantied by such Person; and (x) all obligations of such
Person of the character described in clauses (i) through (xii)
above to the extent such Person remains legally liable in
respect thereof notwithstanding such obligation is deemed to
be extinguished under GAAP.
"Debt Service Coverage Ratio" means on a Consolidated
Basis, with respect to any Fiscal Year of Borrower, the ratio
of (i) EBITDA for such fiscal year, to (ii) the sum of
interest expense of Borrower and its Subsidiaries for such
fiscal year, plus scheduled payments of principal on Debt of
Borrower and its Subsidiaries (after giving effect to the
application of prepayments of principal pursuant to this
Agreement and to the New Credit Agricole Credit Agreement) for
the immediately succeeding fiscal year.
"Debtor" means each of the Borrower and each of its
Subsidiaries that are identified in Schedule 1.1 (Debtors)
hereto.
"Debtor Guaranties" has the meaning set forth in Section
2.4 hereof.
"Default" means any condition or event which constitutes
an Event of Default or which, with the giving of notice or
lapse of time or both, would become an Event of Default.
"Default Rate" means the greater of (i) twelve and six
tenths percent (12.6%) per annum, and (ii) the sum of the
Credit Agricole Prime Rate plus four hundred (400) basis
points.
"Deferral Period" has the meaning set forth in Section
2.11(d) hereof.
"Deferred Interest" has the meaning set forth in Section
2.11(d) hereof.
"Dip Facility" means that certain Amended and Restated
Debtor in Possession Credit Agreement dated as of February 28,
1996 among Old SWI, Old SWII and Credit Agricole entered into
pursuant to the Second Order Authorizing Debtors to (1) Incur
Secured Indebtedness and Granting Security Interests and
Priority Pursuant to 11 U.S.C. Section 364 and (2) Use Cash
Collateral Pursuant To 11 U.S.C. Section 363(c)(2) entered by the
Bankruptcy Court on March 13, 1996.
"Disposition" means a sale, lease, hypothecation,
abandonment, assignment, encumbrance or other transfer or
disposition, whether voluntary or involuntary or by operation
of Law, except a return of leased property upon the expiration
or termination of the term of the subject lease.
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"EBITDA" means, on a Consolidated Basis, for any fiscal
period, (i) the total amount of the Borrower's income before
interest and taxes, plus (ii) to the extent deducted in
determining such income, depreciation, amortization, and other
similar non cash charges, plus (iii) to the extent recognized
in determining such income, charges not arising from
operations, minus (iv) to the extent recognized in determining
such income, gains not arising from operations; provided,
however, that EBITDA shall be determined without regard to
minority interests.
"Effective Date" means the date hereof.
"Environmental Law" means any and all Laws (including,
without limitation, CERCLA and RCRA) (i) relating to the
environment or to emissions, discharges, releases or
threatened releases of or exposures to PCBs, pollutants,
contaminants, chemicals or industrial, agricultural, toxic or
hazardous substances, wastes or Hazardous Materials into the
environment, including, without limitation, ambient air,
surface water, ground water or land, or (ii) otherwise
relating to the manufacture, processing, distribution, use,
generation, recycling, release, processing, treatment,
storage, disposal, transport, or handling of such PCBs,
pollutants, contaminants, chemicals or industrial,
agricultural, toxic or hazardous substances, wastes or
Hazardous Materials.
"Equity Infusion" has the meaning set forth in Section
4.25 hereof.
"ERISA" means the Employee Retirement Income Security Act
of 1974, heretofore or hereafter amended, or any successor
statute.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) that, together with Borrower, would be treated
as a single employer under Section 4001 of ERISA.
"ERISA Plan" means any employee benefit plan which is
covered by ERISA and in respect of which any Debtor or a
Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of
ERISA. All references to "ERISA Plan" shall include, without
limitation, any employee benefit plan maintained by any Debtor
or any Commonly Controlled Entity in a jurisdiction outside of
the United States.
"Exception Ranch" means the Pre Identified Asset
identified as the Exception Ranch on the Minimum Release Price
Schedule.
"E & y causes of action" means the claims and causes of
action of Borrower (whether as successor to any Person or
otherwise) against Ernst & Young LLP, its former independent
public accountants, based on any and all theories of liability
which may be available to Borrower, and including all rights
to recover all monetary damages of any kind and amount which
Borrower may be entitled to recover from Ernst & Young LLP, in
connection with any and all professional services rendered by
Ernst & Young LLP, or any of its predecessors to Borrower, any
Borrower Subsidiary or any predecessor of any of the same at
any time, and including all defenses available to Borrower
under the Plan, the Bankruptcy Code or other applicable Law.
"Event of Default" has the meaning set forth in
Section 6.1 hereof.
"Final Order" means an order or judgment of the
Bankruptcy Court, as entered on the docket in the Chapter 11
Case, which has not been reversed, stayed, modified or
amended, and as to which (i) the time to appeal or seek
certiorari has expired and no appeal or petition for
certiorari has been timely filed, or (ii) any appeal that has
been or may be taken or any petition for certiorari that has
been or may be filed has been resolved by the highest court to
which the order or judgment was appealed or from which
certiorari was sought.
"Financing Statements" has the meaning set forth in
Section 2.7 hereof.
"Fiscal Year" means a fiscal year of the Borrower, which
is the twelve (12) month period ending on December 31 of each
calendar year.
"Foreign Grower Policies and Procedures" means the
policies and procedures governing advances to Growers located
outside the United States of America delivered to Lender
pursuant to Section 5.1(x), as from time to time amended with
Lender's prior written consent.
"Foreign Subsidiary" means any Subsidiary of the Borrower
which is not incorporated under the laws of a state of the
United States of America or of the District of Columbia.
"Funded Crop Costs" has the meaning set forth in Section
4.24(b) hereof.
"GAAP" means the generally accepted accounting principles
in the United States of America, as in effect from time to
time, applied on a consistent basis.
"Good Faith Contest" means, with respect to the payment
of taxes, fines, fees, penalties, judgments or any other
claims or liabilities, the satisfaction of each of the
following conditions: (i) the validity or amount thereof is
being diligently and promptly contested in good faith by the
Debtor by appropriate proceedings timely instituted; (ii) the
Debtor has established adequate reserves with respect to the
contested items in accordance with GAAP; (iii) during the
period of such contest, the enforcement of any contested item
is effectively stayed; and (iv) such failure to so pay or
discharge during the period of such contest would not result
in a Material Adverse Event.
"Governmental Body" shall mean any commonwealth,
national, state, territorial, regional, provincial, municipal,
parish or local jurisdiction of any kind (whether within or
outside the United States of America) (including, without
limitation, those of the United States of America, the
Netherlands, the Netherlands Antilles, the Grand Cayman
Islands or France, or any state, district, province, city or
town therein) or any governmental, legislative, executive or
monetary authority or regulatory body, or any subdivision,
agency, commission or authority of any such jurisdiction
(including, without limitation, those pertaining to
agriculture, agricultural marketing, water, environmental
protection, building and safety, land planning and zoning), or
any quasi-governmental or private body exercising any
regulatory authority thereunder, and any Person directly or
indirectly owned by and subject to the control of any of the
foregoing, or any court, arbitrator, grand jury or other
judicial or quasi-judicial tribunal, agency or department.
"Grower" means each Person engaged in the farming of
produce for whom or which Borrower provides marketing
services, whether or not the Borrower also provides
harvesting, hauling and packing services to such Person.
"Guaranty" by any Person means any obligation, contingent
or otherwise, of such Person directly or indirectly
guaranteeing any indebtedness, dividend or other obligation of
any other Person in any manner and, without limiting the
generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person with respect
to the Debt of such other Person.
"Hancock Cash Payment" means the cash sum of Two Million
Dollars ($2,000,000), which Cadiz is to deliver (whether
directly or through the Borrower) to the Lender on or before
the Effective Date.
"Hazardous Materials" has the meaning set forth in
Section 3.12 hereof.
"Indemnitees" has the meaning set forth in Section 7.3(b)
hereof.
"Intellectual Property Collateral" means the Patents,
Trademarks and Copyrights as defined in the New Hancock
Security Documents.
"Indemnified Liabilities" has the meaning set forth in
Section 7.3(b) hereof.
"Insurance Summary" has the meaning set forth in Section
4.4(a).
"Interest Rate" means ten and six tenths percent (10.6%)
per annum.
"Interest Coverage Ratio" means on a Consolidated Basis,
with respect to any fiscal period, the ratio of (i) EBITDA for
such fiscal period, to (ii) the sum of interest expense of
Borrower and its Subsidiaries for such fiscal period.
"Investment" means any direct or indirect investment by
any Person in any other Person, whether by means of share or
securities purchase, capital contribution, Capital
Contribution, loan, advance, time deposit, acquisition of
substantially all of the assets or business of such other
Person by purchase, merger, consolidation or other form of
acquisition of the operating assets or business of such other
Person, or otherwise.
"Joint Venture" means any special purpose corporation,
partnership (whether a general, limited or limited liability
partnership), limited liability company, trust, estate or
other entity created by (i) Borrower or any of its
Subsidiaries, and (ii) any Person or Persons other than
Borrower or any of its Subsidiaries, in order to conduct a
common business enterprise with such Person or Persons.
"Laws" means all applicable statutes, laws (federal,
state, local, foreign, common or otherwise), ordinances,
regulations, rules, codes, orders, judgments, permits,
licenses, certificates, orders, directives, requests for
information, notices, writs, injunctions, decrees or like
action of any Governmental Body, including, without
limitation, any of the foregoing pertaining to Hazardous
Materials, agriculture, water, land use or zoning, equal
employment opportunities, product labeling, food products,
food handling or marketing, or public health and safety.
"Lender" means John Hancock Mutual Life Insurance
Company, a Massachusetts mutual life insurance company, as
lender, and its successors and assigns.
"Lien" means, with respect to any asset (including,
without limitation, any real or personal property), any
mortgage, lien (statutory or other), pledge, charge, security
interest, claim, Capital Lease, sublease of a Capital Lease,
deed of trust, option, right of first refusal, easement,
servitude, transfer restriction (including in the case of
securities, under any shareholder voting trust agreements or
similar arrangements) or encumbrance, other similar
restriction, or other similar limitation in respect of such
asset whether or not recorded. For the purposes of this
Credit Agreement, any Debtor shall be deemed to own subject to
a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement
relating to such asset.
"Long Term Debt" means on a Consolidated Basis, as of any
date of determination, all Debt of Borrower and its
Subsidiaries which is payable more than one (1) year after the
date on which the determination is being made and which is
shown on the balance sheet as a liability in accordance with
GAAP. Any obligation shall be treated as Long Term Debt if it
is renewable, pursuant to written agreement, at the option of
the debtor, under the terms thereof or of a revolving credit
agreement, to a date more than one (1) year after the date of
the determination.
"Make Whole Amount" has the meaning set forth in
Schedule 1.1 (Make Whole) hereto.
"Mandatory Prepayment" has the meaning set forth in
Section 2.12 hereof.
"Marguleas Rayo Water Rights" means the Water Rights,
whether in nature real or personal property, that Cadiz may
have previously acquired or may hereafter acquire pursuant to
that certain Agreement by and between the Marguleas Family
Partnership, a California general partnership and Cadiz, which
Water Rights (to the extent previously acquired) have been,
and (to the extent hereafter acquired) shall be, contributed
by Cadiz to the Borrower, which Water Rights specifically
include (without limitation) certain contract rights to use
waters of the Kaweah River and any claim, right, benefit or
cause of action (and any proceeds therefrom in settlement or
otherwise) arising out of or in connection with such contract
rights.
"Marketing Agreement" means each written agreement
between Borrower (whether as successor to any Person or
otherwise) and a Grower pursuant to which Borrower agrees to
purchase produce from such Grower for resale or to market such
Grower's produce on consignment or otherwise, whether or not
such agreement contemplates that Borrower shall provide
harvesting, hauling or packing services to such Grower and
whether or not such agreement provides that Borrower shall
have an interest in such produce.
"Material Adverse Event" means any fact, event,
occurrence, condition or circumstance that has the effect of
imposing a material liability on the Lender, or that
materially and adversely affects, or could reasonably be
expected to materially and adversely affect, any of the
following: (a) the Condition of the Borrower individually;
(b) the Condition of the Borrower and its Subsidiaries taken
as a whole; (c) the Condition or market value of any
Collateral which (prior to such fact, event, occurrence,
condition or circumstance) had (or could reasonably be
expected to have) an aggregate appraised fair market value of
Two Hundred and Fifty Thousand Dollars ($250,000) or more; (d)
the validity or the priority (as contemplated herein) of the
Lender's Lien and security interest in any Collateral with an
aggregate fair market value exceeding Two Hundred and Fifty
Thousand Dollars ($250,000) or the validity or enforceability
of any material provision of the New Hancock Loan Documents;
(e) the ability of any Debtor to perform its obligations under
the New Hancock Loan Documents; (f) the material rights and
remedies of the Lender under the New Hancock Loan Documents;
or (g) any business or other license, permit or other
authorization that is issued by a Governmental Body and that
is material to the continued ability of any Debtor to operate
its business in an efficient or profitable manner consistent
with Section 4.6 hereof, including, without limitation, those
required under PACA, or those required under the California
Food and Agriculture Code to operate as a "Producer Dealer" or
a "Processor".
"Maturity Date" means September 13, 2006.
"Maximum Rate" has the meaning set forth in Section
2.11(c) hereof.
"Merger" means the merger referenced at the beginning of
this Credit Agreement of Old SWII and Old SWI, pursuant to
which Old SWI is the surviving corporation and is the renamed
Sun World International, Inc. provided for under the Plan and
the Borrower hereunder.
"MetLife Personalty" means the personal property which
has been or will be purchased by the Borrower, Old SWI or Old
SWII from MetLife Capital as part of the settlement of its
claim in the Chapter 11 Case and which would have been subject
to, or would have contained or given rise to, a Lien of the
Lender thereon pursuant to the Original Credit Agreement had
such personal property been acquired prior to the Effective
Date, including, without limitation, the personal property
identified in Schedule 1.1 ("MetLife Personalty"), except that
identified therein as "Equipment which will be Sold."
"Minimum Release Price" means, with respect to any Pre
Identified Asset, the Dollar amount specified therefor on the
Minimum Release Price Schedule.
"Minimum Release Price Schedule" means the schedule
relating to Blythe Ranch and to the Minimum Release Prices
agreed to by Borrower, Lender and Credit Agricole on or before
the Effective Date pursuant to the Agreement Re Minimum
Release Price Schedule dated as of the Effective Date,
identifying (among other things) the Pre Identified Assets and
classifying certain of them as Tier A Pre Identified Assets or
Tier B Pre Identified Assets, listing the applicable Minimum
Release Price for each such Pre Identified Asset and setting
forth, for illustrative purposes only, the aggregate
adjustment to the Minimum Cash Balance (as defined in the New
Credit Agricole Credit Agreement, but subject to the
limitation set forth in the proviso therein) that would result
from the sale of such Pre Identified Asset in its entirety,
based on the circumstances existing as of June 30, 1996.
"Multiemployer Plan" means a Plan described in Section
4001(a)(3) of ERISA that covers employees of Borrower or any
ERISA Affiliate.
"Net Income" means, with respect to any period,
Borrower's net income for such period, determined on a
Consolidated Basis in accordance with GAAP.
"Net Sales Proceeds" means the cash amount equal to the
difference between (a) the gross consideration for any sale of
any Pre Identified Asset, minus (b) all bona fide third party
out of pocket costs or expenses paid or incurred by the
Borrower or any other Debtor selling the Pre Identified Asset,
as the case may be, through the consummation of (and directly
in connection with) such Disposition, such as reasonable
attorneys' fees, escrow costs and fees, title and insurance
premiums, brokerage or finder's fees, filing and recordation
fees, and transfer taxes, but excluding any delinquent or pro
rated non-delinquent real estate taxes or assessments and any
expenditures (paid by any Debtor through the Disposition
escrow) necessary to cause the subject Collateral to comply
with any Law.
"New Credit Agricole Credit Agreement" means that certain
Amended and Restated Credit Agreement, dated as of a date no
later than the Effective Date, between the Borrower and Credit
Agricole relating to the New Credit Agricole Note.
"New Credit Agricole Deed of Trust" means, collectively,
the deeds of trust executed by the Borrower in favor of Credit
Agricole to secure indebtedness under the New Credit Agricole
Note and which cover the real property identified on schedules
or exhibits to each such deed of trust.
"New Credit Agricole Loan Documents" means, collectively,
the New Credit Agricole Credit Agreement, the New Credit
Agricole Deed of Trust, the New Credit Agricole Note, and such
other documentation as may be required to be executed and
delivered pursuant to the New Credit Agricole Credit
Agreement, including, without limitation, the Cadiz Agreement
dated as of the Effective Date by and between Cadiz and Credit
Agricole.
"New Credit Agricole Note" means the promissory note
executed by the Borrower in favor of Credit Agricole to
evidence the Borrower's indebtedness under the New Credit
Agricole Credit Agreement.
"New Credit Agricole Obligations" means the obligations
of Borrower or any of its Subsidiaries to Credit Agricole
under the New Credit Agricole Credit Agreement or the other
New Credit Agricole Loan Documents.
"New Hancock Loan" has the meaning set forth in Section
2.3 hereof.
"New Hancock Loan Documents" means this Credit Agreement,
the New Hancock Note, the Debtor Guaranties, the New Hancock
Security Documents, any releases of the Lender executed by the
Debtors, the Environmental Indemnity, the Agreement Re Minimum
Release Prices dated as of the Effective Date, the Cadiz
Agreement and any other document contemplated hereby or
thereby and executed by any Debtor, except that
notwithstanding anything to the contrary expressed or implied
herein or in any New Hancock Security Document, the
obligations of any Debtor under the Environmental Indemnity or
of Cadiz under the Cadiz Agreement are not intended to be, and
shall not be, secured by any New Hancock Security Document or
the Collateral. Any reference to any New Hancock Loan
Document shall be deemed a reference to such document as
amended, supplemented or modified from time to time.
"New Hancock Note" has the meaning set forth in Section
2.2 hereof.
"New Hancock Security Documents" has the meaning set
forth in Section 2.3 hereof.
"New Intercreditor Agreement" means the Amended and
Restated Intercreditor and Subordination Agreement referred to
in Section 2.10(d) hereof.
"Officer's Certificate" means a certificate of any
Debtor, as the case may be, executed by a Responsible Officer;
provided, however, that every Officer's Certificate with
respect to the compliance with a condition precedent to the
consummation of the transactions contemplated hereby as of the
Effective Date shall include a statement that: (i) the
officer or officers making or giving such Officer's
Certificate have read such condition and any definitions or
other provisions contained in this Credit Agreement relating
thereto; (ii) in the opinion of the signers, they have made or
have caused to be made such examination or investigation, if
any, as is necessary in the sole reasonable judgment of the
signers to enable them to express an informed opinion as to
whether or not such condition has been complied with; and
(iii) in the opinion of the signers, such condition has been
complied with.
"Old SWI" means the pre Merger Sun World, Inc., a
Delaware corporation, as described at the beginning of this
Credit Agreement.
"Old SWII" means the pre Merger Sun World International,
Inc., a Delaware corporation, as described at the beginning of
this Credit Agreement.
"OSHA" means the Occupational Health and Safety Act and
the rules and regulations thereunder, as heretofore or
hereafter amended, or any successor statute.
"PACA" means the federal Perishable Agricultural
Commodities Act (7 U.S.C. Section 499a et seq.), as heretofore or
hereafter amended, or any successor statute.
"Party" has the meaning set forth in the Recitals hereto.
"Patents, Trademarks and Copyrights" means all present
and future patents (both U.S. and worldwide), trademarks,
tradenames, copyrights and other tangible or intangible
intellectual property of the Borrower and/or any other Debtor,
including, without limitation, (i) any of the same that
secured the Original Loan to the extent still existing, as
listed in Schedule 3.16 hereto, (ii) all copyrights, rights in
copyrights, and works subject to copyright protection, and all
renewals and extensions thereof throughout the world in
perpetuity, the right (but not the obligation) to register
claims under copyrights, the right (but not the obligation) to
renew and extend such copyrights, and the right (but not the
obligation) to sue in the name of the Borrower or otherwise
for past, present and future infringement of copyright;
including in each case, without limitation, (A) all of the
Borrower's or any other Debtor's right, title and interest, if
any, in and to the copyrights or rights or interests in
copyrights registered or recorded in the United States
Copyright Office or in any copyright office in any foreign
country, (B) all of the Borrower's or any other Debtor's
right, title and interest in and to copyrights of all works
covered by such copyrights, if any, including, without
limitation, copyrights or rights or interests in copyrights
registered or recorded in the United States Copyright Office
or in any copyright office in any foreign country, (C) all of
the Borrower's or any other Debtor's right, title and
interest, if any, in and to all copyrights in musical
compositions and mechanical copyrights, (D) all of the
Borrower's or any other Debtor's right, title and interest, if
any, to all renewals and extensions of any such copyrights
that may be secured under the law now or hereafter in force
and effect in the United States or in any other country or
countries and (E) all of the Borrower's or any other Debtor's
right title and interest, if any, to make and exploit all
derivative works based on or adapted from all works covered by
the copyrights referred to herein; (iii) plant and other
patent applications and plant and other patents and plant
variety protection certificates and applications for plant
variety protection certificates under any Law, and including
all proceeds thereof (such as, by way of example and not by
way of limitation, license royalties and proceeds of
infringement suits), the right (but not the obligation) to
register claims under any such patent or patent application
law or regulation and to renew and extend any such patents and
patent applications, the right (but not the obligation) to sue
for past, present and future infringements in the name of the
Borrower or otherwise, all rights (but not the obligations)
corresponding thereto throughout the world and all re issues,
divisions, continuations, renewals, extension and
continuations in part thereof; and (iv) service marks,
designs, logos, indicia, trade names, corporate names, company
names, business names, fictitious business names, trade styles
and/or other source and/or identifiers and applications
pertaining thereto, and the goodwill associated therewith,
including, without limitation, (A) all of the trademarks which
are presently or in the future may be owned or used by the
Borrower or any other Debtor in conducting its business and
including all federal, state and foreign registrations
therefor, heretofore or hereafter granted, (B) all proceeds
thereof (such as, by way of example and not by way of
limitation, license royalties and proceeds of infringement
suits), (C) the right (but not the obligation) to register
claims under any Law and to renew and extend trademarks and
registrations, and (D) the right (but not the obligation) to
sue or bring opposition or cancellation proceedings in the
name of the Borrower or otherwise for past, present and future
infringements of the trademarks or registrations and all
rights (but not obligations) corresponding thereto throughout
the world.
"Payments" has the meaning set forth in Section 2.10
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to ERISA or any entity succeeding to any
or all of its functions under ERISA.
"PCBs" means polychlorinated biphenyls.
"Permanent Crop Capital Expenditures" means the Capital
Expenditures on, for or with respect to that portion of the
Collateral consisting of permanent crops (including, without
limitation, the planting and replanting of permanent crops,
trellises and irrigation systems), but excluding any
expenditures for routine cultivation, maintenance or repairs,
removals (other than removals that are part of, and
substantially contemporaneous with, replanting) or research
and development costs.
"Permitted Investments" means, as at any date of
determination, (i) marketable securities issued or directly
and unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within
one (1) year from the date of such acquisition; (ii)
marketable direct obligations issued by any state of the
United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing
within one (1) year from the date of such acquisition, and at
the time of acquisition thereof, having the highest rating
obtainable from both Standard & Poor's Corporation and Moody's
Investors Service, Inc.; (iii) commercial paper maturing no
more than one (1) year from the date of such acquisition and,
at the time of acquisition thereof, having a rating of at
least A 1 from Standard & Poor's Corporation and at least P 1
from Moody's Investors Service, Inc.; (iv) certificates of
deposit, Eurodollar time deposits, overnight bank deposits,
bankers' acceptances, repurchase agreements or reverse
repurchase agreements issued by any bank or trust company
having a combined capital and surplus of at least One Billion
Dollars ($1,000,000,000) and with a long term rated debt
having a rating of at least A 1 from Standard and Poor's
Corporation and at least P 1 from Moody's Investors Services,
Inc.; (v) advances to employees, officers or agents of a
Debtor for travel, relocation and other reasonable and
ordinary business expenses in an aggregate amount from time to
time outstanding not to exceed Fifty Thousand Dollars
($50,000.00); (vi) Investments existing as of the Effective
Date and listed on Schedule 1.1 (Permitted Investments); (vii)
the performance, by the employees of Borrower, in a prudent
manner consistent with standard industry practices, of
harvest, haul and pack services for any Grower pursuant to a
Marketing Agreement permitting Borrower to deduct its charges
for such services before remitting to such Grower such
Grower's share of the proceeds of sale of produce subject to
such Marketing Agreement; and (viii) Investments (excluding
advances of seed to Growers from excess inventory to the
extent that the aggregate fair market value of such seed so
advanced in any Fiscal Year exceeds Five Hundred Thousand
Dollars ($500,000)) consisting of working capital "grower
advances" not more than two hundred forty (240) days
outstanding, in accordance with standard industry practice
("Grower Advances"), (A)(I) either to Growers located in the
United States, that at the time of their entry into Marketing
Agreements are not, and have not previously been, Affiliates
of Borrower or any Debtor, provided that such Grower Advances
are secured by a perfected security interest of first priority
in those crops, or (II) to Growers located in Mexico, Chile or
South Africa made substantially in accordance with Foreign
Grower Policies and Procedures; (B) solely pursuant to
Marketing Agreements that permit Borrower to deduct all
amounts owed to it before remitting to such Growers their
respective shares of the proceeds of sale of crops marketed
pursuant to such Marketing Agreements; and (C) provided that
such advances are used by the Growers to finance their
respective working capital needs directly relating to the
crops subject to such Marketing Agreements.
"Permitted Liens" means the following encumbrances and
claims against any Debtor on the assets against which such
Lien has arisen: (i) Liens (other than a Lien imposed by
ERISA) for taxes or assessments or other governmental charges
or levies, either not yet due and payable or not paid to the
extent that nonpayment thereof is expressly permitted by the
terms of this Credit Agreement; (ii) workers', mechanics',
suppliers', carriers', landlords', warehousemen's, PACA or
other similar liens arising in the ordinary course of business
and securing obligations that are either (a) not more than
sixty (60) days past the date such obligation first became due
and payable, or (b) are the subject of a Good Faith Contest;
(iii) the Liens in favor of the Lender hereunder with respect
to the Collateral; (iv) Liens of record disclosed in the title
assurances described in Section 5.1(g) hereof; (v) Liens
arising from UCC financing statements regarding leases
expressly permitted by this Credit Agreement; (vi) the Liens
securing the New Credit Agricole Obligations; (vii) the Lien
on an undivided one half (1/2) interest in Blythe Ranch
granted to Zenith pursuant to the Plan; and (viii) such other
Liens as may be disclosed in Schedule 1.1 (Permitted Liens),
or as from time to time may be approved in writing by the
Lender acting in its sole discretion; provided, that none of
the foregoing Liens shall be pari passu with, or senior to,
the security interest and Lien on the Collateral in favor of
the Lender, except as expressly provided otherwise in Section
2.3(c) hereof. Nothwithstanding anything to the contrary
expressed or implied herein, the Liens securing the New Credit
Agricole Obligations shall not exceed the principal amount
stated in the New Credit Agricole Note as of the Effective
Date, as reduced from time to time by any payments of
principal made thereon, plus the following: (I) an increase,
on a single occasion, in the amount of Two Million Dollars
($2,000,000) arising from Credit Agricole's making of the Re
Advance (as defined in the New Credit Agricole Credit
Agreement), (II) accrued and unpaid interest on such principal
or such Re Advance (including, when applicable under the New
Credit Agricole Loan Documents, interest at the Default Rate
provided for therein) and (III) other costs, expenses and fees
and other amounts that, under the New Credit Agricole Loan
Documents are (A) payable by any Debtor (as defined in the New
Credit Agricole Credit Agreement ("Credit Agricole Debtor"))
and (B) secured by the liens arising under the New Credit
Agricole Loan Documents ("Credit Agricole Liens"), including,
but not limited to: (w) any late charges or prepayment
premiums, (x) any and all amounts advanced by Credit Agricole
for the protection or preservation of property subject to the
Credit Agricole Liens, including, but not limited to, payment
of real property taxes and assessments, insurance premiums,
attorneys' fees, fees for receivers, consultants' fees, and
all other fees, costs or expenses incurred or expended by
Credit Agricole in connection with the enforcement of any
rights, remedies or options it may have under the Credit
Agricole Loan Documents; (y) any environmental damages due
under any secured environmental indemnity agreement; and (z)
any damages, claims, actions or causes of action that Credit
Agricole may have against the Credit Agricole Debtors.
"Person" means an individual natural person, a
corporation, a partnership, an association, a trust or any
other entity or organization, including, without limitation, a
Governmental Body.
"Personal Property Security" means all items of personal
property that are part of the Collateral described in the New
Hancock Security Documents, which items shall include, without
limitation, those that are located on or included in or
appurtenant to and used in the operation of the other
Collateral, but do not include the Specified Credit Agricole
Collateral (as such term is defined in the deeds of trust
delivered to the Lender pursuant hereto).
"Plan" has the meaning set forth in the Recitals hereto.
"Plan Implementation Agreement" means the agreement
contemplated by the Plan whereby Cadiz shall (i) purchase all
the common stock and preferred stock of Old SWII and any
common stock of the Borrower, and (ii) otherwise take the
actions required of Cadiz to implement the Plan.
"Pre Identified Assets" means any asset listed on the
Minimum Release Price Schedule, except Blythe Ranch (if the
same is listed thereon).
"Prepayment Amount" has the meaning set forth in Section
2.12(a) hereof.
"Prepayment Commitment Notice" has the meaning set forth
in Section 2.12(a) hereof.
"Principal Amount" means Ninety One Million Eighty Three
Thousand Eight Hundred Fifty Three Dollars and Ninety Five
Cents ($91,083,853.95).
"Principal Payment Date" has the meaning set forth in
Section 2.13 hereof.
"Prohibited Transaction" means any transaction set forth
in Section 406 of ERISA or Section 4975 of the Code.
"Proposed Prepayment Date" has the meaning set forth in
Section 4.27(c) hereof.
"Qualification" means, with respect to any certificate
covering financial statements, a qualification to such
certificate (such as a "subject to" or "except for" statement
therein) (i) resulting from a limitation on the scope of
examination of such financial statements or the underlying
data, or (ii) which could be eliminated by changes in
financial statements or notes thereto covered by such
certificate (such as by the creation of or increase in a
reserve or a decrease in the carrying value of assets) and
which if so eliminated by the making of any such change and
after giving effect thereto would occasion a Default or Event
of Default; provided that, without limitation, none of the
following shall constitute a Qualification: (a) a consistency
exception relating to a change in accounting principles with
which the independent public accountants for the Person whose
financial statements are being certified have concurred, or
(b) a qualification relating to the outcome or resolution of
threatened litigation, pending litigation subject to a Good
Faith Contest, pending or threatened claims or other
contingencies, the impact of which litigation, claims or
contingencies cannot be determined with sufficient certainty
to permit quantification in such financial statements.
"RCRA" means the Resource Conservation and Recovery Act
of 1976 as may be amended from time to time, or any successor
statute thereto.
"Re Advance" has the meaning set forth in Section 2.1(b)
hereof.
"Release" has the meaning set forth in Section 3.12
hereof.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Responsible Officer" shall mean each of the Chairman,
the President, Chief Executive Officer, Chief Operating
Officer, the Controller, the Treasurer, the Chief Financial
Officer, any Vice President or the General Counsel of a
Person.
"Restricted Payment" means, with respect to any Debtor or
Subsidiary thereof: (i) any dividend or other distribution,
whether direct or indirect, on, or payment of cash or other
property in respect of, any shares of its capital stock
(except dividends payable by a Debtor to the Borrower); (ii)
any payment on account of the purchase, redemption, retirement
or acquisition of (A) any shares of its capital stock, (B) any
option, warrant or other right to acquire shares of its
capital stock or subordinated Debt issued by any such Debtor
or Subsidiary thereof or (C) any subordinated Debt issued by
any Debtor or Subsidiary thereof (including, without
limitation, any payment, prepayment, defeasance, redemption,
purchase pursuant to tender offer or other acquisition or
retirement for value prior to or at its scheduled maturity);
(iii) any prepayment or advance payment of any amount in
respect of any Debt, except prepayments to Lender, or payments
to Zenith of net proceeds from a sale of Blythe Ranch, or
payments to Credit Agricole expressly permitted in Section
4.26 hereof; (iv) any Investment in, or Guaranty on behalf of,
directly or indirectly, any Foreign Subsidiary; (v) any
payment to any officer, director or employee of any such
Debtor or Subsidiary that constitutes a "bonus" (except for
payments to Keith Brackpool pursuant to the express terms of
the Cadiz Services Agreement and for payments to officers or
employees that are required to be paid under an employment
agreement or a bonus compensation plan duly adopted by the
Borrower's board of directors); (vi) any fees or other
compensation to a Person (other than Cadiz pursuant to the
Cadiz Services Agreement, or a natural person who is a full
time officer or employee, or a director of the Borrower) for
performing or providing senior executive management services
to the Borrower; (vii) any payments to Cadiz in respect of
management services provided under the Cadiz Services
Agreement exceeding Three Hundred Seventy Five Thousand
Dollars ($375,000) per calendar quarter; (viii)
notwithstanding (vi) or (vii) above, any payments to Cadiz
(except for distributions of a Re Advance received from Lender
or Credit Agricole) whatsoever or any Cadiz Subsidiary not a
Subsidiary of Borrower, under the Cadiz Services Agreement,
the Tax Sharing Agreement, the Cadiz Lease or otherwise, at
any time during (A) the period commencing on the first (1st)
day of the Deferral Period and ending on the date on which all
interest accrued in respect of the New Hancock Loan during the
Deferral Period has been paid in full or (B) the continuance
of any Default or Event of Default; (ix) any payment in
respect of any Class 6 Claim or Class 8 Claim except (A) from
the funds transferred to the Unsecured Claims Disbursement
Account from the Unsecured Claims Reserve Account, as a
Capital Contribution by Cadiz to Borrower, and (B) following
compliance with Section 4.1(u); (x) any payment of any expense
of resolving any Disputed Claim (as defined in the Plan); (xi)
any issuance of securities other than common stock (except
preferred stock which will be issued by the Borrower upon
completion of the Merger and cancelled on the Effective Date,
or acquired by Cadiz and cancelled promptly thereafter); or
(xii) any payment to any Grower in the nature of a "rendering
up" payment if the aggregate of all such payments to all
Growers during the previous twelve (12) month period exceeds
One Hundred and Fifty Thousand Dollars ($150,000).
"Short Term Spot Market Water Sales" means a sale or
exchange or other transfer by the Borrower, in compliance with
all Laws, for cash or other consideration pursuant to an arm's
length written contract or written understanding, of legal
rights to use Excess Water (as hereinafter defined) for a
period (the "Contract Period") (after giving effect to any and
all options, extensions, renewals or similar rights held by
the buyer under such contract or understanding) not to exceed
twelve (12) calendar months; provided that (i) the Borrower
shall not enter into, or otherwise become legally obligated or
bound under, any such contract or understanding prior to a
date that is more than fifteen (15) days prior to the
commencement of the buyer's rights to use Excess Water under
such contract or understanding; (ii) such contract or
understanding shall include written provisions substantively
identical to those set forth in Schedule 1.1 (Short Term Water
Sales) hereto; and (iii) any contract or understanding not
satisfying (i) or (ii) above shall automatically be null and
void and of no force and effect. As used herein, "Excess
Water" means that volume of water (after giving effect to all
other existing or proposed Short Term Spot Market Water Sales)
that (a) Borrower is entitled to own, use or consume pursuant
to any Law, permit, contract, lease, deed or otherwise, and
(b) will not be needed for the ensuing Contract Period to
maintain, farm, cultivate, use or otherwise operate a given
parcel or parcels of real property or the aggregate of all
parcels located within a given water district in accordance
with the requirements of this Credit Agreement (including,
without limitation, Sections 4.3 and 4.6 hereof), or to
satisfy any other lawful commitment or obligation of Borrower
or any of its Subsidiaries.
"Subsidiary" means, as to any Person, (i) a corporation
of which shares of stock having ordinary voting power (other
than stock having such power only by reason of the happening
of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the
time owned, or the management of which is otherwise
controlled, directly or indirectly, through one or more
intermediaries, or both, by such Person and/or by one or more
Subsidiaries of such Person, (ii) a partnership a majority of
the equity interests in which is owned, or the management of
which is otherwise controlled, directly or indirectly, through
one or more intermediaries, or both, by such Person or by any
one or more Subsidiaries of such Person, (iii) as to Borrower
and Sun Desert, Coachella Growers; and (iv) as to Borrower,
Sun World (Europe) B.V.
"Subordination Agreement" has the meaning set forth in
Section 2.6 hereof.
"Tangible Assets" means, as of any date of determination,
the assets of Borrower and its Subsidiaries determined on a
Consolidated Basis, in accordance with GAAP; excluding,
however, all assets that would be classified as intangible
assets under GAAP (including, without limitation, goodwill,
patents, trademarks, trade names, copyrights and franchises).
"Tangible Net Worth" means on a Consolidated Basis, as of
any date of determination, for Borrower and its Subsidiaries,
the excess of (i) Tangible Assets over (ii) total liabilities
determined in accordance with GAAP.
"Tax Sharing Agreement" means the agreement between Cadiz
and Borrower, dated as of the Effective Date, relating to the
sharing of certain income tax obligations, in form and
substance acceptable to Lender, as (subject to Section 4.15
hereof) amended, modified or supplemented from time to time.
"Threshold Renewal Premium" has the meaning set forth in
Section 4.32 hereof.
"Tier A Pre Identified Asset" means a Pre Identified
Asset identified as such on the Minimum Release Price
Schedule.
"Tier B Pre Identified Asset" means a Pre Identified
Asset identified as such on the Minimum Release Price
Schedule.
"UCC" means the Uniform Commercial Code in effect from
time to time in the State of California or in any other
applicable state, as heretofore or hereafter amended.
"Unsecured Claims Disbursement Account" means the
"Unsecured Claims Disbursement Account" established and
maintained by Borrower pursuant to the Plan.
"Unsecured Claims Reserve Account" means the "Unsecured
Claims Reserve Account" established and maintained by Cadiz
pursuant to the Plan.
"Water Rights" means, with respect to any Person, all
right, title and interest of such Person in and to all water,
water rights and entitlements, and other rights to water or
water rights of every kind or nature whatsoever, including all
water inventory and rights to use, acquire, appropriate,
exchange or otherwise obtain the benefit of any water, such
as: (i) ground or subsurface water wherever located, whether
or not subject to pumping or other extraction from real
property or from any underground river, aquifer, storage basin
or other source, whether or not subject to removal, use or
extraction pursuant to any easement, license, contract,
servitude, covenant running with any land or other property,
permit, approval, consent, judicial or water authority
decision, by operation of Law or other basis of right,
including pursuant to any water related contract, water
approval, or water reallocation right or otherwise, and
including groundwater or water stored in a groundwater basin
which is made available to Borrower through any water district
or company or similar entity or otherwise; (ii) surface water
from any source, whether based upon any appropriative,
riparian, prescriptive or other right, or water approval,
water related contract or water reallocation right, whether
"preconsolidation" water from the California aqueduct or other
water authority water or subsequent to any such consolidation,
whether based upon any easement, license, contract, servitude,
covenant running with the land or other property, permit,
approval, consent, judicial or water authority decision, by
operation of Law, or other basis of right, including rights
accruing because of the location of any real property within
the boundaries of any water district or other water authority,
ownership of any securities or equity or other interest in any
water company or other water authority or otherwise; and (iii)
any right to acquire or transfer any water or water right, any
water allocation or distribution right, any storage, delivery
or transportation right, or other right, whether or not
appurtenant to any real property, whether based upon any water
related contract or any ownership or other interests in any
real property, any stock securities or other equity or other
interests in any water company or other water authority
(including any water reallocation right), or otherwise. For
purposes of this definition, the term "water" includes water
rights and rights to water or whatever rights to money,
property or other benefits are exchanged or received for or on
account of any water or any conservation or other nonuse of
water, including whatever rights are achieved by depositing
one's share of any water in any water bank or with any water
authority, and any other water reallocation rights.
"Wholly Owned Subsidiary" means any Subsidiary all of the
shares of capital stock of which (except directors' qualifying
shares) are at the time directly or indirectly owned by
another Person.
"Working Capital" means, at any time, the excess of
Current Assets over Current Liabilities.
"Zenith" means Zenith Insurance Company.
"Zenith Intercreditor Agreement" means the Intercreditor
Agreement, dated as of the Effective Date, between Lender and
Zenith, as amended, supplemented or modified from time to
time.
SECTION 1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered
hereunder (including, without limitation, those under Section
4.1 and Section 4.12 hereof) shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes
in accordance with Section 4.14 concurred in by the Borrower's
independent public accountants) with the most recent audited
financial statements of the Borrower delivered to the Lender.
SECTION 1.3 Singular and Plural Terms. Defined terms used herein in
the singular shall include the plural and vice versa.
ARTICLE 2
THE NEW HANCOCK LOAN
SECTION 2.1 POST REORGANIZATION INDEBTEDNESS.
(a) The Borrower represents, warrants and agrees that
upon the Effective Date, the Borrower shall be indebted to the
Lender in the aggregate principal amount of the Principal
Amount, and that such indebtedness shall be subject to no
deductions, withholdings, defenses, counterclaims or rights of
set off of any kind whatsoever.
(b) Provided that, in the case of an event described in
either clause (i) or clause (iii) of Section 3(b) of the Cadiz
Agreement, (i) Cadiz pays in full the Two Million Dollar
($2,000,000) payment that it is required to make to Lender
thereunder; (ii) thereafter, both (A) the New Hancock Loan and
the New Credit Agricole Obligations are reinstated and (B) not
later than the third (3d) anniversary of the Effective Date,
Lender has received Net Sales Proceeds in an aggregate amount
equal to at least Thirty Million Dollars ($30,000,000), at
least Five Million Dollars ($5,000,000) of which shall have
come from the sale of Tier B Pre Identified Assets; (iii)
there shall not have occurred and then be continuing (or would
exist immediately thereafter) any Default or Event of Default;
and (iv) the conditions precedent set forth in subsection (c)
immediately below are satisfied, Lender shall readvance to
Borrower the sum of Two Million Dollars ($2,000,000) (the "Re
Advance"), and Borrower shall be permitted to distribute such
amount to Cadiz.
(c) Lender's obligation to make the Re Advance shall be
subject to the satisfaction of the following conditions
precedent (the satisfaction of which shall be determined, and
may be waived, by Lender on or prior to the date on which the
Re Advance is funded):
(i) The Lender shall have received a request for the Re
Advance, executed by Borrower, no later than eleven (11:00)
a.m., Boston time, at least four (4) Business Days prior to
the date on which Borrower desires the Re Advance to be
funded, designating the date on which the Re Advance is to be
funded.
(ii) All representations and warranties of Cadiz or
Borrower or any Subsidiary of either Cadiz or Borrower set
forth in the Cadiz Agreement or in any New Hancock Loan
Document (other than those that speak as of a specific date)
shall be true and correct in all material respects as if made
on and as of the date of the Re Advance.
(iii) As of the date of the Re Advance, there shall not
have occurred and then be continuing (or would exist
immediately after the Re Advance is made and the proceeds
thereof are used by Borrower) any Default or Event of Default.
(iv) Borrower shall have provided to Lender, at
Borrower's sole cost and expense, such endorsements as Lender
may reasonably request, dated as of the date of the Re
Advance, in form and substance satisfactory to Lender, to the
title assurances described in Section 5.1(g) hereto or any
successor assurances thereto insuring the Liens of the
Lender's deeds of trust on the Collateral, including, without
limitation, endorsements insuring Lender that the Liens on
real property Collateral continue to constitute valid Liens
upon the real property Collateral covered thereby in the full
amount of the outstanding principal of the New Hancock Loan
after giving effect to the Re Advance, subject only to such
title exceptions as Lender approved in writing in connection
with the satisfaction of Section 5.1(g) hereof on the
Effective Date.
(v) The Lender's satisfaction that any Re Advance that
Credit Agricole is obligated to make under the New Credit
Agricole Credit Agreement has been funded, or will be funded
concurrently with the Lender's Re Advance.
On the date on which the Re Advance is funded, Borrower shall
be deemed to have represented and warranted to Lender that
each of the conditions precedent to the funding of the Re
Advance not waived in writing by Lender has been satisfied.
SECTION 2.2 NEW HANCOCK NOTE. The Borrower's obligation
to repay the Principal Amount shall be evidenced by a
promissory note (the "New Hancock Note") of the Borrower,
which New Hancock Note shall be for the Principal Amount, be
dated the Effective Date, bear interest at the Interest Rate
or the Default Rate (as the case may be) from the Effective
Date, be payable in the amounts and on the dates, and contain
the other terms and provisions set forth herein and in the
form of promissory note attached to this Credit Agreement as
Exhibit "A."
SECTION 2.3 NEW HANCOCK LOAN SECURITY AND PRIORITY
THEREOF.
(a) The obligations owed to the Lender under this Credit
Agreement and the New Hancock Note and the loan contemplated
in and by such documents (collectively, the "New Hancock
Loan") shall be secured by perfected security interests and
Liens on all the Collateral with the priority set forth in
subsection (c) below. Such security interests and Liens shall
be established, evidenced and perfected by such deeds of
trust, security agreements, stock pledges, collateral
assignments, UCC financing statements, notices and other
documents, recordations and filings (collectively, the "New
Hancock Security Documents") in such form and substance as the
Lender (acting in its sole and absolute discretion) may
require, whether before, on or after the Effective Date.
Without limiting the generality of the foregoing, Borrower
shall cause the Merger documentation filed with the Delaware
Secretary of State to be recorded with (i) the United States
Patent and Trademark Office within sixty (60) days after the
date hereof, (ii) the United States Copyright Office within
fifteen (15) days after the date hereof, and (iii) with the
foreign patent and trademark offices as reasonably necessary
to protect any Debtor's interest in the Intellectual Property
Collateral.
(b) If any Debtor obtains title, whether ownership in
fee or otherwise, to any real property that is presently
leased or any personal property that would have been subject
to, or would have contained or given rise to, a Lien of the
Lender thereon pursuant to the Original Credit Agreement or
the New Hancock Loan Documents had title been obtained prior
to the Effective Date (collectively, "After Acquired
Property"), and the After Acquired Property is not covered by
the New Hancock Security Documents, or the Lender's security
interest or Lien upon such After Acquired Properties is not
perfected pursuant to the Laws of the jurisdiction where
perfection is necessary, the Borrower shall immediately notify
the Lender. Regardless of whether the Borrower shall have
given to the Lender notice as aforesaid, at the request of the
Lender, each Debtor having an ownership interest in such After
Acquired Property shall (i) execute and deliver to the Lender
such new agreement, document or filing, or such amended New
Hancock Security Document granting to the Lender a Lien on any
After Acquired Property that the Lender (acting in its sole
and absolute discretion) may specify, (ii) file a new or
amended financing statement or statements, and (iii) do such
other acts and things and execute and deliver such documents
and instruments as may be necessary or desirable to perfect
the Lender's security interest and Lien (and the priority
thereof required hereby) in and on such After Acquired
Property.
(c) Borrower agrees that notwithstanding anything to the
contrary expressed or implied herein or in any other New
Hancock Loan Document, the perfected security interests and
Liens of the Lender on the Collateral shall be senior to, and
have a first priority over, all security interests or Liens,
except that the perfected security interests and the Liens of
the Lender (i) as to Patents, Trademarks and Copyrights shall
be in parity to those of Credit Agricole arising under the New
Credit Agricole Documents so that Hancock and Credit Agricole
shall each hold equal security interests in the Patents,
Trademarks, and Copyrights; (ii) as to Blythe Ranch shall be
immediately junior to those of Credit Agricole arising under
the New Credit Agricole Documents; (iii) as to all real
property Collateral shall be junior to such security interests
and Liens as may be specifically disclosed as exceptions to
the seniority of the Lender's Liens in the title insurance and
title assurances described in Section 5.1(g) hereof and
approved by the Lender pursuant thereto; (iv) as to the
MetLife Personalty shall be junior to those of MetLife Capital
arising pursuant to MetLife Capital's financing of the
purchase thereof by Borrower, Old SWI or Old SWII; and (v)
Liens described in subclauses (i) or (ii) of "Permitted Liens"
in Section 1.1 and given priority equal or prior to those of
the Lender by operation of Law, provided that Borrower hereby
represents and warrants that no such Liens shall exist on the
Effective Date other than those (if any) not yet due and
payable.
SECTION 2.4 GUARANTIES. As a condition and inducement
for the New Hancock Loan, the Debtors or the successors
thereto (other than the Borrower) shall absolutely and
unconditionally guarantee, and assume the liability of the
Borrower for, the payment of all principal and interest due
under the New Hancock Note and the performance of each and
every monetary or non monetary obligation of the Borrower
under each of the New Hancock Loan Documents. Such Guaranties
(collectively, the "Debtor Guaranties") shall be in form and
substance completely satisfactory to the Lender (acting in its
sole and absolute discretion). In addition, the Guaranty of
Sun Desert, Inc., as the successor to Sun Desert, Inc., debtor
in possession in the Chapter 11 Case, shall be secured by a
first priority security interest and Lien on the property that
as of December 13, 1994 secured the Guaranty of such debtor in
possession pursuant to the Original Loan; the other Debtor
Guaranties shall be secured by a first priority Lien on the
assets of the Debtor guarantors thereunder except that Credit
Agricole may hold an equal security interest in the Patents,
Trademarks and Copyrights of the Debtor guarantors); and all
such first priority security interests and Liens shall be
established and perfected by such deeds of trust and other
security documents as the Lender (acting in its sole and
absolute discretion) may require, whether before, on or after
the Effective Date.
SECTION 2.5 ENVIRONMENTAL INDEMNITY AGREEMENT. In
addition to the Borrower's obligations elsewhere hereunder,
the Debtors shall make certain representations as to
environmental matters pertaining to the Collateral, and shall
indemnify the Lender, pursuant to an Environmental Indemnity
Agreement completely satisfactory to the Lender (acting in its
sole and absolute discretion). Notwithstanding anything to
the contrary express or implied herein, such Environmental
Indemnity Agreement shall be an unsecured obligation of each
obligor thereunder.
SECTION 2.6 SUBORDINATION AGREEMENT. Subject to (and
not in derogation of) Section 4.8 hereof, the Borrower agrees
that any existing or future Lien or charge securing any Debt
upon the Collateral shall at all times be and remain
subordinate and junior in priority to the Lender's first
priority security interests and Liens on the Collateral
(except as expressly provided to the contrary in Section
2.3(c) hereof); and to ensure that any such Lien or charge
shall be so, Borrower shall cause to be executed and delivered
to the Lender such subordination agreements executed by such
Persons (including, without limitation, Credit Agricole) and
in such form and substance as may be completely satisfactory
to Lender (acting in its sole and absolute discretion), such
subordination agreements (individually, and collectively, the
"Subordination Agreement") to be executed, acknowledged,
delivered and recorded (a) by the Effective Date with respect
to Liens existing on the Effective Date, and (b) promptly
after the Lender's demand therefor with respect to Liens
arising thereafter.
Section 2.7 FINANCING STATEMENTS. The Borrower agrees
that the security interest and Lien in any Collateral which
may constitute personal property or fixtures shall be
perfected by the Debtors' filing or recordation of such UCC 1
and UCC 2 financing statements (the "Financing Statements") as
the Lender may from time to time reasonably require.
SECTION 2.8 [Intentionally reserved]
SECTION 2.9 CLOSING. The Parties shall take the steps
necessary to consummate the transactions contemplated hereby
at or prior to the Effective Date, but the consummation of the
transactions contemplated hereby shall in any event be deemed
to have occurred and be effective on (and to be subject to)
the Effective Date; provided that no such consummation shall
occur unless all the conditions set forth in Article 5 hereto
have been fulfilled, or waived in writing by the Lender.
SECTION 2.10 PAYMENTS.
(a) All payments to be made to the Lender under (or
pursuant to) this Credit Agreement, the New Hancock Note or
any other New Hancock Loan Document, including, without
limitation, all interest, principal, prepayments, late
charges, costs, fees, expenses or otherwise (collectively,
"Payments") shall be made in Dollars, via wire transfer of
immediately available funds, without presentment, demand,
protest, notice, deduction, defense, withholding, set off or
counterclaim, and absolutely free and clear and net of any
Liens, charges, taxes or other amounts withheld, in the manner
and to the account and containing the information set forth in
Schedule 2.10 hereto, or to such other place or account as the
Lender may hereafter direct the Borrower in writing, by not
later than one (1) p.m. (Boston time) on the date on which
such Payment is due (each such Payment made after such time on
such due date shall be deemed to have been made on the next
succeeding Business Day).
(b) If the due date of any Payment would otherwise fall
on a day that is not a Business Day, such date shall be
extended to the next succeeding Business Day, and interest
shall accrue and be payable for any Payment so extended for
the period of such extension.
(c) Except as expressly provided otherwise herein,
provided that no Default or Event of Default shall have
occurred and be continuing, all payments shall be applied
first to the payment of fees, costs and expenses then due and
payable for which demand has been made to Borrower, second to
the payment of interest then due and payable, and third to the
payment of principal.
(d) Borrower acknowledges that, under the terms of the
Amended and Restated Intercreditor Agreement between Lender
and Credit Agricole dated the Effective Date, Lender may be
required to turn over to Credit Agricole certain amounts
debited by, or otherwise paid to, Lender in respect to
Borrower's obligations under the New Hancock Loan Documents,
and agrees that, in any such event, Borrower's obligation to
pay to Lender the amount so turned over to Credit Agricole
shall be reinstated (and interest shall resume accruing
thereon commencing as of the date of such turnover to Credit
Agricole), all as though such amount had never been debited by
or paid to Lender. Lender shall give notice to Borrower of
the date on which any amount is so turned over to Credit
Agricole and of the amount thereof; provided, however, that
Lender's failure to give such notice shall not limit or
otherwise affect the obligation of Borrower hereunder with
respect to such turnover.
SECTION 2.11 INTEREST.
(a) Interest on the unpaid principal balance due on the
New Hancock Note shall be payable monthly in arrears on the
first (1st) calendar day of each calendar month beginning with
the first (1st) such calendar day occurring after the
Effective Date, and shall accrue at the Interest Rate;
provided, however, that (i) certain scheduled interest
payments shall be deferred subject to, and in accordance with,
subsection (d) below; (ii) any Payment in respect of the New
Hancock Loan not paid when due, whether of principal, interest
or any other amount and whether on a scheduled payment date,
at stated maturity, by acceleration or otherwise, shall
thereafter bear interest (after as well as before judgment,
and during the pendency of any bankruptcy proceedings),
payable upon demand, at the Default Rate, and (iii) whenever a
Default or Event of Default has occurred and is continuing,
the entire outstanding principal amount of the New Hancock
Loan shall bear interest (after as well as before judgment,
and during the pendency of any bankruptcy proceedings) at the
Default Rate. The accrual of interest at the Default Rate
shall not excuse any default in payment. The Default Rate
shall change from time to time automatically and without
notice, effective as of the effective date of each change in
the Credit Agricole Prime Rate.
(b) All interest due hereunder (whether accruing at the
Interest Rate, the Default Rate or otherwise) shall be
computed on the basis of a year consisting of twelve (12)
thirty day months, except that for any interest period that is
less than thirty (30) days, interest shall be computed on the
basis of a year of three hundred sixty (360) days and the
actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable.
(c) In no event shall interest charged under any New
Hancock Loan Document, however such interest may be
characterized or computed, exceed the highest rate permissible
under any California or United States Law which a California
state or a United States Federal court of competent
jurisdiction applying California or United States Law shall,
in a final determination, deem applicable to this Credit
Agreement (the "Maximum Rate"). In the event that any such
court determines that the rate of interest charged hereunder
exceeded the Maximum Rate during any period or periods, the
rate of interest hereunder for such period or periods shall be
deemed to have been the Maximum Rate, and the rate of interest
hereunder shall be deemed to have continued to be and shall
continue to be the Maximum Rate for such period as is
necessary for the total amount of interest paid or accrued
hereunder to equal the amount of interest that would have been
paid or accrued hereunder had the interest rate hereunder at
all times remained as provided in the preceding subsections of
this Section 2.11. If, notwithstanding the foregoing interest
rate adjustment, any such court determines that the Lender has
received interest in excess of the Maximum Rate, any such
excess shall first, be applied to any unpaid costs and
expenses owed to the Lender under the New Hancock Loan
Documents and to the unpaid principal amount of the New
Hancock Loan and second, be refunded to the Borrower.
(d) Provided that (i) no Default or an Event of Default
has occurred and is continuing, and (ii) Borrower does not
make any payment (whether as a dividend, management services
or other fee or otherwise) to Cadiz either in advance with
respect to, or during the period May 1 through October 31 of
any calendar year (the "Deferral Period"), interest (but not
principal) otherwise scheduled to be paid hereunder on the
first (1st) calendar day in May, June, July and August of each
calendar year shall not be payable on such dates, but instead,
such interest shall accrue at the Interest Rate (compounded
monthly) from its otherwise scheduled due date until paid, and
all such deferred scheduled interest (the "Deferred Interest")
plus the interest accrued and compounded thereon ("Additional
Interest") shall be due and payable as follows: (i) one half
(1/2) of the Deferred Interest plus the Additional Interest
accrued through such date, shall be due and payable on
September 1 of each such calendar year, along with the
regularly scheduled interest due and payable on September 1
for the month of August; and (ii) the remaining one half (1/2)
of the Deferred Interest, plus the Additional Interest accrued
through such date, shall be due and payable on October 1,
along with the regularly scheduled interest due and payable on
October 1 for the month of September.
SECTION 2.12 PREPAYMENTS.
(a) The Borrower shall have no right to prepay the
outstanding principal balance due on the New Hancock Loan,
except (i) for the prepayments of principal that the Borrower
is required to make under Sections 4.24 or 4.27 of this Credit
Agreement (each a "Mandatory Prepayment"), or (ii) as
otherwise set forth expressly in this subsection (a). The
privilege is reserved to the Borrower to prepay voluntarily
the entire unpaid principal balance owed to the Lender, or
from time to time to make partial prepayments of such
principal of not less than (and in increments of) One Hundred
Thousand Dollars ($100,000) in such principal amount as is
specified in the Prepayment Commitment Notice; provided,
however, that (i) any prepayment of principal must be
accompanied by payment of the Make Whole Amount and all
accrued but unpaid interest on such principal prepayment (such
interest and the Make Whole Amount, collectively, along with
the principal amount being prepaid, "the Prepayment Amount");
(ii) Borrower shall have given written notice to the Lender of
the Borrower's commitment to make any such prepayment of
principal ("Prepayment Commitment Notice") on a date specified
therein ("Prepayment Date") not less than fifteen (15) days
prior to such Prepayment Date; and (iii) Borrower shall pay
the Prepayment Amount on the Prepayment Date specified in each
Prepayment Commitment Notice.
(b) Except as set forth in subsection (c) immediately
below, and provided no Default or Event of Default has
occurred and is continuing, all prepayments of principal
(whether voluntary or mandatory) shall be applied against the
principal due on the New Hancock Loan in inverse order of
maturity; provided, however, that the Borrower shall continue
to make the payments due under the New Hancock Note as if such
prepayment had not been made.
(c) All Net Sales Proceeds received by Hancock on or
before the third (3d) anniversary of the Effective Date, or
within six (6) months thereafter if the escrow therefor was
opened in good faith prior to such third (3d) anniversary and
was closed within six (6) months after the opening of such
escrow, pursuant to Section 4.24(b) hereof with respect to
sales of Pre Identified Assets shall be applied against
principal due on the New Hancock Loan, fifty percent (50%) in
the inverse order of maturity thereof, and fifty percent (50%)
in the order of principal payments as they become due (but
with no change to the original principal amortization
schedule); provided, however, that the foregoing part of this
Section 2.12(c) shall not apply to Net Sales Proceeds
exceeding Thirty Million Dollars ($30,000,000) or to Net Sales
Proceeds from the sale of Tier A Pre Identified Assets
exceeding Twenty Five Million Dollars ($25,000,000), or if any
of the following conditions then exist:
(i) The New Hancock Loan has been (and continues to be)
accelerated for any reason whatsoever pursuant to Section 6.2
hereof or otherwise;
(ii) A Default or an Event of Default has occurred and
is continuing by reason of the Borrower's failure to pay any
principal or any interest due under the New Hancock Note, and
the delinquent payment(s) have not been made;
(iii) A Default or an Event of Default has occurred and
is continuing by reason of the Borrower's failure to pay any
other amount due under the New Hancock Loan Documents within
ten (10) days after written demand from the Lender therefor,
provided that all such other amounts then aggregate at least
Two Hundred Fifty Thousand Dollars ($250,000), and the
delinquent payments have not been made; or
(iv) The occurrence of any of the following and the
continuation thereof:
(A) The receipt by Credit Agricole, and application by
Credit Agricole to the payment of the obligations of the
Borrower under the New Credit Agricole Credit Agreement, of
any dividends, cash, securities, instruments or other property
or distributions under Section 3, or the exercise (whether by
proxy or otherwise) by Credit Agricole of any voting or other
consensual right under Section 4, of that certain Stock Pledge
Agreement dated as of the date hereof given by Cadiz to Credit
Agricole;
(B) The acceleration by Credit Agricole of the
indebtedness due under the New Credit Agricole Loan Documents;
(C) The exercise by Credit Agricole, prior to any such
acceleration, of any right or remedy arising upon or after a
Default under the New Credit Agricole Loan Documents that (i)
results in the Borrower's loss of use or control of any assets
(other than the Cash Account or the cash therein) such that
the Borrower can no longer conduct business substantially in
the ordinary course, or (ii) constitutes a liquidation by
Credit Agricole of any material assets (other than the
Collateral) into cash proceeds for the benefit of Credit
Agricole; or
(D) The exercise by Credit Agricole of any set off or
offset right that Credit Agricole may have under Section 8.9
of the New Credit Agricole Credit Agreement or otherwise.
Notwithstanding anything to the contrary expressed or implied
herein, for purposes of this Section 2.12(c), amounts received
by the Lender from the Disposition of any Pre Identified
Assets shall not be deemed to have cured any Default or Event
of Default, and Borrower shall not assert or contend
otherwise.
(d) If for any reason the Lender has not received on or
prior to the third (3d) anniversary of the Effective Date
pursuant to Section 4.24(b) at least Thirty Million Dollars
($30,000,000) in Net Sales Proceeds from sales of all Pre
Identified Assets (including at least Five Million Dollars
($5,000,000) of Net Sales Proceeds from sales of Tier B Pre Identified
Assets), the Borrower shall cause Cadiz to pay to the Lender on or
before the next Business Day following such third (3d) anniversary the
cash sum of Two Million Dollars ($2,000,000), free and clear of Liens,
and upon receipt thereof, the Lender shall apply such sum against the
Borrower's indebtedness to the Lender in accordance with Section
2.12(b) hereof, and not Section 2.12(c) hereof.
SECTION 2.13 PRINCIPAL AMORTIZATION. Principal payments shall
be made on the Effective Date and thereafter on the first (1st)
calendar day of each January, April and September throughout the term
of the New Hancock Loan (singly, a "Principal Payment Date") in the
amounts specified in Schedule 2.13 hereto. Prepayments of principal
shall be credited against amounts due hereunder in accordance with the
terms of this Credit Agreement, but the amortization schedule set forth
in Schedule 2.13 shall not be recalculated by reason of any principal
prepayments of any kind (whether mandatory or voluntary).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants to the Lender (as
of the Effective Date and as of each subsequent date as of which
Borrower is required to make, or is deemed to have made, such
representation and warranty, as a condition or otherwise, and
including, without limitation, the date of any Re Advance) that:
SECTION 3.1 CORPORATE EXISTENCE AND POWER. Each of the Debtors
and their respective Subsidiaries (if any) (except for Sun Harvest,
Inc. and Pacific Farm Service, Inc., neither of which holds any
material assets or currently engages in any business whatsoever) (a) is
duly incorporated (if a corporation), validly existing and in good
standing under the laws of its jurisdiction of incorporation or
formation, and is in compliance with its partnership agreement or
corporate charter and by laws (as the case may be); (b) is duly
qualified as a foreign corporation or partnership, licensed and in good
standing in each jurisdiction where qualification or licensing is
required by the nature of its business or the character and location of
its property, business or customers, and where the failure to qualify
would constitute a Material Adverse Event; and (c) has the corporate or
partnership power and authority and all governmental licenses,
authorizations, consents and approvals and the legal right necessary or
advisable to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease and to
conduct its business as now, heretofore and proposed to be conducted.
Sun World (Europe) B.V. has no significant assets and is inactive;
Borrower, acting alone or together with one or more of its
subsidiaries, has no authority to cause the direction of Sun World
(Europe) B.V.'s management.
SECTION 3.2 CORPORATE AND GOVERNMENTAL AUTHORIZATION: NO
CONTRAVENTION. The execution and delivery of the New Hancock Loan
Documents by each signatory thereto and the performance by such
signatory of its obligations hereunder and thereunder: (a) are within
the corporate or partnership power of such signatory; (b) have been
authorized by the Bankruptcy Court (except for such signatory that are
not debtors in the Chapter 11 Case); (c) have been duly authorized by
all necessary corporate or partnership action; (d) require no action
by, or in respect of, or registration or filing with, or consent,
approval or exemption action or confirmation from, any Governmental
Body; (e) will not contravene, or conflict with, or constitute (with or
without the giving of notice or lapse of time or both) a default or
breach under, or result in a termination event or an acceleration of
any obligation arising, existing or created by or under, or result in
the creation or imposition or material modification of (or obligation
to create or impose) any Lien (other than the Lien created hereby in
favor of the Lender) on any of the assets or properties of such
signatory under any provision of (i) any applicable Law, (ii) such
signatory partnership agreement or corporate charter and by laws (as
the case may be), (iii) any agreement or instrument evidencing or
governing Debt for borrowed money of such signatory, or (iv) any
material agreement or other material instrument binding upon such
signatory, and (f) do not require any approval of stockholders or other
equity holders or any approval or consent of any Person under any
contractual obligation of such signatory.
SECTION 3.3 BINDING EFFECT. The New Hancock Loan Documents
constitute valid and binding agreements of each signatory thereto
(other than Lender), enforceable against such signatory in accordance
with their respective terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency, and
other similar laws affecting creditors' rights generally, or otherwise
limited by general principles of equity.
SECTION 3.4 LITIGATION. There is no action, suit or proceeding
that (a) is pending against, or to the knowledge of any Responsible
Officer of the Borrower threatened against, any Debtor or any
Subsidiary thereof before any Governmental Body, except for the matters
disclosed in Schedule 3.4 hereof, none of which matters would result,
if determined adversely to any Debtor, in a Material Adverse Event, or
(b) in any manner questions the validity or enforceability of, or
impedes the timely consummation of, any New Hancock Loan Document or
the priority of Lender's Lien on the Collateral as contemplated herein.
SECTION 3.5 COMPLIANCE WITH ERISA. Borrower, and each
Subsidiary of Borrower, is in compliance in all material respects with
all applicable provisions of ERISA. Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to
any ERISA Plan; no notice of intent to terminate an ERISA Plan has been
filed, nor has any ERISA Plan been terminated, except as disclosed in
Schedule 3.5 hereto; no circumstances exist which constitute grounds
under Section 4042 of ERISA entitling the PBGC to institute proceedings
to terminate, or appoint a trustee to administrate, an ERISA Plan, nor
has the PBGC instituted any such proceedings; neither Borrower, nor any
ERISA Affiliate, nor any Person that was previously treated as a single
employer with any Borrower or any Subsidiary of Borrower under Section
4001 or ERISA, has completely or partially withdrawn under Sections
4201 or 4204 of ERISA from a Multiemployer Plan; Borrower, each ERISA
Affiliate and any Person that was previously treated as a single
employer with any Borrower or any Subsidiary of Borrower under Section
4001 or ERISA, has met its minimum funding requirements under ERISA
with respect to all of its ERISA Plans and the present value of all
vested benefits under each such ERISA Plan exceeds the fair market
value of all ERISA Plan assets allocable to such benefits, as
determined on the most recent valuation data of the ERISA Plan and in
accordance with the provisions of ERISA for calculating the potential
liability of Borrower or any ERISA Affiliate or any Person that was
previously treated as a single employer with Borrower or any Borrower
Subsidiary under Section 4001 of ERISA, to the PBGC or the ERISA Plan
under Title IV of ERISA; and neither Borrower nor any ERISA Affiliate
nor any Person that was previously treated as a single employer with
Borrower or any Borrower Subsidiary under Section 4001 of ERISA, has
incurred any liability to the PBGC under ERISA.
SECTION 3.6 TAXES. All federal, state, local, foreign and
other tax returns, reports and statements required to be filed by the
Debtors and their Subsidiaries have been filed with appropriate
Governmental Bodies in all jurisdictions in which such returns,
reports and statements are required to be filed, and all taxes and
other impositions, shown as due and payable, have been timely paid
prior to the date on which any fine, penalty, interest, late charge or
loss may be added thereto for nonpayment thereof. No Debtor or
Subsidiary thereof has given, or has been requested to give, a waiver
of the statute of limitations relating to the payment of federal,
state, local, foreign and other taxes or other impositions. Proper
and accurate amounts have been withheld by the Debtors and from their
employees for all periods to comply in all material respects with the
tax, social security and unemployment withholding provisions of
applicable Law. Timely payments of sales and use taxes required by
applicable Law have been made by the Debtors. Proper and accurate
federal and state returns have been filed by the Debtors and their
Subsidiaries for all periods for which returns were due with respect
to employee income tax withholding, social security and unemployment
taxes, and the amounts shown thereon to be due and payable have been
paid in full or adequate provision therefor is included on the books
of the Debtors and their Subsidiaries. The foregoing representations
are subject to the facts disclosed in Schedule 3.6 hereto.
SECTION 3.7 COMPLIANCE WITH LAWS. Each Debtor and each
Subsidiary thereof is in compliance with all Laws (including, without
limitation, PACA, the California Food and Agriculture Code,
Environmental Laws and OSHA) applicable to it and/or to any of the
Collateral, except for such Laws (if any) the violation of which,
individually or in the aggregate, would not constitute a Material
Adverse Event.
SECTION 3.8 INVESTMENT COMPANY ACT; CERTAIN REGULATIONS. No
Debtor and no Subsidiary thereof is (a) an "investment company", or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended, or (b) engaged
principally, or as one of its principal activities, in the business of
extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System or any interpretations or
rulings thereunder).
SECTION 3.9 POSSESSION OF FRANCHISES, LICENSES, ETC. Each
Debtor and Subsidiary thereof either owns or otherwise possesses all
(and is not in violation of any) franchises, Patents, Trademarks and
Copyrights, service marks, trade names, copyrights, leases, licenses,
Water Rights or other rights and governmental permits, certificates,
consents and approvals that are necessary for the ownership and
operation of its respective properties and businesses in accordance
with Section 4.6 hereof, except for those the absence of which,
individually or in the aggregate, would not constitute a Material
Adverse Event.
SECTION 3.10 FULL DISCLOSURE. Neither the information set
forth in the Plan, nor the New Hancock Loan Documents nor any report
or financial projection referred to herein, nor any certificate,
report or other statement delivered to the Lender by or on behalf of
the Borrower or Cadiz in connection with the negotiation of the New
Hancock Loan Documents or the transactions contemplated hereby or
thereby, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact known to the
Borrower that has not been disclosed to the Lender in writing that (a)
materially adversely affects or could adversely affect the business,
earnings, prospects, properties or condition (financial or other) of
the Borrower or Cadiz, or (b) adversely affects or could adversely
affect the ability of any Debtor or Cadiz to perform its obligations
under the New Hancock Loan Documents, or (c) constitutes a Material
Adverse Event. Each written projection heretofore delivered to
Lender, and each other written projection delivered hereafter to
Lender, by or on behalf of Borrower, Cadiz, Old SWII or Old SWI in
connection with the transactions contemplated by this Agreement, upon
delivery to Lender, will be prepared on the basis of the assumptions
set forth therein, such assumptions are (or will be, as the case may
be) reasonable in light of the financial condition and prospects of
the Person to which such projections; and each projection heretofore
delivered to Lender represented, and each such projection hereafter
delivered to Lender will represent, the good faith opinion of the
Chief Executive Officer and the Chief Financial Officer of Borrower,
Cadiz or Old SWII (as the case may be), at the time of delivery
thereof to Lender, as to the course of business of the Person to which
such projections relate during the period covered thereby.
SECTION 3.11 LABOR DISPUTES AND ACTS OF GOD. Neither the
business, nor the real property nor the personal property of any
Debtor or any Subsidiary thereof is currently affected by any fire,
explosion, accident, strike, lockout, work stoppage, slowdown or other
labor dispute, drought, storm, hail, earthquake, embargo, act of God
or of the public enemy, or other casualty (whether or not covered by
insurance) which would, individually or in the aggregate, constitute a
Material Adverse Event. Except as disclosed in Schedule 3.11 hereto,
no Debtor is a party to any collective bargaining or other agreement
with any labor union, and no employee of the Debtors (including
temporary and seasonal employees) are represented by any union nor is
there any organizing petition or effort known to the Borrower to
represent such employees or any of them.
SECTION 3.12 ENVIRONMENTAL MATTERS.
(a) Except for the matters disclosed in items 7, 8 and 9 of
Schedule 3.12 hereto, none of which matters constitutes or will
constitute a Material Adverse Event, no notice, notification, demand,
request for information, directive, citation, summons or order has
been issued, no complaint has been filed, no allegations have been
made, no penalty has been assessed and no investigation or review is
pending or threatened by any Governmental Body or other Person with
respect (i) to any alleged or actual failure by a Debtor or any
Subsidiary thereof to comply with any Environmental Law or to have any
permit, certificate, license, approval, registration or authorization
required in connection with the conduct of its business or with any
environmental investigation, remediation and clean up, or (ii) to any
handling, use, manufacture, presence, processing, distribution,
generation, treatment, storage, recycling, transportation, disposal or
release, as that term is defined in 42 U.S.C. Sectin 9601(22) or in other
Environmental Laws ("Release"), of, or exposure to, any hazardous,
carcinogenic or toxic material, substance or waste (including, without
limitation, PCBs, gasses, pesticides or any components thereof,
asbestos, pollutants, contaminants and petroleum products or any
fractions thereof) regulated or defined under any Environmental Law
("Hazardous Materials"), by or caused by Debtor or any Subsidiary
thereof.
(b) Except for the matters disclosed in Schedule 3.12 hereof,
none of which matters constitutes or will constitute a Material
Adverse Event, no Debtor or Subsidiary thereof has used, handled,
treated, stored, processed, generated or disposed of any Hazardous
Material at, on or about any property or facility now or previously
owned or leased by such Debtor or Subsidiary, which use, handling,
treatment, storage, processing, generation or disposal has resulted in
the release of a Hazardous Material;
(c) Except for the matters disclosed in items 6, 7, 8, 9 and 10
of Schedule 3.12 hereto, none of which matters constitutes or will
constitute a Material Adverse Event, no Hazardous Material is or has
been present at any property or facility now or previously owned or
leased by any Debtor or Subsidiary thereof in violation of any
Environmental Law;
(d) Except for the matters disclosed in Schedule 3.12 hereof,
none of which matters constitutes or will constitute a Material
Adverse Event, there are no underground storage tanks for Hazardous
Materials, active or abandoned, and there are no PCB's, transformers,
capacitors, ballasts, asbestos, asbestos containing materials,
formaldehyde containing materials or radon gas at any property now or
previously owned or leased by any Debtor or Subsidiary thereof;
(e) Except for the matters disclosed in items 6, 7, 8, 9 and 10
of Schedule 3.12, none of which matters constitutes or will constitute
a Material Adverse Event, no Hazardous Materials have been released
at, on or about any property now or previously owned or leased by any
Debtor or Subsidiary thereof and no condition at or activity on any
such property has or will create a nuisance or other tortious
condition;
(f) No Debtor or any Subsidiary thereof has transported or
arranged for the transportation of any Hazardous Material to any
location which is listed or proposed for listing under CERCLA, on
CERCLIS, on the National Priority List, or on any similar state list
or which is the subject of federal, state or local or third party
investigation or enforcement actions which may lead to claims against
such Debtor or Subsidiary for clean up costs, remedial work, damages
to natural resources or for personal injury or property damage claims,
including, but not limited to, claims under CERCLA;
(g) Except for the matters disclosed in items 6, 7, 8, 9 and 10
of Schedule 3.12, none of which matters constitutes or will constitute
a Material Adverse Event, no Hazardous Material has been used,
processed, handled, recycled, treated, stored, disposed of, or
transported to or from, or released by any Debtor or Subsidiary
thereof at any location in violation of any Environmental Law, or that
could lead to future liability under any Environmental Law;
(h) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of any Debtor or Subsidiary
thereof except for the matters disclosed in items 6, 7, 8, 9 and 10 of
Schedule 3.12, none of which matters constitutes or will constitute a
Material Adverse Event, and no property now or previously owned or
leased by any Debtor or Subsidiary thereof is listed on the National
Priority List promulgated pursuant to CERCLA, on CERCLIS or on any
similar state list of sites requiring investigation or clean up or
that are currently being investigated;
(i) Each Debtor and its Subsidiaries have obtained all
environmental permits, licenses and other authorizations necessary in
conjunction with operations at the real property or properties owned
or leased or previously owned or leased by such Debtor or Subsidiary;
(j) There are no Liens arising under Environmental Laws on any
of the real property or properties owned or leased, or previously
owned or leased, by any Debtor or Subsidiary thereof, and no
government actions have been taken or, to the knowledge of the
Responsible Officers of the Borrower, are in process which could
subject any of such properties to such Liens;
(k) No Debtor or Subsidiary thereof has been required by any
Environmental Law to place any notice or restriction relating to the
presence of Hazardous Material at any property owned or leased, or
previously owned or leased, by it, or on any deed to such property or
with the county or municipality in which such property is located;
(l) There have been no investigations, studies, audits, tests,
reviews or other analyses in connection with any Environmental Law or
Hazardous Material or environmental matter or business operation
conducted by or which are in the possession of any Debtor or
Subsidiary thereof or any third party relating to any property or
facility now or previously owned or leased by any Debtor or Subsidiary
thereof, that disclose facts or circumstances relating to this Section
3.12 and which have not been made available to the Lender;
(m) The Borrower has disclosed to the Lender in writing the
nature and amount of all actual or projected Capital Expenditures
necessary to be in compliance with any and all Environmental Laws
which affect the Debtors or any Subsidiary thereof.
SECTION 3.13 BROKERS' FEES. Any brokerage commission or
finder's fees payable in connection with this Credit Agreement or the
transactions contemplated hereby shall be payable by Cadiz, and not in
any event by the Lender. No Debtor or Subsidiary thereof has incurred
any obligation for such a brokerage commission or a finder's fee.
SECTION 3.14 CAPITALIZATION OF BORROWER. Except for
outstanding preferred stock that will be cancelled immediately after
the Effective Date, and for authorized but unissued preferred stock,
the authorized capital stock of the Borrower consists of 300,000
shares of common stock, par value $0.01 per share, of which 42,000
shares are issued and outstanding. All such outstanding shares of
such common stock were duly authorized and validly issued, are fully
paid and non assessable, and are owned of record and beneficially by
Cadiz. There are no outstanding Liens, encumbrances, subscriptions,
options, warrants, calls, rights (including preemptive rights) or
other agreements or commitments of any nature relating to any capital
stock of the Borrower, except for the pledge of Borrower's common
stock to Credit Agricole pursuant to the New Credit Agricole Loan
Documents. The Borrower is not subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any shares
of its capital stock.
SECTION 3.15 SUBSIDIARIES AND OWNERSHIP OF STOCK. A true and
correct list of all Subsidiaries of each Debtor is attached hereto as
Schedule 3.15, indicating, for each such Subsidiary (a) its true
corporate or partnership name, and (b) its jurisdiction of
organization, (c) the name of each record holder of all or any portion
of its outstanding capital stock or other outstanding equity interests
and the percentage of such capital stock or equity interest held by
each such record holder, (d) whether such Subsidiary is active or
inactive, and (e) whether or not it holds assets having a fair market
value in excess of Five Hundred Thousand Dollars ($500,000). All of
the outstanding capital stock of each such Subsidiary is validly
issued, fully paid and nonassessable, and is free and clear of all
Liens, except for Liens in favor of Lender and for the Liens in favor
of Credit Agricole pursuant to the New Credit Agricole Loan Documents.
SECTION 3.16 PROPERTIES AND ASSETS. Each of Borrower and each
Subsidiary thereof has good and valid title to, or valid leasehold
interests in, all of its assets and properties. Except for (a) as of
the Effective Date, the nonstandard exceptions to the title assurances
received by the Lender pursuant to Section 5.1(g) hereof and for the
Lien of the Credit Agricole Loan Documents, and (b) thereafter
Permitted Liens, there are no Liens on any Collateral. Without
limiting the generality of the foregoing, the Debtors own, free and
clear of all Liens (other than Permitted Liens) overlying groundwater
rights and other Water Rights to receive water on the real property
Collateral that are appurtenant to such real property Collateral.
Each Debtor has the right to, and does, enjoy peaceful and undisturbed
possession under all leases under which it is leasing property. All
such leases are valid, subsisting and in full force and effect, and
none of such leases is in default. Schedule 3.16 sets forth, with
respect to Borrower and each Subsidiary of Borrower, as of the date of
this Agreement, a complete and correct list of (a) each Patent and
Trademark; (b) all tradenames under which such Person currently
conducts, or has within the last five (5) years conducted, business;
(c) the addresses of all locations at which such Person conducts any
portion of its business; (d) all real property owned or leased by such
Person (as lessor or lessee) and indicating on which parcels such
Person grows, or intends to grow, crops and the Borrower's Ranch
number therefor; (e) all Investments of such Person, and (f) all
insurance policies under which such Person is either a loss payee or
an additional insured. Borrower has heretofore delivered to Lender a
schedule of all Marketing Agreements to which any such Person is a
party as of the date of this Agreement, including, with respect to
each such Marketing Agreement, the names of the parties thereto, the
crops and number of acres to which it applies, the term and payment
terms thereof, the date by which such Marketing Agreement must be
renewed or replaced by a new Marketing Agreement with the Grower party
thereto with respect to the next succeeding crop cycle, and the
percentage of the total units of produce projected to be sold by
Borrower under Marketing Agreements during the fiscal year ending
December 31, 1996 represented by such Marketing Agreement. Borrower's
chief executive office and chief place of business is located at the
address for notices set forth in Section 7.1 hereof.
SECTION 3.17 PRESERVATION OF LENDER RIGHTS. The satisfaction
(or the waiver by the Lender) of the condition set forth in Section
5.1(l) hereof shall not in any way impede, limit, impair or diminish
(or constitute a waiver of, or forbearance with respect to) any
Debtor's obligations or the Lender's rights and remedies under any New
Hancock Loan Document, or otherwise estop in any way the Lender from
exercising or enforcing such obligations, rights, and remedies, even
if (for example) any Debtor's future compliance with (or performance
of) such Debtor's obligations under (a) any New Hancock Loan Document
may result in (or otherwise cause or lead to) a default under any new
Credit Agricole Loan Document, or (b) any New Credit Agricole Loan
Document may result in (or otherwise cause or lead to) a default under
any New Hancock Loan Document. Notwithstanding anything to the
contrary expressed or implied herein, this Section 3.17 shall be
deemed renewed and remade continuously at and as of each date after
the Effective Date.
SECTION 3.18 NO SIDE AGREEMENTS. There are no agreements,
understandings, or arrangements of any kind, oral or written, between,
among, or binding upon any of Cadiz, Borrower, any of Borrower's
Subsidiaries, or any Affiliate of any such Person, on the one hand,
and Credit Agricole, Zenith, LSL Biotechnologies, Inc., The Irvine
Company, Howard P. Marguleas, any other former shareholder of Old
SWII, the entities whose consent is required in Section 5.1(t) hereof,
Bank of Scotland, any past or present member of the Unsecured
Creditors' Committee, or any Affiliate of any such Person, on the
other hand, which have not been fully disclosed by Borrower to Lender
(including by delivery of copies of all relevant writings) or are not
a matter of public record.
ARTICLE 4
COVENANTS
The Borrower agrees that, from and including the Effective
Date and for so long thereafter as any amount owed hereunder or under
the New Hancock Loan remains unpaid:
SECTION 4.1 INFORMATION. The Borrower shall deliver or cause
to be delivered to the Lender:
(a) No later than December 1 of each year, (i) a final Business
Plan for the Fiscal Year ending December 31 of the following calendar
year, (A)(I) based on the then current Business Plan, revised to take
into account anticipated asset Dispositions, abandonments, new
plantings and other known changes, (II) including any then available
operating budgets for such succeeding Fiscal Year, (III) reflecting
estimated maximum expenditures during such succeeding Fiscal Year in
respect of Grower Advances, land leases and long term contracts for
the purchase of packaging materials, chemicals and other supplies,
based on then current contract negotiations, and (IV) explaining in
reasonable detail all variances from the then current Business Plan,
and (B) certified by the Chief Financial Officer of Borrower as having
been (I) approved by Borrower's Board of Directors in final form, (II)
prepared on the basis of reasonable assumptions and (III) representing
the good faith opinion of the Chief Executive Officer and the Chief
Financial Officer of Borrower, at the time of delivery thereof to
Lender, as to the course of business of Borrower during the period
covered thereby; and (ii) a final crop development plan for the Fiscal
Year ending December 31 of the following calendar year, in form and
substance reasonably satisfactory to Lender, based on the then current
Crop Development Plan, (A) revised to take into account asset sales,
abandonments, new plantings and other known changes, and (B)
explaining in reasonable detail all variances from the then current
Crop Development Plan;
(b) On June 1 and September 15 of each year commencing 1997, a
reforecast of Borrower's projected results for the Fiscal Year ending
December 31 of such year, including a comparison to the projections
included in the then current Business Plan;
(c) As soon as reasonably practicable but in any event within
one hundred and nine (109) days after the end of each Fiscal Year,
consolidated balance sheets in reasonable detail of the Borrower and
its Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of operations, of cash flows and of
stockholders' equity for such Fiscal Year, setting forth, in each
case, in comparative form the figures for the previous Fiscal Year,
all in reasonable detail and audited (for Fiscal Years 1997 and
thereafter without Qualification) on by a firm of independent public
accountants of nationally recognized standing selected by the Borrower
and reasonably approved by the Lender;
(d) As soon as reasonably practicable but in any event within
one hundred and nine (109) days after the end of each Fiscal Year, a
consolidating balance sheet in reasonable detail of the Borrower and
its Subsidiaries as of the end of such Fiscal Year and the related
consolidating statement of operations for such Fiscal Year, all
certified by the Chief Financial Officer of the Borrower as having
been used in connection with the preparation of the financial
statements referred to in paragraph (a) of this Section 4.1, and all
in reasonable detail and audited (for Fiscal Years 1997 and
thereafter without Qualification) on by a firm of independent public
accountants of nationally recognized standing selected by the Borrower
and reasonably approved by the Lender;
(e) [RESERVED]
(f) (i) With respect to each of the fiscal months of Borrower
ending on or before the first (1st) anniversary of the Effective Date
(other than the last fiscal month of Borrower's Fiscal Year): (A) as
soon as available and in any event within thirty (30) days after the
end of each such month, monthly and year to date financial statements,
prepared in a manner consistent with those delivered by the Debtors
during the year immediately preceding the Effective Date, (B) as soon
as available and in any event within sixty (60) days after the end of
each month, monthly and year to date financial statements, (I)
prepared in accordance with GAAP as applied in the preparation of the
balance sheets referred to in Section 5.1(p) hereof (subject to normal
year end adjustments) and so certified by Borrower's Chief Financial
Officer, and (II) prepared in accordance with GAAP, and so certified
by Borrower's Chief Financial Officer; and (ii) with respect to each
of Borrower's fiscal months ending after the first (1st) anniversary
of the Effective Date (other than the last fiscal month of a Fiscal
Year), as soon as available and in any event within thirty (30) days
after the end of each such month monthly and year to date financial
statements, prepared in accordance with GAAP and so certified by
Borrower's Chief Financial Officer; all such financial statements,
whether delivered pursuant to clause (i) or clause (ii) of this
subsection (f) shall include profit and loss statements and a balance
sheet of Borrower and its Subsidiaries, on a Consolidated Basis, as of
the end of such month, together with a comparison and reconciliation
of Borrower's actual performance for such month to the then current
Business Plan;
(g) Simultaneously with the delivery of each set of financial
statements referred to in paragraphs (c) or (d) of this Section 4.1,
an Officer's Certificate (i) setting forth in reasonable detail such
calculations as are required to establish whether the Borrower was in
compliance with the requirements of Section 4.12 on the date or for
the period, as the case may be, of such financial statements, (ii)
stating whether on the date of such certificate any Default or Event
of Default had occurred and, if so whether such Default or Event of
Default was continuing, setting forth the details thereof and the
action that the Borrower is taking or proposes to take with respect
thereto, (iii) stating whether, to the knowledge of such Responsible
Officer, since the date of the most recent previous delivery of
financial statements pursuant to paragraphs (c) or (d) of this
Section 4.1, there has been any Material Adverse Event.
(h) Simultaneously with the delivery of each set of financial
statements referred to in paragraph (c) of this Section 4.1, a
statement of the firm of independent public accountants that reported
on such statements (i) stating that their audit examination has
included a review of the terms of this Credit Agreement and the New
Hancock Note as they relate to financial or accounting matters; (ii)
stating whether anything has come to their attention to cause them to
believe that on the date of such statements any Default or Event of
Default had occurred and was continuing and (iii) confirming the
calculations set forth in the Officer's Certificate delivered
simultaneously therewith pursuant to subsection (g) of this Section
4.1; provided, however, that this Section 4.1(h) will not require any
such statement by such firm of independent public accountants to be
furnished or delivered to the extent nationally recognized firms of
independent public accountants are not then providing such statements
in the ordinary course of their business on behalf of their clients
which have borrowed money pursuant to loan or credit agreements;
(i) Forthwith upon (but no later than two (2) Business Days
after) any Responsible Officer of the Borrower confirming the
occurrence of any of the following, an Officer's Certificate of the
Borrower setting forth the details thereof and the action that the
Borrower is taking or proposes to take with respect thereto and
including a copy of all written communications received from or sent
to other Persons with respect thereto:
(i) a Default or an Event of Default;
(ii) any failure or alleged failure of any Debtor to comply
with any Environmental Law, or any notice of inquiry or
investigation with respect thereto;
(iii) any litigation or proceeding which may exist at any
time in which the amount involved exceeds One Hundred Thousand
Dollars ($100,000), or in which injunctive or similar relief is
sought (A) between any Debtor and any Governmental Body, or
(B) affecting the Collateral;
(iv) any claim exceeding One Hundred Thousand Dollars
($100,000) made under any insurance policy with respect to the
Collateral; and
(v) any proposed amendment, modification or supplement to
the partnership agreement, articles of incorporation, corporate
charter or bylaws of any Debtor at least fifteen (15) days prior
to the proposed effectuation thereof by the partners or
shareholders.
(j) Promptly upon the delivery to the shareholder of the
Borrower, copies of all final financial statements and related reports
so delivered;
(k) Promptly after the filing or receipt thereof, copies of all
reports (including annual reports) and notices that Borrower or any
Subsidiary of Borrower files with or receives from the PBGC or the
U.S. Department of Labor under ERISA; and as soon as possible after
Borrower or any Subsidiary of Borrower knows or has reason to know
that any actual or potential violation, Reportable Event or Prohibited
Transaction has occurred with respect to any ERISA Plan, or that the
PBGC or either Borrower or any such Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any ERISA
Plan, a certificate of the Chief Executive Officer setting forth
details as to such Reportable Event or Prohibited Transaction or ERISA
Plan termination and the action Borrower proposes to take with respect
thereto;
(l) Promptly upon receipt thereof, copies of each report
submitted to the Board of Directors (or the Audit Committee thereof)
of any Debtor by independent public accountants in connection with any
annual, interim or special audit made by them of the consolidated
financial statements of such Debtor and its Subsidiaries, including,
without limitation, each report submitted to the Board of Directors
(or the Audit Committee thereof) of the Borrower concerning the
Borrower's accounting practices and systems and any final "management
letter" submitted by such accountants to management in connection with
the annual audit of the Borrower and its Subsidiaries;
(m) Promptly upon execution thereof, a copy of each amendment to
or modification or waiver of, any instrument evidencing Debt for
borrowed money, Capital Leases or letters of credit of any Debtor
showing the computation of compliance by the Debtor with the
requirements of such documents, together with a certificate from a
Responsible Officer of the Borrower to the effect that such
modification, amendment or waiver does not violate any of the terms of
any of the New Hancock Loan Documents;
(n) As soon as reasonably practicable after the end of each
Fiscal Year and in any event within thirty (30) days of the end of
each Fiscal Year, an Officer's Certificate identifying each Short Term
Spot Market Water Sale that occurred during the prior Fiscal Year, the
volume of water subject thereto, the buyer, the consideration received
therefor, the relevant water district, and the basis upon which such
water was determined to be Excess Water;
(o) As soon as possible and in any event within two (2) Business
Days after the Borrower knows or has reason to know thereof, notice of
any Material Adverse Event, and at the time of release thereof copies
of all press releases of any Debtor or Cadiz concerning any Material
Adverse Event;
(p) Not later than December 1 of any calendar year, any new,
modified or updated versions of the plans specified in Section
5.1(k)(ii) hereof, in such form and including such information as
Lender may reasonably request;
(q) Promptly following each (i) allocation or reallocation of
costs or other amounts under the Cadiz Services Agreement, (ii)
determination of any amount payable to or by Borrower under the Tax
Sharing Agreement, or (iii) determination of the annual rent payable
under the Cadiz Lease, notice thereof;
(r) No later than October 25, 1996, audited financial statements
of Old SWII and its Subsidiaries for each of the fiscal years of
Debtors ended December 31, 1994 and 1995, certified by Deloitte &
Touche LLP or other independent accountants selected by Borrower and
reasonably acceptable to Lender;
(s) A copy of such documents, reports, statements or other
communications that any Debtor or Cadiz is obligated to deliver (and
has delivered) to Credit Agricole pursuant to the New Credit Agricole
Loan Documents or the Cadiz Agreement (as such term is defined
therein).
(t) Promptly following each payment of Excess Cash (as defined
under the New Credit Agricole Agreement), such calculation and
information as may be reasonably required to enable the Lender to
confirm the correctness of the amount thereof and such other
information as the Lender may reasonably require related thereto;
(u) No later than two (2) Business Days prior to effecting any
payment from the Unsecured Claims Disbursement Account, notice of the
amount to be so paid, together with evidence, reasonably satisfactory
to Lender, that sufficient funds (i) have been made available to
Borrower by Cadiz from the Unsecured Claims Reserve Account, as a
Capital Contribution, and (ii) are held in the Unsecured Claims
Disbursement Account, to effect such payment; and
(v) From time to time such additional information as the Lender
may reasonably request regarding the Condition of the Debtors, the
Collateral, the Business Plan, the Crop Development Plan or any
reports or other information that the Borrower is required to produce
elsewhere under this Credit Agreement.
SECTION 4.2 PAYMENT OF OBLIGATIONS. Except as expressly
prohibited by this Credit Agreement (it being agreed that no such
exception to performance shall apply to repayment of the New Hancock
Loan and other amounts owing under the New Hancock Loan Documents),
each Debtor shall pay and discharge, as the same shall become due and
payable, all their respective material obligations and liabilities
(excluding any obligation to pay any Debt), including, without
limitation (a) all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons which, in any
such case, if unpaid, might by Law give rise to a Lien upon any of
such Debtor's property or assets, and (b) all taxes, assessments and
governmental charges or levies imposed upon it or upon such Debtor's
property or assets; and (c) all claims which, if unpaid, might by Law
become a Lien upon such Debtor's property or assets; provided,
however, that no Debtor shall be required to pay or discharge any such
obligations, liabilities, taxes, assessments, charges, claims, demands
or levies referred to in clause (a), (b) or (c) of this Section 4.2
if the same (i) are the subject of a Good Faith Contest, and (ii) have
not resulted in or caused the attachment and subsequent enforcement of
any Lien with respect thereto or any event which would permit (after
notice or lapse of time or both) the acceleration of the maturity of
any such obligations or liabilities. Nothing contained in this
Section 4.2 shall diminish any obligations that any Debtor may have
under Section 4.21 hereof or elsewhere hereunder.
SECTION 4.3 MAINTENANCE AND PRESERVATION OF COLLATERAL.
(a) The Debtors and their Subsidiaries shall at all times
maintain, preserve, protect and keep, or cause to be maintained,
preserved, protected and kept, their respective property (including,
without limitation, the Collateral) in compliance with (subject to
Section 4.21 hereof) all Laws (including, without limitation,
Environmental Laws), in good repair, working order and condition, and
from time to time shall make, or cause to be made, all repairs,
renewals, replacements, extensions, additions, betterments and
improvements to their respective property as are needed and proper, so
that the business carried on in connection therewith may be conducted
properly and efficiently at all times; provided, however, that the
foregoing shall not prevent any Debtor or any Subsidiary thereof from
making a Disposition of any property (other than Collateral) in the
ordinary course of business if in the reasonable opinion of the
Borrower, such Disposition is in the reasonable best interest of such
Debtor or such Subsidiary.
(b) In addition to, and not in derogation of, the provisions of
Section 4.3(a) above, but subject to Section 4.24 hereof, the Debtors
and their Subsidiaries shall with respect to the Collateral:
(i) properly care for and keep all of the Collateral
including buildings, structures, fixtures and other improvements
at all times in good condition and repair (except if the failure
to do so may be cured or rectified at an aggregate out of pocket
cost not exceeding Two Hundred Fifty Thousand Dollars ($250,000),
free (in all material respects) of dry rot, fungus, termites,
beetles, and all other wood boring, wood eating and other harmful
or destructive insects;
(ii) except for Short Term Spot Market Water Sales permitted
hereunder, preserve and protect all Water Rights (including,
without limitation, rights to irrigation water), and in all
material respects any irrigation item and equipment, and properly
lubricate, service and care for such equipment or item so as to
prevent undue wear and tear on such equipment or item; and
without limiting the foregoing, Borrower shall cause an
appropriately completed Form 7 2181 to be filed with the Arvin
Edison Water Storage District within thirty (30) days after the
Effective Date.
(iii) except for mobile equipment moved from time to time in
the ordinary course of business to another location in the State
of California for a period not to exceed (in any one instance)
ninety (90) days, not remove from the real property Collateral,
demolish, or in any material respect impair or alter (except such
alterations as may be required by Law) any buildings, structures,
fixtures, equipment, fence, canal, well or other material
improvement now or hereafter situated on the Collateral;
(iv) complete promptly and in good and workmanlike manner
any building or other improvement which may be constructed on (or
constituting a part of) the Collateral and promptly restore in
like manner any building or other improvement which may be
damaged or destroyed thereon, and pay when due all claims for
labor performed and materials furnished therefor;
(v) subject to Section 4.21 hereof, comply with all Laws
now or hereafter affecting the Collateral or requiring any
alterations or improvements to be made thereon, including but not
limited to those relating to conservation, environmental
protection, pollution, health and safety, building and zoning, or
special assessments of the Collateral as farmland;
(vi) not commit or permit any waste or deterioration of the
Collateral, including, without limitation, any waste or
deterioration associated with Hazardous Materials except for
waste or deterioration that may be cured or rectified at an
aggregate out of pocket cost not exceeding Two Hundred Fifty
Thousand Dollars ($250,000);
(vii) not commit, suffer or permit any act to be done in or
upon the Collateral that will damage or cause the Collateral or
any portion thereof to depreciate in value or (subject to Section
4.21 hereof) violate any Law except for damage, depreciation or
violations of Law that may be cured or rectified at an aggregate
out of pocket cost not exceeding Two Hundred Fifty Thousand
Dollars ($250,000);
(viii) plant, cultivate, irrigate, fertilize, fumigate,
spray, prune, harvest and otherwise employ proper farming,
husbandry and/or ranching practices and do any other act or acts
all in a timely and proper manner, which, from the character or
use of the Collateral, is or are necessary to protect and
preserve the Collateral and which is or are in accordance with
the best standards practiced by others engaged in similar
operations, the specific enumerations herein not excluding the
general;
(ix) not use the Collateral for any purpose other than for
purposes consistent with Section 4.6 hereof;
(x) not cut, remove, replace, graft, bud or otherwise alter
any trees or plantings, except in the ordinary course of business
consistent with Section 4.6 hereof;
(xi) not permit oil, gas or mineral explorations, operations
or related activities on any Collateral;
(xii) except for Short Term Spot Market Water Sales, not form
or enter into any agreement with any water or drainage district
or similar district or agency or water company, or terminate (or
allow to be terminated) or amend (or allow to be amended) any
existing agreements pertaining to any such district, agency or
company without the prior written consent of the Lender, which
consent the Lender may withhold, deny or delay in its complete
absolute discretion;
(xiii) use all diligence by the best means known for the
controlling and curing of pests and diseases which hinder and
menace permanent, row or growing crops, vines, plants or trees,
and use all required means to rid the Collateral of same and keep
the Collateral and the crops thereon free (in all material
respects) from all types of weeds;
(xiv) except to the extent (if any) specifically covered by,
and specifically and expressly approved by the Lender in
connection with the Lender's review of, the then current Crop
Development Plan, maintain and preserve all the permanent crop
plantings on any real property Collateral that have by the
Effective Date reached the age and size necessary for full
commercial production, in terms of the number, crop type and
quality thereof as well as the volume and quality of the
production therefrom, at no less than the levels thereof on the
Effective Date; provided that to the extent consistent with
prudent farming and ranching practices, the Debtors may replace
such plantings with new ones for the same or different crops, of
equivalent or better value, if (A) pursuant to (and consistent
with) its most recent Crop Development Plan, or (B) with Lender's
advance written approval;
(xv) farm all real property Collateral containing permanent
crops that have not by the Effective Date reached the age and
size necessary for full commercial production so as to bring such
permanent crops to commercial production in accordance with good
farming and ranching practices and the Crop Development Plan; and
(xvi) subject to Section 4.32 hereof, take all steps
necessary to preserve, and (if necessary to preserve) to renew,
extend or replace with equivalent policies (and make timely
payments of premiums with respect to), the key man life insurance
policies or any equivalent replacements thereof identified in
Schedule 4.3(b)(xvi) regardless of whether the key man insured is
or remains an employee of Borrower.
SECTION 4.4 INSURANCE. In addition to the insurance
described in Section 4.3(b)(xvi) hereof, the Borrower shall maintain,
or cause to be maintained, in full force and effect, with such
insurers, amounts, coverages and forms satisfactory to and approved by
the Lender, insurance as follows:
(a) REQUIRED INSURANCE COVERAGES AND LIMITS. The Borrower, at
its own cost and expense and at all times during the term, shall carry
and maintain or cause to be carried and maintained:
(i) CASUALTY INSURANCE "all risk" property insurance on
the Collateral, including, without limitation, flood insurance
(to the extent any of the Collateral constituting facilities or
buildings is located in flood zone A as designated by the Federal
Emergency Management Agency or any successor agency), in an
amount not less than the full replacement cost of the Collateral
(without regard to depreciation);
(ii) LIABILITY INSURANCE comprehensive general liability
(including, without limitation, blanket contractual, personal,
injury, products/completed operations, independent contractors,
sudden and accidental pollution liability for mobile equipment
and broad form property damage) and automobile liability
insurance applicable to the Collateral in such amounts as from
time to time are usually carried by corporations similar to the
Debtors and their Subsidiaries owning or leasing and operating
similar properties in similar locations; provided that sudden and
accidental pollution liability for mobile equipment shall be
subject to availability on commercially practicable terms; and
provided, further, that the Borrower shall be required to carry
and maintain liability insurance applicable to the Collateral in
a minimum amount of not less than Fifty Million Dollars
($50,000,000);
(iii) BUSINESS INTERRUPTION INSURANCE business
interruption insurance and/or loss of rental value insurance in
amounts at least equal to those currently in effect, as reflected
in the Insurance Summary, dated August 5, 1996, prepared by Aon
Risk Services, Inc. of Northern California with respect to
insurance coverages maintained by the Debtors and their
Subsidiaries (the "Insurance Summary");
(iv) DIRECTOR/OFFICER LIABILITY INSURANCE directors' and
officers' insurance, providing aggregate coverage for claims
brought during the then current annual policy period in an amount
no less than Five Million Dollars ($5,000,000);
(v) INSURANCE SUMMARY insurance providing such other
coverages, and in such amounts, as are reflected in the Insurance
Summary;
(vi) WORKER'S COMPENSATION worker's compensation
insurance with respect to employees of the Debtors and their
Subsidiaries sufficient to meet the statutory requirements of the
State of California; and
(vii) OTHER INSURANCE such other insurance with
respect to its property and business of such a nature, with such
terms and in such amounts, as a prudent person would maintain
with respect to similar properties and a similar business, and,
in any event, each Debtor and each Subsidiary thereof shall
maintain insurance on all its property of a character usually
insured by corporations engaged in the same or a similar business
similarly situated against loss or damage of the kinds and in the
amounts customarily insured against and for by such corporation.
All the foregoing insurance policies shall be subject to
such deductible amounts and retention as are usual and customary for
corporations similar to the Debtors and their Subsidiaries owning or
leasing and operating similar properties, but in no event greater than
reasonably acceptable to the Lender. In addition, the Debtors and
their Subsidiaries shall require worker's compensation and liability
coverage by contractors and major subcontractors at all times that any
of the foregoing shall be performing services on the Collateral.
(b) ADDITIONAL INSUREDS; LOSS PAYEES. All insurance hereunder
shall name the Lender and such other parties as the Lender may
designate as additional insureds as their respective interests may
appear (in the case of insurance required by clauses (a)(iii) (iv),
to the extent permitted under applicable Law and available from the
respective insurers). All insurance referred to in clause (a)(i)
above (except with respect to Blythe Ranch) shall name the Lender as
first loss payee. The Borrower shall effect all insurance provided
for in this Section 4.4 with insurance companies legally qualified to
issue insurance in California, reasonably acceptable to the Lender,
and rated A8 or higher by AM Best's Insurance Reports. All such
policies referred to in clauses (a)(i) and (a)(ii) and such other
policies as to which the Lender is named as an additional insured or
first loss payee, as the case may be, shall (A) provide that the same
shall not be cancelled or terminated, nor shall there be any reduction
in any limitation of liability, any increase in any deductible or co
insurance or any exclusions added to the same, without at least thirty
(30) days' prior written notice (or ten (10) days' prior written
notice in the case of non payment of premium or fraud) to each insured
and each loss payee named therein, (B) provide for at least thirty
(30) days' prior written notice (or ten (10) days' prior written
notice in the case of non payment of premium or fraud) to each insured
and each loss payee named therein of the date on which such policies
shall terminate by lapse of time if not renewed, (C) with respect to
the insurance referred to in clause (a)(i) above, contain a breach of
warranty clause providing that the respective interests of the Lender
or any other additional insured or loss payee shall not be invalidated
by any action or inaction of any Debtor or any other Person, (D) with
respect to the insurance referred to in clause (a)(i) above insure the
Lender and any other additional insured or loss payee regardless of
any breach or violation by any Debtor or any other Person of any
warranties, declarations, or conditions contained in the policies
related to such insurance, (E) provide that the insurer thereunder
waives all right of subrogation against the Lender and waives any
right of set off or counterclaim and any other right of deduction
whether by attachment or otherwise, (F) be primary without right of
contribution from any other insurance carried by or on behalf of any
Lender with respect to any interest in the Collateral, (G) provide
that no Person other than the Borrower shall have any liability for
any premiums with respect thereto and (H) include a cross liability
endorsement providing that inasmuch as the policies are written to
cover more than one insured, all terms and conditions, insuring
agreements and endorsements, with the exception of limits of
liability, shall operate in the same manner as if there were a
separate policy covering each insured. The Lender shall not, by
reason of accepting, rejecting, approving or obtaining insurance incur
any liability for the existence, nonexistence, form or legal
sufficiency thereof, the solvency of any insurer, or the payment of
any losses.
(c) CERTIFICATE. On or prior to the Effective Date, and
thereafter not less than ten (10) days after the expiration dates of
the expiring policies required pursuant to this Section 4.4, the
Borrower shall deliver to the Lender certificates of insurance issued
by the insurers thereunder or by an insurance broker authorized to
bind such insurers evidencing the insurance maintained pursuant to
this Section 4.4.
(d) PERFORMANCE BY LENDER. In the event that any Debtor or
Subsidiary thereof shall fail to maintain insurance as herein
provided, the Lender may at its option, but without obligation,
provide such insurance and, in such event, the Borrower shall, within
ten (10) days after written demand from time to time, reimburse the
Lender for the cost thereof, together with interest at the Default
Rate on such cost from the date of payment of such cost to the date of
reimbursement.
(e) PROCEEDS. The amount collected under any such insurance
policies maintained pursuant to this Section 4.4 shall be distributed
or applied in accordance with the terms and provisions of the New
Hancock Security Documents.
(f) SEPARATE INSURANCE OF LENDER. Nothing in this Section 4.4
shall be construed to prohibit the Lender from insuring at its own
expense its interest in the Collateral or otherwise, and any insurance
so maintained shall not provide for or result in a reduction of the
coverage or the amounts payable under any of the insurance required to
be maintained by any Debtor or Subsidiary thereof under this Section
4.4.
(g) SEPARATE INSURANCE OF DEBTORS. No Debtor or Subsidiary
thereof will obtain or carry separate insurance concurrent in form or
contributing in the event of loss with that required by this Section
4.4, unless the Lender is the additional insured thereunder, with loss
payable as provided herein. The Borrower shall immediately notify the
Lender whenever any such separate insurance is obtained and shall
deliver to the Lender the certificates evidencing the same. The
Borrower shall furnish to the Lender information describing in
reasonable detail the insurance maintained by the Debtors and their
Subsidiaries not later than thirty (30) days after the effective date
with respect to each policy of such insurance.
SECTION 4.5 INSPECTION OF PROPERTY, BOOKS AND RECORDS.
(a) The Debtors and their respective Subsidiaries shall permit
representatives of the Lender (including, without limitation, any
accounting firm, legal counsel, consultant or other professional
advisor to the Lender), at the reasonable expense of the Borrower if
prior to the occurrence and continuation of any Default or Event of
Default, and otherwise at the expense of Borrower, to visit, inspect
and investigate (including, without limitation, if without
unreasonable interference with the Debtors' and their Subsidiaries'
ordinary business operations and subject to such reasonable procedures
as the Borrower may set forth, by testing, drilling, coring, or other
physical invasion or alteration of the Collateral) any of their
respective properties (whether Collateral or otherwise), to examine
their respective corporate, financial and operating records and make
copies thereof or abstracts therefrom, to assess the Borrower's
Condition and compliance with the New Hancock Loan Documents
(including, without limitation, Section 4.3 hereof), to ascertain
compliance with Environmental Laws and other Laws and to discuss their
respective affairs, finances and accounts with their respective
directors, officers, employees, legal counsel and independent public
accountants, all at such reasonable times and as often as may
reasonably be desired, upon reasonable advance notice to the Borrower.
This Section 4.5 shall constitute (without further act of any Person)
the Borrower's irrevocable authorization and direction to the
aforementioned directors, officers, employees, legal counsel,
consultants and independent public accountants to provide such records
to such representatives of the Lender and to discuss such affairs,
finances and accounts with such representatives of the Lender.
(b) The Debtors and their Subsidiaries shall make and keep
proper books, records and accounts in which full, true and correct
entries shall be made of all dealings and transactions in relation to
its business and activities, including, without limitation, their
respective transactions and Dispositions of their respective assets,
and each shall maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary (A) to
permit preparation of financial statements in conformity with GAAP
except as previously disclosed to the Lender and (B) to maintain
accountability for assets, and (iii) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.
SECTION 4.6 CONDUCT OF BUSINESS AND MAINTENANCE OF
SUBSIDIARIES.
(a) Each Debtor and its Subsidiaries shall (i) continue to
engage in business of the same general type as conducted by it on the
Effective Date and other lines of business reasonably related thereto,
(ii) not engage, and shall not permit any of its respective
Subsidiaries to engage, in any other business, and (iii) preserve,
renew and keep in full force and effect its corporate or partnership
existence and all material rights, privileges, licenses, permits and
franchises necessary or desirable in the normal conduct of its
business, including, without limitation, those required under PACA or
the California Food and Agriculture Code. Without limiting the
generality of the foregoing, each Debtor and its Subsidiaries shall
maintain Marketing Agreements with each Grower for whom or which
Borrower provides marketing services and keep in force, and diligently
perform its obligations and enforce its rights under, all Marketing
Agreements, including, without limitation, by all appropriate legal
proceedings and without waiver or amendment except with Lender's prior
written consent. Furthermore, by October 15, 1996, Borrower shall
obtain the license required under PACA and referenced in Section
5.1(q) hereof and deliver a copy thereof to Lender.
(b) Notwithstanding subsection (a) above, Borrower shall not
(and shall not permit any Subsidiary of Borrower to) (i) make a
Disposition of any shares of capital stock of any Subsidiary of
Borrower (except for Permitted Liens), (ii) issue any shares of its
capital stock or any other
equity interests, (iii) issue warrants to purchase its capital stock
or other equity interests or securities, or (iv) issue Debt
instruments convertible into its capital stock or any other equity
interest.
(c) Borrower shall not create or acquire, or permit any
Subsidiary of Borrower to create or acquire, any Subsidiary, or enter
into or remain a party to, or permit any Subsidiary of Borrower to
enter into or remain a party to, any Joint Venture, other than
(i) Joint Ventures consisting of partnerships existing as of the
Effective Date and listed on Schedule 4.6(c), and (ii) Joint Ventures
with Growers relating to the production and sale of row crops, entered
into in the ordinary course or business and substantially in
accordance with the Debtors' past practices.
(d) The cash amount maintained by the Borrower in the Cash
Account (as defined in the New Credit Agricole Credit Agreement) shall
not exceed the greater of (i) the amount required to be maintained
therein by the New Credit Agricole Credit Agreement, and (ii) the
amount required by prudent cash management practices.
SECTION 4.7 DEBT; DEBT REPAYMENTS AND CANCELLATIONS.
(a) No Debtor shall incur, create, issue, assume, guarantee or
in any manner or at any time become or remain liable for, contingently
or otherwise in respect of, or suffer to exist, any (i) outstanding
indebtedness aggregating at any one (1) time more than Twenty Five
Million Dollars ($25,000,000) by any Debtor in the ordinary course of
business to trade creditors and other Persons that does not constitute
obligations for borrowed money or have a repayment term exceeding
ninety (90) days; or (ii) Debt, except the following:
(A) Debt outstanding under the New Hancock Obligations;
(B) Debt the proceeds of which are used solely for payment
of the purchase price of assets (other than renewals, replacements,
extensions, additions, betterments, or improvements of Collateral)
acquired by a Debtor after the Effective Date in an aggregate amount
not exceeding in any Fiscal Year the lesser of (I) One Million Five
Hundred Thousand Dollars ($1,500,000) and (II) the difference (if a
positive number) between the total Capital Expenditures made by the
Debtors in such Fiscal Year and the total of all Capital Expenditures
made by the Debtors in such Fiscal Year on the Collateral;
(C) The New Credit Agricole Obligations, provided that the
principal amount thereof shall not exceed the principal amount thereof
as of the Effective Date, as reduced from time to time by any payments
of principal made thereon (but without limiting in any manner the
provisions of Section 4.26) and subject to an increase, on a single
occasion, in the amount of Two Million Dollars ($2,000,000) arising
from Credit Agricole's making of the Re Advance (as such term is
defined in the New Credit Agricole Credit Agreement) or
(D) Debt that exists as of the Effective Date and is listed
on Schedule 4.7 hereto; provided that the Plan does not require such
Debt so listed to be paid upon or prior to the Effective Date, and the
principal amount thereof shall not exceed the principal amount thereof
as of the Effective Date, as reduced from time to time by any payments
of principal made thereon (but without limiting in any manner the
provisions of Section 4.26).
(b) No Debtor shall cancel any claim or Debt owing to it, except
for reasonable consideration and in the ordinary course of business,
and for the settlement of intercompany accounts with the Borrower.
SECTION 4.8 LIENS. No Debtor or Subsidiary thereof shall
create, incur or permit to exist any Lien on any Collateral, except
for Permitted Liens.
SECTION 4.9 CONSOLIDATIONS, MERGERS, ACQUISITIONS AND
DISPOSITIONS OF ASSETS.
(a) Borrower shall not merge (whether as the disappearing or the
surviving Person) or consolidate with, or sell, assign, lease, or
otherwise make a Disposition of (whether in one transaction or in a
series of transactions) all or substantially all of its assets
(whether now owned or hereafter acquired) to any Person, or permit any
Subsidiary of Borrower to do so, except for a Disposition by Sun World
Brands of its interest in American Sun Melon as a Pre Identified Asset
in accordance with Section 4.24(b) hereof or for a Disposition that
constitutes a Permitted Lien.
(b) Neither Borrower nor any Subsidiary thereof shall acquire
any fee interest in (i) any real property, or (ii) (except for
Permitted Investments, or in the ordinary course of business) in any
other asset or property.
SECTION 4.10 FURTHER ASSURANCES. The Debtors and their
Subsidiaries shall execute, deliver, record, register and file all
such notices, statements and other documents and take such other
steps, including but not limited to the amendment of the New Hancock
Loan Documents and any Financing Statements prepared thereunder, as
may be reasonably necessary or advisable, or that the Lender may
reasonably request, to render fully valid and enforceable under all
applicable Laws, the rights, Liens and priorities of the Lender with
respect to all Collateral from time to time furnished under this
Credit Agreement or any other New Hancock Loan Document or intended to
be so furnished, or otherwise in order more fully to carry out the
provisions and intentions of this Agreement, in each case in such form
and at such times as shall be reasonably satisfactory to Lender.
SECTION 4.11 RESTRICTED PAYMENTS. No Debtor and no Subsidiary
thereof shall declare, set aside, make or permit any Restricted
Payment.
SECTION 4.12 FINANCIAL COVENANTS. The Borrower shall do as
follows:
(a) Maintain, as of the last day of each fiscal year listed
below, Working Capital in an amount equal to at least the amount set
forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM WORKING CAPITAL
December 31, 1996 $35.2 million
December 31, 1997 34.5 million
December 31, 1998 34.4 million
December 31, 1999 34.1 million
December 31, 2000 34.0 million
December 31, 2001 36.0 million
December 31, 2002 36.0 million
December 31, 2003 36.0 million
December 31, 2004 36.0 million
December 31, 2005 and thereafter 36.0 million
(b) Maintain, as of the last day of each fiscal quarter listed
below, Working Capital in an amount equal to at least the amount set
forth opposite such fiscal quarter:
FISCAL QUARTER ENDING MINIMUM WORKING CAPITAL
March 31 of any fiscal year $25.0 million
June 30 of any fiscal year 10.0 million
September 30 of any fiscal year 27.0 million
(c) Maintain, as of the last day of each fiscal year listed
below, a ratio of Current Assets to Current Liabilities of not less
than the ratio set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 3.16 to 1
December 31, 1997 3.06 to 1
December 31, 1998 2.93 to 1
December 31, 1999 2.72 to 1
December 31, 2000 2.67 to 1
December 31, 2001 2.71 to 1
December 31, 2002 2.71 to 1
December 31, 2003 2.71 to 1
December 31, 2004 2.71 to 1
December 31, 2005 and thereafter 2.71 to 1
(d) Maintain, as of the last day of each fiscal quarter listed
below, a ratio of Current Assets to Current Liabilities of not less
than the ratio set forth opposite such fiscal quarter:
<PAGE>
FISCAL QUARTER ENDING MINIMUM RATIO
March 31 of any fiscal year 2.50 to 1
June 30 of any fiscal year 1.22 to 1
September 30 of any fiscal year 2.30 to 1
(e) Maintain, as of the last day of each fiscal year listed
below, a Debt Service Coverage Ratio for such fiscal year of not less
than the ratio set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 0.68 to 1
December 31, 1997 1.01 to 1
December 31, 1998 1.16 to 1
December 31, 1999 1.12 to 1
December 31, 2000 1.05 to 1
December 31, 2001 1.25 to 1
December 31, 2002 1.25 to 1
December 31, 2003 1.25 to 1
December 31, 2004 1.25 to 1
December 31, 2005 and thereafter 1.25 to 1
(f) Maintain, as of the last day of each fiscal year listed
below, an Interest Coverage Ratio for such fiscal year of not less
than the ratio set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 1.10 to 1
December 31, 1997 1.38 to 1
December 31, 1998 1.73 to 1
December 31, 1999 2.01 to 1
December 31, 2000 2.33 to 1
December 31, 2001 2.94 to 1
December 31, 2002 2.94 to 1
December 31, 2003 2.94 to 1
December 31, 2004 2.94 to 1
December 31, 2005 and thereafter 2.94 to 1
(g) Maintain, as of the last day of each fiscal year listed
below, a ratio of (i) Debt as of the last day of such fiscal year to
(ii) EBITDA for such fiscal year, of not greater than the ratio set
forth opposite such fiscal year:
FISCAL YEAR ENDING MAXIMUM RATIO
December 31, 1996 8.69 to 1
December 31, 1997 6.81 to 1
December 31, 1998 5.42 to 1
December 31, 1999 4.54 to 1
December 31, 2000 3.85 to 1
December 31, 2001 2.99 to 1
December 31, 2002 2.99 to 1
December 31, 2003 2.99 to 1
December 31, 2004 2.99 to 1
December 31, 2005 and thereafter 2.99 to 1
(h) Maintain, as of the last day of each fiscal year listed
below, a Tangible Net Worth of not less than the amount set forth
below opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM TANGIBLE NET WORTH
December 31, 1996 $20.0 million
December 31, 1997 22.5 million
December 31, 1998 26.5 million
December 31, 1999 31.9 million
December 31, 2000 37.7 million
December 31, 2001 45.3 million
December 31, 2002
through December 31,
2005 and thereafter $45.3 million plus one hundred
percent (100%) of the
cumulative aggregate
Net Income of Borrower
for each fiscal year
of Borrower beginning
with and including
fiscal year 2002.
(i) Maintain, as of the end of each fiscal year of Borrower
indicated below, a ratio of (i) Debt to (ii) Borrower's stockholder's
equity, no greater than the ratio set forth below opposite such fiscal
year:
FISCAL YEAR ENDING MAXIMUM RATIO
December 31, 1996 5.76 to 1
December 31, 1997 4.59 to 1
December 31, 1998 3.53 to 1
December 31, 1999 2.84 to 1
December 31, 2000 2.21 to 1
December 31, 2001 1.66 to 1
December 31, 2002 1.66 to 1
December 31, 2003 1.66 to 1
December 31, 2004 1.66 to 1
December 31, 2005 and thereafter 1.66 to 1
(j) Borrower's compliance with the covenants contained in
subsections (b) and (d) shall be determined as of the end of each
fiscal quarter of Borrower indicated in the relevant Section, and
Borrower's compliance with the covenants contained in subsections (a),
(c), and (e) through (i) shall be determined as of the end of each
fiscal year of Borrower. For purposes of determining Borrower's
compliance with any of subsections (e), (f) and (g) with respect to
the fiscal year ending December 31, 1996, (i) all calculations shall
be based on Borrower's and its Subsidiaries'
operations for the entire calendar year 1996 determined on a
Consolidated Basis, excluding (A) the effects of (I) the Acquisition
and (II) the application of purchase accounting; and (B)(I) adequate
protection payments made in such entities' bankruptcy cases and
recorded as expenses on such entities' income statement, (II)
professional fees paid in connection with such entities' bankruptcy
cases, (III) (without duplication of amounts excluded under clause
(B)(I)) expenses recorded by such entities to reflect increases in
liabilities relating to (X) interest accruals at contracted default
rates and contractually reimbursable costs and expenses (including,
without limitation, professional fees) incurred by third parties, and
(Y) adjudication or settlement of claims against such entities in
amounts greater than the amount recorded by such entities for such
claims on their financial statements, and (IV) income arising from the
adjudication or settlement of claims against such entities in amounts
less than the amounts recorded by such entities for such claims on
their financial statements; and (C) interest expense for the period
from January 1, 1996 through September 13, 1996 shall be deemed to be
Eleven Million Two Hundred Twenty Seven Thousand Three Hundred Seventy
Four Dollars ($11,227,374).
SECTION 4.13 LIMITATIONS ON INVESTMENTS. No Debtor or
Subsidiary thereof shall make or acquire any Investment in any Person,
except Permitted Investments.
SECTION 4.14 FISCAL YEAR; ACCOUNTING PRACTICES. The Borrower
shall not (a) change its fiscal year from that set forth in the
definition of Fiscal Year, or (b) except as may be required by reason
of a change in GAAP, change the accounting principles and practices
reflected in the financial statements referred to in Section 4.1(c) in
any manner which would materially affect any accounting determination
contemplated by this Credit Agreement.
SECTION 4.15 AMENDMENT OF DEBT, CORPORATE AND OTHER DOCUMENTS.
No Debtor or Subsidiary thereof shall without the prior written
consent of the Lender, which consent the Lender may deny, withhold or
delay in its sole and absolute discretion, permit or consent to any
amendment, modification, supplement, waiver or termination of any of
the following: (i) any of the documentation governing or relating to
the New Credit Agricole Obligations, the New Credit Agricole Loan
Documents or any other Debt permitted under Section 4.7, including,
without limitation, any change to the definition of "Minimum Cash
Balance" in the New Credit Agricole Credit Agreement that causes such
Minimum Cash Balance definition to mean (currently or potentially)
less than Thirty Five Million Dollars ($35,000,000) (if the Exception
Ranch is not sold) or Thirty Four Million Six Hundred Ninety Thousand
Dollars ($34,690,000) (if the Exception Ranch is sold); (ii) any
Debtor or Debtor Subsidiary charter, certificate of incorporation,
bylaws or any other constituent documents; (iii) any Crop Development
Plan or Business Plan previously approved by Lender; (iv) the Cadiz
Services Agreement; (v) the Tax Sharing Agreement; or (vi) the Cadiz
Lease.
SECTION 4.16 LEASES. Except for the Cadiz Lease and for
leases of space (each lease for a term, including any extensions or
renewals, not exceeding six (6) months) for the purpose of storing
equipment, inventory and other personal property and if the aggregate
rent due under all such leases in any Fiscal Year does not exceed One
Hundred Thousand Dollars ($100,000), Borrower shall not create, incur,
assume, or suffer to exist, or permit any Subsidiary of Borrower to
create, incur, assume, or suffer to exist, any obligation (as lessee,
license or otherwise) for the rental, hire or use of (a) any personal
property, other than in the ordinary course of business; or (b) any
real property, other than to replace land owned or leased as of the
Effective Date (or land subsequently leased to replace such land in
accordance with this Section 4.16) for the growing of row crops and
provided that the then current Business Plan calls for such row crops
to continue to be grown in quantities necessitating Borrower's entry
into such replacement lease.
SECTION 4.17 TRANSACTIONS WITH AFFILIATES. No Debtor or
Subsidiary thereof shall, directly or indirectly, do any of the
following:
(a) Enter into or continue any transaction, including, without
limitation, the Disposition of property or the rendering of any
service, with any Affiliate (including, without limitation, Cadiz), or
permit any Subsidiary of Borrower to enter into or continue any
transaction, including, without limitation, the Disposition of
property or the rendering of any service, with any Affiliate, except
(i) if otherwise not prohibited by this Credit Agreement and with an
Affiliate that is (A) Borrower or a Subsidiary of Borrower, or (B) an
Affiliate of Cadiz that owns ten percent (10%) or less of the
outstanding voting securities of Cadiz (I) upon fair and reasonable
terms no less favorable to Borrower or such Subsidiary than those
which would be obtainable in a comparable arm's length transaction
with a Person not an Affiliate and (II) (except for the Cadiz Lease)
in the ordinary course of Borrower's (or such Subsidiary's) business;
or (ii) if such Affiliate is (A) Cadiz or a Subsidiary of Cadiz other
than Borrower or any of its Subsidiaries, or (B) an Affiliate of Cadiz
that owns more than ten percent (10%) of the outstanding voting
securities of Cadiz: (X) pursuant to a Marketing Agreement upon fair
and reasonable terms no less favorable to Borrower or such Subsidiary
than those which would be obtainable in a comparable arm's length
transaction with a Person not an Affiliate, or (Y) in accordance with
the Cadiz Services Agreement or the Tax Sharing Agreement.
(b) Except in accordance with either the Cadiz Services
Agreement, the Cadiz Lease or the Tax Sharing Agreement, permit, or
permit any Subsidiary of Borrower to permit, Cadiz or any Affiliate of
Cadiz other than Borrower or its Subsidiaries to (i) pay Borrower's or
such Subsidiary's expenses; (ii) except to the extent expressly
provided in the New Hancock Loan Documents or in the Cadiz Agreement
(as defined in the New Credit Agricole Credit Agreement), guaranty
Borrower's (or any Subsidiary's) obligations; or (iii) advance funds
to Borrower or such Subsidiary, for the payment of expenses or
otherwise; provided, however, that Cadiz may from time to time make
Capital Contributions to Borrower (including, without limitation, in
connection with the transfer of funds into the Unsecured Claims
Reserve Account as required to comply with Cadiz's obligations under
the Plan);
(c) Act, or permit any Subsidiary of Borrower to act, as agent
for Cadiz; or
(d) Except in accordance with either the Cadiz Services
Agreement, the Cadiz Lease or the Tax Sharing Agreement, take any
action or permit any action to be taken on its behalf, or permit any
Subsidiary of Borrower to take any action or permit any action to be
taken on its behalf (or, in either such case, fail to take any action
or cause any action to be taken on its behalf), if the effect of
taking or not taking such action, as the case may be, could result in
Borrower's being substantively consolidated in the estate of another
Person in the event of a bankruptcy or insolvency of any such Person.
SECTION 4.18 COMPLIANCE WITH ERISA. No Debtor or Subsidiary
thereof shall create, sponsor, participate in, or otherwise incur any
liabilities or obligations contingent or otherwise under any ERISA
Plan, except those set forth in Schedule 4.18 hereto.
SECTION 4.19 SALES AND LEASEBACKS. No Debtor or Subsidiary
thereof shall enter into any arrangement or a series of arrangements
with any Person or to which such Person is a party providing for the
leasing by such Debtor or Subsidiary of any real property and/or
personal property that constitutes a sale by such Debtor or Subsidiary
to such Person (or an entity with which such Person has an interest,
directly or indirectly, with such Person as investor or lender) to
whom or which funds have been or are to be advanced by a lender,
investor or any other Person on the security of such property or
rental obligations of such Debtor or Subsidiary.
SECTION 4.20 OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
No Debtor or Subsidiary thereof shall create, assume or otherwise
cause or suffer to exist or to become effective any contractual
restriction on the ability of such Debtor or Subsidiary to make
payments in respect of any Debt or trade payable owed to the Borrower
or any of its Subsidiaries (other than as permitted or required by any
of the New Hancock Loan Documents, and other than contractual
restrictions under the New Credit Agricole Loan Documents, and
contractual restrictions binding upon any Person at the time such
Person becomes a Subsidiary of the Borrower so long as such
contractual restrictions are not created, incurred or assumed in
contemplation of such Person becoming a Subsidiary of the Borrower).
SECTION 4.21 COMPLIANCE WITH LAWS.
(a) Each Debtor and Subsidiary thereof shall comply with all
Laws (other than Environmental Laws, which are addressed separately in
Section 4.21(b) herein) applicable to such Debtor or Subsidiary or the
Collateral (including, without limitation, OSHA and other health and
safety Laws), except for such Laws (i) the absence of compliance from
which does not constitute a Material Adverse Event, or (ii) the
compliance with which is the subject of a Good Faith Contest.
(b) Each Debtor and Subsidiary thereof shall comply with all
Environmental Laws applicable to such Debtor or Subsidiary or the
Collateral, except for such Environmental Laws (i) the absence of
compliance from which does not constitute a Material Adverse Event, or
(ii) the compliance with which is the subject of a Good Faith Contest,
and during the pendency of such Good Faith Contest, (A) the condition
of the Collateral shall not be in danger of worsening or of being
forfeited, lost or otherwise made the subject of a Disposition;
(B) the Borrower shall have provided such additional security as the
Lender may reasonably request or as may be required as part of such
Good Faith Contest; and (C) the Lender shall not be subjected to any
risk of loss or liability by reason of such Good Faith Contest.
SECTION 4.22 AGRICULTURAL CONSULTANT REVIEW. The Lender shall
have the right (at the Borrower's expense not to exceed Fifty Thousand
Dollars ($50,000) a year if prior to the occurrence and continuation
of a Default or an Event of Default, and otherwise at the Borrower's
expense) to engage an agricultural consultant selected by the Lender
to review annually each Crop Development Plan and the Debtors'
compliance with this Credit Agreement, including, without limitation,
Section 4.1(a), Section 4.1 (b) and Section 4.3 hereof, and to prepare
a written report of the results of such review.
SECTION 4.23 SENIOR EXECUTIVE MANAGEMENT. Borrower shall
employ at all times, as chief executive officer of Borrower, a person
having experience in the management of companies engaged in
agriculture and in marketing activities such as those currently
engaged in by Borrower. The chief executive officer shall have the
chief executive authority for Borrower and each Subsidiary of
Borrower. On and after the Effective Date, no individual who performs
the duties and responsibilities customarily associated with the senior
executive management of an entity comparable to the Borrower,
including, without limitation, the Borrower's president, chief
executive officer, chief operating officer and chief financial officer
shall be (a) a past or present director, officer or shareholder of any
Debtor or pre Effective Date predecessor thereof, or (b) elected or
appointed to any of the aforementioned positions, or perform the
duties and responsibilities customarily associated therewith.
SECTION 4.24 LIMITATIONS ON DISPOSITIONS OF COLLATERAL.
(a) Notwithstanding anything to the contrary express or implied
herein, but subject to the express terms of subsections (b), (c), (d)
and (e) of this Section 4.24, none of the Collateral shall be the
subject of any Disposition (except for Permitted Liens, leases
expressly permitted under Section 4.16 hereof and licenses of Patents,
Trademarks and Copyrights to third parties in the ordinary course of
business on commercially reasonable terms) without the Lender's prior
written consent, which consent the Lender may in its sole and absolute
discretion deny, withhold or delay.
(b) Pre Identified Assets may be the subject of a third party
sale by the Borrower, through a third party escrow and entirely for
cash, without the prior written consent of the Lender, provided that:
(i) Lender must receive directly from the sale escrow
concurrently with the closing thereof, as a Mandatory Prepayment
pursuant to Section 2.12 hereof, in cash free and clear of all
Liens, the Net Sales Proceeds resulting from such sale, provided
that such Net Sales Proceeds must not be less than the Minimum
Release Price for the Pre Identified Asset in question. Net
Sales Proceeds in the foregoing sentence shall not include Crop
Value, if any, or any sale transaction expense or cost properly
and entirely allocable to Crop Value; provided, however that any
such expense or cost which cannot be determined as properly and
entirely allocable to either the sale of a Pre Identified Asset
or the sale of the growing crops underlying the Crop Value shall
be allocated based on the gross sales prices of the Pre
Identified Asset and the Crop Value. "Crop Value" means, if
growing crops are sold, the cash sales price for any growing
crops (if any) on the Pre Identified Asset to be sold, if such
sale and price for the growing crops is set forth in an arms'
length, good faith written agreement between the Borrower and the
buyer, and such price is readily distinguishable from the sales
price for such Pre Identified Asset.
(ii) Not later than ten (10) Business Days prior to the
proposed date of sale, the Lender shall have received an
Officer's Certificate from the Borrower (with a copy of any
written sale agreement pertaining to the Pre Identified Asset
attached) stating:
A. That the Borrower, acting in good faith in an
arm's length transaction, has entered into the attached
agreement, and that such agreement is a bona fide
contract with a third party for the sale in cash of a
specified Pre Identified Asset;
B. That no Default or Event of Default occurred and
is continuing, or if one exists, describing the nature
and extent thereof;
C. The expected escrow closing date for such sale;
D. The gross sales price and anticipated Net Sales
Proceeds;
E. That such Pre Identified Asset to be sold
constitutes a properly created parcel under the
California Subdivision Map Act and implements local
ordinances pursuant to a parcel or subdivision map, if
applicable, and that any real property Collateral
adjacent to the Pre Identified Asset to be sold shall
also comply with such Act and ordinances and shall
retain adequate access to a public street and utility
easements, and attaching to such Certificate evidence
satisfactory to the Lender of such compliance; and
F. A computation of the Minimum Cash Balance (as such
term is defined in the New Credit Agricole Credit
Agreement) reflecting the proposed sale.
(iii) Each of the procedural requirements for a release
of the Lender's Lien set forth in the applicable New Hancock
Security Documents shall have been satisfied in all respects.
(iv) The Borrower must obtain the Lender's prior
written consent to any sale of a Pre Identified Asset if, in connection
with the sale of such Pre Identified Asset, (A) a Crop Value
exists, and (B) such Crop Value is greater than one hundred and
twenty percent (120%) of Funded Crop Costs. "Funded Crop Costs"
means costs and expenses (except those that are or will or must
be capitalized in accordance with GAAP by the Borrower) that are
both directly attributable to the growing crops included in Crop
Value and accounted for in the Borrower's books and records
within any of the categories of Direct Expenses set forth in
Schedule 4.24(b)(iv) hereto. Direct Expenses must be determined
and accounted for in accordance with the pre Effective Date
accounting and budget practices of the Debtors' predecessors
during their bankruptcy (regardless of whether such practices
conformed to GAAP).
(c) Short Term Spot Market Water Sales shall not require any
prior consent or approval of the Lender; provided, however, that the
Lender shall receive from the Borrower at least ten (10) days' advance
written notice thereof along with a copy of the proposed written
agreement pertaining thereto, and no Default or Event of Default has
occurred and is continuing when such notice is given or when any such
Short Term Spot Market Water Sale is consummated.
(d) The Borrower may renew or replace machinery, equipment and
other tangible personal property constituting Personal Property
Security with like property having a fair market value, useful life,
utility and condition at least equal to that of such Personal Property
Security so replaced (assuming Borrower's prior compliance with
Section 4.3 hereof); provided that the Lender shall have a first
priority Lien and security interest on and in any such replacement
personal property.
(e) Borrower may sell Blythe Ranch to a third party without the
Lender's prior consent; provided that the net proceeds shall be
applied by Credit Agricole, subject to the rights (if any) of Zenith
to any net proceeds, against the principal then outstanding under the
New Credit Agricole Obligations in accordance with the application
rules set forth in Section 2.4.1(d) of the New Credit Agricole Credit
Agreement, and then (after payment in full of the New Credit Agricole
Obligations) to the extent of any remaining net proceeds and the
Lender's receipt thereof, by the Lender.
SECTION 4.25 EQUITY INFUSION. On or before the Effective Date,
the Borrower shall cause Cadiz to contribute to the Borrower's equity
a cash amount equal to not less than Fifteen Million Dollars
($15,000,000) (the "Equity Infusion"). Borrower shall use the Equity
Infusion for general corporate purposes consistent with Section 4.6
hereof. The Borrower's use of such Equity Infusion shall be and
remain subject to its obligations elsewhere hereunder, but otherwise
substantially unrestricted by the Borrower's Debt or other obligations
to other Persons, except as expressly provided in the New Credit
Agricole Loan Documents.
SECTION 4.26 NEW CREDIT AGRICOLE OBLIGATIONS. Notwithstanding
anything to the contrary expressed or implied herein, except for
payments of Excess Cash (as defined in the New Credit Agricole Credit
Agreement) and of net proceeds from the sale of Blythe Ranch required
to be made to Credit Agricole pursuant to the New Credit Agricole
Credit Agreement, the Borrower shall not, under any circumstances,
make any prepayment of amounts due on the New Credit Agricole
Obligations unless and until the repayment of the New Hancock Loan in
full occurs.
SECTION 4.27 CHANGE OF CONTROL. No Change of Control shall
occur for any reason, except as set forth below:
(a) The Borrower shall, within two (2) Business Days after any
Responsible Officer has knowledge of the occurrence of any Change of
Control or Control Event, give written notice of such Change of
Control or Control Event to Lender unless notice in respect of such
Change of Control (or the Change of Control contemplated by such
Control Event) shall have been given pursuant to subparagraph (b) of
this Section 4.27. If a Change of Control has occurred, such notice
shall contain and constitute an offer to prepay the New Hancock Note
as described in section (c) of this Section 4.27 and shall be
accompanied by the Officer's Certificate described in section (g) of
this Section 4.27.
(b) The Borrower shall not take any action that consummates or
finalizes a Change of Control unless (i) at least thirty (30) days
prior to such action, the Borrower shall have given to the Lender
written notice containing and constituting an offer to prepay the New
Hancock Note as described in section (c) of this Section 4.27,
accompanied by the Officer's Certificate described in section (g) of
this Section 4.27, and (ii) contemporaneously with such action, the
Borrower prepays the New Hancock Note as required to be prepaid in
accordance with this Section 4.27.
(c) The offer to prepay the New Hancock Note contemplated by
subsections (a) and (b) of this Section 4.27 shall be an offer to
prepay, in accordance with and subject to this Section 4.27, the New
Hancock Note on a date specified in such offer (the "Proposed
Prepayment Date"). If such Proposed Prepayment Date is in connection
with an offer contemplated by subsection (a) of this Section 4.27,
such date shall be not less than thirty (30) days and not more than
ninety (90) days after the date of such offer (if the Proposed
Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the thirtieth (30th) day after the date of
such offer).
(d) The Lender may accept the offer to prepay made pursuant to
this Section 4.27 by causing a notice of such acceptance to be
delivered to the Borrower at least ten (10) days prior to the Proposed
Prepayment Date. A failure by the Lender to respond to an offer to
prepay made pursuant to this Section 4.27 shall be deemed to
constitute an acceptance of such offer by the Lender.
(e) Any prepayment of the New Hancock Note pursuant to this
Section 4.27 shall be at one hundred percent (100%) of the principal
amount of the New Hancock Note, plus the Make Whole Amount determined
for the date of prepayment with respect to such principal amount,
together with interest on such New Hancock Note accrued to the date of
prepayment, plus any other amounts then due and payable under the New
Hancock Loan Documents. The prepayment shall be made on the Proposed
Prepayment Date except as provided in subparagraph (f) of this Section
4.27.
(f) The obligation of the Borrower to prepay the New Hancock
Note pursuant to the offer required by subsection (b) and accepted in
accordance with subsection (d) of this Section 4.27 is subject to the
occurrence of the Change of Control in respect of which such offer and
acceptance shall have been made. In the event that such Change of
Control does not occur on the Proposed Prepayment Date in respect
thereof, the prepayment shall be deferred until, and shall be
recalculated as of, and made on, the date on which such Change of
Control occurs. The Borrower shall keep the Lender reasonably and
timely informed of (i) any such deferral of the date of prepayment,
(ii) the date on which such Change of Control and the prepayment are
expected to occur, and (iii) any determination by the Borrower that
efforts to effect such Change of Control have ceased or been abandoned
(in which case the offers and acceptances made pursuant to this
Section 4.27 in respect of such Change of Control shall be deemed
rescinded).
(g) The offer to prepay the New Hancock Note pursuant to this
Section 4.27 shall be accompanied by an Officer's Certificate dated
the date of such offer, specifying: (i) the Proposed Prepayment Date;
(ii) that such offer is made pursuant to this Section 4.27; (iii) the
estimated Make Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation; (iv) the
interest that would be due on the New Hancock Note, accrued to the
Proposed Prepayment Date; (v) that the conditions of this Section 4.27
have been fulfilled; and (vi) in reasonable detail, the nature and
date or proposed date of the Change of Control.
SECTION 4.28 E & Y CAUSES OF ACTION. Lender acknowledges that
Borrower has assigned the Debtors' rights and interests in the E & Y
Causes of Action to Credit Agricole pursuant to a written assignment.
Notwithstanding anything to the contrary expressed or implied in such
assignment, the Borrower and its Subsidiaries shall not pay or incur
any material out of pocket cost, expense or other amount with respect
to the E & Y Causes of Action.
SECTION 4.29 INDEPENDENT BOARDS OF DIRECTORS. Borrower shall
maintain at all times a Board of Directors (a) a majority of the
members of which are "Independent" with the meaning that term as used
in Section 3 of the New York Stock Exchange Listed Company Manual, and
(b) none of whom was or is at any time a director or shareholder of
any Debtor or any Subsidiary of any Debtor. For purposes of this
Section 4.29, (a) Dwight Makins, current chair of the Board of
Directors of Cadiz, shall be deemed independent, notwithstanding the
foregoing sentence, but (b) no other individual who, at the time he or
she becomes a director of Borrower or any of its Subsidiaries, is (or
becomes) or has been a director or officer or other employee of Cadiz
or any of its Affiliates (including Borrower and its Subsidiaries)
shall be considered independent, and (c) no individual who, after
becoming a director of Borrower or any of its Subsidiaries, becomes
(i) a director, officer or other employee of Cadiz or any of its
Affiliates (other than Borrower and its Subsidiaries) or (ii) an
officer or other employee of Borrower or any of its Subsidiaries,
shall be considered independent.
SECTION 4.30 CAPITAL EXPENDITURES. The Borrower shall make
both (a) Capital Expenditures on or with respect to the Collateral in
an aggregate amount of not less than (i) (for each calendar year
through 1998) seventy percent (70%) of the sum of (A) all Capital
Expenditures less (B) Capital Expenditures made on assets other than
the Collateral or computer software in an aggregate amount of up to
Two Hundred Fifty Thousand Dollars ($250,000), less (C) Capital
Expenditures made on computer software up to an aggregate amount (from
the Effective Date through calendar year 1998) of One Million Dollars
($1,000,000), (ii) (for calendar year 1999) seventy percent (70%) of
the sum of (A) all Capital Expenditures less (B) Capital Expenditures
made on assets other than the Collateral in an aggregate amount of up
to Two Hundred Fifty Thousand Dollars ($250,000), and (iii) (for each
calendar year after 1999) seventy five percent (75%) of the sum of (A)
all Capital Expenditures less (B) Capital Expenditures made on assets
other than the Collateral in an aggregate amount of up to Two Hundred
Fifty Thousand Dollars ($250,000); and (b) Permanent Crop Capital
Expenditures in an aggregate amount of not less than the amount
specified for the corresponding calendar year as set forth in Schedule
4.30 hereto, except that such minimum amounts under (a) and (b) above
shall be pro rated for the calendar year during which repayment in
full of the New Hancock Loan occurs based on the number of days
elapsed during such calendar year.
SECTION 4.31 SWAPS AND SIMILAR ARRANGEMENTS. No Debtor shall
enter into, or otherwise incur, or permit to exist, any obligation in
respect of any interest rate or currency swap, collar, floor or cap or
other similar agreement, whether or not such agreement would be
accounted for as a hedging obligation under GAAP, or whether or not
payments thereunder are to be made periodically or upon the happening
of a contingency.
SECTION 4.32 CERTAIN INSURANCE POLICIES. If, for any reason,
on or before September 28, 1998, (a) Borrower is unable to obtain a
continuation, extension or equivalent replacement of each of the two
(2) insurance policies issued by Aurora National Life Assurance
Company and identified as Policy Nos. C 11634064L and C 11640005L (the
"Aurora Policies") for a term extending until at least one (1) month
after the Maturity Date, or (b) Borrower is able to do so, but (i) the
first (1st) aggregate annual premiums for the Aurora Policies due for
coverage after November 27, 1998 will exceed One Hundred Twenty Five
Thousand Four Hundred and Seventy Two Dollars ($125,472) (the
"Threshold Renewal Premium") and (ii) the average annual increase to
such Threshold Renewal Premium for the remainder of the term of the
New Hancock Loan will exceed Seventeen Thousand Five Dollars
($17,005), Borrower shall so notify Lender in writing on or before
September 30, 1998, whereupon the following shall occur:
(1) Borrower shall elect, by written notice to Lender delivered
on or before October 30, 1998, either (A) (in lieu of obtaining a
continuation, extension or equivalent replacement of the Aurora
Policies) to pay to the Lender on November 27, 1998 a cash amount
equal to the Threshold Renewal Premium, and on each subsequent
November 27 thereafter a cash amount equal to the amounts set forth in
Schedule 4.32 hereto, or (B) to procure a continuation, extension or
equivalent replacement of the Aurora Policies for such aggregate face
amount as may be obtainable for the annual amounts otherwise payable
by Borrower under (A) above. If, for any reason, Borrower fails to
issue the written notice of election required under this subsection
(1), Borrower shall be deemed to have elected the choice described in
clause (1)(A) above.
(2) Borrower shall cause Aurora National Life Assurance Company
(or any successor thereto) to pay directly to Lender any and all cash
surrender value payable under the Aurora Policies upon any expiration
or termination thereof.
Provided that no Default or Event of Default has occurred
and is continuing, Lender shall credit all payments received by Lender
pursuant to this Section 4.32 against the principal due on the New
Hancock Loan in the inverse order of maturity thereof (with no
recalculation of the principal amortization schedule).
SECTION 4.33 TITLE INSURANCE COMMITMENT. Borrower shall cause
Chicago Title Insurance Company to perform all its obligations under
the commitment letter referenced in Section 5.1(g) hereof, including,
without limitation, its obligation to issue to Lender the endorsements
and title policy referenced therein and to obtain the reinsurance
referenced therein.
ARTICLE 5
CONDITIONS
SECTION 5.1 LENDER'S CONDITIONS. The Lender's obligation
hereunder to consummate the transactions contemplated hereby shall be,
unless waived in writing by the Lender, subject to the satisfaction of
the following conditions precedent:
(a) Timely and full performance by the Debtors prior to or at
the Effective Date of all of the agreements theretofore to be
performed by them under, pursuant to or contemplated by the Plan or
this Credit Agreement (including, without limitation, all requirements
specified in Article 2 and in Section 4.28 hereof);
(b) The accuracy of the Debtors' respective representations and
warranties contained in the New Hancock Loan Documents and the
Lender's receipt of (i) an Officer's Certificate to that effect dated
the Effective Date executed by a Responsible Officer of the Borrower
certifying that (A) no Default or Event of Default shall have occurred
and be continuing or shall exist immediately following the Effective
Date; (B) all representations and warranties set forth herein or in an
any other New Hancock Loan Document (other than those that speak as of
a specific date) are true and correct in all material respects on the
Effective Date as if made on and as of the Effective Date; and (C)
all other conditions precedent set forth in this Article V have been
satisfied; and (ii) an Officer's Certificate of the Chief Executive
Officer and Chief Financial Officer of Cadiz certifying that (A) no
Default or Event of Default with respect to Cadiz or any of its
Subsidiaries (other than Borrower and Borrower's Subsidiaries) shall
have occurred and be continuing or shall exist immediately following
the Effective Date; and (B) all representations and warranties of
Cadiz set forth in the Cadiz Agreement or in any other New Hancock
Loan Document (other than those that speak as of a specific date)
executed and delivered by Cadiz are true and correct in all material
respects on the Effective Date as if made on and as of the Effective
Date.
(c) The Lender's receipt, at the expense of the Borrower, of
legal opinions, dated the Effective Date, in form and substance
reasonably satisfactory to the Lender, from each of the following:
(i) Tuttle & Taylor, as special counsel to the Lender;
(ii) Miller & Holguin, as special counsel to Cadiz;
(iii) Latham & Watkins, as special counsel to the Borrower;
(iv) Young Wooldridge, as special Water Rights counsel to
the Lender; and
(v) Poms, Smith, Lande & Rose, as special Patents,
Trademarks and Copyrights counsel to the Lender; and
(vi) Stutman, Triester & Glatt (or other legal counsel
satisfactory to Lender), as legal counsel to Howard P. Marguleas.
(d) The Lender's receipt of (and in its sole and absolute
discretion, complete satisfaction with) each of the New Hancock Loan
Documents duly executed, acknowledged and delivered to the Lender by
all parties thereto (other than the Lender), and without limiting the
generality of the foregoing, the Borrower shall have executed the New
Hancock Note in the aggregate amount of the Principal Amount payable
to the Lender, as well as the New Hancock Security Documents;
(e) The due filing or recordation of such New Hancock Loan
Documents and such other documents, notices, filings or instruments as
may be necessary or appropriate to establish and perfect, to the
complete satisfaction of the Lender (acting in its sole and absolute
discretion), the Lender's security interest and Lien on the Collateral
with the priority thereof contemplated herein, including, without
limitation, evidence that the Debtors have given all notices to, and
obtained all consents of, third parties, with respect to the security
interests to be created under the New Hancock Security Documents to
the extent such notice and/or consent is necessary to create, perfect
or maintain such security interests;
(f) The Lender's receipt of (and in its sole and absolute
discretion, complete satisfaction with) (i) evidence that the
insurance contemplated in this Credit Agreement and the New Hancock
Security Documents is in place; (ii) endorsements of all policies of
insurance required to be maintained under the New Hancock Loan
Documents, naming the Lender as loss payee or additional insured, as
the case may be; and (iii) evidence that written notice of the
security interest granted to the Lender in such policies of insurance
has been given to the insurers as required to perfect such security
interest under the UCC, and that such perfected security interest has
a first priority with respect to the policies referred to in Section
4.3(b)(xvi) hereof;
(g) The Lender's receipt of (and in its sole and absolute
discretion, complete satisfaction with) four (4) pro forma CLTA Form
110.5 endorsements issued by Chicago Title Insurance Company to Title
Policy Nos. 519396, 32757, D620713 and 6056267 and a pro forma ALTA
Loan Policy (with ALTA Endorsement Form I coverage) re Blythe Ranch,
along with a commitment letter from Chicago Title Insurance Company
substantially in the form and substance of Schedule 5.1(g) hereof with
such reinsurance to be issued, pursuant to ALTA Facultative
Reinsurance Policies, as may be referenced in such letter or otherwise
required by the Lender (acting in its sole and absolute discretion);
(h) In the Lender's sole and absolute discretion, the Lender's
complete satisfaction with the form and substance of the Plan, the
Confirmation Order and the Final Order, and the implementation of the
Plan as contemplated therein in accordance with the terms thereof,
including, without limitation, (i) the termination of the DIP Facility
and all letters of credit, security interests, mortgages and other
Liens issued pursuant thereto or contemplated thereby, (ii) the
satisfaction (or waiver by the Person or Persons entitled to the
benefit thereof) of all conditions precedent to the occurrence of the
Effective Date (including, without limitation, the consummation of
each of the Acquisition and the Merger in accordance with the terms of
the Plan), other than the conditions set forth herein; (iii) Cadiz's
payment in full, as provided in the Plan, of the Three Million Dollars
($3,000,000) in aggregate payments to be made under the Plan to the
holders of Interests in Classes 9 and 10 as defined in the Plan; (iv)
Cadiz's funding of at least Fifteen Million Dollars ($15,000,000) into
the Unsecured Claims Reserve Account or such lesser amount as Lender
may agree to; (v) Cadiz's funding to Borrower, as a Capital
Contribution, of an amount not less than the aggregate amount required
to be paid under the Plan on the Effective Date in respect of Class 6
Claims (as defined in the Plan), which amount shall be free of Liens
of Credit Agricole and any other Person; and (vi) if Borrower has
reached a settlement with LSL Biotechnologies, Inc., documentation
effecting the settlement by Borrower of its disputes with LSL
Biotechnologies, Inc. on terms and conditions providing, among other
things, for the release by LSL Biotechnologies, Inc. of all of its
claims against Borrower and its Subsidiaries.
(i) In the Lender's sole and absolute discretion, the Lender's
complete satisfaction with all proceedings to be taken in connection
with the transactions contemplated by this Credit Agreement and the
other New Hancock Loan Documents and any documents incident to such
transactions;
(j) The Lender's receipt of (and in its sole and absolute
discretion, complete satisfaction with) all documents or other
evidence which it may reasonably have requested in connection with
such transactions, including, without limitation, those set forth in
Schedule 5.1(j) hereof;
(k) The Lender's receipt of (and in its sole and absolute
discretion, complete satisfaction with): (i) Borrower's written plans
for Capital Expenditures (including, without limitation, as a separate
item, Permanent Crop Capital Expenditures) for the year ended December
31, 1996; and (ii) the Borrower's Crop Development Plan and its
Business Plan (including, without limitation, asset Disposition and
financial projections) for its 1996 Fiscal Year;
(l) (i) The Lender's delivery to Borrower of written
acknowledgement of the Lender's receipt of the New Credit Agricole
Loan Documents and its complete satisfaction (acting in its sole and
absolute discretion) with the terms and provisions of the New Credit
Agricole Obligations and the New Credit Agricole Loan Documents,
subject in any case to Section 3.17 hereof, and (ii) the Lender's
receipt of a certificate from Credit Agricole, in form and substance
reasonably satisfactory to Lender, confirming the satisfaction of, or
Credit Agricole's waiver of, all conditions precedent to the full
effectiveness of the New Credit Agricole Credit Agreement;
(m) The Equity Infusion shall have been made upon the Effective
Date, and no Material Adverse Event shall have occurred since December
31, 1995;
(n) (i) The Lender's and Credit Agricole's mutual execution and
delivery of the New Intercreditor Agreement, (ii) the recordations of
Subordination Agreements, all of the foregoing completely satisfactory
to the Lender acting in the Lender's sole and absolute discretion;
(o) The Lender's receipt of the Hancock Cash Payment and all
adequate protection and other payments owed to the Lender through and
on the Effective Date by the Borrower and any other Debtors,
including, without limitation, all net proceeds from the pre Effective
Date sale of any Collateral, except for the fifteen percent (15%)
portion of such net proceeds payable to Credit Agricole for sales of
certain of the so called Pearson Properties.
(p) Lender shall have received pro forma (i) balance sheets of
Borrower and its Subsidiaries prepared on a Consolidated Basis and a
consolidating basis, and (ii) a balance sheet of Cadiz and its
Subsidiaries (including Borrower and Borrower's Subsidiaries), in each
case (A) prepared on a Consolidated Basis and a purchase accounting
basis as of the Effective Date and immediately after giving effect to
the consummation of the Plan and of all transactions contemplated by
the Plan to be consummated thereon (including, without limitation, the
Acquisition and the Merger, all Capital Contributions to be made to
Borrower by Cadiz on the Effective Date pursuant to the Plan, all
payments to be made by the Borrower and its Subsidiaries or Cadiz on
the Effective Date pursuant to the Plan, the payment of any tax
liability arising by reason of, or otherwise in connection with, the
Acquisition, and the restructuring of the pre petition claims of
Lender and Credit Agricole as contemplated hereby; and (B) excluding
(I) any amounts remaining in the bankruptcy estates of the Borrower
and its Subsidiaries and (II) any obligations that remain obligations
of such estates, rather than of Borrower or any Subsidiary of
Borrower; in each case (i) and (ii), together with a certification by
the Chief Executive Officer and Chief Financial Officer of Borrower or
Cadiz, as the case may be, to the effect that such pro forma balance
sheets (x) are reasonably stated in light of the actual (to the extent
available) or reasonably anticipated (to the extent that actual
results are not available) yields and prices of crops as of the
Effective Date and (y) have been prepared on a purchase accounting
basis in accordance with GAAP, and have been reviewed by Price
Waterhouse LLP, in connection with such accountants' standard
procedures relating to the preparation of audited financial statements
for Cadiz for the fiscal year ending March 31, 1997, and that such
accountants have orally informed such officers that such pro forma
balance sheets appear to have been properly prepared;
(q) The Lender's complete satisfaction (acting in its sole and
absolute discretion) that (i) no Material Adverse Event exists on (or
shall exist immediately after) the Effective Date, (ii) all licenses
that the Borrower and its Subsidiaries may need under PACA or the
California Food and Agriculture Code, including, without limitation,
"Producer Dealer" and "Processor" licenses issued by the California
Department of Food and Agriculture, to operate their businesses in
accordance with Section 4.6 hereof and otherwise to comply with this
Credit Agreement are in full force and effect, including, without
limitation, a written commitment from the United States Department of
Agriculture, in form and substance acceptable to Lender, to issue to
Borrower the license required under PACA to permit the marketing by
Borrower of produce on behalf of Growers; and (iii) no Default or
Event of Default shall exist immediately after the Effective Date.
(r) The Borrower's payment in full of all costs and expenses
arising out of or in connection with the New Hancock Loan Documents
and/or the consummation of the transactions contemplated hereby on the
Effective Date, including, without limitation, the out of pocket costs
of the Lender for attorneys' or consultants' fees;
(s) The Lender's complete satisfaction (acting in its sole and
absolute discretion) with (i) the terms and conditions of the Cadiz
Agreement, the Cadiz Services Agreement, the Cadiz Lease, the Tax
Sharing Agreement and any agreement that Cadiz and any Debtor may
enter into on or before the Effective Date, and (ii) the Borrower's
compliance with Section 4.3(b)(xvi);
(t) The Lender's receipt of (and in its sole and absolute
discretion, complete satisfaction with) written evidence that (i) each
of Cooperative Centrale Raiffeisen Boerenleenbank B.A. and Henry
Ansbacher & Co., Limited has consented to Cadiz's performance of the
actions to be taken by Cadiz or the Borrower (as the case may be) as
contemplated by the Plan, the New Hancock Loan Documents and the New
Credit Agricole Loan Documents, and (ii) all conditions to the
Effective Date set forth in the New Credit Agricole Credit Agreement
have been fulfilled to Credit Agricole's satisfaction or waived by
Credit Agricole;
(u) Lender's receipt of evidence, in form and substance
reasonably acceptable to it, that as of July 31, 1996 and determined
on a Consolidated Basis as if the Effective Date had occurred on such
date (and, without limitation, reflecting Borrower's expenditure of
all amounts required to obtain all bonds necessary to secure the
issuance of all licenses, under PACA or other applicable Law, required
for the conduct of Borrower's business), the total of all (i) cash
(including all funds held in deposit or other accounts) of Debtors and
their Subsidiaries and (ii) cash equivalent investments of Debtors and
their Subsidiaries that qualify as Permitted Investments under this
Credit Agreement was at least Five Million Dollars ($5,000,000);
(v) The Lender's receipt of (and in its sole and absolute
discretion, satisfaction with) the written releases necessary to
effect the releases of Lender set forth in Schedule 5.1(v) hereof;
(w) An agreement setting forth the Minimum Release Price
Schedule shall have been executed and delivered by Borrower, Lender
and Credit Agricole;
(x) Borrower shall have delivered to Lender the set of policies
and procedures, in form and substance acceptable to Lender, that will
apply initially to Borrower's making of advances to Growers located
outside the United States of America, including, among other things,
separate aggregate dollar limits on cultural, packing and crossing
advances.
(y) Lender shall have received copies, certified by Borrower as
true and complete copies of the originals thereof, of each assessment,
report, study or other investigation, produced at any time after
December 8, 1989 and prior to the Effective Date, regarding the
actual, alleged or possible production, use, presence, treatment,
storage, transportation, disposal, Release or threatened Release of
any Hazardous Materials at, on or about any real property or personal
property currently or formerly owned, leased or operated by Borrower
or any Subsidiary of Borrower.
(z) Lender shall have received the Water Rights Plans referred
to in Section 4(e) of the Cadiz Agreement.
ARTICLE 6
EVENTS OF DEFAULTS
SECTION 6.1 EVENTS OF DEFAULTS. The occurrence of any one or
more of the following events, regardless of the reason therefor, shall
constitute an "Event of Default" hereunder:
(a)(i) The Borrower shall fail to pay when due any principal due
on the New Hancock Loan or the New Hancock Note, whether at the due
date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise, or (ii) any Debtor shall fail to
pay on the due date thereof any other amounts owed by it (including,
without limitation, any interest, Mandatory Prepayment, Make Whole
Amount, fees, costs or expenses) under the New Hancock Note or the
other New Hancock Loan Documents or (if no due date is specified)
within ten (10) days after written demand therefor; or
(b) The Borrower shall fail to observe or perform any of its
covenants or obligations contained in Sections 4.1(f), 4.1(i)(i),
4.3(b)(ix), 4.3(b)(xi), 4.3(b)(xii), 4.3(b)(xvi), 4.4, 4.6 (except
subsection (d) thereof), 4.7, 4.9, 4.11, 4.12, 4.15, 4.17, 4.18, 4.24,
4.25, 4.26, 4.27, 4.28, 4.29, 4.30, 4.31 or 4.32 inclusive; or
(c) Any representation, warranty, certification or statement
made in any of the New Hancock Loan Documents or in any certificate,
financial statement or other document delivered pursuant thereto shall
have been incorrect in any material respect when made (or deemed
made); or
(d) Any "default" or "event of default" under any New Credit
Agricole Document, as in effect on the Effective Date (and
irrespective of any waivers, consents, amendments, supplements or
other modifications becoming effective thereafter except to the extent
expressly consented to by the Lender), shall occur, or any default
shall occur under any other Debt of the Borrower, if such other Debt
individually or in the aggregate exceeds Two Hundred and Fifty
Thousand Dollars ($250,000);
(e) Except to the extent covered elsewhere in this Section 6.1,
any Debtor shall fail to observe or perform any of its covenants or
agreements contained in any of the New Hancock Loan Documents for
fifteen (15) days after the earlier of (i) written notice from the
Lender, and (ii) a Responsible Officer of any Debtor obtains knowledge
of such failure; or
(f) Any Debtor or Cadiz shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or thereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay, or shall
admit in writing its general inability to pay, its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(g) An involuntary case or other proceeding shall be commenced
against any Debtor or Cadiz seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) days; or an order for relief shall
be entered against any Debtor or Cadiz under the federal bankruptcy
laws as now or hereafter in effect; or
(h) Any judgment or order shall be rendered against any Debtor
for the payment of money in excess of Two Hundred and Fifty Thousand
Dollars ($250,000) or which otherwise constitutes a Material Adverse
Event, and there shall be any period of thirty (30) consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(i) The failure of the Lender for any reason to hold and have a
perfected security interest and Lien on the Collateral with an
aggregate fair market value exceeding Twenty Five Thousand Dollars
($25,000) with the priority set forth herein for any reason
whatsoever, except Lender's voluntary release of such security
interest and Lien or Lender's failure to make a timely filing of a
required UCC 2 Continuation Statement, or any Debtor or Cadiz shall so
assert in writing; or
(j) The filing or other commencement by Borrower, Cadiz or any
Subsidiary of either of them of any adversary proceeding against the
Lender or any of its Affiliates in respect of any matter arising out
of or related to the New Hancock Loan Documents or the transactions
contemplated by the New Hancock Loan Documents; or
(k) Any material provision of any of the New Hancock Loan
Documents or of the Cadiz Agreement shall, for any reason, cease to be
valid, binding or enforceable as to any signatory thereof (other than
the Lender), or any such signatory shall so assert in writing or shall
deny that it has any further liability or obligation thereunder;
(l) The failure by any Debtor to hold or obtain, or any loss,
termination, expiration or suspension of, any business or other
license, permit or other authorization that is issued by a
Governmental Body and that is material to the continued ability of any
Debtor to operate its business in an efficient or profitable manner
consistent with Section 4.6 hereof, including, without limitation, any
post Effective Date failure of the Debtors to keep in full force and
effect the licenses described in Section 5.01(p) hereof; or
(m) Cadiz shall fail to pay any amounts owed by Cadiz under the
Cadiz Agreement to the Lender or to perform any other obligations owed
by it thereunder to the Lender within two (2) Business Days of the due
date thereof; or
(n) Any of the following events occur or exist with respect to
Borrower or any ERISA Affiliate: (i) any Prohibited Transaction
involving any ERISA Plan; (ii) any Reportable Event with respect to
any ERISA Plan; (iii) the filing under Section 4041 of ERISA of a
notice of intent to terminate any ERISA Plan or the termination of any
ERISA Plan; (iv) any event or circumstance that might constitute
grounds entitling the PBGC to institute proceedings under Section 4042
of ERISA for the termination of, or for the appointment of a trustee
to administer, any ERISA Plan, or the institution by the PBGC of any
such proceedings; (v) the complete or partial withdrawal under Section
4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of a Multiemployer Plan; and in each any
such case, such event or condition, together with all other events or
conditions, if any, could in the opinion of Lender subject Borrower to
any tax, penalty, or other liability to an ERISA Plan, a Multiemployer
Plan, the PBGC, or otherwise (or any combination thereof) which in the
aggregate exceed or may exceed Fifty Thousand Dollars ($50,000.00); or
(o) Any attachment, execution, garnishment, tax lien or any
other Lien shall be issued against any property of Borrower or Cadiz
or any of their respective Subsidiaries for an amount in excess of Two
Hundred and Fifty Thousand Dollars ($250,000) and shall not be
vacated, discharged, satisfied or stayed or bonded pending appeal
within thirty (30) days after such issuance; or
(p) Any amendment, modification, waiver or supplement of the
Cadiz Agreement (as defined in the New Credit Agricole Credit
Agreement); or
(q) The failure of the Lender to receive Net Sales Proceeds
aggregating at least Five Million Dollars ($5,000,000) on or before the
third (3d) anniversary of the Effective Date from the sale of Tier B Pre
Identified Assets; or
(r) The imposition by Credit Agricole of any material
restrictions on the Cash Account (as defined in the New Credit Agricole
Credit Agreement) or on the right of the Borrower to withdraw the monies
therein for any use not in contravention of the New Credit Agricole Loan
Documents; or
(s) Borrower shall fail to observe or perform its covenants
under Section 4.6(d) hereof for thirty (30) days after written notice of
such failure from the Lender.
SECTION 6.2 ACCELERATION. Upon the occurrence and continuance of
any of the Events of Default set forth in subsections (f) or (g) of
Section 6.1, the entire New Hancock Loan shall automatically mature and
become due and payable, together with interest accrued thereon, plus any
Make Whole Amount or other premium, without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived. Upon
the occurrence and continuance of any of the Events of Default set forth
in any subsection of Section 6.1 other than subsections (f) or (g), the
Lender may at its option, by written notice or notices to the Borrower,
declare the entire New Hancock Loan to be due and payable, together with
interest accrued thereon, plus any Make Whole Amount or other premium,
without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived. Upon any acceleration of the New
Hancock Loan under this Section 6.2, there shall become due and payable
(and the Borrower shall pay), as compensation to the Lender for the loss
of its investment opportunity and not as a penalty, a Make Whole Amount.
The Borrower hereby acknowledges that its agreement to pay the Make Whole
Amount if the New Hancock Loan is accelerated under this Section 6.2 was
separately negotiated with the Lender, that the economic value of the
various elements of this waiver and agreement was discussed, that the
consideration given by the Borrower for the New Hancock Loan was adjusted
to reflect the specific waiver and agreement negotiated between the
Parties and contained herein, and that this waiver is intended to comply
with California Civil Code Section 2954.10.
BORROWER'S INITIALS __________
SECTION 6.3 REMEDIES UPON AN EVENT OF DEFAULT. Upon the
occurrence of an Event of Default hereunder and the acceleration of the
New Hancock Loan pursuant to Section 6.2 hereof, the Lender may, at its
option, and in addition to all other rights and remedies available to the
Lender, without further notice of the Borrower, do any one or more of the
following:
(i) Proceed to protect and enforce the rights, privileges and
remedies granted to the Lender by this Credit Agreement or any other New
Hancock Loan Document by such judicial proceedings as the Lender shall
deem necessary or appropriate, either at law, in equity, in bankruptcy or
otherwise, whether for specific enforcement of any covenant or agreement
contained in the New Hancock Loan Documents, or in aid of the exercise of
any right, power, privilege or remedy therein or herein granted;
(ii) Foreclose or otherwise enforce the Lender's security
interest or Lien on the Collateral in any manner permitted by Law, or
provided for in any New Hancock Loan Document, and exercise at any time
all rights and remedies of a secured party under the UCC or otherwise for
any foreclosure of the Collateral under any judgment or decree in any
judicial proceeding, or to enforce any other legal or equitable right or
remedy granted or otherwise available to the Lender hereunder, under the
other New Hancock Loan Documents, or at law or in equity;
(iii) Enter onto, and take possession of, any Collateral with or
without judicial action;
(iv) Prior to the Disposition of the Collateral, store,
process, repair or recondition it or otherwise prepare it for Disposition
in any manner, and to the extent the Lender deems appropriate and in
connection with such preparation and Disposition, without charge, use any
Patents, Trademarks and Copyrights, technical process, permit, approval,
license, consent or governmental approval used or held by the Borrower or
any other Debtor;
(v) Demand, sue for, collect or receive any money or property
at any time payable to or receivable by the Borrower on account of or in
exchange for any part of the Collateral;
(vi) Secure the appointment of a receiver without notice to the
Borrower;
(vii) Make a Disposition of any Collateral at one or more public
or private sales, whether or not such Collateral is present at the place
of sale, without assumption of any credit risk, for cash or credit or
future delivery, on such terms and in such manner as the Lender may
determine in its sole and absolute discretion and in light of the
Lender's own best interest, with or without any previous demand on (or
notice to) the Borrower or advertisement of any such sale or other
Disposition, and for the aforesaid purposes, all notice of sale,
advertisement and demand and any right or equity of redemption otherwise
required by, or available to the Borrower under Law, are hereby waived by
the Borrower to the fullest extent permitted by Law; the power of sale
hereunder shall not be exhausted by one or more sales, and the Lender may
from time to time adjourn any sale to be made hereunder; the Lender or
any other Person may be the purchaser of any or all of the Collateral so
sold and thereafter hold the same absolutely free from any claim or right
of whatsoever kind, including any equity of redemption, of the Borrower;
to the extent permitted by Law, the Borrower waives all claims, damages
and demands against the Lender arising out of the repossession, retention
or Disposition of the Collateral, except for claims based on the gross
negligence or wilful misconduct of the Lender; and
(viii) Take any other action and seek any other remedy available
to a secured party under Law.
The enumeration of the foregoing rights and remedies is not
intended to be exhaustive, and the exercise of any right or remedy shall
not preclude the exercise of any other rights or remedies, all of which
shall be cumulative and not alternative.
SECTION 6.4 RESCISSION OF ACCELERATION. If (a) the outstanding
principal amount of the New Hancock Note shall have become immediately
due and payable, (b) no judgment or decree for any amounts so becoming
due and payable shall have been entered, (c) all amounts of principal,
Make Whole Amount, if any, and interest which shall have become due and
payable in respect of all of the New Hancock Note (other than pursuant to
any acceleration) shall have been paid in full, including interest on all
overdue principal, the Make Whole Amount, if any, and (to the extent
permitted by applicable Law) interest at the applicable rate or rates
provided for in the Credit Agreement, (d) the Lender shall have been paid
an amount sufficient to cover all costs and expenses of collection
incurred by or on behalf of the Lender (including, without limitation,
counsel fees and expenses), (e) all other obligations then due and owing
by any Debtor shall have been paid in full, and (f) every other Event of
Default shall have been remedied or waived to the satisfaction of the
Lender (acting in its sole and absolute discretion), then the Lender may,
by written notice or notices to the Borrower, rescind and annul any
acceleration of the New Hancock Loan and its consequences, but no such
rescission and annulment shall extend to, or affect, any subsequent
Default or Event of Default or impair any right consequent thereon, or
require the Lender to repay any interest, principal or Make Whole Amount
actually paid as a result of such acceleration.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 NOTICES. All notices, requests, demands and other
communications to any Party under this Credit Agreement shall be in
writing and shall be given to such Party at its address or telecopy
number set forth in Schedule 7.1 hereto or such other address or telecopy
number as such Party may hereafter specify for the purpose of notice to
the Lender and the Borrower. Each such notice, request or other
communication shall be effective if given (i) by telecopy, when such
telecopy is transmitted to the telecopy number specified pursuant to this
Section 7.1 and a confirmation report is produced by the sender's
telecopier, (ii) by registered or certified mail, return receipt
requested, seventy two (72) hours after such communication is deposited
in the U.S. mails with postage prepaid, addressed as aforesaid, or (iii)
by any other means (including, without limitation, reputable overnight
courier service) when delivered at the address specified pursuant to this
Section 7.1.
SECTION 7.2 NO WAIVERS. No failure or delay by the Lender in
exercising any right, power or privilege under any New Hancock Loan
Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies provided in the New Hancock Loan Documents shall be cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 7.3 EXPENSES; DOCUMENTARY TAXES; INDEMNIFICATION.
(a) The Borrower shall pay (to the extent not included in the
Principal Amount as of the Effective Date) all the Borrower's and the
Lender's out of pocket costs, fees and expenses, including, without
limitation, search fees; filing or recording taxes, fees and other
charges; appraisal fees; title or other insurance fees; escrow charges;
travel expenses; all reasonable fees, disbursements, and other charges of
accountants, legal counsel, appraisers and other experts, consultants and
professional advisors to the Lender (including, without limitation,
Correia Xavier Incorporated, Hillen & Associates, Coopers & Lybrand,
Tuttle & Taylor Incorporated, local counsel, foreign counsel,
environmental counsel, special Patents, Trademarks and Copyrights counsel
and special Water Rights counsel) arising out of or in connection with
any of the following: (i) the Lender's consideration, negotiation,
documentation, consummation, administration, monitoring or enforcement of
this Credit Agreement and the other New Hancock Loan Documents
(including, without limitation, such on going review or inspection of the
Condition of the Debtors or the Collateral under Section 4.5 or otherwise
as the Lender shall deem necessary); (ii) any waiver or consent or full
or partial release of security thereunder or any amendment thereof or any
Default or Event of Default or alleged Default or Event of Default
thereunder; and (iii) any collection and other enforcement proceedings
resulting therefrom. All amounts payable by the Borrower on the
Effective Date pursuant to this Section 7.3 shall be paid by the Borrower
within ten (10) days after written demand is made by the Lender therefor.
(b) In addition to the payment of expenses pursuant to Section
7.3(a), whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to defend (with counsel reasonably
acceptable to the Lender), indemnify, pay and hold harmless the Lender
and the officers, directors, employees, representatives, agents and
Affiliates of the Lender (collectively, the "Indemnitees") from and
against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees) in connection with any investigative, administrative or
judicial proceeding commenced or threatened by any Person, whether or not
any such Indemnitee shall be designated as a party (or a potential party
thereto), whether direct, indirect or consequential and whether based on
any Laws (including, without limitation, securities and commercial laws,
statutes, rules or regulations and Environmental Laws), or equitable
cause or on contract or otherwise, that may be imposed on, incurred by,
or asserted against any such Indemnitee, in any manner relating to or
arising out of the Collateral, this Credit Agreement or any other New
Hancock Loan Document or the transactions contemplated hereby or thereby,
including, without limitation, any transfer taxes, documentary taxes,
assessment or charges (other than income and franchise taxes based on or
measured by the net income of the Lender) made by any Governmental Body
by reason of the execution and delivery of the New Hancock Loan Documents
or the consummation of any of the transactions contemplated thereby, or
Lender's agreement to make the New Hancock Loan hereunder (collectively,
the "Indemnified Liabilities"); provided, however, that the Borrower
shall not have any obligation to any Indemnitee hereunder with respect to
any Indemnified Liabilities to the extent such Indemnified Liabilities
arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent
jurisdiction. To the extent that the undertaking to defend, indemnify,
pay and hold harmless set forth in the preceding sentence may be
determined by a final judgment of a court of competent jurisdiction to be
unenforceable because it is violative of any Law or public policy, the
Borrower shall contribute the maximum portion that the Borrower is
permitted to pay and satisfy under applicable Law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees
or any of them. Neither the making of the New Hancock Loan hereunder nor
the exercise of the rights or duties of the Lender shall impose, or be
deemed to impose, on the Lender any liability to the Borrower or any
other Person and the Lender shall not be deemed to be in control of the
operations of the Borrower as a result of any action taken pursuant to or
in connection with this Credit Agreement or other New Hancock Loan
Document.
(c) In furtherance and not in limitation of the foregoing, the
indemnification, defense and reimbursement obligations of the Borrower
contained in this Section 7.3 shall include, without limitation, and
regardless of when discovered or incurred, all liabilities, losses,
damages (including, without limitation, punitive and consequential
damages), costs and expenses incurred by or alleged or assessed against
the Lender as a result of any claim, order, directive, request for
information, action, allegation, suit, proceeding, loss, cost, damage,
liability, deficiency, fine, penalty, punitive or consequential damage or
expense (including reasonable attorneys' and consultants' fees,
investigation and laboratory fees, court costs and litigation expenses),
directly or indirectly resulting from, arising out of, or based upon (i)
the presence, Release, use, handling, processing, recycling, treatment,
manufacture, installation, generation, discharge, storage or disposal, at
any time, of any Hazardous Materials at, on, under, in, from or about, or
migrating to or from, any Collateral, or the transportation or disposal
of any such Hazardous Materials to or from any Collateral, or (ii) the
violation or alleged violation by any Debtor of any Law, Environmental
Law, permit, judgment or license relating to the presence, handling,
processing, recycling, treatment, use, generation, manufacture,
installation, Release, discharge, storage or disposal, at any time, of
Hazardous Materials at, on, under, in, from or about, or migrating to or
from any Collateral, or the transportation or disposal of any such
Hazardous Materials to or from any Collateral, which indemnity shall
include, without limitation (A) any damage, liability, fine, penalty,
punitive damage, cost or expense arising from or out of any claim,
action, allegation, suit or proceeding for personal injury (including
sickness, disease, death, pain or suffering), tangible or intangible
property damage, compensation for lost wages, business income, profits or
other economic loss, damage to the natural resources or the environment,
nuisance, pollution, contamination, leak, spill, Release or other effect
on the environment, and (B) the cost of any required or necessary repair,
investigation, cleanup, treatment, remediation or detoxification of the
Collateral and the preparation and implementation of any closure,
disposal, remedial or other required reports or actions in connection
with the Collateral. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in the preceding sentence shall be
determined in a final judgment of a court of competent jurisdiction to be
unenforceable under Law, the Borrower shall contribute the maximum
portion that it is permitted to pay and satisfy under the applicable Law,
to the payment and satisfaction of all indemnified liabilities incurred
by the Lender.
(d) The Borrower, for itself and on behalf of its successors and
assigns, hereby waives, releases and forever discharges any now existing
or hereafter created or arising right or claim against the Lender and its
assigns for contribution, reimbursement, indemnity or other similar
rights against the Lender and its successors and assigns in any way
related to any Hazardous Materials at, on, under, in, from or about, or
migrating to or from, any Collateral, or the transportation or disposal
of any such Hazardous Materials to or from any Collateral, including,
without limitation, any right to contribution that may exist in the
Borrower's favor pursuant to CERCLA or any other similar Law or
Environmental Law.
(e) The Borrower hereby acknowledges and agrees that (i) the Lender
is not now, and has not ever been, in control of the Collateral or of the
Borrower's affairs; and (ii) the Lender does not have the capacity to
influence the Borrower's conduct with respect to the ownership, operation
or management of the Collateral.
SECTION 7.4 AMENDMENTS AND WAIVERS. Any provision of the New
Hancock Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by both the Debtor
signatory thereto and the Lender.
SECTION 7.5 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
This Credit Agreement shall be binding upon, and inure to the
benefit of, the Parties hereto and their respective successors and
assigns, except that the Borrower shall not assign or transfer any of its
rights or obligations under this Credit Agreement without the prior
written consent of the Lender, which consent the Lender may deny,
withhold or delay in the Lender's sole and absolute discretion.
SECTION 7.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) THIS CREDIT AGREEMENT, THE NEW HANCOCK NOTE AND ANY OTHER NEW
HANCOCK LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN <PAGE>
ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD
TO ANY PRINCIPLES OF CONFLICTS OF LAW).
(b) THE BORROWER HEREBY CONSENTS AND SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ALL FEDERAL AND STATE COURTS IN THE STATE OF
CALIFORNIA FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THE NEW HANCOCK LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY. EACH OF THE BORROWER AND THE LENDER AGREES THAT
SUCH COURTS SHALL HAVE JURISDICTION FOR ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO ANY NEW HANCOCK LOAN DOCUMENT. EACH OF THE
BORROWER AND THE LENDER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUT OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE RESPECTIVE PARTY AT ITS ADDRESS FOR NOTICES PURSUANT
TO SECTION 7.1 IN ACCORDANCE WITH THE RULES OF THE COURT. NOTHING
HEREIN SHALL ADVERSELY AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE BORROWER OR THE COLLATERAL IN ANY
OTHER JURISDICTION.
(c) EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER
THIS CREDIT AGREEMENT OR ANY OTHER NEW HANCOCK LOAN DOCUMENT OR
INSTRUMENT ATTACHED HERETO OR THERETO, REFERRED TO HEREIN OR THEREIN
OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (ii) IN ANY WAY
CONNECTED HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN
EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT EACH PARTY TO THIS CREDIT AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY GOVERNMENTAL BODY AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDER MAKING THE NEW HANCOCK LOAN TO THE
BORROWER.
LENDER'S INITIALS: ; BORROWER'S INITIALS: .
SECTION 7.7 EFFECTIVENESS. In addition to any other
preconditions to effectiveness hereunder, this Credit Agreement shall
become effective when the Lender shall have received counterparts
hereof signed by the Parties hereto.
SECTION 7.8 COLLATERAL. The security interests and Liens
created by this Credit Agreement in the Collateral shall be and remain
valid and perfected without the necessity that financing statements be
filed, any deed of trust be recorded or any other action be taken
under applicable Law to perfect the security interests or Liens
granted hereby or thereby.
SECTION 7.9 INDEPENDENCE OF COVENANTS. All covenants of the
Borrower hereunder shall be given independent effect so that, if a
particular action or condition is prohibited by any such covenants,
the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid
the occurrence or continuance of a Default or Event of Default if such
action is taken or such condition exists.
SECTION 7.10 SURVIVAL. All covenants, agreements,
representations and warranties made by the Borrower in this Credit
Agreement and in any certificates or other documents delivered
pursuant to this Credit Agreement shall survive the making of the New
Hancock Loan and the execution and delivery of the New Hancock Note,
and shall continue in full force and effect until the New Hancock Loan
in its entirety is repaid in full. All such covenants, agreements,
representations and warranties shall be binding upon any successors
and assigns of the Borrower.
SECTION 7.11 INCORPORATIONS; CAPTIONS. The preamble, recitals,
schedules and exhibits hereto are hereby incorporated into this Credit
Agreement and made a part hereof, but the table of contents, captions
and section headings appearing herein are included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Credit Agreement.
SECTION 7.12 INVESTIGATION. Notwithstanding any past, present
or future right of the Lender to investigate the affairs of any Debtor
and notwithstanding any past, present or future knowledge of facts
determined or determinable by the Lender pursuant to such
investigation or right of investigation, the Lender has the right to
rely fully upon the representations, warranties, covenants and
agreements now or hereafter made by the Debtors under (or pursuant to)
any of the New Hancock Loan Documents.
SECTION 7.13 TIME IS OF THE ESSENCE. Time is of the essence of
this Credit Agreement.
SECTION 7.14 PRIOR UNDERSTANDINGS. This Credit Agreement
supersedes all prior understandings and agreements (whether written,
oral or otherwise), and constitutes the entire agreement between the
Parties hereto relating to the subject matter hereof and the
transactions provided for herein.
SECTION 7.15 FAIR CONSTRUCTION. The terms of this Credit
Agreement and the other New Hancock Loan Documents have been
negotiated by the Parties hereto, and the language used in this Credit
Agreement and the other New Hancock Loan Documents shall be deemed to
be the language chosen by the Parties hereto to express their mutual
intent. This Credit Agreement and the other New Hancock Loan
Documents shall be construed without regard to any presumption or rule
requiring construction against the Party causing such instrument or
any portion thereof to be drafted, or in favor of the Party receiving
a particular benefit under the same. Without limiting the generality
of the foregoing, this Credit Agreement and the other New Hancock Loan
Documents shall be construed without regard to, or aid of, California
Civil Code Section 1654 or California Code of Civil Procedure Section
1864, and shall not be construed against the Lender because of the
Lender's involvement in their preparation or drafting.
SECTION 7.16 LENDER BORROWER RELATIONSHIP. Notwithstanding any
provision of this Credit Agreement or any document or transaction
contemplated hereby to the contrary: (a) the relationship between
the Lender on the one hand and the Borrower on the other in connection
with this Credit Agreement and the other New Hancock Loan Documents is
intended to be, and the Parties specifically agree that it is, limited
to the relationship of a lender to a borrower in a commercial loan
transaction between sophisticated commercial entities dealing with
each other on an arm's length basis, and (b) the Lender is not
intended to be, and the Parties specifically agree that Lender is not,
by virtue of this Credit Agreement and the other New Hancock Loan
Documents or the transactions contemplated hereby or thereby, a
partner, joint venturer, fiduciary, quasi fiduciary, alter ego,
manager, shareholder, controlling person or other business associate
or participant of any kind of the Borrower, and the Lender intends to
assume no such status or any duties, obligations or limitations
associated therewith.
SECTION 7.17 LENDER AS ATTORNEY IN FACT.
(a) The Borrower hereby appoints the Lender as attorney in fact
for the Borrower, with full power of substitution, for the purposes of
carrying out the provisions of this Credit Agreement and the other New
Hancock Loan Documents and taking any action and executing any
instrument and obtaining any governmental consent or approval that the
Lender may deem necessary or desirable for the purposes of carrying
out the provisions hereof or thereof. Without limiting the generality
of the foregoing, the Borrower hereby gives the Lender the power and
right, in the name and on behalf of the Borrower, to do any and all of
the following: (i) to ask or make demand for, collect, receive
payment of, and receipt for, all moneys, claims, and other amounts due
at any time in respect of, or arising out of, any Collateral; (ii) to
commence and prosecute any suits, actions, or proceedings at law or in
equity in any court of competent jurisdiction to collect all or part
of any Collateral and to enforce any other right with respect to any
Collateral; (iii) to defend any suit, action, or proceeding brought
against the Borrower with respect to any Collateral; and (iv)
generally, to sell, transfer, pledge, and make any agreement with
respect to, or otherwise deal with, any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof for
all purposes, and to do, at the Lender's discretion and the Borrower's
expense, at any time or from time to time, all acts and things which
the Lender deems necessary to protect, preserve, or realize upon the
Collateral, all as fully and effectively as the Borrower might do.
(b) The Borrower also authorizes the Lender at any time and from
time to time to execute any endorsements, assignments, or other
instruments of conveyance or transfer with respect to the Collateral
that the Lender deems necessary or desirable in order to give effect
to the purposes of this Credit Agreement and the other New Hancock
Loan Documents, and to make inquiries of third parties regarding the
status of the Collateral. By execution and delivery of this Credit
Agreement and the other New Hancock Loan Documents, the Borrower
hereby authorizes each Person obligated (or otherwise having
information relating to) any Collateral to provide to the Lender
copies of the monthly installments or other information relating
thereto and otherwise to respond to such inquiries of the Lender.
(c) The Borrower hereby ratifies all that said attorney(s) shall
lawfully do or cause to be done by virtue hereof. Such powers, being
coupled with an interest, are irrevocable while the New Hancock Loan
or any other amount payable by the Borrower under any of the New
Hancock Loan Documents shall remain unpaid, and may be exercised at
any time and from time to time by any employee or representative of
the Lender.
(d) The powers conferred on the Lender under this Section 7.17
are solely to protect the Lender's interest in the Collateral and
shall not impose any duty upon the Lender to exercise any such rights
and powers except to the extent required by, and in accordance with
such standards of conduct as would be applicable under, the UCC. The
Lender shall have no obligation to make any payment, and shall have no
liability for payment or non payment, of any expenses or obligations
of the Borrower.
SECTION 7.18 REVIVAL OF OBLIGATIONS. To the extent that the
Borrower makes a payment or payments to the Lender or the Lender
enforces its security interests, or the Lender exercises any rights of
set off, and such payment or payments or the proceeds of such
enforcement or set off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or
otherwise restored to the Borrower, a trustee, receiver or any other
Person under any Law, including without limitation any bankruptcy Law
or equitable cause, then to the extent of any such restoration, the
obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment
had not been made or such enforcement or set off had not occurred.
SECTION 7.19 SUBMISSION OF AGREEMENT. The submission of this
Credit Agreement to the Borrower or its agent or attorney for review
or signature does not constitute a commitment by the Lender to make
the New Hancock Loan to the Borrower, and this Credit Agreement shall
have no binding force or effect unless and until the Effective Date
occurs.
SECTION 7.20 THIRD-PARTY CONSULTANTS. The Lender may hire such
third-party experts, advisors or other consultants (including, without
limitation, attorneys, accountants, appraisers, environmental
consultants and agricultural production or marketing experts) as the
Lender reasonably deems necessary, the reasonable costs of which shall
be paid by Borrower, to provide the following services: (a) inspect
or investigate the Collateral or Borrower's books and records,
properties and environmental compliance at any time; (b) evaluate any
reports, or financial or other information heretofore or hereafter
prepared or submitted by or on behalf of the Borrower and delivered to
the Lender; (c) perform such additional investigations and tests of
the Collateral as may be necessary to perform such evaluation; (d)
investigate or ascertain the Borrower's compliance with the New
Hancock Loan Documents; (e) establish the existence or nonexistence of
any fact or facts, the existence or nonexistence of which is a
condition or requirement of this Credit Agreement; and (f) perform
such other services as may, from time to time, be required by the
Lender. If the Borrower fails to do so, the Borrower hereby
authorizes the Lender to pay for such third party consultants on the
Borrower's behalf, and any such disbursements shall, at the Lender's
option, be added to the outstanding principal balance of the New
Hancock Note; provided, however, that no such disbursement shall be
construed as a waiver by the Lender of the Borrower's breach of its
obligation to make such disbursement itself. The authorization
granted hereby shall be irrevocable, and no further direction or
authorization from the Borrower shall be necessary to make such
disbursements.
SECTION 7.21 INCONSISTENCIES WITH LOAN DOCUMENTS. Except as
otherwise provided in any other New Hancock Loan Document by specific
reference to the applicable provision of this Credit Agreement, in the
event of any direct conflicts or inconsistencies between the terms of
this Credit Agreement and the terms of any other New Hancock Loan
Document, the terms of this Credit Agreement shall govern and prevail.
SECTION 7.22 COUNTERPARTS. This Credit Agreement may be
executed in any number of counterparts each of which shall be deemed
an original and all of which shall constitute one and the same
agreement with the same effect as if all Parties had signed the same
signature page. Any signature page of this Credit Agreement may be
detached from any counterpart of this Agreement and reattached to any
other counterpart of this Credit Agreement identical in form hereto
but having attached to it one or more additional signature pages.
SECTION 7.23 NO NOVATION. This Credit Agreement and the other
New Hancock Loan Documents are not intended to effect a satisfaction
or novation of Lender's pre petition claims against the Debtors, but
rather to restructure, in their entirety, the obligations of Borrower
and its Affiliates relating thereto.
SECTION 7.24 REGISTRATION, ETC. OF NEW HANCOCK NOTE.
(a) The Borrower shall keep at its principal executive office a
register for the registration and registration of transfers of the New
Hancock Note. The name and address of the Lender, each transfer
thereof and the name and address of each transferee of the New Hancock
Note shall be registered in such register. Prior to due presentment
for registration of transfer, the Person in whose name any New Hancock
Note shall be registered shall be deemed and treated as the owner and
holder thereof for all purposes hereof, and the Borrower shall not be
affected by any notice or knowledge to the contrary. The Borrower
shall give to any holder of a New Hancock Note promptly upon written
request therefor, a complete and correct copy of the name and address
of the registered holder of the New Hancock Note.
(b) Upon surrender of the New Hancock Note at the principal
executive office of the Borrower for registration of transfer or
exchange (and in the case of a surrender for registration of transfer,
duly endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such New Hancock Note or its
attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such New Hancock Note or part thereof),
the Borrower shall execute and deliver, at the Borrower's expense
(except as provided below), one or more new New Hancock Notes (as
requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the
surrendered New Hancock Note. Each such new New Hancock Note shall be
payable to such Person as such holder may request and shall be
substantially in the form of the New Hancock Note. Each such new Note
shall be dated and bear interest from the date to which interest shall
have been paid on the surrendered New Hancock Note or dated the date
of the surrendered New Hancock Note if no interest shall have been
paid thereon. The Borrower may require payment of a sum sufficient to
cover any stamp tax or governmental charge imposed in respect of any
such transfer of any New Hancock Note. No New Hancock Note shall be
transferred in denominations of less than One Hundred Thousand Dollars
($100,000), provided that if necessary to enable the registration of
transfer by a holder of its entire holding of New Hancock Notes, one
New Hancock Note may be in a denomination of less than One Hundred
Thousand Dollars ($100,000).
(c) Upon receipt by the Borrower of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any New Hancock Note, and
(i) in the case of loss, theft or destruction, of an
unsecured indemnity reasonably satisfactory to the Borrower (provided
that if the holder of such New Hancock Note is, or is a nominee for,
the Lender or another holder of a New Hancock Note with a minimum net
worth of at least $100 Million, such Person's own unsecured agreement
of indemnity shall be deemed to be satisfactory), or
(ii) in the case of mutilation, upon surrender and
cancellation of the New Hancock Note,
the Borrower at its own expense shall execute and deliver, in lieu
thereof, a new New Hancock Note in the same principal amount as is
then outstanding on the New Hancock Note, dated and bearing interest
from the date to which interest shall have been paid on such lost,
stolen, destroyed
or mutilated New Hancock Note or dated the date of such lost, stolen,
destroyed or mutilated New Hancock Note if no interest shall have been
paid thereon.
SECTION 7.25 WAIVER OF APPRAISEMENT, VALUATION, ETC. To the
full extent that the Borrower may lawfully do so, the Borrower, for
itself and for any other Person who or which may claim through or
under it, hereby (a) agrees that neither it nor any such Person shall
set up, plead, claim or in any manner whatsoever take advantage of,
any appraisal, valuation, stay, moratorium, extension or redemption
laws, now or hereafter in force, (b) waives all benefit or advantage
of any such Laws and waives and releases any and all such rights and
covenants not to hinder, delay or impede the exercise of any right or
remedy permitted herein or in any New Hancock Loan Document but to
suffer and permit every such right or remedy as though no such Laws
were in effect, (c) consents and agrees that the Collateral may be
sold by the Lender as an entirety or in parts and (d) agrees that the
Borrower shall neither claim, demand or otherwise be entitled to any
credit against or deduction from the principal, the Make Whole Amount,
if any, or the interest on the New Hancock Note or any other sums
which may become payable under the terms of the New Hancock Loan by
reason of the payment of any tax, assessment or other municipal or the
governmental charge or imposition on (or relating to) the Collateral
or any part thereof, nor claim or otherwise be entitled to any
deduction from the taxable or assessed value of the Collateral or any
part thereof by reason of any New Hancock Loan Document.
SECTION 7.26 WAIVER OF MARSHALLING AND OTHER DEFENSES.
Borrower hereby (a) waives any and all rights to require any
marshalling of assets in favor of Borrower or any other Person and
specifically agrees that in the event of any sale of the Collateral or
any part thereof by foreclosure or otherwise, whether by action or
advertisement or otherwise, all of the Collateral and all interests in
the Collateral offered for sale may, at the option of the Lender, be
sold together, in a single sale, and (b) agrees that the Lien of the
New Hancock Loan Documents as to the interests of the Borrower will
not be released, impaired or subordinated by any amendment to or
termination of any New Hancock Loan Document, any extension of time or
waiver of right or remedy under any New Hancock Loan Document, or any
other act, inaction or thing which, but for this provision, would so
release, impair or subordinate such Lien.
IN WITNESS WHEREOF, the Parties hereto have caused this
Credit Agreement to be duly executed by their respective authorized
signatories as of the day and year first above written.
BORROWER: SUN WORLD INTERNATIONAL, INC.
By: /S/ Timothy J. Shaheen
---------------------------------
Chief Executive Officer
LENDER: JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /S/ David Munro
---------------------------------------
Second Vice President
<PAGE>
SCHEDULE 1.1 (Blythe Ranch)
LEGAL DESCRIPTION OF BLYTHE RANCH
PARCEL 1
The west 30.00 feet of the North Half of the Southwest Quarter of
Section 34, Township 6 South, Range 22 East, San Bernardino Meridian,
in the County of Riverside, State of California, according to the
Official Plat thereof, which lies north of the north line of the state
highway acquired by order of condemnation, recorded March 3, 1969 as
Instrument No. 20981, Official Records.
Except that portion described by deed to the State of California
recorded May 19, 1946 as Instrument No. 2906, Official Records.
PARCEL 2
Parcels 1 through 11 inclusive and 12 through 16 inclusive of Parcel
Map 16920, in the County of Riverside, State of California, as per map
recorded in Book 112, Pages 44 through 49, inclusive of parcel maps,
in the Office of the County Recorder of said county.
Except all oil, gas, oilshale, coal, phosphate, sodium, gold, silver
and all other mineral deposits, as reserved by the State of California
in patent recorded April 8, 1954 as Instrument No. 17593, Official
Records.
PARCEL 3
A non exclusive easement for ingress, egress and public utilities and
public roads over, under and across the following described real
property, to wit:
The east 30.00 feet and the south 30.00 feet of the Northeast Quarter
of Section 18, Township 6 South; Range 22 East, San Bernardino
Meridian, in the County of Riverside, State of California, according
to the Official Plat thereof.
PARCEL 4
A non exclusive easement for ingress, egress and public utilities and
public roads over, under and across that portion Township 6 South,
Range 22 East, San Bernardino Meridian, in the County of Riverside,
State of California, described as follows:
The east 30.00 feet, the south 30.00 feet, the west 30.00 feet and the
north 30.00 feet of the Northwest Quarter of Section 17; the east
30.00 feet, the south 30.00 feet, the west 30.00 feet and the north
30.00 feet of Section 16; the south 30.00 feet of the Southeast
Quarter; the west 30.00 feet of the North Half of the Southwest
Quarter and the west 30.00 feet of the Northwest Quarter of
Section 15.
PARCEL 5
Parcels 1 through 46 inclusive of Parcel Map 14093, in the County of
Riverside, State of California, as per map recorded in Book 105,
Pages 78 through 87, inclusive of parcel maps, in the Office of the
County Recorder of said county.
PARCEL 6
The West Half of the Southeast Quarter of Section 8, Township 6 South,
Range 22 East, San Bernardino Meridian, in the County of Riverside,
State of California, according to the Official Plat thereof.
PARCEL 7
A non exclusive conditional easement and right of way over the east
30.00 feet of Sections 16, 21, 28 and that portion of Section 33,
Township 6 South, Range 22 East, San Bernardino Meridian, in the
County of Riverside, State of California, according to the Official
Plat thereof, which lies north of old California Highway 60-70 known
as Hobson Way and over the north 15.00 feet of the East Half of the
Northeast Quarter of Section 17, and over the north 15.00 feet of
Section 16, Township 6 South, Range 22 East, San Bernardino Meridian
and over the south 15.00 feet of the East Half of the Southeast
Quarter of Section 8 and over the south 15.00 feet of the West 3/4ths
of Section 9, Township 6 South, Range 22 East, San Bernardino
Meridian, upon the conditions and agreements contained in the
documents recorded January 12, 1977 as Instrument Nos. 6140, 6141 and
6142, all of Official Records, Riverside County Records.
PARCEL 8
That portion of the Northwest Quarter of Section 23, Township 6 South,
Range 22 East, San Bernardino Meridian, in the County of Riverside,
State of California, according to the Official Plat thereof, described
as follows:
Beginning at the northwest corder of said Section 23; thence south
01 18' 06" east, on the westerly line of said Section 23, 1,289.56
feet to the southwest corner of the Northwest Quarter of the Northwest
Quarter of said Section 23; thence north 88 41' 17" east on the
southerly line of said Northwest Quarter, 178.85 feet; thence north
01 49' 44" west, 1,290.32 feet to a point on the northerly line of
said Section 23; Thence south 88 26' 38" west, on the northerly line
of said Section 23, 166.98 feet to the point of beginning.
Except all mineral rights under said land, as reserved in deed
recorded June 8, 1983 as Instrument No. 112847, Official Records.
PARCEL 9
A non exclusive easement for the placement, use and maintenance of a
water transmission line across and under the following described
property:
The south 30.00 feet of the west 2,700.00 feet of Section 16,
Township 6 South, Range 22 East, San Bernardino Meridian, in the
County of Riverside, State of California, according to the Official
Plat thereof.
PARCEL 10
Parcels 1 through 4 inclusive of Parcel Map 14293, in the County of
Riverside, State of California, as per map recorded in Book 108,
Pages 11 through 20, inclusive of parcel maps, in the Office of the
County Recorder of said county.
PARCEL 11
Parcels 5 through 34, inclusive of Parcel Map 14293, in the County of
Riverside, State of California, as per map recorded in Book 108, Pages
11 through 20, inclusive of parcel maps, in the office of the County
Recorder of said county.
SCHEDULE 1.1 (Blythe Ranch)
SCHEDULE 1.1
(CROP DEVELOPMENT PLAN DATA)
(1) A summary of current land then owned or leased by each
Debtor showing in reasonable detail (i) for the Borrower and
each other Debtor individually and in the aggregate and (ii)
on a ranch by ranch basis, the following:
(a) Permanent Plantings
(b) Developing Plantings
(c) Row crop land
(d) Fallow land
(e) Facilities
(f) Other land (i.e., roads, etc.)
and for each such category further showing:
(a) The owner of such land (and lessee, if
appropriate)
(b) The crop or crops grown thereon
(c) The age of such crop
(d) The anticipated productive life of such crop
(2) A listing of any Disposition of any real estate constituting
Collateral occurring from the previous report showing in
reasonable detail the following:
(a) identity of real estate
(b) Net Sale Proceeds
(c) identity of buyer
(3) A listing of crop abandonments occurring from the previous
report showing in reasonable detail the following:
(a) identity of crop having been abandoned
(b) current use of land on which crop was abandoned
(4) A listing of any acquisitions of real estate from the
previous report.
(5) A listing of new plantings and replanting anticipated during
the immediately succeeding year, a description thereof
including location (along with revised crop map) and the
estimated cost thereof.
SCHEDULE 1.1
(CROP DEVELOPMENT PLAN DATA)
SCHEDULE 1.1 (DEBTORS)
LIST OF DEBTORS (EXCEPT BORROWER)
1. Sun Desert, Inc., a Delaware corporation as the successor to Sun
Desert, Inc., a Debtor in Possession in the Chapter 11 Case.
2. Sun World Brands, a California corporation.
3. Sun World Management Corporation, a California corporation.
4. Sun World/Rayo, a California corporation.
5. Superior Farming Europe N.V., a Netherlands Antilles corporation.
6. Superior Farming Europe B.V., a Netherlands corporation.
SCHEDULE 1.1
(LIST OF DEBTORS, EXCEPT BORROWER)
SCHEDULE 1.1 (MAKE WHOLE)
"Make Whole Amount" means an amount equal to the excess, if any,
of the Discounted Value of the Remaining Scheduled Payments with
respect to Called Principal over the amount of such Called Principal.
For purposes of determining the Make Whole Amount under this Schedule,
the following terms have the following meanings:
(a) "Applicable Spread" means as follows:
(i) Whenever either a Default or an Event of Default
has occurred and is continuing, Section 4.27
applies or the principal of the New Hancock Note
has become or is declared to be immediately due
and payable pursuant to Section 6.2, zero (0)
basis points.
(ii) Except when subsection (i) above applies, the
following:
(A) for the period from the third (3d) anniversary of
the Effective Date through and including the
fourth (4th) anniversary of the Effective Date,
two hundred and fifty (250) basis points;
(B) for the period from the fourth (4th) anniversary
of the Effective Date through and including the
fifth (5th) anniversary of the Effective Date, two
hundred (200) basis points;
(C) for the period from the fifth (5th) anniversary of
the Effective Date through and including the sixth
(6th) anniversary of the Effective Date, one
hundred and fifty basis (150) points;
(D) for the period from the sixth (6th) anniversary of
the Effective Date through and including the
seventh (7th) anniversary of the Effective Date,
one hundred (100) basis points; and
(E) thereafter, fifty (50) basis points.
(b) "Called Principal" means the principal of the New
Hancock Note that is to be prepaid or has become or is
declared to be immediately due and payable pursuant to
Section 6.2, as the context requires.
(c) "Discount Factor" means the sum of the Reinvestment
Yield plus the Applicable Spread.
(d) "Discounted Value" means, with respect to the Called
Principal, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such
Called Principal from their respective scheduled due
dates to the Settlement Date with respect to such
Called Principal, in accordance with accepted financial
practice and at the Discount Factor (applied on a
monthly basis).
(e) "Reinvestment Yield" means, with respect to the Called
Principal, the yield to maturity implied by (i) the
yields reported, as of 10:00 A.M. (New York City time)
on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Access
Service (or such other display as may replace Page 678
on Telerate Access Service) for actively traded U.S.
Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of
such Settlement Date, or (ii) if such yields are not
reported as of such time or the yields reported as of
such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for
which such yields have been so reported, as of the
second Business Day preceding the Settlement Date with
respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as
of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond equivalent yields in
accordance with accepted financial practice and (b)
interpolating linearly between (1) the actively traded
U.S. Treasury security with the maturity closest to and
greater than the Remaining Average Life and (2) the
actively traded U.S. Treasury security with the
maturity closest to and less than the Remaining Average
Life.
(f) "Remaining Average Life" means, with respect to any
Called Principal, the number of years (calculated to
the nearest one twelfth year) obtained by dividing (i)
such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such
Called Principal by (b) the number of years (calculated
to the nearest one twelfth year) that will elapse
between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining
Scheduled Payment.
(g) "Remaining Scheduled Payments" means, with respect to
the Called Principal, all payments of such Called
Principal and interest thereon that would be due after
the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were
made prior to its scheduled due date; provided that if
such Settlement Date is not a date on which interest
payments are due to be made under the terms of the New
Hancock Note, then the amount of the next succeeding
scheduled interest payment will be reduced by the
amount of interest which is accrued to such Settlement
Date and required to be paid on such Settlement Date or
which has become or is declared to be immediately due
and payable pursuant to Section 6.2, as the context
requires.
(h) "Settlement Date" means, with respect to the Called
Principal, the date on which such Called Principal is
to be prepaid or has become or is declared to be
immediately due and payable pursuant to Section 6.2, as
the context requires.
Notwithstanding anything to the contrary expressed herein,
the Make Whole Amount shall never be less than zero, and shall be zero
(0) (i) through and including the third (3d) anniversary of the
Effective Date if section (a)(ii) applies, and (ii) with respect to a
Mandatory Prepayment Payment pursuant to Section 4.24(b) hereof
received prior to an acceleration of the New Hancock Loan under
Section 6.2 hereof.
SCHEDULE 1.1 (Make Whole)
SCHEDULE 1.1 (PERMITTED INVESTMENTS)
LIST OF CERTAIN PERMITTED INVESTMENTS
AS OF THE EFFECTIVE DATE
Investment at book value
As of July 31, 1996
COMPANY
Sun Date (1) 46,523 Sun World Management
American Sunmelon (1) 1,940,883 Sun World Brands
McFarland Vineyards (8,374) Sun World International, Inc.
-----------
1,979,032
==========
Other
Trademarks & Patents 3,236,059 Sun World, Inc.
Rayo Water Rights 500,000 Sun World Rayo, Inc.
Product Sales Retention (2) 263,332 Sun World, Inc.
California Ammonia 25,000 Sun World, Inc.
---------
4,024,391
==========
(1) Sun World's interest in partnership
(2) Citrus and Raisin
Other Investment
Sun World (Europe) B.V., an inactive, limited liability company,
organized in The Netherlands. Sixty (60) percent of outstanding
stock owned by Sun World International, Inc. Control of
management requires two thirds vote of outstanding shares.
SCHEDULE 1.1 (PERMITTED INVESTMENTS)
SCHEDULE 1.1 (PERMITTED LIENS)
LIST OF CERTAIN PERMITTED LIENS
Such equipment leases listed on List B attached hereto as
may have been assumed by the Borrower in connection with the
reorganization of Old SWI and Old SWII pursuant to the Chapter 11
Case.
SCHEDULE 1.1 (PERMITTED LIENS)
Schedule 1.1 (short term water sales)
[Language for Agreements Re Short Term Spot Market Water Sales.]
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT:
1. Unless sooner terminated or expired in accordance with
the terms hereof, this agreement shall, automatically
and without further oral or written notice to anyone,
expire and be of no further force or effect on the date
which is the earlier of (a) twelve (12) calendar months
after the date hereof, and (b) the day when either
party hereto becomes aware that this agreement violates
any applicable law.
2. The parties hereto acknowledge that John Hancock Mutual
Life Insurance Company (the "Lender") has a first
priority security interest and lien in the water and/or
water rights covered by this agreement, and
accordingly, the rights, titles and interests of the
transferee of the water and/or water rights covered by
this agreement are subject and subordinate to such
first lien security interest, and this agreement shall
not be amended or modified in any way without the
Lender's prior written consent, which consent the
Lender may deny, withhold or delay in its sole and
absolute discretion. Under no circumstances shall this
agreement be deemed to create, nor shall buyer
otherwise be deemed to hold by reason of the
transactions contemplated hereby or the performance or
nonperformance of either party hereunder, any security
interest or lien upon all or any portion of the assets
of seller (including, without limitation, the water
and/or water rights that are the subject of this
agreement).
3. Any provision herein or any other actual or purported
agreement between the parties hereto that is contrary
to, or inconsistent with, paragraphs 1 and 2 above
shall be null and void, and of no force and effect.
Schedule 1.1 (short erm water sales)
SCHEDULE 2.10
[HANCOCK WIRE TRANSFER INSTRUCTIONS]
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
All payments on account of the New
Hancock Note shall be made in
immediately available funds at the
opening of business on the due date
via electronic funds transfer,
properly identified, through the
Automated Clearing House system to
the following account:
Federal Reserve Bank of Chicago for
the account of Bank Illinois,
Champaign, Illinois (0711 0199 6)
For further credit to
John Hancock Mutual Life Insurance
Company,
Loan Number 163335
All payments shall reference the New Hancock Note and shall
include a breakdown of the amount of principal (including
referencing whether such payment is a prepayment of principal),
interest and Make Whole Amount, if any, in the wire transfer
instructions.
SCHEDULE 2.10
(HANCOCK WIRE TRANSFER INSTRUCTIONS)
SCHEDULE 2.13
AMORTIZATION SCHEDULE
Principal Amount $91,083,853.95
DUE DATE SCHEDULED PRINCIPAL PAYMENT
Effective Date 1,518,064.23
1/1/1997 1,518,064.23
4/1/1997 1,518,064.23
9/1/1997 1,518,064.23
1/1/1998 1,518,064.23
4/1/1998 1,518,064.23
9/1/1998 1,518,064.23
1/1/1999 1,518,064.23
4/1/1999 1,518,064.23
9/1/1999 2,277,096.35
1/1/2000 2,277,096.35
4/1/2000 2,277,096.35
9/1/2000 2,277,096.35
1/1/2001 2,277,096.35
4/1/2001 2,277,096.35
9/1/2001 2,277,096.35
1/1/2002 2,277,096.35
4/1/2002 2,277,096.35
9/1/2002 2,277,096.35
1/1/2003 2,277,096.35
4/1/2003 2,277,096.35
9/1/2003 2,277,096.35
1/1/2004 2,277,096.35
4/1/2004 2,277,096.35
9/1/2004 2,277,096.35
1/1/2005 2,277,096.35
4/1/2005 2,277,096.35
9/1/2005 2,277,096.35
1/1/2006 2,277,096.35
4/1/2006 2,277,096.35
9/1/2006 2,277,096.35
9/13/2006 27,325,156.18
SCHEDULE 2.13
(AMORTIZATION SCHEDULE)
SCHEDULE 3.4 (LITIGATION)
PENDING AND THREATENED LITIGATION
See attached list.
SCHEDULE 3.4 (LITIGATION)
(PENDING AND THREATENED LITIGATION)
SCHEDULE 3.5
ERISA PLAN TERMINATIONS
Subsequent to execution of the Amended and Restated
Credit Agreement, in December, 1989, with Caisse Nationale de
Credit Agricole, Sun World terminated the Superior Farming
Company money purchased pension plans for salaried and hourly
employees. Form 5500's for each plan for the years 1991, 1992
and 1993 have previously been provided to Lender.
During 1994, Sun World terminated its participation in
the multi employer Western Growers Pension trust.
SCHEDULE 3.5
(ERISA PLAN TERMINATIONS)
SCHEDULE 3.11
COLLECTIVE BARGAINING AGREEMENTS
The following collective bargaining agreements have
been entered into by Debtors; in addition, a collective
bargaining agreement to which Coachella Growers is a party has
been included although Coachella Growers is not a Debtor.
1. Collective Bargaining Agreement Between Coachella
Growers and United Farm Workers of America, AFL CIO (Sun Desert
Ranch in Blythe, CA) effective August 21, 1995.
2. Collective Bargaining Agreement Between Sun
Desert, Inc. and United Farm Workers of America, AFL CIO,
effective November 12, 1995.
3. Collective Bargaining Agreement Between Sun World,
Inc. and United Farm Workers of America, AFL CIO, effective
February 1, 1995.
SCHEDULE 3.11
(COLLECTIVE BARGAINING AGREEMENTS)
SCHEDULE 3.15
LIST OF BORROWER AND ALL SUBSIDIARIES
See attached data.
SCHEDULE 3.15
(LIST OF BORROWERS AND ALL SUBSIDIARIES)
SCHEDULE 3.16
LIST OF PROPERTIES AND ASSETS
See attached lists.
SCHEDULE 3.16
(LIST OF PROPERTIES AND ASSETS)
SCHEDULE 4.3(b)(xvi)
(LIST OF KEY MAN INSURANCE POLICIES)
1. Philadelphia Life Insurance Company, Policy No. 8404003;
Insured: Howard P. Marguleas; Face Amount: $7,000,000.
2. Aurora National Life Assurance Company, Policy No.
C11634064L; Insured: Howard P. Marguleas; Face Amount:
$1,000,000.
3. Aurora National Life Assurance Company, Policy No.
C11640005L; Insured: Howard P. Marguleas; Face Amount:
$5,000,000.
SCHEDULE 4.3(b)(xvi)
(LIST OF KEY MAN INSURANCE POLICIES)
SCHEDULE 4.6(c)
LIST OF JOINT VENTURES
Sun Date, a general partnership.
American Sunmelon, a general partnership.
Sun World/North, a general partnership.
Sun World (Europe), B.V., a limited liability company.
SCHEDULE 4.6(c)
(LIST OF JOINT VENTURES)
NEW HANCOCK CREDIT AGREEMENT
SCHEDULE 4.7
DEBT
CERTAIN CLAIMS AND OBLIGATIONS OF THE BORROWER ARISING UNDER THE
PLAN (All capitalized terms used below shall have the respective
meanings given to such terms in the Plan.)
I. Administrative Claims
II. Tax Claims
III. Weyerhaeuser's Allowed Secured Claim
IV. Allowed Other Secured Claims
V. Allowed Unsecured Claims
VI. Class 6 Claims
VII. Class 8 Claims
(The funds to pay Class 6 and 8 claims, including, without
limitation, any amount payable to LSL Biotechnologies, Inc.
pursuant to a settlement of its claims or otherwise, with respect
to its pre petition claims against the Debtors, shall be provided
by Cadiz and such funds shall ultimately be disbursed through Sun
World's Unsecured Claims Disbursement Account)
SCHEDULE 4.18
LIST OF EXISTING ERISA PLANS
See attached list.
SCHEDULE 4.18
(LIST OF EXISTING ERISA PLANS)
SCHEDULE 4.24(b)(iv)
SUN WORLD
Farming Enterprise
Source: 1996 Budget
LIST OF DIRECT EXPENSES:
Fertilization
Weed Control/Hoeing
Cultivation
Irrigation
Insect & Disease Control
Repair Trellis, Wire & Stakes
Pruning, Tying and Training
Thinning
Fruit Enlarge/Pollin/Growth Hormone
Girdling
Irrigation Equipment Expense
Cover Crop & Brush Removal
Budding and Grafting (with respect to row crops only)
Stump Suckering
Drop Bunch/Crown Sucker/Side Lateraling
Cane Turning/Leafing/Cane Trimming
Land Preparation (with respect to row crops only)
Cost of Seed, Trees or Plants (with respect to row crops only)
Planting (with respect to row crops only)
Frost Protection
Fumigation
Tissue Cultures (with respect to row crops only)
Harvest/Haul/Pack
SCHEDULE 4.24(b)(iv)
SCHEDULE 4.30
Required Minimum Permanent Crop Capital Expenditures
By Calendar Year:
CALENDAR YEAR ENDED DEC. 31: MINIMUM $ AMOUNT
1996 $0 (from Effective Date to year end)
1997 $1,200,000
1998 $1,500,000
1999 $1,800,000
2000 $2,000,000
2001 $2,000,000
2002 $2,000,000
2003 $2,000,000
2004 $2,000,000
2005 $2,000,000
2006 and thereafter $2,000,000
SCHEDULE 4.30
SCHEDULE 4.32
(AURORA INSURANCE PREMIUMS)
DUE DATE NOVEMBER 27: DOLLAR AMOUNT
1999 $138,019
2000 $151,821
2001 $167,003
2002 $183,704
2003 $202,074
2004 $222,281
2005 $244,509
SCHEDULE 4.32
(AURORA INSURANCE PREMIUMS)
SCHEDULE 5.1(j)
CORPORATE ACTIONS
(i) resolutions of the Board of Directors of each
of Cadiz, Borrower and each Debtor guarantor authorizing (a) the
execution, delivery and performance of such of the New Hancock
Loan Documents as have been or are to be executed by such Person,
(b) the consummation of the transactions contemplated hereby and
thereby, and (c) all other actions to be taken by such Person in
connection herewith, each certified by the secretary or an
assistant secretary of such Person as being in full force and
effect, without amendment, as of the Effective Date;
(ii) a certificate of the Secretary or Assistant
Secretary of each of Cadiz, Borrower and each Debtor guarantor
certifying the incumbency, names and true signatures of the
officers of such Person authorized to sign such of the Loan
Documents to which such Person is or is to become a party
pursuant hereto;
(iii) a copy of each of (a) the Certificate or
Articles of Incorporation and (b) bylaws of each of Cadiz,
Borrower and each Debtor guarantor, certified by the Secretary or
an Assistant Secretary of such Person as being a true and
complete copy thereof, including all amendments, as in full force
and effect on the Effective Date and after giving effect to the
Merger;
(iv) a certificate or certificates of the
Secretary of State or other appropriate official of the State of
incorporation of each of Cadiz, Borrower and each Debtor
guarantor, and of each other State in which such Person is
qualified to do business, dated as of a date close to the
Effective Date, to the effect that (a) such Person is validly
existing (or qualified to do business, as the case may be) and in
good standing in such State, or the equivalent thereof, and (b)
if generally available in such State, to the effect that such
Person is in good standing with the tax authorities of such
State, or the equivalent thereof; and
(v) A copy of the Agreement of Merger between Old
SWI and Old SWII giving effect to the Merger, certified by the
Secretary of State of the State of Delaware as being a true and
correct copy of the original, as filed.
SCHEDULE 5.1(j)
(CORPORATE ACTIONS)
SCHEDULE 5.1(v)
RELEASES
1. BORROWER. Borrower and each of Borrower's
Subsidiaries, on behalf of themselves and their respective
controlled Affiliates and their and such Affiliates' respective
predecessors, successors and assigns on one hand, and Lender on
the other shall have executed and delivered mutual general
releases of each other and their respective stockholders,
directors, employees, agents, representatives and attorneys, and
the predecessors, successors, assigns and personal
representatives of each of the foregoing Persons, with respect to
any and all claims and other obligations or liabilities, of any
nature whatsoever, whether known or unknown, in any way relating
to the credit relationship between Lender and Borrower and any of
its Affiliates, or to the Debtors' bankruptcy proceedings, and
arising from any action or omission occurring on or before the
Effective Date; provided, however, that such releases shall not
include any claims, obligations or liabilities arising under
documents executed in connection with the consummation of the
Plan.
2. CREDIT AGRICOLE. Credit Agricole on one hand, and
Lender on the other, shall have executed and delivered mutual
general releases of each other and their respective stockholders,
directors, employees, agents, representatives and attorneys, and
the predecessors, successors, assigns and personal
representatives of each of the foregoing Persons, with respect to
any and all claims and other obligations or liabilities, of any
nature whatsoever, whether known or unknown, in any way relating
to their respective claims against Borrower or any Affiliate of
Borrower, or to the Debtors' bankruptcy proceedings, and arising
from any action or omission occurring on or before the Effective
Date; provided, however, that such releases shall not include any
claims, obligations or liabilities arising under documents
executed in connection with the consummation of the Plan.
3. FORMER STOCKHOLDERS. Each of the former
stockholders of Old SWII (except the Robert and Charlotte J. Nies
Revocable Trust dated 6 15 88), on behalf of themselves and their
respective controlled Affiliates and their and such Affiliates'
respective predecessors, successor and assigns on one hand, and
Lender on the other shall have executed and delivered mutual
general releases of each other and their respective stockholders,
directors, employees, agents, representatives and attorneys, and
the predecessors, successor, assigns and personal representatives
of each of the foregoing Person, with respect to any and all
claims and other obligations or liabilities, of any nature
whatsoever, whether known or unknown, in any way relating to the
credit relationship between Lender and Borrower and any of its
Affiliates, to any transaction between Borrower or any of its
Affiliates and such other Person, or to the Debtors' bankruptcy
proceedings, and arising from any action or omission occurring on
or before the Effective Date; provided, however, that such
releases shall not include any claims, obligations or liabilities
arising under documents executed in connection with the
consummation of the Plan.
4. ZENITH. Zenith, on behalf of itself and its
respective controlled Affiliates and its and such Affiliates'
respective predecessors, successors and assigns on one hand, and
Lender on the other shall have executed and delivered mutual
general releases of each other and their respective stockholders,
directors, employees, agents, representatives and attorneys, and
the predecessors, successors, assigns and personal
representatives of each of the foregoing Persons, with respect to
any and all claims and other obligations or liabilities, of any
nature whatsoever, whether known or unknown, in any way relating
to the credit relationship between Lender and Borrower and any of
its Affiliates, to the transactions between Zenith and Borrower
or any of its Affiliates, or to the Debtors' bankruptcy
proceedings, and arising from any action or omission occurring on
or before the Effective Date; provided, however, that such
releases shall not include any claims, obligations or liabilities
arising under documents executed in connection with the
consummation of the Plan.
5. CADIZ. Cadiz, on behalf of itself and its
controlled Affiliates and its and such Affiliates' respective
predecessors, successors and assigns on one hand, and Lender on
the other shall have executed and delivered mutual general
releases of each other and their respective stockholders,
directors, employees, agents, representatives and attorneys, and
the predecessors, successors, assigns and personal
representatives of each of the foregoing Persons, with respect to
any and all claims and other obligations or liabilities, of any
nature whatsoever, whether known or unknown, in any way relating
to the Acquisition, the Merger or the other transactions
contemplated thereby, or to the credit relationship between
Lender and Borrower and any of its Affiliates, or to the Debtors'
bankruptcy proceedings, in each case, arising from any action or
omission occurring on or before the Effective Date; provided,
however, that such releases shall not include any claims,
obligations or liabilities arising under documents executed in
connection with the consummation of the Plan.
SCHEDULE 5.1(v)
(RELEASES)<PAGE>
SCHEDULE 7.1
(ADDRESSES)
Borrower: Sun World International, Inc.
5544 California Avenue, #280
Bakersfield, California 93309
Attention: Chief Executive Officer
FAX: (800) 225 2487
With a copy to: Cadiz Land Company, Inc.
1330 Parkview Avenue
Manhattan Beach, California 90266
Attn: Keith Brackpool
FAX: (310) 546 7542
and
Miller & Holguin
1801 Century Park East, 7th Floor
Los Angeles, California 90067
Attn: Howard Unterberger, Esq.
FAX: (310) 557 2205
Lender: John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attn: Bond and Corporate Finance Group,
Agricultural Team, T 57
FAX: (617) 572 1606
With a copy to: Office Manager
John Hancock Mutual Life Insurance Company
1900 Point West Way
Suite 188
Sacramento, California 95818
FAX: (916) 922 6554
and
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Attention: Investment Law, T 50
FAX: (617) 572 9268
and
Tuttle & Taylor
355 South Grand Avenue
40th Floor
Los Angeles, California 90071 3101
Attn: Charles L. Woltmann, Esq.
FAX: (213) 683 0225
SCHEDULE 7.1
(ADDRESSES)
SECURED PROMISSORY NOTE
$ [Principal Amount] ________________, California
[Effective Date], 1996
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of
which is hereby acknowledged, SUN WORLD INTERNATIONAL, INC., a
Delaware corporation and the successor by merger to Sun World
International, Inc. and Sun World, Inc. ("Borrower"), hereby
promises to pay to JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a
Massachusetts mutual life insurance company, or registered
assigns (collectively "Lender"), in lawful money of the United
States of America, the principal sum of [insert Principal
Amount] Dollars ($____________), together with
interest on the unpaid principal amount from the date hereof as
specified below and at the place and in the manner provided in
the Credit Agreement referred to below. Under certain
circumstances, such Credit Agreement provides for the making of a
Re advance. The Re Advance, if made, shall constitute a portion
of the outstanding principal of the New Hancock Loan and of this
Note, and Borrower's obligation to repay the Re Advance shall be
evidenced by this Note.
This Secured Promissory Note (the "Note") is the New
Hancock Note referred to in that certain New Hancock Credit
Agreement dated as of the Effective Date between Borrower and
Lender (as modified and supplemented and in effect from time to
time, the "Credit Agreement"). Terms used but not otherwise
defined herein shall have the meanings ascribed to them in the
Credit Agreement. Reference should be made to such Credit
Agreement for additional provisions pertaining to this Note, the
repayment or prepayment hereof, the principal amortization and
interest due hereunder, the enforcement and administration
hereof, and otherwise.
Principal and interest due under this Note shall be
paid and (when paid) applied in accordance with the Credit
Agreement, including, without limitation, Sections 2.10 through
2.13 (inclusive). Subject to the Maximum Rate (as defined in the
Credit Agreement), interest due hereunder shall accrue in
accordance with Section 2.11 of the Credit Agreement at the
Interest Rate or the Default Rate. The Interest Rate hereunder
is ten and six tenths percent (10.6%) per annum, and the Default
Rate is the greater of (i) twelve and six tenths percent (12.6%)
per annum, and (ii) the sum of the Credit Agricole Prime Rate (as
such term is defined in the Credit Agreement) plus four hundred
(400) basis points.
EXHIBIT A
Upon any Event of Default as defined under the Credit
Agreement or any other New Hancock Loan Document, as set forth in
Section 6.2 of the Credit Agreement either (i) Lender shall have
the right, upon written notice to Borrower, to declare the
entire, unpaid balance hereof, together with all accrued and
unpaid interest hereon, immediately due and payable, whereupon
such balance and interest shall be immediately due and payable,
or (ii) such balance and interest shall automatically be
immediately due and payable.
Whenever the maturity of this Note has been accelerated
automatically or by Lender or otherwise, a tender of the amount
necessary to satisfy the entire indebtedness evidenced hereby,
paid at any time following such acceleration and prior to a
foreclosure or trustee's sale, shall include a Make Whole Amount.
Furthermore, upon a purchase by any Person at a foreclosure sale
or trustee's sale of any of the Collateral following such
acceleration, the Lender hereof shall, to the extent permitted by
Law, receive out of the proceeds of such sale as indebtedness due
under this Note, in addition to all other amounts to which Lender
is entitled, a Make Whole Amount.
This Note is secured by the New Hancock Security
Documents. Further reference is made to the Credit Agreement and
to such New Hancock Security Documents for events or conditions
upon the occurrence of which Lender will have the right to
accelerate the maturity of this Note and require immediate
payment of all outstanding principal and accrued and unpaid
interest hereon. The rights and remedies of Lender as provided
herein, in the New Hancock Loan Documents and otherwise by Law,
shall be cumulative and concurrent, may be pursued singularly,
successively or together at the sole and absolute discretion of
Lender, and may be exercised as often as occasion therefor may
arise.
Borrower, any and all endorsers and guarantors hereof
and all other Persons who may become liable for all or any part
of the indebtedness evidenced by this Note hereby jointly and
severally waive presentment and demand for payment, notice of
dishonor, protest and notice of protest and any and all lack of
diligence or delay in the collection or enforcement hereof, and
further hereby agree that any waiver, modification, forbearance
or extension of the terms of payment made by Lender at the
request of any Person liable hereon shall not diminish or impair
the liability of any of them for the payment hereof.
Borrower shall pay any and all costs and expenses,
including, without limitation, attorneys' fees, incurred by
Lender in collecting amounts due hereunder or enforcing any of
Lender's rights or remedies provided in this Note, the New
Hancock Loan Documents or otherwise at Law, whether or not suit
is filed thereon; and every amount of such cost or expenses shall
bear interest from the date Lender incurs the same, at the
Interest Rate or (if applicable) the Default Rate.
THIS NOTE AND ANY OTHER NEW HANCOCK LOAN DOCUMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA (WITHOUT REGARD TO ANY PRINCIPLES OF
CONFLICTS OF LAW).
BORROWER HEREBY CONSENTS AND SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE COURTS IN THE
STATE OF CALIFORNIA FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS NOTE AND THE OTHER NEW HANCOCK LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
BORROWER AGREES THAT SUCH COURTS SHALL HAVE JURISDICTION FOR ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS NOTE AND ANY
OTHER NEW HANCOCK LOAN DOCUMENT. BORROWER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OUT OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE RESPECTIVE
PARTY AT ITS ADDRESS FOR NOTICES PURSUANT TO SECTION 7.1 OF THE
CREDIT AGREEMENT IN ACCORDANCE WITH THE RULES OF THE COURT.
NOTHING HEREIN SHALL ADVERSELY AFFECT THE RIGHT OF LENDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER OR
THE COLLATERAL IN ANY OTHER JURISDICTION.
BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS NOTE OR ANY OTHER NEW HANCOCK LOAN DOCUMENT OR
INSTRUMENT ATTACHED HERETO OR THERETO, REFERRED TO HEREIN OR
THEREIN, OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR
(ii) IN ANY WAY CONNECTED HEREWITH OR THEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND BORROWER HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT EACH PARTY TO THE CREDIT AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY GOVERNMENTAL BODY
AS WRITTEN EVIDENCE OF THE CONSENT OF BORROWER TO THE WAIVER OF
BORROWER'S RIGHTS TO TRIAL BY JURY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER MAKING THE NEW HANCOCK LOAN TO BORROWER.
LENDER'S INITIALS: ; BORROWER'S INITIALS: .
This Note is a registered note and, as provided in the
Credit Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument
of transfer duly executed, by the registered holder hereof or
such holder's attorney duly authorized in writing, a new note for
a like principal amount will be issued to, and registered in the
name of, the transferee. Prior to due presentment for
registration of transfer, the Borrower may treat the Person in
whose name this Note is registered as the owner hereof for the
purpose of receiving payment and for all other purposes, and the
Borrower will not be affected by any notice to the contrary.
This Note, which replaces the Original Note, has been
executed and delivered in connection with the restructuring of
the Original Loan and the loan documentation related thereto,
including, without limitation, the Original Credit Agreement, all
pursuant to the Plan and the Final Order. Such restructuring is
not intended to effect a novation of the obligations of the
Borrower or any other obligors to Lender under the Original Loan,
which obligations (as modified by the New Hancock Loan Documents)
shall survive the execution and delivery of the New Hancock Loan
Documents.
SUN WORLD INTERNATIONAL, INC., a
Delaware corporation
By: /S/
--------------------------------
Name:
Title:
EXHIBIT 10.4
-----------
SECURED PROMISSORY NOTE
$ 91,083,853.95 Los Angeles, California
Principal Amount September 13, 1996
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which
is hereby acknowledged, SUN WORLD INTERNATIONAL, INC., a Delaware
corporation and the successor by merger to Sun World International,
Inc. and Sun World, Inc. ("Borrower"), hereby promises to pay to
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, a Massachusetts mutual
life insurance company, or registered assigns (collectively
"Lender"), in lawful money of the United States of America, the
principal sum of Ninety One Million Eighty Three Thousand Eight
Hundred Fifty Three Dollars and Ninety Five Cents ($91,083,853.95),
together with interest on the unpaid principal amount from the date
hereof as specified below and at the place and in the manner
provided in the Credit Agreement referred to below. Under certain
circumstances, such Credit Agreement provides for the making of a
Re advance. The Re Advance, if made, shall constitute a portion of
the outstanding principal of the New Hancock Loan and of this Note,
and Borrower's obligation to repay the Re Advance shall be
evidenced by this Note.
This Secured Promissory Note (the "Note") is the New
Hancock Note referred to in that certain New Hancock Credit
Agreement dated as of the Effective Date between Borrower and
Lender (as modified and supplemented and in effect from time to
time, the "Credit Agreement"). Terms used but not otherwise
defined herein shall have the meanings ascribed to them in the
Credit Agreement. Reference should be made to such Credit Agreement
for additional provisions
pertaining to this Note, the repayment or prepayment hereof, the
principal amortization and interest due hereunder, the enforcement
and administration hereof, and otherwise.
Principal and interest due under this Note shall be paid
and (when paid) applied in accordance with the Credit Agreement,
including, without limitation, Sections 2.10 through 2.13
(inclusive) thereof. Subject to the Maximum Rate (as defined in
the Credit Agreement), interest due hereunder shall accrue in
accordance with Section 2.11 of the Credit Agreement at the
Interest Rate or the Default Rate. The Interest Rate hereunder is
ten and six tenths percent (10.6%) per annum, and the Default Rate
is the greater of (i) twelve and six tenths percent (12.6%) per
annum, and (ii) the sum of the Credit Agricole Prime Rate (as such
term is defined in the Credit Agreement) plus four hundred (400)
basis points.
Upon any Event of Default as defined under the Credit
Agreement or any other New Hancock Loan Document, as set forth in
Section 6.2 of the Credit Agreement either (i) Lender shall have
the right, upon written notice to Borrower, to declare the entire,
unpaid balance hereof, together with all accrued and unpaid
interest hereon, immediately due and payable, whereupon such
balance and interest shall be immediately due and payable, or (ii)
such balance and interest shall automatically be immediately due
and payable.
Whenever the maturity of this Note has been accelerated
automatically or by Lender or otherwise, a tender of the amount
necessary to satisfy the entire indebtedness evidenced hereby, paid
at any time following such acceleration and prior to a foreclosure
or trustee's sale, shall include a Make Whole Amount. Furthermore,
upon a purchase by any Person at a foreclosure sale or trustee's
sale of any of the Collateral following such acceleration, the
Lender hereof shall, to the extent permitted by Law, receive out of
the proceeds of such sale as indebtedness due under this Note, in
addition to all other amounts to which Lender is entitled, a Make
Whole Amount.
This Note is secured by the New Hancock Security
Documents. Further reference is made to the Credit Agreement and
to such New Hancock Security Documents for events or conditions
upon the occurrence of which Lender will have the right to
accelerate the maturity of this Note and require immediate payment
of all outstanding principal and accrued and unpaid interest
hereon. The rights and remedies of Lender as provided herein, in
the New Hancock Loan Documents and otherwise by Law, shall be
cumulative and concurrent, may be pursued singularly, successively
or together at the sole and absolute discretion of Lender, and may
be exercised as often as occasion therefor may arise.
Borrower, any and all endorsers and guarantors hereof and
all other Persons who may become liable for all or any part of the
indebtedness evidenced by this Note hereby jointly and severally
waive presentment and demand for payment, notice of dishonor,
protest and notice of protest and any and all lack of diligence or
delay in the collection or enforcement hereof, and further hereby
agree that any waiver, modification, forbearance or extension of
the terms of payment made by Lender at the request of any Person
liable hereon shall not diminish or impair the liability of any of
them for the payment hereof.
Borrower shall pay any and all costs and expenses,
including, without limitation, attorneys' fees, incurred by Lender
in collecting amounts due hereunder or enforcing any of Lender's
rights or remedies provided in this Note, the New Hancock Loan
Documents or otherwise at Law, whether or not suit is filed
thereon; and every amount of such cost or expenses shall bear
interest from the date Lender incurs the same, at the Interest Rate
or (if applicable) the Default Rate.
THIS NOTE AND ANY OTHER NEW HANCOCK LOAN DOCUMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF CALIFORNIA (WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS
OF LAW).
BORROWER HEREBY CONSENTS AND SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ALL FEDERAL AND STATE COURTS IN THE STATE OF
CALIFORNIA FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS NOTE AND THE OTHER NEW HANCOCK LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BORROWER AGREES
THAT SUCH COURTS SHALL HAVE JURISDICTION FOR ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS NOTE AND ANY OTHER NEW HANCOCK
LOAN DOCUMENT. BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE RESPECTIVE PARTY AT ITS
ADDRESS FOR NOTICES PURSUANT TO SECTION 7.1 OF THE CREDIT AGREEMENT
IN ACCORDANCE WITH THE RULES OF THE COURT. NOTHING HEREIN SHALL
ADVERSELY AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE BORROWER OR THE COLLATERAL IN ANY
OTHER JURISDICTION.
BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS NOTE OR ANY OTHER NEW HANCOCK LOAN DOCUMENT OR
INSTRUMENT ATTACHED HERETO OR THERETO, REFERRED TO HEREIN OR
THEREIN, OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR (ii)
IN ANY WAY CONNECTED HEREWITH OR THEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO, IN EACH CASE WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE; AND BORROWER HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT EACH PARTY
TO THE CREDIT AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION WITH ANY GOVERNMENTAL BODY AS WRITTEN EVIDENCE OF
THE CONSENT OF BORROWER TO THE WAIVER OF BORROWER'S RIGHTS TO TRIAL
BY JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER MAKING
THE NEW HANCOCK LOAN TO BORROWER.
LENDER'S INITIALS:-------; BORROWER'S INITIALS:---------.
This Note is a registered note and, as provided in the
Credit Agreement, upon surrender of this Note for registration of
transfer, duly endorsed, or accompanied by a written instrument of
transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new note for a like
principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of
transfer, the Borrower may treat the Person in whose name this Note
is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Borrower will not be
affected by any notice to the contrary.
This Note, which replaces the Original Note, has been
executed and delivered in connection with the restructuring of the
Original Loan and the loan documentation related thereto,
including, without limitation, the Original Credit Agreement, all
pursuant to the Plan and the Final Order. Such restructuring is
not intended to effect a novation of the obligations of the
Borrower or any other obligors to Lender under the Original Loan,
which obligations (as modified by the New Hancock Loan Documents)
shall survive the execution and delivery of the New Hancock Loan
Documents.
SUN WORLD INTERNATIONAL, INC., a
Delaware corporation
By: /S/ Timothy J. Shaheen
-------------------------------
Title: Chief Executive Officer
------------------------------
