-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JaZ3nQ7309Pvj0yZ53+w50HK27sA9AcTUJvcnSa6K6PAYgJsH++9T37ywN0kzCIg VGKXvUuSosRDxCUDzJ3A/g== 0000727273-96-000006.txt : 19960221 0000727273-96-000006.hdr.sgml : 19960221 ACCESSION NUMBER: 0000727273-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960220 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CADIZ LAND CO INC CENTRAL INDEX KEY: 0000727273 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE SERVICES [0700] IRS NUMBER: 770313235 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12114 FILM NUMBER: 96523291 BUSINESS ADDRESS: STREET 1: 10535 FOOTHILL BLVD STE 150 CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91730 BUSINESS PHONE: 9099802738 MAIL ADDRESS: STREET 1: 10535 FOOTHILL BLVD SUITE 150 CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91730 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC AGRICULTURAL HOLDINGS INC DATE OF NAME CHANGE: 19920602 FORMER COMPANY: FORMER CONFORMED NAME: ARIDTECH INC DATE OF NAME CHANGE: 19880523 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from............to............ Commission File Number 0-12114 -------------- CADIZ LAND COMPANY, INC. (Exact name of registrant specified in its charter) DELAWARE 77-0313235 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 10535 Foothill Boulevard, Suite 150 Rancho Cucamonga, CA 91730 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (909) 980-2738 -------------- Securities Registered Pursuant to Section 12(b) of the Act: None Name of Each Exchange Title of Each Class on Which Registered ------------------- ------------------- None None Securities Registered Pursuant to Section 12(g) of the Act: Common Stock (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- The number of shares outstanding of each of the Registrant's classes of Common Stock at February 16, 1996 was 18,322,611 shares of Common Stock, par value $0.01. CADIZ LAND COMPANY, INC. For the Nine Months Ended December 31, 1995 TABLE OF CONTENTS ----------------- Page(s) ------- I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS A. Balance Sheet . . . . . . . . . . . . . . . . 1-2 B. Statement of Cash Flows . . . . . . . . . . . . 3 C. Statement of Operations . . . . . . . . . . . . 4-5 D. Statement of Stockholders' Equity . . . . . . . 6 E. Notes . . . . . . . . . . . . . . . . . . . . . 7-9 II. SUPPLEMENTARY INFORMATION A. Management's Discussion and Analysis of Financial Condition and Results of Operations . . 10-20 B. Other Information . . . . . . . . . . . . . . . . 21-22 C. Signatures . . . . . . . . . . . . . . . . . . . . 23 CADIZ LAND COMPANY, INC. Condensed Consolidated Balance Sheet Assets (in thousands)
December 31, March 31, 1995 1995 ----------- --------- (unaudited) Cash (Note 3) $ 2,600 $ 2,454 Accounts receivable 402 131 Inventory 188 198 Property and equipment, net 2,216 2,308 Land and improvements: Developed property, net 9,515 9,715 Unimproved land 12,012 11,792 Water transfer projects 2,392 1,764 Excess of purchase price over net assets acquired, net 5,214 5,389 Debt issue costs and other assets 955 1,137 ------- ------- $35,494 $34,888 ------- ------- ------- ------- See accompanying notes to the consolidated financial statements.
CADIZ LAND COMPANY, INC. Condensed Consolidated Balance Sheet Liabilities and Stockholders' Equity (in thousands except number of shares)
December 31, March 31, 1995 1995 ----------- --------- (unaudited) Accounts payable $ 857 $ 1,174 Other liabilities 493 385 Debt 17,308 16,381 Contingencies (Note 5) Stockholders' equity: Common stock - $.01 par value; shares issued and outstanding - 18,322,611 at December 31, 1995 and 16,988,454 at March 31, 1995 183 170 Additional paid-in capital 67,908 62,687 Accumulated deficit (51,255) (45,909) ------- ------- Total stockholders' equity 16,836 16,948 ------- ------- $35,494 $34,888 ------- ------- ------- ------- See accompanying notes to the consolidated financial statements.
CADIZ LAND COMPANY, INC. Condensed Consolidated Statement of Cash Flows (in thousands) (unaudited)
Nine Months Ended December 31, ---------- 1995 1994 ---- ---- Cash flows from operating activities: Loss from continuing operations $(5,346) $(3,250) Adjustments to reconcile loss from continuing operations to net cash used for continuing operating activities: Depreciation and amortization 1,427 1,085 Interest capitalized to debt 380 651 Extraordinary gain on debt settlement - (115) The effect on net cash used for continuing operating activities from changes in assets and liabilities: Inventory and accounts receivable (262) 96 Debt issue costs and other assets (253) (196) Accounts payable and other liabilities (209) (841) ------ ------ Net cash used for continuing operating activities (4,263) (2,570) Net cash provided by discontinued operating activities - 57 ------ ------ Net cash used for operating activities (4,263) (2,513) ------ ------ Cash flows from investing activities: Land purchase and development (331) (342) Water transfer projects (628) (973) Additions to property and equipment (217) (563) ------ ------ Net cash used for investing activities (1,176) (1,878) ------ ------ Cash flows from financing activities: Net proceeds from issuance of common stock 5,234 2,088 Proceeds from issuance of debt 376 - Principal payments on debt (25) (399) ------ ------ Net cash provided by financing activities 5,585 1,689 ------ ------ Net increase (decrease) in cash 146 (2,702) Cash, beginning of year 2,454 4,408 ------ ------ Cash, end of period $2,600 $1,706 ------ ------ ------ ------ See accompanying notes to the consolidated financial statements.
CADIZ LAND COMPANY, INC. Condensed Consolidated Statement of Operations (in thousands except per share data) (unaudited)
Three Months Ended December 31, ----------- 1995 1994 ---- ---- Revenues $ 470 $ 383 ------- ------- Costs and expenses: Resource development 967 702 Landfill prevention activities (Note 5) 140 - General and administrative 514 312 Amortization 58 58 ------- ------- 1,679 1,072 ------- ------- Operating loss (1,209) (689) Interest expense, net 451 315 ------- ------- Net loss $(1,660) $(1,004) ------- ------- ------- ------- Loss per share: Net loss per share $ (0.10) $ (0.06) ------- ------- ------- ------- See accompanying notes to the consolidated financial statements.
CADIZ LAND COMPANY, INC. Condensed Consolidated Statement of Operations (in thousands except per share data) (unaudited)
Nine Months Ended December 31, ------------ 1995 1994 ---- ---- Revenues $ 1,120 $ 448 ------- ------- Costs and expenses: Resource development 2,881 1,604 Landfill prevention activities (Note 5) 671 - General and administrative 1,405 1,134 Amortization 175 175 ------- ------- 5,132 2,913 ------- ------- Operating loss (4,012) (2,465) Interest expense, net 1,334 900 ------- ------- Loss before extraordinary item (5,346) (3,365) Extraordinary item: Gain on debt settlement - 115 ------- ------- Net loss $(5,346) $(3,250) ------- ------- ------- ------- Loss per share: Loss before extraordinary item $ (0.31) $ (0.21) Extraordinary item - 0.01 ------- ------- Net loss per share $ (0.31) $ (0.20) ------- ------- ------- ------- See accompanying notes to the consolidated financial statements.
CADIZ LAND COMPANY, INC. Condensed Consolidated Statement of Stockholders' Equity For the Nine months Ended December 31, 1995 (in thousands except number of shares) (unaudited)
Total Common Stock Paid-In Accumulated Stockholders' Shares Amount Capital Deficit Equity ------ ------ ------- ------- ------ Balance as of March 31, 1995 16,988,454 $170 $62,687 $(45,909) $16,948 Exercise of stock options (Note 4) 120,000 1 301 302 Issuance of shares in connection with private placement (Note 4) 1,214,157 12 4,920 4,932 Net loss (5,346) (5,346) ---------- ---- ------- -------- ------- Balance as of December 31, 1995 18,322,611 $183 $67,908 $(51,255) $16,836 ---------- ---- ------- -------- ------- ---------- ---- ------- -------- ------- See accompanying notes to the consolidated financial statements.
CADIZ LAND COMPANY, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - CURRENT STATUS AND DESCRIPTION OF BUSINESS - -------------------------------------------------- Business of the Company - ----------------------- Cadiz Land Company, Inc. (the "Company") identifies, acquires and develops properties (to date in the desert regions of Southern California) which have significant indigenous supplies of water. The Company currently owns or controls approximately 41,750 acres, with its largest property totalling approximately 31,800 acres at Cadiz, California. The Company's primary objective is to maximize the long-term value of each of its properties through strategic use of the water resources associated with the properties. The alternatives available to the Company, which are evaluated by management on an ongoing basis, include the transfer of water to third party users and/or the development of the properties using indigenous water sources for agricultural, commercial or residential purposes. The transfer of water to third party users, both from the Cadiz property and from other Company properties, is being actively pursued. The Company proposes to sell water from the Cadiz basin which is surplus to both the present and projected agricultural requirements of the Company. Negotiations relative to specific terms of water delivery arrangements are continuing with several California water agencies with respect to this project. The Company is also in discussions with prospective purchasers of its water from the Piute project. In addition, agricultural development at Cadiz has been an integral part of the Company's ongoing business strategy as a means of maximizing the value of the Company's landholding as a way to generate cash flow from such landholding. To date, 800 acres have been developed to table grapes, 560 acres have been developed to citrus, and 240 acres have been planted to various row crops. The Company has been able to enter into joint venture or leasing arrangements for the farming of these crops on its properties. Basis of Presentation - --------------------- The Condensed Consolidated Financial Statements have been prepared by the Company without audit and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest Form 10-K for the year ended March 31, 1995. The foregoing Condensed Consolidated Financial Statements include all adjustments, consisting only of normal recurring adjustments which the Company considers necessary for a fair presentation. The results of operations for the nine months ended December 31, 1995 are not necessarily indicative of the results to be expected for the full fiscal year. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --------------------------------------------------- See Note 2 to the Condensed Consolidated Financial Statements included in the Company's latest Form 10-K for a discussion of the Company's accounting policies. NOTE 3 - ACQUISITION OF SUN WORLD INTERNATIONAL, INC. - ----------------------------------------------------- On December 11, 1995, the Company executed a Plan Support Agreement with the Official Committee of Creditors Holding Unsecured Claims (the "Committee") in the Chapter 11 case of Sun World International, Inc. ("SWI"), whereby the Company proposed to purchase the assets of SWI or submit a joint Plan of Reorganization (the "Plan") with the Committee in which the unsecured creditors of SWI would receive subordinated notes or a cash alternative and existing shareholders of SWI would receive notes convertible into shares of stock in the Company after a period of time. Concurrent with the execution of the Plan Support Agreement, the Company delivered $1 million, representing a deposit to the trust account of the attorney for the Committee which is recorded as Cash in the accompanying Balance Sheet. Upon completion of the acquisition, the deposit will be dispersed to either the reorganized SWI or to the Company. However, if the acquisition is not completed, then under certain circumstances, the cash will be used to purchase, on a pro rata basis, interest in the claims of unsecured creditors in the SWI Chapter 11 case. The Company has been proceeding with its due diligence investigation of SWI and is continuing to negotiate with the various constituent parties in an effort to obtain a consensual plan. Before the acquisition can be completed, the United States Bankruptcy Court must confirm the Plan. NOTE 4 - STOCK OPTIONS EXERCISED AND PRIVATE PLACEMENTS - ------------------------------------------------------- During the nine months ended December 31, 1995, 120,000 previously outstanding stock options were exercised resulting in gross proceeds to the Company of $304,000. During the quarter ended December 31, 1995, the Company completed private placements of 764,157 shares of its common stock resulting in gross proceeds to the Company of $3,176.000. NOTE 5 - CONTINGENCIES - ---------------------- As further discussed in Note 9 to the Condensed Consolidated Financial Statements included in the Company's latest Form 10-K, the Company was awarded full reimbursement for its legal fees and costs incurred in defending a legal action for which the plaintiffs filed an appeal. In August 1995, the Arizona Court of Appeals ruled in favor of the trial court's judgment upholding the award for full reimbursement to the Company for such legal fees and costs incurred. In addition, the Court of Appeals has awarded the Company reimbursement for legal fees on appeal, the amount of which has yet to be determined. The Company has not yet recorded a gain contingency in connection with this matter, however, the plaintiffs have posted a cash bond from which the Company will collect its judgment which is estimated at approximately $400,000. In addition, on December 29, 1995, the Company filed an action relative to the proposed construction and operation of a landfill to be located adjacent to Company property, with the Superior Court in San Bernardino County against the County of San Bernardino and Rail Cycle , L.P., among others. The Company alleges the County of San Bernardino did not comply with the guidelines prescribed by the California Environmental Quality Act and violated state planning and zoning laws when approving a General Plan Amendment and granting a conditional use permit for the proposed landfill. The Company is seeking specific action and compensatory damages in excess of $75,000,000. See "Other Information - Item 1 - Legal Proceedings". CADIZ LAND COMPANY, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (unaudited) RESULTS OF OPERATIONS Quarter Ended December 31, 1995 Compared to Quarter ended December 31, 1994 - --------------------------------------------------------------------------- During the quarter ended December 31, 1995, the Company incurred a net loss of $1,660,000 compared to a loss of $1,004,000 during the same period in 1994. The following table summarizes the net loss for both periods (in thousands): 1995 1994 ---- ---- Revenues $ 470 $ 383 ------ ------ Resource development 967 702 Landfill prevention activities 140 - General and administrative 514 312 Amortization 58 58 Interest expense, net 451 315 ------ ------ $1,660 $1,004 ------ ------ ------ ------ Revenues - -------- Revenues are recognized from the Company's resource development as a result of the Company's ability to enter into joint venture or leasing arrangements with third party growers for the farming of crops on its properties. A combination of gross crop proceeds from the citrus orchard and both rent and percentage of gross crop proceeds from the vineyard totalled $441,000 and $383,000 for the quarter ended December 31, 1995 and 1994, respectively. Resource Development - -------------------- Expenses recorded in this category consist of costs incurred in the agricultural, land and water resource development of the Company's landholdings. As an integral part of its strategy to control the ultimate use of the resources associated with the Cadiz project, the Company continues to maintain control of management of both the infrastructure associated with these properties as well as the development of the area for agricultural use. Accordingly, costs related to the Company's management of its infrastructure and agricultural development are included in Resource Development, as well as the Company's share of joint venture crop costs. Additionally, operating costs associated with the Company's produce brokerage and the Company's continual evaluation of additional potential land acquisition sites, such as overhead, legal and travel are included within this category. Resource development expenses totalled $967,000 for the quarter ended December 31, 1995 as compared to $702,000 for the same period in 1994. During 1995, the Company undertook work on several water projects as compared to only one project in 1994. Therefore, costs associated with such activities increased from the prior year. In addition, crop production costs totalled approximately $360,000 and $253,000 during the quarters ended December 31, 1995 and 1994, respectively. Costs related to ranch overhead increased with the additional acres to row crops put into production during the current fiscal year. Also included in resource development are operating expenses attributable to the Company's produce brokerage, which was created in April 1995, and costs associated with evaluation of the potential acquisition of additional sites. Landfill Prevention Activities - ------------------------------ The Company is engaged in vigorous opposition to the proposed construction and operation of a landfill proposed to be located adjacent to Company property, and has filed a lawsuit seeking, among other things, to set aside regulatory approvals for the landfill project. See "Other Information - Item 1 - Legal Proceedings". During the quarter ended December 31, 1995, expenses incurred in connection with activities in opposition to the project totalled $140,000, including litigation costs, professional fees and expenses, and contributions in support of an initiative to be considered by the voters of San Bernardino County on March 26, 1996 (the "Landfill Initiative") which, if approved, would require that no large solid waste landfill shall overlie or be located within ten miles from the point of extraction of a significant water resource, unless such a facility had been fully permitted, constructed or operational as of March 14, 1995. General and Administrative - -------------------------- During the 1995 period, the Company was engaged in evaluating the possible acquisition of Sun World International, Inc. ("SWI"), one of California's largest permanent crop companies, negotiations and/or discussions with prospective purchasers regarding several of the Company's water transfer projects and management of its permanent crops, as well as production of additional acreage to row crops in its farming operation. In 1994, such activities pertained to evaluation of only one water transfer project and management of the Company's permanent crops. As a result of this increased level of activity, the Company has accordingly incurred an increase in costs related to overhead, professional fees, salaries and travel, among others. Interest Expense - ---------------- Net interest expense totalled $451,000 during the quarter ended December 31, 1995 as compared to $315,000 during the same period in 1994. The following table summarizes the components of net interest expense for the three month periods ended December 31, 1995 and 1994 (in thousands): 1995 1994 ---- ---- Interest expense on outstanding debt $ 254 $ 217 Amortization of financing costs 210 120 Interest income (13) (22) ----- ----- Net interest expense $ 451 $ 315 ----- ----- ----- ----- Interest expense on outstanding debt increased during the period as a result of an increased level of borrowing. Amortization of financing costs increased as a result of debt issue costs incurred in connection with the March 1995 additional loan as further discussed in the Company's latest Form 10-K. Nine Months Ended December 31, 1995 Compared to Nine Months Ended December 31, 1994 - ----------------------------------------------------------------- During the nine months ended December 31, 1995, the Company incurred a net loss of $5,346,000 compared to a loss of $3,250,000 during the same period in 1994. The following table summarizes the net loss for both periods (in thousands): 1995 1994 ---- ---- Revenues $1,120 $ 448 ------ ------ Resource development 2,881 1,604 Landfill prevention activities 671 - General and administrative 1,405 1,134 Amortization 175 175 Interest expense, net 1,334 900 Gain on debt settlement - (115) ------ ------ $5,346 $3,250 ------ ------ ------ ------ Revenues - -------- As a result of the additional acreage put into row crop production during the 1995 period, the Company was able to generate additional revenue during the nine months ended December 31, 1995 in an amount totalling approximately $564,000 from the honeydew melon, seedless watermelon and radicchio joint venture operations. Revenues from other sources (including the lemon harvest, vineyard and produce brokerage) contributed to the increase in revenues by approximately $98,000. Resource Development - -------------------- Resource development expenses totalled $2,881,000 for the nine months ended December 31, 1995 as compared to $1,604,000 for the same period in 1994. As activities were taking place on multiple water projects during the nine months ended December 31, 1995, costs associated with this development increased as compared to the 1994 period when the Company was involved in only the Cadiz water transfer project. In addition, with the development of an additional 240 acres to row crops at the beginning of the current fiscal year, the Company has attracted third party growers to enter into joint venture and similar arrangements with the Company for multiple harvests throughout the year. As a result, the Company has incurred its share of joint venture production costs associated with the various row crops, as well as an increase in costs associated with management of the Cadiz ranch, as it pertains to oversight of the additional acreage. Landfill Prevention Activities - ------------------------------ Expenses incurred during the nine months ended December 31, 1995 in connection with the Company's opposition to a proposed waste landfill project adjacent to its Cadiz landholdings were $671,000, which included litigation costs, professional fees and expenses, and contributions in support of the Landfill Initiative. General and Administration - -------------------------- General and administrative expenses during both periods consisted primarily of corporate operating expenses, professional fees and salaries. These expenses increased by $270,000 during the nine months ended December 31, 1995, as compared to the same period in 1994. This increase was primarily due to costs incurred in evaluating the potential acquisition of SWI and an increase in corporate operating expenses related to the increased level of activity associated with the Company's water transfer projects and agricultural operations offset by reduced legal fees related to litigation. Interest Expense - ---------------- The following table summarizes the components of net interest expense for the nine month periods ended December 31, 1995 and 1994 (in thousands): 1995 1994 ---- ---- Interest expense on outstanding debt $ 744 $ 640 Amortization of financing costs 631 360 Interest income (41) (100) ------ ------ Net interest expense $1,334 $ 900 ------ ------ ------ ------ Interest expense on outstanding debt increased during the period as a result of an increased level of borrowing. Amortization of financing costs increased as a result of debt issue costs incurred in connection with the March 1995 additional loan as further discussed in the Company's latest Form 10-K. Gain on Debt Settlement - ----------------------- In June 1994, the Company retired a note payable in the amount of $249,000 to an individual at a discounted amount resulting in an extraordinary gain on settlement of debt of $115,000. The note, which originated in 1985, was scheduled to be retired with a balloon payment in December 1996. LIQUIDITY AND CAPITAL RESOURCES Pursuant to its business strategy, the Company has historically utilized its working capital primarily for development purposes: that is, for purposes designed to increase the long term value of its properties. A substantial portion of these developmental expenses are being incurred in connection with the development of the Company's water transfer projects at Cadiz and Piute. As the Company does not expect to receive significant revenues from these water transfer projects before 1997, the Company has been required to obtain financing to bridge the gap between the time development expenses are incurred and the time a revenue stream will commence. Accordingly, the Company has looked to outside funding sources to address its liquidity and working capital needs. Since the beginning of the 1992 fiscal year, the Company has addressed these needs primarily through secured debt financing arrangements with its lenders, private placements and the exercise of outstanding stock options. The Company is currently evaluating the possible acquisition of SWI, which is now in Chapter 11 reorganization proceedings. SWI, with annual revenues in excess of $150 million, is one of California's largest permanent crop companies. The acquisition, if completed, will result in the addition of approximately 20,000 acres of developed land primarily in the Central Valley of California, and will provide assets complimentary to the Company in agriculture, produce marketing and water rights. However, regardless of whether or not this acquisition is completed, the Company will continue to develop its existing properties. The Company's projected working capital needs therefore relate both to the continued development of its existing properties, on the one hand, and to the acquisition of SWI, on the other hand. Operational Requirements - ------------------------ WATER TRANSFER PROJECTS - The Company proposes to sell to third party users water from the Cadiz basin which is surplus to both the present and projected agricultural requirements of the Company. In 1993, the County of San Bernardino certified an Environmental Impact Report allowing for the withdrawal from the Cadiz basin of 30,000 acre-feet of groundwater per year for 40 years for agricultural and domestic use. Currently, total agricultural and domestic water use in the Cadiz area is approximately 5,000 acre-fee per year. As an alternative to the full expansion of agricultural development, the Company will allocate a portion of its unused water resources for transfer to several public agencies that require supplemental sources of water. The Company is continuing to negotiate the specific terms of water delivery arrangements with several California water agencies with respect to this project. The Environmental Impact Statement/Environmental Impact Report ("EIS/EIR") to be prepared for the water transfer project will, as required, evaluate the environmental impacts associated with the transfer of water both at the currently projected level of 20,000 acre-feet per year and at reasonable alternative amounts. A groundwater management plan will be developed as part of the EIS/EIR under which a groundwater management entity will have authority to implement a management program for usage of the basin's water and will monitor compliance with the plan on an ongoing basis. Although the length of the regulatory review process cannot be predicted with certainty, the Company expects completion of the EIS/EIR process in mid to late 1997 and completion of the necessary delivery system within several months, thereafter, although no assurance can be given. The Company is also in discussion with prospective purchasers of its water from the Piute project. Funding for preparatory work to date on the Company's water transfer projects has come from the Company's working capital. However, the substantial majority of the capital costs associated with these projects, which have yet to be incurred, will be funded through separate project financings. The nature of the additional financings for the water transfer projects will depend upon how the development and ownership of each project is ultimately structured, and how much of each project's funding will be the Company's responsibility. AGRICULTURAL OPERATIONS - Agricultural development continues to be an integral part of the Company's ongoing business strategy as a means of maximizing the value of the Company's landholdings and as a way to generate cash flow from such landholdings. The Company has been able to attract third party growers with significant expertise in their respective purview and to enter into joint venture or leasing arrangements for the farming of crops on its properties. With the implementation of the Company's program to conduct agricultural operations on its properties primarily through third party leasing and joint venture operations and the establishment of its produce brokerage, agricultural operations are anticipated to require substantially less operating funds in 1996. Sun World Acquisition - --------------------- In December 1995, the Company executed a Plan Support Agreement with the Official Committee Holding Unsecured Claims (the "Committee") in the SWI Chapter 11 case. Under this Agreement, the Committee pledged to support a plan of reorganization which, in broad terms, would result in the acquisition of SWI by the Company and would provide for the Company to enter into renegotiated lending arrangements with SWI's secured lenders, to issue to SWI's unsecured creditors subordinated notes in the proven amount of their claims (or, alternatively, cash at a 60% discount to the amount of the notes), and to issue to SWI's equity holders a total of $10 million in convertible notes. Pursuant to the Agreement, the Company has placed $1 million as a deposit to the trust account of the attorneys for the Committee. The Company expects that the fundamental provisions of the formal plan of reorganization ("Plan") to be submitted to the U.S. Bankruptcy Court will be consistent with those outlined in the Plan Support Agreement. The Company is continuing its negotiations with the other parties to the SWI bankruptcy proceedings in an effort to reach a consensual agreement on the terms of the Plan, although the Company may continue to pursue the SWI acquisition whether or not full consensual agreement can be reached. Approval of the Plan by the Bankruptcy Court will be required before the acquisition of SWI by the Company can be completed. The Company intends as part of the proposed SWI plan of reorganization to make capital available to SWI upon closing of the acquisition in an amount estimated as necessary to enable SWI to be self-sufficient thereafter for working capital purposes. This capital is expected to include cash of approximately $15 million to be used to discharge SWI's obligations to unsecured creditors. The Company intends to raise such capital through a separate placing of securities, the closing of which will be conditioned upon final approval of the Plan and completion of the SWI acquisition. Current Financing Arrangements - ------------------------------ The Company's two primary lenders are Cooperative Centrale Raiffeisen-Boerenleenbank B.A., a Netherlands commercial bank ("Rabobank") and Henry Ansbacher & Co., Limited, a banking corporation organized under the laws of England ("Ansbacher") (collectively, the "Banks"). As previously reported in the Company's latest Form 10-K, in March 1995 the Company arranged to draw $2.45 million from an additional $3 million loan facility provided by Ansbacher. From these proceeds, the Company used $250,000 to reduce the Company's existing Rabobank loan and to reimburse Rabobank for various fees and expenses with the balance to be applied towards the Company's estimated working capital requirements through March 31, 1996. The remaining $550,000 of this facility is expected to be drawn down April 1, 1996 for application towards the Company's estimated working capital requirements for the fiscal year ending March 31, 1997. Ansbacher agreed to accrue and capitalize interest on the outstanding principal amount of these advances through January 1997. Interest rates on outstanding debt to the Banks, with the exception of the March 1995 additional loan facility, are fixed until January 1997, the maturity date under the current financing arrangements. Interest on the Ansbacher portion is accrued and capitalized until maturity. Rabobank interest is paid quarterly through draw downs against a letter of credit provided by Ansbacher for that purpose. The Company and the Banks have, in the past, structured their financing arrangements with a view towards effective implementation of the Company's business plan. The Company may, if it deems necessary, seek adjustments to these existing arrangements to accommodate previously unforeseen developments, such as the SWI acquisition and/or any changes in the timetable for regulatory approvals of the water transfer projects. Equity Placements - ----------------- During the fiscal year ended March 31, 1995, the Company raised gross proceeds of approximately $2.3 million through the exercise of outstanding stock options and warrants. In addition, the Company raised gross proceeds of $304,000 through the exercise of outstanding stock options during the nine months ended December 31, 1995. During the quarter ended December 31, 1995, the Company completed private placements of 764,157 shares of its common stock resulting in gross proceeds of $3,224,000. In July 1995, the Company completed a private placement of 450,000 shares of its common stock to several institutions thereby receiving gross proceeds of $1,800,000. The Company will utilize such proceeds to fund its capital projects related to development of its water transfer projects, purchase of additional acreage and for operating requirements. Working Capital Resources - ------------------------- The Company has adopted an unclassified balance sheet (eliminating the distinction between current assets and long-term assets and current liabilities and long-term liabilities). Accordingly, any historical or forward looking discussion of the Company's working capital resources should focus on the receipt and use of cash as opposed to the broader concepts of working capital and current ratio. Cash used for continuing operating activities totalled $4,263,000 for the nine month period ended December 31, 1995 as compared to $2,570,000 for the same period in 1994. In furtherance of the Company's primary objective to maximize the long-term value of each of its properties through strategic use of the water resources associated with the properties, the Company initiated work on development of several water projects during the 1995 period. As a result, overhead associated with such development increased throughout the nine months ended December 31, 1995 as compared to the same period in 1994. In addition, as agricultural development has been an integral part of the Company's ongoing business strategy as a means of maximizing the value of the Company's landholdings and a way to generate cash flow from such landholdings, an additional 240 acres were developed to row crops at the beginning of the current fiscal year. Following completion of this further agricultural development, the Company was able to attract third party growers thus allowing the Company to reduce its exposure to the performance of any single given crop and generate additional cash flow from its share of crop proceeds (offset by its share of crop production costs) resulting, however, in an increase in costs relating to the management of this additional acreage. In addition, in April 1995, the Company established a produce brokerage to market fresh fruit and vegetables, which management expects will be cash flow positive in the next fiscal year. Professional fees and other costs totalling $671,000 incurred in the Company's opposition to a proposed waste landfill project adjacent to its Cadiz landholdings also served to increase the cash used for continuing operations for the nine month period ended December 31, 1995 as compared to the same period in 1994. The cash provided by discontinued operating activities during the 1994 quarter resulted from the sale of property during that period. Cash used for investing activities totalled $1,176,000 during the nine months ended December 31, 1995 as compared to $1,878,000 for the same period in 1994. Although the Company commenced serious evaluation of the Cadiz water transfer project as early as 1994, the Company is pleased with the progress made to-date. Much progress has been made with regard to the exhaustive studies required by the various water agencies before they may enter into multi-year arrangements. In addition, the Company commenced water development operations at its landholdings in the Piute valley in February 1995 and at other locations during the current fiscal year. Costs of $628,000 associated with the Company's water transfer projects during 1995 related primarily to fees associated with specific environmental studies, environmental analyses, evaluation of the quantity and quality of the water resources and development of institutional arrangements. Costs related to the Company's water projects incurred in 1994 were associated with the drilling of test and production wells and fees associated with the evaluation and documentation of the feasibility of the Cadiz water transfer project. In addition, in 1995 the Company converted a warehouse into a housing facility, purchased required farming equipment and a weather station for the ranch and installed a new computer system. During 1994, property and equipment additions included costs related to the drilling of a production well and construction of an irrigation manifold system necessary for the development of an additional 240 acres. Financing activities provided $5,585,000 for the nine months ended December 31, 1995 as compared to $1,689,000 during the nine months ended December 31, 1994. Proceeds from the issuance of common stock as a result of private placements and the exercise of previously existing stock options totalled $5,234,000 and $2,088,000 during the 1995 and 1994 periods, respectively. Proceeds from the issuance of debt increased by $376,000 during the 1995 period and principal payments on debt decreased by $374,000 compared to the 1994 period. SHORT-TERM OUTLOOK During fiscal 1996, the Company has funded its working capital requirements from the remaining balance of the $2.45 million in proceeds received in March 1995 from the additional loan facility provided by Ansbacher, the $2.081 million received by the Company through the exercise of stock options and warrants during the prior year and the completion of private placements in July 1995 and December 1995 (See Note 3 to the Condensed Consolidated Financial Statements). These 1996 working capital requirements were an integral means of not only advancing the Cadiz water transfer project through the lengthy regulatory review process and closer to the point where the actual movement of water will generate revenue sufficient to meet the operating requirements of the Company, but also provided the necessary capital to develop additional acreage to row crops which allows for multiple harvests from the same acreage each year, thus providing the Company an opportunity for an immediate return in capital invested. However, as a result of expenditures incurred by the Company in connection with the proposed SWI acquisition (including the $1 million deposit, professional fees and due diligence expenses) the Company's requirement for additional working capital in the short-term has increased. Therefore, the Company expects to raise additional funds to meet its short-term working capital needs either through an increase in borrowings or an additional private placement of equity, as needed. Although a portion of the funds raised in such placement would be used to fund expenses related to the SWI acquisition, such placement would not be conditioned upon the completion of the SWI acquisition, so that the funds will be available to the Company whether or not the acquisition is completed. Management believes that funds available from these sources combined with the additional revenue from the Company's current agricultural operations and possible deposits from water agencies or other pre-sale arrangements related to the Company's water transfer projects would be sufficient to meet the Company's working capital requirements through the next year, although no assurances can be given. The funding to be made available by the Company upon the closing of the SWI acquisition will, as noted previously, be obtained via a separate placement of securities which will be conditioned upon Plan confirmation and the completion of the acquisition. LONG-TERM OUTLOOK Historically, the Company has financed both its working capital and property acquisitions cash requirements from outside resources via a combination of debt and equity placements. However, the Company does not anticipate it will rely on such funding combinations in the future as a result of the progress made to date in the Company's various development activities. The Company believes that an acquisition of SWI upon the terms currently proposed will enable SWI to be self-sufficient thereafter for working capital purposes. The Company intends as part of the proposed SWI plan of reorganization to make capital available to SWI at closing in an amount estimated as necessary to achieve this result. However, the Company does not expect, in the foreseeable future, to make additional capital contributions to SWI, but to the contrary, expects SWI to generate a return to the Company on its initial capital investment, although until the acquisition is completed and the final structure is determined, no assurances can be given. As the Company is actively pursuing the development of its water resources, it is seeking the finalization of the regulatory approvals needed to commence construction of a water delivery project at Cadiz. Once the lengthy regulatory review process is finalized and construction of the necessary delivery system has commenced, the Company anticipates to generate a revenue stream within less than a year thereafter which will be sufficient to meet the operating requirements of the Company, although no assurances can be given. Concurrently with the regulatory review process, the Company is also negotiating the terms of water delivery arrangements with various California water agencies, which include issues such as financing, pricing concepts and formulas and ownership of the pipeline and the delivery system. In addition to the development of its water resources, the Company is actively involved in further agricultural development of its landholding as a result of San Bernardino County's approval of a General Plan Amendment covering 9,600 acres of the Company's landholdings at Cadiz and the increased grower interest in Cadiz as an agricultural area. Such development will be systematic and in furtherance of the Company's business strategy to provide for maximization of the value of its assets. Such development is expected to continue to be accomplished through negotiated arrangements with third parities, which will significantly reduce any capital outlay required of the Company in connection with such development activities and provide a revenue stream in the future. As a result of the above, the Company expects in 1996 SWI to generate a return to the Company on its initial capital investment, assuming the acquisition takes place, and an increase in the revenue generated from its agricultural operations. Additionally, the Company anticipates a revenue stream to commence in calendar 1997 from its other landholding and associated resources. However, no assurances can be made as to the amount of such revenues or whether such revenues will be of sufficient levels by the end of fiscal 1997 to fund the Company's ongoing cash requirements. Such cash requirements will be dependent, in large part upon the form of the arrangements utilized by the Company for the development of its resources. CADIZ LAND COMPANY, INC. OTHER INFORMATION Item 1 - Legal Proceedings ----------------- On November 21, 1995, the San Bernardino County Board of Supervisors certified the Environmental Impact Report/Environmental Impact Statement ("EIR/EIS") for the proposed construction and operation of a substantial landfill on the shore of Bristol Lake near Amboy, California (the "Rail Cycle" Project). On November 28, 1995, the Board of Supervisors by a 3-2 vote approved, among other things, a Conditional Use Permit to Rail Cycle, L.P. ("Rail Cycle ") to construct and operate the Rail Cycle Project. The general partner of Rail Cycle is controlled by WMX Technologies, Inc. ("WMX") (formerly Waste Management, Inc.). The Rail Cycle Project would be located within a few miles of 9,600 acres of land owned by the Company at Cadiz, California, which the County of San Bernardino has designated for agricultural use in its General Plan. On December 29, 1995, an action styled CADIZ LAND COMPANY, INC. VS. COUNTY OF SAN BERNARDINO, ET. AL. CASE NO. BCV 02341 was filed by the Company in Superior Court in San Bernardino County. The action challenges the various decisions by the County of San Bernardino relative to the Rail Cycle Project. Named in this action, in addition to the County of San Bernardino, were the Board of Supervisors of the county of San Bernardino, three individual members of the Board of Supervisors, an employee of the County, and Rail Cycle. On February 1, 1996, Rail Cycle and the County removed the case to Federal District Court for the Central District of California (Case No. CV-96-740-JGD [BQRX]). The Company alleges that the actions of the County did not comply with the guidelines prescribed by the California Environmental Quality Act ("CEQA") and violated state planning and zoning laws. The action seeks to set aside the County's certification of the EIR/EIS and approval of the proposed Rail Cycle Project. The Company continues to believe that the proposed Rail Cycle Project, if constructed and operated as currently designed, poses environmental risks both to the Company's agricultural operations at Cadiz and to the groundwater basin underlying the Cadiz property. Accordingly, the Company intends to pursue a claim for damages against the County of San Bernardino and Rail Cycle and therefore, the action also seeks compensatory damages in excess of $75 million. On March 26, 1996, an initiative will be considered by the voters of San Bernardino County which, if approved, would require that no large solid waste landfill shall overlie or be located within ten miles from the point of extraction of a significant water resource, unless such a facility had been fully permitted, constructed or operational as of March 14, 1995. However, the Company was unable to consider the outcome of the vote on this upcoming initiative and its effect upon construction of the Rail Cycle Project before commencing the action, as under CEQA procedures the Company was required to file the suit within thirty days of the Board of Supervisors' actions in order for the Company to preserve its rights. Item 2 - Change in Securities -------------------- Not applicable. Item 3 - Defaults Upon Senior Securities ------------------------------- Not applicable. Item 4 - Submission of Matter to a Vote of Security Holders -------------------------------------------------- Not applicable. Item 5 - Other Information ----------------- Not applicable. Item 6 - Exhibits and Reports on Form 8-K -------------------------------- A. Exhibits -------- 1. Exhibit 27 - Financial Data Schedule 2. Exhibit 10.44 - Plan Support Agreement dated December 11, 1995 3. Exhibit 10.45 - Waiver of Certain Provisions of Plan Support Agreement dated January 12, 1996 B. Reports on Form 8-K ------------------- 1. None CADIZ LAND COMPANY, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CADIZ LAND COMPANY, INC. By: /s/ Keith Brackpool February 19, 1996 ------------------------------------- ------------------ Keith Brackpool Date Chief Executive Officer and Director By: /s/ Susan K. Chapman February 19, 1996 ------------------------------------- ------------------ Susan K. Chapman Date Chief Financial Officer and Secretary EX-27 2
5 1,000 9-MOS MAR-31-1996 DEC-31-1995 2,600 0 402 0 188 0 2,216 0 35,494 857 0 0 0 183 67,908 35,494 0 1,120 0 5,132 0 0 1,334 0 0 (5,346) 0 0 0 (5,346) (.31) 0
EX-10.44 3 EXHIBIT 10.44 ------------- PLAN SUPPORT AGREEMENT This Plan Support Agreement (the "Agreement"), is dated as of December 11, 1995, and is entered into by and among Cadiz Land Company, Inc. ("Cadiz") and the Official Committee of Creditors Holding Unsecured Claims in the jointly administered Chapter 11 cases of Sun World International, Inc. and Sun World, Inc., Case No. SB 94-23212 DN, U.S.B.C., C.D. Cal. (the "Committee" and, together with Cadiz, the "Parties"). This Agreement is entered into in light of each of the following facts. A. Sun World has filed a plan of reorganization entitled the Second Amended Consolidated Plan of Reorganization Dated November 16, 1995 (the "Current Plan"). B. The Current Plan provides for two alternative means of reorganizing Sun World: (i) a stand-alone reorganization which accords unsecured creditors and shareholders stock in reorganized Sun World ("Stand-alone Option"), or (ii) a reorganization in which a third party buys some or all of Sun World's assets and/or invests capital into Sun World in exchange for some or all of the equity in reorganized Sun World and unsecured creditors and existing shareholders receive a package of consideration which may include Cash, Cash equivalents or other property (as defined in the Current Plan), including shares in reorganized Sun World and/or portions of the purchase price consideration ("Sale Option"). C. The Current Plan provides that exercise of the Sale Option shall be mandatory if a Buyer (as defined in the Current Plan) agrees to contribute to Classes 8-10, at least $27 million in Cash, Cash equivalents or other property acceptable to the Committee. D. Sun World currently has the exclusive right to file a plan and to solicit acceptances thereto pursuant to 11 U. S . C. Section 1121 until January 19, 1996. E. Cadiz has performed preliminary due diligence in the form of a review of publicly-available information, and has executed a confidentiality agreement with Sun World to obtain access to non-public information to continue with its due diligence. F. Cadiz wishes to cause Sun World to modify the Current Plan in a manner which incorporates the terms and conditions of Exhibit A, or to sponsor a separate, competing plan of reorganization proposed by either Cadiz or the Committee which incorporates the material terms and conditions of such a modification of the Current Plan. Subject to the terms hereof, the Committee is willing to sponsor Cadiz as the Buyer in the modified Current Plan or a separate competing plan. In light of the foregoing, and in consideration of the premises and the mutual covenants herein contained, the Parties agree as follows: 1. DEFINITIONS. When used in this Agreement, the following terms shall have the meanings set forth below. Undefined terms that are used in the Bankruptcy Code or Bankruptcy Rules shall be accorded the meanings given them in the Bankruptcy Code. 1.1 BANKRUPTCY CODE means Title 11 of the United States Code Section 101 et seq., as amended from time to time. 1.2 CHAPTER 11 CASES means the proceedings for reorganization of Sun World under Chapter 11 of the Bankruptcy Code, which are currently procedurally consolidated under Case No. SB 94-23212 DN, U.S.B.C., C.D. Cal. 1.3 COURT means the United States Bankruptcy Court for the Central District of California or such other court as may exercise jurisdiction over the Chapter 11 Cases or any part thereof. 1.4 EFFECTIVE DATE shall have the meaning ascribed to it in the Current Plan or in the New Plan, as applicable. 1.5 FINAL ORDER means an order or judgment of the Court, as entered by the Clerk thereof on the docket in or related to the Chapter 11 Cases, the effect of which has not been stayed, and as to which the time to appeal or petition for review or rehearing has expired and from which no appeal or petition for review or rehearing has been filed, or from which any appeal or petition for review or rehearing has been finally determined or dismissed. 1.6 NEW PLAN means the Current Plan, as modified by Exhibit A hereto or any plan of reorganization proposed by Cadiz or proposed by the Committee and supported by Cadiz that materially conforms to the Current Plan as modified by Exhibit A, together with any modification required to comply with the Code or that increases the prospects for confirmation and that does not have a material adverse effect on Cadiz . 1.7 PLEADINGS means any and all pleadings, notices, reports, schedules, statements or other documents filed or lodged with the Court or the United States Trustee in connection with the Chapter 11 Cases or any adversary proceeding, contested matter or other request to the Court, whether commenced by complaint, motion, application or other similar document. 1.8 SUN WORLD means Sun World International, Inc., Sun World, Inc., Coachella Growers, Sun Desert, Inc., and AAI Services, Inc. 2. AGREEMENTS OF COMMITTEE. The Committee agrees, if Cadiz has deposited the Special Deposit, and so long as this Agreement has not been terminated and Cadiz is not in default hereunder, as follows. 2.1 LETTER OF SUPPORT. If, on or before January 12, 1996 Cadiz commits in writing to be the Buyer under the New Plan and to support confirmation thereof or to cause Sun World to modify the Current Plan to conform with the terms of Exhibit A or to sponsor a competing plan (which will be filed immediately after exclusivity is terminated) proposed by Cadiz or the Committee which will conform to the terms set forth in Exhibit A, subject to no contingency save material adverse change in the operations of Sun World, the Committee shall deliver a letter requesting that Sun World modify the Current Plan in accordance with Exhibit A hereto and designate Cadiz as the Buyer under the Sale Option under the New Plan (the "Letter of Support"). 2.2 EXCLUSIVITY AND NEW PLAN. If Sun World (i) refuses in writing to modify the Current Plan or to designate Cadiz as the Buyer under the Sale Option or (ii) has not agreed in writing to do so within fourteen (14) days of the delivery of the Letter of Support, then the Committee agrees to object to further extensions of exclusivity, and, if permitted by the Court, to propose the New Plan or to support the New Plan proposed by Cadiz. 2.3 "NO SHOPPING". (a) The Committee shall not solicit any other proposals by third parties to act as Buyer under the Sale Option, to invest in Sun World, to purchase its assets or any substantial portion thereof, or to purchase the unsecured claims against Sun World (collectively, a "Competing Offer"). This section shall not restrict the Committee from any discussions with existing creditors and shareholders of Sun World over the terms of a consensual restructuring of claims under the Stand-alone Option under the Current Plan or any other plan. (b) Subject to Section 6.1 hereof, the Committee shall be permitted (but not required) to contact all entities with whom it has had discussions concerning a Competing Offer and all other parties in interest in these Chapter 11 Cases to advise them of the terms of this Agreement and of the restrictions that the Agreement imposes on the Committee. (c) The Committee shall notify Cadiz of all entities with whom the Committee has had communications concerning a Competing Offer and the substance and status of those communications. The Committee shall, within three (3) business days of its receipt by the Committee, provide Cadiz with copies of any written communication received by the Committee after execution of this Agreement concerning a Competing Offer. (d) The Committee shall be permitted to respond to communications, requests for information and inquiries concerning a Competing Offer and shall, at Cadiz' request, provide Cadiz with copies of all information furnished by the Committee in response to the communication. (e) Nothing in this Agreement shall require the Committee to disclose any information received or discussion held pursuant to any presently-existing confidentiality agreement, but the Committee shall not, from and after the effective date of this Agreement and continuing until it has been terminated, enter into any further confidentiality agreements which would limit the Committee's ability to provide information to Cadiz hereunder. 2.4 COMMITTEE COOPERATION. (a) PLEADINGS. Pending confirmation of the Plan, the Committee shall furnish Cadiz with copies of all Pleadings received or initiated by the Committee in connection with the Chapter 11 Cases. (b) FINANCIAL INFORMATION. The Committee shall comply with Cadiz' reasonable requests for information concerning Sun World and its financial affairs, including analyses the Committee has performed with respect to the confirmability of a plan of reorganization or claims against third parties and any presently-existing or subsequently-prepared analysis of the claims against Sun World. (c) SUPPORT OF THE SALE AND THE PLAN. In the absence of an Overbid that complies with Section 5.1 hereof, the Committee shall support confirmation of the New Plan and/or implementation of the Sale Option with Cadiz as Buyer, shall recommend that unsecured creditors vote in favor of the New Plan and/or shall recommend that the New Plan under the Sale Option with Cadiz as Buyer be confirmed. The Committee shall take reasonable steps to assist Cadiz in securing the confirmation of the New Plan and/or approval and implementation of the Sale Option including, without limitation, filing pleadings in support of the New Plan or that advance the process of confirming the New Plan. (d) Notwithstanding any other provision of this Agreement, the Committee shall be permitted to object to the treatment afforded unsecured creditors under the Stand-alone Option under the Current Plan or the New Plan, and shall be permitted to take such acts, including negotiation, to obtain superior treatment for unsecured creditors under the Stand-alone Option. 3. AGREEMENTS OF CADIZ. Cadiz agrees, so long as this Agreement has not been terminated and the Committee is not in default hereunder, as follows. 3.1 SPECIAL DEPOSIT OF FUNDS. Concurrent with the execution of this Agreement, Cadiz shall deliver $1 million to the Committee, which shall be held in the client trust account of Sidley & Austin, to be disbursed in accordance with Section 4 of this Agreement (the "Special Deposit"). The Special Deposit shall not constitute an asset of Sun World, and shall not be subject to claims of Sun World's creditors save in accordance with Section 4 of this Agreement. (For purposes of clarity, any disposition of the Special Deposit shall include any interest actually earned thereon from and after the deposit.) 3.2 PROPOSED TRANSACTION. (a) No later than January 12, 1996, Cadiz shall irrevocably (subject only to a material adverse change in Sun World's operations) and in writing request that Sun World modify the Current Plan to conform to the New Plan. Such a writing shall include Cadiz' commitment to perform the obligations of the Buyer under the New Plan and to satisfy the Feasibility Test. (b) If the Court permits the Committee to propose a plan, then Cadiz shall commit to support confirmation and act as Buyer under the Sale Option under the New Plan as proposed by the Committee (collectively, Cadiz' obligations under sections 3.2(a) and (b)are the "Firm Proposal"). 3.3 ABILITY TO PERFORM. (a) Cadiz shall keep the Committee apprised of all material developments concerning its ability to perform under the Firm Proposal and the New Plan and shall, at the Committee's request, provide written or oral reports addressing how much capital will be provided by Cadiz, the source of such funds, the steps taken to raise such funds, and future steps that will be taken to secure such funds and all material developments concerning Cadiz' ability to raise money and obtain the commitments required under the New Plan to pay Class 8 creditors, to provide seasonal crop financing, and to provide working capital to Sun World.(together, the "Feasibility Test"). (b) If, at any point, the Committee believes that Cadiz has not demonstrated its ability to comply with the Feasibility Test, then the Committee shall be permitted to send Cadiz a notice of default. The Committee may, five (5) days after giving its notice of default, notice a termination of this Agreement if Cadiz has failed, within the five day notice of default period, to establish its ability to comply with the Feasibility Test. Either Party may, within the five day notice of default period, file a motion requesting that the Court determine, as a contested matter, whether Cadiz has established its ability to comply with the Feasibility Test. If such a motion is filed then termination of the Agreement shall not be effective until the motion has been resolved by a Final Order of the Court. 3.4 DILIGENT PURSUIT OF CONFIRMATION. In the absence of an Overbid, Cadiz shall diligently support confirmation of the New Plan and consummation and implementation of the Firm Proposal and shall diligently seek to comply with the Feasibility Test. Cadiz shall take reasonable steps to advance the confirmation of the New Plan including, without limitation, filing pleadings in support of the New Plan or that advance the process of confirming the New Plan. 3.5 NO RELIANCE ON COMMITTEE. Cadiz acknowledges that it is not relying on and will not rely on financial information, assurances or representations provided by the Committee. 3.6 CONFIDENTIALITY OF INFORMATION. Cadiz shall keep all information provided by the Committee private and confidential in accordance with confidentiality agreements to be entered into by the Parties. 4. DISPOSITION OF THE SPECIAL DEPOSIT. 4.1 DISPOSITION UPON CONFIRMATION OF THE NEW PLAN. If the New Plan is confirmed and consummated in accordance with the terms hereof and the Sale Option is implemented with Cadiz as Buyer, then the Special Deposit shall be disbursed to reorganized Sun World or Cadiz on the Effective Date of the New Plan. 4.2 DISPOSITION TO CADIZ. The Special Deposit shall be disbursed to Cadiz if any of the following takes place or fails to take place, as the case may be: (a) Cadiz does not make a Firm Proposal by January 12, 1996 because its due diligence reveals that the financial information contained in Sun World's [Proposed] Disclosure Statement Dated November 16, 1995 is materially inaccurate. (b) The Court has not approved this Agreement by Final Order entered by January 12, 1996. (c) The New Plan is not confirmed by Final Order entered prior to June 30, 1996 (or such later date which the Committee may from time to time designate in writing) and Cadiz has complied with all of its obligations hereunder. (d) Cadiz terminates the Agreement on account of a material default by the Committee. (e) Cadiz withdraws the Firm Proposal after a material adverse change in Sun World's operations. (f) The New Plan is confirmed with an Overbid or with the Stand-alone Option. (g) The New Plan is not confirmed solely because (i) the Claims Estimation Order estimates the ultimate amount of allowed Class 8 claims to exceed $32 million, and (ii) the Committee invokes option (x) on Exhibit A. 4.3 DISPOSITION TO UNSECURED CREDITORS. (a) GROUNDS FOR DISPOSITION OF THE SPECIAL DEPOSIT TO UNSECURED CREDITORS. If any of the events described in this section takes place or fails to take place, as the case may be, then the Special Deposit shall be disbursed to unsecured creditors in accordance with Section 4.3(b) hereof. (i) The Committee terminates this Agreement on account of a material default by Cadiz. (ii) Cadiz fails to make a Firm Proposal by January 12, 1996 and Section 4.2(a) does not apply. (iii) Cadiz withdraws a Firm Proposal and there has been no material adverse change in Sun World's operations. (iv) Sun World declines to designate Cadiz the Buyer under the Sale Option and Cadiz does not support termination of exclusivity, does not support the New Plan with the Committee or withdraws its support of the New Plan when there has been no material adverse change in Sun World's operations. (v) The New Plan is not confirmed by Final Order entered prior to June 30, 1996 (or such later deadline as the Committee may from time to time designate) and Cadiz has not complied with all of its obligations hereunder. (vi) Cadiz materially alters its Firm Proposal without consent or agreement from the Committee. (For these purposes, a material alteration shall include any cap on or reduction in the amount paid to Class 8 Creditors or any increase in the amounts paid or benefits provided to members of Classes 9-10 (other than an increase that is attributable to an increase in the value of Cadiz' stock).) (vii) Cadiz declines to make non-material changes in the terms of the Firm Proposal or to consent to non-material modifications to the Current Plan or to the New Plan that increase the prospects for confirming the Plan and implementing the Sale Option. (viii) Cadiz fails to raise or to commit the funds required to confirm the New Plan or to comply with the Feasibility Test. It is expressly acknowledged that, from and after making a Firm Proposal, Cadiz assumes the risks associated with raising the funds required to confirm the New Plan and to implement the Sale Option such that, in the absence of a material adverse change in Sun World's operations, any failure by Cadiz to raise the funds required to implement the Sale Option by the Effective Date shall result in a disposition of the Special Deposit to unsecured creditors. (b) MECHANICS FOR DISTRIBUTION TO UNSECURED CREDITORS. If the Special Deposit is to be distributed to unsecured creditors, then this section 4.3(b) shall apply. (i) As and when all unsecured claims that were filed or deemed filed against Sun World in the Chapter 11 Cases have been and are allowed, then the Special Deposit (after deduction of expenses associated with the distribution) shall be distributed pro rata to holders of all allowed unsecured claims (excluding Sun World or any direct or indirect wholly-owned subsidiary), and the claims of all recipients of the distribution shall be reduced, dollar-for-dollar, by any such payment. (ii) Any reasonable and necessary expense associated with the distribution to unsecured creditors may be deducted from the Special Deposit. (iii) As and when the Special Deposit is distributed to unsecured creditors, Cadiz shall have an allowed unsecured claim against Sun World in the amount so disbursed. (c) If there is a dispute over the Special Deposit or any part thereof, the Committee and/or Sidley & Austin shall be permitted to interplead the Special Deposit (or portion in dispute) with the Court. The Committee and/or Sidley & Austin shall be permitted to satisfy its reasonable attorneys fees and costs in such an interpleader action from the Special Deposit. The Court shall have sole jurisdiction over any such interpleader action or any other dispute relating to the Special Deposit or its disposition. 5. OVERBIDS/EXPENSE REIMBURSEMENT. 5.1 AMOUNT OF OVERBIDS. The Parties agree to the following overbid procedure and will seek Court approval thereof. Any overbid ("Overbid") must be presented in writing to the Court and served so that it is received by counsel to the Committee, the United States Trustee, Sun World, Howard Marguleas, John Hancock Mutual Life Insurance Company and Caisse Nationale de Credit Agricole no later than (5) business days prior to the commencement of the hearing on confirmation of the New Plan. It should be accompanied by evidence demonstrating an ability to timely perform the obligations to all constituencies and consummate the proposed sale or other transaction. Any Overbid must be determined by the Court to have an aggregate value of not less than $4 million more than the Firm Proposal by Cadiz, of which not less than the greater of $3.5 million or 87.5% of the excess value shall be additional consideration to Class 8 creditors, up to the allowed amount of unsecured claims plus post-petition interest, if allowed. 5.2 EXPENSE REIMBURSEMENT. The Parties agree to the following protections for Cadiz in the event of an Overbid and will seek Court approval thereof. The Committee acknowledges that, in making its proposal, Cadiz is contributing significant value to the estates and unsecured creditors. Accordingly, if Cadiz makes a Firm Proposal and, while the Firm Proposal has not been withdrawn and the Agreement has not been terminated and Cadiz is not in default hereunder, there is a successful Overbid, then Sun World shall reimburse Cadiz for its reasonable and actual third-party charges, up to $1 million, incurred in connection with the preparation and pursuit of its Firm Proposal. Such charges shall include, without limitation, attorneys' fees, investment banking fees and accounting fees and expenses, but shall exclude any charge for the time and services of Cadiz employees. 6. COURT APPROVAL AND CONFIDENTIALITY. 6.1 The Committee agrees not to disclose the consideration promised to Class 8 creditors under this Agreement and the New Plan (including the Special Deposit) until December 22, 1995, provided that the Committee shall be permitted to disclose and discuss all terms of this Agreement with any party to whom Cadiz has disclosed the consideration promised to Class 8 creditors or the Special Deposit. Cadiz shall promptly notify the Committee in writing of any entities to whom it has disclosed such matters. 6.2 The Committee shall file a motion seeking court approval of this Agreement no earlier than December 22, 1995, and shall seek a hearing date on December 29, 1995, to enable Cadiz to meet with other creditors before the terms of this Agreement become public. 7. REPRESENTATIONS; WARRANTIES; AND FURTHER AGREEMENTS. 7.1 Cadiz represents, warrants, acknowledges and agrees that it has authority to enter into this Agreement and to consummate the transactions contemplated hereby. 7.2 The Committee represents, warrants and acknowledges that it has authority to enter into this Agreement and to consummate the transactions contemplated hereby, subject only to approval by the Court. 7.3 The Parties have consulted with counsel and relied upon counsel's advice in connection with the negotiation and execution of this Agreement. The Parties have negotiated this Agreement freely such that there is no implication that any Party is the author hereof in a fashion that would result in the Agreement being construed against such Party. 8. TERMINATION; EXCUSE FROM PERFORMANCE; REMEDIES. 8.1 BY CADIZ. Cadiz may declare this Agreement terminated: (a) By written notice to the Committee if any of the conditions precedent to the effectiveness of the Sale or of the New Plan (as contained in the New Plan) become incapable of satisfaction and such condition has not been waived by Cadiz; (b) If the Court enters an order dismissing the Chapter 11 Cases or converting the Chapter 11 Cases to Chapter 7 of the Bankruptcy Code, or appoints a trustee; (c) By written notice to the Committee if the Committee fails to perform its obligations hereunder in a manner that deprives Cadiz of the benefit of its bargain; or (d) By written notice to the Committee if Sun World withdraws or declines to propose the New Plan and the Committee is not permitted to file the New Plan. 8.2 BY THE COMMITTEE. The Committee may terminate this Agreement by written notice to Cadiz upon the occurrence of any of the following: (a) It is or becomes unlawful or in violation of any ruling, regulation or request of a governmental authority to perform any material obligation of Sun World or of the Committee under this Agreement; (b) The Court enters an order to dismiss the Chapter 11 Cases or to convert the Chapter 11 Cases to cases under Chapter 7 of the Code, or appoints a trustee; (c) Cadiz fails to perform its obligations hereunder in a manner that deprives the Committee of the benefit of its bargain; (d) The Court has failed to approve the Agreement by Final Order entered by January 12, 1996. 8.3 COURT APPROVAL. In the event either Party seeks to terminate the Agreement, the Party so seeking shall be permitted, but not required, to commence a proceeding in the Court to establish the grounds for termination. The Parties agree that such a proceeding may be commenced by way of motion and prosecuted as a contested matter. 8.4 REMEDIES FOR BREACH. The sole remedy of one Party to this Agreement for the breach or default by the other Party or for the failure by the other Party to perform its obligations hereunder shall be to terminate this Agreement and all then-unperformed obligations thereunder, except as provided in this Section. The provisions of Section 4 shall survive any termination of the Agreement, and shall control the disposition of the Special Deposit. Neither Party shall be entitled, in law or in equity, to any remedy of damages. In particular, without limiting the generality of the foregoing, Committee members, agents and professionals shall not be individually or personally liable to Cadiz in connection with the Committee's obligations under this Agreement. The Parties consent to the jurisdiction of the Court to enforce the terms of this Agreement, including entry of orders to compel one or both of the Parties to perform in accordance with the terms hereof. Other than as set forth above, the Parties agree that termination of this Agreement is an adequate remedy for any breach or failure to perform by any other party hereto. 9. MISCELLANEOUS. 9.1 AMENDMENT AND WAIVER. This Agreement may not be amended except by an instrument in writing signed on behalf of the Committee and Cadiz. Any agreement on the part of any Party hereto to any such amendment or waiver shall be valid only to the extent set forth in such instrument of amendment. Amendments and waivers shall be effective upon receipt of facsimile signatures so long as original signatures are subsequently provided in the ordinary course of business. 9.2 HEADINGS. Headings and captions in this Agreement are for reference only and shall not affect in any way the meaning or interpretation of this Agreement. 9.3 BINDING EFFECT. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective assigns only. The Parties do not intend, and expressly disavow, any intention to enter into this Agreement for the benefit of a third party. 9.4 ASSIGNMENT. This Agreement may not be assigned by any Party without the written consent of the other Parties hereto. 9.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts each of which so executed shall be deemed to be an original; but such counterparts together shall constitute but one and the same instrument. 9.6 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to principles of conflict of laws. The parties hereto agree to submit to the sole jurisdiction of the Court in any action or proceeding arising out of or relating to this Agreement. 9.7 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, (i) the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and (ii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable. 9.8 NOTICES. Any notice or communication hereunder may be given by hand delivery, by certified mail (return receipt requested), by overnight courier or by telecopy. Any such notice or communication shall be deemed given only upon actual receipt thereof by the addressee at the address or telecopy number set forth below. If to the Committee: Michael D. McKee Executive Vice President The Irvine Company 550 Newport Center Drive, 9th Floor Newport Beach, CA 92660 Telecopy: (714) 720-2810 with a copy to: Richard W. Havel, Esq. Sidley & Austin 555 West Fifth Street, Suite 4000 Los Angeles, CA 90013 Telecopy: (213) 896-6600 If to Cadiz: Keith Brackpool Chief Executive Officer Cadiz Land Company, Inc. 10535 Foothill Blvd., Suite 150 Rancho Cucamonga, CA 97730 Telecopy: (909) 980-6738 with a copy to: Dale Miller, Esq. Miller & Holquin 2029 Century Park East, Suite 1060 Los Angeles, CA 90067 Telecopy: (310) 557-2205 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the date first above written. CADIZ LAND COMPANY, INC. a Delaware Corporation By: /s/ Keith Brackpool --------------------------- Keith Brackpool Chief Executive Officer THE OFFICIAL COMMITTEE OF CREDITORS HOLDING UNSECURED CLAIMS By: /s/ Michael D. McKee --------------------------- Michael D. McKee Chairman EXHIBIT A -- PLAN SUMMARY 1. p. 39, the treatment of Credit Agricole under the Sale Option shall be amended to provide as follows: In the absence of agreement with Credit Agricole, Credit Agricole shall receive no worse treatment than proposed under Article IV of the Plan, and the words "provided that the lien on personal property shall be subordinate to the lien of the Seasonal Lender" shall be deleted. 2. p. 39, the first paragraph describing the treatment for Class 8 creditors shall be deleted and replaced with the following: 1. At each creditors' option, either (i) a note issued by reorganized Sun World in the allowed amount of such claim paying interest at 8%, with interest-only for three years, and the principal thereof paid in equal installments during the fourth through seventh years or (ii) either (u) 60% of the allowed amount of such creditor's claim in cash upon the Effective Date or (v) an amount in accordance with the following paragraph. 2.a. In connection with confirmation of the New Plan, the Parties shall seek a Court order estimating the ultimate amount of the allowed Class 8 claims. If the Court determines by entry of a Final Order (the "Claims Estimation Order") that the estimated ultimate amount of the allowed Class 8 claims (excluding claims of insiders, as described below) exceeds $32 million (the "Claims Estimate"), then (i) Cadiz shall have the right, within five (5) business days after the Claims Estimation Order becomes a Final Order, by written notice to the Committee and other parties in interest, to agree to pay all Class 8 creditors 60 cents per dollar of allowed claim. If Cadiz does not timely send such a written notice, then the Committee shall have the right, by written notice provided to Cadiz and other parties in interest within ten (10) business days after entry of the Final Order, either (x) upon such notice, disclosure and/or resolicitation as the Committee may deem appropriate or the Court may order, to terminate this Agreement (thereby entitling Cadiz to a return of the Special Deposit) and thereby prevent confirmation of the New Plan absent compliance with Section 1129(b) of the Bankruptcy Code, or (y) to agree to accept, on behalf of Class 8 creditors, $19 million (or such other greater amount as Cadiz may agree to provide), to be shared pro rata among all allowed Class 8 claims. If no timely notice is sent, then the Committee shall be deemed to have made a notice in accordance with option (x). Pending the sending and receipt of notices permitted by this paragraph, no order confirming the New Plan shall be entered. b. If the Committee timely sends a notice selecting option (y), then the Committee shall continue post-confirmation at the expense of reorganized Sun World for the purpose of objecting, along with reorganized Sun World, to disputed Class 8 claims and shall be given the power as representative of the estate along with reorganized Sun World under section 1123(b)(3)(B) of the Bankruptcy Code to assert defenses to claims and counterclaims thereto, including those that arise under Sections 544-550 of the Bankruptcy Code, and reorganized Sun World shall provide all information required by the Committee to interpose such objections and pursue such counterclaims. If the Committee continues to exist after the order confirming the New Plan is a Final Order, then, upon entry of a Final Order determining that the total amount of allowed Class 8 claims will not exceed $32 million, the Committee shall be disbanded and its powers as representative of the estate transferred to reorganized Sun World. c. For purposes of these sections 2 and 3 only (and not for purposes of section 1), Class 8 claims shall exclude any and all claims held by insiders of Sun World. For these purposes, a claim by an insider shall include any and all claims asserted by any entity who falls within the definition of "insider" under the Bankruptcy Code, to the extent such claim arose while the entity was an insider or is based upon an agreement executed while the entity was an insider. 3. In addition to the rights in section 2, if the Committee determines, after due consideration of the written claims analyses which have disclosed to Cadiz, that the Committee's Claims Estimate exceeds $32 million, then the Committee may send a notice to Cadiz setting forth that fact and the basis therefore. Within five (5) business days after receiving such notice, Cadiz may, by written notice to the Committee, agree to pay all allowed Class 8 claims 60 cents per dollar of allowed claim. If Cadiz does not timely send such a written notice, then the Committee shall have the right, by written notice provided to Cadiz within ten (10) business days after first sending the notice to Cadiz, either (x) upon such notice, disclosure and/or resolicitation as the Committee may deem appropriate or the Court may order, to terminate this Agreement, or (y) to agree to accept, on behalf of Class 8 creditors, $19 million (or such other greater amount as Cadiz may agree to provide), to be shared pro rata among all allowed Class 8 claims. If no timely notice is sent, then the Committee shall be deemed to have made a notice in accordance with option (x). Pending the sending and receipt of notices permitted by this paragraph, no order confirming the New Plan shall be entered. 3. p. 40, the description of treatment for Classes 9 and 10 shall be deleted and replaced with the following: The total consideration to holders of claims or interests in Classes 9 and 10 paid from Reorganized Sun World or Cadiz shall be not more than $10 million in value, based upon the face value of the consideration and based upon the value of Cadiz stock as of December 5, 1995, in the form of convertible promissory notes issued by Cadiz, to be allocated among the members of such Classes in accordance with an agreement involving the members of such Classes, settlement or Court order. 4. p. 41, "Litigation Recoveries" shall be amended to provide that all Litigation Recoveries shall be Retained Claims. EX-10.45 4 EXHIBIT 10.45 ------------- WAIVER OF CERTAIN PROVISIONS OF PLAN SUPPORT AGREEMENT This Waiver of Certain Provisions of Plan Support Agreement (the "Waiver" and "Agreement"), dated as of January 12, 1996, is entered into by and between Cadiz Land Company, Inc. ("Cadiz") and the Official Committee of Creditors Holding Unsecured Claims in the jointly administered Chapter 11 cases of Sun World International, Inc. and Sun World, Inc. Case No. SB 94-23212, U.S.B.C., C.D. Cal. (the "Committee" and, together with Cadiz, the "Parties"). This Waiver is entered into in light of each of the following facts: A. The Parties entered into the PSA as of December 11, 1995. B. Section 8.2(d) of the Agreement provides in part that the "Committee may terminate th[e] Agreement by written notice to Cadiz upon the occurrence of any of the following: . . . The Court has failed to approve the Agreement by Final Order entered by January 12, 1996." C. Section 4.2(b) of the Agreement provides in part that "[t]he Special Deposit shall be disbursed to Cadiz if any of the following takes place or fails to take place, as the case may be: . . . The Court has not approved this Agreement by Final Order entered by January 12, 1996." D. Section 1.5 of the Agreement provides in part that "Final Order means an "order or judgment of the Court . . . from which no appeal . . . has been filed." E. On January 2, 1996, the Court entered its "Order Authorizing Creditors' Committee to Enter into Plan Support Agreement with Cadiz Land Company, Inc.; and (2) Approving Overbid Procedures, Expense Reimbursement to Cadiz Land Company, Inc. and Disposition of Special Deposit" (the "Order"). The Order reflects certain modifications to the Agreement to which the Parties consented. F. On or about January 12, 1996, Caisse Nationale de Credit Agricole filed a Notice of Appeal of the Order (the "Appeal"). G. Notwithstanding the pendency of the Appeal, the Parties wish to proceed in accordance with the Agreement and the Order. In light of the foregoing, the Parties agree as follows: 1. DEFINITIONS. ----------- Capitalized terms in this Waiver shall have the meanings ascribed to them herein or in the Agreement. Undefined terms that are used in the Bankruptcy Code or Rules shall be accorded the meanings given them in the Bankruptcy Code or Rules, as applicable. 2. AGREEMENT OF COMMITTEE ----------------------- The Committee hereby irrevocable waives its right pursuant to Section 8.2 to terminate the Agreement on account of the pendency of the Appeal. 3. AGREEMENT OF CADIZ ------------------ Cadiz hereby irrevocably waives any right it might have to disbursement of the Special Deposit to it pursuant to Section 4.2 on account of the pendency of the Appeal. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the date first above written. CADIZ LAND COMPANY, INC. a Delaware corporation By: /s/ Keith Brackpool ---------------------------------- Keith Brackpool Chief Executive Officer THE OFFICIAL COMMITTEE OF CREDITORS HOLDING UNSECURED CLAIMS By: /s/ Michael D. McKee --------------------------------- Michael D. McKee Chairman -----END PRIVACY-ENHANCED MESSAGE-----