-----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, UaHD7Cb19O+TFzRCTduFMNNaHcnI7EbZ8ib8lWJ84n4u29CI8oAlEnbGDe2Ho7Ss xzMGVplxm6IV5KrmAfoo2A== 0000727273-98-000017.txt : 19980521 0000727273-98-000017.hdr.sgml : 19980521 ACCESSION NUMBER: 0000727273-98-000017 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 REFERENCES 429: 333-19109 FILED AS OF DATE: 19980519 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: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-53069 FILM NUMBER: 98628359 BUSINESS ADDRESS: STREET 1: 100 WILSHIRE BLVD. STREET 2: SUITE 1600 CITY: SANTA MONICA STATE: CA ZIP: 90401 BUSINESS PHONE: 310-899-4700 MAIL ADDRESS: STREET 1: 100 WILSHIRE BLVD. STREET 2: SUITE 1600 CITY: SANTA MONICA STATE: CA ZIP: 90401-1111 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 S-3 1 As filed with the Securities and Exchange Commission on May 19, 1998 Registration No. ============================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- Form S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ---------------------------- CADIZ LAND COMPANY, INC. (Exact name of registrant as specified in its charter) Delaware 77-0313235 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 100 Wilshire Boulevard, Suite 1600 Santa Monica, California 90401 (310) 899-4700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Stanley E. Speer 100 Wilshire Boulevard, Suite 1600 Santa Monica, California 90401 (310) 899-4700 (Name, address, and telephone number of agent for service) ----------------------------------- Copies of communications to: HOWARD J. UNTERBERGER, ESQ. J. BRAD WIGGINS, ESQ. Miller & Holguin 1801 Century Park East, Seventh Floor Los Angeles, California 90067 (310) 556-1990 ---------------------------- Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ============================================================== Title of each Proposed class of maximum Proposed securities offering maximum Amount of to be Amount price aggregate registration registered to be registered per unit offering price fee - -------------------------------------------------------------------------- Common Stock, par value 5,910,712 shares(1)(3) $13.00(2) $76,839,256.00 $22,667.58(3) $.01 per share Warrants for the purchase 500,000 warrants of Common Stock (the "Warrants")(3)(4) - --------------------------------------------------------------------------- (1) Of this total, 50,000 shares underlie the Options and 500,000 shares underlie the Warrants which are included in this Registration Statement. Also registered hereunder are an indeterminate number of additional shares of Common Stock which may become issuable by virtue of anti-dilution provisions of the Options and Warrants. (2) Estimated solely for the purpose of calculating the registration fee, and based, pursuant to Rule 457(c), on the average of the high and low prices of the Registrant's Common Stock as reported by Nasdaq for May 12, 1998, which date is within 5 business days prior to the initial filing date of this Registration Statement. (3) A total of 5,110,712 shares and 75,000 Warrants which are included within this Registration Statement were included in the Registrant's Registration Statement on Form S-1 No. 333-19109, declared effective May 13, 1997. The Registrant has previously paid registration fees totaling $7,285.70 with respect to such securities in connection with this earlier Registration Statement. As permitted pursuant to Rule 429 of Regulation C under the Securities Act, such amount has been applied by Registrant against the total registration fee set forth above. As a result, a total of $15,381.88 is being paid by Registrant concurrently with the filing of this Registration Statement. (4) No fee for registration of the Warrants is required by virtue of the last sentence of Rule 457(g). The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ============================================================== PROSPECTUS - ---------- CADIZ LAND COMPANY, INC. 5,910,712 SHARES OF COMMON STOCK (INCLUDING 50,000 OPTION SHARES ISSUABLE UPON EXERCISE OF OUTSTANDING OPTIONS AND 500,000 WARRANT SHARES ISSUABLE UPON EXERCISE OF WARRANTS) AND 500,000 WARRANTS FOR THE PURCHASE OF COMMON STOCK This Prospectus relates to the offer by the security holders named herein under the caption "Selling Security Holders" (collectively, the "Selling Security Holders") for sale to the public of 5,910,712 shares of the $.01 par value common stock (the "Common Stock") of Cadiz Land Company, Inc. (the "Company" or "Cadiz") (collectively, the "Shares"), including (i) 5,360,712 outstanding Shares (the "Outstanding Shares"); (ii) 50,000 shares of Common Stock (the "Option Shares") which are issuable by the Company upon the exercise of outstanding options (the "Options"); and (iii) 500,000 shares of Common Stock (the "Warrant Shares") which are issuable by the Company upon the exercise of previously issued warrants (the "Warrants"). In addition, this Prospectus relates to the offer by one of the Selling Security Holders for sale to the public of the Warrants for the purchase of the Warrant Shares. The Company will not receive any proceeds from the sale by the Selling Security Holders of the Shares or the Warrants offered hereunder. See "Plan of Distribution." The 500,000 Warrant Shares covered by this Prospectus are issuable upon exercise of previously issued Warrants held by one of the Company's institutional lenders. Of these 500,000 Warrants, 75,000 Warrants are exercisable for five years beginning on April 30, 1997 at an exercise price of $5.03 per share, 75,000 Warrants are exercisable for five years beginning on April 30, 1998 at an exercise price of $11.8125 per share, 200,000 Warrants are exercisable for seven years beginning on November 25, 1997 at an exercise price of $7.00 per share, 112,500 Warrants are exercisable for seven years beginning on April 13, 1998 at an exercise price of $7.00 per share, and 37,500 Warrants are exercisable for seven years beginning May 11, 1998 at an exercise price of $7.00 per share. See "Description of Securities." The Selling Security Holders have advised the Company that they may sell, directly or through brokers, all or a portion of the securities offered hereby in negotiated transactions or in one or more transactions in the market at the price prevailing at the time of sale. In connection with such sales, the Selling Security Holders and any participating broker may be deemed to be "underwriters" of the Shares within the meaning of the Act. It is anticipated that usual and customary brokerage fees will be paid by Selling Security Holders in all open market transactions. The Company will pay substantially all other expenses of the offering. See "Plan of Distribution." The Company has filed a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), covering the offer and sale of the Shares and the Warrants by the Selling Security Holders. This registration is in satisfaction of the terms of agreements by the Company with certain Selling Security Holders to register their Shares and Warrants for resale under the Securities Act. AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE THE DISCUSSION OF"RISK FACTORS." BEGINNING ON PAGE 3. --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is ___________, 1998 No dealer, salesman or other person has been authorized to give any information or make any representations, other than those contained in this Prospectus, in connection with the offering hereby, and, if given or made, such information and representations must not be relied upon as having been authorized by the Company or the Selling Security Holders. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities to any person in any State or other jurisdiction in which such offer or solicitation is unlawful. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company or the facts herein set forth since the date hereof. This Prospectus includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts included in this Prospectus including, without limitation, the statements regarding industry prospects and the Company's financial position are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed in the Prospectus including, without limitation, in conjunction with the forward-looking statements included in this Prospectus and under "Risk Factors." All subsequent written and oral forward-looking statements attributable to the Company, the Selling Security Holders or persons acting on their behalf are expressly qualified in their entirety by the Cautionary Statements. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement (the "Registration Statement") under the Securities Act, with respect to the securities offered by this Prospectus. This Prospectus does not contain all of the information set forth in the Registration Statement. For further information with respect to the Company and the securities offered hereby, reference is made to the Registration Statement and to the schedules and exhibits filed therewith, which may be inspected without charge at the principal office of the Commission, 450 5th Street, N.W., Washington, D.C. 20549, and copies of the material contained therein may be obtained from the Commission upon payment of applicable copying charges. Statements contained in this Prospectus as to the contents of any contract or other document referred to herein are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference. The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy and information statements and other information with the Commission. Such reports and other information filed by the Company can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 5th Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Commission at 450 5th Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains a Web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding the Company and other registrants that file electronically with the Commission. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents previously filed with the Commission by the Company (SEC File No. 0-12114) pursuant to the Exchange Act are incorporated by reference in this Prospectus and made a part hereof: 1. The Company's Annual Report on Form 10-K for the year ended December 31, 1997; 2. The Company's Proxy Statement furnished in connection with its Annual Meeting of Stockholders on May 13, 1998, filed with the Commission on March 30, 1998; 3. The description of the Common Stock set forth in the Company's Registration Statement filed with the Commission on Form 8A under the Exchange Act on May 8, 1984, as amended by reports on Form 8-K filed with the Commission on May 26, 1988 and June 2, 1992; and 4. The Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998. In addition, all reports and other documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the termination of the offering made hereby shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to any person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the documents which have been incorporated by reference in this Prospectus, other than exhibits to such documents unless such exhibits are specifically incorporated by reference into the documents so incorporated. Requests for such copies should be directed to the Company at 100 Wilshire Boulevard, Suite 1600, Santa Monica, California 90401, Attention: Stanley E. Speer, Chief Financial Officer (telephone (310) 899-4700). TABLE OF CONTENTS Available Information Incorporation of Certain Information by Reference Prospectus Summary Risk Factors Selling Security Holders Plan of Distribution Description of Securities Legal Matters Experts PROSPECTUS SUMMARY THE FOLLOWING SUMMARY INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE AND, ACCORDINGLY, SHOULD BE READ IN CONJUNCTION WITH THAT INFORMATION AND THOSE FINANCIAL STATEMENTS AND NOTES. THE COMPANY The long-term strategy of Cadiz Land Company, Inc. (the "Company") is to acquire and develop water-related land and agricultural assets, as well as selected water-related technologies. The Company has created an integrated and complementary portfolio of landholdings, water resources, and agricultural operations throughout central and southern California which either possess sizable assured supplies of water or can, in future years, utilize water supplied from other Company properties. Management therefore 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. In September 1996, the Company significantly enhanced this portfolio through its acquisition of Sun World International, Inc. ("Sun World"). The Sun World acquisition has made the Company one of the largest fully integrated agricultural companies in California by adding to the Company's portfolio more than 17,200 acres of prime agricultural land, packing facilities, marketing expertise, proprietary agricultural products and the highly regarded Sun World brand name. The acquisition of Sun World also added valuable water rights to the Company's existing water resource development operations. In addition to its Sun World properties, the Company holds more than 39,000 acres of land in eastern San Bernardino County which are underlain by excellent groundwater resources with demonstrated potential for future applications, including water storage and supply programs, and agricultural, municipal, recreational and industrial development. All of the Company's properties are located in close proximity to California's major aqueduct systems. The Company expects to utilize its resources to participate in a broad variety of water storage and supply programs, including the storage and supply of surplus water for public agencies which require supplemental sources of water. The Company has reached agreement with the Metropolitan Water District of Southern California ("MWD") on principles and terms for a long-term agreement at its Cadiz, California property, subject to Board approval of each party. The program (the "Cadiz/Fenner Water Storage and Supply Program") will provide storage capacity of approximately 500,000 acre-feet and a dry-year source of up to 100,000 acre-feet per year of high quality water. The Company continually seeks to develop and manage its land, water and agricultural resources for their highest and best uses. Agricultural development enables the Company to maximize the value of its landholdings while generating cash flow. The Company also continues to evaluate acquisition opportunities which are complementary to its current portfolio of landholdings, water resources and agricultural operations. The Company's principal offices are located at 100 Wilshire Boulevard, Suite 1600, Santa Monica, California 90401, and its telephone number is (310) 899-4700. THE OFFERING Total Shares Offered by the Selling Security Holders...............5,910,712 Shares Outstanding Shares...................5,360,712 Shares Option Shares...........................50,000 Shares Warrant Shares.........................500,000 Shares Total Warrants Offered by the Selling Security Holders.................500,000 Warrants Risk Factors.............................This offering is speculative and involves a high degree of risk. See "Risk Factors." Use of Proceeds..........................The Company will not receive any proceeds from the sale of Shares or the sale of Warrants pursuant to this Prospectus. Nasdaq National Market System Symbol.....CLCI RISK FACTORS The securities offered hereby involve a high degree of risk. Prior to making an investment, prospective investors should carefully consider the following risks affecting the Company and this offering. This Prospectus and the documents incorporated herein by reference contain trend analysis and other forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual results could differ materially from those projected in the forward-looking statements throughout these documents as a result of the factors described below. HISTORICAL OPERATING LOSSES AND ACCUMULATED DEFICITS The Company has a history of operating losses (approximately $8.5 million for the fiscal year ended March 31, 1996, approximately $6.0 million for the nine months ended December 31, 1996 and approximately $8.5 million for the fiscal year ended December 31, 1997) and accumulated deficits (approximately $54.4 million at March 31, 1996, approximately $61.1 million at December 31, 1996 and approximately $70.8 million at December 31, 1997). Until such time, if ever, as the Company generates significant revenues from the development of its water resources (see "Risks of Water Development Projects", below), the Company's consolidated results of operations will be largely dependent upon the results of operations of its Sun World subsidiary. The Company cannot predict with any degree of accuracy what effect the operations of Sun World will have on the Company's overall business operations in the next several years. See also "Risks Inherent in Agricultural Operations," below. RISKS INHERENT IN AGRICULTURAL OPERATIONS The Company is subject to risks associated with its agricultural operations. Numerous factors can affect the price, yield and marketability of the crops grown on the Company's properties. Crop prices may vary greatly from year to year as a result of the relationship between production and market demand. For example, the production of a particular crop in excess of demand in any particular year will depress market prices, and inflationary factors and other unforeseeable economic changes may also, at the same time, increase operating costs with respect to such crops. In addition, the agricultural industry in the United States is highly competitive, and domestic growers and produce marketers are facing increased competition from abroad, particularly from Mexico. There are also a number of factors outside of the Company's control that could, alone or in combination, materially adversely affect the Company's agricultural operations, such as adverse weather conditions, insects, blight or other diseases, labor problems such as boycotts or strikes and shortages of competent laborers. The Company's operations may also be adversely affected by changes in governmental policies, social and economic conditions, and industry production levels. As a result, there can be no assurance that the Company's agricultural operations will be commercially profitable. RISKS OF WATER DEVELOPMENT PROJECTS The Company anticipates that it will continue to incur operating losses from its non-Sun World operations until such time as it is able to receive significant revenues from the development of its water development projects, including water storage and supply programs. Additional financing specifically in connection with the Company's water projects will be required. In addition to the risk of delays associated with receiving all necessary regulatory approvals and permits, the Company may also encounter unforeseen technical difficulties which could result in construction delays and cost increases with respect to the Company's water development projects. The Company is continuing to negotiate the specific terms of water storage and supply programs with various California water agencies, including the MWD (with which it has reached agreement on principles and terms for the Cadiz/Fenner Water Storage and Supply Program, subject to Board approval by each party). However, the outcome of other negotiations cannot be predicted with any degree of certainty. There can be no assurances as to the amount of water which the Company will be able to deliver or store under such arrangements, nor as to the price which the Company will be able to obtain. Furthermore, the Company has no experience to date in the commercial production and delivery of water in large amounts on a long-term basis. There is, therefore, a limited historical basis on which to evaluate future performance of the Company's proposed operations in this area. SIGNIFICANT LEVERAGE AND WORKING CAPITAL REQUIREMENTS The consolidated Company's capital structure is significantly leveraged. As of March 31, 1998 the Company had approximately $9.8 million of direct indebtedness outstanding under a term loan (the "Cadiz Term Loan") due April 30, 1999 (with provisions for extension, if required) and approximately $5 million of direct indebtedness outstanding under a $15 million revolving credit facility with a final maturity date of December 31, 2000 (the "Cadiz Revolver"), and Sun World had $118 million of indebtedness outstanding (including $115 million of 11-1/4% First Mortgage Notes due April 15, 2004 (the "Sun World Notes")) and $9.8 million of indebtedness outstanding under a one-year $30 million revolving credit facility (the "Sun World Revolver"). The Cadiz Term Loan and Cadiz Revolver are secured by substantially all of the Company's non-Sun World assets. The Sun World Notes are secured by a first lien on substantially all of the assets of Sun World and its subsidiaries, other than the growing crops, crop inventories and accounts receivable and proceeds thereof, which secure the Sun World Revolver. The Sun World Notes are also secured by the stock of Sun World held by the Company. Sun World will depend on the Sun World Revolver to meet its significant seasonal working capital needs. Management anticipates that the credit available under the Sun World Revolver will be sufficient to meet Sun World's current seasonal requirements, although no assurances can be given. See "Seasonality," below." The degree to which the Company's capital structure is leveraged could impair both the Company's and Sun World's access to additional financing in the future for working capital, capital expenditures, acquisitions, and general or other corporate purposes. The ability of the Company and Sun World to generate sufficient working capital and cash flow needed for ongoing debt service and working capital needs depends on the future performance of the Company and Sun World. If Sun World does not generate sufficient cash flow to service its debt, or if Sun World or Cadiz fails to comply with covenants in the indenture under which the Sun World Notes were issued (the "Sun World Indenture"), they would face a default on their obligations. Such a default could result in the loss of all of the Company's investment in Sun World. LIMITATIONS ON ACCESS TO SUN WORLD CASH FLOW AND DIVIDENDS The Company's ability to receive distributions from Sun World's cash flow is restricted by a series of covenants in the Sun World Indenture that allow for the payment of dividends subject to meeting certain tests and ratios. POTENTIAL ADVERSE EFFECT OF RAIL-CYCLE PROJECT ON THE COMPANY In November 1995 the San Bernardino County Board of Supervisors certified the Environmental Impact Report/Environmental Impact Statement ("EIR/EIS") for, and approved a Conditional Use Permit for, the proposed construction and operation of a landfill adjacent to the Company's Cadiz properties (the "Rail-Cycle Project"). The Company contends that the Rail-Cycle Project, as currently designed, poses environmental risks to both the Company's agricultural operations at Cadiz and to the groundwater basin underlying the Cadiz property. The Company has vigorously opposed the Rail-Cycle Project on a number of grounds and has filed a lawsuit seeking, among other things, to set aside the County's certification of the EIR/EIS and approval of the proposed project. The Company has also filed lawsuits against certain proponents and other parties in interest as to the Rail-Cycle Project asserting claims for damages under federal and state law. There can be no assurances as to the outcome of the Company's lawsuits. Furthermore, the Board of Supervisors decided to require a business license tax to be levied against the Rail-Cycle Project which, prior to adoption, must be approved by a majority vote in a general election. The Company believes that the Rail-Cycle Project, if constructed and operated as proposed, will have a materially adverse impact upon the Company's business. However, management is unable to predict the magnitude of such impact, if any, at this time. SEASONALITY In connection with the water resource development activities of the Company, revenues are not expected to be seasonal in nature. Sun World's agricultural operations are impacted by the general seasonal trends that are characteristic of the agricultural industry. Sun World has historically received the majority of its net income during the months of June to October following the harvest and sale of its table grape and tree fruit crops. Due to this concentrated activity, Sun World has, therefore, historically incurred a loss with respect to its agricultural operations in the other months during the year. See "Risk Factors - Significant Leverage and Working Capital Requirements." ENVIRONMENTAL MATTERS In the normal course of its agricultural operations, the Company handles, stores, transports and dispenses products identified as hazardous materials which could subject the Company to liability for the cleanup of such hazardous substances or wastes or may adversely affect the value of the Company's properties. Such matters could, in the future, have a material adverse effect on the Company. REGULATION Certain areas of the Company's operations are subject to varying degrees of federal, state and local laws and regulations. The Company's agricultural operations are subject to a broad range of evolving environmental laws and regulations. These laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Comprehensive Environmental Response, Compensation and Liability Act. Environmental concerns are inherent in most major agricultural operations, including those conducted by the Company, and there can be no assurances that the cost of compliance with environmental laws and regulations in the future will not be material. The Company's food operations are also subject to regulations enforced by, among others, the U.S. Food and Drug Administration and state, local and foreign equivalents and to inspection by the U.S. Department of Agriculture and other federal, state, local and foreign environmental and health authorities. Among other things, the U.S. Food and Drug Administration enforces statutory standards regarding the safety of food products, establishes ingredients and manufacturing procedures for certain foods, establishes standards of identity for foods and determines the safety of food substances in the United States. Similar functions are performed by state, local and foreign governmental entities with respect to food products produced or distributed in their respective jurisdictions. In addition, there can be no assurances as to the effect of any environmental regulations which may be adopted in the future. Water supplied by the Company may be subject to regulation as to quality by the United States Environmental Protection Agency (the "EPA") acting pursuant to the Federal Safe Drinking Water Act (the "US Act"). In California, the responsibility for enforcing the US Act is delegated to the California Department of Health Services (the "Health Department") and to the Resources Board acting pursuant to the California Safe Drinking Water Act (the "Cal Act"). The US Act provides for the establishment of uniform minimum national water quality standards, as well as governmental authority to specify the type of treatment processes to be used for public drinking water. Moreover, the EPA has an ongoing directive to issue regulations under the US Act and to require disinfection of drinking water, specification of maximum contaminant levels ("MCLS") and filtration of surface water supplies. The Cal Act and the mandate of the Health Department are similar to the US Act and the mandate of the EPA, and in many instances MCLS and other requirements of the Health Department are more restrictive than those promulgated by the EPA. Both the EPA and the Health Department have promulgated regulations and other pronouncements which require various testing and sampling of water and inspections by producers which set MCLS for numerous contaminants. Since the Company does not intend to supply water directly to consumers, these standards only affect the water agencies that may buy or lease water from the Company. While such environmental regulations do not directly affect the Company, the regulations regarding the quality of water distributed affects the Company's intended customers and may, therefore, depending upon the quality of the water supplied by the Company, impact the price and terms upon which the Company may in the future sell its surplus water or water rights. REGULATORY APPROVALS As the Company proceeds with the development of its properties, including related infrastructure, the Company will be required to satisfy various regulatory authorities that it is in compliance with the laws, regulations and policies enforced by such authorities. Groundwater development, and the export of surplus groundwater for sale to single entities such as public water agencies, are not subject to regulation by existing statutes, other than general environmental statutes applicable to all development projects. Management cannot predict with certainty what requirements, if any, may be imposed by regulators upon future development. In addition, the time and costs associated with obtaining regulatory approvals for resource development are significant, and there can be no assurance that the Company will receive desired approvals for future development plans. COMPETITION The agricultural business is highly competitive. The Company's competitors include a limited number of large international food companies, as well as a large number of smaller independent growers and grower cooperatives. No single competitor has a dominant market share in this industry due to the regionalized nature of these businesses. Sun World utilizes brand recognition, product quality, harvesting in favorable product windows, competitive pricing, effective customer service and consumer marketing programs to enhance its position within the highly competitive fresh food industry. Consumer and institutional recognition of the Sun World trademark and related brands and the association of these brands with high quality food products contribute significantly to Sun World's ability to compete in the market for fresh fruit and vegetables. The Company faces competition for the acquisition, development and sale of its properties from a number of competitors, some of which have significantly greater resources than the Company. The Company may also face competition in the development of water resources associated with its properties. Since California has scarce water resources and an increasing demand for available water, the Company believes that price and reliability of delivery are the principal competitive factors affecting transfers of water in California. In this regard, the ability of the Company to price its water on a competitive basis will depend upon the cost of constructing and maintaining delivery systems for its surplus water. YEAR 2000 RISKS The Company has conducted a preliminary review of its electronic data processing systems to assess what changes might be needed for those systems to recognize the year 2000 and not to treat any date after December 31, 1999 as a date during the twentieth century. Management believes that all such changes can be implemented in an orderly and timely manner and without material cost. The Company plans to try to coordinate its response to these issues with those third parties with whom the Company engages in electronic transactions, both domestically and internationally, including suppliers, customers, creditors and financial service organizations, although the Company cannot effectively ensure against all potential Year 2000 problems that might originate with third parties. If the Company or any third party with whom the Company does business were to have a Year 2000 problem, the Company's business could be seriously disrupted and the Company's financial condition and results of operations could be materially adversely affected. AUTHORIZATION OF "BLANK CHECK" PREFERRED STOCK The Company's Certificate of Incorporation, as amended, authorizes the issuance of up to 100,000 shares of preferred stock with such designations, rights and preferences as may be determined from time to time by the Company's Board of Directors. Accordingly, the Board of Directors is empowered, without stockholder approval, to issue preferred stock in one or more series, and to fix for any series the dividend rights, dissolution or liquidation preferences, redemption prices, conversion rights, voting rights, and other rights, preferences or privileges for such preferred stock which could adversely affect the voting power or other rights of the holders of the Common Stock. To date the Board of Directors has designated three series of Preferred Stock for issuance, including (i) up to 60,000 shares of Series A Preferred, (ii) up to 1,000 shares of 6% Convertible Series B Preferred Stock (the "Series B Preferred"), and (iii) up to 365 shares of 6% Convertible Series C Preferred Stock (the "Series C Preferred"). No shares of Preferred Stock are currently outstanding. See "Description of Securities." The Board of Directors has no present plans or arrangements for the issuance of additional shares of Preferred Stock, and the Company's ability to issue additional Preferred Stock is restricted by covenants in the Sun World Indenture. However, there can be no assurance that the Company will not issue such shares in the future. Such shares could, under certain circumstances, be issued as a method of discouraging, delaying or preventing a change in control of the Company. The issuance of such shares could prevent holders of the Company's Common Stock from receiving a premium for their shares from a potential third-party acquiror. DILUTION UPON CONVERSION AND EXERCISE OF SECURITIES The issuance of Shares upon conversion and exercise of outstanding Options and Warrants may have certain dilutive effects, including dilution of the Company's earnings per share. MARKET RISKS FROM SUBSTANTIAL INCREASE IN NUMBER OF SHARES OF COMMON STOCK ELIGIBLE FOR RESALE The registration for resale hereunder of 5,360,712 Outstanding Shares, 50,000 Option Shares and 500,000 Warrant Shares, for an aggregate total of 5,910,712 Shares, significantly increases the number of outstanding shares of Common Stock of the Company eligible for resale. See "Description of Securities." The sale, or availability for sale, of these Shares could cause downward pressure on, and decreases in, the market price of the Company's Common Stock, particularly in the event that a large number of Shares were sold in the public market over a short period of time. NO ASSURANCE OF DIVIDENDS ON COMMON STOCK To date, the Company has never paid a cash dividend on Common Stock, and the Company's ability to pay such dividends is subject to certain covenants pursuant to agreements with the Company's lenders. SELLING SECURITY HOLDERS The following table sets forth certain ownership information with respect to the Selling Security Holders. The information set forth below is based upon reports of beneficial ownership filed with the Securities and Exchange Commission and records of the Company and its transfer agent, Continental Stock Transfer & Trust Company. If the Selling Security Holders were to sell all of the Shares covered by this Prospectus(1), each Selling Security Holder would have no further beneficial interest in the Company's Common Stock except as otherwise noted. Unless noted, the Selling Security Holders have not had any position, office or other material relationship with the Company or any of its affiliates within the past three years. Shares Beneficially Owned Prior Name to Offering(2) Shares Offered (2) - ------------------------------- -------------- ------------------- Lar Ze Company 25,000 25,000 Capital Group Companies, Inc. 1,915,000(7) 250,000(7) MeesPierson Securities, Ltd. 1,014,563 1,014,563 Gamma Leasing Ltd. 69,998 69,998 BT Holdings (NY) Inc. (Bankers Trust) 801,498 801,498 Morgan Stanley Asset Management, Inc. 2,661,592(8) 755,997(8) Heritable & General Investment Bank Ltd. 307,996 307,996 Zaphiriou Zarifi Overseas Equities, Inc. 419,998 419,998 Singer & Friedlander (IOM) Ltd. 419,998 419,998 Smith Barney Inc. (3) 491,959 491,959 The Weinress Group (4) 20,158 20,158 Henderson Crosthwaite Institutional Brokers Ltd. (3) 14,558 14,558 Henry Ansbacher & Co. Limited(5) 30,000 30,000 ING Baring (U.S.) Capital Corporation(5) 500,000(9) 500,000(9) Hunter & Company(3) 50,000(10) 50,000(10) Board of Trustees of the Policemen & Firemen Retirement System of the City of Detroit 83,999 83,999 Irving B. Harris Revocable Trust 145,598 145,598 Roxanne H. Frank Trust 60,198 60,198 Harris Foundation 16,798 16,798 Couderay Partners 33,598 33,598 Jerome Kahn, Jr. Revocable Trust 23,798 23,798 Mark A. Liggett(6) 419,357 375,000 - ----------------------------- (1) The Selling Security Holders are not required to sell all or any part of the Shares covered by this Prospectus; therefore, the number and percentage of outstanding Shares to be held by them after completion of the offering may exceed that indicated herein. (2) Includes Option Shares and Warrant Shares offered under this Prospectus which have not yet been issued. (3) Consultant to the Company. (4) A consulting firm which is an affiliate of a former Director of the Company. (5) Lender or former lender to the Company. (6) Employee of the Company. (7) Assuming the sale of all Shares covered by this Prospectus, Capital Group Companies, Inc. would continue to beneficially own 1,665,000 shares of Common Stock, or 5.0% of the total outstanding. (8) Assuming the sale of all Shares covered by this Prospectus, Morgan Stanley Asset Management, Inc. would continue to beneficially own 1,905,595 shares of Common Stock, or 5.8% of the total outstanding. (9) Includes 75,000 Warrant Shares underlying Warrants which are exercisable for five years beginning on April 30, 1997 at an exercise price of $5.03 per share, 75,000 Warrant Shares underlying Warrants which are exercisable for five years beginning on April 30, 1998 at an exercise price of $11.8125 per share, 200,000 Warrant Shares underlying Warrants which are exercisable for seven years beginning on November 25, 1997 at an exercise price of $7.00 per share, 112,500 Warrant Shares underlying Warrants which are exercisable for seven years beginning on April 13, 1998 at an exercise price of $7.00 per share, and 37,500 Warrant Shares underlying Warrants which are exercisable for seven years beginning on May 11, 1998 at an exercise price of $7.00 per share. (10) Includes 50,000 Option Shares underlying Options exercisable at $5.50 per share, which expire January 9, 2000. PLAN OF DISTRIBUTION The Company has been advised by the Selling Security Holders that there are no underwriting arrangements with respect to the sale of the Shares and Warrants, that the Shares and Warrants will be sold from time to time (i) as to the Shares only, in the over-the-counter market (through Nasdaq) at then prevailing prices, or (ii) as to the Shares and the Warrants, in private transactions at negotiated prices, and that usual and customary brokerage fees may be paid by the Selling Security Holders in connection therewith. The Company will receive none of the proceeds from sales by the Selling Security Holders of the Shares and Warrants. In connection with such sales, the Selling Security Holders and any participating broker may be deemed to be "underwriters" of the Shares and Warrants, as such term is defined in the Act, although the offering of the Shares and Warrants will not be underwritten by a broker-dealer or investment banking firm. Sales of the Shares may be made in the over-the-counter market to broker-dealers making a market in the Common Stock or to other broker-dealers, and such broker-dealers, upon their resale of the Shares, may also be deemed to be "underwriters" under the Act. The Company has agreed to indemnify certain of the Selling Security Holders against liabilities they may incur as a result of any untrue statement of a material fact in the Registration Statement of which this Prospectus forms a part, or any omission herein or therein to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. Such indemnification includes liabilities that such Selling Security Holders may incur under the Act. No such indemnification must be given by the Company if the untrue statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by the Selling Security Holder for use in the Registration Statement. The Company will bear all costs and expenses of the registration of the Shares and Warrants under the Act and certain state securities laws, other than fees of counsel (if any) retained by the Selling Security Holders and any discounts or commissions payable with respect to sales of the Shares and Warrants. The Company has advised the Selling Security Holders of (i) the requirement for delivery of this Prospectus in connection with any sale of the Shares or Warrants, and (ii) the relevant cooling off period specified by Regulation M and restrictions upon the Selling Security Holders' bidding for or purchasing securities of the Company during the distribution of Shares and Warrants. DESCRIPTION OF SECURITIES GENERAL The Company is authorized to issue 45,000,000 shares of Common Stock, par value $.01 per share, and 100,000 shares of Preferred Stock, par value $.01 per share ("Preferred Stock"). COMMON STOCK Holders of Common Stock are entitled to one vote, either in person or by proxy, for each share held of record by them on all matters submitted to a vote of stockholders. Except as otherwise provided by law, action can be taken by a majority of shares entitled to vote at a meeting. Holders of Common Stock have no cumulative voting rights. Holders of Common Stock are entitled to dividends when, as and if declared by the Board of Directors out of funds legally available therefor, subject to the prior rights of the holders of any Preferred Stock. In the event of liquidation or dissolution and winding up of the Company, holders of Common Stock are entitled to share ratably in the assets of the Company remaining after payment of liabilities and after provision has been made for each class of stock, including any Preferred Stock outstanding at that time, that has preference over the Common Stock. Holders of Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. All of the outstanding shares of Common Stock are, and, when issued, the Option Shares and Warrant Shares offered under this Prospectus will be, fully paid and nonassessable. PREFERRED STOCK Shares of Preferred Stock may be issued without stockholder approval. The Board of Directors is authorized to issue such shares in one or more series and to fix the rights, preferences, powers, qualifications, limitations and restrictions thereof, including dividend rights and rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of such series, without any vote or action by the stockholders. To date the Board of Directors has designated three series of Preferred Stock for issuance, including (i) up to 60,000 shares of Series A Preferred, of which 27,631 shares have been issued and no shares currently remain outstanding; (ii) up to 1,000 shares of Series B Preferred, of which 1,000 shares have been issued and no shares currently remain outstanding; and (iii) up to 365 shares of Series C Preferred, of which 340 shares have been issued and no shares currently remain outstanding. The Series A Preferred is convertible into shares of Common Stock, at the option of the holder, at a price of $3.75 per share. Holders thereof are entitled to cumulative dividends payable at a rate of 6% per annum. The Series A Preferred is also mandatorily convertible in full at the option of the Company at any time prior to May 12, 1997 provided that, as a condition to such conversion, the Company shall pay to holders one full year's worth of dividends (less the amount of any dividends theretofore paid). The Company exercised this right effective May 7, 1997, and the then outstanding shares of Series A Preferred were converted into 7,314,917 shares of Common Stock. Both the Series B Preferred and the Series C Preferred are convertible into shares of Common Stock at a price equal to the lower of (a) $5.8125 per share or (b) 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. All shares of Series B Preferred and Series C Preferred issued to date have been converted to Common Stock. Holders thereof are also entitled to cumulative dividends at the rate of 6% per annum until conversion. The Company reserves the right to redeem any convertible shares of Preferred Stock for their full cash equivalent by giving the investors five days' notice. Subject to the rights of creditors, holders of Series A Preferred are entitled, in the event of any voluntary or involuntary liquidation of the Company, to an amount in cash equal to $1,000 for each share outstanding and for each share issuable with respect to all accrued and unpaid dividends. Holders of Series B Preferred and Series C Preferred have similar liquidation rights as to an amount in cash equal to $10,000 for each share outstanding and for each share issuable with respect to all accrued and unpaid dividends. In the event of such a liquidation, the Series A Preferred, Series B Preferred and Series C Preferred would rank equally with each other and on a parity with any other class or series of Preferred Stock of the Company, and would rank senior and prior to the Company's Common Stock. Except as provided by law, holders of Series A Preferred, Series B Preferred and Series C Preferred shall not be entitled to vote upon any matter submitted to a vote of the Company's stockholders. As of the date of this Prospectus, the Company has no current plans for the issuance of any additional shares of Preferred Stock. The Company's ability to issue additional Preferred Stock is restricted by covenants in the Sun World Indenture. However, any Preferred Stock that may be issued in the future could rank prior to the Common Stock offered hereby with respect to dividend rights and rights on liquidation. The Board of Directors may, without stockholder approval, issue Preferred Stock with voting and conversion rights that could adversely affect the voting power of holders of the Common Stock offered hereby or create impediments to persons seeking to gain control of the Company, although there is no present intention to do so. The issuance of such shares could prevent holders of the Company's Common Stock from receiving a premium for their shares from a potential third-party acquiror. See "Risk Factors - Authorization of "Blank Check" Preferred Stock." WARRANTS A total of 500,000 Warrants are offered for sale hereby by an institutional lender to the Company. 75,000 Warrants are exercisable until April 30, 2002 for the purchase of up to 75,000 Warrant Shares at an exercise price equal to $5.03 per share, 75,000 Warrants are exercisable until April 30, 2003 for the purchase of up to 75,000 Warrant Shares at an exercise price equal to $11.8125, 200,000 Warrants are exercisable until November 25, 2004 for the purchase of up to 200,000 Warrant Shares at an exercise price equal to $7.00 per share, 112,500 Warrants are exercisable until April 13, 2005 for the purchase of up to 112,500 Warrant Shares at an exercise price equal to $7.00 per share, and up to 37,500 Warrants are exercisable until May 11, 2005 for the purchase of up to 37,500 Warrant Shares at an exercise price equal to $7.00 per share. The exercise price and the number and kind of securities which can be purchased upon exercise of all of the Warrants are subject to standard anti-dilution and other adjustments to be made from time to time in the event of any (i) dividend or distribution in shares of Common Stock, (ii) subdivision, reclassification or combination of Common Stock, (iii) issuance to all holders of Common Stock of rights or warrants entitling them to purchase shares of Common Stock at a price less than the current market price of the Common Stock, (iv) issuance to all holders of Common Stock of evidences of the Company's indebtedness or assets (excluding cash dividends or distributions) or rights or warrants (excluding those referred to in (iii) above), or (v) issuance of shares of Common Stock, or securities convertible into or exchangeable for shares of Common Stock, at a price less than the current market price of the Common Stock. TRANSFER AGENT The transfer agent for the Company's Common Stock is Continental Stock Transfer & Trust Company, New York, New York. LEGAL MATTERS Certain legal matters in connection with the issuance of the securities offered hereby will be passed upon for the Company by Miller & Holguin, attorneys at law, Los Angeles, California. EXPERTS The consolidated financial statements of the Company contained in the Annual Report on Form 10-K of the Company for the year ended December 31, 1997 and incorporated in this Prospectus by reference, have been so included in reliance on the reports of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing. PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The Company estimates that expenses in connection with the distribution described in this Registration Statement will be as shown below. All expenses incurred with respect to the distribution will be paid by the Company. See "Plan of Distribution." SEC registration fee..........................$ 22,667.58 Printing expenses............................. 4,000.00 Accounting fees and expenses.................. 5,000.00 Legal fees and expenses....................... 7,000.00 Miscellaneous................................. 5,000.00 ---------- Total $ 43,667.58 ============ ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law permits the Company's Board of Directors to indemnify any person against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding in which such person is made a party by reason of his being or having been a director, officer, employee or agent of the Company, in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act of 1933, as amended (the "Act"). The statute provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Company's Bylaws provide for mandatory indemnification of directors and officers of the Company, and those serving at the request of the Company as directors, officers, employees, or agents of other entities (collectively, "Agents"), to the maximum extent permitted by law. The Bylaws provide that such indemnification shall be a contract right between each Agent and the Company. In 1990, the Company entered into an Indemnity Agreement with each of the individuals then serving as an executive officer or director of the Company, including Keith Brackpool, the current Chief Executive Officer of the Company. The Indemnity Agreement as to Mr. Brackpool remains in effect; all of the other executive officers and directors who executed an Indemnity Agreement with the Company have since resigned from their positions with the Company. The Indemnity Agreement provides for the indemnification of the indemnified party with respect to his activities as a director or officer of the Company or an affiliate of the Company against expenses and liabilities, of whatever nature, incurred in connection with any claim made against him by reason of facts which include his affiliation with the Company. Such indemnification is provided to the maximum extent permitted by the Company's charter documents, insurance policies and/or any applicable law. The Subscription Agreements between the Company and the purchasers (the "Purchasers") of certain of the securities registered for resale hereunder provide that the Company shall indemnify the Purchasers under certain circumstances and the Purchasers shall indemnify the Company and controlling persons of the Company under certain circumstances, including indemnification for liabilities arising under the Act. The Warrants registered hereunder also include similar indemnification provisions. The Company's Certificate of Incorporation provides that a director of the Company shall not be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. The Company also has purchased a liability insurance policy which insures its directors and officers against certain liabilities, including liabilities under the Act. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) EXHIBITS The following exhibits are filed or incorporated by reference as part of this Registration Statement. 4.1 Specimen Form of Stock Certificate for the Company's registered stock(1) 4.2 Certificate of Designations of 6% Convertible Series A Preferred Stock(2) 4.3 Certificate of Designations of 6% Convertible Series B Preferred Stock(3) 4.4 Certificate of Designations of 6% Convertible Series C Preferred Stock(2) 4.5 Indenture dated as of April 16, 1997 among Sun World as issuer, the Company and certain subsidiaries of Sun World as guarantors, and IBJ Schroder Bank & Trust Company as Trustee, for the benefit of holders of 11-1/4% First Mortgage Notes due 2004(4) 4.6 Warrant to purchase 75,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of March 31, 1997. 4.7 Warrant to purchase 75,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of March 31, 1997. 4.8 Warrant to purchase 200,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of November 25, 1997. 4.9 Warrant to purchase 150,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of November 25, 1997. 5.1 Opinion of Miller & Holguin as to certain corporate law matters 23.1 Consent of Price Waterhouse LLP 23.2 Consent of Miller & Holguin (included in Exhibit 5.1) 27.1 Financial Data Schedule(5)(6) - ------------------------------------ (1) Previously filed as Exhibit to the Company's Report on Form 8-K dated May 6, 1992 (2) Previously filed as Exhibit to the Company's Report on Form 8-K dated September 13, 1996 (3) Previously filed as Exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996 (4) Previously filed as Exhibit to Amendment No. 1 to the Company's Form S-1 Registration Statement No. 333-19109 (5) Previously filed as Exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 (6) Previously filed as Exhibit to the Company's Report on Form 10-Q for the quarter ended March 31, 1997 ITEM 17. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post- effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. (h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Monica, State of California, on May 18, 1998. CADIZ LAND COMPANY, INC. By: /s/ Keith Brackpool ------------------------------ Keith Brackpool Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Dwight W. Makins Chairman of the Board May 18, 1998 - -------------------------- and Director /s/ Keith Brackpool Chief Executive Officer May 18, 1998 - ------------------------- and Director Keith Brackpool (Principal Executive Officer) /s/ Russ Hammond Director May 18, 1998 - ------------------------- Russ Hammond /s/ Murray Hutchison Director May 18, 1998 - ------------------------- Murray Hutchison /s/ Mitt Parker Director May 18, 1998 - ------------------------- Mitt Parker /s/ Stanley E. Speer Chief Financial Officer May 18, 1998 - ------------------------- and Secretary Stanley E. Speer (Principal Financial and Accounting Officer) EXHIBITS INDEX - ---------- -------------------------- ----------- 4.1 Specimen Form of Stock Certificate for the Company's registered stock(1) * 4.2 Certificate of Designations of 6% Convertible Series A Preferred Stock(2) * 4.3 Certificate of Designations of 6% Convertible Series B Preferred Stock(3) * 4.4 Certificate of Designations of 6% Convertible Series C Preferred Stock(2) * 4.5 Indenture dated as of April 16, 1997 among Sun World as issuer, the Company and certain subsidiaries of Sun World as guarantors, and IBJ Schroder Bank & Trust Company as Trustee, for the benefit of holders of 11-1/4% First Mortgage Notes due 2004( 4) * 4.6 Warrant to purchase 75,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of March 31, 1997 __ 4.7 Warrant to purchase 75,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of March 31, 1997 __ 4.8 Warrant to purchase 200,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of November 25, 1997 __ 4.9 Warrant to purchase 150,000 shares of Common Stock of the Company in favor of ING Baring (U.S.) Capital Corporation dated as of November 25, 1997 __ 5.1 Opinion of Miller & Holguin as to certain corporate law matters __ 23.1 Consent of Price Waterhouse LLP __ 23.2 Consent of Miller & Holguin (included in Exhibit 5.1) __ 27.1 Financial Data Schedule(5)(6) * - ----------------------------------------- * Incorporated by reference (1) Previously filed as Exhibit to the Company's Report on Form 8-K dated May 6, 1992 (2) Previously filed as Exhibit to the Company's Report on Form 8-K dated September 13, 1996 (3) Previously filed as Exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996 (4) Previously filed as Exhibit to Amendment No. 1 to the Company's Form S-1 Registration Statement No. 333-19109 (5) Previously filed as Exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1997 (6) Previously filed as Exhibit to the Company's Report on Form 10-Q for the quarter ended March 31, 1997 EX-4.6 2 EXHIBIT 4.6 --------- THE WARRANTS AND WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE WARRANTS AND THE WARRANT SHARES MAY NOT BE SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS AND WARRANT SHARES OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AS AMENDED. Void after 5:00 p.m. New York Time, on the Expiration Date. Warrant to Purchase 75,000 Shares of Common Stock. WARRANT TO PURCHASE COMMON STOCK OF CADIZ LAND COMPANY, INC. This is to Certify that, FOR VALUE RECEIVED, ING Baring (U.S.) Capital Corporation ("ING"), or assigns ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Cadiz Land Company, Inc., a Delaware corporation ("Company"), 75,000 shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at a price per share equal to the average daily closing price of the Common Stock (determined in accordance with the second sentence of Section (f)(8) below) over the ten trading day period ending on and including April 29, 1997 at any time during the period from the earlier of (a) April 30, 1997 (if the Extension (as defined below) is exercised) or May 30, 1997 (the "Initial Exercise Date") to the fifth anniversary of the Initial Exercise Date (the "Expiration Date"), but not later than 5:00 p.m., New York Time, on the Expiration Date. The shares of Common Stock (or other stock or securities) deliverable upon such exercise are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of each share of Common Stock (as such price may be adjusted from time to time as provided herein) is hereinafter sometimes referred to as the "Exercise Price". Notwithstanding anything to the contrary set forth herein, this Warrant shall not be exercisable by the Holder unless and until (i) the Company has exercised its option to extend the maturity date of the Borrowers' Obligations (as defined in that certain Global Amendment Agreement by and between the Company, its wholly owned subsidiary Cadiz Valley Development Corp., and ING dated March 31, 1997) from April 30, 1997 to April 30, 1998 (the "Extension"), or (ii) if the Company has not theretofore exercised the Extension, the Borrowers' Obligations shall not have been repaid in full on or before May 30, 1997. Should the Borrowers' Obligations be repaid by the Company in full at any time on or prior to the Initial Exercise Date, then this Warrant shall immediately upon such repayment and without the requirement of notice be canceled and shall be of no further force and effect. (a) EXERCISE OF WARRANT. Subject to the provisions of Section (k) hereof, this Warrant may be exercised in whole or in part at any time or from time to time on or after the Initial Exercise Date and until the Expiration Date, or if either such day is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. The Holder may exercise this Warrant, in whole or in part, without the payment of any cash or other property, by presentation and surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Purchase Form duly executed and accompanied by a written request from the Holder instructing the Company to issue to the Holder a number of Warrant Shares equal to the product of (1) a fraction, (i) the numerator of which shall be the excess of the current market price (as defined in Section (f)(8) below) of the Common Stock on the date preceding the date of such exercise of the Warrant over the then Exercise Price per Warrant Share and (ii) the denominator of which shall be the current market price (as defined in Section (f)(8) below) of the Common Stock on such date, times (2) the number of Warrant Shares as to which the Warrant is being exercised. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. The Company shall pay all expenses, transfer taxes and other charges payable in connection with the preparation, issue and delivery of stock certificates under this Section (a), except that, in case such stock certificates shall be registered in a name or names other than the name of the holder of this Warrant, all stock transfer taxes which shall be payable upon the issuance of such stock certificate or certificates shall be paid by the Holder at the time of delivering the Purchase Form. (b) RESERVATION OF SHARES. The Company hereby agrees that at all times following the Initial Exercise Date there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock (or other stock or securities deliverable upon exercise of this Warrant) as shall be required for issuance and delivery upon exercise of this Warrant. All shares of Common Stock issuable upon the exercise of this Warrant shall be duly authorized, validly issued, fully paid and nonassessable and free and clear of all liens and other encumbrances. (c) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a National Securities Exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq system, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked prices reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount not less than the book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in good faith and in such reasonable manner as may be prescribed by the Board of Directors of the Company, and reasonably acceptable to the Holder. (d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. This Warrant is transferable and may be assigned or hypothecated, in whole or in part, at any time and from time to time from the date hereof. Subject to the provisions of Section (k), upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant registered in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the case of loss, theft or destruction, of reasonably satisfactory indemnification and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. Furthermore, the Holder by acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of this Warrant, including, without limitation, all the obligations imposed upon the holder hereof by Section (k). In addition, the holder of this Warrant, by accepting the same, agrees that the Company and the transfer agent may deem and treat the person in whose name this Warrant is registered as the absolute, true and lawful owner for all purposes whatsoever, and neither the Company nor the transfer agent shall be affected by any notice to the contrary. (f) ANTI-DILUTION PROVISIONS. The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant (the "Warrant Shares") shall be subject to adjustment from time to time upon the happening of certain events as hereinafter provided. The Exercise Price in effect at any time and the Warrant Shares shall be subject to adjustment as follows: (1) In case the Company shall (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock in shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares, then (x) if such event should occur prior to the Initial Exercise Date, then the aggregate number and kind of Warrant Shares shall be proportionately adjusted so that the Holder of this Warrant exercised after such date shall be entitled to receive the aggregate number and kind of shares which, if this Warrant had been exercised by such Holder immediately prior to such date, such Holder would have owned upon such exercise and been entitled to receive upon such dividend, distribution, subdivision, combination or reclassification. For example, if the Company declares a 2 for 1 stock dividend or stock split and the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such event was 75,000, the adjusted number of shares of Common Stock issuable upon exercise of this Warrant immediately after such event would be 150,000; (y) if such event should occur on or subsequent to the Initial Exercise Date, then the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification shall be adjusted so that such Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date by a fraction, the numerator of which is the number of shares of Common Stock outstanding on such record date or effective date, and the denominator of which is the number of shares of Common stock outstanding immediately after such dividend, distribution, subdivision, combination or reclassification. For example, if the Company declares a 2 for 1 stock dividend or stock split and the Exercise Price immediately prior to such event was $10.00 per share, the adjusted Exercise Price immediately after such event would be $5.00 per share. Such adjustment shall be made successively whenever any event listed in this Subsection (1) shall occur. (2) In case the Company shall hereafter issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the current market price of the Common Stock (as defined in Subsection (8) below) on the record date mentioned below, then (x) if such event should occur prior to the Initial Exercise Date, the aggregate number and kind of Warrant Shares shall be adjusted so that the same shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior to the record date mentioned below by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding on such record date and the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible), and the denominator of which shall be the sum of the number of shares of Common Stock outstanding on the record date mentioned below and the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such current market price per share of the Common Stock. Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants; and to the extent that shares of Common Stock are not delivered (or securities convertible into Common Stock are not delivered) after the expiration of such rights or warrants the number of Warrant Shares shall be readjusted to the number of Warrant Shares which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. (y) if such event should occur on or subsequent to the Initial Exercise Date, the Exercise Price shall be adjusted so that the same shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the record date mentioned below by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding on the record date mentioned below and the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such current market price per share of the Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding on such record date and the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants; and to the extent that shares of Common Stock are not delivered (or securities convertible into Common Stock are not delivered) after the expiration of such rights or warrants the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. (3) In case the Company shall hereafter distribute to all holders of its Common Stock evidences of its indebtedness or assets (excluding regular cash dividends or distributions and dividends or distributions referred to in Subsection (1) above) or subscription rights or warrants (excluding those referred to in Subsection (2) above), then (x) if such event should occur prior to the Initial Exercise Date, in each such case the aggregate number and kind of Warrant Shares shall be adjusted so that the same shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in Subsection (8) below), and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock, less the aggregate fair market value (as determined in good faith by the Company's Board of Directors and reasonably acceptable to the Holder) of said assets or evidences of indebtedness so distributed or of such rights or warrants. (y) if such event should occur on or subsequent to the Initial Exercise Date, in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in Subsection (8) below), less the aggregate fair market value (as determined in good faith by the Company's Board of Directors and reasonably acceptable to the Holder ) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock. Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (4) In case the Company shall issue shares of its Common Stock [excluding shares issued (i) in any of the transactions described in Subsection (1) above, (ii) upon exercise of options granted to the Company's employees under a plan or plans adopted by the Company's Board of Directors and approved by its shareholders, if such shares would otherwise be included in this Subsection (4), (but only to the extent that the aggregate number of shares excluded hereby and issued after the date hereof, shall not exceed 5% of the Company's Common Stock outstanding at the time of any issuance), (iii) upon exercise of options and warrants outstanding at the date hereof, and this Warrant, (iv) upon the exercise of any convertible security as to which the Exercise Price has already been adjusted pursuant to Subsection (5) below, and (v) to shareholders of any corporation which merges into the Company in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger, or issued in a bona fide public offering pursuant to a firm commitment underwriting, but only if no adjustment is required pursuant to any other specific subsection of this Section (f) (without regard to Subsection (9) below) with respect to the transaction giving rise to such rights] for a consideration per share less than the current market price per share defined in Subsection (8) below, then on the date the Company fixes the offering price of such additional shares: (x) if such event should occur prior to the Initial Exercise Date, in each such case the aggregate number and kind of Warrant Shares shall be adjusted immediately thereafter so that the same shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for the issuance of such additional shares would purchase at such current market price per share of Common Stock. (y) if such event should occur on or subsequent to the Initial Exercise Date, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for the issuance of such additional shares would purchase at such current market price per share of Common Stock, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues shares of Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (5), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (5) In case the Company shall issue any securities convertible into or exchangeable for its Common Stock [excluding securities issued in transactions described in Subsections (2) and (3) above] for a consideration per share of Common Stock initially deliverable upon conversion or exchange of such securities [determined as provided in Subsection (7) below] less than the current market price per share [as defined in Subsection (8) below] in effect immediately prior to the issuance of such securities,, then (x) if such event should occur prior to the Initial Exercise Date, in each case the aggregate number and kind of Warrant Shares shall be adjusted immediately thereafter so that it shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance and the maximum number of shares of Common Stock of the Company deliverable upon conversion of or in exchange for such securities at the initial conversion or exchange price or rate, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for such securities would purchase at such current market price per share of Common Stock. (y) if such event should occur on or subsequent to the Initial Exercise Date, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for such securities would purchase at such current market price per share of Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance and the maximum number of shares of Common Stock of the Company deliverable upon conversion of or in exchange for such securities at the initial conversion or exchange price or rate. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues securities convertible into or exchangeable for a number of shares of its Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (4), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (6) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsections (1), (2), (3), (4) and (5) above, the number of Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price, as adjusted. (7) For purposes of any computation respecting consideration received pursuant to Subsections (4) and (5) above, the following shall apply: (A) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith: (B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof) and reasonably acceptable to the Holder; and (C) in the case of the issuance of securities convertible into or exchangeable for shares of Common Stock, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof [the consideration in each case to be determined in the same manner as provided in clauses (A) and (B) of this Subsection (7)]. (8) For the purpose of any computation under Subsections (2), (3), (4) and (5) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily closing prices for 30 consecutive business days before such date. The closing price for each day shall be the last sale price regular way or, in case no such reported sale takes place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or if not listed or admitted to trading on such exchange, the average of the last reported bid and asked prices as reported by Nasdaq, or other similar organization if Nasdaq is no longer reporting such information, of if not so available, the fair market price as determined in good faith by the Board of Directors and reasonably acceptable to the Holder. (9) No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five cents ($0.05) in such price; provided, however, that any adjustments which by reason of this Subsection (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment required to be made hereunder. All calculations under this Section (f) shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Anything in this Section (f) to the contrary notwithstanding, the Company shall be entitled, but shall not be required, to reduce the Exercise Price, in addition to those changes required by this Section (f), as it, in its sole discretion, shall determine to be advisable in order that any dividend or distribution in shares of Common Stock, subdivision, reclassification or combination of Common Stock, issuance of warrants to purchase Common Stock or distribution or evidences of indebtedness or other assets (excluding cash dividends) referred to hereinabove in this Section (f) hereafter made by the Company to the holders of its Common Stock shall not result in any tax to such holders of its Common Stock or securities convertible into Common Stock. (10) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsections (1) to (9), inclusive above. The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by Section (f), and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment absent manifest error or negligence. (11) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant. (g) OFFICER'S CERTIFICATE. Whenever the Exercise Price or number of Warrant Shares shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price or number of Warrant Shares determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to Sections (a) and (d) and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to such Holder or any such holder. (h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of or class of its capital stock or any other rights or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another entity, sale, lease, or transfer of all or substantially all of the property and assets of the Company to another entity, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior the record date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or offer of rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall be entitled to receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale, dissolution, liquidation or winding up. (i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another entity (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease, or conveyance to another entity of all or substantially all of the property and assets of the Company, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that such Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale, lease or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale, lease or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations, and changes of shares of Common Stock and to successive consolidations, mergers, sales, leases or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale, lease or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution, or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section (f) hereof. (j) REGISTRATION UNDER THE SECURITIES ACT OF 1933. (1) The Company shall advise the Holder of this Warrant or of the Warrant Shares or any then holder of Warrants or Warrant Shares (such persons being collectively referred to herein as "holders") by written notice at least four weeks prior to the filing of any new registration statement under the Securities Act of 1933, as amended, or the Rules and Regulations promulgated thereunder (such Act and Rules and Regulations being hereinafter referred to as the "Act") covering securities of the Company and will for a period ending on the second anniversary of the Initial Exercise Date and commencing as of the date hereof, upon the request of any such holder, include in any such registration statement such information as may be required to permit a public offering of the Warrants and the Warrant Shares. The Company shall supply prospectuses, use its best efforts to cause the registration statement to become effective and to qualify the Warrants and/or the Warrant Shares for sale in such states as any such holder designates and furnish indemnification in the manner as set forth in Subsection (2)(B) of this Section (j). Such holders shall furnish information and indemnification as set forth in Subsection (2)(B) of this Section (j). (2) The following provision of this Section (j) shall also be applicable: (A) The Company shall bear the entire cost and expense of any registration of securities initiated by it under Subsection (1) of this Section (j) notwithstanding that Warrants and/or Warrant Shares subject to this Warrant may be included in any such registration. Any holder whose Warrants and/or Warrant Shares are included in any such registration statement pursuant to this Section (j) shall, however, bear the fees of such holder's own counsel and any registration fees, transfer taxes or underwriting discounts or commissions applicable to the Warrant Shares sold by such holder pursuant thereto. (B) (i) The Company shall indemnify and hold harmless each such holder and each underwriter, within the meaning of the Act, who may purchase from or sell for any such holder any Warrants and/or Warrant Shares (in the case of indemnification of such underwriter) from and against any and all losses, claims, damages and liabilities ("Losses") arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any post-effective amendment thereto under the Act or any prospectus included therein required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Losses arise out of or are based upon any such untrue statement or alleged untrue statement or omission or alleged omission based upon information furnished or required to be furnished in writing to the Company by such holder, in the case of indemnification of such holder, or underwriter, in the case of indemnification of such underwriter, expressly for use therein, which indemnification shall include each person, if any, who controls any such holder or underwriter within the meaning of such Act; provided, however, that the Company shall not be obliged so to indemnify any such holder or underwriter or controlling person unless such holder or underwriter shall at the same time indemnify, severally and not jointly, the Company, its directors, each officer signing the related registration statement and each person, if any, who controls the Company within the meaning of such Act, from and against any and all Losses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any prospectus required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement or omission made in conformity with information furnished in writing to the Company by any such holder or underwriter expressly for use therein. (ii) If the indemnity obligation provided for above is unavailable or insufficient to hold harmless an indemnified party in respect of any Losses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by PRO RATA allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the previous sentence. (C) Notwithstanding anything herein to the contrary, the Holder hereof shall have no rights to have the Warrants or Warrant Shares registered if in the opinion of either counsel for the Company, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Holder hereof in the reasonable judgement of such Holder), or counsel for the Holder hereof, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Company in the Company's reasonable judgement), the Holder hereof may lawfully sell publicly, at the time and in the manner the Holder hereof proposes to sell the Warrants or the Warrant Shares, all of the securities proposed to be sold without registering the sale under the Act, whether pursuant to an exemption from registration available under Section 4(1) of the Act, Rule 144 or Rule 144(k) under the Act, or otherwise. (D) The Company will (a) file reports in compliance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) comply with all rules and regulations of the Securities and Exchange Commission (the "Commission") applicable in connection with the use of Rule 144 under the Act and take such other actions and furnish the Holder with such other information as such Holder may request in order to avail itself of such rule or any other rule or regulation of the Commission allowing such Holder to sell any Warrants or Warrant Shares without registration, and (c) at its expense, upon the request of the Holder, deliver to such Holder a certificate, signed by the Company's principal financial officer, stating (i) the Company's name, address and telephone number (including area code), (ii) the Company's Internal Revenue Service identification number, (iii) the Company's Commission file number, (iv) the number of shares of each class of stock outstanding as shown by the most recent report or statement published by the Company, and (v) whether the Company has filed the reports required to be filed under the Exchange Act for a period of at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder. If at any time the Company is not required to file reports in compliance with either Section 13 or Section 15(d) of the Exchange Act, the Company at its expense will, upon the written request of the Holder, make available adequate current public information with respect to the Company within the meaning of paragraph (c)(2) of Rule 144 under the Act. (k) EXERCISE AND TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. The Holder of this Warrant and any transferee hereof, by their acceptance hereof, hereby agree that: (a) the Warrants being acquired hereunder are being purchased for investment purposes only and not with a view to distribution and will not be transferred unless registered or unless there is an exemption available from the registration requirements of the Act, which exemption has been established to the reasonable satisfaction of the Company; (b) no public distribution of the Warrants or Warrant Shares will be made in violation of the provisions of the Act or any applicable state laws; and (c) during such period as delivery of a prospectus with respect to the Warrants or Warrant Shares may be required by the Act, no public distribution of the Warrants or Warrant Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state laws. The Holder of this Warrant and any such transferee hereof further agree that if any public distribution of any of the Warrants or Warrant shares is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Act, which action shall be taken only after submission to the Company of an opinion of counsel, reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed distribution will not be in violation of the Act or of applicable state law. Furthermore, it shall be a condition to the transfer of the Warrants or Warrant Shares that the transferee thereof deliver to the Company such Holder's written agreement to accept and be bound by all of the terms and conditions of this Warrant. CADIZ LAND COMPANY, INC. By: /s/ Stanley E. Speer ---------------------------- Its: Chief Financial Officer Dated: ___________,_____ PURCHASE FORM Dated:________________ ,_______ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _________shares of Common Stock and hereby makes payment of __________in payment of the actual exercise price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name _____________________________________________________________ (Please typewrite or print in block letters) Address_______________________________________________________ Signature_____________________________________________________ ASSIGNMENT FORM FOR VALUE RECEIVED, _______________________hereby sells, assigns and transfers unto Name ______________________________________________________________ (Please typewrite or print in block letters) Address _____________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of ___________shares as to which such right is exercisable and does hereby irrevocably constitute and appoint _______________Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Date _________________,_______ Signature _____________________________ EX-4.7 3 EXHIBIT 4.7 ------------ THE WARRANTS AND WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE WARRANTS AND THE WARRANT SHARES MAY NOT BE SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS AND WARRANT SHARES OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AS AMENDED. Void after 5:00 p.m. New York Time, on the Expiration Date. Warrant to Purchase 75,000 Shares of Common Stock. WARRANT TO PURCHASE COMMON STOCK OF CADIZ LAND COMPANY, INC. This is to Certify that, FOR VALUE RECEIVED, ING Baring (U.S.) Capital Corporation ("ING"), or assigns ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Cadiz Land Company, Inc., a Delaware corporation ("Company"), 75,000 shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at a price per share equal to the average daily closing price of the Common Stock (determined in accordance with the second sentence of Section (f)(8) below, but subject to adjustment as provided in Section (j)(3) below) over the ten trading day period ending on and including April 29, 1998 at any time during the period from the earlier of (a) April 30, 1998 (if the Extension (as defined below) is exercised) or May 30, 1998 (the "Initial Exercise Date") to the fifth anniversary of the Initial Exercise Date (the "Expiration Date"), but not later than 5:00 p.m., New York Time, on the Expiration Date. The shares of Common Stock (or other stock or securities) deliverable upon such exercise are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of each share of Common Stock (as such price may be adjusted from time to time as provided herein) is hereinafter sometimes referred to as the "Exercise Price". Notwithstanding anything to the contrary set forth herein, this Warrant shall not be exercisable by the Holder unless and until (i) the Company has exercised its option to extend the maturity date of the Borrowers' Obligations (as defined in that certain Global Amendment Agreement by and between the Company, its wholly owned subsidiary Cadiz Valley Development Corp., and ING dated March 31, 1997) from April 30, 1998 to April 30, 1999 (the "Extension"), or (ii) if the Company has not theretofore exercised the Extension, the Borrowers' Obligations shall not have been repaid in full on or before May 30, 1998. Should the Borrowers' Obligations be repaid by the Company in full at any time on or prior to the Initial Exercise Date, then this Warrant shall immediately upon such repayment and without the requirement of notice be canceled and shall be of no further force and effect. (a) EXERCISE OF WARRANT. Subject to the provisions of Section (k) hereof, this Warrant may be exercised in whole or in part at any time or from time to time on or after the Initial Exercise Date and until the Expiration Date, or if either such day is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. The Holder may exercise this Warrant, in whole or in part, without the payment of any cash or other property, by presentation and surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Purchase Form duly executed and accompanied by a written request from the Holder instructing the Company to issue to the Holder a number of Warrant Shares equal to the product of (1) a fraction, (i) the numerator of which shall be the excess of the current market price (as defined in Section (f)(8) below) of the Common Stock on the date preceding the date of such exercise of the Warrant over the then Exercise Price per Warrant Share and (ii) the denominator of which shall be the current market price (as defined in Section (f)(8) below) of the Common Stock on such date, times (2) the number of Warrant Shares as to which the Warrant is being exercised. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. The Company shall pay all expenses, transfer taxes and other charges payable in connection with the preparation, issue and delivery of stock certificates under this Section (a), except that, in case such stock certificates shall be registered in a name or names other than the name of the holder of this Warrant, all stock transfer taxes which shall be payable upon the issuance of such stock certificate or certificates shall be paid by the Holder at the time of delivering the Purchase Form. (b) RESERVATION OF SHARES. The Company hereby agrees that at all times following the Initial Exercise Date there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock (or other stock or securities deliverable upon exercise of this Warrant) as shall be required for issuance and delivery upon exercise of this Warrant. All shares of Common Stock issuable upon the exercise of this Warrant shall be duly authorized, validly issued, fully paid and nonassessable and free and clear of all liens and other encumbrances. (c) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a National Securities Exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq system, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked prices reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount not less than the book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in good faith and in such reasonable manner as may be prescribed by the Board of Directors of the Company, and reasonably acceptable to the Holder. (d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. This Warrant is transferable and may be assigned or hypothecated, in whole or in part, at any time and from time to time from the date hereof. Subject to the provisions of Section (k), upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant registered in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the case of loss, theft or destruction, of reasonably satisfactory indemnification and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. Furthermore, the Holder by acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of this Warrant, including, without limitation, all the obligations imposed upon the holder hereof by Section (k). In addition, the holder of this Warrant, by accepting the same, agrees that the Company and the transfer agent may deem and treat the person in whose name this Warrant is registered as the absolute, true and lawful owner for all purposes whatsoever, and neither the Company nor the transfer agent shall be affected by any notice to the contrary. (f) ANTI-DILUTION PROVISIONS. The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant (the "Warrant Shares") shall be subject to adjustment from time to time upon the happening of certain events as hereinafter provided. The Exercise Price in effect at any time and the Warrant Shares shall be subject to adjustment as follows: (1) In case the Company shall (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock in shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares, then (x) if such event should occur prior to the Initial Exercise Date, then the aggregate number and kind of Warrant Shares shall be proportionately adjusted so that the Holder of this Warrant exercised after such date shall be entitled to receive the aggregate number and kind of shares which, if this Warrant had been exercised by such Holder immediately prior to such date, such Holder would have owned upon such exercise and been entitled to receive upon such dividend, distribution, subdivision, combination or reclassification. For example, if the Company declares a 2 for 1 stock dividend or stock split and the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such event was 75,000, the adjusted number of shares of Common Stock issuable upon exercise of this Warrant immediately after such event would be 150,000; (y) if such event should occur on or subsequent to the Initial Exercise Date, then the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification shall be adjusted so that such Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date by a fraction, the numerator of which is the number of shares of Common Stock outstanding on such record date or effective date, and the denominator of which is the number of shares of Common stock outstanding immediately after such dividend, distribution, subdivision, combination or reclassification. For example, if the Company declares a 2 for 1 stock dividend or stock split and the Exercise Price immediately prior to such event was $10.00 per share, the adjusted Exercise Price immediately after such event would be $5.00 per share. Such adjustment shall be made successively whenever any event listed in this Subsection (1) shall occur. (2) In case the Company shall hereafter issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the current market price of the Common Stock (as defined in Subsection (8) below) on the record date mentioned below, then (x) if such event should occur prior to the Initial Exercise Date, the aggregate number and kind of Warrant Shares shall be adjusted so that the same shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior to the record date mentioned below by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding on such record date and the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible), and the denominator of which shall be the sum of the number of shares of Common Stock outstanding on the record date mentioned below and the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such current market price per share of the Common Stock. Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants; and to the extent that shares of Common Stock are not delivered (or securities convertible into Common Stock are not delivered) after the expiration of such rights or warrants the number of Warrant Shares shall be readjusted to the number of Warrant Shares which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. (y) if such event should occur on or subsequent to the Initial Exercise Date, the Exercise Price shall be adjusted so that the same shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the record date mentioned below by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding on the record date mentioned below and the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such current market price per share of the Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding on such record date and the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants; and to the extent that shares of Common Stock are not delivered (or securities convertible into Common Stock are not delivered) after the expiration of such rights or warrants the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. (3) In case the Company shall hereafter distribute to all holders of its Common Stock evidences of its indebtedness or assets (excluding regular cash dividends or distributions and dividends or distributions referred to in Subsection (1) above) or subscription rights or warrants (excluding those referred to in Subsection (2) above), then (x) if such event should occur prior to the Initial Exercise Date, in each such case the aggregate number and kind of Warrant Shares shall be adjusted so that the same shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in Subsection (8) below), and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock, less the aggregate fair market value (as determined in good faith by the Company's Board of Directors and reasonably acceptable to the Holder) of said assets or evidences of indebtedness so distributed or of such rights or warrants. (y) if such event should occur on or subsequent to the Initial Exercise Date, in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in Subsection (8) below), less the aggregate fair market value (as determined in good faith by the Company's Board of Directors and reasonably acceptable to the Holder ) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock. Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (4) In case the Company shall issue shares of its Common Stock [excluding shares issued (i) in any of the transactions described in Subsection (1) above, (ii) upon exercise of options granted to the Company's employees under a plan or plans adopted by the Company's Board of Directors and approved by its shareholders, if such shares would otherwise be included in this Subsection (4), (but only to the extent that the aggregate number of shares excluded hereby and issued after the date hereof, shall not exceed 5% of the Company's Common Stock outstanding at the time of any issuance), (iii) upon exercise of options and warrants outstanding at the date hereof, and this Warrant, (iv) upon the exercise of any convertible security as to which the Exercise Price has already been adjusted pursuant to Subsection (5) below, and (v) to shareholders of any corporation which merges into the Company in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger, or issued in a bona fide public offering pursuant to a firm commitment underwriting, but only if no adjustment is required pursuant to any other specific subsection of this Section (f) (without regard to Subsection (9) below) with respect to the transaction giving rise to such rights] for a consideration per share less than the current market price per share defined in Subsection (8) below, then on the date the Company fixes the offering price of such additional shares: (x) if such event should occur prior to the Initial Exercise Date, in each such case the aggregate number and kind of Warrant Shares shall be adjusted immediately thereafter so that the same shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior thereto by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for the issuance of such additional shares would purchase at such current market price per share of Common Stock. (y) if such event should occur on or subsequent to the Initial Exercise Date, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for the issuance of such additional shares would purchase at such current market price per share of Common Stock, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues shares of Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (5), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (5) In case the Company shall issue any securities convertible into or exchangeable for its Common Stock [excluding securities issued in transactions described in Subsections (2) and (3) above] for a consideration per share of Common Stock initially deliverable upon conversion or exchange of such securities [determined as provided in Subsection (7) below] less than the current market price per share [as defined in Subsection (8) below] in effect immediately prior to the issuance of such securities,, then (x) if such event should occur prior to the Initial Exercise Date, in each case the aggregate number and kind of Warrant Shares shall be adjusted immediately thereafter so that it shall equal the number determined by multiplying the number of Warrant Shares in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance and the maximum number of shares of Common Stock of the Company deliverable upon conversion of or in exchange for such securities at the initial conversion or exchange price or rate, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for such securities would purchase at such current market price per share of Common Stock. (y) if such event should occur on or subsequent to the Initial Exercise Date, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for such securities would purchase at such current market price per share of Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance and the maximum number of shares of Common Stock of the Company deliverable upon conversion of or in exchange for such securities at the initial conversion or exchange price or rate. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues securities convertible into or exchangeable for a number of shares of its Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (4), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (6) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsections (1), (2), (3), (4) and (5) above, the number of Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price, as adjusted. (7) For purposes of any computation respecting consideration received pursuant to Subsections (4) and (5) above, the following shall apply: (A) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith: (B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof) and reasonably acceptable to the Holder; and (C) in the case of the issuance of securities convertible into or exchangeable for shares of Common Stock, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof [the consideration in each case to be determined in the same manner as provided in clauses (A) and (B) of this Subsection (7)]. (8) For the purpose of any computation under Subsections (2), (3), (4) and (5) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily closing prices for 30 consecutive business days before such date. The closing price for each day shall be the last sale price regular way or, in case no such reported sale takes place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or if not listed or admitted to trading on such exchange, the average of the last reported bid and asked prices as reported by Nasdaq, or other similar organization if Nasdaq is no longer reporting such information, of if not so available, the fair market price as determined in good faith by the Board of Directors and reasonably acceptable to the Holder. (9) No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five cents ($0.05) in such price; provided, however, that any adjustments which by reason of this Subsection (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment required to be made hereunder. All calculations under this Section (f) shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Anything in this Section (f) to the contrary notwithstanding, the Company shall be entitled, but shall not be required, to reduce the Exercise Price, in addition to those changes required by this Section (f), as it, in its sole discretion, shall determine to be advisable in order that any dividend or distribution in shares of Common Stock, subdivision, reclassification or combination of Common Stock, issuance of warrants to purchase Common Stock or distribution or evidences of indebtedness or other assets (excluding cash dividends) referred to hereinabove in this Section (f) hereafter made by the Company to the holders of its Common Stock shall not result in any tax to such holders of its Common Stock or securities convertible into Common Stock. (10) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsections (1) to (9), inclusive above. The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by Section (f), and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment absent manifest error or negligence. (11) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant. (g) OFFICER'S CERTIFICATE. Whenever the Exercise Price or number of Warrant Shares shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price or number of Warrant Shares determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to Sections (a) and (d) and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to such Holder or any such holder. (h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of or class of its capital stock or any other rights or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another entity, sale, lease, or transfer of all or substantially all of the property and assets of the Company to another entity, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior the record date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or offer of rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall be entitled to receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale, dissolution, liquidation or winding up. (i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another entity (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease, or conveyance to another entity of all or substantially all of the property and assets of the Company, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that such Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale, lease or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale, lease or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations, and changes of shares of Common Stock and to successive consolidations, mergers, sales, leases or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale, lease or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution, or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section (f) hereof. (j) REGISTRATION UNDER THE SECURITIES ACT OF 1933. (1) The Company shall advise the Holder of this Warrant or of the Warrant Shares or any then holder of Warrants or Warrant Shares (such persons being collectively referred to herein as "holders") by written notice at least four weeks prior to the filing of any new registration statement under the Securities Act of 1933, as amended, or the Rules and Regulations promulgated thereunder (such Act and Rules and Regulations being hereinafter referred to as the "Act") covering securities of the Company and will for a period ending on the second anniversary of the Initial Exercise Date and commencing as of the date hereof, upon the request of any such holder, include in any such registration statement such information as may be required to permit a public offering of the Warrants and the Warrant Shares. The Company shall supply prospectuses, use its best efforts to cause the registration statement to become effective and to qualify the Warrants and/or the Warrant Shares for sale in such states as any such holder designates and furnish indemnification in the manner as set forth in Subsection (2)(B) of this Section (j). Such holders shall furnish information and indemnification as set forth in Subsection (2)(B) of this Section (j). (2) The following provision of this Section (j) shall also be applicable: (A) The Company shall bear the entire cost and expense of any registration of securities initiated by it under Subsection (1) of this Section (j) notwithstanding that Warrants and/or Warrant Shares subject to this Warrant may be included in any such registration. Any holder whose Warrants and/or Warrant Shares are included in any such registration statement pursuant to this Section (j) shall, however, bear the fees of such holder's own counsel and any registration fees, transfer taxes or underwriting discounts or commissions applicable to the Warrant Shares sold by such holder pursuant thereto. (B) (i) The Company shall indemnify and hold harmless each such holder and each underwriter, within the meaning of the Act, who may purchase from or sell for any such holder any Warrants and/or Warrant Shares (in the case of indemnification of such underwriter) from and against any and all losses, claims, damages and liabilities ("Losses") arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any post-effective amendment thereto under the Act or any prospectus included therein required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Losses arise out of or are based upon any such untrue statement or alleged untrue statement or omission or alleged omission based upon information furnished or required to be furnished in writing to the Company by such holder, in the case of indemnification of such holder, or underwriter, in the case of indemnification of such underwriter, expressly for use therein, which indemnification shall include each person, if any, who controls any such holder or underwriter within the meaning of such Act; provided, however, that the Company shall not be obliged so to indemnify any such holder or underwriter or controlling person unless such holder or underwriter shall at the same time indemnify, severally and not jointly, the Company, its directors, each officer signing the related registration statement and each person, if any, who controls the Company within the meaning of such Act, from and against any and all Losses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any prospectus required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement or omission made in conformity with information furnished in writing to the Company by any such holder or underwriter expressly for use therein. (ii) If the indemnity obligation provided for above is unavailable or insufficient to hold harmless an indemnified party in respect of any Losses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the previous sentence. (C) Notwithstanding anything herein to the contrary, the Holder hereof shall have no rights to have the Warrants or Warrant Shares registered if in the opinion of either counsel for the Company, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Holder hereof in the reasonable judgement of such Holder), or counsel for the Holder hereof, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Company in the Company's reasonable judgement), the Holder hereof may lawfully sell publicly, at the time and in the manner the Holder hereof proposes to sell the Warrants or the Warrant Shares, all of the securities proposed to be sold without registering the sale under the Act, whether pursuant to an exemption from registration available under Section 4(1) of the Act, Rule 144 or Rule 144(k) under the Act, or otherwise. (D) The Company will (a) file reports in compliance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) comply with all rules and regulations of the Securities and Exchange Commission (the "Commission") applicable in connection with the use of Rule 144 under the Act and take such other actions and furnish the Holder with such other information as such Holder may request in order to avail itself of such rule or any other rule or regulation of the Commission allowing such Holder to sell any Warrants or Warrant Shares without registration, and (c) at its expense, upon the request of the Holder, deliver to such Holder a certificate, signed by the Company's principal financial officer, stating (i) the Company's name, address and telephone number (including area code), (ii) the Company's Internal Revenue Service identification number, (iii) the Company's Commission file number, (iv) the number of shares of each class of stock outstanding as shown by the most recent report or statement published by the Company, and (v) whether the Company has filed the reports required to be filed under the Exchange Act for a period of at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder. If at any time the Company is not required to file reports in compliance with either Section 13 or Section 15(d) of the Exchange Act, the Company at its expense will, upon the written request of the Holder, make available adequate current public information with respect to the Company within the meaning of paragraph (c)(2) of Rule 144 under the Act. (3) In the event that, upon the Initial Exercise Date, the Holder hereof may not lawfully sell publicly all of the Warrants or the Warrant Shares, either (x) pursuant to an effective registration statement or (y) without registering the sale under the Act, whether pursuant to an exemption from registration available under Section 4(1) of the Act, Rule 144 or Rule 144(k) under the Act, or otherwise, then, effective upon the Initial Exercise Date, the Exercise Price shall immediately and without the need for any further action on the part of the Holder be reduced to equal 85% of the Exercise Price as would otherwise have been in effect on the Initial Exercise Date but for the application of this Section (j)(3). (k) EXERCISE AND TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. The Holder of this Warrant and any transferee hereof, by their acceptance hereof, hereby agree that: (a) the Warrants being acquired hereunder are being purchased for investment purposes only and not with a view to distribution and will not be transferred unless registered or unless there is an exemption available from the registration requirements of the Act, which exemption has been established to the reasonable satisfaction of the Company; (b) no public distribution of the Warrants or Warrant Shares will be made in violation of the provisions of the Act or any applicable state laws; and (c) during such period as delivery of a prospectus with respect to the Warrants or Warrant Shares may be required by the Act, no public distribution of the Warrants or Warrant Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state laws. The Holder of this Warrant and any such transferee hereof further agree that if any public distribution of any of the Warrants or Warrant shares is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Act, which action shall be taken only after submission to the Company of an opinion of counsel, reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed distribution will not be in violation of the Act or of applicable state law. Furthermore, it shall be a condition to the transfer of the Warrants or Warrant Shares that the transferee thereof deliver to the Company such Holder's written agreement to accept and be bound by all of the terms and conditions of this Warrant. CADIZ LAND COMPANY, INC. By: /s/ Stanley E. Speer ----------------------------- Its: Chief Financial Officer ----------------------------- Dated:-----------,----- PURCHASE FORM Dated: -------------------- The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing ________shares of Common Stock and hereby makes payment of _________in payment of the actual exercise price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name________________________________________________________ (Please typewrite or print in block letters) Address_____________________________________________________ Signature___________________________________________________ ASSIGNMENT FORM FOR VALUE RECEIVED, __________________hereby sells, assigns and transfers unto Name________________________________________________________ (Please typewrite or print in block letters) Address_____________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of _________ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ____________________Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Date _____________________,__________ Signature _____________________________ EX-4.8 4 EXHIBIT 4.8 -------- THE WARRANTS AND WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE WARRANTS AND THE WARRANT SHARES MAY NOT BE SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS AND WARRANT SHARES OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AS AMENDED. Void after 5:00 p.m. New York Time, on the Expiration Date. Warrant to Purchase 200,000 Shares of Common Stock. WARRANT TO PURCHASE COMMON STOCK OF CADIZ LAND COMPANY, INC. This is to Certify that, FOR VALUE RECEIVED, ING Baring (U.S.) Capital Corporation ("ING"), or assigns ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Cadiz Land Company, Inc., a Delaware corporation ("Company"), 200,000 shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at the exercise price of Seven Dollars ($7.00) per share commencing on the date hereof (the "Initial Exercise Date") and ending on the seventh anniversary of the Initial Exercise Date (the "Expiration Date"), but not later than 5:00 p.m., New York Time, on the Expiration Date. The shares of Common Stock (or other stock or securities) deliverable upon such exercise are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of each share of Common Stock (as such price may be adjusted from time to time as provided herein) is hereinafter sometimes referred to as the "Exercise Price". (a) EXERCISE OF WARRANT. Subject to the provisions of Section (k) hereof, this Warrant may be exercised in whole or in part at any time or from time to time on or after the Initial Exercise Date and until the Expiration Date, or if either such day is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. The Holder may exercise this Warrant, in whole or in part, without the payment of any cash or other property, by presentation and surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Purchase Form duly executed and accompanied by a written request from the Holder instructing the Company to issue to the Holder a number of Warrant Shares equal to the product of (1) a fraction, (i) the numerator of which shall be the excess of the current market price (as defined in Section (f)(8) below) of the Common Stock on the date preceding the date of such exercise of the Warrant over the then Exercise Price per Warrant Share and (ii) the denominator of which shall be the current market price (as defined in Section (f)(8) below) of the Common Stock on such date, times (2) the number of Warrant Shares as to which the Warrant is being exercised. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. The Company shall pay all expenses, transfer taxes and other charges payable in connection with the preparation, issue and delivery of stock certificates under this Section (a), except that, in case such stock certificates shall be registered in a name or names other than the name of the holder of this Warrant, all stock transfer taxes which shall be payable upon the issuance of such stock certificate or certificates shall be paid by the Holder at the time of delivering the Purchase Form. (b) RESERVATION OF SHARES. The Company hereby agrees that at all times following the Initial Exercise Date there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock (or other stock or securities deliverable upon exercise of this Warrant) as shall be required for issuance and delivery upon exercise of this Warrant. All shares of Common Stock issuable upon the exercise of this Warrant shall be duly authorized, validly issued, fully paid and nonassessable and free and clear of all liens and other encumbrances. (c) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a National Securities Exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq system, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked prices reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount not less than the book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in good faith and in such reasonable manner as may be prescribed by the Board of Directors of the Company, and reasonably acceptable to the Holder. (d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. This Warrant is transferable and may be assigned or hypothecated, in whole or in part, at any time and from time to time from the date hereof. Subject to the provisions of Section (k), upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant registered in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the case of loss, theft or destruction, of reasonably satisfactory indemnification and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. Furthermore, the Holder by acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of this Warrant, including, without limitation, all the obligations imposed upon the holder hereof by Section (k). In addition, the holder of this Warrant, by accepting the same, agrees that the Company and the transfer agent may deem and treat the person in whose name this Warrant is registered as the absolute, true and lawful owner for all purposes whatsoever, and neither the Company nor the transfer agent shall be affected by any notice to the contrary. (f) ANTI-DILUTION PROVISIONS. The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant (the "Warrant Shares") shall be subject to adjustment from time to time upon the happening of certain events as hereinafter provided. The Exercise Price in effect at any time and the Warrant Shares shall be subject to adjustment as follows: (1) In case the Company shall (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock in shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares, then the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification shall be adjusted so that such Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date by a fraction, the numerator of which is the number of shares of Common Stock outstanding on such record date or effective date, and the denominator of which is the number of shares of Common stock outstanding immediately after such dividend, distribution, subdivision, combination or reclassification. For example, if the Company declares a 2 for 1 stock dividend or stock split and the Exercise Price immediately prior to such event was $7.00 per share, the adjusted Exercise Price immediately after such event would be $3.50 per share. Such adjustment shall be made successively whenever any event listed in this Subsection (1) shall occur. (2) In case the Company shall hereafter issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the current market price of the Common Stock (as defined in Subsection (8) below) on the record date mentioned below, then the Exercise Price shall be adjusted so that the same shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the record date mentioned below by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding on the record date mentioned below and the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such current market price per share of the Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding on such record date and the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants; and to the extent that shares of Common Stock are not delivered (or securities convertible into Common Stock are not delivered) after the expiration of such rights or warrants the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. (3) In case the Company shall hereafter distribute to all holders of its Common Stock evidences of its indebtedness or assets (excluding regular cash dividends or distributions and dividends or distributions referred to in Subsection (1) above) or subscription rights or warrants (excluding those referred to in Subsection (2) above), then in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in Subsection (8) below), less the aggregate fair market value (as determined in good faith by the Company's Board of Directors and reasonably acceptable to the Holder ) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock. Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (4) In case the Company shall issue shares of its Common Stock [excluding shares issued (i) in any of the transactions described in Subsection (1) above, (ii) upon exercise of options granted to the Company's employees under a plan or plans adopted by the Company's Board of Directors and approved by its shareholders, if such shares would otherwise be included in this Subsection (4), (but only to the extent that the aggregate number of shares excluded hereby and issued after the date hereof, shall not exceed 5% of the Company's Common Stock outstanding at the time of any issuance), (iii) upon exercise of options and warrants outstanding at the date hereof, and this Warrant, (iv) upon the exercise of any convertible security as to which the Exercise Price has already been adjusted pursuant to Subsection (5) below, and (v) to shareholders of any corporation which merges into the Company in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger, or issued in a bona fide public offering pursuant to a firm commitment underwriting, but only if no adjustment is required pursuant to any other specific subsection of this Section (f) (without regard to Subsection (9) below) with respect to the transaction giving rise to such rights] for a consideration per share less than the current market price per share defined in Subsection (8) below, then on the date the Company fixes the offering price of such additional shares, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for the issuance of such additional shares would purchase at such current market price per share of Common Stock, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues shares of Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (5), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (5) In case the Company shall issue any securities convertible into or exchangeable for its Common Stock [excluding securities issued in transactions described in Subsections (2) and (3) above] for a consideration per share of Common Stock initially deliverable upon conversion or exchange of such securities [determined as provided in Subsection (7) below] less than the current market price per share [as defined in Subsection (8) below] in effect immediately prior to the issuance of such securities, then the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for such securities would purchase at such current market price per share of Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance and the maximum number of shares of Common Stock of the Company deliverable upon conversion of or in exchange for such securities at the initial conversion or exchange price or rate. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues securities convertible into or exchangeable for a number of shares of its Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (4), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (6) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsections (1), (2), (3), (4) and (5) above, the number of Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price, as adjusted. (7) For purposes of any computation respecting consideration received pursuant to Subsections (4) and (5) above, the following shall apply: (A) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith: (B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof) and reasonably acceptable to the Holder; and (C) in the case of the issuance of securities convertible into or exchangeable for shares of Common Stock, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof [the consideration in each case to be determined in the same manner as provided in clauses (A) and (B) of this Subsection (7)]. (8) For the purpose of any computation under Subsections (2), (3), (4) and (5) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily closing prices for 30 consecutive business days before such date. The closing price for each day shall be the last sale price regular way or, in case no such reported sale takes place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or if not listed or admitted to trading on such exchange, the average of the last reported bid and asked prices as reported by Nasdaq, or other similar organization if Nasdaq is no longer reporting such information, of if not so available, the fair market price as determined in good faith by the Board of Directors and reasonably acceptable to the Holder. (9) No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five cents ($0.05) in such price; provided, however, that any adjustments which by reason of this Subsection (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment required to be made hereunder. All calculations under this Section (f) shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Anything in this Section (f) to the contrary notwithstanding, the Company shall be entitled, but shall not be required, to reduce the Exercise Price, in addition to those changes required by this Section (f), as it, in its sole discretion, shall determine to be advisable in order that any dividend or distribution in shares of Common Stock, subdivision, reclassification or combination of Common Stock, issuance of warrants to purchase Common Stock or distribution or evidences of indebtedness or other assets (excluding cash dividends) referred to hereinabove in this Section (f) hereafter made by the Company to the holders of its Common Stock shall not result in any tax to such holders of its Common Stock or securities convertible into Common Stock. (10) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsections (1) to (9), inclusive above. The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by Section (f), and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment absent manifest error or negligence. (11) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant. (g) OFFICER'S CERTIFICATE. Whenever the Exercise Price or number of Warrant Shares shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price or number of Warrant Shares determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to Sections (a) and (d) and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to such Holder or any such holder. (h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of or class of its capital stock or any other rights or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another entity, sale, lease, or transfer of all or substantially all of the property and assets of the Company to another entity, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior the record date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or offer of rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall be entitled to receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale, dissolution, liquidation or winding up. (i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another entity (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease, or conveyance to another entity of all or substantially all of the property and assets of the Company, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that such Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale, lease or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale, lease or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations, and changes of shares of Common Stock and to successive consolidations, mergers, sales, leases or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale, lease or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution, or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section (f) hereof. (j) REGISTRATION UNDER THE SECURITIES ACT OF 1933. (1) The Company shall advise the Holder of this Warrant or of the Warrant Shares or any then holder of Warrants or Warrant Shares (such persons being collectively referred to herein as "holders") by written notice at least four weeks prior to the filing of any new registration statement under the Securities Act of 1933, as amended, or the Rules and Regulations promulgated thereunder (such Act and Rules and Regulations being hereinafter referred to as the "Act") covering securities of the Company and will for a period ending on the second anniversary of the Initial Exercise Date and commencing as of the date hereof, upon the request of any such holder, include in any such registration statement such information as may be required to permit a public offering of the Warrants and the Warrant Shares. The Company shall supply prospectuses, use its best efforts to cause the registration statement to become effective and to qualify the Warrants and/or the Warrant Shares for sale in such states as any such holder designates and furnish indemnification in the manner as set forth in Subsection (2)(B) of this Section (j). Such holders shall furnish information and indemnification as set forth in Subsection (2)(B) of this Section (j). (2) The following provision of this Section (j) shall also be applicable: (A) The Company shall bear the entire cost and expense of any registration of securities initiated by it under Subsection (1) of this Section (j) notwithstanding that Warrants and/or Warrant Shares subject to this Warrant may be included in any such registration. Any holder whose Warrants and/or Warrant Shares are included in any such registration statement pursuant to this Section (j) shall, however, bear the fees of such holder's own counsel and any registration fees, transfer taxes or underwriting discounts or commissions applicable to the Warrant Shares sold by such holder pursuant thereto. (B) (i) The Company shall indemnify and hold harmless each such holder and each underwriter, within the meaning of the Act, who may purchase from or sell for any such holder any Warrants and/or Warrant Shares (in the case of indemnification of such underwriter) from and against any and all losses, claims, damages and liabilities ("Losses") arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any post-effective amendment thereto under the Act or any prospectus included therein required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Losses arise out of or are based upon any such untrue statement or alleged untrue statement or omission or alleged omission based upon information furnished or required to be furnished in writing to the Company by such holder, in the case of indemnification of such holder, or underwriter, in the case of indemnification of such underwriter, expressly for use therein, which indemnification shall include each person, if any, who controls any such holder or underwriter within the meaning of such Act; provided, however, that the Company shall not be obliged so to indemnify any such holder or underwriter or controlling person unless such holder or underwriter shall at the same time indemnify, severally and not jointly, the Company, its directors, each officer signing the related registration statement and each person, if any, who controls the Company within the meaning of such Act, from and against any and all Losses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any prospectus required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement or omission made in conformity with information furnished in writing to the Company by any such holder or underwriter expressly for use therein. (ii) If the indemnity obligation provided for above is unavailable or insufficient to hold harmless an indemnified party in respect of any Losses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the previous sentence. (C) Notwithstanding anything herein to the contrary, the Holder hereof shall have no rights to have the Warrants or Warrant Shares registered if in the opinion of either counsel for the Company, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Holder hereof in the reasonable judgement of such Holder), or counsel for the Holder hereof, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Company in the Company's reasonable judgement), the Holder hereof may lawfully sell publicly, at the time and in the manner the Holder hereof proposes to sell the Warrants or the Warrant Shares, all of the securities proposed to be sold without registering the sale under the Act, whether pursuant to an exemption from registration available under Section 4(1) of the Act, Rule 144 or Rule 144(k) under the Act, or otherwise. (D) The Company will (a) file reports in compliance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (b) comply with all rules and regulations of the Securities and Exchange Commission (the "Commission") applicable in connection with the use of Rule 144 under the Act and take such other actions and furnish the Holder with such other information as such Holder may request in order to avail itself of such rule or any other rule or regulation of the Commission allowing such Holder to sell any Warrants or Warrant Shares without registration, and (c) at its expense, upon the request of the Holder, deliver to such Holder a certificate, signed by the Company's principal financial officer, stating (i) the Company's name, address and telephone number (including area code), (ii) the Company's Internal Revenue Service identification number, (iii) the Company's Commission file number, (iv) the number of shares of each class of stock outstanding as shown by the most recent report or statement published by the Company, and (v) whether the Company has filed the reports required to be filed under the Exchange Act for a period of at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder. If at any time the Company is not required to file reports in compliance with either Section 13 or Section 15(d) of the Exchange Act, the Company at its expense will, upon the written request of the Holder, make available adequate current public information with respect to the Company within the meaning of paragraph (c)(2) of Rule 144 under the Act. (k) EXERCISE AND TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. The Holder of this Warrant and any transferee hereof, by their acceptance hereof, hereby agree that: (a) the Warrants being acquired hereunder are being purchased for investment purposes only and not with a view to distribution and will not be transferred unless registered or unless there is an exemption available from the registration requirements of the Act, which exemption has been established to the reasonable satisfaction of the Company; (b) no public distribution of the Warrants or Warrant Shares will be made in violation of the provisions of the Act or any applicable state laws; and (c) during such period as delivery of a prospectus with respect to the Warrants or Warrant Shares may be required by the Act, no public distribution of the Warrants or Warrant Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state laws. The Holder of this Warrant and any such transferee hereof further agree that if any public distribution of any of the Warrants or Warrant shares is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Act, which action shall be taken only after submission to the Company of an opinion of counsel, reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed distribution will not be in violation of the Act or of applicable state law. Furthermore, it shall be a condition to the transfer of the Warrants or Warrant Shares that the transferee thereof deliver to the Company such Holder's written agreement to accept and be bound by all of the terms and conditions of this Warrant. CADIZ LAND COMPANY, INC. By: /s/ Stanley E. Speer -------------------------- Its: Chief Financial Officer Dated:____________, ______ PURCHASE FORM Dated:________________, The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _______shares of Common Stock and hereby makes payment of _________in payment of the actual exercise price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name________________________________________________________ (Please typewrite or print in block letters) Address ____________________________________________________ Signature___________________________________________________ ASSIGNMENT FORM FOR VALUE RECEIVED,________________________________hereby sells, assigns and transfers unto Name____________________________________________________________ (Please typewrite or print in block letters) Address____________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of __________shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ________________Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Date__________________, ________ Signature __________________________________ EX-4.9 5 EXHIBIT 4.9 ------------ THE WARRANTS AND WARRANT SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE WARRANTS AND THE WARRANT SHARES MAY NOT BE SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS AND WARRANT SHARES OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AS AMENDED. Void after 5:00 p.m. New York Time, on the Expiration Date. Warrant to Purchase 150,000 Shares of Common Stock. WARRANT TO PURCHASE COMMON STOCK OF CADIZ LAND COMPANY, INC. This is to Certify that, FOR VALUE RECEIVED, ING Baring (U.S.) Capital Corporation ("ING"), or assigns ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from Cadiz Land Company, Inc., a Delaware corporation ("Company"), 150,000 shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at the exercise price of Seven Dollars ($7.00) per share commencing on the "Initial Exercise Date", as defined below, and, with respect to any Vested Warrant Share (as defined below), ending on the seventh anniversary of the Initial Exercise Date of such Vested Warrant Share (the "Expiration Date"), but not later than 5:00 p.m., New York Time, on the Expiration Date. The shares of Common Stock (or other stock or securities) deliverable upon such exercise are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of each share of Common Stock (as such price may be adjusted from time to time as provided herein) is hereinafter sometimes referred to as the "Exercise Price". Notwithstanding anything to the contrary set forth herein, this Warrant shall not be exercisable by the Holder unless and until the Company has exercised its right under that certain Credit Agreement dated as of November 25, 1997 to which the Company and ING are parties (the "Credit Agreement") to make a Borrowing other than the Initial Borrowing (as such terms are defined in the Credit Agreement) (an "Additional Borrowing"), and then shall be exercisable only as to the number of Warrant Shares as are equal to the product of (1) a fraction, (i) the numerator of which shall be the amount of the Additional Borrowing and (ii) the denominator of which shall be $10 million, times (2) 150,000. The foregoing calculation shall be performed with respect to each Additional Borrowing made prior to the Maturity Date (as defined in the Credit Agreement) until such time, if any, as the aggregate amount of all Additional Borrowings equals or exceeds $10 million. Any Warrant Shares as to which this Warrant may become exercisable from time to time pursuant to the foregoing provision shall be referred to herein as "Vested Warrant Shares", and the "Initial Exercise Date" shall, with respect to any Vested Warrant Share, be the date of the Additional Borrowing as a result of which such Warrant Share becomes a Vested Warrant Share. Upon the Maturity Date, this Warrant shall (only as to such Warrant Shares, if any, which have not become Vested Warrant Shares) immediately and without the requirement of notice be canceled and shall be of no further force and effect. The cancellation of this Warrant as of the Maturity Date as to any Warrant Shares which have not become Vested Warrant Shares shall have no effect whatsoever upon the validity and binding effect of this Warrant as to any Vested Warrant Shares. By way of example only, in the event that the Company requests an Additional Borrowing of $2.5 million on April 1, 1999 and another Additional Borrowing of $5 million on April 1, 2000, then this Warrant will become exercisable as to (a) 37,500 Vested Warrant Shares with an Initial Exercise Date of April 1, 1999 and an Expiration Date of April 1, 2006 and (b) 75,000 Vested Warrant Shares with an Initial Exercise Date of April 1, 2000 and an Expiration Date of April 1, 2007. If no further Additional Borrowings are made by the Company prior to the Maturity Date, then, as of the Maturity Date, this Warrant shall be canceled as to the remaining 37,500 Warrant Shares only, but not as to the 112,500 Vested Warrant Shares. (a) EXERCISE OF WARRANT. Subject to the provisions of Section (k) hereof, this Warrant may be exercised in whole or in part as to any Vested Warrant Shares at any time or from time to time on or after the applicable Initial Exercise Date and until the applicable Expiration Date, or if either such day is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. The Holder may exercise this Warrant, in whole or in part, without the payment of any cash or other property, by presentation and surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Purchase Form duly executed and accompanied by a written request from the Holder instructing the Company to issue to the Holder a number of Warrant Shares equal to the product of (1) a fraction, (i) the numerator of which shall be the excess of the current market price (as defined in Section (f)(8) below) of the Common Stock on the date preceding the date of such exercise of the Warrant over the then Exercise Price per Warrant Share and (ii) the denominator of which shall be the current market price (as defined in Section (f)(8) below) of the Common Stock on such date, times (2) the number of Warrant Shares as to which the Warrant is being exercised. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. The Company shall pay all expenses, transfer taxes and other charges payable in connection with the preparation, issue and delivery of stock certificates under this Section (a), except that, in case such stock certificates shall be registered in a name or names other than the name of the holder of this Warrant, all stock transfer taxes which shall be payable upon the issuance of such stock certificate or certificates shall be paid by the Holder at the time of delivering the Purchase Form. (b) RESERVATION OF SHARES. The Company hereby agrees that at all times following the Initial Exercise Date there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock (or other stock or securities deliverable upon exercise of this Warrant) as shall be required for issuance and delivery upon exercise of this Warrant. All shares of Common Stock issuable upon the exercise of this Warrant shall be duly authorized, validly issued, fully paid and nonassessable and free and clear of all liens and other encumbrances. (c) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a National Securities Exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the Nasdaq system, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked prices reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount not less than the book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in good faith and in such reasonable manner as may be prescribed by the Board of Directors of the Company, and reasonably acceptable to the Holder. (d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. This Warrant is transferable and may be assigned or hypothecated, in whole or in part, at any time and from time to time from the date hereof. Subject to the provisions of Section (k), upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant registered in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the case of loss, theft or destruction, of reasonably satisfactory indemnification and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. (e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. Furthermore, the Holder by acceptance hereof, consents to and agrees to be bound by and to comply with all the provisions of this Warrant, including, without limitation, all the obligations imposed upon the holder hereof by Section (k). In addition, the holder of this Warrant, by accepting the same, agrees that the Company and the transfer agent may deem and treat the person in whose name this Warrant is registered as the absolute, true and lawful owner for all purposes whatsoever, and neither the Company nor the transfer agent shall be affected by any notice to the contrary. (f) ANTI-DILUTION PROVISIONS. The Exercise Price and the number and kind of securities purchasable upon the exercise of this Warrant (the "Warrant Shares") shall be subject to adjustment from time to time upon the happening of certain events as hereinafter provided. The Exercise Price in effect at any time and the Warrant Shares shall be subject to adjustment as follows: (1) In case the Company shall (i) pay a dividend or make a distribution on its shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding Common Stock in shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding Common Stock into a smaller number of shares, then the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, combination or reclassification shall be adjusted so that such Exercise Price shall equal the price determined by multiplying the Exercise Price in effect immediately prior to such record date or effective date by a fraction, the numerator of which is the number of shares of Common Stock outstanding on such record date or effective date, and the denominator of which is the number of shares of Common stock outstanding immediately after such dividend, distribution, subdivision, combination or reclassification. For example, if the Company declares a 2 for 1 stock dividend or stock split and the Exercise Price immediately prior to such event was $7.00 per share, the adjusted Exercise Price immediately after such event would be $3.50 per share. Such adjustment shall be made successively whenever any event listed in this Subsection (1) shall occur. (2) In case the Company shall hereafter issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price (or having a conversion price per share) less than the current market price of the Common Stock (as defined in Subsection (8) below) on the record date mentioned below, then the Exercise Price shall be adjusted so that the same shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the record date mentioned below by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding on the record date mentioned below and the number of additional shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered) would purchase at such current market price per share of the Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding on such record date and the number of additional shares of Common Stock offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall be made successively whenever such rights or warrants are issued and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights or warrants; and to the extent that shares of Common Stock are not delivered (or securities convertible into Common Stock are not delivered) after the expiration of such rights or warrants the Exercise Price shall be readjusted to the Exercise Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made upon the basis of delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. (3) In case the Company shall hereafter distribute to all holders of its Common Stock evidences of its indebtedness or assets (excluding regular cash dividends or distributions and dividends or distributions referred to in Subsection (1) above) or subscription rights or warrants (excluding those referred to in Subsection (2) above), then in each such case the Exercise Price in effect thereafter shall be determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the current market price per share of Common Stock (as defined in Subsection (8) below), less the aggregate fair market value (as determined in good faith by the Company's Board of Directors and reasonably acceptable to the Holder ) of said assets or evidences of indebtedness so distributed or of such rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such current market price per share of Common Stock. Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of shareholders entitled to receive such distribution. (4) In case the Company shall issue shares of its Common Stock [excluding shares issued (i) in any of the transactions described in Subsection (1) above, (ii) upon exercise of options granted to the Company's employees under a plan or plans adopted by the Company's Board of Directors and approved by its shareholders, if such shares would otherwise be included in this Subsection (4), (but only to the extent that the aggregate number of shares excluded hereby and issued after the date hereof, shall not exceed 5% of the Company's Common Stock outstanding at the time of any issuance), (iii) upon exercise of options and warrants outstanding at the date hereof, and this Warrant, (iv) upon the exercise of any convertible security as to which the Exercise Price has already been adjusted pursuant to Subsection (5) below, and (v) to shareholders of any corporation which merges into the Company in proportion to their stock holdings of such corporation immediately prior to such merger, upon such merger, or issued in a bona fide public offering pursuant to a firm commitment underwriting, but only if no adjustment is required pursuant to any other specific subsection of this Section (f) (without regard to Subsection (9) below) with respect to the transaction giving rise to such rights] for a consideration per share less than the current market price per share defined in Subsection (8) below, then on the date the Company fixes the offering price of such additional shares, the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for the issuance of such additional shares would purchase at such current market price per share of Common Stock, and the denominator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues shares of Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (5), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (5) In case the Company shall issue any securities convertible into or exchangeable for its Common Stock [excluding securities issued in transactions described in Subsections (2) and (3) above] for a consideration per share of Common Stock initially deliverable upon conversion or exchange of such securities [determined as provided in Subsection (7) below] less than the current market price per share [as defined in Subsection (8) below] in effect immediately prior to the issuance of such securities, then the Exercise Price shall be adjusted immediately thereafter so that it shall equal the price determined by multiplying the Exercise Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such securities and the number of shares of Common Stock which the aggregate consideration received [determined as provided in Subsection (7) below] for such securities would purchase at such current market price per share of Common Stock, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance and the maximum number of shares of Common Stock of the Company deliverable upon conversion of or in exchange for such securities at the initial conversion or exchange price or rate. Such adjustment shall be made successively whenever such an issuance is made; provided, however, that no such adjustment shall be made unless, in such issuance, the Company issues securities convertible into or exchangeable for a number of shares of its Common Stock in an amount which, when combined with all other issuances of Common Stock after the date hereof and all other issuances of securities convertible into or exchangeable for its Common Stock after the date hereof, which securities are excluded from Subsections (4) or (5) by operation of this proviso or the proviso in the last section of Subsection (4), would exceed 20% of the Company's Common Stock outstanding immediately prior to the time of such issuance. (6) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsections (1), (2), (3), (4) and (5) above, the number of Warrant Shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of Warrant Shares issuable upon exercise of this Warrant immediately prior to such adjustment by the Exercise Price in effect immediately prior to such adjustment and dividing the product so obtained by the Exercise Price, as adjusted. (7) For purposes of any computation respecting consideration received pursuant to Subsections (4) and (5) above, the following shall apply: (A) in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith: (B) in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors of the Company (irrespective of the accounting treatment thereof) and reasonably acceptable to the Holder; and (C) in the case of the issuance of securities convertible into or exchangeable for shares of Common Stock, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof [the consideration in each case to be determined in the same manner as provided in clauses (A) and (B) of this Subsection (7)]. (8) For the purpose of any computation under Subsections (2), (3), (4) and (5) above, the current market price per share of Common Stock at any date shall be deemed to be the average of the daily closing prices for 30 consecutive business days before such date. The closing price for each day shall be the last sale price regular way or, in case no such reported sale takes place on such day, the average of the last reported bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock is admitted to trading or listed, or if not listed or admitted to trading on such exchange, the average of the last reported bid and asked prices as reported by Nasdaq, or other similar organization if Nasdaq is no longer reporting such information, of if not so available, the fair market price as determined in good faith by the Board of Directors and reasonably acceptable to the Holder. (9) No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least five cents ($0.05) in such price; provided, however, that any adjustments which by reason of this Subsection (9) are not required to be made shall be carried forward and taken into account in any subsequent adjustment required to be made hereunder. All calculations under this Section (f) shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. Anything in this Section (f) to the contrary notwithstanding, the Company shall be entitled, but shall not be required, to reduce the Exercise Price, in addition to those changes required by this Section (f), as it, in its sole discretion, shall determine to be advisable in order that any dividend or distribution in shares of Common Stock, subdivision, reclassification or combination of Common Stock, issuance of warrants to purchase Common Stock or distribution or evidences of indebtedness or other assets (excluding cash dividends) referred to hereinabove in this Section (f) hereafter made by the Company to the holders of its Common Stock shall not result in any tax to such holders of its Common Stock or securities convertible into Common Stock. (10) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsections (1) to (9), inclusive above. The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by Section (f), and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment absent manifest error or negligence. (11) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in this Warrant. (g) OFFICER'S CERTIFICATE. Whenever the Exercise Price or number of Warrant Shares shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price or number of Warrant Shares determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to Sections (a) and (d) and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to such Holder or any such holder. (h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of or class of its capital stock or any other rights or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another entity, sale, lease, or transfer of all or substantially all of the property and assets of the Company to another entity, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior the record date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or offer of rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall be entitled to receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, lease, transfer, sale, dissolution, liquidation or winding up. (i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another entity (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease, or conveyance to another entity of all or substantially all of the property and assets of the Company, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that such Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale, lease or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale, lease or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section (i) shall similarly apply to successive reclassifications, capital reorganizations, and changes of shares of Common Stock and to successive consolidations, mergers, sales, leases or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale, lease or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution, or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section (f) hereof. (j) REGISTRATION UNDER THE SECURITIES ACT OF 1933. (1) The Company shall advise the Holder of this Warrant or of the Warrant Shares or any then holder of Warrants or Warrant Shares (such persons being collectively referred to herein as "holders") by written notice at least four weeks prior to the filing of any new registration statement under the Securities Act of 1933, as amended, or the Rules and Regulations promulgated thereunder (such Act and Rules and Regulations being hereinafter referred to as the AAct@) covering securities of the Company and will for a period ending on the second anniversary of the Initial Exercise Date and commencing as of the date hereof, upon the request of any such holder, include in any such registration statement such information as may be required to permit a public offering of the Warrants and the Warrant Shares. The Company shall supply prospectuses, use its best efforts to cause the registration statement to become effective and to qualify the Warrants and/or the Warrant Shares for sale in such states as any such holder designates and furnish indemnification in the manner as set forth in Subsection (2)(B) of this Section (j). Such holders shall furnish information and indemnification as set forth in Subsection (2)(B) of this Section (j). (2) The following provision of this Section (j) shall also be applicable: (A) The Company shall bear the entire cost and expense of any registration of securities initiated by it under Subsection (1) of this Section (j) notwithstanding that Warrants and/or Warrant Shares subject to this Warrant may be included in any such registration. Any holder whose Warrants and/or Warrant Shares are included in any such registration statement pursuant to this Section (j) shall, however, bear the fees of such holder=s own counsel and any registration fees, transfer taxes or underwriting discounts or commissions applicable to the Warrant Shares sold by such holder pursuant thereto. (B) (i) The Company shall indemnify and hold harmless each such holder and each underwriter, within the meaning of the Act, who may purchase from or sell for any such holder any Warrants and/or Warrant Shares (in the case of indemnification of such underwriter) from and against any and all losses, claims, damages and liabilities (ALosses@) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any post-effective amendment thereto under the Act or any prospectus included therein required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Losses arise out of or are based upon any such untrue statement or alleged untrue statement or omission or alleged omission based upon information furnished or required to be furnished in writing to the Company by such holder, in the case of indemnification of such holder, or underwriter, in the case of indemnification of such underwriter, expressly for use therein, which indemnification shall include each person, if any, who controls any such holder or underwriter within the meaning of such Act; provided, however, that the Company shall not be obliged so to indemnify any such holder or underwriter or controlling person unless such holder or underwriter shall at the same time indemnify, severally and not jointly, the Company, its directors, each officer signing the related registration statement and each person, if any, who controls the Company within the meaning of such Act, from and against any and all Losses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement or any prospectus required to be filed or furnished by reason of this Section (j) or arising out of or based upon any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement or omission made in conformity with information furnished in writing to the Company by any such holder or underwriter expressly for use therein. (ii) If the indemnity obligation provided for above is unavailable or insufficient to hold harmless an indemnified party in respect of any Losses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties= relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the previous sentence. (C) Notwithstanding anything herein to the contrary, the Holder hereof shall have no rights to have the Warrants or Warrant Shares registered if in the opinion of either counsel for the Company, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Holder hereof in the reasonable judgement of such Holder), or counsel for the Holder hereof, knowledgeable and experienced in Federal securities matters (said counsel to be acceptable to the Company in the Company's reasonable judgement), the Holder hereof may lawfully sell publicly, at the time and in the manner the Holder hereof proposes to sell the Warrants or the Warrant Shares, all of the securities proposed to be sold without registering the sale under the Act, whether pursuant to an exemption from registration available under Section 4(1) of the Act, Rule 144 or Rule 144(k) under the Act, or otherwise. (D) The Company will (a) file reports in compliance with the Securities Exchange Act of 1934, as amended (the AExchange Act@), (b) comply with all rules and regulations of the Securities and Exchange Commission (the ACommission@) applicable in connection with the use of Rule 144 under the Act and take such other actions and furnish the Holder with such other information as such Holder may request in order to avail itself of such rule or any other rule or regulation of the Commission allowing such Holder to sell any Warrants or Warrant Shares without registration, and (c) at its expense, upon the request of the Holder, deliver to such Holder a certificate, signed by the Company=s principal financial officer, stating (i) the Company=s name, address and telephone number (including area code), (ii) the Company=s Internal Revenue Service identification number, (iii) the Company=s Commission file number, (iv) the number of shares of each class of stock outstanding as shown by the most recent report or statement published by the Company, and (v) whether the Company has filed the reports required to be filed under the Exchange Act for a period of at least ninety (90) days prior to the date of such certificate and in addition has filed the most recent annual report required to be filed thereunder. If at any time the Company is not required to file reports in compliance with either Section 13 or Section 15(d) of the Exchange Act, the Company at its expense will, upon the written request of the Holder, make available adequate current public information with respect to the Company within the meaning of paragraph (c)(2) of Rule 144 under the Act. (k) EXERCISE AND TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. The Holder of this Warrant and any transferee hereof, by their acceptance hereof, hereby agree that: (a) the Warrants being acquired hereunder are being purchased for investment purposes only and not with a view to distribution and will not be transferred unless registered or unless there is an exemption available from the registration requirements of the Act, which exemption has been established to the reasonable satisfaction of the Company; (b) no public distribution of the Warrants or Warrant Shares will be made in violation of the provisions of the Act or any applicable state laws; and (c) during such period as delivery of a prospectus with respect to the Warrants or Warrant Shares may be required by the Act, no public distribution of the Warrants or Warrant Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state laws. The Holder of this Warrant and any such transferee hereof further agree that if any public distribution of any of the Warrants or Warrant shares is proposed to be made by them otherwise than by delivery of a prospectus meeting the requirements of Section 10 of the Act, which action shall be taken only after submission to the Company of an opinion of counsel, reasonably satisfactory in form and substance to the Company's counsel, to the effect that the proposed distribution will not be in violation of the Act or of applicable state law. Furthermore, it shall be a condition to the transfer of the Warrants or Warrant Shares that the transferee thereof deliver to the Company such Holder=s written agreement to accept and be bound by all of the terms and conditions of this Warrant. CADIZ LAND COMPANY, INC. By:_/s/ Stanley E. Speer ________________________ Its: Chief Financial Officer Dated: _______________, ________ PURCHASE FORM Dated: __________,______ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _______shares of Common Stock and hereby makes payment of ________in payment of the actual exercise price thereof. INSTRUCTIONS FOR REGISTRATION OF STOCK Name_________________________________________________________ (Please typewrite or print in block letters) Address______________________________________________________ Signature ___________________________________________________ ASSIGNMENT FORM FOR VALUE RECEIVED, _____________________hereby sells, assigns and transfers unto Name__________________________________________________________ (Please typewrite or print in block letters) Address_______________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of _________shares as to which such right is exercisable and does hereby irrevocably constitute and appoint _________________Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Date _________________, ______ Signature ___________________________ EX-5.1 6 EXHIBIT 5-1 ------------ May 18, 1998 Cadiz Land Company, Inc. 100 Wilshire Boulevard, Suite 1600 Santa Monica, California 90401 Re: Registration Statement on Form S-3 Ladies and Gentlemen: Our opinion has been requested in connection with the Registration Statement to which this opinion is filed as an exhibit and under which the following securities are being registered: (i) a total of 5,910,712 Shares of Common Stock, consisting of 5,360,712 Outstanding Shares, 50,000 Option Shares and 500,000 Warrant Shares, and (ii) 500,000 Warrants (as such terms are defined in the Registration Statement). We have examined the Registration Statement and have examined, and have relied as to matters of fact upon, the originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, agreements, documents and other instruments and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such other and further investigations, as we have deemed relevant and necessary as a basis for the opinion hereinafter set forth. Based on and subject to the above, it is our opinion that the 5,360,712 Outstanding Shares and the 500,000 Warrants are duly authorized, legally issued, fully paid and non-assessable, and that the 50,000 Option Shares, when issued as contemplated under the terms of the Options governing their issuance, and the 500,000 Warrant Shares, when issued as contemplated under the terms of the Warrants governing their issuance, will be duly authorized, legally issued, fully paid and non- assessable. We are members of the Bar of the State of California and we do not express any opinion herein concerning any law other than the law of the State of California, the General Corporation Law of the State of Delaware and the federal law of the United States. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the heading "Legal Matters" in the prospectus forming a part of the Registration Statement. Very truly yours, /s/ Miller & Holguin ------------------------- MILLER & HOLGUIN EX-23.1 7 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-3 of our report dated February 13, 1998 appearing on page 28 of Cadiz Land Company, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1997. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ Price Waterhouse LLP - ------------------------- PRICE WATERHOUSE LLP Los Angeles, California May 15, 1998 -----END PRIVACY-ENHANCED MESSAGE-----